Shagun Jewellers P.Ltd, New Delhi V. ACIT, Circle-23(1), New Delhi

ITA 9890/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0618 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 31-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Keywords: Unexplained cash credit; Unexplained expenditure; Document seized; Tangible material; Accommodation entries; Documents seized; TDS
• Section: 69C; 143(3); 13; 153; 153C; 131; 68; 148; 12

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI G BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE, JUDICIAL M EMBER ITA NO. 9890/DEL/2019 [ASSESSMENT YEAR: 2010-11] M/S SHAGUN JEWELLERS [P] LTD VS. THE A.C.I.T A 3, /179, PASCHIM VIHAR CIRCLE 23 (1) WEST DELHI, NEW DELHI, NEW DELHI PAN: AAFCS 4608 A [APPELLANT] [RESPONDENT] DATE OF HEARING : 10.06.2020 DATE OF PRONOUNCEMENT : 16.06.2020 ASSESSEE BY : SHRI GAUTAM JAIN, ADV REVENUE BY : SHRI SARAS KUMAR, SR. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS DIRECTED TOWARDS TH E ORDER OF THE CIT(A) - 8, NEW DELHI DATED 19.11.2019 PERTAINING T O ASSESSMENT YEAR 2010-11. 2 2. THE ASSESSEE IS AGGRIEVED BY THE FOLLOWING ADDIT IONS: (I) RS. 2 CRORES AS UNEXPLAINED CASH CREDITS U/S 68 OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'T HE ACT' FOR SHORT]; II) RS. 5,40,000/- AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT; AND III) RS. 1,55,16,090/- AS UNEXPLAINED EXPENDITURE U /S 69C OF THE ACT. 3. IN ADDITION TO THE ABOVE, THE ASSESSEE HAS ALSO CHALLENGED THE VALIDITY OF THE ASSESSMENT ORDER FRAMED U/S 143(3) R.W.S 147 OF THE ACT ALLEGING THAT THE APPROPRIATE SECTION IS 153 OF THE ACT. 4. THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTA NCE OF THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENC ES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 1 8(6) OF ITAT RULES AND HAVE ALSO PERUSED THE JUDICIAL DECISIONS RELIED UPON BY BOTH THE SIDES 3 5. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH WAS CONDUCTED AT AHMEDABAD AND NEW DELHI IN WHICH CERTA IN DOCUMENTS WERE FOUND AND SEIZED BY THE SEARCH PARTY. FROM TH E DOCUMENTS FOUND, UNACCOUNTED MONEY LENDING BUSINESS OF SHRI A SHARAM BAPU AND HIS ASSOCIATES CAME INTO LIGHT. IT ALSO CAME TO TH E KNOWLEDGE OF THE REVENUE THAT THERE WERE SEVERAL BENEFICIARIES. STA TEMENT OF ONE SHRI DEVI DAS TIKAMDAS WAS RECORDED U/S 131A R.W.S 131 OF THE ACT ON 25 TH AND 26 TH SEPTEMBER, 2015. 6. IN HIS STATEMENT, SHRI DEVI DAS TIKAMDAS CHATTA NI STATED THAT WHOLE OF THE LOAN ACCOUNT WAS MAINTAINED BY ONE SHR I POPAT LAL VANI. SHRI DEVI DAS TIKAMDAS CHATTANI ALSO STATED THAT ON E SHRI SANT LAL AGGARWAL WAS HANDLER OF RS. 200 CRORES AT DELHI FRO M WHERE THE LOAN WAS DISBURSED TO AROUND 100 PARTIES, OUT OF WHICH 6 0 SUCH PARTIES WERE TRANSACTED THROUGH SHRI SANT LAL AGGARWAL. 7. THE ASSESSING OFFICER OF THE ASSESSEE WAS INFORM ED BY THE INVESTIGATION WING OF THE DEPARTMENT THAT FROM VERI FICATION OF DOCUMENTS SEIZED, IT CLEARLY APPEARS THAT SHRI SANT LAL AGGARWAL RECEIVED CASH LOANS FROM SHRI ASHARAM AND FURTHER D ISBURSED TO OTHER 4 PARTIES AND THE ASSESSEE IS ONE OF THE BENEFICIARIE S. ACCORDING TO THE ASSESSING OFFICER, THE FOLLOWING CASH LOANS WERE GI VEN TO THE ASSESSEE: DATE BENEFICIARY NAME DEBIT CREDIT GROUP CONTRA 01.07.2009 SHAGUN JEWELLERS 0 72,00,090 GOVIND DELHI 01.07.2009 SHAGUN JEWELLERS PVT. LTD. 72,00,090 0 GOVIND INTEREST RECEIVED 01.07.2009 SHAGUN JEWELLERS 75,00,000 0 GOVIND DELHI 29.03.2010 SHAGUN JEWELLERS 0 83,16,000 GOVIND DELHI 29.03.2010 SHAGUN JEWELLERS PVT. LTD. 83,16,000 0 GOVIND INTEREST RECEIVED 29.03.2010 SHAGUN JEWELLERS 83,00,000 0 GOVIND DELHI TOTAL 3,13,16,090 1,55,16,090 8. ON THE STRENGTH OF THE INFORMATION RECEIVED FROM THE ADIT, INV, THE ASSESSING OFFICER ASSUMED JURISDICTION U/S 148 OF THE ACT AND ACCORDINGLY, STATUTORY NOTICES WERE ISSUED AND SERV ED UPON THE ASSESSEE. 9. SINCE THE DOCUMENTS WERE FOUND AT THE PREMISES O F THE SEARCHED PERSON, THEY DID NOT BELONG TO THE ASSESSEE AND THE TRANSACTIONS RECORDED IN THE SEIZED DOCUMENTS WERE IN THE BOOKS OF THE SEARCHED PERSON AND, THEREFORE, INFORMATION RECEIVED FROM TH E INVESTIGATION 5 WING WAS A TANGIBLE MATERIAL EVIDENCE WHICH PROMPTE D THE ASSESSING OFFICER TO INITIATE PROCEEDINGS U/S 148 OF THE ACT. 10. IN OUR CONSIDERED OPINION, PROVISIONS OF SECTIO N 153C OF THE ACT DO NOT APPLY ON THE FACTS OF THE CASE IN HAND, AND THEREFORE, JURISDICTIONAL ISSUE CHALLENGED BY THE ASSESSEE DOE S NOT HOLD ANY WATER. ACCORDINGLY, GROUND NO. 2 WITH ALL ITS SUB GROUNDS IS DISMISSED. 11. COMING TO THE MERITS OF THE ADDITIONS, DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS TAKEN LOAN FROM M/S INDEX SECURITIES AND RESEAR CH PVT LTD AMOUNTING TO RS. 2 CRORES. THE ASSESSEE WAS ASKED TO EXPLAIN THE CREDIT IN LIGHT OF PROVISIONS OF SECTION 68 OF THE ACT. THE ASSESSEE FURNISHED CONFIRMATIONS FROM M/S INDEX SECURITIES A ND RESEARCH PVT LTD ALONGWITH ITS TAX RETURNS AND BANK STATEMENT. THE DIRECT EVIDENCES FURNISHED BY THE ASSESSEE DID NOT FIND ANY FAVOUR W ITH THE ASSESSING OFFICER WHO CONCLUDED BY MAKING ADDITION OF RS. 2 C RORES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 6 12. THE ENTIRE ADDITION IS BASED UPON THE STATEMENT OF SHRI DEVI DAS TIKAMDAS CHATTANI. THE ASSESSING OFFICER WAS OF TH E FIRM BELIEF THAT THE ASSESSEE IS ONE OF THE ENTITIES WHO HAS RECEIVE D CREDITS AMOUNTING TO RS. 2 CRORES AND IS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES FROM M/S INDEX SECURITIES AND RESEARCH PVT LTD. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAS ROUTED ITS UNEXPLAINED INCOME THROUGH M/S INDEX SECURITIES AND RESEARCH PVT LTD. WHILE MAKING ADDITIONS, THE ASSESSING OFFICER DREW SUPPORT FROM THE STATEMENT OF SHRI VINOD KUMAR TANEJA AND SHRI CHANCHAL TANEJA WH O ARE DIRECTORS OF M/S INDEX SECURITIES AND RESEARCH PVT LTD. 13. ACCORDING TO THE ASSESSING OFFICER, BOTH THE DI RECTORS DID NOT HAVE ANY KNOWLEDGE ABOUT THE FINANCIALS OF M/S INDE X SECURITIES AND RESEARCH PVT LTD. THE ASSESSING OFFICER OBSERVED T HAT M/S INDEX SECURITIES AND RESEARCH PVT LTD IS NOT DOING ANY BU SINESS ACTIVITY IN REALITY AND IS MERELY A PAPER ENTITY. 14. AS MENTIONED ELSEWHERE, THE ASSESSEE HAS FURNIS HED COMPLETE DETAILS OF M/S INDEX SECURITIES AND RESEARCH PVT LT D. COPY OF CONFIRMATION OF ACCOUNTS IS PLACED AT PAGE 105 OF T HE PAPER BOOK WHICH IS AS UNDER: 7 8 15. ON A PERUSAL OF THE BANK STATEMENT OF THE ASSES SEE EXHIBITED AT PAGES 132 TO 135 OF THE PAPER BOOK, IT CAN BE SEEN THAT RS. 2 CRORES WERE CREDIT THROUGH RTGS ON 11.09.2009. RS. 1.80 C RORES WAS REPAID ON 10.12.2009 AND RS. 20 LAKHS WAS REPAID ON 12.12. 2009 AND INTEREST OF RS. 4,80,000/- WAS PAID ON 22.12.2009 AFTER DEDU CTING TDS. 16. COMING TO THE FINANCIAL OF M/S INDEX SECURITIES AND RESEARCH PVT LTD., THE BALANCE SHEET READS AS UNDER: 9 10 17. IT CAN BE SEEN FROM THE AFORE EXTRACTED BALANCE SHEET THAT M/S INDEX SECURITIES AND RESEARCH PVT LTD. WAS HAVING A VAILABLE FUNDS AMOUNTING TO RS. 1,556 LAKHS. 18. THE RETURNED INCOME OF M/S INDEX SECURITIES AND RESEARCH PVT LTD. AS PER ITR AT PAGE 104 OF THE PAPER BOOK WAS R S. 67.79 LAKHS ON WHICH IT HAS PAID RS. 20.94 LAKHS AS TAX, WHICH WAS ADJUSTED AGAINST TDS AMOUNT OF RS. 59.74 LAKHS. 19. THESE CLINCHING EVIDENCES DEMOLISH THE ALLEGATI ON OF THE ASSESSING OFFICER THAT M/S INDEX SECURITIES AND RES EARCH PVT LTD IS MERELY A PAPER COMPANY. FURTHER, THE DIRECTORS OF THE COMPANY APPEARED BEFORE THE ASSESSING OFFICER ALONGWITH SHR I SANT LAL AGGARWAL WHO HAPPENS TO BE A SHARE HOLDER OF THE COMPANY. I T WOULD NOT BE OUT OF PLACE TO MENTION THAT SHRI SANT LAL AGGARWAL AND SHRI CHANCHAL TANEJA ALSO APPEARED DURING THE REMAND PROCEEDINGS AND WERE SUBJECTED TO CROSS EXAMINATION BY SHRI SUBHASH AGGA RWAL, DIRECTOR OF THE APPELLANT COMPANY. 11 20. A PERUSAL OF THE STATEMENT OF SHRI SANT LAL AG GARWAL SHOWS THAT HE HAS CATEGORICALLY STATED THAT M/S INDEX SECURITI ES AND RESEARCH PVT LTD IS A GROUP COMPANY IN WHICH HE IS A SHARE HOLDE R AND THE SAID COMPANY IS NBFC COMPANY, WHICH IS ENGAGED IN THE BU SINESS OF GIVING AND TAKING LOANS. IN HIS STATEMENT, SHRI SANT LAL ALSO AFFIRMED THE LOAN TRANSACTION WITH THE APPELLANT COMPANY WHICH WAS RE AFFIRMED BY HIM DURING THE CROSS EXAMINATION. WHILE AFFIRMING THE LOAN TRANSACTION, SHRI SANT LAL AGGARWAL CATEGORICALLY DENIED ANY CAS H TRANSACTION WITH THE APPELLANT COMPANY. 21. THERE IS NO DISPUTE THAT U/S 68 OF THE ACT, THE INITIAL ONUS IS UPON THE ASSESSEE TO EXPLAIN THE IDENTITY, GENUINENESS O F THE TRANSACTION AND THE CAPACITY OF THE LENDER. EVIDENCES DISCUSSE D HEREINABOVE CLEARLY SHOW THAT THE ASSESSEE HAS SUCCESSFULLY EST ABLISHED THE IDENTITY, GENUINENESS OF THE TRANSACTION AND CAPACI TY OF THE COMPANY M/S INDEX SECURITIES AND RESEARCH PVT LTD. 22. THESE DIRECT AND CLINCHING EVIDENCES CANNOT BE BRUSHED ASIDE LIGHTLY. THE ENTIRE ADDITIONS HAVE BEEN MADE ON SUR MISES AND ASSUMPTIONS REVOLVING AROUND THE STATEMENT OF ONE S HRI DEVI DAS TIKAMDAS CHATTANI IGNORING THE FACT THAT THE DIRECT OR OF M/S INDEX 12 SECURITIES AND RESEARCH PVT LTD ALONGWITH MAJOR SHA RE HOLDER SHRI SANT LAL AGGARWAL APPEARED BEFORE THE ASSESSING OFFICER. FINANCIALS WERE AVAILABLE WITH THE ASSESSING OFFICER. THE ASSESSING OFFICER/CIT(A) SHOULD NOT HAVE DISCARDED THE EVIDENCES. IN OUR CO NSIDERED OPINION, THE ASSESSEE HAS SUCCESSFULLY DISCHARGED THE ONUS C AST UPON IT U/S 68 OF THE ACT. WE, ACCORDINGLY, DO NOT FIND ANY MERIT IN THE ADDITION OF RS. 2 CRORES AND THE SAME IS HEREBY DELETED. 23. ADDITION OF RS. 5,40,000/- U/S 69C IS DIRECTLY RELATED TO THE LOAN AMOUNT OF RS. 2 CRORES AS THE SAME IS INTEREST PAID BY THE ASSESSEE TO THE COMPANY AND THE SAME IS ALSO DIRECTED TO BE DEL ETED. 24. BEFORE CLOSING, IT CAN BE SEEN FROM THE CONFIRM ATION EXHIBITED ELSEWHERE THAT THE LOAN WAS TAKEN ON 11.09.2009 AND WITHIN THREE MONTHS, THE LOAN WAS REPAID. ALL THE TRANSACTIONS HAVE BEEN DONE THROUGH BANKING CHANNEL. ACCORDINGLY, GROUND NO 3 WITH ALL ITS SUB GROUNDS AND GROUND NO. 4 ARE ALLOWED. 25. COMING TO THE MERITS OF ADDITION OF RS. 1,55,16 ,090/-, ONCE AGAIN, THE ENTIRE ADDITION REVOLVES AROUND THE STAT EMENT OF SHRI DEVI DAS TIKAMDAS CHATTANI. IN HIS STATEMENT, SHRI DEVI DAS TIKAMDAS 13 CHATTANI STATED THAT SHRI SANT LAL AGGARWAL IS HAND LER AND IS THE MAIN PERSON FOR DISBURSING CASH LOAN TO 60 PARTIES. THE ALLEGED CASH LOANS GIVEN TO THE ASSESSEE IS ALREADY EXHIBITED ELSEWHER E AT PARA 7 HEREINABOVE. 26. AS MENTIONED ELSEWHERE, THE FOUNDATION OF THE I MPUGNED ADDITION IS THE STATEMENT OF SHRI DEVI DAS TIKAMDAS CHATTANI. EXCEPT FOR THAT, THERE IS NO DIRECT EVIDENCE BROUGHT ON RE CORD TO SHOW THAT ANY CASH TRANSACTIONS TOOK PLACE BETWEEN THE ASSESS EE AND THE SAID PERSON. 27. ON THE CONTRARY, THE STATEMENT OF SHRI SANT LAL AGGARWAL WHICH IS PART OF THE ASSESSMENT ORDER AND IS EXTRACTED AT PA GES 17 TO 24 OF THE ASSESSMENT ORDER SHOWS THAT SHRI SANT LAL AGGARWAL, ANSWERING TO QUESTION NO. 13, EMPHATICALLY STATED THAT HE DOES N OT KNOW WHO SHRI DEVI DAS TIKAMDAS CHATTANI IS. ONCE AGAIN, ANSWERI NG TO QUESTION NO. 18, SHRI SANT LAL AGGARWAL STATED THAT HE DOES NOT KNOW WHO IS SHRI DEVI DAS TIKAMDAS CHATTANI. ANSWERING TO QUESTION NO. 19, SHRI SANT LAL AGGARWAL STATED THAT HE DOES NOT KNOW SHRI DEVI DAS TIKAMDAS CHATTANI AND NEVER HANDLED RS. 200 CRORES AND NO SU CH TRANSACTION WAS DONE BY HIM EXCEPT SELLING RICE TO THE ASHRAM. IN THE VERY SAME 14 STATEMENT, SHRI SANT LAL AGGARWAL ACCEPTED THE TRAN SACTION OF M/S INDEX SECURITIES AND RESEARCH PVT LTD AND THE APPEL LANT COMPANY. 28. THE ASSESSING OFFICER NEVER CONFRONTED SHRI DEV I DAS TIKAMDAS CHATTANI TO SHRI SANT LAL AGGARWAL. IF THE STATEME NT OF SHRI DEVI DAS TIKAMDAS CHATTANI IS TO BE BELIEVED, THEN ON THE SA ME FACTS, STATEMENT OF SHRI SANT LAL AGGARWAL CANNOT BE IGNOR ED OR BRUSHED ASIDE LIGHTLY. MERELY BECAUSE THE STATEMENT OF SHRI SANT LAL GOES IN FAVOUR OF THE ASSESSEE, CANNOT BE A REASON TO DISBELIEVE THE SAME. AS MENTIONED ELSEWHERE, THERE IS NO DIRECT EVIDENCE BR OUGHT ON RECORD WHICH COULD SUGGEST THAT SOME CASH TRANSACTIONS TOO K PLACE BETWEEN THE ASSESSEE AND THE SEARCHED PERSON. THE OBSERVAT IONS MADE BY THE ASSESSING OFFICER AT PAGE 25 OF THE ASSESSMENT ORDE R CLEARLY SHOW THAT THE ENTIRE ADDITION HAS BEEN MADE ON SURMISES AND C ONJECTURES. THE RELEVANT PARA OF THE ASSESSMENT ORDER READS AS UNDE R: FROM ABOVE IT IS CLEAR THAT M/S. SHAGUN JEWELLERS HAS HAD TRANSACTIONS WITH M/S INDEX SECURITIES & RESEARCH P UT LTD WHICH WAS A CONDUIT COMPANY MANAGED BY MR.SANTLAL AGGARWA L WHO HAS FURTHER ACTED ON BEHALF OF SH. ASHARAM BAPU. HENCE, IT CANNOT BE RULED OUT THAT CASH LOAN WERE RECEIVED BY THE ASSES SEE FROM SANTLAL AGGARWAL. MOREOVER, THE SEIZED MATERIAL RET RIEVED , CLEARLY INDICATES THAT THE ASSESSEE COMPANY HAS PAID RS. 1, 55,16,090/- IN CASH ON ACCOUNT OF INTEREST ON SUCH CASH LOAN. 15 29. CONSIDERING THE FACTS OF THE CASE IN HAND, IN T HE LIGHT OF STATEMENT OF SHRI SANT LAL AGGARWAL, WE DO NOT FIND ANY MERIT IN THE IMPUGNED ADDITION AND THE SAME IS DIRECTED TO BE DE LETED. ACCORDINGLY, GROUND NOS. 4 AND 5 ARE ALLOWED. 30. GROUND NO. 7 RELATES TO LEVY OF INTEREST U/S 23 4B OF THE ACT. LEVY OF INTEREST IS MANDATORY, THOUGH CONSEQUENTIAL . THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE INTEREST AS PER PR OVISIONS OF LAW. 31. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 9890/DEL/2019 IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.06. 2020. SD/- SD/- [SUCHITRA KAMBLE ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16 TH JUNE, 2020. VL/ 16 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ASST. REGISTRAR 4. CIT(A) ITAT, NEW DELHI 5. DR DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER