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TMI Blog2022 (6) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue in quantum proceedings in ITA No. 1278/Mum/2021. The grounds raised by the Revenue are reproduced as under: 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A), erred in deleting the addition of Rs.3,92,00,000/- made in the hand of Mr. Vipul D. Shah u/s 69A of the Income Tax Act, 1961 without appreciating the fact that assessee did not discharge its duty to explain the fact that Rs.3,92,00,000/- were duly accounted and offered for tax. 2. We find that in this case, in view of the information received by the Assessing Officer from the Investigation Wing of the Income Tax Department, Mumbai that during the course of search action at the premises of Bharani Group and M/s Evergreen Enterprises, it was found that two concerns of 'Parinee Group' namely 'Green Bird P. Ltd.' and 'P.D. Construction' received cash loan to the tune of Rs.3.92 crores and in the said documents seized, name of the assessee was recorded as contact person and his mobile number was also available in connected seized documents. During the course of search of the premises of 'Bharani' Group, statement of partner of M/s Evergreen Enterprises namely Shri Nilesh Bharani was record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein he mentioned how figures are mentioned in coded form and were to be to multiplied by 1000 to get real figures. He also mentioned the name of contact person connected to the entities in the said Annexure A-2 at the time of recording of his statement and amount of Rs. 2.23 Crores was shown against the name of M/s. Greenbird and contact person was Shri Vipul Bhai or Vipul Shah. 3. It is however, not understandable as to how the addition was made in the name of Shri Vipul Shah when the borrower was M/s. Greenbird. It appears that, assessee repeatedly requested you to furnish the copies of relevant seized documents but you failed to provide the same to the assessee. 4. Accordingly, You are requested to send me copies of relevant seized record on the basis of which the addition of Rs. 3.92 crores was made as against the evidence of Rs. 2.23 crores found during the search action, along with your comments about makinq addition in the hands of Shri Vipul Shah. 5. A report in the matter may please be submitted by 16.02.2021. 6.4 The Id. A0 vide letter dated 16.02.2021 submitted his report along with copies of letters received from Investigation Wing and statement of Shri Nile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are reproduced as under: In respect of the above we humbly submit as follows:- 1) The said report fully substandate the submissions made earlier by your appellant before your Honors which is reproduced as follows: a) There is no basis for makins addition of Rs. 3,92,00,000 in the hands of "our appellant Mr. Vimul D. Shah for A.X. 2011-12 as the information pertains to N/s Greentird Constructions and M/s P.D. Constructions Farther there is no basis for these amounts as there is no seized materiai pertaining to M/s Evergreen Enterprises with the Learned A.O. The staid addition is made simply on the basis of letter received from DDIT Investigation) which is against the Law as held in the case of - Varshaben S Patel VITO (GUN) (HC) (2015) Firalat Chumilat Jain v. ITO (TIAT Mumbai) (2016) ITO v. Paresh Arvind Gandhi (TAT Mumbai) (2015) Khandehwal Construction v. CIT 227 TR 900 (Gau.) b) The learned Addl.CIT attached statement recoded at cross examination on 26/12/2018 in which he denied any such cash transactions. Further, Annexure A-2 and A-5 do not mention Rs.3,92,00,000/- or Rs.50.00.000/- or R$ 3,42,00,000/- It mentioned 22300 against M/s Greenbird. There is no menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, he was engaged in giving cash loans to various persons as per Annexure A-2. Alongwith him, statements of his employees and associates Shri Ashwin Rathod, Shri Jagdish Ramani and Viva Rawate were also recorded, who had also stated that cash loans were being given by Bharani group to various persons, as mentioned in Annexure A-2. The relevant portion of the statement on oath of Shri Nilesh Bharani is reproduced as under for the sake of clarity:- "Q.19 Please explain the nature of business of M/s. Evergreen Enterprise. Ans: In Evergreen Enterprises we arrange private loans for several borrowers and get brokerage income. Usually, interest rate is 15% per annum of the principal amount but it varies from party to party. Brokerage is usually charged at 0.6% per annum of the principal amount. Brokerage is earned by Evergreen Enterprises only when interest is paid by the borrower party to the lender party. Evergreen ears brokerage income only as the borrowing and Q.71 I am showing you one red colour borrower ledger book found and seized from the premises, 12, Sharda shadan, 7 S.G. Road, Dadar (E), Mumbai- 400014, and marked as annexure-A-2 containing pages marked from 1 540, pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information/2017. Is dated 23.03.2018 stating that evidences gathered during the course of search action at the premise of M/. Evergreen Enterprises in the form of documents seized and statements recorded on oath u/S. 132(4) of the Income Tax Act, 1961 of Mr. Nilesh Bharani, one of the partner of M/S. Evergreen Enterprises and othèr key employees of the concern, revealed that Shri Vipul Dilip Shah has entered into cash or unaccounted transactions from/through Nilesh Bharani/Evergreen Enterprises. As per information received total amount of cash or unaccounted transactions executed during the year under consideration was of Rs. 3,92,00,000/-. 3. Therefore, the AO has a reason to believe that income of Rs.3,92,00,000/- chargeable to tax has escaped assessment for A.Y. 2011-12 within the meaning of clause (c) of Explanation-2 of section 147 of the Income Tax Act, 1961. The income chargeable to tax has escaped assessment on account of failure of the assessee to disclose full and true material facts necessary for assessment of its income for the assessment year under consideration 6.9 Thereafter the assessee filed his objections to the reasons provided by the A vide letter d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n are not correct. Q.8 Please confirm that the statement recorded on 11.10.2017 was recorded in front of witness 1 and witness 2 (who had also signed on content of every page of statement recorded on 11.10.2017). Ans. When statement was recorded witness were not present in the room. After the statement and many annexure were prepared first I signed on the paper. Subsequently, witness have signed on it. I emphasize the statement was not recorded in the front of the witness. They have merely signed the papers. Q.9 Please substantiate answer given by you to above question that statement was not recorded in presence of witness and you were not in a stable mind with any documentary evidence. Ans. I have no documentary evidence of this matter. Later after the search operation was over I explained whole matter to my tax consultant. Tax consultant was not allowed to be present during the process of search at my home and at my office even after mv request to call them. On advise of my tax consultant I have sent retraction letter addressed to the Commissioner of Income Tax (Inv.)-2, Scindhia House, Ballard estate Mumbai On 14.10.2017. I am handing over the photo copy of the letter to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representative have not received copy of all the seized material. Q.15. Have you appointed any representative in your search case. Ans. I have appointed C.A Vinod Kumar Bindal & Co. as my representative in the search case. Q.16 Please provide the address of the above representative as answered in Q. no. 15. Ans. 503, Dalamal Chamber, 29, New Marine Lines, Mumbai-20. Q.17 Please provide your appropriate date and time to inspect the seized material and explain the content related to Vipul D Shah considering that this case is limited by time which is going to get time barred on 31. 12. 2018. Ans. Tomorrow I.e. on 27. 12. 2018, I am going out of town and returning on o3. 01.2019 so, please keep any date between 04. 01.2019 and 09.01. 2019 to explain the content related to Vipul D. shah. 0.18 It is found from Central Circle -4(1), Mumbai that you have received all the seized material so you are requested go through the content of seized material and provide answer to all the question asked in statement recorded on 11. 10.2017 and contents were name of Vipul D. Shah, P D Construction and Green Bird is mentioned in seized material. As you have stated that you are not in town ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions (R$.3.42 crs.) and not Shri Vipul Shah. Shri Vipul Shah's name was appearing only as contact person and for the simple reason that he was to be a partner/director of the said concerns and both Greenbird and P.D. Constructions were his group entities. Therefore, it is not understandable as to why the Id. AO chose to re-open the assessment and to make additions in the case of Vipul Shah and not in the case of M/s. Greenbird Pvt. Ltd. (PAN- AABCG5483D) and P.D. Constructions Pvt.Ltd. (PAN- AAECP5447M). It is gathered that, both these entities are being assessed to tax with the same AO and therefore, there is no reason as to why the AO could not have initiated relevant proceedings in the hands of these entities. However, as far as the case of Vipul Shah is concerned, in my considered view he could not be held liable for unsecured loan transactions done by his group entities. In fact neither the Investigating Officer nor the AO recorded the statement of Vipul Shah in this regard, to ascertain his version of things. It appears that Sri Nilesh Bharani had nowhere stated in his statement on oath that he had given loan to Shri Vipul Shah. In fact, the seized record of Annexure A- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and take suitable action, after considering all relevant material." 4.1 We find that the Ld. CIT(A) has deleted the addition mainly in view of the following reasons : (i) The Assessing Officer himself has recorded in the reasons to belief that cash loan was received by the two firms M/s Green Bird Pvt. Ltd. and P.D. Construction and name of the assessee was appearing in which contact person. Evidently if the loan has been received by the partnership firm/company wherein the assessee is a partner or director, the said loan cannot be added in the hands of the assessee. The Ld. CIT(A) has rightly advised the Assessing Officer to consider examination of the transactions in the hands of M/s P.D. Construction and M/s Green Bird Pvt. Ltd for any suitable action. (ii) The original statement of Shri Nilesh Bharani were never provided to the assessee despite repeated request for inspection of the original statement, wherein he stated of provided cash loan to two concerns namely P.D. Construction and M/d Green Bird Pvt. Ltd. (iii) Shri Nilesh Bharani even retracted his statement made u/s 132(4) of providing cash loan to two concerns. (iv) During the cross-examination by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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