TMI Blog2017 (6) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... same amount in difference hands like substantive addition in the hands of M/s Encee Securities Pvt. Ltd. and on protective basis in the hands of the present assessee, which cannot be said to be justified. Totality of facts and the circumstances clearly indicates that at least the addition in the hands of the present assessee cannot survive. Even no question was put to Shri Harish Sharma against Shri Shirish Shah, while recording the statement. Thus, considering the totality of facts, and the material available on record, we don’t find any justification to make the addition u/s 68 of the Act in the hands of the present assessee, therefore, the appeal of the assessee is allowed. - ITA NO.369 /Mum/2017, And ITA NO.370/Mum/2017 - - - Dated:- 13-4-2017 - Shri Joginder Singh, Judicial Member, And Shri Rajendra, Accountant Member For The Assessee : Shri Prakash Jotwani For The Revenue : Shri Rajesh Kumar Yadav-DR ORDER Per Joginder Singh (Judicial Member) These two appeals are by the different assessee against the impugned orders both dated 05/12/2016 of the Ld. First Appellate Authority, Mumbai. First, we shall take up appeal in ITA No.369/Mum/2017, wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and the alleged statement, which was recorded under duress and threat was retracted within a reasonable time by Shri Harish Sharma. Plea was also raised that the assessee was never examined/confronted with respect to the statement of Shri Shirish Shah. Plea was also raised that the statement of Shri Shirish Shah was never provided to the assessee in spite of request of the assessee. A strongly plea was raised even it is presumed that Encee Securities Pvt. Ltd. got the money through share application from some persons, how it can be added u/s 68 of the Act in the hands of the present assessee. 2.1. On the other hand, the ld. DR, Shri Rajesh Kumar Yadav, strongly defended the addition made in the hands of the present assessee by claiming that the whole issue is arranged transaction given in the form of loan to the assessee, therefore, the addition was argued to be rightly made. Our attention was invited to para 3.2, 5.1 and 7.1 of the impugned order. It was pleaded that it was a colourable device and the loan was nothing but the money of the assessee itself. 2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is our bounded duty to analyze the same, consequently, the contents of the statement are reproduced hereunder:- Q1. Please identify yourself and confirm that oath has been administered to you and you have also been made aware of consequence of giving'false statement under oath. Ans. I am Harish Madanlal Sharma aged 38 years, son of Mr. Madanlal Dhanraj Sharma, residing at Room No. 8, Somji Bldg. 198, North Block Street, Nr. Gol Devi Mandir, Mumbai - 400004. My nat ive place i s Vi l lage- Khiwandi, Tahs i lSumerpur, District- Pali, Rajasthan, PIN code - 306901. I can read, write and understand Hindi and English. My mobile n umb e r i s 9 3 2 4 0 1 5 2 0 6. I c o n f i rm t h a t o a t h h a s b e e n administered to me and I have also be made aware of the c6nsequences of giving false statement under oath.I Further submit that I am physically fit and in good position to depot statement on oath. Q2. Please state your educational qualifications, and confirm that you can read, write and understand English,. Ans. I am 12th commerce pass in 1995 with Sscvganj High School, Dist. Sirohi, Rajasthan. Yes, I confirm that I can read, write and understand English. Q3. Pleas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... floor, Soneji Building, Kumbharwada, Mumbai - 400004 and incidenta l ly my residential address is same i.e Room No. 8, 1st floor, Soneji Building, Kumbharwada, Mumbai - 400004, I am staying with my family in the said premises from 1994 onwards which belongs to shri Chaganlal Bhikamchand Jain who is father of shri Anil C. Jain. Q13. Whether any rent payment is made by M/s Encee Securities Pvt. Ltd. for this office premises. Ans. Sir, I am not aware. Q14. It means your residential address is mentioned as registered address of company. Please confirm there is no company business activity in premises mentioned in answer number Ans. Sir, I am staying with my family at Room No.8, 1st Floor, Soneji Building, Kumbharwada, Mumbai-40004, I confirm that there is no business activity of company at said premises. There is no staff working for company. I myself and other director shri Nikhil Kumar Jain, only signing the books of accounts and statutory documents. Q9. I am showing you the ROC statement wherein the authorized capital of company M/s Encee Securities Pvt. Ltd. is ₹ 75 lacs and paid up capital of ₹ 60.96 lacs. The total number of shareholder are 13 incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arranging accommodation entry of share capital. Please confirm that you know shri Pravin Kumar Jain who has arranged accommodation entry of share capital in Encee Securities Put. Ltd. Ans. Sir, I do not know Pravin Kumar Jain personally or otherwise. I further confirm that I do not know other 10 companies directors personally or otherwise. The Encee Securities Pvt. Ltd. is controlled and managed by Shri Anil C. Jam. Q20. Please explain what do you mean by accommodation entries and explain the modus employed for giving various types of accommodation entries. Ans. Sir, I again confirm that I do not know what is accommodation entries and what is modus employed for giving various types of accommodation entries. Sir, I again repeat that The Encee Securities Pvt. Ltd. is controlled and managed by Shri Anil C. Jam. The Encec Securities Pvt. Ltd. is controlled and managed by Shri Anil C. Jam. They might be knowing other 10 above mentioned shareholders. Q21. Who looks after books of account, day to day banking transaction of unsecure loans receipt and unsecured loan t o adv an c e t o v a r ious p a r t y a l s o int e r e s t r e c e i v ed and interest payment. Please produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. Jain have with Other shareholder of Encee Securities Pvt. Ltd. Le shri Shantilal Bhikamchand Jain. Ans. Sir, shri Shantilal Bhikamchand Jain is uncle of Shri Anil C.. Jain. Q28. Do you want to state anything else. Ans. No Sir. 2.3. We note that in the aforesaid statement, Shri Harish Sharma, has tendered that he was getting directors remuneration from M/s Milton Generic Pvt. Ltd. and M/s Encee Securities Pvt. Ltd. He duly explained the nature of operation of M/s Milton Generic Pvt. Ltd. as is evident from reply to question no.4 (page-41 of the paper book) and in reply to question no. 6 7 with respect to registration of M/s Encee Securities Pvt. Ltd., he specifically denied that he was not aware about the registration of the company. In reply to question no.11 with respect of receipt of remuneration from M/s Encee Securities Pvt. Ltd. he specifically tendered that he was not getting any remuneration from the said company. In reply to question No.18 with respect to details of business activities of M/s Encee Securities Pvt. Ltd., Mr. Sharma tendered that he is basically working with M/s Milton Generic Pvt. Ltd., where he is looking after day to day activity of distribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the statement was recorded under duress under threat on 08/01/2016 by Ld. ACIT and Mr. Sharma was coerced to sign the statement. In another affidavit (page-78 of the paper book) in para-6, it has been mentioned that the assessee was threatened by police action/arrest etc and the initial papers were torn off and the assessee was forced to sign certain tight papers, prepared by the ACIT. In such a situation, the authenticity of the statement comes under clouds. Thus, in the light of the foregoing discussion, one clear fact is oozing out that the statement recorded by the officer and retracted by Shri Harish Sharma cannot be the sole basis of making the addition in the hands of the present assessee. 2.4. It is also noted that the assessee filed the audited account for the year ending 31/03/2013 (page to 2 to 39 of the paper book), which was made available before the Ld. Assessing Officer as well as before the Ld. Commissioner of Income Tax (Appeal). It is also noted that M/s Encee Securities Pvt. Ltd. duly confirmed of giving loan to the assessee. M/s Encee Securities Pvt. Ltd. duly filed the return (page 79 to 88 of the paper book), which was also available with the Ld. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach entry has to be explained separately by the assessee (CIT vs R.S. Rathaore) 212 ITR 390 (Raj.). The Hon ble Guwahati High Court in Nemi Chandra Kothari vs CIT (264 ITR 254)(Gau) held that transaction by cheques may not be always sacrosanct. In the present appeal, we note that the assessee has duly proved the identity of the party from where loan was taken, therefore, identity is not in dispute, since, the loan was taken through banking channel, and therefore, its genuineness cannot be doubted. So far as, explanation is concerned, the assessee duly explained the same that the loan was received from M/s Encee Securities Pvt. Ltd. The totality of facts, clearly indicates that the assessee duly discharged the onus caste upon the assessee. 2.5. It is also noted that if the Ld. Assessing Officer was apprehensive about the genuineness of the amount, he was duty bound to examine in the hands of the M/s Encee Securities Pvt. Ltd. or its share holders. At least, the money was germinated from the hands of the share holders, who contributed to M/s Encee Securities Pvt. Ltd. but in the hands of the present assessee, it is merely a loan and this fact has not been denied by any of the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer with respect to the statement tendered by Shri Harish Sharma or Shri Shirish Shah. The present assessee was never provided the statement of Shri Shirish Shah. Neither any query was raised from these persons with respect to the present assessee. Even it is presumed that M/s Encee Securities Pvt. Ltd. got the money from certain share applicants/some persons, how addition can be made u/s 68 in the hands of the present assessee. It seems that addition has been made of the same amount in difference hands like substantive addition in the hands of M/s Encee Securities Pvt. Ltd. and on protective basis in the hands of the present assessee, which cannot be said to be justified. Totality of facts and the circumstances clearly indicates that at least the addition in the hands of the present assessee cannot survive. Even no question was put to Shri Harish Sharma against Shri Shirish Shah, while recording the statement. Thus, considering the totality of facts, and the material available on record, we don t find any justification to make the addition u/s 68 of the Act in the hands of the present assessee, therefore, the appeal of the assessee is allowed. 3. Now, we shall tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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