SANDEEP MALOO, MUMBAI V. DCIT, CC-1(1), MUMBAI

ITA 613/MUM/2023

AI Insights

The case involves Sandeep Maloo, the appellant, who contested the additions made to his income by the AO under section 68 of the Income Tax Act, 1961, treating the unsecured loans received as unexplained cash credits. These loans were allegedly linked to a network of accommodation entry providers operated by Shri Praveen Kumar Jain. The primary contention was that the additions were made based on the general statements of Shri Jain, which were not specific to the appellant's case and were later retracted. The Tribunal examined the materials presented, including bank statements, tax returns, and loan confirmations, and found that the assessee had sufficiently established the legitimacy of the transactions. The Tribunal's decision was influenced by precedents where similar additions were not upheld based solely on the statements of accommodation entry providers without corroborative evidence.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130093 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 11-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 28-02-2023
• Other Referred Cases: Smt. Jyoti D Shah Vs. ITO 21 (1)(2), ITO 10(2)(4) Vs. M/s Superline Construction Pvt. Ltd., First Global Stock Broking Private Ltd. Vs. ACIT, M/s SDB Estate Private Limited Vs. ITO-5(3)(2), ACIT Vs. Tristar Jewellery Exports Pvt. Ltd., CIT Vs. Smt. Sushila Devi Khadaria, ITO Vs. Anant Shelters (P) Ltd., CIT vs. Orrisa Corporation (P) Ltd., Nemi Chand Kothari Vs. CIT, Murlidhar Lahorimal Vs. CIT, Hon'ble Supreme Court in the case of CIT vs. Orrisa Corporation (P) Ltd., Hon'ble Gujarat High Court in the case of Nemi Chand Kothari Vs. CIT, Hon'ble Gujarat High Court in the case of Murlidhar Lahorimal Vs. CIT, Hon'ble Mumbai High Court, Hon'ble ITAT Mumbai, Hon'ble ITAT Mumbai Bench 'E', Hon'ble ITAT Mumbai Bench 'C'
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries; TDS
• Section: 68; 132; 143(3); 153A; 264

Judgement Text

P a g e | 1 ITA No. 613/Mum/2023 Sandeep Maloo Vs. DCIT, CC-1(1) IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.613/Mum/2023 (A.Y. 2013-14) Sandeep Maloo Shree Radhey, 21-C, Barwara House, Civil Lines, Jaipur, Rajasthan- 302001 Vs. DCIT-CC-1(1) Pratishtha Bhawan, M.K. Road, Mumbai – 400 020 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AFCPM7905F Appellant .. Respondent [ Appellant by : Jayant Bhatt Respondent by : Kishore Dhule Date of Hearing 12.07.2023 Date of Pronouncement 17.08.2023 आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the ld. CIT(A)-47, Mumbai, dated 20.02.2023 for A.Y. 2013- 14. The assessee has raised the following grounds before us: “1. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) failed to comment on validity of the order passed u/s 153A of the Income Tax Act, 1961 in absence of any incriminating material found during search. 2. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in not commenting on the fact that an opportunity to cross examination has not been awarded to the appellant. 3. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the additions made by the P a g e | 2 ITA No. 613/Mum/2023 Sandeep Maloo Vs. DCIT, CC-1(1) Ld. AO without appreciating the fact that the repayment of the loan taken has already been made. 4. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.80,00,000/- by treating the loan received as unexplained cash credit u/s 68 of the Income Tax Act, 1961. 5. The Appellant craves leaves to add, to amend, alter, modify and/or withdraw any or all of the above grounds of appeal, each of which are without prejudice to one another.” 2. Fact in brief is that search and seizure action u/s 132 of the Act was conducted in the case of Shri Praveen Kumar Jain on 01.10.2013. The premises of the assessee was also covered for search u/s 132 of the Act. During the course of search carried out in the case of Praveen Kumar Jain it was found that he was engaged in the activity of providing accommodation entries in the guise of unsecured loan, share capital/purchase and sale bills without supplying any material. During the course of assessment proceedings it was found that assessee has also taken entries in the form of unsecured loan during the year under consideration from the associated concern of Shri Praveen Kumar Jain. On query, the assessee explained that he has not been provided the copy of statement given by Shri Praveen Kumar Jain and his other associate during the course of a search and seizure and later on. The assessee also submitted that general statement given by Shri Praveen Kumar Jain cannot be applied to his case without any other relevant evidences. The assessee explained that loans taken have been repaid back and also provided copies of letter dated 09.12.2015 vide which various details along with documents i.e ledger confirmation on the loan and advances taken, copy of bank statement confirmation along with tax return of the parties from whom the loan were taken. However, the AO has not agreed with the submission of the assesse and referred the statements of Shri Praveen Kumar Jain and others recorded during the course of search action in the case of Praveen Kumar Jain which provide P a g e | 3 ITA No. 613/Mum/2023 Sandeep Maloo Vs. DCIT, CC-1(1) that he was indulged in providing accommodation entries through his various concerns. The assessing officer further stated that during the year under consideration the assessee has obtained unsecured loan from the two concern namely Nakshtra Business Pvt. Ltd. and Olive Overseas Pvt.ltd. & both theses concern were operated and maintained by Shri Praveen Kumar Jain. The assessing officer observed that assesse company was one of the beneficiary who have obtained accommodation entries from 2 of the concern among the various concern being operated by Shri Praveen Kumar Jain. The detail of such unsecured loan obtained from these two concern is as under: Sr. No. Name of the entry provider company Nature of transaction Amount Date of transaction 1. Olive Overseas Pvt. Ltd. Unsecured Loan 50,00,000 24.12.2012 2. Nakshtra Business Pvt. Ltd. Unsecured loan 30,00,000 22.12.2012 The assessing officer after reiterating the findings of the search action in the case of Shri Praveen Kumar Jain held that assesse was a beneficiary who had obtained accommodation entries amounting to Rs.80,00,000/- from the concerns operated by Mr. Praveen Kumar Jain. Therefore, the assessing officer treated the total amount of accommodation entries of Rs.80,00,000/- as unexplained credit u/s 68 of the Act and added to the total income of the assessee. 3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assesse. 4. During the course of appellate proceedings before us the at the outset the ld. Counsel vehemently contended that the impugned addition u/s 68 was made without any incriminating material found and seized from the search action in the case of the assesse. The addition was made purely on the basis of general statement of Shri P a g e | 4 ITA No. 613/Mum/2023 Sandeep Maloo Vs. DCIT, CC-1(1) Praveen Kumar Jain and nowhere he has mentioned that loan availed by the assesse was not genuine. The ld. Counsel also referred that Shri Praveen Kumar Jain has also retracted his statement on 15.05.2014. On merit also the ld. Counsel submitted that during the course of assessment proceedings the assessee has produced the relevant supporting materials i.e confirmation from the lenders along with copy of bank statement and supporting documents like income tax returns etc and the loan obtained were repaid to the lenders. The ld. Counsel also submitted that AO has not brought any material on record to disprove these facts and just made the addition on the basis