DCIT CEN CIR 3, MUMBAI V. LILADHAR RAVJI MAJETHIA/THAKKAR, MUMBAI

ITA 5059/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3794 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 04-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R C PRASAD MS RITIKA AGARWAL
• Assessee Lawyers: PTB
• Keywords: Unexplained cash credit; Search and seizure; Loose papers; Onus to prove
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI , , BEFORE SHRI R C SHARMA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA NO. 5059 /MUM/201 4 (ASSESSMENT YEAR 20 1 0 - 11 ) DCIT CENTRAL CIRCLE - 3 OLD CGO BLDG, ANNEXE, 9 TH FLOOR, M K ROAD, MUMBAI - 400 020 VS SHRI LILADHAR RAVJI MAJETHIA / THAKKAR , 7, 2 ND FLOOR, PATHAIBAPA NIWAS, N S ROAD, MULUND (WEST), MUMBAI - 400 080 PAN: ABYPT 7683 B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R C PRASAD RESPONDENT BY : MS . RITIKA AGARWAL /DATE OF HEARING : 17 - 0 2 - 201 6 /DATE OF PRONOUNCEMENT : 06 - 0 5 - 2016 ORDER , . : - PER AMIT SHUKLA, J. M. : T HE AFORESAID APPEAL FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED 02.05 .201 4 , PASSED BY CIT (APPEALS) - 36 , MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) FOR THE ASSESSMENT YEAR 2009 - 10 ON THE FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.1,55,10,000/ - ON ACCOUNT OF UNSECURED LOANS UNDER SECTION 68 AS THE ASSESSEE WAS UNABLE TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTION AN D UNABLE TO PROVE THE CAPACITY AND CREDIT WORTHINESS OF THE LENDERS. 2 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS.1,55,10,000/ - UNDER SECTION 68 OF THE ACT WITHOUT APPRECIATING THE FACT THA T IN THE CASE OF EACH LOAN CREDITOR, THERE WAS CREDIT ENTRY OF A CORRESPONDING AMOUNT IMMEDIATELY PRECEDING THE ADVANCEMENT OF LOAN ESPECIALLY WHEN LOAN OBTAINED THROUGH BANKING CHANNEL DOES NOT MAKE THE TRANSACTION SACROSANCT AND THE ASSESSEE FAILED TO DI SCHARGE THE ONUS OF BURDEN OF PROOF. 2. THE MAIN ISSUE INVOLVED IN THE APPEAL IS ADDITION ON ACCOUNT OF UNSECURED LOAN AGGREGATING TO RS.2,02,50,000/ - (DISPUTED BEFORE US , RS.1,55,10,000) RECEIVED BY THE PROPRIETORSHIP ENTITIES OF THE ASSESSEE FROM 29 PE RSONS. THE BACKGROUND OF THE ADDITION AS BEEN DISCUSSED BY THE AO IS THAT A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) WAS CONDUCTED IN THE CASE OF HARESH MAJETHIA. DURING THE COURSE OF WHICH, IT HAS REVEALED THAT MAJETHIA BROTHERS , THAT IS, HARESH MAJ ETHIA AND LILADHAR MAJETHIA (ASSESSEE) THROUGH THEIR VARIOUS PROPRIETORSHIP CONCERNS , PARTNERSHIP FIRMS AND COMPANIES WERE ENGAGED IN THE REAL ESTATE BUSINESS AS BROKER - CUM - INVESTOR AND ALSO IN PURCHASE AND SALES OF LAND IN NAVI MUMBAI. THE ASSESSEE HA S T WO PROPRIETARY CONCERN S, M/S EKTA TRADING CO. AND M/S K M DEVELOPERS. DURING THE SEARCH, CERTAIN LOOSE PAPERS WERE FOUND WHICH REVEALED THAT, SEVERAL LOANS WERE TAKEN AND GIVEN BY THE ASSESSEE AND THEIR FAMILY CONCERNS, THE DETAILS OF WHICH HAD BEEN INCORP ORATED BY THE AO AT PAGE 3. THE AO