ASSTT. CIT - CC-1(2), MUMBAI V. MANGAL BUILDHOME P. LTD., MUMBAI

ITA 567/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8245 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 14-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Accommodation entries; Retraction; TDS; Liquidation
• Section: 68; 132; 142(1); 143(2); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, HON'BLE JUDICIAL MEMBER ITA NO. 566/MUM/2021 (A.Y: 2012-13) DCIT – 1(1) 903, 9 th Floor Pratishtha Bhavan Old CGO Building Annexe Maharishi Karve Road Mumbai - 400020 v. M/s. Shree Ratna Mangal Jewels Pvt. Ltd., Shop No.302, 3 rd Floor Chinatamani Arcade, Dhanji Street Mumbai - 400003 PAN: AAPCS6589J (Appellant) (Respondent) ITA NO. 567/MUM/2021 (A.Y: 2013-14) DCIT – 1(1) 903, 9 th Floor Pratishtha Bhavan Old CGO Building Annexe Maharishi Karve Road Mumbai - 400020 v. M/s. Mangal Buildhome Pvt. Ltd., A.1701-1702, Lotus Corporate Park Goregaon (E), Mumbai - 400063 PAN: AAGCM5420M (Appellant) (Respondent) ITA NO. 537/MUM/2021 (A.Y: 2014-15) DCIT – 1(1) 903, 9 th Floor Pratishtha Bhavan Old CGO Building Annexe Maharishi Karve Road Mumbai - 400020 v. M/s. Mangal Bullion Pvt. Ltd., 202, 2 nd Floor Chinatamani Arcade Opp. Bombay Bullion Building Dhanji Street, Mumbai - 400003 PAN: AAGCM2672M (Appellant) (Respondent) 2 ITA NOs. 566, 567, 537 & 643/MUM/2021 (A.Y: 2012-13) M/s. Mangal Buildhome Pvt. Ltd., & others ITA NOs. 643/MUM/2021 (A.Y: 2012-13) DCIT – 1(1) 903, 9 th Floor Pratishtha Bhavan Old CGO Building Annexe Maharishi Karve Road Mumbai - 400020 v. M/s. Shree Mangal Jewels Pvt. Ltd., Shop No. 201, 2nd Floor Chinatamani Arcade Dhanji Street, Mumbai - 400003 PAN: AAOCS8945B (Appellant) (Respondent) Assessee by : Shri Neelkanth Khandelwal Department by : Shri Rakesh Garg Date of Hearing : 08.02.2022 Date of Pronouncement : 23.02.2022 O R D E R PER S. RIFAUR RAHMAN (AM) 1. These appeals are filed by the Revenue against different assessees of same group and different orders of the Learned Commissioner of Income Tax (Appeals)-47, Mumbai [hereinafter in short “Ld.CIT(A)”] for the Assessment Year 2012-13, 2013-14 and 2014-15. 2. Since the issues raised in all the appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. We are taking Appeal in the case of Mangal 3 ITA NOs. 566, 567, 537 & 643/MUM/2021 (A.Y: 2012-13) M/s. Mangal Buildhome Pvt. Ltd., & others Buildhome Pvt. Ltd., in ITA.No. 567/Mum/2021 for the A.Y. 2013-14 as the lead case. 3. Brief facts of the case are that, a search and seizure operation u/s.132(1) of the Act was conducted in the case of Shri Pravin Kumar Jain (for short “PKJ”) on 01.10.2013. During the course of search, companies belonging to Mangal Group were also covered, assessee is related to Mangal Group of Companies, the cases were centralized, accordingly, notices u/s. 153C of the Act was issued on 01.02.2016 which was duly served on the assessee. In response, assessee filed its return of income u/s. 153C of the Act on 05.02.2016 declaring the total income of ₹.2,71,470/-. Subsequently, notices u/s. 143(2) and 142(1) were issued and served on the assessee. In response, Ld. AR of the assessee attended and submitted the relevant information as called for. 4. Assessee is engaged in the construction business. In search and seizure operation conducted on the residential and business premise of the PKJ and on the basis of evidences recovered and statements of various persons recorded, Assessing Officer observed that it was found that PKJ was not doing any genuine business activity and was engaged in the activity of providing accommodation entries. During the assessment 4 ITA NOs. 566, 567, 537 & 643/MUM/2021 (A.Y: 2012-13) M/s. Mangal Buildhome Pvt. Ltd., & others proceedings it was found that assessee has also taken accommodation entries and purchase bills, accordingly, Assessing Officer required the assessee to explain why the unsecured loans taken from PKJ and associates should not be treated as accommodation entries and should not be added in the income of the assessee treating as unexplained cash credit. In