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2024 (6) TMI 818
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....unexplained cash credit under section 68 of the Act. 3 The assessee in the present case, a private limited company, is engaged in the business of shares dealing/ trading and investment. The brief history of the case is like this that there was a search and seizure operation along with survey operation at the premises of Shri Chandrakant Shah (for short SCS) and his employees and the associates of SCS dated 9th April 2013. There were found various documents of incriminating nature marked as "cash sheet and cheque sheet" containing the information about the accommodation entries provided by SCS to various parties. SCS used to provide accommodation entries through various intermediaries. He was maintaining 212 companies which were utilized for layering the funds, generating bogus share application money, unsecured loans, long-term capital gain, short term capital gain. The "cash and cheque sheets" contained the information of the intermediaries who were engaged in introducing the clients to SCS for providing the accommodation entries to the parties. 3.1 The statements under section 132(4) /133A of the Act of SCS and his employees were recorded wherein they admitted having been e....
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....posits has filed duly confirmed ledgers of the parties along with their addresses and PAN. According to the assessee, these intercorporate deposits were returned through cheque/RTGS to the parties. This fact was also admitted by SCS in his statement dated 13.1.2014. Furthermore, SCS has nowhere in the statement accepted that there was any exchange of cash against the bank entries taken by the assessee. 3.7 As per the assessee, the amount of Rs. 4,76,00,000 represents the sale proceeds which has been offered to tax in the profit and loss account and therefore the same cannot be added under the provisions of section 68 of the Act which will amount to double addition of the same amount. 3.8 The assessee also requested during the assessment proceedings to provide the opportunity of cross examination of SCS, his employees and the directors of the companies from whom the assessee was alleged to have received sale consideration and intercorporate deposits. 3.9 However, the AO disagreed with the contention of the assessee on the reasoning that all the companies from whom the assessee has received the fund either in the form of intercorporate deposits or as sales consideration are ....
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....heet' as well as in various account maintained in the name of intermediaries who had introduced clients to Shri Shirish Chandrakant Shah. On perusal of these sheets and the statement of Shri Shirish Chandrakant Shah and his employees established that the main intermediary through whom clients of Ahmedabad availed accommodation entries from Shri Shirish Chandrakant Shah was Shri Rajesh N. Jhaveri (key person of Rajesh Jhaveri Group). It was also established that in the cash sheets seized from Shri Shirish Chandrakant Shah, entries against the name "rajesh Jhaveri", "n navkar", "R JHAVERI", "RAJESH JHAVERI" and "N NAVKAR (sawaca)" related to Shri Rajesh Jhaveri (iii) The directors of various companies managed by Mr. Shirish Shah were dummy directors which are accepted to be true by such directors in affidavits filed at various stages including before Investigation Department. (iv) During the course of search at the premises of Mr. Shirish Shah, various incriminating material including cash sheets were found which prove that they have provided various types of accommodative entries against cheques and vice versa The sample copies of such loose papers are reproduc....
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....an/ICD taken by Appellant is genuine, whereas in case before Hon'ble Madhya Pradesh High Court, all the investor companies and directors have confirmed their transactions against notices us 133(6) of the Act. In the present case during the course of assessment proceedings, the AO had asked to the appellant to produce the directors of the companies from whom loans/ICD were taken but of directors remained present. It is observed that Jurisdictional High Court in the case of Amrapali Fincap Limited (supra) has upheld the Order of Hon'ble Settlement Commission in connection with entries taken from Mr. Shirish Shah and Group (x) A holistic approach is required to be made, test of preponderance of probability has to be applied and while deciding these facts, the evidences discussed herein above against Mr. Shirish Shah cannot be ignored (xi) Various judicial pronouncements discussed in preceding paras clearly prove that loan/ICD taken by Appellant is non-genuine. The decision referred herein above includes the decision of Jurisdictional High Court in the case of Mr. Pavan Sanghvi, one of the main persons of Mr. Shirish Shah Group, decision of Hon'ble Mumbai ....
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.... unexplained cash credit without disturbing purchases shown in the profit and loss account. In simple words, the assessee has already shown sales in the profit and loss account, meaning thereby such sale has been offered to tax. Now, the Revenue without reducing the corresponding sales from the profit and loss account, has treated the sales of Rs. 4,76,00,000 as unexplained cash credit under section 68 of the Act. In our considered view, such an act of the Revenue leads to the double addition of the same receipt shown by the assessee which is not desirable under the provisions of law until and unless the provisions warrant so. Thus, we are of the view that the Revenue has taken contradictory stand while framing the assessment which has been upheld subsequently by the learned CIT-A erroneously. Thus, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. 6.2 Regarding the balance amount of addition of Rs. Rs. 7,53,45,000 under section 68 of the Act, we note that the Revenue has not challenged the submission of the assessee that such borrowing has been repaid to the companies. In this respect, we find support and guidance from the judgm....
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....y the AO by adding to the total income of the assessee. 9. Aggrieved assessee preferred an appeal to the Ld. CIT-A who confirmed the order of the AO. 10. Being aggrieved by the order of the Ld. CIT-A, the assessee is in appeal before us. 10.1 The learned AR before us submitted that the assessee has been dealing in the scripts of multiple companies and therefore it is inappropriate to say that the assessee has taken some arranged transaction so as to book the bogus loss in the books of accounts. All the transactions for the purchase and sales in the impugned scripts were carried out through the banking channel. 10.2 On the contrary, the learned DR vehemently supported the order of the authorities below. 11. We heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the Tribunal in the group case of the assessee i.e. Vicky Rajesh Jhaveri V/s ITO in ITA No.426/AHD/2013 involving identical facts and circumstances has deleted the disallowance made by the revenue by observing as under: 9. We have heard the rival contentions of both the parties and perused the materials available on record. In the p....
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....fficult to register in mind that a person maintaining such a portfolio shall enter into any bogus transactions to bring down the profit so as to avoid the tax liability in a situation where he has sufficient brought forward losses. As such, considering the magnitude of the business of the assessee, the loss in dispute is miniscule and no prudent person will enter into such bogus transactions. 9.4 It was alleged by the revenue that the assessee has carried out the transactions in the script of M/s Prraneta Industries in connivance with SCS. The basis for holding so was that it was discovered during the search proceedings at the premises of SCS and M/s Prraneta Industries that the company namely M/s Prraneta Industries is engaged in providing accommodation entries through the involvement of SCS. However, on the contrary we find that all the transactions were carried out by the assessee at the stock exchange through the involvement of registered/ stockbrokers. But, the Revenue has not established any link between SCS/ M/s Prraneta Industries viz a viz the registered stockbrokers which in our considered view was necessary for carrying out manipulation in the script in dispute.....
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....ash to purchase trading loss. (vi) The assessee has no nexus with the company, its directors or operators. He is not concerned with the activity of broker and has no control over the same. (vii) The purchase and sale of shares have been duly recognized by the concerned company. They are also reflected in the balance sheet of the assessee. (viii) The Opportunity of cross examination is not given. 9.9 In our view, just the modus operandi, generalisation, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee. Unless specific evidence is brought on record to prove that the assessee was involved in the collusion with the entry operator/ stockbrokers for such a scam. In the absence of such finding how is it possible to link their wrong doings with the assessee. Further the case laws relied by the AO are with regard to test of human probabilities which may be of greater impact but the same cannot be used blindly without disposing off the evidence forwarded by the assessee especially without bringing any evidence from independent enquiry corroborating the allegation. In holding so we draw support and guidan....
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....titious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that "There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different vi....
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.... pertaining to the assessee. Accordingly, the AO disallowed the claim of the loss by adding the same to the total income of the assessee. On appeal, the ld. CIT-A concurred with the view of the AO. 17. Being aggrieved by the order of the Ld. CIT-A, the assessee is in appeal before us. 17.1 The learned AR before us submitted that the revenue has not doubted on the genuineness of the loss but rejected the claim of the assessee on the reasoning that such loss was belonging /pertaining to other parties. Therefore, the revenue was under the apprehension that such loss might have also been claimed by such other parties. As per the Revenue, such a loss should not be claimed twice by 2 different parties, once by the assessee and the other party to whom this loss belongs to. The ld. AR fairly agreed with the apprehension of the revenue. Accordingly, the ld. AR contended that the matter can be set aside to the AO to verify whether such loss has been claimed by the other parties too, if yes, then the same can be disallowed or otherwise the same should be allowed to the assessee. 17.2 On the contrary, the learned DR vehemently supported the order of the authorities below. 18. We he....
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....e assessee in its ground of appeal for the AY 2010-11 is identical to the issue raised by the assessee in ITA No. 401/AHD/2023 for the assessment year 2012-13 except the change in the amount and the basis of calculation being peak credit. Therefore, the findings given in IT(SS)A No. 401/AHD/2023 shall also be applicable for the assessment year 2010-11. The appeal of the assessee for the AY 2012-13 has been decided by us vide paragraph No. 6 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the assessment year 2010-11. Hence, the ground of appeal filed by the assessee is hereby allowed. 23. In the result, the appeal of the assessee is hereby partly allowed for the statistical purposes. Coming to ITA No. 400/AHD/2023 for the AY 2011-12 24. The assessee in ground No. 1 has challenged the validity of the proceedings initiated under section 143(3) read with section 147 of the Act. 25. At the outset, the learned counsel for the assessee before us submitted that he has been instructed by the assessee not to press this ground of appeal. Accordingly, we dismi....
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....es Limited being bogus in nature. 32. At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2013-14 is identical to the issue raised by the assessee in ITA No. 401/AHD/2023 for the assessment year 2012-13 except the change of the scripts. Therefore, the findings given in IT(SS)A No. 401/AHD/2023 shall also be applicable for the assessment year 2013-14. The appeal of the assessee for the AY 2012-13 has been decided by us vide paragraph No. 11 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the assessment year 2013-14. Hence, the ground of appeal filed by the assessee is hereby allowed. 33. The 2nd issue raised by the assessee is that the learned CIT-A erred in confirming the order of the AO by upholding the addition on account of unexplained cash credit under section 68 of the Act amounting to Rs. 2,84,90,000.00 34. At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2013-14 is identical to the issue raised by the assessee in ITA No. 401/AHD/2023 for the assessment ye....