NOTED THAT THE INVESTIGATION WING TO ASCERTAIN THE GENUINENESS OF THE LOANS MADE FIELD ENQUIRIES TO CHECK THE IDENTITY OF THE SOME OF THE LENDERS ; TO VERIFY THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF T HE LENDERS ON RANDOM BASIS. IN THE STATEMENT RECORDED UNDER SECTION 131 OF THE OF THE ACT FROM SOME OF THE LENDERS, IT WAS STATED BY THEM THAT THEY HAVE ONLY RECEIVED CHEQUES FR O M PERSONS RELATED TO MAJETHIA GROUP FOR DEPOSITING INTO 3 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 THE BANK ACCOUNTS AND CHEQUE FOR SUCH AN AMOUNT WERE TAKEN IN THE NAME OF PERSONS/ENTITIES OF THE ASSESSEE MAJETHIA GROUP. SOME OF THE LENDERS WERE HAVING VERY MEAGER INCOME. BASED ON THESE ENQUIRIES, IT WAS DEDUCED THAT FIRSTLY, THE LENDERS WERE MEN OF LI TTLE MEANS ; SECONDLY, THEY WERE NOT AWARE OF THE AMOUNTS FROM WHOSE ACCOUNTS CHEQUES WERE ISSUED AND DEPOSITED IN THEIR ACCOUNT; THIRDLY, NONE OF THEM HAD ANY BUSINESS RELATIONSHIPS WITH THE SAID PERSONS; FOURTHLY, THEY WERE GIVEN THE CHEQUES BY THE ASSESS EE - G ROUP WHICH AT TIMES WERE DIRECTLY CREDITED BY THEM INTO THEIR ACCOUNTS AND IN TURN HAVE ISSUED THE CHEQUES IN FAVOUR OF THE ASSESSEE G ROUP ; LASTLY, T HE RETURN OF INCOME IN THE NAME OF THESE LENDERS WERE FILED BY THE ASSESSEE G ROUP ITSELF SO AS TO CREAT E AS SEMBLANCE OF GENUINENESS OF TRANSACTION. BASED ON THESE OBSERVATIONS MADE BY THE INVESTIGATION WING, AO DOUBTED THE WHOLE OF UNSECURED LOANS AS APPEARING IN THE BALANCE SHEET OF THE TWO PROPRIETORSHIP CONCERNS OF THE ASSESSEE . IN SUPPORT OF THE GENUIN ENESS OF THE CREDIT, THE ASSESSEE ALONG WITH THE CONFIRMATION OF THE LENDERS HAD FILED COPY OF INCOME - TAX RETURN , PAN CARD, COPY OF BANK STATEMENT ETC. FROM THE PERUSAL OF THE BANK STATEMENT S OF THE LENDERS , THE AO OBSERVED THAT THE LENDERS DO NOT HAVE THE REGULAR SOURCE OF INCOME AND HUGE FUNDS HAVE BEEN CREDITED TO THE BANK ACCOUNTS BEFORE ADVANCING THE LOANS. SUMMONS WERE ALSO ISSUED TO VARIOUS PARTIES ON WHICH AO OBSERVED THAT THE RESPONSES RECEIVED FROM SUCH LENDERS WERE POSTED FROM THE POST OFFICE LOC ATED AT VASHI , I.E. NEAR THE ADDRESS AND LOCALITY OF THE ASSESSEE. ACCORDINGLY, HE ISSUED A SHOW CAUSE NOTICE TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND THE CREDENTIAL OF THE LENDERS TO LEND THE SUM TO THE ASSESSEE. IN RESPONSE TO AOS QUERRY , THE AS SESSEE HAS FILED HIS DETAILED EXPLANATION ALONG WITH DOCUMENTS / EVIDENCES WHICH HAS NOT BEEN DISCUSSED IN DETAIL IN T HE ASSESSMENT ORDER . THE AO OBSERVED THAT, ASSESSEE HAS FAILED TO PRODUCE SINGLE PARTY FOR CROSS VERIFICATION AND MANY LENDERS FILED THEIR E - RETURNS AND SOURCES OF THEIR INCOME HAVE BEEN STATED FROM INCOME FROM OTHER SOURCES AND DID NOT HAD BALANCE - SHEET ALONG 4 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 WITH THE RETURN . FROM THE PERUSAL OF THEIR BANK STATEMENT, HE HELD THAT THERE IS NO REGULAR OR PERIOD ICAL INCOME CREDITED TO THE BA NK ACCOUNTS. THUS, HE CONCLUDED THESE ARE BOGUS TRANSACTIONS TAKEN BY THE ASSESSEE IN THE FORM OF LOAN BEFORE THE PURCHASE OF A PROPERTY BY ANY OF THE GROUP CONCERN. HIS DETAILED CONCLUSION HAS BEEN DISCUSSED IN PARA 5.4 TO 5.7 OF THE ASSESSMENT ORDER . THE REAFTER, HE DISCUSSED THE CONCEPT OF LAW OF SECTION 68 AND VARIOUS CASE AUTHORITIES. ACCORDINGLY, HE CONFIRMED THE UNSECURED LOANS WHICH HAS BEEN TAKEN AT RS.2,04,83,832/ - , THOUGH THE CORRECT FIGURE WAS RS.2,02,50,000/ - . 3. BEFORE THE CIT(A), THE BREAK - UP OF LOAN TAKEN BY THE TWO PROPRIETORSHIP CONCERNS FROM VARIOUS PERSONS WERE AS UNDER: - SR.NO. NAME OF THE PARTY AMOUNT(RS.) ENTITIES 1 M/S EKTA TRADING CO. 1,22,60,000 17 2 M/S K M DEVEOPERS 79,90,000 12 TOTAL 2,02,50,000 29 THE FURTHER BREAK UP OF LOANS TAKEN FROM THE 29 ENTITIES/PERSONS WAS AS UNDER : - EKTA TRADING CO. (ETC) S.NO. NAME OF THE PARTY AMOUNT (RS.) 1 ANISH P PARAB 4,00,000/ - 2 BHARAT KANUBHAI SHAH 3,50,000/ - 3 BHARTI SURESH BHANUSHALI 5,00,000/ - 4 CHAMPABEN G RUPAREL 3,50,000/ - 5 CHUNILAL PREMJI GOSAR 5,00,000/ - 6 L R SHAH (HUF) 4,00,000/ - 7 K C TRIVEDI (HUF) 4,00,000/ - 8 K M DEVELOPERS 61,50,000/ - 9 KALPANA VALJI BHANUSHALI 5,00,000/ - 10 KHUSHALI ATUL POLADIYA 5,00,000/ - 11 KISHOR V KAWA 2,00,000/ - 12 LAXMICHAND V. RAMBHAI (HUF) 3,50,000/ - 13 LILABEN R SHAH 3,00,000/ - 14 R N ENTERPRISES 60,000/ - 15 SAKARBHAI NANJI SATRA 5,00,000/ - 16 VASANT MORARJI KARANI (HUF) 5,00,000/ - 17 VINOD TUKARAM PATEKAR (HUF) 3,00,000/ - TOTAL 1,22,60,000/ - 5 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 K M DEVELOPERS (KMD) S.NO. NAME OF THE PARTY AMOUNT (RS.) 1 ARVIND RAVJI MAJETHIA 4,75,000/ - 2 HARESH RAVJI MAJETHIA 20,15,000/ - 3 HIRJI SHIVJI & SONS 2,00,000/ - 4 JALARAM ENTERPRISES 9,60,000/ - 5 JALARAM ENTERPRISES PVT LTD 17,20,000/ - 6 K C TRIVEDI (HUF) 4,00,000/ - 7 KALPANA VALJI BHANUSHALI 5,00,000/ - 8 KHUSALI ATUL POLADIYA 5,00,000/ - 9 KISHORE V KAWA 2,00,000/ - 10 MAHESH BAPAT 20,000/ - 11 SAKARBHAI NANJI SATRA 5,00,000/ - 12 VASANT MORARJI KARANI (HUF) 5,00,000/ - TOTAL 79,90,000/ - IT WAS CLARIFIED BY THE ASSESSEE THAT, FIRST OF ALL, THE UNSECURED LOANS RAISED WAS RS.2,02,50,000/ - AND NOT RS.2,04,83,832/ - AS ADDED BY THE AO ; SECONDLY , IT WAS POINTED OUT THAT M/S EKTA TRADING CO HAS TAKEN LOAN OF RS.61.50 LAKHS FROM M/S K M DEVELOPERS, (WHICH IS EVIDENT FROM ABOVE) BOTH OF WHICH ARE PROPRIETORSHIP CONCERNS OF THE ASSESSEE, THAT IS, IT HAS TRANSFER RED THE MONEY FROM ONE POCKET TO ANOTHER ; LASTLY , IT WAS CLARIFI ED THAT, SOME OF THE PERSONS/ENTITIES ARE THE SISTER CONCERNS OF THE ASSESSEE AND THEY WE RE BEING ASSESSED IN THE SAME CHARGE AND IN THEIR CASE S THIS ISSUE OF LOAN GIVEN TO ASSESSEE HAS BEEN DISCUSSED AND ANALYSED BY THE AO. 4. APART FROM THAT, ON MERITS, IT WAS SUBMITTED THAT IN ORDER TO PROVE THE IDENTITY, CREDITWORTHINESS OF THE 29 LENDERS AND THE GENUINENESS OF THE TRANSACTION, FOLLOWING DOCUMENTS WERE PL A CED ON RECORD B EFORE THE AO: - A. COPIES OF CONFIRMATION FROM THE LEND ERS; B. COPIES OF PAN CARD OF THE LENDERS; C. COPIES OF RATION CARD OF THE LENDER; D. COPIES OF RETURN OF INCOME FOR AY 2010 - 11 OF THE LENDER E. COPIES OF BALANCE SHEET FOR AY 2010 - 11 OF THE LENDER; F. COPIES OF BANK STATEMENT OF THE LENDER HIGHLIGHTING THE 6 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 RECEIPT AS WELL AS REPAYMENT ENTRIES; G. COPIES OF BANK STATEMENT OF M/S EKTA TRADING AND M/S K M DEVELOPERS SHOWING THE RECEIPT AS WELL AS REPAYMENT OF LOAN ENTRIES. A CHART WAS SUBMITTED SHOWING THE EVIDENCES FILED IN THE CASE O F EACH LENDER IN THE PAPER BOOK BEFORE THE CIT(A). THE DETAILED OF WHICH WITH REGARD TO ALL THE 29 ENTITIES IN THE SUMMARIZED FORM ARE REPRODUCED HEREUNDER: K M DEVELOPERS LOAN CONFIRMATION DETAILS 01/04/2009 TO 31/03/2010 SR. NO. NAME OF THE PARTIES CONFI - RMATION IT RETURN BALANCE SHEET BANK STAT. PAN CARD RATION CARD OUR BANK STATE - MENT 1 ARVIND RAVJI MAJETHIYA YES YES YES YES YES YES YES 2 HARESH RAVJI MAJETHIYA YES YES YES YES YES YES YES 3 HIRJI SHIVJI & SONS YES YES YES YES YES YES YES 4 JALARAM ENTERPRISES YES YES YES YES YES YES YES 5 JALARAM ENT. PVT LTD. YES YES YES YES YES YES YES 6 K C TREVEDI (HUF) YES YES - YES YES - YES 7 KALPANA VALJI BHANUSHALI YES YES - YES YES - YES 8 KHUSHALI ATUL POLADIYA YES YES - YES YES YES YES 9 KISHORE V KAWA YES YES YES YES YES - YES 10 MAHESH BAPAT YES YES YES YES YES - YES 11 SAKARBHAI NANJI SATRA YES YES YES YES YES - YES 12 VASABT MORARJI KARANI (HUF) YES YES - YES YES - YES EKTA TRADING CO. LOAN CONFIRMATION DETAILS 01/04/2009 TO 31/03/2010 SR. NO. NAME OF THE PARTIES CONFI - RMATION IT RETURN BALANCE SHEET BANK STAT. PAN CARD OUR BANK STATEMENT 1 ANISH P PARAB YES YES -- YES YES YES 2 BHARAT KANUBHAI SHAH YES YES YES YES YES YES 3 BHARTI SURESH BHANUSHALI YES YES YES YES YES YES 4 CHAMPABEN G RUPAREL YES YES -- YES YES YES 5 CHUNILAL PREMJI GOSAR YES YES -- YES YES YES 6 L R SHAH (HUF) YES YES -- YES YES YES 7 K C TREVEDI (HUF) YES YES -- YES YES YES 8 K M DEVELOPERS YES YES YES YES YES YES 9 KALPANA V. BHANUSHALI YES YES -- YES YES YES 10 KHUSHALI ATUL POLADIYA YES YES YES YES YES YES 11 KISHOR V KAWA YES YES -- YES YES YES 12 LAXMICHAND V.RAMBHIA (HUF) YES YES -- YES YES YES 13 LILABEN R SHAH YES YES -- YES YES YES 7 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 14 R N ENTERPRISES YES YES YES YES YES YES 15 SAKARBHAI NANJI SATRA YES YES -- YES YES YES 16 VASANT MORARJI KARANI (HUF) YES YES -- YES YES YES 17 VINOD TUKARAM PATEKAR (HUF) YES YES -- YES YES YES IT WAS SUBMITTED THAT D ESPITE ALL THESE EVIDENCES AND WITHOUT ANY CONTRARY MATERIAL , AO HAS TREATED THE SAID AMOUNT AS UNEXPLAINED CASH CREDIT. REGARDING OTHER OBSERVATIONS OF THE AO, ASSESSEE GAVE POINT - WISE REBUTTAL WHICH HAS BEEN DISCUSSED BY THE LD. CIT(A) FROM PAGES 9 TO 13 OF THE IMPUGNED ORDER. IT WAS ALSO CLARIFIED THAT AMOUNT AGGREGATING TO RS.46,95,000/ - RECEIVED FROM THREE ENTITIES BELONGING TO THE FAMILY GROUP HAVE ALREADY BEEN ADDED IN THEIR ASSESSMENTS , THEREFORE, TO THIS EXTENT THE AMOUNT SHOULD