response assessee filed detailed submissions before the Assessing Officer, along with the ledger account of the parties namely Atharv Business Pvt. Ltd., Duke Business Pvt. Ltd., Falak Trading Co. Pvt. Ltd., and Josh Trading Pvt. Ltd., and submitted that the loans were repaid during the assessment year and in the subsequent assessment year. Assessing Officer rejected the submissions filed by the assessee by relying on the findings made during search proceedings in the case of PKJ and statements recorded thereon and proceeded to treating the unsecured loans as income of the assessee u/s. 68 of the Act. 5. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and filed detailed submissions before him, Ld.CIT(A) after considering the detailed submissions and relying in the case of DCIT v. Smt Meghraj Sohanlal Jain in ITA.No. 4703/Mum/2017 dated 28.08.2019 allowed the ground raised by the assessee. 5 ITA NOs. 566, 567, 537 & 643/MUM/2021 (A.Y: 2012-13) M/s. Mangal Buildhome Pvt. Ltd., & others 6. Aggrieved revenue is in appeal before us raising following grounds in its appeal: - “1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.3,60,00,000/- made u/s 68 of the Income Tax Act, 1961 on account of bogus unsecured loans without appreciating that said loans are from companies controlled and managed by Shri Praveen Kumar Jain, who has confessed in his statement recorded on oath that he was engaged in providing accommodation entries and that his later retraction from the statement has been considered as an afterthought and hereby rejected. 2. Whether on the facts and circumstances of the the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs.3,79,232/- made on account of interest paid on bogus unsecured loans from companies controlled and managed by Shri. Praveen Kumar Jain. 3. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) was justified in not upholding the aforementioned addition made by the A.O. even though the modus operandi of obtaining accommodation entries in the form of unsecured loan is well established and that the transactions of loans should have been considered in light of surrounding circumstances, normal course of human conduct and preponderance of probability. 4. Whether on the facts and circumstances of the case and in law, the La CIT (A) erred in mot appreciating the decision in Nova Promoters and Finlease 342 ITR 169 (2012) wherein the Hon'ble Delhi High Court held that mere filing of PAN, ITRs, account confirmations and bank statements of the creditors is not sufficient enough to discharge the onus cast upon the assessee u/s 68 of the Income Tax Act, 1961 when there are sufficient evidences of accommodation entry. 5. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) erred in not appreciating the fact that presence of cash deposits in bank accounts of creditors before the loan transaction is not sine qua non in the process of providing accommodation entries as cash deposits are usually layered through multiple intermediate entities. 6 ITA NOs. 566, 567, 537 & 643/MUM/2021 (A.Y: 2012-13) M/s. Mangal Buildhome Pvt. Ltd., & others 6. Whether on the facts and circumstances of the case and in law, the La. CIT(A) erred in not upholding the additions made by the AO in view of the judgement of the Supreme Court in Principal Commissioner of Income Tax (Central)-l Vs. NRA Iron & Steel Pvt Ltd (arising out of SLP (Civil) No.29855 of 2018) wherein the Apex court held that the practice of conversion of un-accounted money must be subjected to careful scrutiny. 7. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in not upholding the additions made by the AO in view of the decision in Commissioner of Income Tax vs. Golcha Properties Pvt. Lid (in Liquidation) (1996) 136 CTR 222 (RAJ), wherein the Rajasthan High Court held that the genuineness of the transaction could be decided on the basis of primary facts on record and it is not necessary for the Department to bring a positive evidence.” 