DOSHI HOLDINGS P. LTD, MUMBAI V. ASST CIT CIR 5(1), MUMBAI

ITA 7614/MUM/2012

• Counselvise Citation: 761419914 RSA 2012
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 07-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAYESH DADIA
• Assessee Lawyers: SALIL KAPOOR
• Keywords: Unexplained cash credit; Additional evidence; Accommodation entries; Onus to prove; Retraction; Revised return

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. . .. . . .. . , ,, , !'# !'# !'# !'# , ' ' ' ' BEFORE S/SH. I.P. BANSAL,JUDICIAL MEMBER & RAJENDRA ,ACCOUNTANT MEMBER /. ITA NO.7614/MUM/2012 , $ $ $ $ % % % % / ASSESSMENT YEAR-2009-10 DOSHI HOLDINGS PVT. LTD. 58 NARIMAN BHAVAN, NARIMAN POINT, MUMBAI 400021 VS. ASST. CIT CIR 5(1) AAYAKAR BHAVAN MUMBAI PAN: AABCM0243P ( &' / APPELLANT) ( ()&' / RESPONDENT) &' * ' &' * ' &' * ' &' * ' / / / / APPELLANT BY :SHRI. SALIL KAPOO R ()&' , * ' / RESPONDENT BY :SHRI. JAYESH DADIA $ , - $ , - $ , - $ , - / // / DATE OF HEARING : 07/10/2013 ./% , - / DATE OF PRONOUNCEMENT : 27/11/2013 PER RAJENDRA, A.M. CHALLENGING THE ORDER DATED 02.11.2012 OF THE CIT(A )-9,MUMBAI ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN T AXING RS.17,94,77,088/- BEING THE AMOUNT RECEIVED AS SHARE CAPITAL DURING THE YEAR AS UNDISC LOSED INCOME OF YOUR PETITIONER. THE ACTION IS UNJUSTIFIED, UNWARRANTED AND NOT BASED ON ANY EVIDE NCE. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED I N LAW AND ON THE FACTS OF THE CASE IN NOT ADMITTING AND CONSIDERING THE ADDITIONAL EVIDENCE I N THE FROM OF FINANCIAL ACCOUNTS OF M/S. MCGUFFIN LTD FILED DURING THE COURSE OF APPELLATE P ROCEEDINGS. THE ACTION IS UNJUSTIFIED, UNWARRANTED AND AGAINST THE SPIRIT OF LAW. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED I N LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN T AXING RS.17,94,77,088/- OVERLOOKING AND IGNORING THE DECISION OF THE HONBLE SUPREME COURT, JURISDICTIONAL HIGH COURT, CBDT CIRCULAR AND ADDITIONAL EVIDENCE. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF INVESTM ENTS,FILED ITS RETURN OF INCOME ON 22.09. 2009 DECLARING TOTAL INCOME OF RS.24.57 LAKHS.A REV ISED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.18.19 CRORES;AFTER ADDING THE AMOUNT RECEIVED TOWARDS SHARE CAPITAL INCLUDING SHARE PREMIUM OF RS.17.94 CRORES;WAS FILED ON 19.03. 2011 .THEREAFTER ASSESSEE-COMPANY FILED SECOND REVISED RETURN ON 30 TH MARCH 2011 DECLARING TOTAL INCOME OF RS.24.57 LAKH S. WHILE FINALISING THE ASSESSMENT,AO FOUND THAT A SURVEY ACTION U/S.133A O F THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES BY DDIT(INV.)UNIT IV,MUMBAI ON 28.12.2010, THAT DURING THE COURSE OF SURVEY OFFICERS 2 ITA NO.7614/M/2012 DOSHI HONDINGS PVT.LTD OF THE DEPARTMENT FOUND THAT CERTAIN DOCUMENTS INDI CATED THAT FOREIGN REMITTANCES BY WAY OF SHARE APPLICATION MONEY IN THE NAME OF M/S. MCGUFFI N LTD.(MGL),A BRITISH VIRGIN ISLAND COMPANY WERE RECEIVED BY THE ASSESSEE,THAT CHAIRMAN OF THE COMPANY WAS ASKED TO ESTABLISH THE IDENTITY OF MGL,THAT CHAIRMAN,SHRI MAITREYA DOS HI IN HIS STATEMENT RECORDED UNDER OATH ACCEPTED THAT HE COULD NOT ESTABLISH THE IDENTITY A ND GENUINENESS OF THE SAID COMPANY,THAT HE VOLUNTARILY DISCLOSED THE ENTIRE AMOUNT OF RS.26.83 CRORES AS UNDISCLOSED INCOME AND OFFERED THE SAME TO TAX,THAT SUBSEQUENTLY THE ASSESSEE RETRACTE D THE STATEMENT MADE BY THE CHAIRMAN. AFTER CONSIDERING RECEIPT OF SHARE-MONEY AND PREMIU M BY THE COMPANY-COMPANY DURING THE YEAR UNDER CONSIDERATION AS WELL AS THE STATEMENTS OF SH RI DOSHI,AO HELD THAT AMOUNT OF SHARES APPLI - CATION MONEY RECEIVED IN THE NAME OF MGL WAS NOT GE NUINE-RATHER SAME WAS BENAMI AND BOGUS, THAT SHRI DOSHI DID NOT PROVIDE DETAIL WITH REGARD TO MGL,THAT EVEN DURING THE COURSE OF ASSESS MENT-PROCEEDINGS ASSESSEE DID NOT FURNISH ANY DETAI LS RESPECT OF THE INVESTOR COMPANY I.E.MGL, THAT DETAILS;LIKE COPY OF LETTER OF OFFER,LETTER OF ACCEPTANCE,ADDRESSES OF SHARES HOLDERS, NAMES OF THE PERSON WHO HAD SIGNED SHARE APPLICATION FORMS; WERE NOT PRODUCED BEFORE HIM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AUTHORI SED REPRESENTATIVE(AR)OF THE ASSESSEE FILED LETTER DATED 08.11.2011 , BEFORE THE AO,WHEREBY IT WAS CONTENDED THAT DISCLOS URE MADE BY THE ASSESSEE COMPANY,AMOUNTING TO RS.26.83 CRORES,WAS M ADE UNDER DURESS AND PRESSURE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,AO HELD THAT REVISED RETURNS COULD BE FILED TO CORRECT ANY OMISSION OR WRONG STATEMENT IN THE ORIGINAL RET URN DUE TO A BONA FIDE INADVERTENCE OR A MISTAKE ON PART OF THE ASSESSEE WITHOUT WHICH BENEF IT TO THAT PROVISION COULD NOT BE CLAIMED,THAT IN THE CASE UNDER CONSIDERATION SUCH A SITUATION DI D NOT EXIST,THAT ASSESSEE HAD FILED A REVISED RETURN WITH A DELIBERATE INTENTION TO WITHDRAW THE SURRENDERED AMOUNT,THAT BY SURRENDERING THE MONEY AND BY AGREEING TO FILE A REVISED RETURN FOR SUCH AMOUNT ASSESSEE STOPPED THE REVENUE AUTHORITIES FROM MAKING FURTHER INVESTIGATION,THAT RETRACTION WAS MADE BY THE ASSESSEE AFTER LAPSE OF 90 DAYS FROM THE DATE OF MAKING AN OFFER O F VOLUNTARY DISCLOSURE IN THE STATEMENT RECORDED ON 28.12.2010 THAT THE STATEMENT BY SHRI D OSHI WAS VOLUNTARY STATEMENT, THAT ASSESSEE HAD ABSOLUTELY FAILED TO DISCHARGE THE BURDEN OF PR OVING THE FACT THAT STATEMENT WAS RECORDED UNDER PRESSURE,THAT SHRI DOSHI DID NOT BRING TO THE NOTICE OF THE HIGHER AUTHORITIES ABOUT THE PRESSURE OF THE SURVEY TEAM.AO FURTHER HELD THAT D ETAILS FILED ABOUT THE CORRESPONDENCE ENTERED INTO WITH THE RESERVE BANK OF INDIA(RBI)REVEALED TH AT PAPERS WERE SELF DECLARATORY AND FULFILLED THE STATUTORY REQUIREMENT OF LAW,THAT RBI VERIFIED THE AUTHENTICITY OF DECLARATION FILED BY THE ASSESSEE ,THAT RBI DID NOT LOOK INTO THE GENUINENES S OR CREDITWORTHINESS OF THE INVESTOR, THAT THERE WAS AN OBLIGATION ON THE PART OF THE ASSESSEE COMPA NY TO ESTABLISH THE GENUINENESS OF THE TRANSACTION BEFORE THE REVENUE AUTHORITY,THAT COMPL IANCE TO THE RBI NORMS DID NOT MEAN THAT MONEY RECEIVED BY THE ASSESSEE WAS GENUINE.FINALLY, HE HELD THAT THE ASSESSEE COULD NOT EXPLAIN AND GIVE TRUE AND CORRECT DETAILS OF MGL,THAT CREDI TWORTHINESS OF MGL AND JUSTIFICATION FOR OFFERING HIGHER PREMIUM FOR THE SHARES OF THE ASSES SEE COMPANY WAS NOT EXPLAINED BY IT,THAT MGL WAS A PAPER-COMPANY,THAT ONLY SHRI DOSHI NEW AB OUT THE INVESTMENT MADE BY MGL,THAT COMPANY HAD REVISED ITS RETURN OF INCOME AND SURREN DERED MONEY INVESTED BY MGL AS ITS OWN INCOME,THAT THEREAFTER AN ATTEMPT WAS MADE TO RETRA CT THE STATEMENT WITHOUT PRODUCING ANY CORROB -ORATIVE EVIDENCE.WITH REFERENCE TO A CONFIRMATION LETTER,DATED 12.01.2010 OF MGL,FILED BY THE ASSESSEE,AO HELD THAT IT WAS NEITHER ON THE LETTER HEAD OF THE COMPANY NOR WAS IT ORIGINAL PIECE OF PAPER, THAT IT WAS ON A COMPUTER GENERATED STATI ONARY,THAT IT HAD NO AUTHENTICITY VALUE.FINALLY, HE MADE AN ADDITION OF RS.17.94 CRORES U/S.69 OF TH E ACT TO THE TOTAL INCOME OF THE ASSESSEE. 3 ITA NO.7614/M/2012 DOSHI HONDINGS PVT.LTD 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R ALONG WITH THE STATEMENTS RECORDED BY THE INVESTIGATING WING OF THE DEPARTMENT,FAA HELD THAT ASSESSEE HAD INDULGED IN THE INTRODUCTION OF UNEXPLAINED MONEY INTO BOOKS OF ACCOUNT FOR THE A.Y S. 2007-08,2008-09 AND 2009-10,THAT IT FAILED TO EXPLAIN THE COMPLETE IDENTITY AND THE CRE DITWORTHINESS OF MGL,THAT IT FURTHER FAILED TO PROVE GENUINENESS OF THE IMPUGNED TRANSACTIONS,THAT THERE WAS NOTHING TO SHOW THAT OFFICERS OF SURVEY PARTY INTIMATED SHRI DOSHI,THAT SH. DOSHI HA D ADMITTED THAT ACCOMMODATION ENTRIES WORTH RS. 30.67 CRORES WERE TAKEN BY THE COMPANY IN THE N AME OF 16 SUPPLIERS OF GOODS WHO HAD NOT SUPPLIED ANY MATERIAL TO M/S. PREMIER LIMITED,THAT ASSESSEE DID NOT RETRACT THAT PORTION OF ADMISSION,THAT EVEN THE RESPONSIBLE AND EMPLOYEES O F SHRI DOSHI HAD ADMITTED THAT NO GOODS WERE RECEIVED FROM THE PARTIES CONCERNED AND THESE WERE ONLY ACCOMMODATION ENTRIES ENTERED IN TO BY THE EMPLOYEES UNDER THE INSTRUCTIONS OF SHRI DOSHI,THAT THERE WAS NOTHING ON RECORD TO SHOW THAT SURVEY PARTY THREATENED SHRI DOSHI TO DIS CLOSE UNEXPLAINED CASH CREDIT INTRODUCED IN THE NAME OF MGL,THAT ASSESSEE HAD NOT DISCHARGED TH E BURDEN OF PROOF REQUIRED TO PROVE THE EXISTENCE TO COERCION AND USE OF FORCE DURING THE C OURSE OF SURVEY,THAT THE STATEMENT OF SH.DOSHI WERE RECORDED U/S.131 OF THE ACT,THAT THE SURVEY WA S CONDUCTED AT THE BUSINESS PREMISES AND IN THE PRESENCE EMPLOYEES OF CHAIRMAN AND THE MANAGING DIRECTOR, THAT THE ASSESSEE FAILED TO OBTAIN ANY STATEMENT FROM HIS EMPLOYEES TO THE EFFE CT THAT THERE WAS IRREGULARITY IN THE SURVEY PROCEEDINGS OR IN THE STATEMENT OF SHRI DOSHI,THAT DELAYED DENIAL OF SH.DOSHI WAS NOT FREE FROM DOUBTS,THAT DELAYED RETRACTION;AFTER ABOUT 3 MONTHS FROM THE CLOSURE OF SURVEY OPERATION;WAS FILED TO ESCAPE THE CONSEQUENCES OF TAXES,INTEREST AND PENALTY,THAT ASSESSEE HAD NOT FILED ANY STATEMENT OR ANY SWORN AFFIDAVIT FROM ITS EMPLOYEE IN SUPPORT OF THE PLEA THAT STATEMENTS OF SHRI DOSHI WAS OBTAINED BY THE COERCION OR THREAT,THAT N OTHING WAS BROUGHT ON RECORD BEFORE HIM THAT WOULD INDICATE THAT ASSESSEE MADE EFFORTS TO BRING TO THE NOTICE OF THE HIGHER AUTHORITIES OF THE HIGH HANDEDNESS OF THE OFFICER CONDUCTING SURVEY,TH AT AFFIDAVIT OF SHRI DOSHI FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS AFTER THOUGHT, THAT BY MAKING THE DISCLOSURE OF SUBSTANTIAL AMOUNT ASSESSEE HAD STOPPED THE ENTIRE PROCESS OF F URTHER INVESTIGATION, THE SUBMISSION MADE BY THE ASSESSEE COULD NOT BE CONSIDERED VALID RETRACTI ON. 3.1. DURING THE COURSE OF APPELLATE PROCEEDINGS, ASSESSE E FURNISHED CERTAIN ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME TAX RULE 1962(RULES).F AA FORWARDED THE SAID EVIDENCES TO THE AO,VIDE HIS OFFICE LETTER DATED 07.06.2012.AO SENT HIS REPORT VIDE HIS LETTER DATED 09.07.2012,TO THE FAA WHO IN TURN FORWARDED THE SAID REMAND REPOR T TO THE ASSESSEE.ASSESSEE-COMPANY FURNISHED REBUTTAL OF THE REMAND REPORT VIDE ITS LE TTER DATED 13.08.2012.IT WAS ARGUED BY THE ASSESSEE THAT EARLIER MGL WAS RELUCTANT TO PART THE DETAILS, THAT LATER ON MGL FURNISHED FINANCIAL STATEMENTS,THAT RETRACTION OF STATEMENT AFTER THREE MONTHS WAS NOT UNUSUAL,THAT NO ADDITION COULD BE MADE ON THE BASIS OF CONFESSION, THAT REASONS FO R UNAVAILABILITY TO THE PRODUCE DOCUMENTARY EVIDENCES TO PROVE IDENTITY CREDITWORTHINESS AND GE NUINENESS OF THE TRANSACTION WAS CAUSED DUE TO RELUCTANCE ON PART OF MGL, THAT ASSESSEE COULD C OLLECTED SOME OF THE STATEMENT AND SAME WERE PRODUCE UNDER RULE 46A OF THE RULES. AFTER CONSIDER ING REMAND REPORT AND THE SUBMISSIONS OF THE ASSESSEE,FAA HELD THAT ADDITIONAL EVIDENCES WERE NO T ON THE LATTER-HEAD OF MGL,THAT THE ORIGINAL DOCUMENTS HAD NOT BEEN PRODUCED BEFORE HIM NOR BEFO RE THE AO, THAT ONLY XEROX COPIES HAD BEEN FURNISHED,THAT SUCH XEROX COPIES WOULD NOT CON STITUTE RELIABLE AND LEGAL MATERIAL EVIDENCES,THAT ASSESSEE HAD NOT FURNISHED THESE DOC UMENTS DURING THE SURVEY OR ASSESSMENT PROCEEDINGS,THAT IN VIEW OF NON-FURNISHING FOR ORIG IN -AL DOCUMENT XEROX COPIES COULD NOT BE ADMITTED AS ADDITIONAL EVIDENCES. HE FURTHER HELD T HAT AO HAD RIGHT TO CONSIDER THE RELIABILITY AND THE GENUINENESS OF THE TRANSACTION IN ADDITION TO I TS VALIDITY,THAT UNDISCLOSED INCOME HAS BEEN 4 ITA NO.7614/M/2012 DOSHI HONDINGS PVT.LTD SURRENDERED BY SHRI DOSHI U/S.131 OF THE ACT AND WA S INCORPORATED BY THE ASSESSEE-COMPANY IN THE REVISED RETURN.FINALLY,HE CONFIRMED THE ORDER O F THE AO. 4. BEFORE US,AR OF THE ASSESSEE-COMPANY SUBMITTED THAT IT COULD NOT PRODUCE THE ADDITIONAL EVIDENCES BEFORE THE AO BECAUSE MGL DID NOT FURNISH REQUIRED DOCUMENTS,THAT THE ASSESSEE WAS IN POSSESSION OF THE ORIGINAL DOCUMENTS COULD PROVE THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE MGL.HE FURTHER SUBMITTED TH AT MATTER SHOULD BE DECIDED BY THE AO/FAA ONLY AFTER CONSIDERING SAID EVIDENCES.DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT ASSESSEE HAD NOT PRODUCED THE EVIDENCES BEFORE THE AO OR THE FAA, THAT NO ORIGINAL DOCUMENT WAS PRODUCED EVEN DURING THE APPELLATE PROCEEDINGS. 4.1. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL BEFORE US.WE ARE OF THE OPINION THAT BEFORE DECIDING THE MATTER ON MERITS,ISSUE OF ADDIT IONAL EVIDENCES HAD TO BE ADDRESSED.DURING THE COURSE OF HEARING,BEFORE US,AR SUBMITTED THAT ASSES SEE WAS IN POSSESSION OF THE ORIGINAL PAPERS, THAT ASSESSEE WAS IN POSITION TO PRODUCE THE SAME B EFORE THE DEPARTMENTAL AUTHORITIES.WE FIND THAT ASSESSEE HAD NOT PRODUCED THE REQUIRED PAPERS AND DOCUMENTS BEFORE THE SURVEY TEAM/AO. EVEN BEFORE FAA,IT HAD FILED THE XEROX COPIES OF TH E PAPERS.FROM THE ORDER OF THE FAA, IT IS NOT CLEAR AS WHETHER THE XEROX COPIES WERE CERTIFIED BY THE ASSESSEE;AS TRUE COPY OF THE ORIGINAL; OR NOT.IN OUR OPINION,ORIGINAL DOCUMENTS HAVE TO BE CO NSIDERED BEFORE TAKING FINAL DECISIONS WITH REGARD TO THE ADDITIONS MADE BY THE AO.SO,IN THE IN TEREST OF JUSTICE,WE ARE REMANDING THE ISSUE TO THE FILE OF THE FAA FOR FRESH ADJUDICATION.ASSESSEE -COMPANY IS DIRECTED TO FURNISH ALL THE ORIGINAL PAPERS BEFORE THE FAA.WHILE FINALISING THE APPEAL B EFORE HIM,FAA MAY CONSIDER THE DECISION OF THE SPECIAL BENCH OF HYDERABAD BENCH TO BE DELIVERE D IN THE CASE OF JAGAN PUBLICATION. WITH THESE OBSERVATIONS,WE ALLOW THE APPEAL FILED B Y THE ASSESSE,IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. 0 -1 $0- , 23 4 ' !5 , !- 67. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER,2013 . '3 , ./% ' 8 9$ 27 $ $ $ $ , 2013 / , : ; SD/- SD/- ( . .. . . .. . / I.P.BANSAL ) ( !'# !'# !'# !'# / RAJENDRA) / JUDICIAL MEMBER ' ' ' ' /ACCOUNTANT MEMBER / MUMBAI, 9$ /DATE: 27. 11 .2013 PS-A.K.PATEL '3 '3 '3 '3 , ,, , (-< (-< (-< (-< ='<%- ='<%- ='<%- ='<%- / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT(A)/ > ? , 4. THE CONCERNED CIT / > ? 5. DR D BENCH, ITAT, MUMBAI / <@: (-$ . , . . . 6. GUARD FILE/ : A )<- (- //TRUE COPY// '3$ / BY ORDER, B / 6 ! DY./ASST. REGISTRAR , /ITAT, MUMBAI