TaxTMI 
TaxTMI 
2017 (8) TMI 321
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.... facts in confirming the same. 3. The learned AO has erred in law and facts in adding to income, a sum of Rs. 600,000/- on account of Unexplained Bank Deposits and Honourable Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the same. 4. The learned AO has erred in law and facts in initiating penalty proceeding u/s 271(1) (c) of the Income Tax Act for furnishing inaccurate particulars of income and concealment of Income. 5. The appellant craves leave to add to, alter, vary, amend and I or delete any or all the above ground I s of appeal. Ground No. 1. 2. This ground is general in nature and the merits of this ground would be considered in the subsequent grounds raised by the assessee. Hence, keeping in view the nature of this ground as general, the same stands dismissed. Ground No. 2 3. This ground relates to confirmation of additions by CIT(A) of Rs. 18,70,00,000/- made by AO on account of unexplained unsecured loans. Facts in brief are that the assessee is an individual engaged in the business of (a) publication through proprietorship concern, M/s. Jayashree Publications and (b) trading in securities and ....
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....that the Assessing Officer had passed order without taking into account the details, prayer to call for remand report from the 'Assessing Officer was also made.' During the assessment proceedings, the Assessee furnished the details to the Assessing officer, however, the same was not accepted by the Assessing Officer ('AO'). Accordingly, the assessee filed the relevant details to the office of the AO through Registered AD. The relevant details so filed are placed at pages 78 to 98 of the paper book filed before us. On its perusal it can be seen that the assessee had furnished following details: a) Covering Letter Written to Dy. Commissioner of Income-tax dated 08 December 2008; (page 80 of the PB) b) Account confirmations of Trison 'Impex with Gift & Novelties Impex for F.Y. 2006-07 & F.Y. 2007-08 as per the books of the party and the appellant; (page 82 - 85 of the PB) * c) Certificate of Registration of VAT; (page 86 of the PB) 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....
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....dings who accepted the same as fresh evidence and called for remand report from the AO. However, Commissioner of Income- tax Appeals rejected the claim of the assessee by upholding the findings of the Assessing Officer. Contention of learned AR was that the assessee has discharged the primary onus cast upon it u/s.68 of the Act by submitting the relevant details such as confirmations, PAN, bank statements, etc. which established the identity, creditworthiness of the parties and genuineness of the transactions. It is submitted that the Assessing Officer has not brought on record any material which would disprove the details submitted by the assessee. It is also submitted that addition made u/s.68 of the Act cannot be sustained merely because the party to whom the Assessing Officer has issued notice does not appear before the Assessing Officer. In this regard, reliance was placed on Honourable Bombay High Court Ruling in the case of Commissioner of Income-Tax, Bombay City - 11 Vs. U.M. Shah, 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 u....
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....ansaction, identity and creditworthiness of the party. As per learned AR, Admix Vinimay Pvt. Ltd. is a Private Limited Company incorporated in West Bengal, Kolkata and there is nothing on the record to demonstrate that the notice server of Mumbai Income-tax office had personally visited the premises in Kolkata. Further, there is nothing on record that the said company has any premises in Mumbai. Addition is purely made on the ground that notices u/s 133(6) / 131 were returned back and the AO has completely ignored other relevant details furnished during the course of assessment proceedings. For this purpose, reliance was placed by learned AR on the decision of Honourable Mumbai Tribunal ruling in case of ACIT Vs. M/s Starlite Enterprises ITA Nos. 129 & 126/Mum/2013 (pages 113 - 123 of the PB) wherein it was held that "....Once confirmation from the party together with its permanent account number, etc. is provided, the onus on the assessee stands discharged. If the Assessing Officer is not satisfied with the 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. W....
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.... 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 basic information as mentioned above, the assessee had discharged its primary onus of proving the genuineness of the transaction, identity and creditworthiness of the party. As per learned AR Savitri Minerals Pvt. Ltd. is a Private Limited Company incorporated in West Bengal, Kolkata and there is nothing on the record to demonstrate that the notice server of Mumbai Income-tax office had personally visited the premises in Kolkata. Further, there is nothing on record that the said company has any premises in Mumbai Addition is purely made on the ground that notices u/s 133(6) / 131 were returned back and the AO has completely ignored other relevant details furnished during the course of assessment proceedings. In respect of loan taken from Origin Management Consultants Pvt. Ltd., assessee has furnished the following details to the AO / CIT(A) during the assessment ....
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....March 2007. The same was repaid by the assessee on 17th March 2007. The funds received from Sharda Creations Private Limited was a stop-gap arrangement till the time Mr. Jalaj Batra would fund the assessee the balance funds as per the oral arrangement. The funds were repaid to Sharda Creations Pvt. Ltd. after receipt of Rs. 75,00,000/- (Rupees Seventy Five Lacs) from M/s. Shrinath Trading company. In respect of the nature of transactions and understanding of the assessee and Shri Jalaj Batra, learned AR submitted as under:- "(a) The appellant was introduced to Shri Jalaj Batra, through a common friend. The assessee was informed that Shri Jalaj Batra was actively involved in stock-market; he had good contacts with promoters of various companies and various market intermediaries; his financial position was very sound and he was resourceful enough to arrange huge funds for playing in the stock market on a large scale at a short notice. These facts lured the assessee for entering into relationship with Shri Jalaj Batra. (b) The appellant agreed to work for Shri Jalaj Batra with an understanding that he will recommend good stocks, arrange for funds to meet margin re....
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....ssessee for his operations. 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....
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.... 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 know in what fine of business Mr. Jalai 8atra is involved? Ans. He trader in shares. He was introduces to me by a common fries. I do not remember the name of the friend. Mr. Jalai Batra has once or twice come to my office & we now meet most of the time al Marriout Hotel in Juhu". In view of the above it was contended that Mr. Jalaj Batra was in habit of arranging funds through parties and introducing the same in the stock market. The fact is well noted by the AO in the assessment order of Shri Jalaj....
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....n 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 additions [ITA 9224/Mum/2010) have been submitted before us. On comparing of the assessment order in the case of the assessee and that of in the case of Paramshakti Distributors P. Ltd., it will be apparent that the Assessing Officer in the case of the assessee has merely reproduced the contents of assessment order of Paramshakti Distributors P. Ltd. It was further submitted that in the case of SKS Group, the additions have been made on the basis of statement given on 6.9.2008 by Shri Kamlesh Ajmera, Proprietor of M/s. Nisha Enterpr....
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.... 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 and Ld CIT(A) had also accepted the same as fresh evidence and called for remand report from the AO. Since in this case, the assessee has discharged the primary onus cast upon it u/s 68 of the Act by submitting the relevant details as mentioned 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 submitted by the assessee and hence in our view, the additions made u/s 68 of the Act cann....
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....nik 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, form-32, master data as available from the website of Ministry of Corporate Affairs, certificate of incorporation, bank statements indicating that the funds were received through banking channel, details of bulk deals entered into by the loan creditor on the Bombay Stock Exchange and National Stock Exchange, confirmation of account, etc. From the above documents, it is clear that by furnishing the basic information the assessee has discharged its primary onus of proving the genuineness of the transactions, identity and creditworthiness....
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..... 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 income of the assessee, because the Tribunal took into account the complete absence of resources of the assessee and also the fact that having regard to her age and the circumstances in which she was placed, she could not be credited with having made any income of her own. Therefore, the Tribunal was right in holding that S.69 of the Act could not be invoked in respect of the investments of the assessee and the additions made for the assessment years 1968-69 and 1969-70 should be deleted." It is pertinent to note that the above ruling of t....
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....d. 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 incriminating material before the AO which indicated that the assessee had resorted to bring back the unaccounted money in the books of account by way of subscription to "share capital" and "share premium" or that the assessee had submitted fabricated bank statements. The Ld. AR has also distinguished these cases on facts by submitting written submissions. The same are reproduced below:- 5.3 In the case of CIT v N.R. Portfolio P. Ltd. [264 CTR 258 (Del)], the decision was rendered after taking into account consideration the fo....
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....scharged 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 of the Act, the burden keeps on shifting depending upon facts and circumstances of the case. Under the provisions of 68 of the Act, the initial burden cast upon the assessee stands discharged when the assessee submits the evidences such as details of the party, PAN, confirmations, bank statements, etc. and the Assessing Officer has to rebut such evidence by bringing material on record to prove to the contrary - which if done, the onus again shifts on the assessee. It is respectfully submitted that the....
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....acts 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. But the revenue authorities rejected the contentions of the assessee by holding that the mediator was not produced. In this respect, our attention was drawn to the fact that the revenue authorities have separately been fighting with Mr. Jalaj Batra and have served him by filing appeal before the Tribunal as well as the Hon'ble High Court. This fact goes to show that when once the primary documents were already supplied to the revenue by the assessee then the revenue could have served the sai....