of retraced statement of Shri Praveen Kumar Jain. The ld. Counsel referred the following judicial pronouncements: In respect of Ground No.1: “i. Smt. Jyoti D Shah Vs. ITO 21 (1)(2) ITAT Bench ‘E’ ii. ITO 10(2)(4) Vs. M/s Superline Construction Pvt. Ltd. iii. First Global Stock Broking Private Ltd. Vs. ACIT, ITAT ‘C’ Bench Mumbai iv. M/s SDB Estate Private Limited Vs. ITO-5(3)(2) ITAT Mumbai Bench ‘E v. ACIT Vs. Tristar Jewellery Exports Pvt. Ltd. ITAT Mumbai Bench ‘E’ In respect of Ground No. 2: “i. CIT Vs. Smt. Sushila Devi Khadaria (supra) the Hon’ble Mumbai High Court ii. ITO Vs. Anant Shelters (P) Ltd. the Hon’ble ITAT Mumbai In respect of Ground No. 3: “i. Hon’ble Supreme Court in the case of CIT vs. Orrisa Corporation (P) Ltd. (159 ITR 0078) ii. Hon’ble Gujarat High Court in the case of Nemi Chand Kothari Vs. CIT (264 ITR 0254) iii. Hon’ble Gujarat High Court in the case of Murlidhar Lahorimal Vs. CIT (280 ITR 512) On the other hand, the ld. D.R supported the order of lower authorities. P a g e | 5 ITA No. 613/Mum/2023 Sandeep Maloo Vs. DCIT, CC-1(1) 5. Heard both the sides and perused the material on record. The assessment u/s 153A r.w.s 143(3) of the Act was completed on 21.03.2016 after making an addition of Rs.80,0000/- on account of unexplained unsecured loan obtained from the two concerns as referred supra alleged to be operated by Shri Praveen Kumar group who were engaged in providing accommodation entries. The assessee explained that there was no other evidence except the retracted general statement of Shri Praveen Kumar Jain. It is also contended that the assessing officer neither provided the copy of the statement of Shri Praveen Kumar Jain and not his associate nor offered cross examination of any of the them. It is also pointed out that there was no reference in any of the statement that Mr. Praveen Kumar Jain has particularly provided accommodation entries to the assesse. The assessee also claimed that identity of the creditors has been established on the basis of PAN Card, return of Income, account confirmation, genuineness of the transactions have been established on the basis of account confirmation and bank statements where all the loan were taken by account payee cheques and creditworthiness of the creditors were established on the basis of balance sheet and bank statement of the parties. The AO had not controverted these material facts with any relevant evidences. The ld. Counsel has also placed reliance on the decision of the Coordinate bench of the ITAT Mumbai in the case of DCIT Vs. Meghraj Sohanlal Jain (ITA No.4703/Mum/2017). The relevant operating part of the decision is reproduced as under: “On appraisal of the above mentioned order, we noticed that the CIT (A) took into consideration, the evidence adduced by the assessee in support of his claim. 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 nowhere found immediate deposit of cash before issuance of P a g e | 6 ITA No. 613/Mum/2023 Sandeep Maloo Vs. DCIT, CC-1(1) 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 seeming 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 conduct 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 Shri Praveen Kumar Jam which was if any related to the assessee. The evidence is also not on record to the fact that the assessee 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 Nakshatra Business Pvt. Ltd which showed that both were in business relationship. Moreover, we found that the identical issue has been decided by the Hon'ble ITAT in which the sole statement of Shri Praveen Kumar Jain as not found justifiable to raise the addition u/s 68 of the Act. There are following cases: 1. ITA No 5589/M/2017 in case of ACIT vs MS Shreedham Builders 2. ПTA 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 HK. Pujara Builders 6. ITA. No. 6006/M/2016 in case of ITO vs. Ms 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 CITA) has decided the matter of controversy judiciously correctly which is not liable to be interfered with at this appellate stage. Accordingly, both the issues are decided in favour of the assessee against the revenue.” The ld. Counsel has also placed reliance on the following judgment: Sr. No. Particulars Citation Deciding Authority 1. CIT Vs. Orrisa Corporation (P) Ltd. 159 ITR 0078 Supreme Court of India 2. Nemi Chand Kothari Vs. CIT 264 ITR 0254 High Court of Gauhati 3. Murlidhar Lahorimal Vs. CIT 280 ITR 0512 High Court of Gujarat P a g e | 7 ITA No. 613/Mum/2023 Sandeep Maloo Vs. DCIT, CC-1(1) 4. Labh Chand Bohra Vs. ITO 219 CTR 0571 Rajasthan High Court 5. CIT vs. Dwarkadish Investment Pvt. Ltd. 330 ITR 0298 Delhi High Court 6. CIT Vs. Value Capital Services Pvt. Ltd. 307 ITR 0334 Delhi High Court 7. Netscape Software Ltd. Vs. DCIT ITA/3852/M/2009 Mumbai ITAT 8. ACIT Vs. Divine (India) Infrastrcture Pvt. Ltd. ITA No. 2082/Del/2011 ITAT Delhi In view of the facts and considering the ratio of case laws as referred herein above, we are of the considered view that assessee has discharged initial burden by filing various documents to prove identity, genuineness of transactions and creditworthiness of the parties. However, the ld. CIT(A) without contrary proving the facts simply confirmed the addition made by the AO. Therefore, we allow the appeal of the assessee and direct the AO to delete the addition made towards unsecured loan u/s 68 of the Act. Accordingly, all the ground of appeal of the assessee no. 1 to 4 are allowed. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 17.08.2023 Sd/- Sd/- (Aby T Varkey) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 17.08.2023 Rohit: PS P a g e | 8 ITA No. 613/Mum/2023 Sandeep Maloo Vs. DCIT, CC-1(1) आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.