AI Drafter 
TaxTMI 
TaxTMI 
2022 (6) TMI 445
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....acts. First, we take up the appeal of the 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 Evergree....
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....form. It appears from the statement of Shri Nilesh Bharani recorded on oath 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 submi....
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....filed further submissions reiterating the earlier position that, there was no evidence against Vipul Shah for making the above additions. For clarity the relevant submission 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 ex....
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....iary A-5. The figure of 22,300/- was interpreted in light of statement of Shri Nilesh Bharani by the Investigating Officer as Rs.2,23,00,000/. In this regard, a detailed statement of Shri Nilesh Bharani was recorded on oath as on 11.10.2017, wherein he had accepted 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.....
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....was placing reliance. Prior to that the assessee requested for copies of reasons recorded for issue of notice u/s.148 of the Act, which were provided by the AO and the same are reproduced as under for the sake of clarity:- An information was received in this case from DDIT(n.) Unit-5(4), Mumbai vide letter No. DDIT(n.) Unit-5(4)Sharing of 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....
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....r which was seized as per annexure A-1. In answer to the above question you have descrihed transactions with Jadhavji Company with specific discretion of the entries. Ans. As I have stated in the answer no. 4 & 6 above, I would like to elaborate. Answers to you question no. 17, 18 and 20 to 90 and also 93 to 99 was not written as per my wish. Search team dictated these answers. So, please understand that answer to these question 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 e....
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....no proof in support of answer to question no. 11 whatever I have said is fact. Q.13 As You are in sound state of mind and not under any pressure coercion please answer im respect of question no . 34 to 100 of the statement recorded on 11. 10. 2017. Ans. Sir, please show me page no. 263 to 265 of the lender ledger of annexure-I as stated in the question no. 34 Q.14 Please confirm that you or any of your representative have received copy of all the seized material and statements. Ans. I or any of my 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. Tomorr....
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....question 2, 1 have not given any cast loan ho you and or your group entites namely Green Bird/P.D. Constructions (by Nilesh Bharani)" 6.12 Therefore, Nilesh Bharani denied of giving any loan to Vipul Shah, the present assessee or to M/S. Greenbird or m/S. P.D. Construction. The cross examination of Nilesh Bharani ended at the above note. 6.13 I have considered the entire gämut of evidences and arguments made by the assessee as also by the AO and observations of the A and his Remand report. From the perusal of the letter dated 23.03.2018 of the DDIT Inv.) Mumbai, it is quite clear that recipient of the loans were M/s. Greenbird (Rs.50 lacs) and M/s. P.D. Constructions (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- AAECP....
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....f Shri Nilesh Bharani, in Central Range-4, DCIT-4(1) Mumbai, was telephonically requested to send across the copies of relevant evidence, but he failed to do so and therefore, it is not possible for me to verify as to how exactly the relevant entries were appearing in the seized records. Since, Shri Vipul Shah's name is appearing only as a contact person and not as recipient person, even as per letter of DDIT(Inv.), in my considered view, no additions could have been made in his hands. The same is therefore, directed to be deleted. 16.14 However, the AO is advised to examine these transactions in the hands of M/s. P.D. Constructions and M/s. Greenbird Pvt. Ltd., in accordance with the 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 th....