SHRIPRAKASH V. SARDESAI, MUMBAI V. DCIT CEN CXIR 47, MUMBAI

ITA 484/MUM/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1326 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 08-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-01-2011
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Keywords: Gift; Source of fund; Initiation of penalty proceedings; Accommodation entries; Penny stocks; Reassessment proceedings
• Section: 133(6); 131; 68

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM & SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 484/MUM/2011 ( / ASSESSMENT YEAR: 200 7 - 08 ) SHRI PRAKASH V. SARDESAI 3 RD FLOOR, MADHAV VILAS, SETALWAD LANE, MUMBAI . / VS. D CIT CEN CXIR 47 R. NO. 658, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI ./ ./ PAN/GIR NO. A MYPS0171J ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA / RESPONDENTBY : MS. S. PADMAJA / DATE OF HEARING : 09 /0 2 /201 7 / DATE OF PRONOUNCEMENT : 18/04/2017 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISS I ONER OF INCOME TAX (APPEALS) - MUMBAI - 36 , DATED 30.11.2010 FOR AY 2007 - 08 ON THE GROUNDS OF APPEAL MENTIONED HEREIN BELOW. 2 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI 1. THE LEARNED ASSESSING OFFICER (AO) HAS ERRED IN LAW AND FACTS IN PASSING THE ORDER U/S . 143 (3) OF THE I. T. ACT 1961 IN DETERMINING THE TOTAL INCOME OF THE APPELLANT AT RS. 1 ,3 3, 5 26,010/ - AS AGAINST RETURN OF INCOME OF RS. ( - ) 53,897,425/ - AND HONU RABLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE SAME. 2. THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND FACTS IN MAKING ADDITION OF RS. 1,87,000,000/ - ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS AND HONOURABL E COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE SAME. 3. THE LEARNE D AO HAS ERRED IN LAW AND FACTS IN ADDING TO INCOME, A SUM OF RS. 600,000/ - ON ACCOUNT OF UNEXPLAINED BANK DEPOSITS AND HONOURABLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE SAME. 4. THE LEARNED AO HAS ERRED IN LAW AN D FACTS IN INITIATING PENALTY PROCEEDING U/S 271(1) (C) OF THE INCOME TAX ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. 5. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, VARY, AMEND AND I OR DELETE ANY OR ALL THE ABOVE GROUND I S OF APPEAL. G ROUND NO. 1. 3 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI 2. THIS GROUND IS GENERAL IN NATURE AND THE MERITS OF THIS GROUND WOULD BE CONSIDERED IN THE SUBSEQUENT GROUNDS RAISED BY THE ASSESSEE. HENCE, KEEPING IN VIEW THE NATURE OF THIS GROUND AS GENERAL, THE SAME STANDS DISMISSED. GROUND NO. 2 3. THIS GROUND RELATES TO CONFIRMATION OF ADDITIONS BY CIT(A) OF RS. 18,70,00,000/ - MADE BY AO ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF (A) PUBLICATION THROUGH PROPRIETORSHIP CONCERN, M/S. JAYASHREE PUBLICATIONS AND (B) TRADING IN SECURITIES AND BROKERAGE THROUGH PROPRIETORSHIP CONCERN S. V. SARDESAI - SHARE & TRADING ACCOUNT AND C) GIFTS AND NOVELTIES IMPEX. DURING THE COURSE OF SCRUTINY ASSESSMENT A O ASKED FOR D ETAILS OF LOAN CREDITORS ALONG WITH ADDRESS AND PAN NUMBER WHICH WERE FILED BEFORE AO AND PLACED AT PAGE 2 - 3 OF THE PAPER BOOK FILED BEFORE US. SR. NO. NAME OF THE PARTY AMOUNT OF LOAN (RS.) ADDRESS PAN NUMBER 1 ADMIX VINIMAY PVT. LTD., 4,25,00,000 G - 21A, KAMALAYA CENTRE, 5166, LENIN SARANI, BEW MARKET, AAFCA3577L 4 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI KOLKATA 700 007 2 SHARDA CREATIONS PVT. LTD., 50,00,000 40, C.P. TANK ROAD, MUMBAI 400 004 PAN: AAHCS0779C TAN:MUMS36579E 3 MATRUBHUMI DEALERS PVT. LTD., 1,40,00,000 MARSHAL HOUSE, R. NO. 748, 7TH FLOOR, 33/1, N S ROAD, KOLKATA - 700001 AAECM5410D 4 ORIGIN MANAGEMENT CONSULTANTS PVT. LTD., 2,45,00,000 7004, 7TH FLOOR, EMRALD HOUSE, S D ROAD, SECUNDERABAD AAAC06754A 5 SAVITRI MINERALS PVT. LTD., 5,95,00,000 27, WESTERN STREET, 5TH FLOOR, ROOM NO. 526,KOLKATA, WEST BENGAL - 700012 25/B, ABINDRA NATH TAGORESARANI SUITE, #10, CAMAC COURT, KOLKATA, WEST BENGAL 700 016 AAICS9692N 6 SHRINATH TRADING CO., 3,00,00,000 C - 3, SHIVALAYA BUILDING, HAJI, BAPU ROAD, MALAD EAST, MUMBAI - 400097 AEAPD9852R 7 JAS CAPITAL SERVICES PVT. LTD., 50,00,000 705 / 706, PUJIT PLAZA, PLOT NO. 6A, SECTOR IL, CBD BELAPUR, NAVI MUMBAI - . 400614 PAN: AABCJ7702J TAN: MUMJ12367F 8 TRISON IMPEX 65,00,000 65/76, HABIB BUILDING, OFFICE NO. 18, C P TANKS ROAD, MUMBAI 400004 ABBPK9675R TOTAL 18,70,00,000 THE ASSESSING OFFICER HAS ADDED THE SAME U/S.68 OF I.T. ACT AND DEALT WITH THE REASONS FOR MAKING ADDITION IN RESPECT OF THE ABOVE PARTY IN PARA 6.1.5 PAGE 28 OF THE ASSESSMENT ORDER. ACCORDING TO THE ASSESSING OFFICER, NO ONE ATTENDED BEFORE HIM AND 5 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI AS SUCH IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN COUL D NOT BE VERIFIED. THE ASSESSEE HAD ELABORATED THE FACTS RELATED TO THIS PARTY BEFORE THE CIT (A) VIDE LETTER DATED 19.03.2009 - WHICH IS PLACED AT PAGE 75 OF THE PAPER BOOK FILED BEFORE US. ON ITS PERUSAL, IT CAN BE SEEN THAT THE ASSESSEE HAD BROUG HT TO T HE ATTENTION OF THE CIT ( A) THE CIRCUMSTANCES IN WHICH THE ASSESSING OFFICER PASSED THE ORDER. TAKING INTO ACCOUNT THE FACT THAT THE ASSESSING OFFICER HAD PASSED ORDER WITHOUT TAKING INTO ACCOUNT THE DETAILS, PRAYER TO CALL FOR REMAND REPORT FROM THE 'ASSE SSING OFFICER WAS ALSO MADE.' DURING THE ASSESSMENT PROCEEDINGS, THE A SSESSEE FURNISH ED THE DETAILS TO THE ASSESSING OFFICER, HOWEVER, THE SAME WAS NOT ACCEPTED BY THE ASSESSING OFFICER ('AO'). ACCORDINGLY, THE ASSESSEE FILED THE RELEVANT DETAILS TO THE OFFICE OF THE AO THROUGH REGIST ERED AD. THE RELEVANT DETAILS SO FILED ARE PLACED AT PAGES 78 TO 98 OF THE PAPER BOOK FILED BEFORE US . ON ITS PERUSAL IT CAN BE SEEN THAT THE ASSESSEE HAD FURNISHED FOLLOWING DETAILS: A) COVERING LETTER WRITTEN TO DY. COMM ISSIONER OF INCOME - TAX DATED 08 DECEMBER 2008; (PAGE 80 OF THE PB) B) ACCOUNT CONFIRMATIONS OF TRISON 'IMPEX WITH GIFT & NOVELTIES IMPEX FOR F.Y. 2006 - 07 & F.Y. 2007 - 08 AS PER THE BOOKS OF THE PARTY AND THE APPELLANT; (PAGE 82 - 85 OF THE PB) C) CERTIF ICATE OF REGISTRATION OF VAT; (PAGE 86 OF THE PB) D) LEDGER ACCOUNT OF GIFT AND NOVELTIES IMPEX FOR F.Y. 2006 - 07 & F.Y. 2007 - 08 IN THE BOOKS OF THE PARTY; (PAGE 87 OF THE PB) 6 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI E) BANK STATEMENT OF TRISON IMPEX WITH THE HIGHLIGHTED TRANSACTIONS; (PAGES 88 - 91 OF THE PB) F) INCOME TAX RETURNS OF MR. KAMLESH KANUNGO, PROPRIETOR OF M/S. TRISON IMPEX FOR A.Y.2007 - 08 (PAGE 92 OF THE PB) AND A.Y.2008 - 09 (PAGE 94 OF THE PB) G) ANNEXURE TO FORM 3CD SHOWING PARTICULARS OF LOANS SHOWING THE TRANSACTIONS WITH THE ASS ESSEE FOR A.Y.2007 - 08 (PAGE 93 OF THE PB) AND A.Y.2008 - 09 (PAGE 95 OF THE PB) ON PERUSAL OF THE LETTER DATED 08.12.2008 SUBMITTED BY THE ASSESSEE, WE FOUND THAT THE PARTY HAD CLEARLY INTIMATED THE ASSESSING OFFICER THAT IT HAD STARTED OPERATING FROM ANOTHER PREMISES (ANAND BHUVAN, SIKKA NAGAR, MUMBAI 400 004) AND ITS EARLIER PLACE O F OPERATION (I.E. HABIB BUILDING, C.P. TANK, MUMBAI 400 004). THEREFORE, THE REASON FOR NOT RESPONDING TO THE NOTICE ISSUED BY THE ASSESSING OFFICER WAS DULY EXPLAINED. THIS ALSO STANDS FORTIFIED BY THE CERTIFICATE OF REGISTRATION ISSUED UNDER MVAT ACT, 20 02 FILED BEFORE THE ASSESSING OFFICER - WHICH IS PLACED AT PAGE 86 OF THE PB. THE ASSESSING OFFICER VIDE LETTER DATED 14.06.2010 SUBMITTED HIS REMAND REPORT TO THE CIT(A) - WHICH IS PLACE D AT PAGES 99 - 101 OF THE PB. ON ITS PERUSAL, IT CAN BE SEEN THAT THE ASSESSING OFFICER HAS MERELY STATED THE REASONS FOR MAKING ADDITION TO THE INCOME OF THE ASSESSEE. IT CAN ALSO BE SEEN THAT THE ASSESSING OFFICER HAS ADMITTED THAT HE HAS RECEIVED THE DETAILS 7 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI THROUGH POST AFTER THE COMPLETION OF THE ASSESSMENT. HOWEVER, TH E ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DISPROVE THE DETAILS SUBMITTED BY THE ASSESSEE IN RESPECT OF THE PARTIES WHICH BALANCES HAVE BEEN ADDED U/S. 68 OF THE ACT. IT WAS CONTENDED BY LEARNED AR THAT THE ASSESSEE HAD FILED HIS REJOIN DER VIDE LETTER DATED 16.11.2010 AND RE - SUBMITTED DETAILS, CONFIRMATIONS AND WRITE UP GIVEN TO THE ASSESSING OFFICER OF ALL THE IMPUGNED PARTIES AS WELL AS ELABORATED ON THE MODUS OPERANDI FOR TRANSACTIONS UNDERTAKEN THROUGH MR. JALAJ BATRA. THE SAID REJOI NDER IS FILED AT PAGE 102 - 106 OF THE PB. IN VIEW OF THE ABOVE, AS PER LEARNED AR THE PARTY HAD FURNISHED RELEVANT DETAILS TO PROVE CREDITWORTHINESS, IDENTITY AND GENUINENESS OF THE TRANSACTIONS. HOWEVER, THE AO HAS ADDED THE UNSECURED LOAN AS INCOME OF TH E ASSESSEE ONLY ON THE GROUND THAT THE PARTIES WERE NOT PRESENT BEFORE THE AO FOR EXAMINATION. THE SAME DETAILS WERE AGAIN FURNISHED BY THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME - TAX (APPEALS) DURING THE FIRST STAGE OF APPELLATE PROCEEDINGS WHO ACCEPT ED THE SAME A S FRESH EVIDENCE AND CALLED FOR REMAND REPORT FROM THE AO. HOWEVER, COMMISSIONER OF 8 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI INCOME - TAX APPEALS REJECTED THE CLAIM OF THE ASSESSEE BY UPHOLDING THE FINDINGS OF THE ASSESSING OFFICER . C ONTENTION OF LEARNED AR WAS THAT THE ASSESSEE HA S DISCHARGED THE PRIMARY ONUS CAST UPON IT U/ S.68 OF THE ACT BY SUBMITTING THE RELEVANT DETAILS SUCH AS CONFIRMATIONS, PAN, BANK STATEMENTS, ETC. WHICH ESTABLISHED THE IDENTITY, CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF THE TRANSACTIONS. IT IS SUB MITTED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL WHICH WOULD DISPROVE THE DETAILS SUBMITTED BY THE ASSESSEE. IT IS ALSO SUBMITTED THAT ADDITION MADE U/S.68 OF THE ACT CANNOT BE SUSTAINED MERELY BECAUSE THE PARTY TO WHOM THE ASSESSIN G OFFICER HAS ISSUED NOTICE DOES NOT APPEAR BEFORE THE ASSESSING OFFICER. IN THIS REGARD, RELIANCE WAS PLACED ON HONOURABLE BOMBAY HIGH COURT RULING IN THE CASE OF COMMISSIONER OF INCOME - TAX, BOMBAY CITY - 11 VS. U.M. SHAH, PROPRIETOR, SHRENIK TRADING CO. 90 ITR 396 (BOM) WHEREIN IT WAS HELD THAT THE ASSESSEE COULD NOT BE BLAMED IF THE PARTIES DO NOT APPEAR IN RESPONSE TO THE SUMMONS. THE HON'BLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL DELETING THE ADDITION MADE TO THE INCOME OF THE ASSESSEE BY THE ASSE SSING OFFICER FOR THE REASON THAT THE PARTIES MERELY FILED CONFIRMATIONS AND FAILED TO 9 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI APPEAR BEFORE THE ASSESSING OFFICER EVEN AFTER SUMMONS WERE ISSUED. IN RESPECT OF LOAN TAKEN FROM JAS CAPITAL SERVICES PVT. LTD., THE ASSESSING OFFICER HAS DEALT WITH T HE REASONS FOR MAKING ADDITION IN PARA 6.1.6 PAGE 28 OF THE ASSESSMENT ORDER. ACCORDING TO THE ASSESSING OFFICER, THOUGH NOTICE WAS RECEIVED BY THE PARTY, NO COMPLIANCE WAS MADE . AS PER LEARNED AR LETTER DATED 19.03.2009 EXPLAINING TO THE CIT(A) THE CIR CUMSTANCES UNDER WHICH THE ASSESSMENT WAS COMPLETED AND FILED THE CONFIRMATIONS OF THE PARTY (PAGES 96 - 98 OF THE PB) WITH PRAYER TO ADMIT THE EVIDENCES AND CALL FOR REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER SUBMITTED HIS REMAND REPORT WHILE DEALING WITH ADDITION MADE IN RESPECT OF M/S. TREASON IMPEX. THE COMMISSIONER OF INCOME - TAX APPEALS REJECTED THE CLAIM OF THE ASSESSEE. IN RESPECT OF LOAN FROM ADMIX VINIMAY PVT. LTD., THE ASSESSEE AD FURNISHED THE FOLLOWING DETAILS TO THE AO / CIT(A) DU RING THE ASSESSMENT PROCEEDINGS / APPELLATE PROCEEDINGS: A) PAN NUMBER: AAFCA3577L; (PAGE 28, 35 OF THE PB) B) TAN NUMBER: CALA08453E; (PAGE 28, 35 OF THE PB) C) ADDRESS : G - 21A, KAMALAYA CENTRE, 5166 LENIN SARANI, BEW MARKET, KOLKATA 700 007 (AS PER RO C MASTER DATA); (PAGE 28, 35 OF THE PB) 10 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI D) FORM 32 FILED BY THE LOAN CREDITOR WITH THE MINISTRY OF CORPORATE AFFAIRS INDICATING DETAILS OF DIRECTORS, PAN OF DIRECTORS, ADDRESS OF DIRECTORS, ETC.; (PAGES 39 - 47 OF THE PB) E) MASTER DATA: AS AVAILABLE FRO M THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS (PAGE 37 OF THE PB) F) CERTIFICATE OF INCORPORATION (PAGE 38 OF THE PB) G) ASSESSEE'S BANK STATEMENTS INDICATING THAT THE FUNDS WERE RECEIVED THROUGH PROPER BANKING CHANNELS THROUGH ACCOUNT PAYEE CHEQUES / RTGS; (PAGES 32 - 33 OF THE PB) H) DETAILS OF BULK DEALS ENTERED INTO BY THE LOAN CREDITOR ON THE BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCHANGE; (PAGES 50 - 57 OF THE PB) I) CONFIRMATION OF ACCOUNTS OF THE LOAN CREDITOR ALONG WITH PAN NUMBER; (PAGE 34 OF THE PB) AS PER LEARNED AR BY FURNISHING THE RELEVANT DETAILS AS MENTIONED ABOVE, THE ASSESSEE HAD DISCHARGED ITS PRIMARY ONUS OF PROVING THE GENUINENESS OF THE TRANSACTION, IDENTITY AND CREDITWORTHINESS OF THE PARTY . AS PER LEARNED AR, ADMIX VINIMA Y PVT. LTD. IS A PRIVATE LIMITED COMPANY INCORPORATED IN WEST BENGAL, KOLKATA AND THERE IS NOTHING ON THE RECORD TO DEMONSTRATE THAT THE NOTICE SERVER OF MUMBAI INCOME - TAX OFFICE HAD PERSONALLY VISITED THE PREMISES IN KOLKATA. FURTHER, THERE IS NOTHING ON RECORD THAT THE SAID COMPANY HAS ANY PREMISES IN MUMBAI. ADDITION IS PURELY MADE ON THE GROUND THAT NOTICES U/S 133(6) / 131 WERE RETURNED BACK AND THE AO 11 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI HAS COMPLETELY IGNORED OTHER RELEVANT DETAILS FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FOR THIS PURPOSE, RELIANCE WAS PLACED BY LEARNED AR ON THE DECISION OF HONOURABLE MUMBAI TRIBUNAL RULING IN CASE OF ACIT VS. M/S STARLITE ENTERPRISES ITA NOS. 129 & 126/MUM/2013 (PAGES 113 - 123 OF THE PB) WHEREIN IT WAS HELD THAT ....ONCE CONFIRMATION FROM THE PARTY TOGETHER WITH ITS PERMANENT ACCOUNT NUMBER, ETC. IS PROVIDED, THE ONUS ON THE ASSESSEE STANDS DISCHARGED. IF THE ASSESSING OFFICER IS NOT SATISFIED WITH THE PARTICULARS SO FURNISHED, IT IS OPEN TO HIM TO MAKE FURTHER INQUIRY FRO M THE CONCERNED PARTY. HAVING NOT DONE SO, IT IS NOT OPEN TO THE A. O. TO MAKE ADDITION. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. THIS GROUND TAKEN BY THE REVENUE IS, THEREFORE, NOT ALLOWED.' IN RESPECT OF LOAN PAYMENT FROM MATRUBHUMI DEAL ERS PVT. LTD., ASSESSEE HAS FILED FOLLOWING DETAILS TO THE AO / CIT(A) DURING THE ASSESSMENT PROCEEDINGS / APPELLATE PROCEEDINGS. A) PAN NUMBER: AAECM5410D; B) ADDRESS: 62, NALINI SHETH ROAD, MEZZANINE FLOOR, KOLKATA, WEST BENGAL - 700 007; C) DETAILS OF DIRECTORS, PAN OF DIRECTORS, ADDRESS OF DIRECTORS, COPY OF BOARD RESOLUTION, ETC.; D) MASTER DATA: AS AVAILABLE FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS E) ASSESSEE'S BANK STATEMENTS INDICATING THAT THE FUNDS WERE RECEIVED THROUGH PROPER BANKIN G CHANNELS THROUGH ACCOUNT PAYEE CHEQUES / RTGS; F) CERTIFICATE OF INCORPORATION; 12 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI G) DETAILS OF BULK DEALS ENTERED INTO BY THE LOAN CREDITOR ON THE BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCHANGE; H) CONFIRMATION. OF ACCOUNTS OF THE LOAN CREDITOR ALON G WITH PAN NUMBER. AS PER LEARNED AR BY FURNISHING THE BASIC INFORMATION AS MENTIONED ABOVE, THE ASSESSEE HAD DISCHARGED ITS PRIMARY ONUS OF PROVING THE GENUINENESS OF THE TRANSACTION, IDENTITY AND CREDITWORTHINESS OF THE PARTY. AS PER LEARNED AR MATRU BHUMI DEALERS PVT. LTD. IS A PRIVATE LIMITED COMPANY INCORPORATED IN WEST BENGAL, KOLKATA AND THERE IS NOTHING ON THE RECORD TO DEMONSTRATE THAT THE NOTICE SERVER OF MUMBAI INCOME - TAX OFFICE HAD PERSONALLY VISITED THE PREMISES IN KOLKATA. FURTHER, THERE IS NOTHING ON RECORD THAT THE SAID COMPANY HAS ANY PREMISES IN MUMBAI ADDITION IS PURELY MADE ON THE GROUND THAT NOTICES U/S 133(6) / 131 WERE RETURNED BACK AND THE AO HAS COMPLETELY IGNORED OTHER RELEVANT DETAILS FURNISHED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. IN RESPECT OF LOAN TAKEN FROM SAVITRI MINERALS PVT. LTD., ASSESSEE HAS FURNISHED THE FOLLOWING DETAILS TO THE AO / CIT(A) DURING THE ASSESSMENT PROCEEDINGS / APPELLATE PROCEEDINGS: A) PAN NUMBER: AAICS9629N; 13 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI B) ADDRESS: 27, WESTON STREET, 5 T H FLOOR, ROOM NO. 526; KOLKATA, WEST BENGAL - 700012 C) FORM 32 - DETAILS OF DIRECTORS, PAN OF DIRECTORS, ADDRESS OF DIRECTORS, ETC.; D) MASTER DATA: AS AVAILABLE FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS E) ASSESSEE'S BANK STATEMENTS INDICATING THAT THE FUNDS WERE RECEIVED THROUGH PROPER BANKING CHANNELS THROUGH ACCOUNT PAYEE CHEQUES / RTGS; F) CERTIFICATE OF INCORPORATION; G) DETAILS OF BULK DEALS ENTERED INTO BY THE LOAN CREDITOR ON THE BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCHANGE; H) CONFIRMATION OF ACCOUNTS OF THE LOAN CREDITOR ALONG WITH PAN NUMBER; AS PER LEARNED AR BY FURNISHING THE BASIC INFORMATION AS MENTIONED ABOVE, THE ASSESSEE HAD DISCHARGED ITS PRIMARY ONUS OF PROVING THE GENUINENESS OF THE TRANSACTION, IDENTITY AND CREDITWORTHINESS OF THE PARTY. AS PER LEARNED AR SAVITRI MINERALS PVT. LTD. IS A PRIVATE LIMITED COMPANY INCORPORATED IN WEST BENGAL, KOLKATA AND THERE IS NOTHING ON THE RECORD TO DEMONSTRATE THAT THE NOTICE SERVER OF MUMBAI INCOME - TAX OFFICE HAD PERSONAL LY VISITED THE PREMISES IN KOLKATA. FURTHER, THERE IS NOTHING ON RECORD THAT THE SAID COMPANY HAS ANY PREMISES IN MUMBAI ADDITION IS PURELY MADE ON THE GROUND THAT NOTICES U/S 133(6) / 131 WERE RETURNED BACK AND THE AO HAS 14 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI COMPLETELY IGNORED OTHER RELEVANT DETAILS FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN RESPECT OF LOAN TAKEN FROM ORIGIN MANAGEMENT CONSULTANTS PVT. LTD., ASSESSEE HAS FURNISHED THE FOLLOWING DETAILS TO THE AO / CIT(A) DURING THE ASSESSMENT PROCEEDINGS / APPELLATE PROCEEDING S: A) PAN NUMBER: AAACO6754A B) ADDRESS : 5 - 2 - 40, JAMBAGH ROAD, OPP. VIKRANTHI THEATRE, 1ST FLOOR, HYDERABAD, ANDHRA PRADESH - 500 095; C) MASTER DATA: AS AVAILABLE FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS D) ASSESSEE'S BANK STATEMENTS INDICATI NG THAT THE FUNDS WERE RECEIVED THROUGH PROPER BANKING CHANNELS THROUGH ACCOUNT PAYEE CHEQUES / RTGS; E) CERTIFICATE OF INCORPORATION; F) DETAILS OF BULK DEALS ENTERED INTO BY THE LOAN CREDITOR ON THE BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCHANGE; G ) CONFIRMATION OF ACCOUNTS OF THE LOAN CREDITOR ALONG WITH PAN NUMBER; AS PER LEARNED AR, BY FURNISHING THE DETAILS AS MENTIONED ABOVE, THE ASSESSEE HAD DISCHARGED ITS PRIMARY ONUS OF PROVING THE GENUINENESS OF THE TRANSACTION, IDENTITY AND CREDITWORTHIN ESS OF THE PARTY. LEARNED AR FURTHER CONTENDED THAT THE DETAILS FILED BY THE ASSESSEE WERE NOT FOUND TO BE INCORRECT. THE ASSESSEE WAS DULY SERVED WITH THE NOTICE BUT IT DID NOT COMPLY THERETO. IT IS SUBMITTED 15 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI THAT IF THE ASSESSEE FAILS TO APPEAR BEFORE T HE ASSESSING OFFICER FOR ANY GIVEN REASON, IT WOULD NOT JUSTIFY ADDITION U/S. 68 OF THE ACT FOR THAT SOLE REASON. IN THIS REGARD, THE ASSESSEE WOULD LIKE TO PLACE RELIANCE ON HONOURABLE BOMBAY HIGH COURT RULING IN THE CASE OF COMMISSIONER OF INCOME - TAX, B OMBAY CITY - 11 VS. U.M. SHAH, PROPRIETOR, SHRENIK TRADING CO. 90 ITR 396 (BOM) WHEREIN IT WAS HELD THAT THE' ASSESSEE COULD NOT BE BLAMED IF THE PARTIES DO NOT APPEAR IN RESPONSE TO THE SUMMONS. IN RESPECT OF LOAN TAKEN FROM SHARDA CREATIONS (P) LTD., AS SESSEE HAS FURNISHED THE FOLLOWING DETAILS TO THE AO / CIT(A) DURING THE ASSESSMENT PROCEEDINGS / APPELLATE PROCEEDINGS. A) PAN NUMBER: AAHCS0779C; B) TAN NUMBER: MUM36579E C) ADDRESS: 40, C.P. TANK ROAD, MUMBAI, MAHARASHTRA; D) MASTER DATA: AS AVAILABL E FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS E) ASSESSEE'S BANK STATEMENTS INDICATING THAT THE FUNDS WERE RECEIVED THROUGH PROPER BANKING CHANNELS THROUGH ACCOUNT PAYEE CHEQUES / RTGS; F) CERTIFICATE OF INCORPORATION; G) CONFIRMATION OF ACCOUNTS OF THE LOAN CREDITOR ALONG WITH PAN NUMBER IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE ASSESSEE HAD RECEIVED RS. 50,00,000/ - (FIFTY LACS ONLY) FROM M/S. SHARDA 16 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI CREATIONS PVT. LTD. ON 12TH MARCH 2007. THE SAME WAS REPAID BY THE ASSESSEE ON 17TH MARCH 2007 . THE FUNDS RECEIVED FROM SHARDA CREATIONS PRIVATE LIMITED WAS A STOP - GAP ARRANGEMENT TILL THE TIME MR. JALAJ BATRA WOULD FUND THE ASSESSEE THE BALANCE FUNDS AS PER THE ORAL ARRANGEMENT. THE FUNDS WERE REPAID TO SHARDA CREATIONS PVT. LTD. AFTER RECEIPT OF RS.75,00,000/ - (RUPEES SEVENTY FIVE LACS) FROM M/S. SHRINATH TRADING COMPANY. IN RESPECT OF THE NATURE OF TRANSACTIONS AND UNDERSTANDING OF THE ASSESSEE AND SHRI JALAJ BATRA, LEARNED AR SUBMITTED AS UNDER: - (A) THE APPELLANT WAS INTRODUCED TO SHRI JALAJ BATRA, THROUGH A COMMON FRIEND. THE ASSESSEE WAS INFORMED THAT SHRI JALAJ BATRA WAS ACTIVELY INVOLVED IN STOCK - MARKET; HE HAD GOOD CONTACTS WITH PROMOTERS OF VARIOUS COMPANIES AND VARIOUS MARKET INTERMEDIARIES; HIS FINANCIAL POSITION WAS VERY SOUND AND HE WAS RESOURCEFUL ENOUGH TO ARRANGE HUGE FUNDS FOR PLAYING IN THE STOCK MARKET ON A LARGE SCALE AT A SHORT NOTICE. THESE FACTS LURED THE ASSESSEE FOR ENTERING INTO RELATIONSHIP WITH SHRI JALAJ BATRA. (B) THE APPELLANT AGREED TO WORK FOR SHRI JALAJ BATRA WI TH AN UNDERSTANDING THAT HE WILL RECOMMEND GOOD STOCKS, ARRANGE FOR FUNDS TO MEET MARGIN REQUIREMENTS THROUGH SEVERAL ENTITIES/COMPANIES ON PROFIT SHARING BASIS. (C) IN TERMS OF THE ABOVE ARRANGEMENT, THE ASSESSEE PURCHASED THE FOLLOWING SCRIPS AS PER SHR I JALAJ BATRA'S DIRECTIONS: 17 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI SR. NO. SCRIP QTY AMOUNT (RS.) 1 BABA ARTS LTD 1,53,226 66,86,940 2 GITANIALI GEMS LTD 4,35,000 10,61,83,728 3 GOLDSTONE TECHNOLOQIES 3,45,051 2,98,57,380 4 PIONEER EMBROIDERY 6,01,516 15, 62, 96,554 5 RASOYA PROTEINS LTD. 55,565 50,24,381 6 SHREE ASHTAVINAYAK CINE VISION LTD., 3,57,724 5,76,95,728 7 STEEL STRIPS WHEEL 74,000 1,72,54,535 8 VIVIMED LABS LTD. 2,13,168 4,16,97,431 TOTAL 22,39,250 42,06,96,648 (D) TO FACILITATE THE PURCHASE, SHRI JALAJ BATRA ARRANGED FOR THE FOLLOWING UNSECURED LOANS, THE DETAILS OF WHICH ARE AS FOLLOWS: SR. NO. SCRIP QTY 1 ADMIX VINIMAY PVT. LTD. 4,25,00,000/ - 2 MATRUBHUMI DEALERS PVT. LTD. 1, 40,00,000/ - 3 ORIGIN MANAGEMENT CONSULTANTS PVT. LTD. 2,45,00,000/ - 4 SAVITRI MINERALS PVT. LTD. 5 95,00,000/ - 5 SHARDA CREATIONS PVT. LTD. 50 00 000/ - 18 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI 6 SHRINATH TRADING CO. 3,00,00,000/ - TOTAL 17,55,00,000/ - E) THE FACT THAT MR. JALAJ BATRA WAS MAIN ACCUSED BY THE SECURITIES AND EXCHANGE BOARD OF INDIA ('SEBI') WAS BROUGHT TO THE NOTICE OF THE AO. THE ORDER OF VIJAY TEXTILES WTM/VKC/IVD - 8/98/07 WAS PLACE ON RECORDS TO DEMONSTRATE THAT MR. JALAJ BATRA WAS PRIMA RY ACCUSED AND HE DID NOT RESPOND TO THE SHOW - CAUSE NOTICE ISSUED BY THE SEBI. AN EX - PARTE ORDER WAS PASSED BY SEBI ON 20 SEPTEMBER 2007 DIRECTING HIM ,NOT TO TRADE ON THE STOCK EXCHANGE UNTIL FURTHER DIRECTIONS. (F) THE AO IN HIS ORDER HAS OBSERVED THAT MR. JALAJ BATRA WAS NOT PRODUCED AND THE AR AS WELL AS THE APPELLANT EXPRESSED INABILITY TO PRODUCE THE PARTIES FOR VERIFICATION. IN THIS REGARD, THE ASSESSEE WOULD LIKE TO PLACE RELIANCE ON THE HON'BLE MUMBAI TRIBUNAL RULING IN CASE OF ACIT VS SHRI JALAJ BATRA ITA NO.1971/MUM/2009 (PAGES 147 TO 152 OF THE PB) WHEREIN IT WAS OBSERVED IN PARA 9 THAT '. ... AT PARA 11 PAGE 14 OF THE ASSESSMENT ORDER, IT IS OBSERVED AS FOLLOWED: - 'DURING THE COURSE OF ASSESSMENT PROCEEDINGS VARIOUS BANK ACCOUNTS IN THE NAME O F VARIOUS ENTITIES WERE FOUND WHICH WERE UTILIZED BY THE ASSESSEE FOR HIS OPERATIONS. THE ANALYSIS OF BANK STATEMENTS OF VARIOUS PARTIES INDICATE HUGE AMOUNT OF CASH DEPOSITS. ALL THESE PERSONS IN THE INQUIRIES CONDUCTED HAVE CONFIRMED THAT THOUGH BANK ACC OUNTS ARE IN THEIR NAME BUT ACTUAL OWNERSHIP IS OF THE ASSESSEE. ALL THESE PERSONS IN THE STATEMENT RECORDED HAVE CATEGORICALLY CONFIRMED THAT THEY WERE ACTING AS PER THE DIRECTIONS OF THE ASSESSEE ONLY AND HAVE NO INTEREST IN THESE TRANSACTIONS. A QUERY W AS PUT BEFORE THE ASSESSEE ABOUT THE SOURCE OF GENERATION OF THESE CASH FUNDS. THE ASSESSEE HAS NOT RESPONDED TO THE QUERY RAISED AND AS SUCH DEPOSITS MADE IN VARIOUS BANK ACCOUNTS IN CASH REMAINED UNEXPLAINED AND THE SAME NEED TO BE TREATED AS DEEMED INCO ME OF THE ASSESSEE. 19 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI OUR ATTENTION WAS ALSO DRAWN TO THE RULING OF HON'BLE BOMBAY HIGH COURT IN CASE OF COMMISSIONER OF INCOME - TAX VS. JALAJ BATRA 372 ITR 622 (BOM) E - PAG , WHEREIN THE HIGH COURT OBSERVED AS UNDER: - '. .... THE ASSESSEE IS STATED TO BE INVOLVED IN OFF MARKET TRANSACTIONS OF PENNY STOCKS. THERE WERE DIRECT TRANSFERS FROM ONE BENEFICIARY ACCOUNT TO ANOTHER AND THAT IS MANAGED WITH THE HELP OF MONEY LENDERS. THE COMPLAINT IS THAT BENAMI BANK ACCOUNTS AND O.P. ACCOUNTS WERE OPENED IN THE NAME OF SEVERAL PERSONS INVOLVED IN THIS GROUPS. THE PRICE OF THE SCRIPS WERE MANIPULATED BY THESE PERSONS AND BULK DEALS IN SUCH SCRIPS WERE UTILIZED FOR BENCH MARKING OF PRICE. OUR ATTENTION WAS ALSO INVITED TO PARA 6.2 PAGE 28 OF THE ASSESSMENT ORDE R WHEREIN THE ASSESSING OFFICER AS REFERRED AND RELIED ON THE STATEMENT OF MR. SHRIPRAKASH SARDESAI WHICH WAS RECORDED ON OATH AND THE SAME IS REPRODUCED AS BELOW FOR THE SAKE OF READY REFERENCE: Q.3 IN THE DETAILS FILED FOR THE ASSESSMENT YEAR 2007 - 08 RELATING TO NUMBER OF PARTIES WITHOUT ANY INTEREST? HOW WILL IT COMMERCIALLY FEASIBLE TO OBTAIN THE HUGE LOAN WITHOUT PAYING ANY INTEREST TO THESE PARTIES. WHETHER YOU HAVE PERSONALLY KNOWN THESE PARTIES AND WHETHER PARTIES STILL EXISTS. ANS. TO THE BEST OF MY KNOWLEDGE FOR PARTIES STILL EXISTS. I DID NOT KNOW THEM PERSONALLY THE LOAN EMERGED BY MR. JALA BATRA WHO HAS INTRODUCED THESE PARTIES Q.4 WHO IS JALA BATRA AND HOW DO YOU KNOW HIM 20 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI PLEASE GIVE HIS PRESENT WHERE ABOUT? A NS. SOMEBODY HAS INTRODUCED MR. JALA} BATRA TO ME. HE STAY SOMEWHERE IN JUHU AREA. I WILL GET I YOU THE POSTAL ADDRESS OF SHRI JALAJ BATRA Q.5 WILL YOU BE ABLE TO PRODUCE THE PART Y VIZ. JALAI BATRA BEFORE ME? ANS. FOR LAST THREE MONTHS HE IS NOT AVAILABLE AT HIS RESIDENCE ALTHOUGH HIS FAMILY STAYS THERE Q.6 WHERE ANY WRITTEN AGREEMENT IS THERE WITH MR. JALA I BATRA OR ANY CORRESPONDENCE IS AVAILABLE WITH YOU WITHIN THE TERMS OF REPAYMENT OF LOAN INTEREST OR PROFIT SHARING WITH THE PARTY IS AVAILABLE WITH YOU? ANS. NO. IT WAS ONLY ORAL AGREEMENT Q.7 I AM SHOWING YOU THE LIST OF LOAN OBTAINED SUBMITTED BY YOU. PLEASE IDENTIFY THE PARTIES WHICH ARE KNOWN TO YOU PERSONALLY? ANS. THE FOLLOWING PARTIES ARE KNOWN TO ME PERSONALLY: - ........ (2) JAS CAPITAL SERVICES PVT. LTD. AND TRISON IMPEX : BOTH THESE CONCERNS HAVE BEEN INTRODUCED BY SOMEBODY WORKING IN 'ORBIT CO.' I DO NOT REMEMBER THE NAME OF THE PERSON. I HAVE NOT PERSONALLY VISITED THE ABOVE COMPANY. THE TRANSACTIONS WERE ENTERED INTO THROUGH CORRESPONDENCE ........ Q.10 WHERE YOU KNOW SRINATH TRADING, SHARAD CREATIONS PVT. LTD. & OTHER PARTIES ADDRESS AT KOLKATA & SECUNDERABAD, WHO ARE THE PERSONS OPERATING COMPANIES AND WHETHER YOU HAVE PERSONALLY VISITED TO THEM OR ANY PERSON FROM THEIR CONCERN HAVE VISITS YOU 21 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI ANS. NO, ALL THESE TRANSACTIONS ARE THROUGH BANK & THROUGH JALAI BATRA. I DO NOT KNOW WHO ARE THE PERSONS INVOLVED IN THE CONCERNS NOR HAVE I VISITED TEM. ALL THESE TRANSACTIONS ARE THROUGH BANK ONLY Q.11 LL IN ANSWER TO QUESTION NO. 7. YOU HAVE STATED THAT IN THE COMPANIES, MIS . JAS CAPITAL SERVICES PVT. LTD. & M/S. TRISON IMPEX, THE PARTIES WERE INTRODUCES BY SOMEONE FROM ORBIT GROUP. CAN YOU NOW RECALL THE NAME OF THE PERSON? ANS. I DO NOT REMEMBER ANYTHING Q.12 DO YOU HAVE ANY MOBILE NO. LANDLINE NO. OF MR. JALAI BATRA? IF YES PLEASE GIVE THE INFORMATION ANS. I HAVE ONLY MOBILE NO. OF JALAI BATRA. THE MOBILE NO. IS 9967906666. I DO NOT HAVE HIS LANDLINE NU MBER. Q.13 DO YOU KNOW IN WHAT FINE OF BUSINESS MR. JALAI 8ATRA IS INVOLVED? ANS. HE TRADER IN SHARES. HE WAS INTRODUCES TO ME BY A COMMON FRIES. I DO NOT REMEMBER THE NAME OF THE FRIEND. MR. JALAI BATRA HAS ONCE OR TWICE COME TO MY OFFICE & WE NOW MEET MOST OF THE TIME AL MARRIOUT HOTEL IN JUHU'. IN VIEW OF THE ABOVE IT WAS CONTENDED THAT MR. JALAJ BATRA WAS IN HABIT OF ARRANGING FUNDS THROUGH PARTIES AND INTRODUCING THE SAME IN THE STOCK MARKET. THE FACT IS WELL NOTED BY THE AO IN THE ASSESSMENT ORDER OF SHRI JALAJ BATRA AND ALSO OBSERVED BY THE 22 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI H ONOURABLE BOMBAY HIGH COURT IN HIS CASE (SUPRA). THE CASE OF THE ASSESSEE WAS NO DIFFERENT. THE FUNDS WERE ARRANGED BY MR. JALAJ BATRA THROUGH VARIOUS PARTIES AND TRANSFERRED TO THE ASSESSEE VIA BANKING CHANNELS FOR THE PURPOSE OF DEALING IN SHARES ON THE STOCK MARKET (BULK DEALS) VIA ASSESSEE. MR. JALAJ BATRA USED TO COMMUNICATE TO THE ASSESSEE VIA TELEPHONIC MEANS IN RESPECT OF FUNDS TRANSFER I.E. VIA PHONE OR SHORT MESSAGING SERVICES (SMS). THE DETAILS OF SMS WERE FURNISHED TO THE AO AS WELL AS COMMISSIO NER OF INCOME - TAX (APPEALS) DURING THE RESPECTIVE PROCEEDINGS. SAMPLE OF SUCH SMS IS KEPT AT PAGE 132 OF THE PB. ONCE THE FUNDS WERE RECEIVED, MR. JALAJ BATRA WOULD ADVISE THE ASSESSEE ABOUT THE SCRIPS TO BE BOUGHT / SOLD. MR. JALAJ BATRA WOULD ALSO KEEP TRACK OF THE STOCKS IN THE ASSESSEE'S DEMAT ACCOUNT AND FREQUENTLY RECONCILED THE SAME WITH THE ASSESSEE VIA EMAIL. THE SAMPLE COPIES OF EMAIL WERE REPRODUCED BEFORE THE AO AS WELL AS COMMISSIONER OF INCOME - TAX (APPEALS). HOWEVER, NEITHER THE AO NOR THE CO MMISSIONER OF INCOME - TAX (APPEALS) PAID ANY ATTENTION TO THE EVIDENCE PLACED BEFORE THEM. THE ASSESSEE ALSO PLEADS THAT THE ARRANGEMENT WITH MR. JALAJ BATRA HAS TO BE SEEN AS CIRCUMSTANTIAL EVIDENCE AND EVEN WITHOUT MR. JALAJ BATRA BEING IN 23 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI PICTURE, THE AS SESSEE HAS DISCHARGED THE PRIMARY ONUS CAST UPON HIM UNDER THE INCOME - TAX ACT BY FURNISHING VARIOUS DETAILS LIKE PAN, TAN, ADDRESS, MASTER DATA FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS, DETAILS OF DIRECTORS, BANK STATEMENT OF THE ASSESSEE INDICATI NG THAT THE FUNDS WERE RECEIVED THROUGH PROPER BANKING CHANNELS VIDE ACCOUNT PAYEE CROSSED CHEQUES OR RTGS, ETC. THE ASSESSING OFFICER HAS MADE ADDITION FOR SOLE REASON THAT THE SUMMONS WERE RETURNED BACK/ PARTIES DID NOT COMPLY TO THE SUMMONS AND TOTALLY DISREGARDED OTHER RELEVANT DETAILS SUBMITTED BY THE ASSESSEE. IN RESPECT OF LOAN FROM SHRINATH TRADING CO., ASSESSEE HAD FURNISHED THE FOLLOWING DETAILS TO THE AO / CIT(A) DURING THE ASSESSMENT PROCEEDINGS / APPELLATE PROCEEDINGS: A) PAN NUMBER: AEAPD98 52R; B) TAN NUMBER: MUM36579E C) ADDRESS: C - 3, SHIVALAYA BUILDING, HAJI BAPU ROAD, MALAD EAST, MUMBAI - 400 097; D) ASSESSEE'S BANK STATEMENTS INDICATING THAT THE FUNDS WERE RECEIVED THROUGH PROPER BANKING CHANNELS THROUGH ACCOUNT PAYEE CHEQUES I RTGS; E) CONFIRMATION OF ACCOUNTS OF THE LOAN CREDITOR ALONG WITH PAN NUMBER ; DURING THE ASSESSMENT PROCEEDINGS, THE OFFICE INSPECTOR VISITED THE PREMISES TO SERVE THE SUMMON BUT ON THIS ADDRESS NO 24 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI CONCERN IN THE NAME OF M/S SHRINATH TRADING CO. WAS FOUND. T HE AO WHILE MAKING THE ADDITION HEAVILY RELIED ON THE ORDER PASSED IN SKS GROUP, COPY - PASTED THE ENTIRE ORDER OF SKS ISPAT AND ADDED THE ENTIRE LOAN AMOUNT AS THE INCOME OF THE ASSESSEE. A COPY OF THE ASSESSMENT ORDER PASSED BY THE AO MAKING ADDITIONS IN T HE CASE OF ONE OF THE GROUP ENTITIES OF SKS GROUP NAMELY PARAMSHAKTI DISTRIBUTORS P. LTD. FOR A.Y. 2006 - 07 AND THE ORDER OF THE TRIBUNAL IN ITS CASE DELETING THE ADDITIONS [ITA 9224/MUM/2010) HAVE BEEN SUBMITTED BEFORE US. ON COMPARING OF THE ASSESSMENT OR DER IN THE CASE OF THE ASSESSEE AND THAT OF IN THE CASE OF PARAMSHAKTI DISTRIBUTORS P. LTD., IT WILL BE APPARENT THAT THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE HAS MERELY REPRODUCED THE CONTENTS OF ASSESSMENT ORDER OF PARAMSHAKTI DISTRIBUTORS P. LT D. IT WAS FURTHER SUBMITTED THAT IN THE CASE OF SKS GROUP, THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF STATEMENT GIVEN ON 6.9.2008 BY SHRI KAMLESH AJMERA, PROPRIETOR OF M/S. NISHA ENTERPRISES, WHOSE REFERENCE IS FOUND ON THE PAGE 5 OF THE ASSESSMENT ORD ER PASSED IN THE CASE OF THE ASSESSEE. SHRI KAMLESH AJMERA LATER HAD RETRACTED HIS STATEMENT 27.10.2008. THE NAME OF ORIGIN MANAGEMENT CONSULTANTS P. LTD. AND SHRINATH TRADING CO. 25 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI ARE APPEARING AT SR.NO.18 AND 119 RESPECTIVELY OF THE CHART REPRODUCED ON PA GES 5 - 25 OF THE ASSESSMENT ORDER PASSED IN THE CASE OF THE ASSESSEE. IT IS SUBMITTED THAT THE ADDITION MADE MERELY ON THE BASIS OF STATEMENTS GIVEN BY SHRI KAMLESH AJMERA WITHOUT BRINGING ON RECORD ANY EVIDENCE IN SUPPORT OF THE ALLEGATIONS MADE BY THE DEP ARTMENT HAS BEEN DELETED BY THE TRIBUNAL IN THE CASE OF SKS ISPAT & POWER LTD. FOR A.Y.2006 - 07 IN ITA 9203/MUM/2010. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REV ENUE AUTHORITIES. THE LD. AR DRAWN OUR ATTENTION TO THE DOCUMENTS FILED BEFORE THE LOWER AUTHORITIES IN RESPECT OF DETAILS OF LOAN CREDITORS CONTAINING THE ADDRESSES AND PAN NOS. THE AR SUBMITTED THAT THE AO HAD MADE ADDITIONS IN RESPECT OF M/S TRISON IMPE X BY HOLDING THAT SINCE NO ONE ON BEHALF OF M/S TRISON IMPEX HAD ATTENDED BEFORE HIM THEREFORE, IDENTITY, CREDITWORTHINESS AND GENUINESS OF THE LOAN COULD NOT BE VERIFIED. THE LD. AR ALSO DRAWN OUR ATTENTION AT PAGE NO. 75 OF THE PAPER BOOK WHICH IS A LETT ER DATED 19.03.09 CONTAINING THE ELABORATED FACTS RELATING TO M/S TRISON IMPEX FILED BEFORE CIT(A). OUR ATTENTION WAS ALSO DRAWN TO PAGE NO. 78 TO 98 WHICH ARE COVERING LETTER WRITTEN TO DCIT DATED 26 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI 08.12.08, ACCOUNT CONFIRMATIONS OF TRISON IMPEX FOR F.Y 20 06 - 07 AND FY 2007 - 08, CERTIFICATE OF REGISTRATION OF VAT, LEDGER ACCOUNT OF THE ASSESSEE FOR FY 2006 - 07 AND 2007 - 08 , BANK STATEMENT OF TRISON IMPEX CONTAINING TRANSACTIONS, INCOME TAX RETURNS OF THE PROPRIETOR OF M/S TRISON IMPEX FOR AY 2007 - 08 AND AY 2008 - 09, ANNEXURE TO FORM 3CD SHOWING PARTICULARS OF LOANS SHOWING THE TRANSACTIONS WITH THE ASSESSEE FOR AY 2007 - 08 AND AY 2008 - 09. ON THE CO - JOINT CONSIDERATION AND READING OF THE ABOVE DOCUMENTS, WE FIND THAT THROUGH THE LETTER DATED 08.12.08, THE PARTY H AD CLEARLY INTIMATED THE AO THAT IT HAD STARTED OPERATING FROM OTHER PREMISES REGARDING WHICH THE DETAILS OF NEW ADDRESS HAVE BEEN GIVEN AND IN THIS WAY THE REASONS FOR NOT RESPONDING TO THE NOTICE ISSUED BY THE AO WAS DULY EXPLAINED. THE AO WHILE SUBMITTI NG HIS REMAND REPORT TO THE CIT(A) HAS ALSO ADMITTED THE RECEIPT OF DETAILS THROUGH POST AFTER THE COMPLETION OF THE ASSESSMENT BUT MAINTAINED HIS STAND THAT THE LEDGER COPY AND CONFIRMATION WOULD NOT PROVE THE CREDITWORTHINESS OR IDENTITIES OF THE PARTIES . WE HAVE ALSO NOTICED THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO DISPROVE THE DETAILS SUBMITTED BY THE ASSESSEE IN RESPECT OF THE PARTIES WHICH BALANCES HAVE BEEN ADDED U/S 68 OF THE ACT. HERE AT THIS JUNCTURE, 27 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI WE WOULD LIKE TO POINT OUT ALL TH E DETAILS IN RESPECT OF THE ABOVE PARTY WERE SUPPLIED BY THE ASSESSEE AND MOREOVER THE SAME WERE SUPPLIED AGAIN BEFORE CIT(A) DURING THE FIRST STAGE OF APPELLATE PROCEEDINGS AND LD CIT(A) HAD ALSO ACCEPTED THE SAME AS FRESH EVIDENCE AND CALLED FOR REMAND R EPORT FROM THE AO. SINCE IN THIS CASE, THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS CAST UPON IT U/S 68 OF THE ACT BY SUBMITTING THE RELEVANT DETAILS AS MENTIONED ABOVE WHICH ESTABLISHED THE IDENTITY, CREDITWORTHINESS OF THE PARTIES AND GENUINESS OF THE TR ANSACTIONS. AT THE SAME TIME, THE LD. AO HAS NOT BROUGHT ON RECORD ANY MATERIAL WHICH WOULD DISPROVE THE DETAILS SUBMITTED BY THE ASSESSEE AND HENCE IN OUR VIEW, THE ADDITIONS MADE U/S 68 OF THE ACT CANNOT BE SUSTAINED MERELY BECAUSE THE PARTY TO WHOM THE AO HAS ISSUED NOTICE DOES NOT APPEAR. IN THIS REGARD, WE DRAW OUR STRENGTH FROM THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VRS. U. M. SHAH, PROPRIETOR SHRENIK TRADING COMPAY 90 ITR 396 (BOM) WHEREIN IT HAS BEEN HELD BY THE HONBLE HIGH CO URT THAT THE ASSESSEE COULD NOT BE BLAMED IF THE PARTIES DO NOT AP PEAR IN RESPONSE TO THE SUMMONS ISSUED BY REVENUE AUTHORITIES. 