TMI Blog2017 (8) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Gift & Novelties Impex, Proprietorship concern of the assessee and in this respect, the statement was also produced before the A.O. After hearing the parties and on perusal of the documents, the statement in respect of withdrawal of 5 lacs from Indian Overseas Bank is reflected and as per the submissions of the assessee. The remaining amount of Rs,1,00,000/- was alleged to be deposited out of cash-in-hand lying with the assessee. However, no documentary evidence in support of availability of 1 lakh was brought on record before the lower authorities nor before us. Therefore, we hold that the AO should have restricted the additions only to the amount which the assessee could not explain the source. Therefore in our view, the additions made by AO and confirmed by CIT(A) is restricted to ₹ 1 lakh only in place of ₹ 6 lakhs. - I.T.A. No. 484/Mum/2011 - - - Dated:- 18-4-2017 - SHRI R. C. SHARMA, AM AND SHRI SANDEEP GOSAIN, JM For The Appellant : Shri Vijay Mehta For The Respondent : Ms. S. Padmaja ORDER Per Sandeep Gosain, Judicial Member: The Present Appeal has been filed by the assessee against the order of Commissioner of Income Tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Vinimay Pvt. Ltd., 4,25,00,000 G-21A, Kamalaya Centre, 5166, Lenin Sarani, Bew Market, AAFCA3577L Kolkata 700 007 2 Sharda Creations Pvt. Ltd., 50,00,000 40, C.P. Tank Road, Mumbai 400 004 PAN: AAHCS0779C TAN:MUMS36579E 3 Matrubhumi Dealers Pvt. Ltd., 1,40,00,000 Marshal House, R. No. 748, 7th Floor, 33/1, N S Road, Kolkata - 700001 AAECM5410D 4 Origin Management Consultants Pvt. Ltd., 2,45,00,000 7004, 7th Floor, Emrald House, S D Road, Secunderabad AAAC06754A 5 Savitri Minerals Pvt. Ltd., 5,95,00,000 27, Western Street, 5th Floor, Room No. 526,Kolkata, West Bengal - 700012 25/B, Abindra Nath Tagoresarani Suite, #10, Camac Court, Kolkata, West Bengal 700 016 AAICS9692N 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) Ledger Account of Gift and Novelties Impex for F.Y. 2006-07 F.Y. 2007-08 in the books of the party; (Page 87 of the PB) e) Bank Statement of Trison Impex with the highlighted transactions; (pages 88-91 of the PB) f) Income tax returns of Mr. Kamlesh Kanungo, proprietor of M/s. Trison Impex for A.Y.2007-08 (page 92 of the PB) and A.Y.2008-09 (page 94 of the PB) g) Annexure to Form 3CD showing particulars of loans showing the transactions with the assessee for A.Y.2007-08 (page 93 of the PB) and A.Y.2008-09 (page 95 of the PB) On perusal of the letter dated 08.12.2008 submitted by the assessee, we found that the party had clearly intimated the Assessing Officer that it had started operating from another premises (Anand Bhuvan, Sikka Nagar, Mumbai 400 004) and its earlier place of operation (i.e. Habib Building, c.P. Tank, Mumbai 400 004). Therefore, the reason for not responding to the notice issued by the Assessing Officer was duly explained. This also stands fortified by the Certificate of Registration issued under MVAT Act, 2002 filed before the Assessing Officer - which is placed at page 86 of the PB. The Assessing Officer vide letter dated 14.06.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ah, Proprietor, Shrenik Trading Co. 90 ITR 396 (Bom) wherein it was held that the assessee could not be blamed if the parties do not appear in response to the summons. The Hon'ble High Court upheld the order of the Tribunal deleting the addition made to the income of the assessee by the Assessing Officer for the reason that the parties merely filed confirmations and failed to appear before the Assessing Officer even after summons were issued. In respect of loan taken from JAS Capital Services Pvt. Ltd., the Assessing Officer has dealt with the reasons for making addition in para 6.1.6 page 28 of the assessment order. According to the Assessing Officer, though notice was received by the party, no compliance was made. As per learned AR letter dated 19.03.2009 explaining to the CIT(A) the circumstances under which the assessment was completed and filed the confirmations of the party (pages 96-98 of the PB) with prayer to admit the evidences and call for report from the Assessing Officer. The Assessing Officer submitted his remand report while dealing with addition made in respect of M/s. Treason Impex. The Commissioner of Income-tax Appeals rejected the claim of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars so furnished, it is open to him to make further inquiry from the concerned party. Having not done so, it is not open to the A. O. to