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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GAGAN GOYAL
PER GAGAN GOYAL, A.M: These appeals by assessee are directed against the order of Ld. CIT (A)-47, Mumbai dated 17.02.2023 u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y. 2013-14 respectively. The assessee has raised the following grounds in AY 2013-14:-
1. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) failed to comment on validity of the order passed u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961 in absence of any incriminating material found during search.
2. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in not commenting on the fact that an opportunity to cross examination has not been awarded to the appellant.
3. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the additions made by the Ld. AO without appreciating the fact that the repayment of the loan taken has already been made.
4. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 1, 65, 00,000/- by treating the loan received as unexplained cash credit u/s 68 of the Income Tax Act, 1961.
3 & 1231/Mum/2023 E-Ally Equities (India) Pvt. Ltd., E-Ally Commodities (India) Pvt. Ltd., 5. The Appellant craves leaves to add, to amend, alter, modify and/or withdraw any or all of the above grounds of appeal, each of which are without prejudice to one another.
2. The brief facts of the case are that assessee company was engaged in the business of shares and securities as brokers/sub-brokers of Bombay Stock Exchange, National Stock Exchange, OTC Exchange or any other Stock Exchange in India or elsewhere and to work as sub- broker of any broker of any Stock Exchange and other authority in India or elsewhere to do the business as Stockbrokers, stock sub-brokers, stock-jobbers, investment fund managers; to become members of Stock Exchanges, to get registered with Stock Exchanges, Securities and Exchange Board of India other Authorities/Institutions in India or elsewhere and to buy, sell transfer, hypothecate, deal in dispose of any shares stocks, securities, properties, bonds, any Government local authority bonds certificates, debentures, whether perpetual or redeemable debentures stocks and to invest in any shares, securities, stocks, debentures, debenture-stock, bonds, participation, certifications, participative units, mutual funds, negotiable instrument - instruments of every description, obligations or securities by original subscription, tender, purchase, exchange or otherwise to guarantee the subscription thereof to exercise & enforce all rights and powers conferred by or the ownership thereof to buy, sell transfer hypothecate, deal in dispose of any shares stocks, securities, properties, bonds, any Government local authority bonds & certificates, debentures. The Assessee Company have income from Business & Profession during the concerned year. Net Loss depicted by Profit & Loss Account was 14, 56,395/-.
4 & 1231/Mum/2023 E-Ally Equities (India) Pvt. Ltd., E-Ally Commodities (India) Pvt. Ltd., 3. A search and seizure operation u/s. 132 of the Act was carried out by the Investigation Unit in the case of Shri Praveen Kumar Jain on 01.10.2013. During the course of search, the director of the assessee company Shri Sandeep Maloo was also covered. Case of the assessee was centralized and a notice u/s. 153C of the Act was issued. In response to the said notice, the assessee filed return of income u/s. 153C on 02.02.2016 declaring total income at Rs. NIL. On the basis of evidences recovered and the statements of various persons recorded during the course of search, it was found that Mr. Praveen Kumar Jain was not doing any genuine business activity but was engaged in the activity of providing accommodation entries in the guise of unsecured loan/share capital/ purchase and sale bills to those who wanted to bring their unaccounted income/money into their books of accounts without paying any taxes. During the assessment proceeding, it was found that the assessee also taken accommodation entries in the guise of unsecured loan during the relevant previous year. Hence, show cause notice under section 153C r.w.s 143(2) was duly issued to assessee dated 17.12.2015 which is made a part of this order and is annexed herewith as Ann. A, to show why the loans taken from Praveen Kumar Jain & his associates concern should not be treated as accommodation entries taken and should not be added in the income of assessee treating the same as unexplained credits in the books of account of assessee.
On page no. 52, para 5.20.III alongwith table 2, we are reproducing in verbatim as under:-
These two entities are there in the list mentioned (supra) vide serial no. 39 & 40 and belong to Mr. Praveen Kumar Jain. Statement of Praveen Kumar Jain as produced on page no. 65 of the assessment order vide para 5.22 is as under;-
In addition to above, the statement of director in M/s. Atharva Business Pvt. Ltd. is also reproduced as under vide page 19 para 5.6.III:-
16 & 1231/Mum/2023 E-Ally Equities (India) Pvt. Ltd., E-Ally Commodities (India) Pvt. Ltd., 7. As a final fact finding authority, this Tribunal cannot be superficial in its assessment of the genuineness of a transaction, and this call is to be taken not only in the light of the face value of the documents presented before the Tribunal but also in the light of all the surrounding circumstances, the preponderance of human probabilities and ground realities. There may be a difference in subjective perception on such issues, on the same set of facts, but that cannot be a reason enough for the fact-finding authorities to avoid taking subjective calls on these aspects, and remain confined to the findings on the basis of irrefutable evidence.
In this case, notice u/s 250 of the Act was issued on 27.04.2016, 16.02.2022, 16.02.2022, 27.04.2022, 11.05.2022, 29.06.2022, 31.10.2022 and 12.01.2023. In response to the notice, no explanation, representation or submissions has been made by the assessee. It is also observed that Shri Praveen Kumar Jain retracted from his statement after almost 8 months from the date of search, without furnishing any documentary evidence to explain or prove the reasons for such a gap in retraction of statement given before the investigation wing. In department’s record Shri Praveen Kumar Jain is a well known established entry provider and he himself accepted before various forums that he is into the business of providing accommodation entries for various purposes like purchase bills, sales bills, fictitious LTCG, STCL, unsecured loans and share capital, etc. He himself offered commission earnings from all these activities carried through various propriety firms, partnership firms and private limited companies (as per the list enumerated in the assessment order) in his personal assessments.
In the given circumstances and considering the landmark judicial pronouncements by Hon’ble Supreme Court in the case of CIT v. Durga Prasad
17 & 1231/Mum/2023 E-Ally Equities (India) Pvt. Ltd., E-Ally Commodities (India) Pvt. Ltd., More and Sumati Dayal v. Commissioner of Income-tax mentioned below, we do not find any strength in the grounds of appeal raised by the assessee.
[1971] 82 ITR 540 (SC) CIT v. Durga Prasad More “The Tribunal is the final fact finding body. It cannot be said that it’s finding as to the unreality of the trust put forward is not based on any evidence or the same is otherwise vitiated. Prima facie, the said finding is a finding of fact. The High Court, as seen earlier, directed the Tribunal to state a case and submit to the High Court the question set out earlier. From that question, it appears that the High Court was of the opinion that for arriving at its finding the Tribunal had to interpret the two documents referred to in that question. This conclusion of the High Court appears to us to be an erroneous one. The Tribunal did not interpret those documents. It merely found itself unable to accept the correctness of some of the recitals in those documents. That does not mean that the Tribunal interpreted those documents. Whether to accept those recitals or not was within the province of the Tribunal. Unless its conclusion is held to be perverse or is not supported by any evidence or is based on irrelevant evidence, the High Court had no jurisdiction to interfere with its findings. We shall presently see what the High Court has to say about that finding.”
Now we shall proceed to examine the validity of those grounds that appealed to the learned judges, (it is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents.
18 & 1231/Mum/2023 E-Ally Equities (India) Pvt. Ltd., E-Ally Commodities (India) Pvt. Ltd., [1995] 80 Taxman 89 (SC) Sumati Dayal v. Commissioner of Income-tax “It is no doubt true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act lies upon the assessee - Parimisetti Seetharamamma's case (supra) at p.
But, in view of section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such case there is, prima facie, evidence against the assessee, viz., the receipt of money, and if he fails to rebut, the said evidence being un-rebutted, can be used against him by holding that it was a receipt of an income nature.”
There is no dispute that the amounts were received by the appellant from various race clubs on the basis of winning tickets presented by her. What is disputed is that they were really the winnings of the appellant from the races. This raises the question whether the apparent can be considered as real. As laid down by this Court, apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities - CIT v. Durga Prasad More [1971] 82 ITR 540, at pp. 545, 547 (SC).
Despite of the above observations, as the proceedings before the Ld. CIT (A) was carried out in ex-parte manner. The claim of the assessee that all the notices of hearing were delivered through e-mail and that email account was not pertaining to him otherwise he would have substantiate his case with relevant explanations and evidences. In view of this for sake of justice and fare play, we restore the matter back to the file of Ld. CIT (A) with a direction to the assessee to furnish latest active e-mail account and other correspondence addresses to the 19 & 1231/Mum/2023 E-Ally Equities (India) Pvt. Ltd., E-Ally Commodities (India) Pvt. Ltd., office of Ld. CIT (A) without being fail. The Ld. CIT (A) is also directed to examine the matter in the light of explanations and evidences adduced by the assessee after giving a proper opportunity of being heard.
In the result, appeal of the assessee is allowed for statistical purposes.
ITA No. 1231/Mum/2023 for AY 2013-14
The assessee has raised the following grounds in this appeal:-
On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) failed to comment on validity of the order passed u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961 in absence of any incriminating material found during search.
On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in not commenting on the fact that an opportunity to cross examination has not been awarded to the appellant.
On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the additions made by the Ld. AO without appreciating the fact that the repayment of the loan taken has already been made.
4. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 2, 38, 50,000/- by treating the loan received as unexplained cash credit u/s 68 of the Income Tax Act, 1961.
The Appellant craves leaves to add, to amend, alter, modify and/or withdraw any or all of the above grounds of appeal, each of which are without prejudice to one another.
20 & 1231/Mum/2023 E-Ally Equities (India) Pvt. Ltd., E-Ally Commodities (India) Pvt. Ltd., 13. Since we have already decided the similar grounds of appeal raised by the assessee in and the facts of this appeal are exactly similar and are applicable mutatis mutandis. Hence, this appeal of assessee is allowed for statistical purposes.
In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open court on 25th day of August, 2023.