28 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI NOW COMING TO THE ADDITIONS MADE ON ACCOUNT OF TRANSACTIONS WITH M/S JAS CAPITAL SERVICES PVT. LTD. IN THIS REGARD, THE LD. A R DRAWN OUR ATTENTION TO PAGE NO. 28 PARA NO. 6.1.6 OF THE ASSESSMENT ORDER WHICH CONTAINS THE REASON FOR MAKING ADDITION. OUR ATTENTION WAS ALSO DRAWN TO PAGE NO 75 OF THE PAPER BOOK WHICH IS LETTER DATED 19.03.09 CONTAINING THE EXPLANATION TO THE CIT(A) , THE CIRCUMSTANCES UNDER WHICH THE ASSESSMENT WAS COMPLETED AND THE ASSESSEE ALSO FILED THE CONFIRMATION OF THE PARTY WHICH IS AT PAGE NO. 96 TO 98 OF THE PAPER BOOK. WE FIND THAT THE AO SUBMITTED HIS REMAND REPORT TO THE CIT(A) BUT THE CIT(A) REJECTED TH E CLAIM OF THE ASSESSEE WITHOUT GIVING ANY COGENT REASONS. WE HAVE ALSO NOTICED THAT WITH REGARD TO TRANSACTIONS WITH M/S JAS CAPITAL SERVICES PVT. LTD, THE AO HAS ALSO NOT BROUGHT ON RECORD ANY MATERIAL TO DISPROVE THE DETAILS SUBMITTED BY THE ASSESSEE I N RESPECT OF THE ABOVE PARTY WHICH BALANCES HAVE BEEN ADDED U/S 68 OF THE ACT. HERE AT THIS JUNCTURE, WE WOULD AGAIN LIKE TO POINT OUT THAT, ALL THE DETAILS INCLUDING CONFIRMATION IN RESPECT OF THE ABOVE PARTY WERE SUPPLI ED BY THE ASSESSEE DURING THE FIRS T STAGE OF APPELLATE PROCEEDINGS AND LD CIT(A) HAD ALSO ACCEPTED THE SAME AS FRESH EVIDENCE AND CALLED FOR REMAND REPORT FROM THE AO. SINCE IN THIS CASE, THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS CAST UPON IT U/S 68 OF THE 29 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI ACT BY SUBMITTING THE RELEVANT DETAILS AS MENTIONED ABOVE WHICH ESTABLISHED THE IDENTITY, CREDITWORTHINESS OF THE PARTIES AND GENUINESS OF THE TRANSACTIONS. AT THE SAME TIME, THE LD. AO HAS NOT BROUGHT ON RECORD ANY MATERIAL W HICH WOULD DISPROVE THE DETAILS/CONFIRMATION SUBMITTED BY TH E ASSESSEE AND HENCE IN OUR VIEW, THE ADDITIONS MADE U/S 68 OF THE ACT CANNOT BE SUSTAINED MERELY BECAUSE THE PARTY TO WHOM THE AO HAS ISSUED NOTICE DOES NOT APPEAR. IN THIS REGARD, WE DRAW OUR STRENGTH FROM THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VRS. U. M. SHAH, PROPRIETOR SHRENIK TRADING COMPAY 90 ITR 396 (BOM) WHEREIN IT HAS BEEN HELD BY THE HONBLE HIGH COURT THAT THE ASSESSEE COULD NOT BE BLAMED IF THE PARTIES DO NOT APPEAR IN RESPONSE TO THE SUMMONS. IN RESPECT OF ADDITIONS MAD E BY AO WITH REGARD TO TRANSACTIONS WITH OTHER PARTIES I.E. ADMIX VINIMAY PVT. LTD., MATRUBHUMI DEALERS PVT. LTD (PAGE 66 - 68 OF PB) ., SAVITRI MINERALS PVT. LTD. (PAGE 71 - 73 OF PB) , ORIGIN MANAGEMENT CONSULTANTS PVT. LTD (PAGE 69 - 70 OF PB) AND SHARDA CREATI ONS (P) LTD. ( PAGE 58 - 65 OF PB), SHRINATH TRADING COMPANY (PAGE NO. 74 OF PB). IN THIS REGARD, LD. AR DRAWN OUR ATTENTION TO THE PAPER BOOK WHICH CONTAINS THE PAN NO., TAN NO., ADDRESSES, FORM - 32, MASTER DATA AS AVAILABLE FROM THE WEBSITE OF 30 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI MINISTRY OF CO RPORATE AFFAIRS, CERTIFICATE OF INCORPORATION, BANK STATEMENTS INDICATING THAT THE FUNDS WERE RECEIVED THROUGH BANKING CHANNEL, DETAILS OF BULK DEALS ENTERED INTO BY THE LOAN CREDITOR ON THE BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCHANGE , CONFIRMATION OF ACCOUNT, ETC. FROM THE ABOVE DOCUMENTS, IT IS CLEAR THAT BY FURNISHING THE BASIC INFORMATION THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS OF PROVING THE GENUINENESS OF THE TRANSACTIONS, IDENTITY AND CREDITWORTHINESS OF THE PARTY. WE HAVE ALSO CONSIDERED THE JUDGMENT OF COORDINATE BENCH OF ITAT IN THE CASE OF ACIT VRS STARLITE ENTERPRISES, ITA NO. 129 AND 126/MUM/2013 . WE FURTHER NOTICED THAT THE ASSESSEE HAD RECEIVED A SUM OF RS 50 LACS FROM M/S SHARDA CREATIONS PVT. LTD. AND THE SAME WERE ALSO REPAID BY THE ASSESSEE ON 17 TH MARCH 2007. WE HAVE ALSO CONSIDERED THE WRITTEN SUBMISSION FILED BY THE ASSESSEE AND IN ORDER TO AVOID REPETITION THE SAME IS NOT BEING REPRODUCED AS A WHOLE BUT ONLY THE PARAS CONTAINING THE LEGAL POSITION ARE BEING REPRODU CED HERE IN BELOW: - 2.9.7 IN THIS RESPECT, THE APPELLANT WOULD FURTHER LIKE TO INVITE YOUR HONOURS' KIND ATTENTION TO THE JUDGEMENT OF THE HONOURABLE KERALA HIGH COURT RULING IN CASE OF COMMISSIONER OF INCOME - TAX VS. P.K. NOORJEHAN (123 ITR 3) (KER) (PAGES 159 - 162 OF THE PB) WHEREIN THE ASSESSEE, A MUSLIM LADY, AGED ABOUT 20 YEARS, HAD NO 31 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI OTHER INCOME EXCEPT SMALL PROPERTY INCOME, THE ASSESSING OFFICER CALLED UPON HER TO EXPLAIN THE INVESTMENT MADE IN PROPERTY PURCHASED IN NOVEMBER 1967 AND NOVEMBER 1968. T HE ASSESSEE EXPLAINED THAT MONEY FOR INVESTMENT CAME OUT OF ACCUMULATED SAVINGS LEFT BY HER MOTHER WHO DIED IN THE YEAR 1941 AND OUT OF RENT FROM BUILDING, INCOME FROM COCOANUT GARDEN. HOWEVER, THE ITO REJECTED THE EXPLANATION AND ADDED THE INVESTMENT VALU E AS 'INCOME FROM OTHER SOURCES WHICH WAS UPHELD BY AAC. HOWEVER, ON FURTHER APPEAL, THE TRIBUNAL FOUND THAT THE EXPLANATION ABOUT THE NATURE AND SOURCE OF THE PURCHASE MONEY WAS UNSATISFACTORY, AND ASSESSEE BEING THE MUSLIM LADY AGED 20 OR 21 YEARS, WHO H AD NO OTHER SOURCE OF INCOME, IT WAS IMPOSSIBLE FOR HER TO HAVE EARNED THE AMOUNTS INVESTED IN THE PROPERTIES, THAT THESE AMOUNTS SHOULD NECESSARILY BE AMOUNTS GIVEN TO HER BY SOMEBODY ELSE, AND THAT THE ASSESSEE COULD NOT BE CREDITED WITH HAVING EARNED TH IS INCOME IN THE COURSE OF ASSESSMENT YEARS, OR COULD EVEN BE IN A POSITION TO EARN IT, FOR A DECADE AND MORE. THE TRIBUNAL, THEREFORE, HELD THAT ALTHOUGH THE EXPLANATION OF THE ASSESSEE WAS LIABLE TO BE REJECTED, S.69 OF THE ACT CONFERRED ONLY DISCRETION ON THE ITO TO DEAL WITH THE INVESTMENTS AS INCOME OF THE ASSESSEE, AND IT DID NOT MAKE IT MAKE IT MANDATORY ON HIS PART TO DEAL WITH THE INCOME AS THE INCOME OF THE ASSESSEE AS SOON AS THE ASSESSEE'S EXPLANATION HAPPENED TO BE REJECTED, AND ALLOWED THE APP EALS AND DELETED THE ADDITIONS MADE BY THE ITO. ON FURTHER REFERENCE FILED BY THE REVENUE THE HIGH COURT CONFIRMED THE ORDER THE TRIBUNAL AND HELD AS UNDER: - 'THE UNSATISFACTORINESS OF THE EXPLANATION GIVEN BY THE ASSESSEE NEED NOT AND DID NOT AUTOMATICALL Y RESULT IN DEEMING THE VALUE OF THE INVESTMENT TO BE THE INCOME OF THE ASSESSEE. TAT IT WAS STILL MATTER WITHIN THE DISCRETION OF THE ITO AND, THEREFORE, OF THE TRIBUNAL. FURTHER, THE TRIBUNAL DID NOT ACT ARBITRARILY OR CAPRICIOUSLY IN DIFFERING FROM THE ITO AND THE AAC IN THE MATTER OF EXERCISE OF JUDICIAL DISCRETION AS TO WHETHER, EVEN AFTER REJECTING THE EXPLANATION OF THE ASSESSEE, THE VALUE OF THE INVESTMENTS WERE TO BE TREATED AS THE INCOME OF THE 32 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI ASSESSEE, BECAUSE THE TRIBUNAL TOOK INTO ACCOUNT THE COMPLETE ABSENCE OF RESOURCES OF THE ASSESSEE AND ALSO THE FACT THAT HAVING REGARD TO HER AGE AND THE CIRCUMSTANCES IN WHICH SHE WAS PLACED, SHE COULD NOT BE CREDITED WITH HAVING MADE ANY INCOME OF HER OWN. THEREFORE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT S.69 OF THE ACT COULD NOT BE INVOKED IN RESPECT OF THE INVESTMENTS OF THE ASSESSEE AND THE ADDITIONS MADE FOR THE ASSESSMENT YEARS 1968 - 69 AND 1969 - 70 SHOULD BE DELETED.' IT IS PERTINENT TO NOTE THAT THE ABOVE RULING OF THE HONOURABLE KERALA HIGH COURT HA S BEEN UPHELD BY HONOURABLE SUPREME COURT IN 237 ITR 570 (SC) 2.9.8 IN THE INSTANT CASE ALSO, AS TABULATED ABOVE, IT COULD HAVE TAKEN YEARS OR EVEN DECADE BY THE APPELLANT TO EARN AN IN EXORBITANT INCOME OF RS. 18.70 CRORES. ACCORDINGLY, THE APPELLANT HUMB LY PRAYS TO DELETE THE ADDITION MADE BY THE AO. 2.9.9 AS REGARDS THE CASH DEPOSIT IN THE ACCOUNT OF M/S SHRINATH TRADING CO., PRIOR TO THE LOAN TRANSACTION WITH THE APPELLANT, THE APPELLANT WOULD LIKE SUBMIT THAT THERE IS NOTHING ADVERSE BROUGHT ON RECORD BY ASSESSING OFFICER TO SUGGEST THAT TRANSACTION WAS NOT GENUINE. IN THIS RESPECT, YOUR HONOURS' KIND ATTENTION IS INVITED TO THE ORDER OF THE TRIBUNAL, AHMEDABAD BENCH, IN THE CASE OF ITO VS M/S. RONAK MOTORS (ITA NO.1083/AHD/2011) (PAGES 175 - 181 OF THE P B). IN THAT CASE, THE ASSESSEE FILED CONFIRMATION OF THE CREDITORS, ITS SOURCE OF FUND, PAN ETC. HOWEVER, THE ASSESSING OFFICER MADE ADDITION TO THE INCOME OF THE ASSESSEE FOR THE REASON THAT IN THE BANK ACCOUNT OF THE CREDITOR PRIOR TO TRANSACTION WITH TH E ASSESSEE, THERE WERE CASH DEPOSITS. HOWEVER, THE ASSESSING OFFICER THE CIT(A) DELETED THE ADDITION BY TAKING INTO ACCOUNT THAT THE PARTIES WERE INCOME - TAX ASSESSEE, THEIR CONFIRMATIONS WERE PRODUCED BUT WITHOUT CAUSING ANY INVESTIGATIONS THE AO MADE ADDI TION MERELY ON DOUBT AND SUSPICION. ON FURTHER APPEAL, THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A) BY OBSERVING AS UNDER: THE ASSESSING OFFICER INSTEAD OF TAKING ACTION, MADE ADDITION FOR THE REASON THAT CASH WAS DEPOSITED BEFORE THE LOAN TRANSACTIONS. THE DEPOSIT OF CASH PROCEEDING 33 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI TRANSACTIONS CAN GIVE RISE TO DOUBT AND BE STARTING POINT FOR INVESTIGATION BUT CANNOT BE THE BASIS OF CONCLUSION DISREGARDING OTHER EVIDENCES. NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER WITH REGARD T O EVIDENCE PRODUCED BY THE ASSESSEE ON THIS POINT. IN ANY MANNER, SINCE CREDITORS WERE ASSESSED TO TAX, CONFIRMATION WERE FILED, TDS DEDUCTED ON INTEREST CREDITED AND LOAN WERE REFLECTING IN THEIR ACCOUNTS, NO ADDITION COULD BE MADE IN THE HANDS OF THE ASS ESSEE U/S 68. ACCORDINGLY, CIT(A) JUSTIFIED IN DELETING THE ADDITION OF RS.2,94,0001 - TO THE INCOME OF THE ASSESSEE.' (EMPHASIS SUPPLIED) THUS, IN VIEW OF THE ABOVE, IT IS RESPECTFULLY SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS COUNT MAY KINDLY BE DELETED. WE HAVE ALSO CONSIDERED THE JUDGMENT S RELIED UPON BY THE LD. DR DURING THE COURSE OF HEARING IN SUPPORT OF THE ADDITIONS MADE BY THE AO, T ITLED M/S N. TARIKA PROPERTY INVESTMENT P. LTD. V CIT [ITA 2080/2010 ORDER DATED 8.11.2013 OF DELHI HIGH COURT - 40 TAXMANN.COM 525] , CIT V. NIPUN BUILDERS AND DEVELOPERS [2013] 350 ITR 407 (DEL)/30 TAX MAN N .292] AND CIT V N. R. PORTFOLIO P. LTD. [ITA NO. 1018/2011, 1019/2011 ORDER DATED 22.11.2013 OF DELHI HIGH COURT - 42 TAXMANN.339] . AFTER ANALYZING THE JUDGMENTS MENTIONED ABOVE AND RELIED UPON BY LD. DR, WE FIND THAT THE SAME ARE DISTINGUISHAB LE ON THE FACTS AND IN ALL THE ABOVE DECISIONS, THERE WERE INCRIMINATING MATERIAL BEFORE THE AO WHICH INDICATED THAT THE ASSESSEE HAD RESORTED T O BRING BACK THE 3 4 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI UNACCOUNTED MONEY IN THE BOOKS OF ACCOUNT BY WAY OF SUBSCRIPTION TO SHARE CAPITAL AND SHARE PREMIUM OR THAT THE ASSESSEE HAD SUBMITTED FABRICATED BANK STATEMENTS. THE LD. AR HAS ALSO DISTINGUISHED THESE CASES ON FACTS BY SUBMITTING W RITTEN SUBMISSIONS. THE SAME ARE REPRODUCED BELOW: - 5.3 IN THE CASE OF CIT V N.R. PORTFOLIO P. LTD. [264 CTR 258 (DEL)], THE DECISION WAS RENDERED AFTER TAKING INTO ACCOUNT CONSIDERATION THE FOLLOWING FACT: - 115 SI;BSEQUENTLY, REASSESSMENT PROCEEDINGS WE RE INITIATED UNDER SECTION 147/148 OF THE ACT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING THAT THE ASSESSEE WAS ONE OF THE BENEFICIARIES, WHO HAD PROCURED SHARE APPLICATION MONEY FROM ENTRY PROVIDERS. ....' 5.4 IN THE CASE OF CIT V NIP UN BUILDERS & DEVELOPERS P. LTD. [350 ITR 407 (DEL)], THE DECISION WAS RENDERED AFTER TAKING INTO ACCOUNT CONSIDERATION THE FOLLOWING FACT: - '1. ON THE BASIS OF A REPORT OF THE INVESTIGATION WING OF THE INCOME - TAX DEPARTMENT, THE ASSESSMENT WAS REOPENED U/S.147 ON THE GROUND THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, IN AS MUCH AS THE SHARE CAPITAL SHOWN TO HAVE BEEN RECEIVED BY THE COMPANY WAS ALLEGED TO REPRESENT MERE ACCOMMODATION ENTRIES.' 5.5 IN THE CASE OF CIT V N. TARIKA PROPERTIES INVE STMENT P. LTD. [40 TAXMANN.COM 525 (DEL)] IN PARA 28, THE HON'BLE HIGH COURT HAS TAKEN COGNIZANCE THAT THE ENTRY BY TRANSFER SHOWN IN THE BANK ACCOUNT, FURNISHED BY THE ASSESSEE IN THE ORIGINAL ASSESSMENT PROCEEDINGS, WAS FABRICATED. 5.6 THUS, THE ASSESSIN G OFFICER IN ALL ABOVE CASES HAD MATERIAL WHICH INDICATED THAT PARTIES THEREIN HAD INDULGED IN ACCOMMODATION ENTRIES. HOWEVER, IN THE CASE OF THE APPELLANT BEFORE YOUR HONOURS THERE IS NO ADVERSE MATERIAL BROUGHT ON RECORD TO SHOW THAT THE APPELLANT HAD EV ER INDULGED OR SOUGHT TO BRING HIS UNACCOUNTED MONEY IN THE BOOKS BY WAY OF ACCOMMODATION ENTRIES/ 35 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI CASH CREDIT. THE ADDITION U/S. 68 OF THE ACT IS MADE FOR THE REASON THAT THE APPELLANT HAS FAILED TO PRODUCE THE PARTIES. THE LEARNED DR HAS ALSO FAILED TO A PPRECIATE THAT THE HON'BLE DELHI COURT IN THE CASE OF N.R. PORTFOLIO'S CASE ITSELF HAS OBSERVED IN PARA 31 OF ITS ORDER THAT 'WHETHER OR NOT ONUS IS DISCHARGED DEPENDS UPON FACTS OF EACH CASE.' AS POINTED ABOVE, THE APPELLANT HAS DISCHARGED HIS PRIMARY ONU S AND THERE IS NO ADVERSE MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER TO PROVE TO THE CONTRARY. THEREFORE, IT IS SUBMITTED THAT THE DECISIONS RELIED UPON BY THE LEARNED DR WERE SOLELY BASED ON THE PECULIAR FACTS OF THOSE CASES AND HENCE, THE SAME A RE NOT APPLICABLE TO THE FACTS OF THE APPELLANT. 5.7 THE LEARNED DR HAS ALSO RE - ITERATED THE PROPOSITION OF THE ASSESSING OFFICER THAT BY SUBMITTING PAN, ADDRESSES, CONFIRMATIONS, ETC. IT CANNOT BE SAID THAT THE APPELLANT HAS DISCHARGED THE ONUS OF PROVING THE IDENTITY, CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF TRANSACTIONS. IN THIS RESPECT, THE LEARNED DR HAS RELIED ON PROVISIONS OF THE INDIAN EVIDENCE ACT, 1872 AND THE FOLLOWING DECISIONS: - A) E. UMMER BAVA V CIT [72 TAXMANN.COM 123 (KER)] B) IT O V CHANDAMA [61 TAXMANN.COM 77 (PAT. - TRIB)] C) ANGEL PIPES & TUBES P. LTD. [50 TAXMANN.COM 128/153 LTD 520 (MUM. TRIB)] 5.8 IT IS RESPECTFULLY SUBMITTED THAT THE PROVISIONS OF THE INDIAN EVIDENCE ACT, 1872 TO NOT STRICTLY APPLY FOR THE PROCEEDINGS UNDER T HE ACT. IT IS SUBMITTED THAT INDIAN EVIDENCE ACT, 1872 CASTS THE BURDEN OF PROVING WHEREAS UNDER THE PROVISIONS OF 68 OF THE ACT, THE BURDEN KEEPS ON SHIFTING DEPENDING UPON FACTS AND CIRCUMSTANCES OF THE CASE. UNDER THE PROVISIONS OF 68 OF THE ACT, THE IN ITIAL BURDEN CAST UPON THE ASSESSEE STANDS DISCHARGED WHEN THE ASSESSEE SUBMITS THE EVIDENCES SUCH AS DETAILS OF THE PARTY, PAN, CONFIRMATIONS, BANK STATEMENTS, ETC. AND THE ASSESSING OFFICER HAS TO REBUT SUCH EVIDENCE BY BRINGING MATERIAL ON RECORD TO PRO VE TO THE CONTRARY - WHICH IF DONE, THE ONUS AGAIN SHIFTS ON THE ASSESSEE. IT IS RESPECTFULLY SUBMITTED THAT THE INITIAL BURDEN CAST UPON THE APPELLANT WHEN HE SUBMITTED THE AFORESAID DETAILS TO 36 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI THE AO AND CIT (A) AND THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE DETAILS SUBMITTED BY THE APPELLANT WERE INCORRECT. IN OTHER WORDS, THE EVIDENCES SUBMITTED BY THE APPELLANT ARE NOT DISPROVED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAVING NOT BROUGHT ANY MATERIAL TO DISPROV E THE DETAILS AND CONTENTIONS OF THE APPELLANT, IT IS SUBMITTED THAT THE ONUS LYING UPON THE ASSESSING OFFICER HAS NOT BEEN DULY DISCHARGED. HENCE, THE ADDITIONS MADE TO THE INCOME OF THE APPELLANT MAY KINDLY BE DELETED. 5.9 IT IS SUBMITTED THAT CASE LAWS RELIED UPON BY THE LEARNED DR ARE DISTINGUISHABLE AND HENCE, NOT APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE. A) IN THE CASE OF E. UMMER BAVA V CIT [72 TAXMANN.COM 123 (KER)] THE ASSESSE HAD RECEIVED GIFT FROM NRI. THE DONOR THEREIN CLAIMED TO HAVE DONATED RETIREMENT BENEFITS RECEIVED FROM THE EMPLOYER. HOWEVER, THE ASSESSEE DID NOT FURNISH ANY SUPPORTING DOCUMENTS. HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED. B) IN THE CASE OF ITO V CHANDAMA [61 TAXMANN.COM 77 (PAT. - TRIB)] - IN T HIS CASE, THE TRIBUNAL CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER BECAUSE IT NOTICED THAT THE CREDITORS HAD LOW LEVEL OF INCOME, THE BOOKS OF THE ASSESSEE WERE NOT FOUND TO BE COMPLETE DURING THE COURSE OF THE SURVEY, ETC. C) IN THE CASE OF ANGEL PIPES & TUBES P. LTD. [50 TAXMANN.COM 128/153 LTD 520 (MUM. TRIB)], THE REVENUE WAS HAVING INCRIMINATING MATERIAL WHICH INDICATED THAT THE ASSESSEE HAD BEEN REAL BENEFICIARY AND SHARE APPLICANTS ENGAGED IN BOGUS BILLINGS. SINCE THE REVENUE RELIED ON THE S TATEMENTS OF THESE PERSONS WHICH COPIES WERE NOT FURNISHED TO THE ASSESSEE AND THAT FACTS WERE NOT PROVEN, THE TRIBUNAL RESTORED THE MATTER TO THE CIT(A) WHO WAS DIRECTED TO ADJUDICATE THE ISSUE IN ACCORDANCE WITH THE DIRECTIONS GIVEN IN THE TRIBUNAL'S ORD ER. 37 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI FROM THE CO - JOINT READING OF ALL THE JUDGMENTS AND THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED VIEW THAT IT IS APPARENT T HAT THE APPELLANT HAS FILED THE RELEVANT DETAILS AND IS NOT THE REAL BENEFICIARY NOR THERE IS ANY EVI DENCE TO SHOW THAT THE ASSESSEE HAS INTRODUCED HIS OWN MONEY AS CASH CREDIT THROUGH IMPUGNED PARTIES. THEREFORE, THE DECISIONS RELI ED UPON BY THE LEARNED DR ARE ON DIFFERENT SET OF FACTS AND ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. EVEN THE DOCUMENT PRODUC ED BEFORE THE REVENUE AUTHORITIES AND ANNEXED IN THE PAPER BOOK CLEARLY SHOWS THAT THE PARTIES WITH WHOM THE ASSESSEE HAS DEALT WITH ARE ACTIVE AND ARE ON THE RECORD OF I.T. DEPARTMENT. WE FURTHER FIND THAT ALTHOUGH THE MATTER WAS RESTORED BY CIT(A) TO THE AO BUT THE AO IN HIS REMAND REPORT HAS NOT CARRIED OUT ANY FURTHER ENQUIRY AND SIMPLY MENTIONED THAT THE CREDITWORTHINESS OF THE PARTIES WERE NOT PROVED. WE NOTICED THAT ALL THE DETAILS WERE NOT ONLY PHYSICALLY SUBMITTED BUT EVEN SUBMITTED THROUGH E - MAILS . THE ASSESSEE HAD ADMITTED THAT HE WAS DEALING WITH THE PARTIES THROUGH THE MEDIATOR MR. JALAJ BATRA. BUT THE REVENUE AUTHORITIES REJECTED THE CONTENTIONS OF THE ASSESSEE BY HOLDING THAT THE MEDIATOR WAS NOT PRODUCED. IN THIS RESPECT, OUR ATTENTION WAS DR AWN TO THE FACT THAT THE 38 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI REVENUE AUTHORITIES HAVE SEPARATELY BEEN FIGHTING WITH MR. JALAJ BATRA AND HAVE SERVED HIM BY FILING APPEAL BEFORE THE TRIBUNAL AS WELL AS THE HONBLE HIGH COURT. THIS FACT GOES TO SHOW THAT WHEN ONCE THE PRIMARY DOCUMENTS WERE ALR EADY SUPPLIED TO THE REVENUE BY THE ASSESSEE THEN THE REVENUE COULD HAVE SERVED THE SAID MEDIATOR MR. JALAJ BATRA AND BY NOT DOING SO, THE ASSESSEE CANNOT BE PUNISHED FOR NOT PRODUCING THE SAID MEDIATOR AND EVEN OTHERWISE WITHOUT MR. JALAJ BATRA BEING IN P ICTURE, THE ASSESSEE HAS ALREADY DISCHARGED THE PRIMARY ONUS CAST ON HIM BY FURNISHING VARIOUS DETAILS LIKE PAN, TAN, ADDRESSES, MASTER DATA FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS, DETAILS OF DIRECTORS, BANK STATEMENT OF THE ASSESSEE INDICATING TRANSACTION THROUGH BANKING CHANNEL. KEEPING IN VIEW OUR ABOVE DISCUSSION AND WHILE CONCURRING WITH THE JUDGMENTS CITED BY ASSESSEE, WE HOLD THAT THE ADDITIONS MADE BY AO AND SUSTAINED BY CIT(A) ON THE GROUND THAT SUMMONS WERE RETURNED BACK AND THE PAR TIES WERE NOT PRODUCED ARE BAD IN LAW, HENCE THE SAME ARE ORDERED TO BE DELETED. GROUND NO. 3 39 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI 4. THIS GROUND RELATES TO CONFIRMATION OF ADDITIONS BY CIT(A) OF RS. 6 LAKHS MADE BY AO ON ACCOUNT OF UNEXPLAINED BANK DEPOSITS. WE HAVE HEARD THE COUNSELS FOR B OTH THE PARTIES AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES. LD. AR SUBMITTED THAT THE CASH DEPOSIT OF RS.6,00,000/ - ON 27.02.2007 WAS DEPOSITED OUT OF CASH WITHDRAWAL OF RS.5,00,000/ - FROM INDIAN OVERSEAS BANK, BREACH CANDY BRANCH, MUMBAL, ACCOUNT NO. 1902 ON 27.02.2007 V IDE CHEQUES NO.840414 & 840416. IT WAS FURTHER SUBMITTED THAT THE BANK ACCOUNT BELONGED TO M/ S. GIFT & NOVELTIES IMPEX, PROPRIE TORSHIP CONCERN OF THE ASSESSEE AND IN THIS RESPECT, THE STATEMENT WAS ALSO PRODUCED BEFORE THE A.O. AFTER HE ARING THE PARTIES AND ON PERUSAL OF THE DOCUMENTS, WE FIND THAT AT PAGE NO. 107 & 108 OF THE PAPER BOOK, THE STATEMENT IN RESPECT OF WITHDRAWAL OF 5 LACS FROM INDIAN OVERSEAS BANK IS REFLECTED AND AS PER THE SUBMISSIONS OF THE ASSESSEE. T HE REMAINING AMOUN T OF RS,1,00,000/ - WAS ALLEGED TO BE DEPOSITED OUT OF CASH - IN - HAND LYING WITH THE ASSESSEE . HOWEVER, NO DOCUMENTARY EVIDENCE IN SUPPORT OF AVAILABILITY OF 1 LAKH WAS BROUGHT ON RECORD BEFORE THE LOWER AUTHORITIES NOR BEFORE US . THEREFORE, IN VIEW OF OUR ABOVE DISCUSSION, WE HOLD THAT THE AO SHOULD HAVE RESTRICTED THE ADDITIONS ONLY TO THE AMOUNT WHICH THE ASSESSEE COULD NOT EXPLAIN THE 40 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI SOURCE . T HEREFORE IN OUR VIEW, THE ADDITIONS MADE BY AO AND CONFIRMED BY CIT(A) IS RESTRICTED TO RS. 1 LAKH ONLY IN PLACE OF RS. 6 LAKHS. GROUND NO. 4 5. THIS GROUND RELATES TO INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT. IN THIS RESPECT, LD. AR STATED THAT HE DOES NOT WANT TO PRESS THIS GROUND OF APPEAL AS THE PENALTY HAS NOT YET BEEN IMPOSED. CONSIDERING THE STATEMENT OF THE LD. AR, THIS GROUND STANDS DISMISSED BEING NOT PRESSED. 6. IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE S ALLOWED IN PART IN TERMS INDICATED HEREIN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH APRIL , 2017 S D/ - SD/ - ( R. C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 18 . 04 .201 7 SR.PS . DHANANJAY 41 I.T.A. NO. 484 /MUM/201 1 (A.Y. 2007 - 08 ) SHRI PRAKASH V. SARDESAI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI