DCIT 10(1), MUMBAI V. SINGHAL GLOBAL LTD, MUMBAI

ITSSA 17/MUM/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8075 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 16-05-2011
• Assessment Year: misc
• Appeal Filed On: 26-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Assessee Lawyers: D R RAIYANI
• Keywords: Accommodation entries
• Section: 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER IT(SS)A NO: 17/M/2010 BLOCK PERIOD (01-04-1993 TO 07-12-1999) DCIT 10(1), SINGHAL GLOBAL LTD., R.NO. 455, AYAKAR BHAVAN, VS 176 SINGHAL SWAROOP HOUSE, M.K. ROAD, ST ROAD, SAANTACRUZ-(E), MUMBAI 400 020. MUMBAI 400 098. PAN; AAACS5251L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.P. TRIVEDI (D.R) RESPONDENT BY : SHRI D.R. RAIYANI DATE OF HEARING : 01-08-2011 DATE OF PRONOUNCEMENT: 12-08-2011 ORDER PER V. DURGA RAO, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-21 DATED 29 TH DECEMBER, 2009 FOR THE BLOCK PERIOD FROM 01- 04-1993 TO 07-12-1999). 2. FACTS ARE IN BRIEF THAT THERE WAS A SEARCH ACTIO N HAD TAKEN PLACE AT THE BUSINESS AND RESIDENTIAL PREMISES OF ONE SHRI M AHINDRA SHAH GROUP ON 7 TH DECEMBER, 1999. DURING THE COURSE OF SEARCH, IT W AS FOUND THAT (LATE) SHRI MAHINDRA SHAH WAS INDULGING IN ACTIVITIES OF I SSUING ACCOMMODATION ENTRIES OF LOANS. IN THE STATEMENTS RECORDED, HE C ONFESSED THAT HE WAS IN THE BUSINESS OF ISSUING CHEQUES AGAINST CASH. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS FOUND TO BE A BENEFI CIARY OF SUCH TRANSACTIONS, THEREFORE, A NOTICE UNDER SECTION 158 BD WAS ISSUED ON 18 TH ITA 17/M/2010 SINGHAL GLOBAL LTD. 2 MARCH, 2005. IN RESPONSE TO THE NOTICE ISSUED BY T HE ASSESSING OFFICER, THE ASSESSEE HAD FILED RETURN OF INCOME FOR THE BLO CK PERIOD DECLARING NIL UNDISCLOSED INCOME. 3. THE ASSESSING OFFICER, ON PERUSAL OF APPRAISAL R EPORT, NOTICED THAT THE ASSESSEE HAD TAKEN LOANS FROM LATE SHRI MAHINDR A SHAH IN FY 1998-99 RS. 5,00,000/- FROM PARAMOUNT TRADING COMPANY, AND IN FY 1998-99 RS. 5,00,000/- FROM MADHU PURI CORPORATION. THE ASSESS EE HAD EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE AFORESAID LOA NS OF RS. 5,00,000/- EACH WERE TAKEN FROM THE ABOVE TWO CONCERNS THROUGH ACCO UNT PAYEE CHEQUES AND INTEREST ALSO PAID THROUGH ACCOUNT PAYEE CHEQUE S. TO THIS EFFECT, THE ASSESSEE HAD FILED BEFORE THE ASSESSING OFFICER THE DETAILS OF CHEQUE NUMBERS, DATES AND NAME OF THE BANKS, ON WHICH CHEQ UES WERE DRAWN, AND DEPOSITED. THE ASSESSEE ALSO FILED COPIES OF BA NK STATEMENTS BEFORE THE AO AND EXPLAINED THAT WHILE PAYING THE INTEREST TDS WAS ALSO DEDUCTED AND DEPOSITED INTO THE GOVERNMENT ACCOUNT. THE ASSE SSEE FURTHER SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE ABO VE SAID TWO AMOUNTS WERE BORROWED FROM THE VARIOUS COMPANIES IN THE NOR MAL BUSINESS PRACTICE AND EVEN ASSESSEE BARROWED SOME OTHER AMOUNTS ALSO. 4. HOWEVER, THE ASSESSING OFFICER HAD NOT CONVINCED WITH THE REPLY GIVEN BY THE ASSESSEE AND OBSERVED THAT SHRI MAHEND RA SHAH DURING THE COURSE OF THE SEARCH ADMITTED THAT IF ANY PARTY WAN TS CHEQUES FROM HIM, HE PAYS AMOUNTS AFTER CHARGING 0.20% COMMISSION FOR RU PEE. HE ALSO ADMITTED THAT ANY PERSON WANTS ENTRY OF RS. 5,00,00 0/- , THEN, HE USED TO TAKE CASH AGAINST SUCH ENTRY AND AFTER DEDUCTING T HE COMMISSION CHEQUES OF RS. 5,00,000/- WAS TO BE ISSUED. ON THE BASIS O F THE ABOVE STATEMENT ITA 17/M/2010 SINGHAL GLOBAL LTD. 3 GIVEN BY MR. MAHENDER SHAH, THE ASSESSING OFFICER H AD PROCEEDED FURTHER AND OBSERVED THAT DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS THE ASSESSEE HAD NOT FILED ANY CONFIRMATION AS THE ONUS LIES ON THE ASSESSEE U/S 68 OF THE ACT TO PROVE IDENTITY, GENUINENESS AN D CREDIT WORTHINESS OF THE DEPOSITORS, WHICH WAS NOT DISCHARGED BY THE ASS ESSEE EVEN AFTER REPEATED OPPORTUNITIES PROVIDED TO ASSESSEE. ACCOR DINGLY, THE ASSESSING OFFICER HAD COMPLETED THE ASSESSMENT BY TREATING TH E LOAN AMOUNT OF RS. 10,00,000/- AS UNDISCLOSED INCOME FOR THE BLOCK PER IOD. 5. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT (A). IT WAS SUBMITTED BEFORE THE LD. CIT ( A) THAT THE ASSESSING OFFICER HAD NOT FOUND ANY MATERIAL AGAINST THE ASSE SSEE TO INVOKE SEC. 158BD / BC. THE ASSESSING OFFICER HAD PROCEEDED ON THE BASIS OF STATEMENT GIVEN BY MR. MAHENDER SHAH WHICH WAS RETR ACTED BY HIM SUBSEQUENTLY. EVEN AS PER THE STATEMENT OF MR. MAH ENDER SHAH, HE HAS NOT SPECIFICALLY MENTIONED THE NAME OF THE ASSESSEE . THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, ALLOWE D THE APPEAL FILED BY THE ASSESSEE. THE RELEVANT FINDINGS OF THE CIT(A) ARE EXTRACTED BELOW:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. THE UNDISCLOSED INCOME HAS BEEN DEFINED IN SECTION 158B B THAT IT SHALL BE AGGREGATE OF THE TOTAL INCOME.ON THE BASI S OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS AND SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH THE AO.AS PER PR OVISIONS OF SECTION 158BD WHERE THE AO IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THA N THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE U/S 132 THEN, THE BOOKS OF ACCOUNTS, OTHER DOCUMENTS SHALL BE HAN DED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSO N AND THAT AO SHALL PROCEED U/S 158BC AGAINST SUCH PERSON. FO R INITIATING PROCEEDINGS UNDER SECTION 158BD R.W.S 15 8BC, THE AO SHOULD BE IN POSSESSION OF SOME SEARCH MATERIAL, INFORMATION, DOCUMENT WHICH SHOULD HAVE BEEN FOUND AS A RESULT OF SEARCH AND SUCH MATERIAL/INFORMATION/DOCU MENTS SHOULD CONTAINS INFORMATION IN RESPECT OF UNDISCLOS ED INCOME. IN THE CASE UNDER CONSIDERATION, THE AO TOTALLY REL IED ON THE ITA 17/M/2010 SINGHAL GLOBAL LTD. 4 STATEMENT OF SHRI MAHINDRA SHAH HAD NOT SPECIFICALL Y MENTIONED THE NAME OF APPELLANT. THUS, IN THE FACT S AND CIRCUMSTANCES, THERE WAS NO MATERIAL AVAILABLE WITH THE AO FOR PROCEEDING UNDER SECTION 158BC R.W.S.158BD OF T HE ACT AGAINST THE APPELLANT. THE AO IN THE ASSESSMENT OR DER HAS HELD THAT THE APPELLANT WAS FOUND TO BE A BENEFICIA RY OF TRANSACTION WITH SHRI. MAHINDRA H. SHAH GROUP. HOW EVER, NOWHERE IN THE ASSESSMENT ORDER THE AO CLARIFIED TH AT HOW THE APPELLANT WAS BENEFICIARY OF SUCH TRANSACTIONS. ON THE CONTRARY, THE AO HIMSELF ADMITTED THAT SHRI MAHINDR A SHAH DID NOT SPECIFICALLY MENTION THE NAME OF APPELLANT. THE SO CALLED LOAN TRANSACTIONS (ALLEGED TO BE ACCOMMODATI ON ENTRIES) WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS AND WER E ROUTED THROUGH BANKING CHANNELS BY DEDUCTING TDS ON THE IN TEREST ELEMENT. THUS, IN THE FACTS AND CIRCUMSTANCES, THE AO WAS NOT IN POSSESSION OF ANY DOCUMENT, SUCH OTHER MATER IAL OR INFORMATION FOUND AS A RESULT OF SEARCH ON THE BASI S OF WHICH THE APPELLANTS LOAN TRANSACTIONS COULD HAVE BEEN T REATED AS ACCOMMODATION ENTRIES. THE ONLY BASIS WITH THE AO WAS THE STATEMENT OF SHRI MAHINDRA SHAH IN WHICH THE APPELL ANTS NAME WAS NOT FIGURING. THE AO ADMITTED THAT SUCH S TATEMENT WAS RETRACTED BY SHRI MAHINDRA SHAH. THUS, IN MY C ONSIDERED OPINION THREE WAS NO MATERIAL IN POSSESSION OF AO F OR COMPUTING UNDISCLOSED INCOME OF APPELLANT. THE ADD ITION MADE BY AO IS THEREFORE, DELETED. 6. ON BEING AGGRIEVED, REVENUE CARRIED THE MATTER I N APPEAL BEFORE THE TRIBUNAL. THE LEARNED D.R STRONGLY RELIED ON THE O RDER PASSED BY THE ASSESSING OFFICER, WHILE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT (A). 7. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THE PRESENT CASE, THE ASSESSING OFFICER TREATED THE LOAN AMOUNT OF RS. 10,00,000/- AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD ON THE BASIS OF STATEMENT GIVEN BY ONE MR. MAHENDER SHAH WITH REGARD TO HIS BUSINESS ACTIV ITIES. MR. MAHENDER SHAH NEITHER MENTIONED THE NAME OF THE ASSESSEE NOR THE ASSESSING OFFICER FOUND ANY MATERIAL AGAINST THE ASSESSEE. IT IS ALS O A FACT THAT MR. MAHENDER SHAH SUBSEQUENTLY RETRACTED HIS STATEMENT GIVEN DURING THE COURSE OF THE SEARCH. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS ITA 17/M/2010 SINGHAL GLOBAL LTD. 5 OBSERVED THAT THE ASSESSEE WAS FOUND TO BE A BENEFI CIARY OF TRANSACTIONS WITH SHRI MAHENDER SHAH GROUP. HOWEVER, THE ASSESS ING OFFICER HAS NOT CLARIFIED NOWHERE IN THE ASSESSMENT ORDER THAT AS T O HOW THE ASSESSEE WAS A BENEFICIARY OF SUCH TRANSACTIONS. THE ASSESSING OFFICER HIMSELF ADMITTED THAT SHRI MAHENDER SHAH DID NOT SPECIFICALLY MENTIO N THE NAME OF THE ASSESSEE. IN FACT THE ASSESSEE HAS CARRIED OUT THE LOAN TRANSACTIONS DULY RECORDED IN THE BOOKS OF ACCOUNT THROUGH BANKING CH ANNELS AND THE INTEREST PAID ON TDS WAS ALSO RECORDED. IN OUR CON SIDERED OPINION THERE IS NO MATERIAL BEFORE THE ASSESSING OFFICER TO INVOKE SEC. 158 BC / BD. THE LD. CIT (A) DELETED THE ADDITION MADE BY THE AO BY CONSIDERING ALL THE FACTS OF THE CASE OF THE ASSESSEE. ON CAREFUL CONSIDERATI ON OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) AND THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2011. SD/- SD/- (R.S. SYAL) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE : 12.08.2011 MUMBAI OKK* ITA 17/M/2010 SINGHAL GLOBAL LTD. 6 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR E BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI DATE INITIALS 1. DRAFT DICTATED ON 2-08-11 PS 2. DRAFT PLACED BEFORE AUTHOR 2-08-11 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER