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2016 (4) TMI 636

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..... h Shrivastav, Shri Ramesh Shrivastav, Shri Jagdishbhai Patel and Shri Vivek Shrivastav have filed returns of income and also have PAN and have also filed the confirmation letters. In the case of Shri Anil Kale, it was claimed that he was doing electrical repair work and his income was below taxable limit; and that the loan was advanced out of his savings. In the case of Smt. Santaben Patel, there was a balance of more than ₹ 7 lakhs in her bank account before advancement of loan and she had also stated that the amount was out of savings of 7-8 years out of her agricultural income; however, according to CIT(A), no proof of any agricultural activity such as 7/12 records or sale receipts etc. could be produced to establish the credit worthiness. The CIT(A) also noted that Shri Jayendra Zala could not appear before the Assessing Officer and no details such as confirmation or his creditworthiness could be filed. The CIT(A) also held that the payment received by account payee cheque by itself does not fulfill the requirement of section 68 of the Act. In this background, the CIT(A) rightly held that the creditworthiness was not established in respect of loans of ₹ 3,19,500/- i .....

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..... ain directions to the Income-tax Department, inter alia, observed as under:- The Chief Commissioner, Baroda is directed to take immediate steps for initiation of appropriate proceedings. It shall be open to Income-tax authorities to direct continuance of the attachment in accordance with law. If so advised, the Income-tax Authorities shall also require Madhu Shrivastava and Bhattoo Shrivastava to explain as to why the claim as made in the VCD of paying money shall not be further enquired into and if any tangible material comes to surface, appropriate action under the Incometax Law shall be taken notwithstanding the findings recorded by the inquiry officer that there is no acceptable material to show that they had paid money, as claimed to Zahira. We make it clear that we are not directing initiation of proceedings as such, but leaving the matter to the Income-tax Authorities to take a decision . 2.2 On the basis of the above directions of the Hon ble Supreme Court, the case of the assessee was selected for scrutiny. It was observed by the Assessing Officer in the impugned assessment order that, in spite of request made to the assessee to furnish the details of financial or o .....

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..... ed me. I never met Ms. Zahira Heikh and I do not know her. Entire transactions of ₹ 18 lakhs with Ms. Zahira Sheikh as seen with Nisar Bapu are not genuine. This can be verified from my bank accounts. I also state that Shri Chandrakant Bhattoo is my cousin and this was done for the defamation of his political career. The aforesaid reply by the assessee was not acceptable to the Assessing Officer; hence, he issued a show-cause notice dated 24.12.2007 and the relevant extract of the same is reproduced as under:- You were given an opportunity to explain your stand as the transcript of Video Compact Disc produced by Tehelka.Com clearly indicated that money was paid to Zahira Sheikh to change her stand. In this matter, your statements u/s. 131(1) of the I.T. Act 1961 was recorded on 18.12.2007 wherein you categorically stated that the voice recorded in C.D. was not yours in reply to Q. No. 7 which was specifically admitted by you at the time of conversation with Shri Nisar Bapu. Further, these facts were noticed from the conversation of Shri Nisar Bapu with your cousin Shri Chandrakant R Shrivastava and Shri Shailesh Patel. Please submit your basis/evidences that the voice .....

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..... by the Hon ble Apex Court that, if required, the Income Tax Authorities may inquire Madhu Shrivastav and Bhattoo Shrivastav to explain as to why the claim made in the VCD of paying money shall not be further enquired into and if any tangible material comes to surface, appropriate action under the Income Tax Law shall be taken. Accordingly the assessee's case was selected for scrutiny. The Assessing Officer has mentioned in his assessment order that after going through the transcript of VCD of Tehelka.com, which was received by him from the Registrar General of Supreme Court of India, he was of the opinion that further investigation needed to be conducted in case of the assessee. Accordingly, not being satisfied with the replies given by the assessee, the Assessing Officer issued summons u/s 131 (1) of the I.T. Act, 1961 as discussed above. The assessee s statement was recorded on 18.12.2007 and in his statement recorded also he has clearly denied of having entered into any financial transaction with Ms. Zahira Sheikh. However, based on the Tehelka VCD, the Assessing Officer added the entire amount of ₹ 18 lakhs to the income of the assessee by considering the same as une .....

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..... he assessee has paid the money of ₹ 18 lakhs to Ms. Zahira Sheikh. It is only the version of DVD which is the basis for making the addition in question, on which the enquiry officer gave his finding that there was no acceptable material to establish that the assessee had paid money to Ms. Zahira Sheikh. In these facts and circumstances, the addition of ₹ 18 lakhs, claimed to be paid by the assessee to Ms. Zahira Sheikh, as unexplained/undisclosed payment is not justified and same is directed to be deleted. 3. Second issue in this appeal is with regard to confirming the addition of ₹ 3,19,500/- as unexplained cash credit u/s 68 of the Income-tax Act. 3.1 The Assessing Officer made addition of ₹ 4,50,000/- as unexplained credit as he was not satisfied regarding the credit worthiness of the 9 creditors. In appeal before the CIT(A), the CIT(A) observed that six out of nine creditors, i.e., Shri Dipak Patel, Shri Sudeep Shrivastav, Shri Naresh Shrivastav, Shri Ramesh Shrivastav, Shri Jagdishbhai Patel and Shri Vivek Shrivastav have filed returns of income and also have PAN and have also filed the confirmation letters. In the case of Shri Anil Kale, it was c .....

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..... persons had paid money to Ms. Zahira as alleged. The AO has not been able to bring on record even an iota of evidence to prove that the appellant had paid ₹ 18 lacs to Ms. Zahira. The AO has not even cited the provisions of section under which he made the addition of ₹ 18 lacs. In the case of the appellant, he has stated all throughout the assessment proceedings that such alleged payment had not been made by him. The AO has also not pinpointed with any cogent material evidence to prove that the appellant has incurred expenditure of ₹ 18 lacs, as alleged in the impugned assessment order, during the previous year relevant to the assessment year under consideration. Further, the appellant has not been afforded sufficient time to prove his claim / to submit satisfactory explanation which is also evident from the impugned assessment order, the relevant portion of the assessment order is reproduced as under :- As a matter of limitation, the undersigned is constrained to finalize the assessment order within the stipulated time. For this reason, further opportunities requested by the assessee, cannot be granted. The main person / star witness of Best bakery, Barod .....

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..... s that the same has been added in both the assessment years 2004-05 and 2005-06, which is also very difficult to sustain. Above all, the addition has been made by the AO on protective basis as seen from conclusion paragraph of the assessment year 2004-05 on Page no. 6 of the assessment order, but it has not mentioned there as to in whose hands substantive addition has been made. But, however, the AO in the remand report mentioned that substantial addition was made in the case of Mahendra, B. Shrivastav in the assessment year 2005- 06, which appeal has not yet been decided. Hence, to keep this issue live, the protective addition made in this case for the assessment year 2005-06 is sustained and the addition made in the assessment year 2004-05 is deleted. 5.2 We have decided the issue in the case of Shri Mahendrabhai B. Shrivastav in ITA No.499/Ahd/2010 for AY 2005-06 (supra) inter alia holding that no payment was made, so the protective assessment in the case of assessee do not survive. In the result, this appeal of the assessee is also allowed. 5. In the result, appeal bearing ITA No.499/Ahd/2010 is partly allowed and the appeal bearing ITA No.1233/Ahd/2009 is allowed. Or .....

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