BE DELETED. THIS AMOUNT OF RS.46,95, 000/ - WERE FROM FOLLOWING PERSONS / ENTITIES, WHICH HAVE NOT BEEN DISPUTED BEFORE US ALSO: SR. NO. NAME OF THE PARTY AMOUNT (RS.) REMARKS 1 M/S JALARAM ENTERPRISES PVT LTD. 17,20,000 ALSO ADDED IN M/S JALARAM ENTERPRISES PVT LTD. 2 HARESH MAJETHIYA 20,15,000 ALSO ADDED IN HARESH MAJETHIYA 3 M/S JALARAM ENTERPRISES (PROP. HARESH MAJETHIYA) 9,60,000 ALSO ADDED IN HARESH MAJETHIYA LASTLY , IT WAS STATED THAT, OUT THE TOTAL LOANS MAJOR PART OF THE LOANS AGGREGATING TO RS.79,90,000/ - HAVE BEEN REPAID IN THE IMPUGNED YEAR ITSELF , OUT OF WHICH RS.61,50,000/ - HAS BEEN RECEIVED FROM ONE PROPRIETORSHIP TO ANOTHER PROPRIETORSHIP. 5. THE LD. CIT(A) AFTER TAKING NOTE OF ENTIRE GAMUT OF FACTS AND EVIDENCES PLACED ON RECORD BEFORE THE AO AS WELL AS DURING THE APPELLATE PROCEEDINGS , DELETED THE SAID ADDITION A S PER THE DISCUSSION APPEARING FROM PAGES 13 TO 15 OF THE APPELLATE ORDER. THE SUM AND SUBSTANCE OF THE FINDING RECORDED BY THE LD. CIT(A) ARE THAT: - ( I ) SO FAR AS ADDITION RELATING TO UNSECURED LOANS RECEIVED FROM M/S K M DEVELOPERS IS CONCERNED , SHE HELD THAT, LOAN 8 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 AGGREGATING TO RS.79,90,000/ - RECEIVED FROM 12 PARTIES HAD BEEN REPAID IN THE IMPUGNED YEAR ITSELF WHICH IS CORROBORATED BY BALANCE - SHEET OF THE ASSESSEE PLACED IN THE PAPER BOOKS. FURTHER, SOME OF THE PART IES ARE RELATED TO THE ASSESSEE, THAT IS, THEY W ERE EITHER BROTHER OF THE ASSESSEE OR PARTNERSHIP CONCERN OF HIS BROTHER. ALL THESE ENTITIES/ PERSONS ARE ASSESSED WITH THE SAME AO AND IN THEIR INCOME - TAX RECORDS AND BALANCE - SHEET EACH AND EVERY ITEM OF LOAN GIVEN HAS BEEN DISCLOSED AND THE ASSESSMENT HAVE BEEN M ADE BY THE AO IN THESE CASES . THUS, THE GENUINENESS AND THE SOURCE STANDS ESTABLISHED. ( II ) FROM THE PERUSAL OF THE BANK STATEMENT, THE LD. CIT(A) NOTED THAT THERE IS NO INSTANCE OF CASH DEPOSITS, IN THE BANK ACCOUNTS OF T HESE PERSONS PRIOR TO ADVANCING OF THE LOANS TO THE ASSESSEE AND ACCORDINGLY, THE GENUINENESS OF THE TRANSACTION AND THE CAPACITY TO LEND ARE BORNE OUT FROM THE BANK STATEMENTS ITSELF . ( III ) SO FAR AS UNSECURED LOANS RECEIVED IN THE CASE OF M/S EKTA TRADING CO., SHE NOTED THAT, LOAN OF RS.61,50,000/ - HAS BEEN RECEIVED FROM KM DEVELOPERS WHICH IS A ANOTHER PROPRIETORSHIP CONCERN OF THE ASSESSEE HIMSELF AND, THEREFORE, IT DOES NOT F ALL IN THE CATEGORY OF THIRD PARTY FROM WHOM UNSECURED LOANS HAS BEEN RECEIVED. MOREOVER, THE SAID AMOUNT HAS BEEN REPAID DURING THE YEARS AND DOES NOT APPEAR IN THE BALANCE SHEET ON THE CLOSING DATE OF 31 ST MARCH, 2010. THAT APART, THE DOCUMENTS AND EVIDENCES LIKE INCOME - TAX RETURNS, PAN CARDS, BANK STATEMENTS HAVE BEEN FURNISHED WHICH SHOWS THAT THE ENTIRE ONUS CAST UPON THE ASSESSEE HAS BEEN DISCHARGED . ( IV ) AS REGARDS THE AOS OBSERVAT ION THAT THE LENDERS HAVE ADVANCED THE LOAN TO M/S EKTA TRADING CO OUT OF CASH DEPOSITS IN THE ACCOUNT OF ITS LENDER IS NOT CORRECT AND THE 9 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 ENTIRE CHARGE IN THIS REGARD IS BASELESS. FROM THE PERUSAL OF THE BANK STATEMENTS, SHE CONCLUDED THAT, I T IS CLEARLY EVIDENT THAT LOANS HAVE BEEN ADVANCED WITH THE FUNDS AVAILABLE WITH THE LENDERS, EITHER OF THEIR OWN OR THROUGH FUNDS RECEIVED OF THE OTHER PARTIES THROUGH BANKING CHANNELS. HENCE, THERE IS NO CASE FOR RAISING ANY SUSPICION . ( V ) AS REGARDS THE FI V E PARTIES , WHICH HAVE NOT APPEARED FOR CROSS EXAMINATION, LD, CIT(A) OBSERVED THAT WHEN THE LENDERS HAVE FORWARD ED THEIR CONFIRMATION, PAN CARD, RETURN OF INCOME, BANK STATEMENT ETC. AND WHEN T HE ASSESSEE REQUESTED THE AO TO MAKE FURTHER ENQUIRIES FROM THE RE SPECTIV E AO S OF THE LENDERS , THEN AO SHOULD HAVE ENQUIRED FROM THE AOS OF THE LENDERS WHEN THEIR ASSESSMENT PARTICULARS WERE AVAILABLE. ONCE IT HAS NOT BEEN DONE , THEN , IT WAS NOT PROPER FOR THE AO TO DRAW ANY ADVERSE INFERENCE WITHOUT ANY FURTHER ENQUIRY. ACCORDINGLY, BASED ON AFORESAID REASONS; FACTS AND EVIDENCES, THE LD. CIT(A) HELD THAT, THE ASSESSEE HAS DISCHARGED HIS OBLIGATION OF IDENTIFYING THE LOAN CREDITORS, ESTABLISHING THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE LENDERS . ACCORDINGLY, ADDITION MADE BY THE AO WAS DELETED. 4. BEFORE US, THE LD. DR AFTER REF ER R ING TO VARIOUS OBSERVATIONS MADE BY THE AO SUBMITTED THAT, A CLANDESTINE MODUS OPERANDI WAS UNEARTHED DURING THE COURSE OF SEARCH WHICH REVEALED THAT, ASSESSEE WAS ENGAGED IN GETTING /PROCURING UNSECURED LOAN S THROUGH CIRCUITOUS ROUTE. IN THE LIGHT OF THESE FINDING IN THE SEARCH , THE UNSECURED LOAN RECEIVED BY THE ASSESSEE IN HIS TWO PROPRIETORSHIP CONCERNS CANNOT BE HELD TO BE GENUINE. HE FURTHER SUBMITTED THAT, ASSESSEE FAILED TO PRODUCE THE LENDERS AS REQUIRED BY THE AO AND THUS, THE CREDITWORTHINESS CANNOT BE ACCEPTED 10 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 ESPECIALLY WHEN AO HAS GIVEN A FINDING THAT LENDERS WERE OF MEN OF LITTLE MEANS. THUS, HE STRONGLY RELIED UPON THE ORDER OF THE AO. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE, MS . RITIKA AGARWAL SUBMITTED THAT, FIRSTLY , IN THE CASE OF THE ASSESSEES BROTHER HARESH MAJETHIA, THE TRIBUNAL VIDE ORDER DATED 10.04.2015 IN ITA NO. 3772 AND CO NO.192/MUM/2011 AND ITA NO.1220/MUM/2 011 HAS DELETED THE SIMILAR ADDITION ON ACCOUNT OF UNSECURED LOANS AND INTEREST ON THE GROUND THAT IF THE RECEIPTS AND REPAYMENT OF LOAN IS CORROBORATED BY THE LEDGER ACCOUNT AND BANK ENTRIES, ADDITION IN RESPECT OF SUCH CREDITS CANNOT BE MADE. HERE I N THI S CASE ALSO, THE REPAYMENT OF LOAN IS FULLY CORROBORATED BY LEDGER ACCOUNT AND BANK ENTRIES. SHE FURTHER SUBMITTED THAT, HERE IN THIS CASE THERE IS CATEGORICAL FINDING BY CIT(A) THAT MAJORITY OF THE LOAN HAS BEEN REPAID BACK DURING THE YEAR AND ALSO MAJOR CHUNK HAS COME FROM ONE PROPRIETORSHIP CONCERN TO ANOTHER PROPRIETORSHIP CONCERN. THERE COULD BE NO ADDITION UNDER SECTION 68 BY TREATING IT TO BE A NON - GENUINE TRANSACTION. REGARDING OTHER ASPECT S AND