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2016 (5) TMI 1082 - ITAT MUMBAI

2016 (5) TMI 1082 - ITAT MUMBAI - TMI - Addition u/s 68 - unsecured cash credit - Held that:- As observed that the assessee has raised loans of ₹ 45,50,000/- from various parties during the instant assessment year 1998-99 under appeal and one Shri Surendra Khandhar has given statement u/s 131 of the Act against the assessee that he has floated various firms to give accommodation loan entries to various persons which also included the assessee . The said statement of Sh.Surender Khandhar wa .....

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the loan transactions as per provisions of the Act after affording opportunity to the assessee, the Tribunal also holding that since Sh Surender Khandhar could not be offered for cross examination by the assessee , his statement cannot be used against the assessee. The said Shri Surendra Khandhar did not appear before the Revenue also. The A.O. also failed to make verification and enquiries on merits with respect to the loan raised by the assessee. The assessee, on the other hand, produced the .....

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/justification for the same as per the facts emanating from the records. This issue is also set-aside to the file of the AO to be decided based on merits after bringing on record cogent material/basis for the said interest to be brought to tax as income of the assessee. - Decided in favour of assessee for statistical purpose. - I.T.A. No. 7007/Mum/2011 - Dated:- 20-4-2016 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri Deepak Tralshawala For T .....

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4 of the Income Tax Act,1961(Hereinafter called the Act ). 2. The grounds raised by the assessee in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai(Hereinafter called the Tribunal ) read as under:- (1) ON ADDITION OF ₹ 45,50,000/- ON A/C. OF UNEXPLAINED CASH CREDIT - (1) On the facts and circumstances, the learned CIT(A) erred in confirming the alleged addition of ₹ 45,50,000/- u/s. 68 without appreciating that- (i) the learned AO. had totally ignored the rele .....

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s-examine Mr. Khandar as his statement was recorded behind the back of Your Appellant that too during the search and seizure action at his place and not during any assessment proceedings of Your Appellant. (4) Without prejudice to the above, learned CIT(A) failed to appreciate that the learned AO completely failed to follow the specific direction of the Hon'ble Tribunal and failed to verify the income tax record of the lenders despite of the fact that the PAN of the respective parties was al .....

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uashed. (7) Alternatively, Your Appellant prays that a specific direction may be given to the learned A.O. for giving opportunity to crossexamine Mr. Khandar, particularly, if he has to solely rely upon his statement. (ll) ON ADDITION OF ₹ 4,00,000/- ON A/c OF INTEREST - (1) The learned CIT(A) erred in confirming the alleged addition of ₹ 4,00,000/- on a/c. of interest on the alleged loans merely because the additions on a/c of alleged hawala loans were confirmed by him. (2) The lear .....

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ed from the DDIT(Inv.), Mumbai vide letter dated 22-9-2003. The assessee carried the matter before the CIT(A) who vide his orders dated 15.2.2006 rejected the appeal of the assessee on the basis of his order for the assessment year 1997- 98 as the facts and circumstances were identical in the assessment year 1998-99 i.e. the year under instant appeal. The asssessee went in appeal before the Tribunal and the Tribunal set aside the assessment vide orders dated 23.07.2008 by stating as under: We ha .....

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officer. The learned D.R. has gone through the said order and conceded that the facts and circumstances of this year are similar to those of the preceding year. Respectfully following the precedent we set aside the impugned order and restore the matter to the file of the assessing officer for a fresh decision as per law after allowing a reasonable opportunity of being heard to the assessee. Needless to say, directions contained in the Tribunal order for the preceding year would be taken into con .....

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as deputed who served the summon on the office of Suman Motels Limited but there were no compliance made by the said Mr. Surender Khandhar. In-spite of several efforts made by the A.O. by issuing and serving of several summons and show cause notices to said Shri Surendra Khandhar as per details in assessment order dated 31.12.2009, said Mr Surender Khandhar did not appear before the A.O. . Penalty notices were also issued u/s 272A(i)(e) of the Act to said Mr. Surender Khandhar but the same also .....

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compliance by Shri Surendra Khandhar, the cross examination of Shri Surendra Khandhar by the assessee could not taken place. The assessee submitted before the A.O. that the assessee has received loan of ₹ 45,50,000/- from various firms during the instant assessment year and also repaid the loan fully by A/c payee cheques. The assessee also submitted that it has given the confirmation with the PAN of the firms from whom loans were borrowed in the form of Hundi papers and refunded as per ter .....

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ons which is a primary evidence to establish that the loans were taken by the assessee. The assessee has taken loans from the following parties appearing in the list of concerns floated by Shri Surendra Khandhar:- Sr. No. Name Date Amount 1 Vijay Sales Corpn. 2.4.1997 5,00,000 2 Kartik Trading Co 14.5.1997 5,00,000 3 Shital International 14.5.1997 5,00,000 4 Prabhavee 7.6.1997 2,50,000 5 Shreeji Corpn. 7.6.1997 5,00,000 6 Gayatri Entrp. 7.6.1997 2,50,000 7 Vipco Sales Corpn. 7.6.1997 5,00,000 8 .....

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ed his undisclosed cash under the garb of accommodation loan and accordingly a sum of ₹ 45,50,000/- plus interest ₹ 4,00,000 totaling to ₹ 49,50,000/- is treated as undisclosed income and added to the income of the assessee after rejecting the submissions of the assessee by the AO vide assessment orders dated 31.12.2009 u/s. 143(3) read with section 254 of the Act. 4. Aggrieved by the assessment order dated 31.12.2009 passed by the A.O. u/s. 143(3) read with Section 254 of the .....

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iven by Shri Surendra Khandhar. The assessee submitted that the evidence in the form of the loan confirmation etc. have already been given to the AO at the time of hearing. The assessee submitted that it has not borrowed any amount directly from Shri Surendra Khandhar. The A.O. has not verified whether the partnership firms from whom the assessee had borrowed and repaid the amount is the one in which Shri Surendra Khandhar is a partner or not. The assessee submitted the assessment was set aside .....

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observed that the assessee also failed to produce Shri Surendra Khandhar before the A.O. The CIT(A) held that the confirmations filed in earlier proceedings were not found to be genuine and therefore the A.O. as well as CIT(A) have treated the same as unexplained cash credit hence the unexplained cash credit introduced in the name of various concerns to be treated as unexplained cash credit u/s 68 of the Act in the hands of the assessee and the orders of the AO was confirmed, vide CIT(A) orders .....

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ddition u/s 68 of the Act as was made in the first round of litigation, hence the direction of the Tribunal has not been complied by the A.O. The assessee has received loans of ₹ 45,50,000/- from various parties as per the details given and the loans have been duly repaid through banking channels. The ld. Counsel submitted that as per the statement given by Shri Surendra Khandhar whereby he admitted that he has floated various firms to give accommodation loan entries to various persons whi .....

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th the said summons/show cause notices. The confirmations were filed before the A.O. in the form of Hundi/Promissory Note s. The ld. Counsel submitted that in the immediately preceding assessment year 1997-98, the matter went up to the Tribunal in the second round of litigation whereby the Tribunal on identical facts and grounds in ITA No.5849/Mum/2011 vide orders dated 06.09.2013, has ordered deletion of addition after verification by the AO , with respect to the loan raised by the assessee in .....

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e orders dated 31/3/2015 u/s 143(3) read with Section 254 of the Act with respect to assessment year 1997-98 in pursuance of directions of the Tribunal in second round of litigation vide ITA No. 5849/Mum/2011 vide orders dated 06.09.2013, whereby the entire addition of ₹ 30,00,000/- made in assessment year 1997-98 with respect to loans raised by the assessee has been deleted. The ld. Counsel submitted that the matter may be set aside to the file of A.O. for verification and decision thereo .....

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that cross examination has not been granted by the A.O. Further, the ld. D.R relied on the order of the CIT(A). 9. We have considered the rival submission and perused the material available on record. We have observed that the assessee has raised loans of ₹ 45,50,000/- from various parties during the instant assessment year 1998-99 under appeal and one Shri Surendra Khandhar has given statement u/s 131 of the Act against the assessee that he has floated various firms to give accommodation .....

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gation, set aside the matter to the file of A.O. with a direction to re-verify the loan transactions as per provisions of the Act after affording opportunity to the assessee, the Tribunal also holding that since Sh Surender Khandhar could not be offered for cross examination by the assessee , his statement cannot be used against the assessee. The said Shri Surendra Khandhar did not appear before the Revenue also. The A.O. also failed to make verification and enquiries on merits with respect to t .....

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low:- We have considered the rival submissions and carefully perused the relevant material on record. In the earlier round of litigation this Tribunal has remanded the matter to the record of the Assessing Officer vide order dated 11-9-2009 in para 5 and 5.1 as under:- 5. We have "heard the rival submissions and considered them carefully. As mentioned above, the assessments were completed originally which were set aside by the Tribunal with a direction to allow cross examination of one Shri .....

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tatement of Shri Khandhar cannot be used against the assessee. 5.1 However, on merit, we are of the considered view that the matter needs re-verification at the end of the AO as the case has not been examined properly on merit. If the statement of a third party ignored then in that case, onus lay upon the assessee to prove the transaction by adducing necessary confirmation and evidences. No such efforts were made by the assessee to obtain the confirmation from the respective parties. Neither the .....

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ccordingly, we set aside the orders of the lower authorities and restore the matter to the file of the AO to pass a fresh order as per our above observations. 7. It is clear from the order of this Tribunal that the addition made on the basis of the statement of Mr. Surendra Khandhar without giving an opportunity of cross-examination was held to be not proper and accordingly it was observed that the statement of Mr. Surendra Khandhar cannot be used against the assessee: The AO was directed to dec .....

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rials available on record. The details and facts of the case are elaborately discussed in the original order passed on 31.3.2005 by the erstwhile Assessing Officer. Hence they are not repeated here again. 11. I do not find that the submission made by the authorised representative has any materials to serve his purpose. Considering the statement on oath provided by the lender of the loan; there is no iota of doubt that the assessee has introduced his undisclosed cash under the garb of accommodati .....

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ce of loan as per order Rs.30,00,000 Dtd. 31.3.2005 Interest on loan Rs.25,25,000 Total income ₹ 57,60,505 Rounded off Rs.57,60,510 It is clear that the AO has not taken pain to examine the issue on merits on the basis of the details to be filed by the assessee as directed by the Tribunal. Now before us the assessee has claimed that the loans have been repaid therefore, the claim of the assessee based on the record showing the repayment of loan is required to be verified. If the claim of t .....

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the A.O. vide order dated 31-3-2015 in compliance to the directions of the Tribunal in second round of litigation, deleted the additions so made for assessment year 1997-98 after verifying that the loans have been duly repaid by the assessee vide orders dated 31-03-2015 (copy placed in the file). The assessee has claimed that the loans raised during the instant year under appeal have also been repaid and claim of the assessee based on records showing the repayment of the loan is required to be v .....

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