7. At the time of hearing, Ld. DR submitted that assessee has taken accommodation entries from PKJ group and he brought to our notice Page No. 9 of the Assessment Order to submitted that revenue has unearthed the evidences and facts at the time of search conducted u/s. 132 of the Act in the premises belonging to PKJ and his Associates. He brought to our notice various findings of the Assessing Officer in Para No. 5.1 to 5.2.2. Further, he brought to our notice Page No. 60 of the Assessment Order to highlight the summary of finding made by the department from the various statements recorded from those Dummy Directors / Employees operated under PKJ. He also took us through the various modus operandi operated by PKJ by taking through the Assessment 7 ITA NOs. 566, 567, 537 & 643/MUM/2021 (A.Y: 2012-13) M/s. Mangal Buildhome Pvt. Ltd., & others Orders wherein Assessing Officer has brought on record various findings unearthed by the investigation wing. 8. Further, he submitted that PKJ has accepted that he is giving accommodation entries to various parties. Further, he brought to our notice Page No. 5 of the Ld.CIT(A) order wherein he has discussed various issues involved in this appeal and also brought to our notice Ld.CIT(A) finding at Page No. 28 of the order wherein Ld.CIT(A) has discussed various issues in his finding that there is no immediate cash deposits and the onus is shifted to the Assessing Officer once the assessee fulfills and establishes the identity, creditworthiness and genuineness of the transaction and submitted that Ld.CIT(A) has not discussed any financial data but merely gave his finding. He opposed the finding of the Ld.CIT(A) on the issue of onus shifted to the Assessing Officer in this regard he submitted that in these kind of transactions the onus is always on the assessee to prove the genuineness of the transaction. Finally, he submitted that he relies in the case of DCIT v. M/s. Leena Power Tech Engineers Pvt. Ltd., in ITA.No. 1313/Mum/2020 dated 21.09.2021 and he brought to our notice Para No. 8 to 10 of the above Tribunal order. 8 ITA NOs. 566, 567, 537 & 643/MUM/2021 (A.Y: 2012-13) M/s. Mangal Buildhome Pvt. Ltd., & others 9. On the other hand, Ld. AR brought to our notice, facts of this case and finding of the Ld.CIT(A) at Para No. 7 of the order and submitted that the issue involved in this case is exactly similar to the case of DCIT v. Smt Meghraj Sohanlal Jain (supra) and he relied on the above case. Further Ld. AR submitted that the case law relied by the Ld.DR in the case of DCIT v. M/s. Leena Power Tech Engineers Pvt. Ltd., (supra), the issue involved in that case was relating to share capital not on the issue of unsecured loans. Further he submitted that in the given case unsecured loans has been repaid by the assessee. Therefore, facts are completely distinguishable to the case relied on by the Ld.DR. Finally, he relied on the finding of the Ld.CIT(A). 10. In the rejoinder Ld. DR submitted that in the case of DCIT v. Smt Meghraj Sohanlal Jain (supra) it was observed that the transaction is carried on with the PKJ in which PKJ has accepted that these are all bogus transactions, he wondered if it is accepted that these are all bogus how it matter whether it is repaid or not. 11. Considered the rival submissions and material placed on record, we observed that the search and seizure operation u/s. 132(1) was conducted in Mangal Group of cases on 01.10.2013 it is relevant to note that Mangal 9 ITA NOs. 566, 567, 537 & 643/MUM/2021 (A.Y: 2012-13) M/s. Mangal Buildhome Pvt. Ltd., & others group is owned by Shri Mangal jain and Shri Ajit Jain and family members and they hold major shares and directorship in companies of Mangal group. Assessee is also part of Mangal group which is owned by Shri Mangal Jain and others. In the case of Mangal group, Assessing Officer observed that assessee made additions related to transactions with PKJ group by way unsecured loans/ share application money/bogus purchases. We observed that in the instant case also assessee made similar additions which is relating to unsecured loans and it is pertinent to note that the above said unsecured loans were repaid during the assessment year or in subsequent Assessment Years. We observe from the record that in the case of DCIT v. Smt Meghraj Sohanlal Jain (supra) who is one of the director of the Mangal Group companies, in her case, the Coordinate Bench has decided the issue as below: “The appellant furnished the copies of the account confirmation of the lender companies, acknowledgement of income tax return of lender companies, and their audited financial statement, bank account of lender companies and affidavit of the lender companies confirming the loan transactions. The companies had also filed the return of income in the relevant assessment year. There were no where found immediate deposit of cash before issuance of cheques. The loan was given by account payee cheques through normal banking channels. The interest was also paid and TDS was also deducted thereon. The identity, credit-worthiness and genuineness of the transaction were not seems in genuine. The evidence is required to be rebutted by the AO on basis of some cogent and convincing reason on record. The AO did not conducted any further enquiry. The addition raised by AO u/ 68 of the Act was on the basis of the statement of Shri Praveen Kumar Jain. No material of any kind was found and recovered from the Shri Praveen Kumar Jain which 10 ITA NOs. 566, 567, 537 & 643/MUM/2021 (A.Y: 2012-13) M/s. Mangal Buildhome Pvt. Ltd., & others was if any related to the assesse. The evidence is also not on record to the fact that the assesse introduced his own money. Moreover, it also came into notice that Shri Praveen Kumar Jain was also director of one company M/s Mangal jewels Pvt Ltd who also mortgaged his own residential flat against the bank loan availed by M/s Mangal Jewels Pvt Ltd. This fact was also admitted by Shri Praveen Kumar Jain in his statement recorded on 01.10.2013 u/s 132(4) of the Act in the question no. 34 which specify all these contents. The appellant was also guarantor of the company in which shri Praveen kumar jain was the director namely M/s Nakshtra Business Pvt Ltd which showned that both were in business relationship. Moreover, we found that the identical issue has been decided by the Honble ITAT in which the sole statement of Shri Praveen Kumar Jain was not found justifiable to raise the addition u/s 68 of the Act. These are the following - cases 1. ITA No. 5589/M/2017 in case of ACIT Vs M.s Shreedham Builders 2. ITA No. 5954/M/2016 in case of M/s Shree Laxmi Estate Pvt Ltd. VS. ITO 3. ITA. No. 1477/M/2017 in case of ACIT Vs. M/s. Shree Ganesh Developers 4. ITA No. 3091 to 3096/M/2017 in case of ACIT Vs. Shri Ramesh Ramswarupdas Jindal. 5. ITA No. 930/M/2017 in case of ACIT Vs. M/s. H.K. Pujara Builders 6. ITA. No. 6006/M/2016 in case of ITO 12(2)(3) Vs. M.s GGF Industries Pvt Ltd 7. ITA No. 930/M/2017 In case of DCIT Vs Bairagra Builders. Taking into account all the facts and circumstances of the case, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interference with at this appellate stage. Accordingly, both the issues are decided in favour of the assesse against the revenue.” 12. Since the facts in the present appeal is exactly similar to the facts in the above case, respectfully following the said decision, we dismiss the 11 ITA NOs. 566, 567, 537 & 643/MUM/2021 (A.Y: 2012-13) M/s. Mangal Buildhome Pvt. Ltd., & others grounds raised by the revenue. The case law relied by Ld.DR is distinguishable with the facts on record. 13. The issues raised by the revenue in other appeals i.e., ITA No. 566/MUM/2021 (A.Y: 2012-13), ITA No. 537/MUM/2021 (A.Y: 2014-15) and ITA No. 643/MUM/2021 (A.Y: 2012-13) for other assessees are same, accordingly the grounds raised by the revenue in all the above said appeals are dismissed. 14. In the result, all the appeals filed by the revenue are dismissed. Order pronounced on 23.02.2022 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board. Sd/- Sd/- (PAVAN KUMAR GADALE) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 23.02.2022 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum