JIGAR PALM RESORTS P.LTD, MUMBAI V. ITO 8(2)(1), MUMBAI

ITA 7628/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8646 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 29-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 23-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure; Accommodation entries
• Section: 143(3); 68; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I,MUM BAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.7628/MUM/2014 FOR (ASSESSMENT YEAR : 2010-11 ) M/S JIGAR PALM RESORTS PVT. LTD. B-4/102, GOLDEN NEST CHS LTD, MAROL MAROSHI ROAD, MAPKHAN NAGAR, ANDHERI (EAST), MUMBAI-400059 PAN: AACCJ2182P VS. ITO-8(2)(1), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : MR. DEVENDRA JAIN (AR) REVENUE BY : MR. SAURABH KUMAR ( DR) DATE OF HEARING : 08.12.2016 DATE OF PRONOUNCEMENT : 10.02.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL BY ASSESSEE U/S 253 OF THE INCOME-TAX A CT (ACT) IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS) [FOR SHORT THE CIT(A)] 17, MUMBAI DATED 05.09.2014 FOR ASSESSMENT YEAR (AY) 2010-11. THE ASSESSEE HAS RAISED ONLY ONE GROUND OF APPEAL THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 10,00,000/- AS UNDISCLOSED INCOME U/S 68 OF THE ACT . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 30.09.2010 DECLARING TOTAL LOSS OF RS. 39,957/-. THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT ON 19.03.2013 U/S 143(3) OF THE ACT. THE AO WHILE MAKING THE ASSESSMENT TREATED THE SHARE CAPITAL OF RS. 10,00,0 00/- FROM MIHIR AGENCIES PVT. LTD. AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. ON APPEAL BEFORE THE LD. CIT(A), THE ADDITION WAS CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE 2 ITA NO. 4893/M/2 014 SKY LITE ELECTRO FIXTURES P. LTD. ON RECORD. THE LD. AR FOR THE ASSESSEE ARGUED THAT THERE WAS A SEARCH ACTION U/S 132 IN CASE OF MAHASAGAR SECURITIES PVT. LTD (MSPL) AND ITS GROUP COMPANIES. THE MCPL AND ITS GROUP CONCERN WERE PROMOTED BY MUKESH M. CHOKSI. IN THE SEARCH STATEMENT OF SH. MUKESH CHOKSI WAS RECORDED. SH. MU KESH CHOKSI MADE A GENERAL STATEMENT THAT HIS GROUP COMPANY WAS ENGAGED IN PRO VIDING ACCOMMODATION ENTRIES. AGAINST THE SAID BACKGROUND ENQUIRIES WERE CONDUCTE D BY INVESTIGATION WING OF INCOME-TAX DEPARTMENT BY CALLING INFORMATION U/S 13 3 FROM VARIOUS PARTIES. THE AO ON THE BASIS OF STATEMENT OF MUKESH CHOKSI MADE THE ADDITION U/68 OF THE ACT. HOWEVER, DURING THE ASSESSMENT M/S MIHIR AGENCIES D ULY CONFIRMED THE TRANSACTION. IN SUPPORT OF TRANSACTION, THE ASSESSEE-COMPANY SUB MITTED CONFIRMATION LETTER OF MIHIR AGENCIES, COPY OF PAN CARD, RETURN OF INCOME, BANK STATEMENT SHOWING THE TRANSACTION OF SHARE APPLICATION MONEY, COPY OF BAL ANCE SHEET OF ASSESSEE, COPY OF RETURN WITH ROC WITH ALLOTMENT OF SHARE AND COPY OF SHARE HOLDING PATTERN. THE ASSESSEE HAS ALSO FILED ALL THESE EVIDENCES BEFORE THE TRIBUNAL IN THE FORM OF PAPER BOOK. THE PAPER BOOK CONTAINED THE ENDORSEMENT THAT ALL THESE DOCUMENTS/ EVIDENCES WERE FILED BEFORE THE AUTHORITIES BELOW. THE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT THE AUTHORITIES BELOW DISREGARDED THE DOCUMENT ARY EVIDENCE AND MADE THE ADDITION SOLELY ON THE BASIS OF THIRD PARTY STATEME NT (STATEMENT OF MUKESH CHOKSI). THE LD. AR OF THE ASSESSEE FURTHER RELIED UPON THE DECISION OF HONBLE APEX COURT IN CIT VS. LOVELY EXPORT PVT. LTD. 216 CTR 195, DECISI ON OF CIT VS. PRANAV FOUNDATION LTD. 51 TAXMAN.COM 98 (MADRAS), CIT VS. KUBER PLORI TECH LTD. 2 TAXMAN 136 (DEL.) AND ACIT VS. ETC INDUSTRIES LTD. (2012) 21 TAXMAN.C OM 457 (INDORE). THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT IN CASE OF JAFF ERALI K. RATTONSEY VS ADIT [2006] 6 SOT 247 (MUM), RAVINDERKUMAR TOSHNIWAL VS DIT ITA NO.5302/M/2008, MAUSUMA S. TANKIWALA VS ITO [ITA NO.1867/M/2014], J YOTI D. SHAH VS ITO [ ITA NO.1843/M/2012] AND JATIN P. AJMERA VS ITO 7859/M/2 011, THE ADDITION ON THE BASIS OF STATEMENT OF MUKESH CHOKSI HAS BEEN DELETE D BY THE MUMBAI TRIBUNAL. THE LD AR FOR ASSESSEE ALSO ELIDE ON THE DECISION OF IN DORE TRIBUNAL IN ACIT VS ETC INDUSTRIES LTD [2012] TAXMAN.COM 457 (INDORE), DELH I TRIBUNAL IN MULTITEX FILTRATION ENGINEERS (P) LTD. VS DCIT [2007] 13 SOT 208 (DELH I). ON THE OTHER HAND, LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE ARGUED THAT IN A SEARCH AND SEIZURE ACTION U/S 132 IN CASE OF MAHASAGAR SECURITIES PVT. 3 ITA NO. 4893/M/2 014 SKY LITE ELECTRO FIXTURES P. LTD. LTD., IT WAS REVEALED THAT MUKESH CHOKSI (C.A.) FLO ATED 36 COMPANIES FOR PROVIDING BOGUS ENTRIES OF SHARE APPLICATION MONEY AND THE AS SESSEE-COMPANY WERE ALSO PROVIDED ACCOMMODATION ENTRIES. THE ASSESSEE HAS NO T DISCHARGE THE ONUS LIES UPON IT. THE ASSESSEE NOT SUPPLIED THE BALANCE-SHEET FOR THE YEAR UNDER CONSIDERATION. THE LD. DR FOR THE REVENUE PRAYED FOR DISMISSAL OF APPEAL. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND THE VARIOUS DECISION RELIED B Y THE ASSESSEE. THE AO DURING THE ASSESSMENT OBSERVED THAT ASSESSEE RECEIVED SHARE CA PITAL OF RS. 10,00,000/- FROM MIHIR AGENCIES. M/S MIHIR AGENCIES WAS PROMOTED BY MSPL GROUP (MUKESH CHOKSI). THE ASSESSEE WAS ASKED AS TO WHY THE SHAR E APPLICATION MONEY SHOULD NOT BE TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. IN RESPONSE TO THE NOTICE OF AO, THE ASSESSEE SUBMITTED THE CONFIRMATION LETTER OF M/S MIHIR AGENCIES P LTD , COPY OF PAN CARD, RETURN OF INCOME, BANK STATEMENT SHOWING THE TRANSACTION OF SHARE APPLICATION MONEY. THE ASSESSEE FURTHER CONTE NDED THAT THE ASSESSEE GENUINELY RECEIVED THE SHARE APPLICATION MONEY FROM MIHIR AGE NCY P. LTD. THE ASSESSEE HAS DISCLOSED THE SAME IN THE RECORD OF THE RETURN SUBM ITTED WITH ROC. THE REPLY OF THE ASSESSEE WAS NOT ACCEPTED BY AO. THE AO CONCLUDED T HAT THE ASSESSEE FOLLOWED THE MODUS OPERANDI AS EXPLAINED BY MUKESH CHOKSI. IN TH E INVESTIGATION CONDUCTED BY INVESTIGATION WING OF THE DEPARTMENT IT WAS EXPOSED THAT THIS GROUP WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. AND THE ASSESSEE H AS NOT REFUTED THE STATEMENT OF MUKESH CHOKSI, THE BALANCE SHEET OF MIHIR AGENCY P. LTD GATHERED DURING THE ASSESSMENT DO NOT REFLECT THE INVESTMENT AND TREATE D THE SHARE CAPITAL AS UNDISCLOSED INCOME OF THE ASSESSEE. DURING THE FIRST APPELLATE STAGE THE LD CIT(A) ALSO RELIED ON THE REPORT OF INVESTIGATION WING OF THE DEPARTMENT. THE LD CIT(A) FURTHER CONCLUDED THAT WHEN ANY SUM IS FOUND CREDITED IN THE BOOKS OF ASSESSEE IN PREVIOUS YEAR, AND SOURCE OF NATURE OF WHICH EITHER NOT EXPLAINED, OR OFFERED BY THE ASSESSEE IS NOT SATISFACTORY, THE SECTION 68 IS ATTRACTED, AND THE DEPARTMENT IS NOT REQUIRED TO PROVE ANYTHING FURTHER. WE HAVE SEEN THAT NEITHER THE AO NOR LD COMMISSIONER (APPEALS) GAVE ANY FINDING ON THE EVIDENCES FILED BY ASSESSEE DURING THE ASSESSMENT PROCEEDING. THE CASE OF ASSESSEE THROUGHOUT IS THAT THE AO SOLE LY RELIED UPON THE STATEMENT OF MUKESH CHOKSI. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE SHARE CAPITAL WAS UNDISCLOSED INCOME OF THE ASSESSE E. THE HONBLE BOMBAY HIGH 4 ITA NO. 4893/M/2 014 SKY LITE ELECTRO FIXTURES P. LTD. COURT IN CIT VS MUKESH RATILAL MAROLIA ITA NO. 456 OF 2007 DATED 7 TH SEPT 2007 , WHILE DEALING WITH THE SIMILAR ISSUE OF SALE OF SH ARE HELD AS UNDER : THE FACT THAT THE ASSESSEE HAS RECEIVED THE SAI D AMOUNT IS NOT IN DISPUTE. IT IS NEITHER THE CASE OF THE REVENUE THAT THIS YEAR I N QUESTION ARE STILL LYING WITH THE ASSESSEE NOR IT IS THE CASE OF THE REVENUE THAT AMOUNT RECEIVED BY THE ASSESSEE ON SALE OF THIS YEAR IS MORE THAN WHAT IS DECLARED BY THE ASSESSEE. THOUGH THERE IS SOME DISCREPANCY IN THE S TATEMENT OF THE DIRECTOR OF NASAS RICHMOND SECURITIES PRIVATE LIMITED REGAR DING THE SALE OF TRANSACTION, THE TRIBUNAL RELYING ON THE STATEMENT OF THE EMPLOYEE OF MAXUS RICHMOND SECURITIES PRIVATE LIMITED AND THAT THE SA LE TRANSACTION WAS GENUINE. 7. IN THESE CIRCUMSTANCES, THE DECISION OF ITAT IN HOLDING THAT THE PURCHASE AND SALE OF SHARE ARE GENUINE AND THEREFOR E, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE AMOUNT OF RS. 1 410 8484/-REPRESENTED UNEXPLAINED INVESTMENT UNDER SECTION 69 OF INCOME T AX ACT CANNOT BE FAULTED. FURTHER, THE HONBLE APEX COURT IN CIT VERSUS LOVEL Y EXPORTS (P) LIMITED [2008] 216 CTR 195 (SC), WHILE CONSIDERING THE ISSUE OF SH ARE APPLICATION MONEY HELD; IF SHARE APPLICATION MONEY IS RECEIVED BY THE A SSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAME ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN TH EIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW BUT THIS AMOUNT OF SHARE MON EY CANNOT BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE ASSE SSEE COMPANY . NOW, WE HAVE OBSERVED THAT BEFORE MAKING ADDITION U /S 68 THE AO HAS NEITHER GAVE ANY FINDING ON THE IDENTITY OF THE PERSON, SOURCE O F SHARE CAPITAL. THE AO STRAIGHTWAY CAME TO THE CONCLUSION ABOUT THE NON- GENUINENITY W ITHOUT BRINGING ANY MATERIAL ON RECORD AGAINST THE ASSESSEE. THE AO HAS NOT GIVEN A NY WATTAGE TO THE EVIDENCES FURNISHED BY THE ASSESSEE. IN THESE CIRCUMSTANCES W E DEEM IT APPROPRIATE TO RESTORE THE CASE TO THE FILE OF AO TO RECONSIDER THE CASE OF AS SESSEE AND GIVE FRESH FINDING BY SPEAKING ORDER ON THE EVIDENCES FURNISHED BY ASSESS EE, AFTER CONSIDERING THE ABOVE REFERRED DECISION OF HONBLE BOMBAY HIGH COURT IN M UKESH RATILAL MAROLIA (SUPRA) AND THE DECISION OF HONBLE APEX COURT IN VERSUS L OVELY EXPORTS (P) LIMITED (SUPRA). NEEDLESS, TO SAY THAT THE AO SHALL PROVID E SUFFICIENT OPPORTUNITY TO THE ASSESSEE BEFORE PASSING THE ORDER. THUS THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 5 ITA NO. 4893/M/2 014 SKY LITE ELECTRO FIXTURES P. LTD. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 0 TH FEBRUARY, 2017. SD/- SD/- (D.KARUNAKARA RAO) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 10/02/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/