make addition. We, therefore, uphold the impugned order on this issue. This ground taken by the Revenue is, therefore, not allowed. In respect of loan payment from Matrubhumi Dealers Pvt. Ltd., assessee has filed following details to the AO / CIT(A) during the assessment proceedings / appellate proceedings. a) PAN Number: AAECM5410D; b) Address: 62, Nalini Sheth Road, mezzanine Floor, Kolkata, West Bengal - 700 007; c) Details of Directors, PAN of Directors, Address of Directors, Copy of Board Resolution, etc.; d) Master Data: As Available from the website of Ministry of Corporate Affairs e) Assessee's Bank statements indicating that the funds were received through proper banking channels through Account Payee Cheques / RTGS; f) Certificate of Incorporation; g) Details of Bulk Deals entered into by the Loan Creditor on the Bombay Stock Exchange and National Stock Exchange; h) Confirmation. of Accounts of the Loan Creditor along with PAN number. As per learned AR by furnishing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement Consultants Pvt. Ltd., assessee has furnished the following details to the AO / CIT(A) during the assessment proceedings / appellate proceedings: a) PAN Number: AAACO6754A b) Address : 5-2-40, Jambagh Road, Opp. Vikranthi Theatre, 1st Floor, Hyderabad, Andhra Pradesh - 500 095; c) Master Data: As Available from the website of Ministry of Corporate Affairs d) Assessee's Bank statements indicating that the funds were received through proper banking channels through Account Payee Cheques / RTGS; e) Certificate of Incorporation; f) Details of Bulk Deals entered into by the Loan Creditor on the Bombay Stock Exchange and National Stock Exchange; g) Confirmation of Accounts of the Loan Creditor along with PAN number; As per learned AR, by furnishing the details as mentioned above, the assessee had discharged its primary onus of proving the genuineness of the transaction, identity and creditworthiness of the party. Learned AR further contended that the details filed by the assessee were not found to be incorrect. The assessee was duly served with the notice but it did not comply thereto. It is submitted that if the assessee fails to ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that he will recommend good stocks, arrange for funds to meet margin requirements through several entities/companies on profit sharing basis. (c) In terms of the above arrangement, the assessee purchased the following scrips as per Shri Jalaj Batra's directions: Sr. No. Scrip Qty Amount (Rs.) 1 Baba Arts Ltd 1,53,226 66,86,940 2 Gitaniali Gems Ltd 4,35,000 10,61,83,728 3 Goldstone Technoloqies 3,45,051 2,98,57,380 4 Pioneer Embroidery 6,01,516 15, 62, 96,554 5 Rasoya Proteins Ltd. 55,565 50,24,381 6 Shree Ashtavinayak Cine Vision Ltd., 3,57,724 5,76,95,728 7 Steel Strips Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. The analysis of bank statements of various parties indicate huge amount of cash deposits. All these persons in the inquiries conducted have confirmed that though bank accounts are in their name but actual ownership is of the assessee. All these persons in the statement recorded have categorically confirmed that they were acting as per the directions of the assessee only and have no interest in these transactions. A query was put before the assessee about the source of generation of these cash funds. The assessee has not responded to the query raised and as such deposits made in various bank accounts in cash remained unexplained and the same need to be treated as deemed income of the assessee. Our attention was also drawn to the Ruling of Hon'ble Bombay High Court in case of Commissioner of Income-Tax Vs. Jalaj Batra 372 ITR 622 (Bom) E-Pag, wherein the high Court observed as under:- ..... The assessee is stated to be involved in off market transactions of penny stocks. There were direct transfers from one beneficiary account to another and that is managed with the help of money lenders. The complaint is that benami bank accounts and O.P. Accounts were opened in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Q.10 Where you know Srinath Trading, Sharad Creations Pvt. Ltd. other parties address at Kolkata Secunderabad, who are the persons operating companies and whether you have personally visited to them or any person from their concern have visits you Ans. No, all these transactions are through Bank through Jalai Batra. I do not know who are the persons involved in the concerns nor have I visited tem. All these transactions are through bank only Q.11 ll In answer to question No. 7. You have stated that in the companies, Mis. Jas Capital Services Pvt. Ltd. M/s. Trison Impex, the parties were introduces by someone from Orbit group. Can you now recall the name of the person? Ans. I do not remember anything Q.12 Do you have any Mobile no. Landline no. of Mr. Jalai Batra? If yes please give the information Ans. I have only Mobile No. of Jalai Batra. The Mobile No. is 9967906666. I do not have his landline number. Q.13 Do you kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er relevant details submitted by the assessee. In respect of loan from Shrinath Trading Co., assessee had furnished the following details to the AO / CIT(A) during the assessment proceedings / appellate proceedings: a) PAN Number: AEAPD9852R; b) TAN Number: MUM36579E c) Address: C-3, Shivalaya Building, haji Bapu Road, Malad East, Mumbai - 400 097; d) Assessee's Bank statements indicating that the funds were received through proper banking channels through Account Payee Cheques I RTGS; e) Confirmation of Accounts of the Loan Creditor along with PAN number; During the assessment proceedings, the office inspector visited the premises to serve the summon but on this address no concern in the name of M/s Shrinath Trading Co. was found. The AO while making the addition heavily relied on the order passed in SKS Group, copy-pasted the entire order of SKS Ispat and added the entire loan amount as the income of the assessee. A copy of the assessment order passed by the AO making additions in the case of one of the group entities of SKS Group namely Paramshakti Distributors P. Ltd. for A.Y. 2006-07 and the order of the Tribunal in its case deleting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08-09, annexure to Form 3CD showing particulars of loans showing the transactions with the assessee for AY 2007-08 and AY 2008-09. On the co-joint consideration and reading of the above documents, we find that through the letter dated 08.12.08, the party had clearly intimated the AO that it had started operating from other premises regarding which the details of new address have been given and in this way the reasons for not responding to the notice issued by the AO was duly explained. The AO while submitting his remand report to the CIT(A) has also admitted the receipt of details through post after the completion of the assessment but maintained his stand that the ledger copy and confirmation would not prove the creditworthiness or identities of the parties. We have also noticed that the AO has not brought on record any material to disprove the details submitted by the assessee in respect of the parties which balances have been added u/s 68 of the Act. Here at this juncture, we would like to point out all the details in respect of the above party were supplied by the assessee and moreover the same were supplied again before CIT(A) during the first stage of appellate proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned above which established the identity, creditworthiness of the parties and genuiness of the transactions. At the same time, the Ld. AO has not brought on record any material which would disprove the details/confirmation submitted by the assessee and hence in our view, the additions made u/s 68 of the Act cannot be sustained merely because the party to whom the AO has issued notice does not appear. In this regard, we draw our strength from the judgment of Hon ble Bombay High Court in the case of CIT Vrs. U. M. Shah, proprietor Shrenik Trading Compay 90 ITR 396 (Bom) wherein it has been held by the Hon ble High Court that the assessee could not be blamed if the parties do not appear in response to the summons. In respect of additions made by AO with regard to transactions with other parties i.e. Admix Vinimay Pvt. Ltd., Matrubhumi Dealers Pvt. Ltd (page 66-68 of PB)., Savitri Minerals Pvt. Ltd. (page 71-73 of PB), Origin Management Consultants Pvt. Ltd (page 69-70 of PB) and Sharda Creations (P) Ltd.( page 58-65 of PB), Shrinath Trading Company (page no. 74 of PB). In this regard, Ld. AR drawn our attention to the paper book which contains the PAN no., TAN no., addresses, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of assessment years, or could even be in a position to earn it, for a decade and more. The Tribunal, therefore, held that although the explanation of the assessee was liable to be rejected, S.69 of the Act conferred only discretion on the ITO to deal with the investments as income of the assessee, and it did not make it make it mandatory on his part to deal with the income as the income of the assessee as soon as the assessee's explanation happened to be rejected, and allowed the appeals and deleted the additions made by the ITO. On further reference filed by the Revenue the High Court confirmed the order the Tribunal and held as under:- The unsatisfactoriness of the explanation given by the assessee need not and did not automatically result in deeming the value of the investment to be the income of the assessee. Tat it was still matter within the discretion of the ITO and, therefore, of the Tribunal. Further, the Tribunal did not act arbitrarily or capriciously in differing from the ITO and the AAC in the matter of exercise of judicial discretion as to whether, even after rejecting the explanation of the assessee, the value of the investments were to be treated as the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced by the assessee on this point. In any manner, since creditors were assessed to tax, confirmation were filed, TDS deducted on interest credited and loan were reflecting in their accounts, no addition could be made in the hands of the assessee u/s 68. Accordingly, CIT(A) justified in deleting the addition of ₹ 2,94,0001- to the income of the assessee. (Emphasis supplied) Thus, in view of the above, it is respectfully submitted that the addition made by the Assessing Officer on this count may kindly be deleted. We have also considered the judgments relied upon by the Ld. DR during the course of hearing in support of the additions made by the AO, titled M/s N. Tarika Property Investment P. Ltd. v CIT [ITA 2080/2010 Order dated 8.11.2013 of Delhi High Court - 40 taxmann.com 525], CIT v. Nipun Builders and Developers [2013] 350 ITR 407 (Del)/30 taxmann.292] and CIT v N. R. Portfolio P. Ltd. [ITA no. 1018/2011, 1019/2011 Order dated 22.11.2013 of Delhi High Court - 42 taxmann.339]. After analyzing the judgments mentioned above and relied upon by Ld. DR, we find that the same are distinguishable on the facts and in all the above decisions, there were inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discharged his primary onus and there is no adverse material brought on record by the Assessing Officer to prove to the contrary. Therefore, it is submitted that the decisions relied upon by the learned DR were solely based on the peculiar facts of those cases and hence, the same are not applicable to the facts of the appellant. 5.7 The learned DR has also re-iterated the proposition of the Assessing Officer that by submitting PAN, addresses, confirmations, etc. it cannot be said that the appellant has discharged the onus of proving the identity, creditworthiness of the parties and genuineness of transactions. In this respect, the learned DR has relied on provisions of The Indian Evidence Act, 1872 and the following decisions: - a) E. Ummer Bava v CIT [72 taxmann.com 123 (Ker)] b) ITO v Chandama [61 taxmann.com 77 (Pat.-Trib)] c) Angel Pipes Tubes P. Ltd. [50 taxmann.com 128/153 lTD 520 (Mum. Trib)] 5.8 It is respectfully submitted that the provisions of the Indian Evidence Act, 1872 to not strictly apply for the proceedings under the Act. It is submitted that Indian Evidence Act, 1872 casts the burden of proving whereas under the provisions of 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in accordance with the directions given in the Tribunal's order. From the co-joint reading of all the judgments and the facts of the present case, we are of the considered view that it is apparent that the appellant has filed the relevant details and is not the real beneficiary nor there is any evidence to show that the assessee has introduced his own money as cash credit through impugned parties. Therefore, the decisions relied upon by the learned DR are on different set of facts and are not applicable on the facts of the present case. Even the document produced before the revenue authorities and annexed in the paper book clearly shows that the parties with whom the assessee has dealt with are active and are on the record of I.T. Department. We further find that although the matter was restored by CIT(A) to the AO but the AO in his remand report has not carried out any further enquiry and simply mentioned that the creditworthiness of the parties were not proved. We noticed that all the details were not only physically submitted but even submitted through e-mails. The assessee had admitted that he was dealing with the parties through the mediator Mr. Jalaj Batra. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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