INGREDIENTS OF ONUS CAST UPON ASSESSEE U/S 68 , SHE REL IED UPON VARIOUS CASE AUTHORITIES IN SUPPORT OF HER CONTENTION QUA THE EVIDENCES FURNISHED BY THE ASSESSEE TO SHOW THAT ONUS WHICH LAY UPON THE ASSESSEE HAS BEEN FULLY DISCHARGED / COMPLIED WITH. THE DECISIONS RELIED UPON AND THE SUBMISSIONS MADE BY THE LD. COUNSEL HAVE BEEN SEPARATELY FILED BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS , P ERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WELL AS MATERIAL PLACED ON RECORDS. HERE IN THIS CASE, ADDITION HAS BEEN MAD E UNDER SECTION 68 ON ACCOUNT OF UNSECURED LOANS RECEIVED BY THE ASSESSEE IN HIS TWO PROPRIETORSHIP CONCERNS FROM VARIOUS PERSONS AS MENTIONED ABOVE . IN ORDER TO PROVE THE NATURE AND SOURCE OF THE CREDIT S , AS STIPULATED UNDER THE LAW, THE ASSESSEE FIRST OF ALL HAS GIVEN THE COPY OF CONFIRMATION / LETTERS FROM THE LENDERS; PAN CARD; RETURN OF INCOME ALONG WITH THE BALANCE SHEET FOR THE RELEVANT AY 2010 - 11; BANK STATEMENT S OF THE LENDERS AS WELL AS BANK 11 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 STATEMENT S OF TWO PROPRIETORSHIPS SHOWING RECEIPTS AS WEL L AS REPAYMENT ENTRIES . T HE SUMMARY OF THE DOCUMENTS /EVIDENCES FURNISHED WITH REGARD TO EACH AND EVERY PERSONS/ENTITIES HAS BEEN ALREADY INCORPORATED ABOVE IN THE FOREGOING PARAGRAPHS. AT THE FACE OF THE LAW, INITIAL BURDEN CASTS UPON THE ASSESSEE TO PROVE THE SOURCE OF THE LOAN HAS BEEN STATED TO BE DISCHARGED. THE REVENUES CASE HAS BEEN THAT, THE CAPACITY OF THE LENDERS HAS NOT BEEN PROVED BECAUSE THESE LENDERS WERE MEN OF LITTLE MEANS OR NO MEANS AND THE AMOUNT CREDITED IN THE BANK ACCOUNTS HAVE BEE N ROUTED IN A CLANDESTINE MANNER AS FOUND DURING THE COURSE OF SEARCH . FOR SUBSTANTIATING THIS ASSERTION, NOTHING HAS BEEN BROUGHT ON RECORD QUA THE ASSESSEES CASE IN HAND AS TO HOW THE AMOUNT WHICH HAS BEEN CREDITED IN THE ACCOUNT OF THE LENDERS HAS FLOWN FROM THE UNDISCLOSED COFFERS OF THE ASSESSEE OR FROM SOME UN KNOWN SOURCES OF THE ASSESSEE. IF A MATERIAL OR INFORMATION HAS BEEN FOUND IN A SEARCH SUGGESTING NON - GENUINE T RANSACTIONS UNDERTAKEN BY THE ASSESSEE, THEN IT IS INCUMBENT UPON THE AO TO MAKE RELEVANT ENQUIRY TO CONTROVERT THE EVIDENCES FILED BY THE ASSESSEE, ESPECIALLY FROM THE CONCERN AOS OF THE LENDERS WHO ARE MOSTLY FAMILY MEMBERS AND CONCERNS. ONCE A LENDER HA S CONFIRMED THE GIVING OF LOAN TO THE ASSESSEE AND HAS CORROBORATED SUCH GIVING OF LOAN THROUGH FURNISHING OF INCOME - TAX RETURN FOR THE RELEVANT ASSESSMENT YEAR , FURNISHING OF BANK STATEMENTS IN WHICH SUCH AN AMOUNT HAS BEEN REFLECTED , THEN PRIMA FACIE IT CANNOT BE HELD THAT THE LENDER DOES NOT HAVE THE CAPACITY TO ADVANCE THE LOAN OR THE CREDITWORTHINESS OF THE LENDER CAN BE DOUBTED. TO DOUBT THE CREDITWORTHINESS OF THE LENDERS IN SUCH CASES , THE AO HAS TO BRING SPECIFIC MATERIAL REBUTTING THE STAND OF THE LENDER THAT HIS CONFIRMATION IS FALSE AND IF AT ALL ANY ADVERSE INFERENCE HAS TO BE DRAWN THEN CASE OF THE LENDERS ALSO NEED TO BE REOPENED OR EXAMINED. HERE IN THIS CASE, THE AO WAS SPECIFICALLY INFORMED THAT SOME OF THE PERSONS WHO WERE FAMILY MEMBERS/C ONCERNS WERE ASSESSED IN HIS RANGE ONLY. FOR THE OTHER PERSONS ALSO SPECIFIC DETAILS IN THIS REGARD WERE FURNISHED. THE LD. CIT(A) HAS 12 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 CATEGORICALLY BROUGHT ON RECORD THAT, MOST OF THE AMOUNT H AS COME FROM THE FAMILY MEMBERS / G ROUP ENTITIES, WHICH ARE REGUL ARLY ASSESSED TO TAX WITH THE SAME AO AND THESE MATTERS COULD HAVE BEEN EXAMINED AND THE OTHER ALLEGATIONS OF THE AO HAS ALSO BEEN TURNED DOWN BY THE LD. CIT(A) ON COGENT REASONS AS DISCUSSED ABOVE . ONCE THAT IS SO, THEN THERE IS NO NEED FOR MAKING SUCH A WILD ALLEGATION THAT THE CAPACITY OF THE LENDERS HAS NOT BEEN PROVED. OTHER IMPORTANT FACT EMERGING FROM RECORDS AS NOTED BY THE LD. CIT(A) THAT THE AMOUNT OF RS.79,90,000/ - RECEIVED FROM THE 12 PARTIES CONSIST ING OF THE FAMILY MEMBERS /G ROUP ENTITIES HAVE BEEN REPAID BACK IN THE IMPUGNED YEAR ITSELF AND ON THIS ASPECT AS POINTED OUT BY THE LD. COUNSEL, ITAT IN THE CASE OF ASSESSEES BROTHER HARESH MAJETHIA HAS DELETED THE ADDITION ON THE GROUND THAT IF THE RECEIPTS AND REPAYMENT OF LOAN I S CORROBORATED BY THE LEDGER ACCOUNT AND BANK ENTRIES. HERE ALSO EXACTLY THE SAME FACT IS PERMEATING, THEREFORE, FOLLOWING THE TRIBUNAL ORDER THIS AMOUNT OF RS.79,90,000 HAS TO BE DELETED. ON OTHER AMOUNT OF RS.61.50 LAKHS ALSO, IT IS UNDISPUTED FACT THAT IT HAS BEEN RECEIVED FROM ONE PROPRIETORSHIP CONCERN OF THE ASSESSEE TO ANOTHER , THEREFORE, IT CANNOT BE ADDED AS INCOME OF THE ASSESSEE . THUS, ON THESE AMOUNTS OF LOANS NO ADVERSE INFERENCE CAN BE DRAWN AND HAS RIGHTLY BEEN DELETED BY THE LD. CIT(A). AS N OTED ABOVE, ALREADY AN AMOUNT OF RS.46,95,000/ - WHICH HAS BEEN ADDED IN THE HANDS OF THE LENDERS HAS ALREADY BEEN DIRECTED TO BE DELETED BY CIT(A) FOR WHICH THERE IS NO DISPUTE BY THE REVENUE. THUS, OUT OF RS.1,55,10,000/ - , SUM OF RS.79,90,000/ - AND RS.61 ,50,000/ - (AGGREGATING RS. 1,41,40,000) COULD NOT HAVE BE EN ADDED IN WAKE OF THE AFORESAID FACTS. REGARDING OTHER SMALL LOAN S ALSO, WE AGREE WITH THE FINDING OF THE CIT(A) THAT THE ENTIRE ONUS CAST UPON THE ASSESSEE IN WAKE OF EVIDENCES FILED HAVE BEEN FUL LY DISCHARGED AND ACCORDINGLY , NO ADDITION COULD BE MADE UNDER THE DEEMING PROVISION S OF SECTION 68. ACCORDINGLY, ORDER OF THE CIT(A) IS AFFIRMED AND THE IMPUGNED ISSUE RAISED BY THE REVENUE IS DISMISSED. 13 SHRI LILADHAR RAVJI MAJETHIA / THAKKAR ITA NO. 5059/MUM/2014 7. IN THE RESULT, APPEAL OF THE REVENUE STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH MAY, 2016 SD/ - SD/ - ( ) ( ) ( R C SHARMA ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 6 TH MAY, 2016 /COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 36 , MUMBAI. 4 ) THE COMMISSIONER OF INCOME TAX - CENTRAL - I , MUMBAI. 5 ) , , / THE D.R. A BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / , ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN, SR.PS