INCOME TAX OFFICER 6(1)(1), MUMBAI V. AJCON FINANCE LIMITED (FORMERLY KNOWN AS AJCON COMMODITY BROKERS LIMITED), MUMBAI

MA 486/MUM/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0343 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 29-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIK
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries; Tax effect; Onus to prove
• Section: 143(3); 133(6); 191; 254(2); 68; 132

Judgement Text

1 MA 486/MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI AMARJIT SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) M.A. NO.486/MUM/2019 (ARISING OUT OF ITA NO.12/MUM/2018) (ASSESSMENT YEAR: 2013-14) ITO - 6(1)(1) ROOM NO.503, 5 TH FLOOR AAYKAR BHAWAN, M.K.ROAD MUMBAI-400 020 VS AJCON FINANCE LTD. 408 EXPRESS ZONE A-WING, CELLO-SNAL REALTY WESTERN EXPRESS HIGHWAY GOREGAON(E) MUMBAI-400 063 PAN : AAACA9736C APPLICANT RESPONDENT APPLICANT BY SMT. KAVITA P. KAUSHIK , DR RESPONDENT BY SHRI. VIMAL PUNMIYA , AR DATE OF HEARING 0 8.11 .2019 DATE OF PRONOUNCEMENT 0 9 .1 2 .2019 O R D ER PER G MANJUNATHA: AM THE REVENUE HAS FILED THIS MISCELLANEOUS APPLICATIO N U/S 254(2) OF THE I.T.ACT, 1961 AND REQUESTED TO RECALL/RECTIFY T HE ORDER OF THE TRIBUNAL IN ITA NO.12/MUM/2018 DATED 16/01/2019 FOR THE AY 2 013-14. 2 MA 486/MUM/2019 2. THE REVENUE HAS NARRATED FACTS AND MISTAKES STAT ED TO APPARENT ON RECORD IN THE ORDER OF TRIBUNAL DATED 16/01/2019 . THE RELEVANT CONTENTS OF MISCELLANEOUS APPLICATION FILED BY THE REVENUE ARE AS UNDER:- 1. THE ABOVE APPEAL FILED BY REVENUE WAS DISPOSED OF B Y THE HONBLE TRIBUNAL 'A' BENCH, MUMBAI BY ITS ORDER DATED 16.01 .2019. THE APPELLANT ABOVE NAMED BEGS TO PRESENT THIS APPLICATION AS THI S IS A CASE WHERE ADDITION IS BASED ON INFORMATION RECEIVED FROM THE DGIT(INV.) -II, MUMBAI, IT FALLS IN THE CATEGORY OF 10(E). 2. IN THIS CASE THE ORDER U/S. 143(3) OF THE I T ACT W AS PASSED ON 28.03.2016. IN THE SAID ORDER, THE A.O HAS MADE ADDITION OF UNS ECURED LOAN RECEIVED FROM M/S ROSHAN GEMS PVT. LTD. OF RS. 35,05,437/- A ND M/S NAVKAR DIAMOND OF RS, 25,03,883/- AS UNEXPLAINED CASH CRED IT U/S 68 OF THE ACT AND DISALLOWED INTEREST PAID TO M/S MOULI GEMS OF R S. 7,323/-. 3. THE ASSESSEE, AGGRIEVED BY THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME-TAX ACT, 1961 DATED 28.03 .2016 FILED AN APPEAL BEFORE THE CIT(A) AGAINST ABOVE MENTIONED ADDITIONS . 4. DURING THE YEAR UNDER CONSIDERATION, ASSES SEE COMP ANY HAD TAKEN ACCOMMODATION ENTRY OF RS. 35 T 05,437/- AND KS. 25.03.S83/- BY WAY OF UNSECURED LOAN FROM M/S ROSHAN GEMS PVT. LTD. & M/S NAVKAR DIAMOND RESPECTIVELY WHICH IS CONTROLLED BY SHRI BHANWARFAL JAIN ENGAGED IN PROVIDING OF ACCOMMODATION ENTRIES BY WAY OF UNSECU RED LOAN. ACCORDINGLY, THE AO HAS MADE ADDITION OF UNSECURED LOAN RECEIVED FROM M/S ROSHAN GEMS PVT LTD. & M/S NAVKAR DIAMOND OF R S.35,05,437/- &RS. 25,03,883/-AS UNEXPLAINED CASH CREDIT U/S 68 O F THE ACT AND DISALLOWED INTEREST PAID TO M/S MOULI GEMS OF RS.7, 323/-. 5. THE LEARNED CIT(A) HAD HELD THAT THE FACTS AND CIRC UMSTANCES OF THE CASE AND THE DOCUMENTARY EVIDENCES FURNISHED BY THE APPELLANT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE CONTENTIO N OF THE APPELLANT ARE ACCEPTABLE. IT WAS SEEN THAT THE UNSECURED LOAN TRA NSACTION HAS BEEN CONFIRMED BY THE LENDER BY WAY OF LEDGER ACCOUNT CO NFIRMATION AS WELL AS BY FURNISHING AN AFFIDAVIT. IT WAS NOTICED THAT THE LENDER CONCERN HAS FILED ITS INCOME TAX RETURN OF THE RELEVANT AY 2012-13 AN D THE UNSECURED LOAN ADVANCED TO THE APPELLANT HAD BEEN SHOWN UNDER LOAN S AND ADVANCES IN THE BALANCE SHEET OF THE SAID CONCERN. IT WAS ALSO SEEN THAT THE CONCERNED LOAN TRANSACTION IS DULY REFLECTED IN THE BANK ACCO UNT STATEMENT OF THE APPELLANT AS WELL AS THE LENDER. THE APPELLANT HAD ALSO REPAID THE LOAN IN THE SUBSEQUENT FINANCIAL YEAR TO THE TUNE OF RS. 20 LAKHS ON 17.02.2017 AND RS. 15 LAKHS ON 20.02.2014. ON OVERALL CONSIDER ATION OF THE EVIDENCES FURNISHED BY THE APPELLANT, IT WAS SEEN T HAT THE APPELLANT HAS ADEQUATELY ESTABLISHED THE IDENTITY OF THE LENDER, THE GENUINENESS OF THE TRANSACTION AND THE CREDIT WORTHINESS OF THE LENDER . FURTHER, THE LD. CIT(A) HAD ALSO PLACED RELIANCE OF THE DECISION OF THE HON 'BLE MUMBAI ITAT IN THE CASE OF RELIANCE CORPORATION VS. ITO IN ITA NOS. 10 69 TO 1071/MUM/20L7 DATED 12.04.2017, WHEREIN THE HON'BLE ITAT HAS DIRE CTED THE DELETION OF ADDITION MADE U/S 68 OF THE ACT IN RESPECT OF UNSEC URED LOANS OBTAINED FROM CONCERNS BELONGING TO SHRI BHANWARLAL JAIN BAS ED ON THE APPRECIATION OF EVIDENCES FURNISHED BY THE ASSESSES WITH REGARD TO THE 3 MA 486/MUM/2019 IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS OF THE LENDERS. CONSIDERING THE AFORESAID FACTS AND DECISI ON, THE LD.CIT(A) HAD ALLOWED THE APPEAL ON THIS GROUND IN FAVOUR OF ASSE SEE. 6. THE DECISION OF THE LD. CIT(A) WAS NOT A CCEPTABLE IN VIEW OF THE FOLLOWING FINDINGS: 7. AS PER THE INFORMATION RECEIVED FROM THE OFFICE OF THE DGIT(INV) -II, MUMBAI, THE ASSESSEE'S NAME IS APPEARING IN THE LIST OF BEN EFICIARIES OF ACCOMMODATION ENTRIES RECEIVED IN THE FORM OF UNSEC URED LOANS FROM THE BHANWARLAL JAIN GROUP, A LEADING ENTRY PROVIDER. TH E FINDINGS OF THE SEARCH ACTION CARRIED OUT BY THE INVESTIGATION WING, MUMBA I IN THE CASE OF SHRI BHANWARLAL JAIN U/S 132 OF THE ACT AND THE SUBSEQUE NT ENQUIRIES CONDUCTED IN THE CASE OF VARIOUS BROKERS AND BENEFICIARIES OF AC COMMODATION ENTRIES, CLEARLY ESTABLISH THAI ALL THE CONCERNS UNDER THE C ONTROL, MANAGEMENT AND OPERATION OF SHRI BHANWARLAL JAIN ARC INVOLVED IN T HE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES. IT IS ALSO PERTINENT TO HIGH LIGHT HERE THAT THE SAID CONCLUSION IS NOT DERIVED ONLY ON THE BASIS OF THE SWORN STATEMENTS OF SHRI BHANWARLAL JAIN AND HIS ASSOCIATES, RECORDED IN THE PRESENCE OF THE INDEPENDENT WITNESSES, BUT ON THE BASIS OF THE CLIN CHING EVIDENCES GATHERED DURING THE COURSE OF THE SEARCH AND THE POST SEARCH ENQUIRIES INCLUDING THE THIRD PARTY EVIDENCES, 8. IN THE INSTANT CASE THE ASSESSEE COMPANY HAS FAILED TO PRODUCE THE PARTIES FOR CONFIRMATION OR CROSS EXAMINATION. AS R EGARDS CROSS VERIFICATION AND CONFRONTING THE ASSESSEE WITH THE EVIDENCES REL IED UPON BY THE DEPARTMENT RELIANCE IS DRAWN TO THE CASE OF T, DEVA SATAYS NADAR 51 ITR 20(MADRAS}, N R PORTFOLIO PVT. LTD (2014) 42 TAXMAN N 339(DELHI). FURTHER, IN NOVA PROMOTERS (2012) 342 ITR 169 (DELHI) WHEREIN T HE HONBLE DELHI HIGH COURT HAS OBSERVED 9. 'WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION O F MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSE SSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF-CONFESSED 'ACCOMMODATION ENTR Y PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEE BRING INTO THEIR BO OKS OF ACCOUNT THEIR UNACCOUNTED, MONIES THROUGH THE MEDIUM OF SHARE SUB SCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAI N SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE A SSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHOR ITIES INTO THE ACTIVITIES OF SUCH 'ENTRY PROVIDERS'. THE EXISTENCE WITH THE ASSE SSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE-MEDITATED PLAN - A SMOKESCREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABIL ITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WHE RE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLAC ED UPON HIM UNDER SEC. 68 TO PROVE AND ESTABLISH THE IDENTITY AND CREDITWO RTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTION. ! N SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VE RIFICATION, OR ENQUIRY INTO 4 MA 486/MUM/2019 THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JU STICE TO EXPRESS A FIERY TO THE CONTRARY.' 10. FURTHER AS HELD BY THE HON. SUPREME COURT IN GIT VS CALCUTTA AGENCY LTD, 19 ITR 191 AND IN CITVS SMT.LNDIRAMANI JATIA 3 5 ITR 298, BURDEN OF PROOF REGARDING THE DEDUCTION OR ALLOWANCE IS ALWAY S ON THE ASSESSEE. FURTHER EXPENSES CANNOT BE NECESSARILY BE ALLOWABLE AS DEDUCTION ON THE BASIS OF PAYMENTS, HON SUPREME COURT IN THE LACHMIN ARAYANNIADANLAL VS CIT 86 ITR 439 HAS HELD THAT IT IS ALWAYS OPEN TO THE I TO TO CONSIDER RELEVANT FACTORS AND DETERMINE FOR HIMSELF THAT SUCH EXPENDI TURE IS PROPERLY DEDUCTIBLE UNDER THE ACT, WHERE AN ASSESSEE SEEKS TO DEDUCT FR OM HIS OR ITS BUSINESS PROFITS CERTAIN ITEM OF EXPENDITURE THE ONUS OF PRO VING THAT SUCH DEDUCTIONS ARE PERMISSIBLE IS ON THE ASSESSEE ESPECIALLY SINCE THE CLAIMS ARE BASED ON FACTS WHICH ARE EXCLUSIVELY WITHIN THE KNOWLEDGE OF THE ASSESSEE. RELIANCE IS ALSO PLACED ON THE JUDGMENT OF THE HONBLE APEX COU RT PASSED ON 10.03.2015 IN CIVIL APPEAL NO. 1569 OF 2007 IN THE CASE OF PRE MIER BREWERIES LTD. 11. THE LD.CIT(A) HAS NOT TAKEN INTO CONSIDERATION THE ABOVE JUDICIAL PRONOUNCEMENT WHILE DECIDING THE A PPEAL. 12. THE LD.CIT(A) HAS RELIED ON THE DECISION OF THE HONBLE ITAT, MUMBAI IN THE CASE OF RELIANCE CORPORATION VS, 1TO IN !TA NOS . 1069 TO 1071/MUM/2017 DATED 12.04.2017. THE FACTS OF THE CU RRENT CASE AND M/S. RELIANCE CORPORATION IS DISTINGUISHABLE. IN THE CAS E OF M/S, RELIANCE CORPORATION, THE LOAN CREDITORS HAD APPEARED BEFORE THE AO IN COMPLIANCE LO THE NOTICE U/S, 133(6) OF THE ACT, WHEREAS IN TH IS CASE, THE ALLEGED PARTIES WERE NEVER PRODUCED BEFORE THE AO. FURTHER, IT IS A LSO SUBMITTED THAT DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE HON 'BLE ITAT IN THE CASE OF RELIANCE CORPORATION AND THE SAME IS CONTESTED BEFO RE THE HON'BLE HIGH COURT (FACT HAS BEEN VERIFIED FROM AC1T 32(3), MUMB AI). CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES, FURTHER APPEAL WAS F ILED BEFORE THE HON'BLE ITAT IN THIS CASE. 13. THE HON'BLE ITAT HAS TAKEN INTO ACCOUNT THE CBD T CIRCULAR NO.3/2018 DATED 11.07.2018 AND THAT THE TAX EFFECT INVOLVED I S LESS THAN 20 LAKHS HAS DISMISSED THE APPEAL FILED BY THE REVENUE AS NOT M AINTAINABLE. WHEN THE BENCH ASKED THE LD. CIT (DR), HE HAS FAIRLY ADMITTE D THAT TAX EFFECT INVOLVED IN THIS APPEAL IS LESS THAN RS.20 LACS AND NOT PRES SED THE MATTER. HOWEVER, THE HON'BLE ITAT HAS KEPT THE OPTION TO THE REVENUE TO FILE A MISCELLANEOUS APPLICATION IF THE PRESENT APPEAL COMES WITHIN THE 3 EXCEPTIONS AS PROVIDED IN PARA 10 OF SAID CIRCULAR AND CLAUSE (E) OF SUBSEQUE NT CIRCULAR. FURTHER, THE CBDT HAS INSTRUCTED ITS OFFICER'S TO FILE APPLICATI ON FOR WITHDRAWAL OF APPEAL ALREADY FILED OR NOT TO PURSUE PENDING APPEALS. HOW EVER, THIS IS A CASE WHERE ADDITION IS BASED ON INFORMATION RECEIVED FROM THE DGIT(LNV.) -II, MUMBAI, IT FALLS IN THE CATEGORY OF 10(E), AND HENCE FILING OF A MISCELLANEOUS APPLICATION BEFORE ITAT IS RECOMMENDED IN THIS CASE. 14. SINCE THE APPEAL MADE BY THE REVENUE IS DI SMISSED OFF BY THE HON'BLE TRIBUNAL WHILE PASSING THE ORDER DATED 16.01.2019, IT IS RESPECTFULLY SUBMITTED 5 MA 486/MUM/2019 THAT THE HON'BLE TRIBUNAL MAY BE PLEASED TO AMEND I TS ORDER AND DISPOSE OF THE APPEAL, AFTER CONSIDERING THE FACTS AND CIRCUMS TANCES OF THIS CASE. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ISCELLANEOUS APPLICATION FILED BY THE REVENUE ALONG WITH ORDER O F THE TRIBUNAL DATED 16/01/2019. WE FIND THAT THE TRIBUNAL HAS DISMISSED APPEAL FILED BY THE REVENUE ON LOW TAX EFFECT BY VIRTUE OF CBDT CIRCULA R 03/2018, DATED 11/07/2018, BECAUSE THE DISPUTED TAX INVOLVED IN TH E PRESENT APPEAL IS LESS THAN THE MONITORY LIMIT FIXED BY THE CBDT FOR FILING APPEAL BEFORE THE TRIBUNAL. THE REVENUE HAS FILED THIS MISCELLANEOUS APPLICATION ON THE BASIS AMENDED LETTER F.NO. 279/ MISC.142/2007-ITJ ( PT), DATED 20/08/2018, AS PER WHICH THE CBDT HAS EXPLAINED THE POSITION OF APPLICABILITY OF SAID CIRCULAR TO CERTAIN CASES. FU RTHER, AS PER SAID CALRIFICATION, WHERE ASSESSMENT HAS BEEN FRAMED ON THE BASIS OF INFORMATION RECEIVED FROM THE EXTERNAL SOURCES IN T HE NATURE OF LAW ENFORCEMENT AGENCIES SUCH AS CBI/ED/DRI/SFIO/DIRECT ORATE GENERAL OF GST (INTL.) (DGGI), THEN IRRESPECTIVE OF TAX EFFECT , THE APPEALS SHALL BE PROSUCUTED ON MERITS. THE DR, ON THE BASIS OF SAID CLARIFICATION ARGUED THAT THE PRESENT ASSESSMENT HAS BEEN FRAMED ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INVESTIGATION) MUMB AI, WHICH FALSE UNDER THE CATEGORY OF EXCEPTION AS PROVIDED IN CLAU SE 10(E) OF SAID CIRCULAR, THEREFORE THE PRESENT APPEAL COMES UNDER THE SAID CIRCULAR AND ACCORDINGLY, THE ORDER OF THE TRIBUNAL MAY BE RECAL LED. WE FIND THAT THE CO-ORDINATE BENCH OF ITAT MUMBAI, IN THE CASE OF LA TE SHRI AMARCHAND P SHAH. VS. ITO-19(1)(1) IN MA NO.818 TO 820/MUM/20 17, VIDE ORDER DATED 08/07/2019 HAD CONSIDERED ABOVE ARGUMENTS OF THE REVEUNE AND HELD THAT INFORMATION RECEIVED FROM DGIT (INVESTIGA TION) DOES NOT CONSTITUTES INFORMATION RECEIVED FROM EXTERNAL SOUR CES IN THE NATURE OF LAW ENFORCEMENT AGENCIES SUCH AS CBIT/ED/DRI/SFIO/ DIRECTORATE 6 MA 486/MUM/2019 GENERAL OF GST (INTL.) (DGGI) AND HENCE, THOSE ORDE RS, WHICH ARE PASSED ON THE BASIS OF INFORMATION RECEIVED FROM DG IT(INVESTIGATION) DOES NOT FALL WITHIN THE CATEGORY OF EXCEPTIONS AS PROVIDED UNDER CLAUSE (10)(E) OF CIRCULAR NO.03/2018 ISSUED BY THE CBDT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MERIT IN THE M ISCELLANEOUS APPLICATION FILED BY THE REVENUE AND HENCE, THE SAM E IS DISMISSED. 4. IN THE RESULT, MISCELLANEOUS APPLICATION FILED B Y THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 .12.201 9. SD/- SD/- AMARJIT SINGH G MANJUNATHA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 09.12.2019 THIRUMALESH, SR.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//