SHRI NARENDRA S SHAH,MUM vs. DCIT, CC-2(2), , MUM

PER OM PRAKASH KANT, AM

These appeals by the assessee and the Revenue are directed against separate orders passed by the Ld. First Appellate Authority i.e.Ld Commissioner of Income-tax (appeals) for various assessment

Shri Narendra S Shah 2 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

years from 2009-10 to 2016 10 to 2016-17. The appeals being connected to 17. The appeals being connected to single assessee, same were heard together and disposed off by way ngle assessee, same were heard together and disposed off by way ngle assessee, same were heard together and disposed off by way of this consolidated order for convenience. of this consolidated order for convenience.

Shri Narendra S Shah 3 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

Rs.11,31,13,070/-,as as against returned loss of Rs.2,12,78,495/ loss of Rs.2,12,78,495/- declared by the assessee in the return of income filed on declared by the assessee in the return of income filed on declared by the assessee in the return of income filed on 30.09.2009. The case of the assessee was reopened by way of issue 30.09.2009. The case of the assessee was reopened by way of issue 30.09.2009. The case of the assessee was reopened by way of issue of notice u/s 148 of the Income of notice u/s 148 of the Income-tax Act, 1961 (in short ‘the Act’) x Act, 1961 (in short ‘the Act’) dated 25.03.2014. In the reasons recorded, the Assessing Officer dated 25.03.2014. In the reasons recorded, the Assessing Officer dated 25.03.2014. In the reasons recorded, the Assessing Officer noted that tax was not deducted by the assessee on the interest noted that tax was not deducted by the assessee on the interest noted that tax was not deducted by the assessee on the interest payment to share payment to share broker namely ‘M/s Sherkhan M/s Sherkhan’ despite the turnover of assessee during the asse assessee during the assessment year 2008 ssment year 2008-09i.e. immediately earlier year, being immediately earlier year, being more than the prescribed limit of more than the prescribed limit of Rs.40,00,000/-. The Assessing Officer accordingly disallowed the . The Assessing Officer accordingly disallowed the . The Assessing Officer accordingly disallowed the interest payment of Rs.24,26,156/ payment of Rs.24,26,156/- in terms of section 40(a)(ia) of in terms of section 40(a)(ia) of the Act. On further appeal, the L . On further appeal, the Ld. CIT(A) upheld the validity of the d. CIT(A) upheld the validity of the reassessment proceedings as well as merit of the disallowance. reassessment proceedings as well as merit of the reassessment proceedings as well as merit of the Aggrieved, the assessee is before the Tribunal by way of challenging Aggrieved, the assessee is before the Tribunal by way of challenging Aggrieved, the assessee is before the Tribunal by way of challenging validity of the reassessment as well as the validity of the reassessment as well as the disallowance disallowance on merit.

The ground No. 2 of the appeal being on merit, it was was taken firstfor adjudication. The relevant finding of the Ld. CIT(A) on the issue in . The relevant finding of the Ld. CIT(A) on the issue in . The relevant finding of the Ld. CIT(A) on the issue in dispute is reproduced as under: dispute is reproduced as under:

“6.2 Decision: 6.2 Decision:- I have carefully considered the facts of the I have carefully considered the facts of the case, submissions of the Appellant, the obse case, submissions of the Appellant, the observations of the rvations of the A contained in the assessment order and the other A contained in the assessment order and the other A contained in the assessment order and the other materials on record on this issue. The only issue arises in materials on record on this issue. The only issue arises in materials on record on this issue. The only issue arises in this appeal of the appellant is regarding disallowances of this appeal of the appellant is regarding disallowances of this appeal of the appellant is regarding disallowances of interest paid u/s 40(a)(ia) of the Income Tax Act. The case interest paid u/s 40(a)(ia) of the Income Tax Act. The case interest paid u/s 40(a)(ia) of the Income Tax Act. The case was reopene was reopened Ws.147 of the Act for the reasons d Ws.147 of the Act for the reasons escapement of income of Rs. 24,26,156/ escapement of income of Rs. 24,26,156/-under section under section 40(a)(ia) of the IT Act 1961. The objection filed for reopening 40(a)(ia) of the IT Act 1961. The objection filed for reopening 40(a)(ia) of the IT Act 1961. The objection filed for reopening

Shri Narendra S Shah 4 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

ofassessment was disposed of by AO vide speaking order ofassessment was disposed of by AO vide speaking order ofassessment was disposed of by AO vide speaking order dated 26/09/2014. dated 26/09/2014. Further, in response to show c Further, in response to show caused by AO the appellant aused by AO the appellant submitted about delayed payment to Share submitted about delayed payment to Share submitted about delayed payment to Share-khan as follows: "According to your goodself the reopening is as per law and "According to your goodself the reopening is as per law and "According to your goodself the reopening is as per law and is based on evidence. Further your goodself has asked the is based on evidence. Further your goodself has asked the is based on evidence. Further your goodself has asked the assessee to furnish the reason why disallowance of int assessee to furnish the reason why disallowance of int assessee to furnish the reason why disallowance of interest should not be made by applying the provisions of section should not be made by applying the provisions of section should not be made by applying the provisions of section 40lalia) of the IT Act, 1961. It is submitted that the said 40lalia) of the IT Act, 1961. It is submitted that the said 40lalia) of the IT Act, 1961. It is submitted that the said provisions are not applicable to the facts of the case in view provisions are not applicable to the facts of the case in view provisions are not applicable to the facts of the case in view of the following: of the following: 1. During the year under consideration assessee had 1. During the year under consideration assessee had 1. During the year under consideration assessee had traded as well as made investment in shares & securities traded as well as made investment in shares & securities traded as well as made investment in shares & securities through brokers. One such broker through whom assessee through brokers. One such broker through whom assessee through brokers. One such broker through whom assessee had bought share was M/s.Sharekhan. Since the assessee had bought share was M/s.Sharekhan. Since the assessee had bought share was M/s.Sharekhan. Since the assessee had incurred huge losses in share investment as well as F had incurred huge losses in share investment as well as F had incurred huge losses in share investment as well as F & 0 trading the financial posit & 0 trading the financial position got deteriorated. Because ion got deteriorated. Because of which he could not make the payment of obligation in of which he could not make the payment of obligation in of which he could not make the payment of obligation in time. This fact is supported by the annexed ledger Ale. as time. This fact is supported by the annexed ledger Ale. as time. This fact is supported by the annexed ledger Ale. as per Ex 'A' A perusal of which it is clear that assessee has per Ex 'A' A perusal of which it is clear that assessee has per Ex 'A' A perusal of which it is clear that assessee has made the payment belatedly. made the payment belatedly. 2. For delaying he paym 2. For delaying he payment Ms. Sharekhan has charged ent Ms. Sharekhan has charged compensation of Rs.21,68,826.41 from assessee and compensation of Rs.21,68,826.41 from assessee and compensation of Rs.21,68,826.41 from assessee and balance sun of Rs.2,60,530/ balance sun of Rs.2,60,530/- charged by Sundry loan charged by Sundry loan Creditors. The details of which is submitted hereto as per Creditors. The details of which is submitted hereto as per Creditors. The details of which is submitted hereto as per Ex 'B'. 3. The fact that this details was disclosed to the 3. The fact that this details was disclosed to the 3. The fact that this details was disclosed to the predecessor La. AO please find herewith the details of essor La. AO please find herewith the details of essor La. AO please find herewith the details of delayed interest charged by M/s.Sharekhan as per Ex 'C' delayed interest charged by M/s.Sharekhan as per Ex 'C' delayed interest charged by M/s.Sharekhan as per Ex 'C' for you goodself perusal and consideration. for you goodself perusal and consideration. The assessee has inadvertently debited the said amount as The assessee has inadvertently debited the said amount as The assessee has inadvertently debited the said amount as delayed payment interest in P & L A/c instead of delayed payment interest in P & L A/c instead of delayed payment interest in P & L A/c instead of compensatory payment. compensatory payment. 4. Since the assessee has already disclosed this fact the 4. Since the assessee has already disclosed this fact the 4. Since the assessee has already disclosed this fact the impugned acion is mere change of opinion. impugned acion is mere change of opinion.

Shri Narendra S Shah 5 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

Shri Narendra S Shah 6 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

that the obligation amount was not paid in time. Thus, the that the obligation amount was not paid in time. Thus, the that the obligation amount was not paid in time. Thus, the payment was delayed by appellant and it has further failed payment was delayed by appellant and it has further failed payment was delayed by appellant and it has further failed to deduct TDS on paid interest and thereby gave new name to deduct TDS on paid interest and thereby gave new name to deduct TDS on paid interest and thereby gave new name for for interest interest paid paid contending contending tha that t this this payment payment is is compensation amount. Definitely, the appellant has failed to compensation amount. Definitely, the appellant has failed to compensation amount. Definitely, the appellant has failed to deduct tax on interest paid which is required as per deduct tax on interest paid which is required as per deduct tax on interest paid which is required as per provisions of section of section 194A of the IT. Act. 6.4 In this respect the appellant has relied on some case 6.4 In this respect the appellant has relied on some case 6.4 In this respect the appellant has relied on some case- laws. It has relled on laws. It has relled on the judgement given by Hon'ble the judgement given by Hon'ble Supreme Court in the case of Mahalaxmi Sugar Mills Ltd Supreme Court in the case of Mahalaxmi Sugar Mills Ltd Supreme Court in the case of Mahalaxmi Sugar Mills Ltd W/s. CIT 2008 TMI 5833 and contended that in this order I W/s. CIT 2008 TMI 5833 and contended that in this order I W/s. CIT 2008 TMI 5833 and contended that in this order I Is discussed that portion of interest paid on delayed Is discussed that portion of interest paid on delayed Is discussed that portion of interest paid on delayed payment is compensatory I nature. fiowever, the contention payment is compensatory I nature. fiowever, the contention payment is compensatory I nature. fiowever, the contention of the appellant is not tenable. The Issue discussed in this of the appellant is not tenable. The Issue discussed in this of the appellant is not tenable. The Issue discussed in this judgement is based on the interest payable on arrears of judgement is based on the interest payable on arrears of judgement is based on the interest payable on arrears of cess under 8.3(3) of the Act and specific direction is given cess under 8.3(3) of the Act and specific direction is given cess under 8.3(3) of the Act and specific direction is given that the interest payable is in the nature of compensation that the interest payable is in the nature of compensation that the interest payable is in the nature of compensation paid to the Gover paid to the Government for delay I the payment of cess. The nment for delay I the payment of cess. The facts of the case in present appeal is totally different and facts of the case in present appeal is totally different and facts of the case in present appeal is totally different and appellant cannot take shelter of this decision. appellant cannot take shelter of this decision. 6.5 In the present case, the appellant has made delayed 6.5 In the present case, the appellant has made delayed 6.5 In the present case, the appellant has made delayed payment of interest for trading in, shares and s payment of interest for trading in, shares and s payment of interest for trading in, shares and securities. The claim of the appellant that to treat this payment as The claim of the appellant that to treat this payment as The claim of the appellant that to treat this payment as compensation amount cannot be accepted in the absence of compensation amount cannot be accepted in the absence of compensation amount cannot be accepted in the absence of any evidence. The A.0. has rightly treated it to be the any evidence. The A.0. has rightly treated it to be the any evidence. The A.0. has rightly treated it to be the payment of interest charges and invoked the provisions of payment of interest charges and invoked the provisions of payment of interest charges and invoked the provisions of section 1944 of t section 1944 of the IT. Act. In any case it will be injustice to he IT. Act. In any case it will be injustice to the department if the appellant does not pay TDS due to the the department if the appellant does not pay TDS due to the the department if the appellant does not pay TDS due to the government as per the provisions of section 1944 of the government as per the provisions of section 1944 of the government as per the provisions of section 1944 of the Income Tax Act by misinterpreting obligation money as Income Tax Act by misinterpreting obligation money as Income Tax Act by misinterpreting obligation money as compensation amount.However, itis wort compensation amount.However, itis worth mentioning that h mentioning that making submission on piece of paper cannot absolve the making submission on piece of paper cannot absolve the making submission on piece of paper cannot absolve the appellant from its responsibility in submitting necessary appellant from its responsibility in submitting necessary appellant from its responsibility in submitting necessary details. Since assessee has failed to deduct TDS on interest details. Since assessee has failed to deduct TDS on interest details. Since assessee has failed to deduct TDS on interest paid, the interest expense has been disallowed by the AO paid, the interest expense has been disallowed by the AO paid, the interest expense has been disallowed by the AO u/s. 40(a)(ia). At appellate stage the appellant has file (a)(ia). At appellate stage the appellant has file (a)(ia). At appellate stage the appellant has file submission as filed before the AO. However failed for submission as filed before the AO. However failed for submission as filed before the AO. However failed for compliance with the genuineness of the transactions and compliance with the genuineness of the transactions and compliance with the genuineness of the transactions and TDS provisions. Considering the above facts and the failure TDS provisions. Considering the above facts and the failure TDS provisions. Considering the above facts and the failure on part of the assessee to justify on part of the assessee to justify the genuineness of above the genuineness of above transactions and compliance with TDS provisions, the transactions and compliance with TDS provisions, the transactions and compliance with TDS provisions, the

Shri Narendra S Shah 7 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

action of the AO is justifiable. Before me, in appellate action of the AO is justifiable. Before me, in appellate action of the AO is justifiable. Before me, in appellate proceedings, no evidence or explanation has been furnished proceedings, no evidence or explanation has been furnished proceedings, no evidence or explanation has been furnished by the assessee as to why the provisions of section 40(a)(ia) by the assessee as to why the provisions of section 40(a)(ia) by the assessee as to why the provisions of section 40(a)(ia) are are are not not not applicable applicable applicable or or or whether whether whether there there there were were were any any any inconsistencies to the contrary, Ihave no reason to deviate inconsistencies to the contrary, Ihave no reason to deviate inconsistencies to the contrary, Ihave no reason to deviate from the position taken by the AO. Therefore, the addition from the position taken by the AO. Therefore, the addition from the position taken by the AO. Therefore, the addition made by the AO is confirmed. Consequently, ground no. 2 made by the AO is confirmed. Consequently, ground no. 2 made by the AO is confirmed. Consequently, ground no. 2 stand Dismissed. stand Dismissed.” 4. We have heard r We have heard rival submission of the parties on the issue in ival submission of the parties on the issue in dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the Ld. Counsel of the assessee submitted that the payee ‘M/s Ld. Counsel of the assessee submitted that the payee Ld. Counsel of the assessee submitted that the payee Sherkhan’ has already paid taxes on the said receipt and therefore, has already paid taxes on the said receipt and therefore, has already paid taxes on the said receipt and therefore, assessee is no more assessee in default under the proviso to section more assessee in default under the proviso to section more assessee in default under the proviso to section 40(a)(ia) of the Act. The Ld. Counsel of the assessee submitted that ) of the Act. The Ld. Counsel of the assessee submitted that ) of the Act. The Ld. Counsel of the assessee submitted that the assessee is willing to the assessee is willing to furnish a certificate from an accountant in furnish a certificate from an accountant in prescribed form to the effect that payee has furnished his return of prescribed form to the effect that payee has furnished his ret prescribed form to the effect that payee has furnished his ret income u/s 139 and taken into account said sum on interest while income u/s 139 and taken into account said sum on interest while income u/s 139 and taken into account said sum on interest while computing his return of income and also paid tax due on the computing his return of income and also paid tax due on the computing his return of income and also paid tax due on the income declared in the return of income as required under proviso income declared in the return of income as required under proviso income declared in the return of income as required under proviso to section 40(a)(ia) read with proviso to section 201(1) ) read with proviso to section 201(1) of the Act. In ) read with proviso to section 201(1) view of undertaking given by the Ld. Counsel of the assessee, we view of undertaking given by the Ld. Counsel of the assessee view of undertaking given by the Ld. Counsel of the assessee feel appropriate to restore this issue back to the file of the Ld. feel appropriate to restore this issue back to the file of the Ld. feel appropriate to restore this issue back to the file of the Ld. Assessing Officer for deciding afresh after verifying the certificate Assessing Officer for deciding afresh after verifying the certificate Assessing Officer for deciding afresh after verifying the certificate which will be filed by the assessee befo which will be filed by the assessee before him as per the proviso to re him as per the proviso to section 40(a)(i) read with proviso to section 201(1) of the Act. The section 40(a)(i) read with proviso to section 201(1) of the Act. The section 40(a)(i) read with proviso to section 201(1) of the Act. The ground No. 2 of the appeal of the assessee is accordingly allowed for ground No. 2 of the appeal of the assessee is accordingly allowed for ground No. 2 of the appeal of the assessee is accordingly allowed for statistical purposes. statistical purposes.

Shri Narendra S Shah 8 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

4.1 Since the ground o Since the ground on merit has been restored to the file of t merit has been restored to the file of the Assessing Assessing Assessing Officer, Officer, Officer, the the the ground ground ground challenging challenging challenging validity validity validity of of of the the the reassessment is not being adjudicated at this stage being merely reassessment is not being adjudicated at this stage being merely reassessment is not being adjudicated at this stage being merely academic. The ground No.1 of the appeal is accordingly dismissed academic. The ground No.1 of the appeal is accordingly dismissed academic. The ground No.1 of the appeal is accordingly dismissed as infructuous.

Shri Narendra S Shah 9 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

“c) Rs. 19,55,340/ “c) Rs. 19,55,340/ - Pages 88 lo 109 refers to addition of Rs. 19,55,000/ Pages 88 lo 109 refers to addition of Rs. 19,55,000/ Pages 88 lo 109 refers to addition of Rs. 19,55,000/- on account of unproved loans which are claimed to be from 7 account of unproved loans which are claimed to be from 7 account of unproved loans which are claimed to be from 7 persons. In whose case loan confirmation were not filed. persons. In whose case loan confirmation were not filed. persons. In whose case loan confirmation were not filed. Now atso the loan confirmation being the primary document Now atso the loan confirmation being the primary document Now atso the loan confirmation being the primary document also not filed in respect of Shri Dhiren Shah, Shri Lalit also not filed in respect of Shri Dhiren Shah, Shri Lalit also not filed in respect of Shri Dhiren Shah, Shri Lalit Motwani, M/s Shradha Car Motwani, M/s Shradha Carrier and pectaustChorehanadna rier and pectaustChorehanadna further evidence to prove the genuineness of loan has been further evidence to prove the genuineness of loan has been further evidence to prove the genuineness of loan has been filed. filed. filed. In In In case case case of, of, of, M/s M/s M/s Mangesh Mangesh Mangesh Construction Construction Construction loan loan loan confirmation and affidavits filed now. The assessce has not confirmation and affidavits filed now. The assessce has not confirmation and affidavits filed now. The assessce has not furnished the bank account to verify the genuineness of furnished the bank account to verify the genuineness of furnished the bank account to verify the genuineness of

Shri Narendra S Shah 10 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

transaction and creditworthiness of the loan creditors. In ansaction and creditworthiness of the loan creditors. In ansaction and creditworthiness of the loan creditors. In respect of Shri Kishor Mehta loan confirmation has been respect of Shri Kishor Mehta loan confirmation has been respect of Shri Kishor Mehta loan confirmation has been filed but no bank account details filed. The assessee has filed but no bank account details filed. The assessee has filed but no bank account details filed. The assessee has not furnished the bank account to verify the genuineness of not furnished the bank account to verify the genuineness of not furnished the bank account to verify the genuineness of transaction and creditwor transaction and creditworthiness of the loan creditors. In thiness of the loan creditors. In respect of Shri RamsahayNishabh the assessee has filed respect of Shri RamsahayNishabh the assessee has filed respect of Shri RamsahayNishabh the assessee has filed unsigned loan confirmation and also not furnished the bank unsigned loan confirmation and also not furnished the bank unsigned loan confirmation and also not furnished the bank account to verify the genuineness of transaction and account to verify the genuineness of transaction and account to verify the genuineness of transaction and creditworthiness of the loan creditors. Thus, the asses creditworthiness of the loan creditors. Thus, the asses creditworthiness of the loan creditors. Thus, the assessee has failed to prove the genuineness of unsecured loans of has failed to prove the genuineness of unsecured loans of has failed to prove the genuineness of unsecured loans of which the onus lies on the assessee to prove the identity of which the onus lies on the assessee to prove the identity of which the onus lies on the assessee to prove the identity of the person, genuineness of the transactions and credit the person, genuineness of the transactions and credit the person, genuineness of the transactions and credit worthiness of the loan creditors Considering the facts of the worthiness of the loan creditors Considering the facts of the worthiness of the loan creditors Considering the facts of the case, the additi case, the addition made of Rs. 19,55,000/- is retained. is retained.” Hence, after careful consideration of the submissions/ Hence, after careful consideration of the submissions/ Hence, after careful consideration of the submissions/ documents filed, the assessee's claim of genuineness of documents filed, the assessee's claim of genuineness of documents filed, the assessee's claim of genuineness of loan is not accepted and the addition made in the original loan is not accepted and the addition made in the original loan is not accepted and the addition made in the original assessment totaling to Rs. 1,03,86,340/ assessment totaling to Rs. 1,03,86,340/- as unexplained nexplained cash credit u/s 68 on account of unproved loans is cash credit u/s 68 on account of unproved loans is cash credit u/s 68 on account of unproved loans is sustained.” 8. Further, the Ld. CIT(A) upheld the addition observing as Further, the Ld. CIT(A) upheld the addition observing as Further, the Ld. CIT(A) upheld the addition observing as under:

“6.2.5. Rs. 19,55,340/ 6.2.5. Rs. 19,55,340/- on account of loan from 7 on account of loan from 7 parties The observation of the A0 is in page no. 4 of the order. The observation of the A0 is in page no. 4 of the order. The observation of the A0 is in page no. 4 of the order. The appellant has commented that for making the addition, the appellant has commented that for making the addition, the appellant has commented that for making the addition, the AO has taken casual approach and neither tried further to AO has taken casual approach and neither tried further to AO has taken casual approach and neither tried further to ascertain the truthfulness of confirmation and other details ascertain the truthfulness of confirmation and other details ascertain the truthfulness of confirmation and other details filed nor issued notice us. 133(6) of the Act before arriving filed nor issued notice us. 133(6) of the Act before arriving filed nor issued notice us. 133(6) of the Act before arriving at the conclu at the conclusion. From the order, I find that the AO has concluded that no From the order, I find that the AO has concluded that no From the order, I find that the AO has concluded that no loan confirmation was filed for four persons. Also bank loan confirmation was filed for four persons. Also bank loan confirmation was filed for four persons. Also bank accounts are not filed with respect to the three persons, accounts are not filed with respect to the three persons, accounts are not filed with respect to the three persons, whose confirmations are filed. On verification of the whose confirmations are filed. On verification of the whose confirmations are filed. On verification of the additional evidences, I f additional evidences, I find that these lacunas still exist ind that these lacunas still exist and the observations of the AO are correct. These are and the observations of the AO are correct. These are and the observations of the AO are correct. These are

Shri Narendra S Shah 11 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

primary primary primary documents documents documents to to to establish establish establish genuineness genuineness genuineness of of of transactions. transactions. Hence, addition of Rs. 19,55,340/ Hence, addition of Rs. 19,55,340/- is confirmed. Thus, is confirmed. Thus, ground of appeal No. 1 is partly allowed. ground of appeal No. 1 is partly allowed.” e heard rival submission of the parties on the issue in 9. We have heard rival submission of the parties on the issue in e heard rival submission of the parties on the issue in dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the documents filed before Ld. Counsel of the assessee has filed Ld. Counsel of the assessee has filed a list of documents lower authorities in respect of seven unsecured loan parties in respect of seven unsecured loan parties, which in respect of seven unsecured loan parties is reproduced as under: is reproduced as under:

C-1 Dhiren Shah 45340 45340 2008-09 Ledger 45340 2009-10 C-2 Kishor T Mehta 568000 Opening Confirmation 125000 125000 2008-09 693000 2009-10 PAN CARD 693000 693000 Ledger C-3 Late Lalit Motani Ledger Confirmation Dev Ashish 335000 335000 2008-09 255000 2009-10 He has expired 80000 2010-11 335000 335000 C-4 Mangesh Account Confirmation Construction 800000 800000 2008-09 307606 2009-10 Ledger -492394 2008-09 Affidavit 800000 307606 C-5 Ramshay Nisad Unsigned Confirmation 50000 50000 2008-09 50000 2009-10 Ledger 50000 50000 C-6 Shraddha 500000 500000 03/12/2 500000 01/12/2 01/12/2 Ledger Carrier 008 008 Bank Statement C-7 Samiullah 100000 100000 2008-09 Chaudhary 175000 2009-10 275000 2009-10 Ledger Land Sale Land Sale ITR of AY 2010-11 Income Showing Part of Sale of land income 275000 275000 Total 10386340 10386340

Shri Narendra S Shah 12 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

9.1 On perusal of the documents filed in respect of erusal of the documents filed in respect of ‘Kishore T erusal of the documents filed in respect of Mehta’ amounting to Rs. to Rs.1,25,000/-, we find that the said party has e find that the said party has filed confirmation, PAN card etc. AN card etc. details, however no verification by no verification by way of inquiry u/s 133(6) or 131 has been carried out by the way of inquiry u/s 133(6) or 131 has been carried out by the way of inquiry u/s 133(6) or 131 has been carried out by the Assessing Officer. Similarly, in the case essing Officer. Similarly, in the case on unsecured loan from on unsecured loan from ‘Magnesh Construction Construction’ amounting to Rs.8,00,000/ amounting to Rs.8,00,000/-, the assessee has filed confirmation, affidavit and ledger account of the said has filed confirmation, affidavit and ledger account of the said has filed confirmation, affidavit and ledger account of the said party. The Assessing Officer has not carried out any inquiry in party. The Assessing Officer has not carried out party. The Assessing Officer has not carried out respect of said party espect of said party, althoughverifiable details were available with details were available with him. In respect of other parties n respect of other parties, the assessee has filed assessee has filed only ledger account without any PAN card or other verifiable information, account without any PAN card or other verifiable account without any PAN card or other verifiable therefore, to the extent of two parties namely , to the extent of two parties namely Sh. Kisho Kishore T Mehta (Rs. 1,25,000/-) and and Magnum Construction (Rs.8,00,000/ Rs.8,00,000/-), we delete the addition sustained by the Ld. CIT(A). However, in respect delete the addition sustained by the Ld. CIT(A). However, in respect delete the addition sustained by the Ld. CIT(A). However, in respect of balance parties, finding of the Ld. CIT(A) finding of the Ld. CIT(A) is upheld. Accordingly, upheld. Accordingly, the ground of appeal of the assessee is allow the ground of appeal of the assessee is allowed partly. ed partly.

Shri Narendra S Shah 13 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

“6.2 Appellate 6.2 Appellate Decision: I have carefully considered the facts Decision: I have carefully considered the facts of the case, submissions of the assessee and material on of the case, submissions of the assessee and material on of the case, submissions of the assessee and material on record. It is relevant to mention here that the A0 in his record. It is relevant to mention here that the A0 in his record. It is relevant to mention here that the A0 in his assessment order, in para 2, has discussed this issue. assessment order, in para 2, has discussed this issue. assessment order, in para 2, has discussed this issue.

Shri Narendra S Shah 14 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

Information was received that a searc Information was received that a search under Section 132 of h under Section 132 of the IT Act was conducted in the case of one Shri Pravin the IT Act was conducted in the case of one Shri Pravin the IT Act was conducted in the case of one Shri Pravin Kumar Jain and the search action resulted in collection of the Kumar Jain and the search action resulted in collection of the Kumar Jain and the search action resulted in collection of the evidence and other findings which led the AO to believe that evidence and other findings which led the AO to believe that evidence and other findings which led the AO to believe that Shri Pravin Kumar Jain Shri Shri Pravin Pravin Kumar Jain Kumar Jain was was was engaged engaged in providing engaged in providing in providing accommodation entries of various natures like unsecured modation entries of various natures like unsecured modation entries of various natures like unsecured loans, bogus share application/ capital and bogus sales and loans, bogus share application/ capital and bogus sales and loans, bogus share application/ capital and bogus sales and purchases to the beneficiaries spread throughout India. purchases to the beneficiaries spread throughout India. purchases to the beneficiaries spread throughout India. According to the AO, from the information and material According to the AO, from the information and material According to the AO, from the information and material received from Investigation Wing, received from Investigation Wing, Mumbai, it was found that Mumbai, it was found that the appellant isone of the beneficiaries and obtained the appellant isone of the beneficiaries and obtained the appellant isone of the beneficiaries and obtained accommodation entries in the form of bogus unsecured loan accommodation entries in the form of bogus unsecured loan accommodation entries in the form of bogus unsecured loan from M Olive Overseas Pvt Ltd, M/s Pragti Gems Pvt ltd, M/s from M Olive Overseas Pvt Ltd, M/s Pragti Gems Pvt ltd, M/s from M Olive Overseas Pvt Ltd, M/s Pragti Gems Pvt ltd, M/s Nakshatra Business Pvt Ltd and M/s Atharv Business Pvt Nakshatra Business Pvt Ltd and M/s Atharv Business Pvt Nakshatra Business Pvt Ltd and M/s Atharv Business Pvt ltd, concerns that are controlled and managed by Shri Pravin , concerns that are controlled and managed by Shri Pravin , concerns that are controlled and managed by Shri Pravin Kumar Jain. 6.3 It is mentioned in the assessment order that with a view 6.3 It is mentioned in the assessment order that with a view 6.3 It is mentioned in the assessment order that with a view to verify the identity, creditworthiness of the parties and to verify the identity, creditworthiness of the parties and to verify the identity, creditworthiness of the parties and genuineness of the transactions, summon us 131 of the Act genuineness of the transactions, summon us 131 of the Act genuineness of the transactions, summon us 131 of the Act dated 23-08 08-2017 was issued to the appellant, requiring his 2017 was issued to the appellant, requiring his presence on 28 presence on 28-08-2017. In response to the same, the AO 2017. In response to the same, the AO received a letter on 28 received a letter on 28-08-2017, requesting for short 2017, requesting for short adjournment. Later on a statement was recorded under oath adjournment. Later on a statement was recorded under oath adjournment. Later on a statement was recorded under oath u/s 131 of the Act of the appellant u/s 131 of the Act of the appellant Shri Narendra Shah. In Shri Narendra Shah. In the statement the appellant confirmed the factum of the statement the appellant confirmed the factum of the statement the appellant confirmed the factum of acceptance of loans from M/s Atharv Business Pvt. Ltd., M/s acceptance of loans from M/s Atharv Business Pvt. Ltd., M/s acceptance of loans from M/s Atharv Business Pvt. Ltd., M/s Olive Overseas Pvt. Ltd. and M/s Pragati Gems Pvt.Ltd. As Olive Overseas Pvt. Ltd. and M/s Pragati Gems Pvt.Ltd. As Olive Overseas Pvt. Ltd. and M/s Pragati Gems Pvt.Ltd. As regards the loans from M/s Nakshtra Business Pvt. Ltd., regards the loans from M/s Nakshtra Business Pvt. Ltd., regards the loans from M/s Nakshtra Business Pvt. Ltd., appellant stated that he did not remember exactly when had ant stated that he did not remember exactly when had ant stated that he did not remember exactly when had he accepted the loan from the said concern and failed to he accepted the loan from the said concern and failed to he accepted the loan from the said concern and failed to provide the requisite details. It is also mentioned in the provide the requisite details. It is also mentioned in the provide the requisite details. It is also mentioned in the assessment order that loan confirmation of M/s Nakshatra assessment order that loan confirmation of M/s Nakshatra assessment order that loan confirmation of M/s Nakshatra Business Pvt. Ltd. Have been f Business Pvt. Ltd. Have been found in the case records of ound in the case records of original assessment proceedings completed us 143(3) of the original assessment proceedings completed us 143(3) of the original assessment proceedings completed us 143(3) of the Act. According to the AO, the appellant has failed to prove the Act. According to the AO, the appellant has failed to prove the Act. According to the AO, the appellant has failed to prove the identity, creditworthiness and genuineness of the said identity, creditworthiness and genuineness of the said identity, creditworthiness and genuineness of the said transaction casted upon him. Finally, addition of transaction casted upon him. Finally, addition of transaction casted upon him. Finally, addition of Rs. 5,50,07,297 / 5,50,07,297 /- is made on account loans being accepted is made on account loans being accepted from M/s Olive Overseas Pvt Ltd, M/s Prati Gems Pvt It, M/s from M/s Olive Overseas Pvt Ltd, M/s Prati Gems Pvt It, M/s from M/s Olive Overseas Pvt Ltd, M/s Prati Gems Pvt It, M/s Nakshatra Business Pt Ltd and M/s Atharv Business Pvt Nakshatra Business Pt Ltd and M/s Atharv Business Pvt Nakshatra Business Pt Ltd and M/s Atharv Business Pvt Ltd.

Shri Narendra S Shah 15 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

6.4 During the appellate proceedings, the Ld. AR has raised 6.4 During the appellate proceedings, the Ld. AR has raised 6.4 During the appellate proceedings, the Ld. AR has raised various arguments various arguments which are briefly summarized as under. which are briefly summarized as under. He submitted that in the statement recorded pursuant to He submitted that in the statement recorded pursuant to He submitted that in the statement recorded pursuant to issue of summon, the AO never asked the appellant to issue of summon, the AO never asked the appellant to issue of summon, the AO never asked the appellant to produce these parties for verification. Moreover, the appellant produce these parties for verification. Moreover, the appellant produce these parties for verification. Moreover, the appellant has categorically stated during the depositi has categorically stated during the deposition that he had on that he had availed the impugned loans through Shri HI M Tater. The availed the impugned loans through Shri HI M Tater. The availed the impugned loans through Shri HI M Tater. The documentary evidences produced before the AO clearly prove documentary evidences produced before the AO clearly prove documentary evidences produced before the AO clearly prove that the loans are genuine. Hence, there is no merit in the that the loans are genuine. Hence, there is no merit in the that the loans are genuine. Hence, there is no merit in the contention of the AO that the loans have been availed contention of the AO that the loans have been availed contention of the AO that the loans have been availed without any without any collateral security or without knowing the collateral security or without knowing the antecedents of the loaner and at a very less interest. antecedents of the loaner and at a very less interest. antecedents of the loaner and at a very less interest. According to the Ld. AR, for availing loan from third parties, it According to the Ld. AR, for availing loan from third parties, it According to the Ld. AR, for availing loan from third parties, it is not necessary to know the antecedents of the loaner. In is not necessary to know the antecedents of the loaner. In is not necessary to know the antecedents of the loaner. In fact, it is done by the loan givi fact, it is done by the loan giving party not by the party who ng party not by the party who is availing.Also, it is not necessary to give security. It is availing.Also, it is not necessary to give security. It is availing.Also, it is not necessary to give security. It depends upon the credibility of the loan availing party, which depends upon the credibility of the loan availing party, which depends upon the credibility of the loan availing party, which normally loan giving party ascertain from the market before normally loan giving party ascertain from the market before normally loan giving party ascertain from the market before advancing loan. Normally in business the loa advancing loan. Normally in business the loans are arranged ns are arranged through mediator or broker. Finally, when the loan has through mediator or broker. Finally, when the loan has through mediator or broker. Finally, when the loan has already been repaid, non already been repaid, non-production of the broker after a gap production of the broker after a gap of so many years cannot tantamount to genuine loans as of so many years cannot tantamount to genuine loans as of so many years cannot tantamount to genuine loans as non-genuine. genuine. 6.5 It is further explained by the Ld. AR that the appe 6.5 It is further explained by the Ld. AR that the appe 6.5 It is further explained by the Ld. AR that the appellant availed loans from the M/s Olive Overseas Pvt Ltd, M/s availed loans from the M/s Olive Overseas Pvt Ltd, M/s availed loans from the M/s Olive Overseas Pvt Ltd, M/s Pragti Gems Pvt It, M/s Nakshatra Business Pvt Ltd and M/s Pragti Gems Pvt It, M/s Nakshatra Business Pvt Ltd and M/s Pragti Gems Pvt It, M/s Nakshatra Business Pvt Ltd and M/s Atharv Business Pvt Ltd by way of a/c payee cheque. On the Atharv Business Pvt Ltd by way of a/c payee cheque. On the Atharv Business Pvt Ltd by way of a/c payee cheque. On the said loan appellant paid interest, on the said interest the said loan appellant paid interest, on the said interest the said loan appellant paid interest, on the said interest the appellant deducte appellant deducted tax at source at the prevailing rate. To d tax at source at the prevailing rate. To prove identity, creditworthiness and genuineness appellant prove identity, creditworthiness and genuineness appellant prove identity, creditworthiness and genuineness appellant provided necessary confirmation, copy of bank statement provided necessary confirmation, copy of bank statement provided necessary confirmation, copy of bank statement highlighting the loan given by the party, copy of P&L. A/c highlighting the loan given by the party, copy of P&L. A/c highlighting the loan given by the party, copy of P&L. A/c and Balance sheet and Ack of ROI filed. and Balance sheet and Ack of ROI filed. Before the AO, the Before the AO, the appellant has also provided retraction statement of Shri appellant has also provided retraction statement of Shri appellant has also provided retraction statement of Shri Pravin Kumar Jain. According to the Ld. AR, once the Pravin Kumar Jain. According to the Ld. AR, once the Pravin Kumar Jain. According to the Ld. AR, once the statement has been retracted, it has got no evidentiary statement has been retracted, it has got no evidentiary statement has been retracted, it has got no evidentiary value. 6.6 The Ld. AR has also explained that there is no evidence 6.6 The Ld. AR has also explained that there is no evidence 6.6 The Ld. AR has also explained that there is no evidence that appellant has given alleged undisclosed cash for t appellant has given alleged undisclosed cash for t appellant has given alleged undisclosed cash for availing the loans. Also, the AO, before coming to conclusion availing the loans. Also, the AO, before coming to conclusion availing the loans. Also, the AO, before coming to conclusion that the loans from Shri Pravin Kumar Jain are bogus, has that the loans from Shri Pravin Kumar Jain are bogus, has that the loans from Shri Pravin Kumar Jain are bogus, has

Shri Narendra S Shah 16 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

never provided the copy of statement recorded of Shri Pravin never provided the copy of statement recorded of Shri Pravin never provided the copy of statement recorded of Shri Pravin Kumar Jain by the Invest Kumar Jain by the Investigation Wing to rebut. He neither igation Wing to rebut. He neither issued any summon to Shri Pravin Jain to verify the facts issued any summon to Shri Pravin Jain to verify the facts issued any summon to Shri Pravin Jain to verify the facts submitted by the appellant during the recording of statement submitted by the appellant during the recording of statement submitted by the appellant during the recording of statement pursuant to summon issued us 131, that whatever appellant pursuant to summon issued us 131, that whatever appellant pursuant to summon issued us 131, that whatever appellant submitted are true and correct or not. The AO submitted are true and correct or not. The AO submitted are true and correct or not. The AO has not provided any opportunity to cross examine Shri Pravin provided any opportunity to cross examine Shri Pravin provided any opportunity to cross examine Shri Pravin Kumar Jain which is against the principle of natural justice. Kumar Jain which is against the principle of natural justice. Kumar Jain which is against the principle of natural justice. Finally, the Ld.AR has relied upon the judgment of Hon'ble Finally, the Ld.AR has relied upon the judgment of Hon'ble Finally, the Ld.AR has relied upon the judgment of Hon'ble ITAT Mumbai in the case of ACIT vSShreedham Builders ITAT Mumbai in the case of ACIT vSShreedham Builders ITAT Mumbai in the case of ACIT vSShreedham Builders wherein the additio wherein the addition has been made on the statement of n has been made on the statement of ShriPravin Kumar Jain was deleted by holding that when the ShriPravin Kumar Jain was deleted by holding that when the ShriPravin Kumar Jain was deleted by holding that when the assessee has provided all the plausible evidence proving assessee has provided all the plausible evidence proving assessee has provided all the plausible evidence proving that loans are not bogus and no evidence of having that loans are not bogus and no evidence of having that loans are not bogus and no evidence of having deposited cash in the accounts are found addition can deposited cash in the accounts are found addition can deposited cash in the accounts are found addition cannot be made us 68 of the IT act 1961. It is claimed that since the made us 68 of the IT act 1961. It is claimed that since the made us 68 of the IT act 1961. It is claimed that since the appellant's case is squarely covered by the aforesaid appellant's case is squarely covered by the aforesaid appellant's case is squarely covered by the aforesaid decision of jurisdictional Hon'ble Mumbai ITAT, the impugned decision of jurisdictional Hon'ble Mumbai ITAT, the impugned decision of jurisdictional Hon'ble Mumbai ITAT, the impugned addition made needs to be deleted. Reliance has also been addition made needs to be deleted. Reliance has also been addition made needs to be deleted. Reliance has also been placed on other placed on other judgments. 6.7On careful consideration, I find merit in the above 6.7On careful consideration, I find merit in the above 6.7On careful consideration, I find merit in the above arguments of the Ld. AR.The point for adjudication is arguments of the Ld. AR.The point for adjudication is arguments of the Ld. AR.The point for adjudication is whether the AO was justified in treating the unsecured loans whether the AO was justified in treating the unsecured loans whether the AO was justified in treating the unsecured loans of Rs. 5,50,07,297/ of Rs. 5,50,07,297/- shown to have been taken by the shown to have been taken by the appellant from aforesa appellant from aforesaid four companies owned, controlled id four companies owned, controlled and managed by Mr. Praveen Kumar Jain as bogus or non and managed by Mr. Praveen Kumar Jain as bogus or non and managed by Mr. Praveen Kumar Jain as bogus or non- genuine u/s 68 of the Act adding the same to the total genuine u/s 68 of the Act adding the same to the total genuine u/s 68 of the Act adding the same to the total income of the appellant. In this connection, it is well income of the appellant. In this connection, it is well income of the appellant. In this connection, it is well- established that the onus lies on the assessee to adduc established that the onus lies on the assessee to adduc established that the onus lies on the assessee to adduce necessary documentary evidence so as to prove all the three necessary documentary evidence so as to prove all the three necessary documentary evidence so as to prove all the three ingredients of section 68 viz, identity of the creditor, ingredients of section 68 viz, identity of the creditor, ingredients of section 68 viz, identity of the creditor, creditworthiness of the creditor and the genuineness of the creditworthiness of the creditor and the genuineness of the creditworthiness of the creditor and the genuineness of the transaction as the relevant facts are within the exclusive transaction as the relevant facts are within the exclusive transaction as the relevant facts are within the exclusive knowledge of the a knowledge of the assessee. It has also been held that the ssessee. It has also been held that the evidences adduced by the assessee has to be examined not evidences adduced by the assessee has to be examined not evidences adduced by the assessee has to be examined not superficially but in depth and having regard to the test of the superficially but in depth and having regard to the test of the superficially but in depth and having regard to the test of the human probabilities and normal course of human conduct. human probabilities and normal course of human conduct. human probabilities and normal course of human conduct. Hon'ble ITAT, Mumbai Bench, Mumbai in t Hon'ble ITAT, Mumbai Bench, Mumbai in the case of ITO v. he case of ITO v. Anant Shelters Pvt. Ltd 51 SOT 234 ITAs No. 193& Anant Shelters Pvt. Ltd 51 SOT 234 ITAs No. 193& Anant Shelters Pvt. Ltd 51 SOT 234 ITAs No. 193& 232/Mum/2018(Mum) 232/Mum/2018(Mum) 232/Mum/2018(Mum) has has has enumerated enumerated enumerated certain certain certain legal legal legal principles regarding cash credits us 68 as under: principles regarding cash credits us 68 as under:

Shri Narendra S Shah 17 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

Shri Narendra S Shah 18 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

identity and creditworthiness of the creditors as well as identity and creditworthiness of the creditors as well as identity and creditworthiness of the creditors as well as genuineness genuineness of the transactions. Therefore, the onus shifted of the transactions. Therefore, the onus shifted to the AO. If the A0 was not satisfied, she had the option of to the AO. If the A0 was not satisfied, she had the option of to the AO. If the A0 was not satisfied, she had the option of making inquiries from the lenders by summoning them. making inquiries from the lenders by summoning them. making inquiries from the lenders by summoning them. However, it is noticed that no independent verification was However, it is noticed that no independent verification was However, it is noticed that no independent verification was carried out by the AO with the l carried out by the AO with the lender companies. No ender companies. No summons us 131 was issued to the lender companies. In the summons us 131 was issued to the lender companies. In the summons us 131 was issued to the lender companies. In the statement recorded of the appellant, it is categorically statement recorded of the appellant, it is categorically statement recorded of the appellant, it is categorically claimed that loans were indeed taken. No evidence was claimed that loans were indeed taken. No evidence was claimed that loans were indeed taken. No evidence was brought on record by the AO to controvert the claims of the brought on record by the AO to controvert the claims of the brought on record by the AO to controvert the claims of the appellant. There is no finding by the AO that the evidences nt. There is no finding by the AO that the evidences nt. There is no finding by the AO that the evidences produced by the appellant were untrustworthy or lacked produced by the appellant were untrustworthy or lacked produced by the appellant were untrustworthy or lacked credibility. In other words, the AO has not discharged his credibility. In other words, the AO has not discharged his credibility. In other words, the AO has not discharged his burden of proof to rebut the evidences produced by the burden of proof to rebut the evidences produced by the burden of proof to rebut the evidences produced by the appellant or to bring any contrary appellant or to bring any contrary material on record. Thus, it material on record. Thus, it is found that the appellant had discharged onus of is found that the appellant had discharged onus of is found that the appellant had discharged onus of establishing the identity and creditworthiness of the lender establishing the identity and creditworthiness of the lender establishing the identity and creditworthiness of the lender companies and genuineness of the transactions with the help companies and genuineness of the transactions with the help companies and genuineness of the transactions with the help of relevant supporting evidences which could not be of relevant supporting evidences which could not be of relevant supporting evidences which could not be disproved by the AO. sproved by the AO.” 13. We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that the assessee has filed all the details in respect of the parties the assessee has filed all the details in respect of the parties the assessee has filed all the details in respect of the parties including their profit and loss account including their profit and loss account, balance sheet and , balance sheet and acknowledgement of return of income filed but no inquiry of any acknowledgement of return of income filed but no inquiry of any acknowledgement of return of income filed but no inquiry of any was carried out by the Assessing Officer carried out by the Assessing Officer either by way of notice u/s by way of notice u/s 133(6) or u/s 131 of the Act. Further, the Ld. CIT(A) has relied on 133(6) or u/s 131 of the Act. Further, the Ld. CIT(A) has relied on 133(6) or u/s 131 of the Act. Further, the Ld. CIT(A) has relied on the decision of the Tribunal in the case of ITO v. Anant Shelters ITO v. Anant Shelters the decision of the Tribunal in the Pvt. Pvt. Pvt. Ltd. Ltd. Ltd. 51 51 51 SOT SOT SOT 234 234 234 ITA No. 193/Mum/2018and230/Mum/2018 for assessment year 2010- 193/Mum/2018and230/Mum/2018 for assessment year 2010 193/Mum/2018and230/Mum/2018 for assessment year 2010 11 and 2012-13, wherein wherein identical circumstances loans received identical circumstances loans received from those four parries have been deleted. The relevant finding of se four parries have been deleted. The relevant finding of se four parries have been deleted. The relevant finding of the Ld. CIT(A) is reproduced as under: ) is reproduced as under:

Shri Narendra S Shah 19 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

“6.9 Apart from the above, I find that Hon'ble Mumbai 6.9 Apart from the above, I find that Hon'ble Mumbai 6.9 Apart from the above, I find that Hon'ble Mumbai Tribunal in the case of ACIT vSAbaniSarbeswar Das (ITA No. Tribunal in the case of ACIT vSAbaniSarbeswar Das (ITA No. Tribunal in the case of ACIT vSAbaniSarbeswar Das (ITA No. 193/Mum/2018 and 232/Mum/2018) AYs. 2010 193/Mum/2018 and 232/Mum/2018) AYs. 2010 193/Mum/2018 and 232/Mum/2018) AYs. 2010-11 and 2012-13 vide order dated 15.05.2019, has examined 13 vide order dated 15.05.2019, has examined 13 vide order dated 15.05.2019, has examined identical issue of identical issue of receiving loans from companies controlled receiving loans from companies controlled by Shri Praveen Km. Jain on the basis of Investigation Wing by Shri Praveen Km. Jain on the basis of Investigation Wing by Shri Praveen Km. Jain on the basis of Investigation Wing report and Statement of Shri Praveen Km. Jain. It is also report and Statement of Shri Praveen Km. Jain. It is also report and Statement of Shri Praveen Km. Jain. It is also observed that one of the concerns M/s Olive Overseas Pvt. observed that one of the concerns M/s Olive Overseas Pvt. observed that one of the concerns M/s Olive Overseas Pvt. Ltd. Is common lender. Ltd. Is common lender. The Hon'ble Tri The Hon'ble Tribunal while dismissing the appeal of the bunal while dismissing the appeal of the Department has held as under Department has held as under- 11. We find that undisputedly the assessee has borrowed 11. We find that undisputedly the assessee has borrowed 11. We find that undisputedly the assessee has borrowed money by way of loan from three aforesaid four parties i.e. money by way of loan from three aforesaid four parties i.e. money by way of loan from three aforesaid four parties i.e. Tanika Commodities P. Ltd, Ansh Merchandise P. Ltd., Duke Tanika Commodities P. Ltd, Ansh Merchandise P. Ltd., Duke Tanika Commodities P. Ltd, Ansh Merchandise P. Ltd., Duke Business P. Ltd and Olive overseas Pvt. Ltd. from whom the Ltd and Olive overseas Pvt. Ltd. from whom the assessee borrowed the money and total outstanding assessee borrowed the money and total outstanding assessee borrowed the money and total outstanding including the interest as on 31.3.2010 were amounting to including the interest as on 31.3.2010 were amounting to including the interest as on 31.3.2010 were amounting to ₹ 91,33,644/-. The case of the assessee was re . The case of the assessee was re-opened upon opened upon receiving the information from DGIT(Inv), receiving the information from DGIT(Inv), Mumbai that the Mumbai that the assessee assessee was was one one of of the beneficiary the beneficiary of of the the said said accommodation entries provided by Praveen Kumar Jain and accommodation entries provided by Praveen Kumar Jain and accommodation entries provided by Praveen Kumar Jain and group. We find from the record that the assessee filed during group. We find from the record that the assessee filed during group. We find from the record that the assessee filed during the course of assessment proceedings all the details like loan the course of assessment proceedings all the details like loan the course of assessment proceedings all the details like loan confirmation letters from the creditors, PAN of the creditors, on letters from the creditors, PAN of the creditors, on letters from the creditors, PAN of the creditors, bank statements of the creditors and the assessee, form bank statements of the creditors and the assessee, form bank statements of the creditors and the assessee, form no.16 qua TDS on interest, profit and loss account and no.16 qua TDS on interest, profit and loss account and no.16 qua TDS on interest, profit and loss account and balance sheet including the ledger account of the creditors, balance sheet including the ledger account of the creditors, balance sheet including the ledger account of the creditors, and ITR etc. Moreover, the loan and ITR etc. Moreover, the loan creditors also appeared creditors also appeared before before before the the the AO AO AO in in in compliance compliance compliance to to to the the the notice notice notice issued issued issued under section 133(6) section 133(6) of the Act and filed confirmations of the Act and filed confirmations before the AO that loans were actually given to the assessee. before the AO that loans were actually given to the assessee. before the AO that loans were actually given to the assessee. From all the From all these details and facts on record, we find that the se details and facts on record, we find that the assessee has discharged its onus cast upon it by filing all assessee has discharged its onus cast upon it by filing all assessee has discharged its onus cast upon it by filing all the necessary details as called for by the AO to corroborate the necessary details as called for by the AO to corroborate the necessary details as called for by the AO to corroborate the transactions of borrowing the money and thereby the transactions of borrowing the money and thereby the transactions of borrowing the money and thereby satisfied all the three main ingre satisfied all the three main ingredients i.e. creditworthiness dients i.e. creditworthiness of the creditors, genuineness of the transactions and identity of the creditors, genuineness of the transactions and identity of the creditors, genuineness of the transactions and identity of the creditors by filing all the details as discussed above of the creditors by filing all the details as discussed above of the creditors by filing all the details as discussed above which proved that the identity of the creditors, genuineness which proved that the identity of the creditors, genuineness which proved that the identity of the creditors, genuineness of the transactions and creditworthiness of the transactions and creditworthiness of the creditors of the creditors have been established by the assessee. So much so that the have been established by the assessee. So much so that the have been established by the assessee. So much so that the

Shri Narendra S Shah 20 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

loan creditors in response to the notice issued under loan creditors in response to the notice issued under loan creditors in response to the notice issued under section 133(6) of the Act appeared before the AO and confirmed that of the Act appeared before the AO and confirmed that of the Act appeared before the AO and confirmed that they have given interest bearing loans to the assessee on ave given interest bearing loans to the assessee on ave given interest bearing loans to the assessee on which TDS have been deducted and paid and form no.16A which TDS have been deducted and paid and form no.16A which TDS have been deducted and paid and form no.16A issued to the loan creditors also filed before the AO. Once the issued to the loan creditors also filed before the AO. Once the issued to the loan creditors also filed before the AO. Once the assessee has filed all the necessary documents before the assessee has filed all the necessary documents before the assessee has filed all the necessary documents before the AO then the onus is shifted AO then the onus is shifted to the department to disprove the to the department to disprove the stand of the assessee, which department has failed to do so stand of the assessee, which department has failed to do so stand of the assessee, which department has failed to do so in the present case. The AO has merely proceeded and relied in the present case. The AO has merely proceeded and relied in the present case. The AO has merely proceeded and relied on the information received from the DGIT(Inv), Mumbai that on the information received from the DGIT(Inv), Mumbai that on the information received from the DGIT(Inv), Mumbai that the assessee is one of the beneficiary of the assessee is one of the beneficiary of the accommodation the accommodation entries without bringing any material against the assessee entries without bringing any material against the assessee entries without bringing any material against the assessee on record by contrary to the defense put up by the on record by contrary to the defense put up by the on record by contrary to the defense put up by the assessee during the course of appellant proceedings. No during the course of appellant proceedings. No during the course of appellant proceedings. No cross examination was allowed to the assessee and cross examination was allowed to the assessee and cross examination was allowed to the assessee and information was used a information was used against the assessee causing violation gainst the assessee causing violation of natural justice. of natural justice. 12. In view of the above facts and circumstances, we are of 12. In view of the above facts and circumstances, we are of 12. In view of the above facts and circumstances, we are of the view that the CIT(A) has rightly deleted the addition and the view that the CIT(A) has rightly deleted the addition and the view that the CIT(A) has rightly deleted the addition and we confirm the same. we confirm the same. 6.10 Hon'ble Mumbai ITAT in the case of ACIT vs Shreedh 6.10 Hon'ble Mumbai ITAT in the case of ACIT vs Shreedh 6.10 Hon'ble Mumbai ITAT in the case of ACIT vs Shreedham BuildersITANO.5589/Mum/2017 AY 2012 BuildersITANO.5589/Mum/2017 AY 2012-13 date of Order 13 date of Order- 22.06.2018 had the occasion of examine the identical issue 22.06.2018 had the occasion of examine the identical issue 22.06.2018 had the occasion of examine the identical issue where lenders are the same i.e., M/s Olive Overseas Pvt.Ltd., where lenders are the same i.e., M/s Olive Overseas Pvt.Ltd., where lenders are the same i.e., M/s Olive Overseas Pvt.Ltd., M/s Nakshatra Business Pvt. Ltd. and M/s Atharv Business M/s Nakshatra Business Pvt. Ltd. and M/s Atharv Business M/s Nakshatra Business Pvt. Ltd. and M/s Atharv Business Pvt. Ltd. The finds o Pvt. Ltd. The finds of the Hon'ble Tribunal are as under f the Hon'ble Tribunal are as under- The Ld. Assessing Officer treated Rs.4.70 crores, introduced The Ld. Assessing Officer treated Rs.4.70 crores, introduced The Ld. Assessing Officer treated Rs.4.70 crores, introduced by by by the the the assessee assessee assessee in in in its its its books books books as as as unsecured unsecured unsecured loans/unexplained credit and added under loans/unexplained credit and added under section 68 section 68 of the Act and some unexplained expenditure under d some unexplained expenditure under section d some unexplained expenditure under 69C of the Act and also disallowed interest of Rs.5,73,193/ of the Act and also disallowed interest of Rs.5,73,193/- of the Act and also disallowed interest of Rs.5,73,193/ , paid on unsecured loan and disallowed the same , paid on unsecured loan and disallowed the same , paid on unsecured loan and disallowed the same under section 37 section 37 of the Act. It is noted that at the conclusion of the Act. It is noted that at the conclusion of the survey, the assessee vide letter dated 28/10/2014 of the survey, the assessee vide letter dated 28/10/2014 of the survey, the assessee vide letter dated 28/10/2014 requested for copy of statement. As per the assessee, the requested for copy of statement. As per the assessee, the requested for copy of statement. As per the assessee, the Assessing Officer did not provide the copy. As per the Assessing Officer did not provide the copy. As per the Assessing Officer did not provide the copy. As per the assessee, the cross ex assessee, the cross examination of Shri Pravin Jain was also amination of Shri Pravin Jain was also not not not provided. provided. provided. The The The assessee assessee assessee filed filed filed loan loan loan confirmation, confirmation, confirmation, acknowledgments of ITRs, relevant bank statement of acknowledgments of ITRs, relevant bank statement of acknowledgments of ITRs, relevant bank statement of lenders, proof of re lenders, proof of re-payment of such loans and on the payment of such loans and on the

Shri Narendra S Shah 21 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

summons issued to all the creditors and the brokers all of summons issued to all the creditors and the brokers all of summons issued to all the creditors and the brokers all of them furnished requisite details. It is noted that the them furnished requisite details. It is noted that the them furnished requisite details. It is noted that the financial statements and other loan creditors were never statements and other loan creditors were never statements and other loan creditors were never disclosed by the Ld. Assessing Officer and by implication disclosed by the Ld. Assessing Officer and by implication disclosed by the Ld. Assessing Officer and by implication accepted that the assessee in fact received loans. This has accepted that the assessee in fact received loans. This has accepted that the assessee in fact received loans. This has been observed even by the been observed even by the First Appellate Authority at page First Appellate Authority at page- 10(para-4.13 of the impugned order). It is further noted that 4.13 of the impugned order). It is further noted that 4.13 of the impugned order). It is further noted that on 21/10/2014, the assessee requested the Assessing on 21/10/2014, the assessee requested the Assessing on 21/10/2014, the assessee requested the Assessing Officer to provide the copy of statement recorded during Officer to provide the copy of statement recorded during Officer to provide the copy of statement recorded during survey, evidence of filing retraction on 11/11/2014 survey, evidence of filing retraction on 11/11/2014 survey, evidence of filing retraction on 11/11/2014, evidence of filing of loan confirmations, acknowledgment of ITRs and of filing of loan confirmations, acknowledgment of ITRs and of filing of loan confirmations, acknowledgment of ITRs and bank statement of parties vide letter dated 28/12/2014, bank statement of parties vide letter dated 28/12/2014, bank statement of parties vide letter dated 28/12/2014, copy copy copy of of of its its its submission submission submission on on on unsecured unsecured unsecured loans loans loans dated dated dated 16/02/2015, retraction affidavit of Shri Pravin Kumar Jain, 16/02/2015, retraction affidavit of Shri Pravin Kumar Jain, 16/02/2015, retraction affidavit of Shri Pravin Kumar Jain, dated 15/05/2014, rep dated 15/05/2014, repayment details of unsecured loans ayment details of unsecured loans and its submissions dated 16/02/2015, wherein, present and its submissions dated 16/02/2015, wherein, present and its submissions dated 16/02/2015, wherein, present address, details of directors and shareholding patterns of address, details of directors and shareholding patterns of address, details of directors and shareholding patterns of lenders companies were filed by the assessee before the Ld. lenders companies were filed by the assessee before the Ld. lenders companies were filed by the assessee before the Ld. Assessing Officer. It is noted that before the F Assessing Officer. It is noted that before the First Appellate irst Appellate Authority, Authority, Authority, the the the assessee assessee assessee challenged challenged challenged the the the validity validity validity of of of assessment by raising an additional ground as the assessee assessment by raising an additional ground as the assessee assessment by raising an additional ground as the assessee was not allowed opportunity to cross examine Shri Pravin was not allowed opportunity to cross examine Shri Pravin was not allowed opportunity to cross examine Shri Pravin Kumar Jain and Kumar Jain and other material used against the assessee, other material used against the assessee, which was not con which was not confronted to it. The Ld. Commissioner of fronted to it. The Ld. Commissioner of Income Tax (Appeal) vide letter dated 05/07/2016 asked the Income Tax (Appeal) vide letter dated 05/07/2016 asked the Income Tax (Appeal) vide letter dated 05/07/2016 asked the Ld. Assessing Officer to handover the statements pertaining to Assessing Officer to handover the statements pertaining to Assessing Officer to handover the statements pertaining to Shri Pravin Kumar Jain or its staff members or dummy Shri Pravin Kumar Jain or its staff members or dummy Shri Pravin Kumar Jain or its staff members or dummy directors to allow the assessee an opportu directors to allow the assessee an opportunity to cross nity to cross examine Shri Pravin Kumar Jain. The Ld. Assessing Officer examine Shri Pravin Kumar Jain. The Ld. Assessing Officer examine Shri Pravin Kumar Jain. The Ld. Assessing Officer was also asked to provide the evidences found during the was also asked to provide the evidences found during the was also asked to provide the evidences found during the course of survey action or any evidence that payment was course of survey action or any evidence that payment was course of survey action or any evidence that payment was made for obtaining unsecured loans and also efforts so made made for obtaining unsecured loans and also efforts so made made for obtaining unsecured loans and also efforts so made to examine the loan creditors. The Assessing Officer was the loan creditors. The Assessing Officer was asked to conduct necessary enquiries with respect to asked to conduct necessary enquiries with respect to asked to conduct necessary enquiries with respect to genuineness of the unsecured loans. The Ld. Assessing genuineness of the unsecured loans. The Ld. Assessing genuineness of the unsecured loans. The Ld. Assessing Officer vide letter dated 07/01/2017, submitted the remand Officer vide letter dated 07/01/2017, submitted the remand Officer vide letter dated 07/01/2017, submitted the remand report as has been reproduced at page report as has been reproduced at page-10 onwards of the wards of the impugned order. It has been mentioned in para 6.3 of the impugned order. It has been mentioned in para 6.3 of the impugned order. It has been mentioned in para 6.3 of the impugned order that Shri Pravin Jain produced the ledger impugned order that Shri Pravin Jain produced the ledger impugned order that Shri Pravin Jain produced the ledger accounts of Shreedham Builders in the books of his accounts of Shreedham Builders in the books of his accounts of Shreedham Builders in the books of his companies alongwith bank statement reflecting all the companies alongwith bank statement reflecting all the companies alongwith bank statement reflecting all the

Shri Narendra S Shah 22 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

transactions and also au transactions and also audited balance sheet of last four dited balance sheet of last four year Shreedham Builders ITA No.5589/Mum/2017 along Shreedham Builders ITA No.5589/Mum/2017 along Shreedham Builders ITA No.5589/Mum/2017 along with the copy of the retraction of statement filed before with the copy of the retraction of statement filed before with the copy of the retraction of statement filed before CBDT. Nothing objectionable was found in the documents or CBDT. Nothing objectionable was found in the documents or CBDT. Nothing objectionable was found in the documents or statements. All the loan creditors were summoned and the statements. All the loan creditors were summoned and the statements. All the loan creditors were summoned and the statements of the directors were recorded, wherein, they statements of the directors were recorded, wherein, they statements of the directors were recorded, wherein, they have accepted of giving loan to the assessee. The Ledger have accepted of giving loan to the assessee. The Ledger have accepted of giving loan to the assessee. The Ledger copies of those companies reflecting loans given to the copies of those companies reflecting loans given to the copies of those companies reflecting loans given to the assessee were also produced. The Ld. Assessing Officer also assessee were also produced. The Ld. Assessing Officer also assessee were also produced. The Ld. Assessing Officer also provided the copy of stat provided the copy of statement recorded from Shri Pravin ement recorded from Shri Pravin Kumar Jain under Kumar Jain under section 131 of the Act on 21/11/2006. of the Act on 21/11/2006. In para 6.6 of the impugned order, there is an observation In para 6.6 of the impugned order, there is an observation In para 6.6 of the impugned order, there is an observation that the nature and source of business/amount was that the nature and source of business/amount was that the nature and source of business/amount was explained and the details of loan were also confirmed. All and the details of loan were also confirmed. All and the details of loan were also confirmed. All corroborative details were duly filed. From the record, we corroborative details were duly filed. From the record, we corroborative details were duly filed. From the record, we also note that the assessee also filed acknowledgment of also note that the assessee also filed acknowledgment of also note that the assessee also filed acknowledgment of filing of IT returns together with computation of total income filing of IT returns together with computation of total income filing of IT returns together with computation of total income (pages 1 & 2 of the paper b (pages 1 & 2 of the paper book), audited annual accounts ook), audited annual accounts along with tax audit report for the year ending 31/03/2012 along with tax audit report for the year ending 31/03/2012 along with tax audit report for the year ending 31/03/2012 (pages 3 to 31 of the paper book), retraction of statement by (pages 3 to 31 of the paper book), retraction of statement by (pages 3 to 31 of the paper book), retraction of statement by Shri Ajay Maheshwari, partner, dated 10/11/2014 for the Shri Ajay Maheshwari, partner, dated 10/11/2014 for the Shri Ajay Maheshwari, partner, dated 10/11/2014 for the statement on oath recorded on 17/ & 18th October, statement on oath recorded on 17/ & 18th October, statement on oath recorded on 17/ & 18th October, 2014 (pages 32 to (pages 32 to Shreedham Builders ITA No.5589/Mum/2017 Shreedham Builders ITA No.5589/Mum/2017 37 of the paper book), remand report of the Assessing Officer 37 of the paper book), remand report of the Assessing Officer 37 of the paper book), remand report of the Assessing Officer dated 17/12/2016 filed before the Ld. Commissioner of dated 17/12/2016 filed before the Ld. Commissioner of dated 17/12/2016 filed before the Ld. Commissioner of Income Tax (Appeal) (pages 38 to 56 of the paper book), Income Tax (Appeal) (pages 38 to 56 of the paper book), Income Tax (Appeal) (pages 38 to 56 of the paper book), remand report of the Asse remand report of the Assessing Officer 04/01/2017 before ssing Officer 04/01/2017 before the CIT(A) (pages 57 of the paper book), acknowledgment the CIT(A) (pages 57 of the paper book), acknowledgment the CIT(A) (pages 57 of the paper book), acknowledgment evidencing for filing of return for Assessment Year 2012 evidencing for filing of return for Assessment Year 2012 evidencing for filing of return for Assessment Year 2012-13, audited annual account for the year ending 31/03/2012, audited annual account for the year ending 31/03/2012, audited annual account for the year ending 31/03/2012, ledger confirmation, ledger account of the assessee ledger confirmation, ledger account of the assessee ledger confirmation, ledger account of the assessee in the books of the lender and bank statement of the lender (in the books of the lender and bank statement of the lender (in the books of the lender and bank statement of the lender (in the case of Athrav Business Pvt. Ltd. (page 58 to 72 of the paper case of Athrav Business Pvt. Ltd. (page 58 to 72 of the paper case of Athrav Business Pvt. Ltd. (page 58 to 72 of the paper book). Identically similar documents as a proof of evidence book). Identically similar documents as a proof of evidence book). Identically similar documents as a proof of evidence were filed from Casper Enterprises Ltd. (pages 71 to 83 of were filed from Casper Enterprises Ltd. (pages 71 to 83 of were filed from Casper Enterprises Ltd. (pages 71 to 83 of the paper book), Duke Business Pvt. Ltd. (J.P. K. Trading I. er book), Duke Business Pvt. Ltd. (J.P. K. Trading I. er book), Duke Business Pvt. Ltd. (J.P. K. Trading I. Pvt.Ltd.) (pages 84 to 96 of the paper book), Olive Overseas Pvt.Ltd.) (pages 84 to 96 of the paper book), Olive Overseas Pvt.Ltd.) (pages 84 to 96 of the paper book), Olive Overseas Pvt.Ltd. (pages 97 to 110 of the paper book), Viraj Mercantile Pvt.Ltd. (pages 97 to 110 of the paper book), Viraj Mercantile Pvt.Ltd. (pages 97 to 110 of the paper book), Viraj Mercantile Pvt.Ltd. (pages 111 to 119 of the paper book) and Nakshatra Pvt.Ltd. (pages 111 to 119 of the paper book) and Nakshatra Pvt.Ltd. (pages 111 to 119 of the paper book) and Nakshatra Business Pvt. Ltd. Business Pvt. Ltd. (Pages 120 to 131 of the paper book). All (Pages 120 to 131 of the paper book). All these documents neither disproved by the Ld. Assessing these documents neither disproved by the Ld. Assessing these documents neither disproved by the Ld. Assessing Officer nor any evidence was brought on record to falsify the Officer nor any evidence was brought on record to falsify the Officer nor any evidence was brought on record to falsify the claim of the assessee or the authenticity of these documents. claim of the assessee or the authenticity of these documents. claim of the assessee or the authenticity of these documents.

Shri Narendra S Shah 23 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

Thus, it can be said that the asse Thus, it can be said that the assessee discharged its onus as ssee discharged its onus as provided under provided under section 68 of the Act. The interest was paid of the Act. The interest was paid through banking channel by the assessee on such loans. It is through banking channel by the assessee on such loans. It is through banking channel by the assessee on such loans. It is also noted that so far as the disallowance of interest p also noted that so far as the disallowance of interest p also noted that so far as the disallowance of interest portion is concerned, the same was deleted by the ld. FAA and has is concerned, the same was deleted by the ld. FAA and has is concerned, the same was deleted by the ld. FAA and has not been challenged before this Tribunal by the Revenue not been challenged before this Tribunal by the Revenue not been challenged before this Tribunal by the Revenue further fortifies the case of the assessee. The loans were further fortifies the case of the assessee. The loans were further fortifies the case of the assessee. The loans were repaid along with interest before the date of survey i.e. repaid along with interest before the date of survey i.e. repaid along with interest before the date of survey i.e. 17/10/2014 and no 17/10/2014 and no cash was found during survey further cash was found during survey further fortifies the claim of the assessee. All the concerned parties fortifies the claim of the assessee. All the concerned parties fortifies the claim of the assessee. All the concerned parties appeared before the Ld. Assessing Officer during remand appeared before the Ld. Assessing Officer during remand appeared before the Ld. Assessing Officer during remand proceedings, the Ld. Assessing Officer recorded their proceedings, the Ld. Assessing Officer recorded their proceedings, the Ld. Assessing Officer recorded their statement and nothing adverse was pointed out statement and nothing adverse was pointed out statement and nothing adverse was pointed out even Shri Pravin Jain himself appeared before the Ld. Assessing Pravin Jain himself appeared before the Ld. Assessing Pravin Jain himself appeared before the Ld. Assessing Officer and even during remand proceedings enquiries were Officer and even during remand proceedings enquiries were Officer and even during remand proceedings enquiries were carried out and no adverse remark was made by the ld. carried out and no adverse remark was made by the ld. carried out and no adverse remark was made by the ld. Assessing Officer. The assessee as well as the other parties Assessing Officer. The assessee as well as the other parties Assessing Officer. The assessee as well as the other parties furnished all possi furnished all possible documents evidencing that the loans ble documents evidencing that the loans are not bogus.No cash was found deposited in the accounts are not bogus.No cash was found deposited in the accounts are not bogus.No cash was found deposited in the accounts of alleged six parties, thus, keeping in view, the totality of of alleged six parties, thus, keeping in view, the totality of of alleged six parties, thus, keeping in view, the totality of facts, attendant facts, attendant circumstances, human probabilities, and in circumstances, human probabilities, and in the presence of plausible explanati the presence of plausible explanation by the assessee, on by the assessee, relevant relevant relevant material, material, material, and and and requirement requirement requirement of of of fulfillment fulfillment fulfillment of of of ingredients, enshrined in ingredients, enshrined in section 68 of the Act, we find that of the Act, we find that onus cast upon the assessee has been duly discharged, onus cast upon the assessee has been duly discharged, onus cast upon the assessee has been duly discharged, therefore, the a therefore, the addition made u/s 68 of the Act, which is ddition made u/s 68 of the Act, which is purely based upon presumption or the statement recorded purely based upon presumption or the statement recorded purely based upon presumption or the statement recorded and later on retracted by the concerned parties, therefore, we and later on retracted by the concerned parties, therefore, we and later on retracted by the concerned parties, therefore, we find infirmity in the conclusion of the Ld. Commissioner of find infirmity in the conclusion of the Ld. Commissioner of find infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal), resultantly, th Income Tax (Appeal), resultantly, the appeal of the Revenue e appeal of the Revenue is is is dismissed.Finally, dismissed.Finally, dismissed.Finally, the the the appeal appeal appeal of of of the the the Revenue Revenue Revenue is is is dismissed.” 13.1 Since the Ld. CIT(A) has followed Since the Ld. CIT(A) has followed a binding precedent of the binding precedent of the Tribunal on the issue in dispute and Tribunal on the issue in dispute and no other decision of higher no other decision of higher judicial forum contrary to the decisio judicial forum contrary to the decision has been brought on record n has been brought on record by the ld CIT(DR), therefore we do not find any error in the order of therefore we do not find any error in the order of therefore we do not find any error in the order of the Ld. CIT(A) on the issue in dispute. Accordingly, we uphold the the Ld. CIT(A) on the issue in dispute. Accordingly, we uph the Ld. CIT(A) on the issue in dispute. Accordingly, we uph

Shri Narendra S Shah 24 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

same. The ground No. 1 of the appeal of the Revenue is accordingly he ground No. 1 of the appeal of the Revenue is accordingly he ground No. 1 of the appeal of the Revenue is accordingly dismissed.

“7.2 Appellate Decision: I have carefully considered the facts 7.2 Appellate Decision: I have carefully considered the facts 7.2 Appellate Decision: I have carefully considered the facts of the case, submissions of the Appellant, the observations of of the case, submissions of the Appellant, the observations of of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other the AO contained in the assessment order and the other the AO contained in the assessment order and the other materials on record on this issue. In this ground the materials on record on this issue. In this ground the materials on record on this issue. In this ground the appellant has appellant has contended that the AO. In this respect the AO contended that the AO. In this respect the AO has observed as under: has observed as under: "The assessee has been asked various times to provide the "The assessee has been asked various times to provide the "The assessee has been asked various times to provide the details of sale agreement and the working of capital gain, details of sale agreement and the working of capital gain, details of sale agreement and the working of capital gain,

Shri Narendra S Shah 25 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

but, no details have been furnished. Accordingly, a show but, no details have been furnished. Accordingly, a show but, no details have been furnished. Accordingly, a show cause notice cause notice has been issued to the assessee on 30 has been issued to the assessee on 30-11-2017, asking him to show cause as to why an amount of asking him to show cause as to why an amount of asking him to show cause as to why an amount of Rs.25,54,440/ Rs.25,54,440/-should not be brought to tax under the head should not be brought to tax under the head 'capital gains'. 'capital gains'. In response to the above, the assessee in the submissions In response to the above, the assessee in the submissions In response to the above, the assessee in the submissions filed in this office on 08 filed in this office on 08-12-2017 has contended that no issue 2017 has contended that no issue other than the reasons recorded for reopening of assessment other than the reasons recorded for reopening of assessment other than the reasons recorded for reopening of assessment could be seen by the AO. This contention of the assessee is could be seen by the AO. This contention of the assessee is could be seen by the AO. This contention of the assessee is not acceptable at all in view of the Explanation 3 to the not acceptable at all in view of the Explanation 3 to the not acceptable at all in view of the Explanation 3 to the provisions of section 147 of the IT Act, 19 provisions of section 147 of the IT Act, 1961: "Explanation 3 "Explanation 3 - For the purpose of assessment or For the purpose of assessment or reassessment under this section, the Assessing Officer may reassessment under this section, the Assessing Officer may reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which assess or reassess the income in respect of any issue, which assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice has escaped assessment, and such issue comes to his notice has escaped assessment, and such issue comes to his notice subsequently in the cou subsequently in the course of the proceedings under this rse of the proceedings under this section, notwithstanding that the reasons for such issue section, notwithstanding that the reasons for such issue section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub have not been included in the reasons recorded under sub have not been included in the reasons recorded under sub- section (2) of section 148". section (2) of section 148". 13.1 It is clear from the above explanation that the Assessing 13.1 It is clear from the above explanation that the Assessing 13.1 It is clear from the above explanation that the Assessing Officer is empow Officer is empowered to verify the issue comes to his notice in ered to verify the issue comes to his notice in the the the course course course of of of the the the proceedings proceedings proceedings under under under this this this section, section, section, notwithstanding that the reasons for such issue have not notwithstanding that the reasons for such issue have not notwithstanding that the reasons for such issue have not been included in the reasons recorded under section 148. been included in the reasons recorded under section 148. been included in the reasons recorded under section 148. There is no bar on the Assessing Officer to There is no bar on the Assessing Officer to examine the examine the issues issues issues noticed noticed noticed in in in connection connection connection with with with the the the reassessment reassessment reassessment proceedings. Thus, the objection raised by the assessee is proceedings. Thus, the objection raised by the assessee is proceedings. Thus, the objection raised by the assessee is hereby rejected. hereby rejected. 13.2 Coming to the merits of the case, the assessee in his 13.2 Coming to the merits of the case, the assessee in his 13.2 Coming to the merits of the case, the assessee in his submissions has contended that he has purchased and sold submissions has contended that he has purchased and sold submissions has contended that he has purchased and sold the property immediately and his intention was not to make he property immediately and his intention was not to make he property immediately and his intention was not to make an investment and hence by no imagination the profit can be an investment and hence by no imagination the profit can be an investment and hence by no imagination the profit can be treated as capital gain. This contention of the assessee is treated as capital gain. This contention of the assessee is treated as capital gain. This contention of the assessee is also not acceptable. As per the section 45 of the Act, any also not acceptable. As per the section 45 of the Act, any also not acceptable. As per the section 45 of the Act, any profit or gains ari profit or gains arising from the transfer of a capital asset sing from the transfer of a capital asset affected in the previous year shall be chargeable to income affected in the previous year shall be chargeable to income affected in the previous year shall be chargeable to income tax under the head "Capital Gains" and shall be deemed to tax under the head "Capital Gains" and shall be deemed to tax under the head "Capital Gains" and shall be deemed to be income of the previous year in which the transfer took be income of the previous year in which the transfer took be income of the previous year in which the transfer took

Shri Narendra S Shah 26 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

place. Given the fact that the assesse place. Given the fact that the assessee has not produced any e has not produced any evidences in the form of purchase agreement and sale evidences in the form of purchase agreement and sale evidences in the form of purchase agreement and sale agreement." 7.3 From the assessment order it appears that the AO has 7.3 From the assessment order it appears that the AO has 7.3 From the assessment order it appears that the AO has formed his view only on the basis of section 45 of the IT Act, formed his view only on the basis of section 45 of the IT Act, formed his view only on the basis of section 45 of the IT Act, wherein the provision says that any profit or ga wherein the provision says that any profit or ga wherein the provision says that any profit or gains arising from the transfer of a capital asset affected in the previous from the transfer of a capital asset affected in the previous from the transfer of a capital asset affected in the previous year shall be chargeable to income tax under the head year shall be chargeable to income tax under the head year shall be chargeable to income tax under the head "Capital Gains" According to the AO, since the appellant did "Capital Gains" According to the AO, since the appellant did "Capital Gains" According to the AO, since the appellant did not produce evidences in the form of purchase agreement not produce evidences in the form of purchase agreement not produce evidences in the form of purchase agreement and sale ag and sale agreement of the property, the impugned addition reement of the property, the impugned addition was made. I find the above observation of the AO lacks in was made. I find the above observation of the AO lacks in was made. I find the above observation of the AO lacks in merit. It appears that the AO has completely ignored the merit. It appears that the AO has completely ignored the merit. It appears that the AO has completely ignored the accounts of the appellant where such transactions (sale and accounts of the appellant where such transactions (sale and accounts of the appellant where such transactions (sale and purchase) in land, flats etc. are purchase) in land, flats etc. are regularly done and profit regularly done and profit from the same is offered through the profit and loss account from the same is offered through the profit and loss account from the same is offered through the profit and loss account in the preceding and seceding years.Just because the in the preceding and seceding years.Just because the in the preceding and seceding years.Just because the appellant has not produced purchase and sale agreements of appellant has not produced purchase and sale agreements of appellant has not produced purchase and sale agreements of the property, the AO is not entitled to change the head o the property, the AO is not entitled to change the head o the property, the AO is not entitled to change the head of the income. income. income. Considering Considering Considering the the the totality totality totality of of of the the the facts facts facts and and and circumstances of the issues involved, the addition of circumstances of the issues involved, the addition of circumstances of the issues involved, the addition of Rs.25,54,440/ Rs.25,54,440/- under the head STCG is deleted. Therefore, under the head STCG is deleted. Therefore, this ground no. 3 of appeal is allowed. this ground no. 3 of appeal is allowed.” 15. We have heard rival submission of the parti We have heard rival submission of the parties on the issue in es on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that the Assessing Officer has only change the Assessing Officer has only changed the head of the income as of the income as income was already declared by the assessee as business profit. The income was already declared by the assessee as business profit. The income was already declared by the assessee as business profit. The Ld. Assessing Officer has not brought Ld. Assessing Officer has not brought on record as how otherwise a how otherwise a business activity of the assessee business activity of the assessee can be held as short short-term capital gain,ignoring the transactions of the assessee of purchase and sale ignoring the transactions of the assessee of purchase and sale ignoring the transactions of the assessee of purchase and sale in earlier as well as subsequent assessment years. In our opinion, as well as subsequent assessment years. In our opinion, as well as subsequent assessment years. In our opinion, the Ld. CIT(A) has corre has correctly held that the Assessing Officer ctly held that the Assessing Officer was not entitled to change the head of the income just because the assessee entitled to change the head of the income just because the assessee entitled to change the head of the income just because the assessee

Shri Narendra S Shah 27 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

had not produced purchase and sale agreement of the property. We purchase and sale agreement of the property. We purchase and sale agreement of the property. We do not find any error in the order of the Ld. CIT(A) on the issue in do not find any error in the order of the Ld. CIT(A) on the issue in do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly nd accordingly, we uphold the same. The ground No. 2 of we uphold the same. The ground No. 2 of the appeal of the Revenue is accordingly dismissed. the appeal of the Revenue is accordingly dismissed.

Shri Narendra S Shah 28 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

contrary to the Provisions of Income Tax Act and contrary to the Provisions of Income Tax Act and contrary to the Provisions of Income Tax Act and rules made there under. rules made there under. 3. On the facts and in the circumstances of the case On the facts and in the circumstances of the case On the facts and in the circumstances of the case and in law, and in law, the Hon'ble CIT(A) erred in upholding the Hon'ble CIT(A) erred in upholding the penalty initiated by the Ld AO u/s. 271(1)(c) the penalty initiated by the Ld AO u/s. 271(1)(c) the penalty initiated by the Ld AO u/s. 271(1)(c) of the IT Act 1961 and the reason assigned for of the IT Act 1961 and the reason assigned for of the IT Act 1961 and the reason assigned for doing so are wrong and contrary to the provision doing so are wrong and contrary to the provision doing so are wrong and contrary to the provision of Income Tax Act and rules made there under. of Income Tax Act and rules made there under. of Income Tax Act and rules made there under. 18. In ground No. 1, the a In ground No. 1, the assessee has challenged validity of the ssessee has challenged validity of the reassessment proceedings, the issue of validity of the reassessment reassessment proceedings, the issue of validity of the reassessment reassessment proceedings, the issue of validity of the reassessment was also challenged by the assessee before the Ld. CIT(A). The Ld. was also challenged by the assessee before the Ld. CIT(A). The Ld. was also challenged by the assessee before the Ld. CIT(A). The Ld. CIT(A) dismissed the ground after analyzing facts of the case of the CIT(A) dismissed the ground after analyzing facts of the case of the CIT(A) dismissed the ground after analyzing facts of the case of the assessee and relying on the various decisions cited in the impugned relying on the various decisions cited in the impugned relying on the various decisions cited in the impugned order. The relevant finding of the Ld. CIT(A) is reproduced as under: order. The relevant finding of the Ld. CIT(A) is reproduced as under: order. The relevant finding of the Ld. CIT(A) is reproduced as under:

“6. Decision on Ground No. 1: 6. Decision on Ground No. 1: I have carefully considered the facts of the case, submissions I have carefully considered the facts of the case, submissions I have carefully considered the facts of the case, submissions of the Appellant, the observations of of the Appellant, the observations of the A contained in the the A contained in the assessment order and the other materials on record on this assessment order and the other materials on record on this assessment order and the other materials on record on this issue. In this Ground the appellant has contended that the issue. In this Ground the appellant has contended that the issue. In this Ground the appellant has contended that the AO has not brought on record any valid reason initiation of AO has not brought on record any valid reason initiation of AO has not brought on record any valid reason initiation of reassessment proceedings. During the course of the appe reassessment proceedings. During the course of the appe reassessment proceedings. During the course of the appellate proceedings, it was submitted by the appellant there is no proceedings, it was submitted by the appellant there is no proceedings, it was submitted by the appellant there is no correlation between the reason for reopening and addition correlation between the reason for reopening and addition correlation between the reason for reopening and addition made by the AO. made by the AO. 6.1 I have taken note of the fact that the A.. has issued 6.1 I have taken note of the fact that the A.. has issued 6.1 I have taken note of the fact that the A.. has issued notice after duly recording the reasons and taking approval notice after duly recording the reasons and taking approval notice after duly recording the reasons and taking approval, as per the provisions of section148 of the Act. Further, a copy as per the provisions of section148 of the Act. Further, a copy as per the provisions of section148 of the Act. Further, a copy of the reasons recorded has been provided to the Appellant, of the reasons recorded has been provided to the Appellant, of the reasons recorded has been provided to the Appellant, during the course of the assessment proceedings. Thus, there during the course of the assessment proceedings. Thus, there during the course of the assessment proceedings. Thus, there has not been any violation of the principles of natural justice has not been any violation of the principles of natural justice has not been any violation of the principles of natural justice by the AO. The AO has followed the due procedure and there e AO. The AO has followed the due procedure and there e AO. The AO has followed the due procedure and there is no technical lapse on the part of the AO in reopening of the is no technical lapse on the part of the AO in reopening of the is no technical lapse on the part of the AO in reopening of the assessment proceedings. The AO has clearly noted the assessment proceedings. The AO has clearly noted the assessment proceedings. The AO has clearly noted the reason for reopening of the case as under: reason for reopening of the case as under:

Shri Narendra S Shah 29 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

The reason for reopening in the case was r The reason for reopening in the case was recorded as under: ecorded as under: "An information has been received from ITO Ward 32(3)(2), "An information has been received from ITO Ward 32(3)(2), "An information has been received from ITO Ward 32(3)(2), Mumbai vide letter NO. IT032(3)(2)/Information/2018 Mumbai vide letter NO. IT032(3)(2)/Information/2018 Mumbai vide letter NO. IT032(3)(2)/Information/2018-19 dated dated dated 14.02.2019 14.02.2019 14.02.2019 that that that the the the bank bank bank statement statement statement of of of MsKalpanikVyapaar Pt Ltd (AADCK3638E) with ICICI Bank MsKalpanikVyapaar Pt Ltd (AADCK3638E) with ICICI Bank MsKalpanikVyapaar Pt Ltd (AADCK3638E) with ICICI Bank Ltd. (A/c no 003505500471), Ltd. (A/c no 003505500471), Dahisar Branch for the F.Y Dahisar Branch for the F.Y 2013-14 reveals payment to Shri Narendra Shah on various 14 reveals payment to Shri Narendra Shah on various 14 reveals payment to Shri Narendra Shah on various dates for the 1.4.2013 to 18.02.2014 amounting to Rs dates for the 1.4.2013 to 18.02.2014 amounting to Rs dates for the 1.4.2013 to 18.02.2014 amounting to Rs 4,14,00,000/. M/ KalpanikVyapaar Pvt. Ltdhaving address 4,14,00,000/. M/ KalpanikVyapaar Pvt. Ltdhaving address 4,14,00,000/. M/ KalpanikVyapaar Pvt. Ltdhaving address 32, Ezra Street, 5th Floor, Kolkata has been declared a shell 32, Ezra Street, 5th Floor, Kolkata has been declared a shell 32, Ezra Street, 5th Floor, Kolkata has been declared a shell company by SEBI. company by SEBI. Enquiries have revealed that M/s KalpanikVyapar Pvt. Ltd. Enquiries have revealed that M/s KalpanikVyapar Pvt. Ltd. Enquiries have revealed that M/s KalpanikVyapar Pvt. Ltd. has been removed/ struck off from the register of Companies has been removed/ struck off from the register of Companies has been removed/ struck off from the register of Companies by the Registrar of Companies, Kolkota and the directors of by the Registrar of Companies, Kolkota and the directors of by the Registrar of Companies, Kolkota and the directors of the said company have also been declared as Disqualified the said company have also been declared as Disqualified the said company have also been declared as Disqualified Directors' under section 164(2)(a) of the Companies Act. It is ctors' under section 164(2)(a) of the Companies Act. It is ctors' under section 164(2)(a) of the Companies Act. It is pertinentto mention that the assessee is one of the Directors pertinentto mention that the assessee is one of the Directors pertinentto mention that the assessee is one of the Directors of the said company declared as disqualified director by of the said company declared as disqualified director by of the said company declared as disqualified director by ROC. Kolkota. On verification of the assessee's bank ROC. Kolkota. On verification of the assessee's bank ROC. Kolkota. On verification of the assessee's bank statement with ICICI Bank statement with ICICI Bank Ltd. (OD AC0156), it is seen that Ltd. (OD AC0156), it is seen that the total credits from M/s KalpanikVyapaar Ltd during the the total credits from M/s KalpanikVyapaar Ltd during the the total credits from M/s KalpanikVyapaar Ltd during the Fy 2013-14 amount to Rs.5,23,00,000/ 14 amount to Rs.5,23,00,000/- As per the detalls As per the detalls available available forA. forA. Y Y 2015-16, 2015 16, a a total total amount amount of of Rs. Rs. 13,33,21,520/ 13,33,21,520/ 13,33,21,520/ appears appears appears as as as unsecured unsecured unsecured loan loan loan from from from MsKalpanikVy MsKalpanikVyapaar Pvt. Ltd. of which only an amount of apaar Pvt. Ltd. of which only an amount of Rs.7,44,71,520/ Rs.7,44,71,520/- was received during the F.Y 2014 was received during the F.Y 2014-15 relevant relevant to to A,Y A,Y 2015 2015-16. 16. Hence, Hence, an an amount amount of of Rs.5,23,00,000/ Rs.5,23,00,000/- has has been been received received from from M/s M/s KalpanikWyapaar Pvt. Ltd as unsecured loan during F.Y KalpanikWyapaar Pvt. Ltd as unsecured loan during F.Y KalpanikWyapaar Pvt. Ltd as unsecured loan during F.Y 2013-14 relevant 14 relevant toA.Y 2014-15. It therefore, evident that the 15. It therefore, evident that the unsecured loan of Rs.5.23,00,000/ received by the assessee unsecured loan of Rs.5.23,00,000/ received by the assessee unsecured loan of Rs.5.23,00,000/ received by the assessee from M/s KalpanikVyupaar Pvt. Ltd is not genuine. from M/s KalpanikVyupaar Pvt. Ltd is not genuine. from M/s KalpanikVyupaar Pvt. Ltd is not genuine. Thus, there was new tangible material on record of the AO Thus, there was new tangible material on record of the AO Thus, there was new tangible material on record of the AO on the basis of which the re on the basis of which the re-assessment proceedings has ceedings has been initiated. Further, the assessee raised an objection on been initiated. Further, the assessee raised an objection on been initiated. Further, the assessee raised an objection on reopening of the case. Accordingly, Order disposing off the reopening of the case. Accordingly, Order disposing off the reopening of the case. Accordingly, Order disposing off the obiection raised dated 27.09.2019 was sent to the assessee obiection raised dated 27.09.2019 was sent to the assessee obiection raised dated 27.09.2019 was sent to the assessee. 6.2 The Section 147 of the Act authorizes and permits the 6.2 The Section 147 of the Act authorizes and permits the 6.2 The Section 147 of the Act authorizes and permits the Assessing Officer to assess or reassess income chargeable to ssing Officer to assess or reassess income chargeable to ssing Officer to assess or reassess income chargeable to

Shri Narendra S Shah 30 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

tax, if he has reason to believe that income for any tax, if he has reason to believe that income for any tax, if he has reason to believe that income for any assessment year has escaped assessment. The word assessment year has escaped assessment. The word assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause "reason" in the phrase "reason to believe" would mean cause "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Of or justification. If the Assessing Officer has cause or ficer has cause or justification to know or suppose that income had escaped justification to know or suppose that income had escaped justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an assessment, it can be said to have reason to believe that an assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be income had escaped assessment. The expression cannot be income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally read to mean that the Assessing Officer should have finally read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The ertained the fact by legal evidence or conclusion. The ertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute function of the Assessing Officer is to administer the statute function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea with solicitude for the public exchequer with an inbuilt idea with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. of fairness to taxpayers. 6.3At the stage of issue of notice, the only ques 6.3At the stage of issue of notice, the only ques 6.3At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable whether there was relevant material on which a reasonable whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the person could have formed a requisite belief. Whether the person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the materials would conclusively prove the escapement is not the materials would conclusively prove the escapement is not the concern at that stage. At that stage, the final outcome of the concern at that stage. At that stage, the final outcome of the concern at that stage. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation g is not relevant. In other words, at the initiation g is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the stage, what is required is "reason to believe", but not the stage, what is required is "reason to believe", but not the established fact of escapement of income. This is so because established fact of escapement of income. This is so because established fact of escapement of income. This is so because the formation of belief by the Assessing Officer is within the the formation of belief by the Assessing Officer is within the the formation of belief by the Assessing Officer is within the realm of subjective realm of subjective satisfaction ITO v. Selected Dalurband satisfaction ITO v. Selected Dalurband Coal Co. (P.) Ltd. /19961 217ITR 597 (SC); Raymond Woollen Coal Co. (P.) Ltd. /19961 217ITR 597 (SC); Raymond Woollen Coal Co. (P.) Ltd. /19961 217ITR 597 (SC); Raymond Woollen Mills Ltd, v. ITO [1999] 236 ITR 34 (SC). Mills Ltd, v. ITO [1999] 236 ITR 34 (SC). 6.4 The Hon'ble Apex Court in the case of ACIT vs. Rajesh 6.4 The Hon'ble Apex Court in the case of ACIT vs. Rajesh 6.4 The Hon'ble Apex Court in the case of ACIT vs. Rajesh Thaveri Stock Brokers Pvt. Ltd. (2007) (291 IT 500) has Thaveri Stock Brokers Pvt. Ltd. (2007) (291 IT 500) has Thaveri Stock Brokers Pvt. Ltd. (2007) (291 IT 500) has categorically stated that "reason to believe" does not mean ategorically stated that "reason to believe" does not mean ategorically stated that "reason to believe" does not mean that the reason for re that the reason for re-opening should have been factually opening should have been factually ascertained by legal evidence or conclusion before the re ascertained by legal evidence or conclusion before the re ascertained by legal evidence or conclusion before the re- opening of an assessment. opening of an assessment. 6.5 Any fresh information received by the AO. can entit 6.5 Any fresh information received by the AO. can entit 6.5 Any fresh information received by the AO. can entitle him to issue notice u/s.148, if on the basis of such information he to issue notice u/s.148, if on the basis of such information he to issue notice u/s.148, if on the basis of such information he has prima face reason to believe that income has escaped has prima face reason to believe that income has escaped has prima face reason to believe that income has escaped assessment. So much so that it was held by the Hon'ble assessment. So much so that it was held by the Hon'ble assessment. So much so that it was held by the Hon'ble Supreme Court in Claggett Brachi Co. Ltd. vs CIT 177 IT 409 Supreme Court in Claggett Brachi Co. Ltd. vs CIT 177 IT 409 Supreme Court in Claggett Brachi Co. Ltd. vs CIT 177 IT 409 (SC) (SC) that that inf information ormation obtained obtained during during assessment assessment proceedings of a subsequent year can also validate the proceedings of a subsequent year can also validate the proceedings of a subsequent year can also validate the proceedings initiated us.147 for earlier year. Similarly, proceedings initiated us.147 for earlier year. Similarly, proceedings initiated us.147 for earlier year. Similarly, Hon'ble Bombay High Court in the case of Anusandhan Hon'ble Bombay High Court in the case of Anusandhan Hon'ble Bombay High Court in the case of Anusandhan Investments Ltd. vs.M.R. Singh, DCIT, 287 IT 482 held t Investments Ltd. vs.M.R. Singh, DCIT, 287 IT 482 held t Investments Ltd. vs.M.R. Singh, DCIT, 287 IT 482 held that a

Shri Narendra S Shah 31 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

notice issued u/s.148 based on assessment of subsequent notice issued u/s.148 based on assessment of subsequent notice issued u/s.148 based on assessment of subsequent assessment year is valid even if the appeal is pending for assessment year is valid even if the appeal is pending for assessment year is valid even if the appeal is pending for such assessment. such assessment. 6.6 Further, it is the duty of the assessee to disclose full and 6.6 Further, it is the duty of the assessee to disclose full and 6.6 Further, it is the duty of the assessee to disclose full and true materials to the A.O. but for which the A.. coul true materials to the A.O. but for which the A.. coul true materials to the A.O. but for which the A.. could initiate the reassessment proceedings.It has been held by the the reassessment proceedings.It has been held by the the reassessment proceedings.It has been held by the Hon'ble Supreme Court in Shri Krishna P. Ltd. 221 ITR538, Hon'ble Supreme Court in Shri Krishna P. Ltd. 221 ITR538, Hon'ble Supreme Court in Shri Krishna P. Ltd. 221 ITR538, 549 that every disclosure is not and cannot be treated to be 549 that every disclosure is not and cannot be treated to be 549 that every disclosure is not and cannot be treated to be a true and full disclosure. A disclosure may be a false one or a true and full disclosure. A disclosure may be a false one or a true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. The . It may be a full disclosure or it may not be. The . It may be a full disclosure or it may not be. The Hon'ble Supreme Court held that a partial disclosure may Hon'ble Supreme Court held that a partial disclosure may Hon'ble Supreme Court held that a partial disclosure may very often be a misleading one. Therefore, what is required is very often be a misleading one. Therefore, what is required is very often be a misleading one. Therefore, what is required is a full and true disclosure of all material facts necessary for a full and true disclosure of all material facts necessary for a full and true disclosure of all material facts necessary for making assessment for making assessment for that year. 6.7 The Hon'ble Supreme Court in the case of Raymond 6.7 The Hon'ble Supreme Court in the case of Raymond 6.7 The Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd.VS. ITO 236 IT 34, 35 (SC) has held that for Woollen Mills Ltd.VS. ITO 236 IT 34, 35 (SC) has held that for Woollen Mills Ltd.VS. ITO 236 IT 34, 35 (SC) has held that for determining whether initiation of reassessment proceedings determining whether initiation of reassessment proceedings determining whether initiation of reassessment proceedings was valid, it has only to be seen whether there was prima was valid, it has only to be seen whether there was prima was valid, it has only to be seen whether there was prima face some m face some material on the basis of which the department aterial on the basis of which the department could reopen the case. It further held that the sufficiency or could reopen the case. It further held that the sufficiency or could reopen the case. It further held that the sufficiency or correctness of the material is not a thing to be considered at correctness of the material is not a thing to be considered at correctness of the material is not a thing to be considered at this stage. 6.8 The present case is not one of change of opinion as 6.8 The present case is not one of change of opinion as 6.8 The present case is not one of change of opinion as alleged by the ap alleged by the appellant. Question of change of opinion pellant. Question of change of opinion arises when the AO forms an opinion and decides not to arises when the AO forms an opinion and decides not to arises when the AO forms an opinion and decides not to make an addition and holds that the appellant was correct in make an addition and holds that the appellant was correct in make an addition and holds that the appellant was correct in his stand. 6.9 The Supreme Court in Malegaon Electricity Co. (P) Ltd. vs. 6.9 The Supreme Court in Malegaon Electricity Co. (P) Ltd. vs. 6.9 The Supreme Court in Malegaon Electricity Co. (P) Ltd. vs. CIT (1970) 78ITR 466 (SC) h CIT (1970) 78ITR 466 (SC) has observed, as under: as observed, as under: 'It is true that if the ITO had made some investigation, 'It is true that if the ITO had made some investigation, 'It is true that if the ITO had made some investigation, particularly if he had looked into the previous assessment particularly if he had looked into the previous assessment particularly if he had looked into the previous assessment records, he would have been able to find out what the records, he would have been able to find out what the records, he would have been able to find out what the written down value of the assets sold was and consequently written down value of the assets sold was and consequently written down value of the assets sold was and consequently he would have been able to find out the price in excess of ould have been able to find out the price in excess of ould have been able to find out the price in excess of their written down value realized by the assessee. It can be their written down value realized by the assessee. It can be their written down value realized by the assessee. It can be said that the ITO if he had been diligent could have got all said that the ITO if he had been diligent could have got all said that the ITO if he had been diligent could have got all the necessary information from his records. But that is not the necessary information from his records. But that is not the necessary information from his records. But that is not the same thing as s the same thing as saying that the assessee had placed aying that the assessee had placed

Shri Narendra S Shah 32 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

before the ITO truly and fully all material facts necessary for before the ITO truly and fully all material facts necessary for before the ITO truly and fully all material facts necessary for the purpose of assessment.The law casts a duty on the the purpose of assessment.The law casts a duty on the the purpose of assessment.The law casts a duty on the assessee to 'disclose fully and truly all material facts assessee to 'disclose fully and truly all material facts assessee to 'disclose fully and truly all material facts necessary for his assessment for that year." necessary for his assessment for that year." 6.10 When there is no discussion on the issue in the .10 When there is no discussion on the issue in the .10 When there is no discussion on the issue in the Assessment order and no details were called for by the AO Assessment order and no details were called for by the AO Assessment order and no details were called for by the AO or filed by the assessee on the issue, no finding either or filed by the assessee on the issue, no finding either or filed by the assessee on the issue, no finding either positive or negative can be said to have been arrived at positive or negative can be said to have been arrived at positive or negative can be said to have been arrived at during the course of original as during the course of original assessment proceedings. Hence, sessment proceedings. Hence, there is no question of change of opinion as held in the there is no question of change of opinion as held in the there is no question of change of opinion as held in the following judgments: following judgments: 1. Kalyanji Mavji& Co. vs. CIT 102 ITR 287 (SC) 1. Kalyanji Mavji& Co. vs. CIT 102 ITR 287 (SC) 2. Esskay Engineering P. Ltd. Vs. CIT 247 IT 818 2. Esskay Engineering P. Ltd. Vs. CIT 247 IT 818 3. ITO vs. Purushottam Das Bangur&Anr. 224 IT 362 (S 3. ITO vs. Purushottam Das Bangur&Anr. 224 IT 362 (S 3. ITO vs. Purushottam Das Bangur&Anr. 224 IT 362 (SC) 6.11 In Writ Petition. No.9036 of 2007, Honda Siel Power 6.11 In Writ Petition. No.9036 of 2007, Honda Siel Power 6.11 In Writ Petition. No.9036 of 2007, Honda Siel Power Products Ltd. vs.Dy CIT &Anr. Decision dated 14th Feb. Products Ltd. vs.Dy CIT &Anr. Decision dated 14th Feb. Products Ltd. vs.Dy CIT &Anr. Decision dated 14th Feb. 2011 (reported at (2011) 52 DTR (el)353 2011 (reported at (2011) 52 DTR (el)353 - Ed.) it was held: Ed.) it was held: "10 The term 'failure' on the part of the assessee is not "10 The term 'failure' on the part of the assessee is not "10 The term 'failure' on the part of the assessee is not restricted only to the restricted only to the IT return and the columns of the IT IT return and the columns of the IT return or the tax audit report. This is the first stage. The said return or the tax audit report. This is the first stage. The said return or the tax audit report. This is the first stage. The said expression 'failure to fully and truly disclose material facts' expression 'failure to fully and truly disclose material facts' expression 'failure to fully and truly disclose material facts' also relate to the stage of the assessment proceeding, the also relate to the stage of the assessment proceeding, the also relate to the stage of the assessment proceeding, the second stage. There can be omis second stage. There can be omission and failure on the part. sion and failure on the part. of the assessee to disclose fully and truly material facts of the assessee to disclose fully and truly material facts of the assessee to disclose fully and truly material facts during- the course of the assessment proceedings. This can the course of the assessment proceedings. This can the course of the assessment proceedings. This can happen when the assessee does not disclose or furnish to happen when the assessee does not disclose or furnish to happen when the assessee does not disclose or furnish to the A0 complete and correct information and details the A0 complete and correct information and details the A0 complete and correct information and details it is required and under an obligation to disclose. Burden is on required and under an obligation to disclose. Burden is on required and under an obligation to disclose. Burden is on the assessee to make full and the true disclosure". the assessee to make full and the true disclosure". the assessee to make full and the true disclosure". 6.12 Further, in the case of Piaggio Vehicles P. Ltd. YS. DCIT 6.12 Further, in the case of Piaggio Vehicles P. Ltd. YS. DCIT 6.12 Further, in the case of Piaggio Vehicles P. Ltd. YS. DCIT 290 IT 377 (Bom), the Hon'ble Jurisdictional High Court held 290 IT 377 (Bom), the Hon'ble Jurisdictional High Court held 290 IT 377 (Bom), the Hon'ble Jurisdictional High Court held that in a case that in a case of reopening after 4 years subsequent to of reopening after 4 years subsequent to scrutiny assessments, contradiction was discovered between scrutiny assessments, contradiction was discovered between scrutiny assessments, contradiction was discovered between Tax Audit report and Return of income, it was a case of Tax Audit report and Return of income, it was a case of Tax Audit report and Return of income, it was a case of omission and/or failure on the part of the assessee to omission and/or failure on the part of the assessee to omission and/or failure on the part of the assessee to disclose fully and truly all facts for compu disclose fully and truly all facts for computation of its income. tation of its income. It is also held by Hon'ble Supreme Court in the following It is also held by Hon'ble Supreme Court in the following It is also held by Hon'ble Supreme Court in the following

Shri Narendra S Shah 33 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

cases that facts which could have been found by the ITO by cases that facts which could have been found by the ITO by cases that facts which could have been found by the ITO by further probing are covered under failure to disclose fully and further probing are covered under failure to disclose fully and further probing are covered under failure to disclose fully and truly all material facts. truly all material facts. 6.13 In the case of Coca Co 6.13 In the case of Coca Cola India Vs. ACIT &Ors. (2009) la India Vs. ACIT &Ors. (2009) 221 CTR 0225 :(2009) 17 DTR 0066 : (2009) 309 IT 0194 : 221 CTR 0225 :(2009) 17 DTR 0066 : (2009) 309 IT 0194 : 221 CTR 0225 :(2009) 17 DTR 0066 : (2009) 309 IT 0194 : (2009) 177 TAXMAN 0103, the Hon'ble Punjab & Haryana (2009) 177 TAXMAN 0103, the Hon'ble Punjab & Haryana (2009) 177 TAXMAN 0103, the Hon'ble Punjab & Haryana High Court has held that notice u/s 147 should be held as High Court has held that notice u/s 147 should be held as High Court has held that notice u/s 147 should be held as bad in law, only if extraneous or absurd reasons are bad in law, only if extraneous or absurd reasons are bad in law, only if extraneous or absurd reasons are recorded by the AO. It was further held by the Hon'ble Court ded by the AO. It was further held by the Hon'ble Court ded by the AO. It was further held by the Hon'ble Court that whether or not the material should be finally taken into that whether or not the material should be finally taken into that whether or not the material should be finally taken into account for reassessment is a separate matter, which has to account for reassessment is a separate matter, which has to account for reassessment is a separate matter, which has to be dealt with during the course of reassessment proceedings. be dealt with during the course of reassessment proceedings. be dealt with during the course of reassessment proceedings. The relevant port The relevant portion of the judgment in this regard is ion of the judgment in this regard is reproduced as under: reproduced as under: - "Obiection of counsel for petitioner is two fold : "Obiection of counsel for petitioner is two fold :- (a) Reference (a) Reference to inapplicable provision of s. 92 as it stood prior to to inapplicable provision of s. 92 as it stood prior to to inapplicable provision of s. 92 as it stood prior to amendment w.e.f. 1st April, 2002 and (b) irrelevance of order amendment w.e.f. 1st April, 2002 and (b) irrelevance of order amendment w.e.f. 1st April, 2002 and (b) irrelevance of order of the TPO of the TPO under Chanter X passed in respect of a under Chanter X passed in respect of a subsequent assessment year.Applicability of s. 147 requires subsequent assessment year.Applicability of s. 147 requires subsequent assessment year.Applicability of s. 147 requires formation of opinion that income escaped assessment. The formation of opinion that income escaped assessment. The formation of opinion that income escaped assessment. The said provision is not in any manner controlled by s. 92 nor said provision is not in any manner controlled by s. 92 nor said provision is not in any manner controlled by s. 92 nor there is any limit to consideration of a there is any limit to consideration of any material having ny material having nexus with the opinion on the issue of escapement of nexus with the opinion on the issue of escapement of nexus with the opinion on the issue of escapement of assessment of income. Interference with the notice for assessment of income. Interference with the notice for assessment of income. Interference with the notice for reassessment is called for only where extraneous or absurd reassessment is called for only where extraneous or absurd reassessment is called for only where extraneous or absurd reasons are made the basis for opinion proposing to reasons are made the basis for opinion proposing to reasons are made the basis for opinion proposing to reassess. Apart fr reassess. Apart from the fact that the AO has given other om the fact that the AO has given other reasons, it cannot be held that the material relied upon by reasons, it cannot be held that the material relied upon by reasons, it cannot be held that the material relied upon by the AO for proposing reassessment is irrelevant. Whether or the AO for proposing reassessment is irrelevant. Whether or the AO for proposing reassessment is irrelevant. Whether or not the said material should be finally taken into account for not the said material should be finally taken into account for not the said material should be finally taken into account for reassessment is a matter which ha reassessment is a matter which has to be left open to he s to be left open to he decided hy the AO after considering the explanation of the decided hy the AO after considering the explanation of the decided hy the AO after considering the explanation of the assessee. It can only he mentioned that having regard to assessee. It can only he mentioned that having regard to assessee. It can only he mentioned that having regard to relationship of the petitioner to its associate company, it relationship of the petitioner to its associate company, it relationship of the petitioner to its associate company, it cannot be claimed that the price mentioned by it must be cannot be claimed that the price mentioned by it must be cannot be claimed that the price mentioned by it must be accepted as final and may not be looked at by the AO. There accepted as final and may not be looked at by the AO. There accepted as final and may not be looked at by the AO. There is no infirmity in the notice proposing reassessment. The AO is no infirmity in the notice proposing reassessment. The AO is no infirmity in the notice proposing reassessment. The AO will be at liberty to pass an appropriate order of assessment, will be at liberty to pass an appropriate order of assessment, will be at liberty to pass an appropriate order of assessment, subject to the rights and remedies of the assessee.Order of subject to the rights and remedies of the assessee.Order of subject to the rights and remedies of the assessee.Order of TPO can cer TPO can certainly have nexus for reaching the conclusion tainly have nexus for reaching the conclusion that income has been incorrectly assessed or has escaped that income has been incorrectly assessed or has escaped that income has been incorrectly assessed or has escaped

Shri Narendra S Shah 34 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

assessment. In the present case, the said material came to assessment. In the present case, the said material came to assessment. In the present case, the said material came to the notice of the AO subsequent to the assessment. There is the notice of the AO subsequent to the assessment. There is the notice of the AO subsequent to the assessment. There is no grievance that provisions of ss no grievance that provisions of ss. 148 to 153 have not been . 148 to 153 have not been followed. In such a situation, it cannot be held that the notice followed. In such a situation, it cannot be held that the notice followed. In such a situation, it cannot be held that the notice proposing reassessment is vitiated merely because one of the proposing reassessment is vitiated merely because one of the proposing reassessment is vitiated merely because one of the reasons referred to order of TPO. reasons referred to order of TPO.-Raymond Woollen Mills Ltd. Raymond Woollen Mills Ltd. vs. ITO &Ors. (1999) 152 CTR SC) 418 : (19 vs. ITO &Ors. (1999) 152 CTR SC) 418 : (1999) 236 ITR 34 99) 236 ITR 34 (SC) and Phool Chand Bairang Lal vs. ITO (1993) 113 CTR (SC) and Phool Chand Bairang Lal vs. ITO (1993) 113 CTR (SC) and Phool Chand Bairang Lal vs. ITO (1993) 113 CTR (SC) 436 : (1993) 203 IT 456 (SC) : AIR 1993SC 2390 relied (SC) 436 : (1993) 203 IT 456 (SC) : AIR 1993SC 2390 relied (SC) 436 : (1993) 203 IT 456 (SC) : AIR 1993SC 2390 relied on." 6.14 In similar facts and circumstances, in the case of Ankit 6.14 In similar facts and circumstances, in the case of Ankit 6.14 In similar facts and circumstances, in the case of Ankit Agrochem (P.)Ltd. Vs. Joint Commissioner of Income Agrochem (P.)Ltd. Vs. Joint Commissioner of Income Agrochem (P.)Ltd. Vs. Joint Commissioner of Income-tax, Range-1, Bikaner (2018] 89 taxmann.com 45 (Raiasthan), the 1, Bikaner (2018] 89 taxmann.com 45 (Raiasthan), the 1, Bikaner (2018] 89 taxmann.com 45 (Raiasthan), the Hon'ble Rajasthan High court has held that where the DIT Hon'ble Rajasthan High court has held that where the DIT Hon'ble Rajasthan High court has held that where the DIT has informed that the assessee has informed that the assessee-company had received share company had received share application money from several entities, which were only application money from several entities, which were only application money from several entities, which were only engaged in business of provi engaged in business of providing bogus accommodation ding bogus accommodation entries to beneficiary concerns, reassessment on basis of entries to beneficiary concerns, reassessment on basis of entries to beneficiary concerns, reassessment on basis of said information was justified. In this case all the entities said information was justified. In this case all the entities said information was justified. In this case all the entities from which the assessee had received share application from which the assessee had received share application from which the assessee had received share application money were only engaged in the business of providing money were only engaged in the business of providing money were only engaged in the business of providing accommodation entries of bogus nature, which was further ommodation entries of bogus nature, which was further ommodation entries of bogus nature, which was further confirmed by the directors, dummy directors/key persons of confirmed by the directors, dummy directors/key persons of confirmed by the directors, dummy directors/key persons of the above entities in their respective statements. The relevant the above entities in their respective statements. The relevant the above entities in their respective statements. The relevant portion of the said judgment is reproduced hereunder: portion of the said judgment is reproduced hereunder: portion of the said judgment is reproduced hereunder:- "14. In the instant case "14. In the instant case, a perusal of the reasons recorded by , a perusal of the reasons recorded by the 10 for issuing notice under Section 148 of the Act reveals the 10 for issuing notice under Section 148 of the Act reveals the 10 for issuing notice under Section 148 of the Act reveals that during the assessment proceedings for AY. 2014 that during the assessment proceedings for AY. 2014 that during the assessment proceedings for AY. 2014-15 it was noticed that the appellant assessee has received share was noticed that the appellant assessee has received share was noticed that the appellant assessee has received share application money to the tune of Rs. application money to the tune of Rs. 2.2 crore from 9 entities 2.2 crore from 9 entities which was utilised during the year and subsequently which was utilised during the year and subsequently which was utilised during the year and subsequently returned in Financial Year 2013 returned in Financial Year 2013-14. That apart, on further 14. That apart, on further examination of certain information received from the examination of certain information received from the examination of certain information received from the Directorate of Investigation, Kolkata which had carried the Directorate of Investigation, Kolkata which had carried the Directorate of Investigation, Kolkata which had carried the investigation in the case of the 9 entities, details whereof has igation in the case of the 9 entities, details whereof has igation in the case of the 9 entities, details whereof has been set out in the reasons recorded, it was ascertained that been set out in the reasons recorded, it was ascertained that been set out in the reasons recorded, it was ascertained that those 9 entities are the companies with no real business and those 9 entities are the companies with no real business and those 9 entities are the companies with no real business and are only engaged in business of providing accommodation are only engaged in business of providing accommodation are only engaged in business of providing accommodation entries of bogus n entries of bogus nature to beneficiary concerns which was ature to beneficiary concerns which was further confirmed by the directors/dummy directors/key further confirmed by the directors/dummy directors/key further confirmed by the directors/dummy directors/key persons of the said entities in their respective statements. persons of the said entities in their respective statements. persons of the said entities in their respective statements.

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Thus, on the basis of the material on record, A0 opined that Thus, on the basis of the material on record, A0 opined that Thus, on the basis of the material on record, A0 opined that the appellant company has received and the appellant company has received and utilised the share utilised the share application money received from bogus sources lacking application money received from bogus sources lacking application money received from bogus sources lacking genuineness, creditworthiness, genuine identity, which fall genuineness, creditworthiness, genuine identity, which fall genuineness, creditworthiness, genuine identity, which fall within the purview of Section 68 of the Act. within the purview of Section 68 of the Act. 16. It is true that the reasons recorded or the material 16. It is true that the reasons recorded or the material 16. It is true that the reasons recorded or the material available on record m available on record must have nexus to the subjective opinion ust have nexus to the subjective opinion formed by the AO regarding the escapement of the income formed by the AO regarding the escapement of the income formed by the AO regarding the escapement of the income but then, while recording the reasons for belief formed, the but then, while recording the reasons for belief formed, the but then, while recording the reasons for belief formed, the AO is not required to finally ascertain the factum of AO is not required to finally ascertain the factum of AO is not required to finally ascertain the factum of escapement of the tax and it is sufficient t escapement of the tax and it is sufficient that the AO had hat the AO had cause or justification to know or suppose that income had cause or justification to know or suppose that income had cause or justification to know or suppose that income had escaped assessment [vide Rajesh Jhaveri Stock Brockers escaped assessment [vide Rajesh Jhaveri Stock Brockers escaped assessment [vide Rajesh Jhaveri Stock Brockers (P.)Ltd.'s case (supra)l. It is also well settled the sufficiency (P.)Ltd.'s case (supra)l. It is also well settled the sufficiency (P.)Ltd.'s case (supra)l. It is also well settled the sufficiency and adequacy of the reasons which have led to formation of and adequacy of the reasons which have led to formation of and adequacy of the reasons which have led to formation of a belief by the Assessing Officer that the income has escaped elief by the Assessing Officer that the income has escaped elief by the Assessing Officer that the income has escaped the assessment cannot be examined by the court." the assessment cannot be examined by the court." the assessment cannot be examined by the court." 18.1 The Ld. CIT(A) has also relied on the decision of the Hon’ble The Ld. CIT(A) has also relied on the decision of the Hon’ble The Ld. CIT(A) has also relied on the decision of the Hon’ble Gujarat High Court in the case of Gujarat High Court in the case of ‘Aaspas Multimedia Ltd. Aaspas Multimedia Ltd. DCIT 83 taxmann.com 82 (Gujarat) and reproduced the relevant para of the (Gujarat) and reproduced the relevant para of the (Gujarat) and reproduced the relevant para of the said decision from page 16 to 26 of the impugned order, which is said decision from page 16 to 26 of the impugned order said decision from page 16 to 26 of the impugned order extracted as under:

“[7.2] From the reasons recorded and the affidavit in reply [7.2] From the reasons recorded and the affidavit in reply [7.2] From the reasons recorded and the affidavit in reply filed on behalf of the Revenue, it appears that after the filed on behalf of the Revenue, it appears that after the filed on behalf of the Revenue, it appears that after the assessment orders cameto be passed, the AO received the essment orders cameto be passed, the AO received the essment orders cameto be passed, the AO received the information from the PrincipalDirector of Income Tax information from the PrincipalDirector of Income Tax information from the PrincipalDirector of Income Tax (Investigation), Ahmedabad vide its ConfidentialLetter dated (Investigation), Ahmedabad vide its ConfidentialLetter dated (Investigation), Ahmedabad vide its ConfidentialLetter dated 16.06.2015 by which the Principal Director of Income 16.06.2015 by which the Principal Director of Income 16.06.2015 by which the Principal Director of Income Tax(Investigation), Ahmedabad forwar Tax(Investigation), Ahmedabad forwarded the information ded the information that a searchunder Section 132 of the IT Act was conducted that a searchunder Section 132 of the IT Act was conducted that a searchunder Section 132 of the IT Act was conducted in the case of one ShriPravin Kumar Jain and the search in the case of one ShriPravin Kumar Jain and the search in the case of one ShriPravin Kumar Jain and the search action resulted in collection of theevidence and other findings action resulted in collection of theevidence and other findings action resulted in collection of theevidence and other findings which conclusively proved that the said ShriPravin Kumar which conclusively proved that the said ShriPravin Kumar which conclusively proved that the said ShriPravin Kumar Jain was engaged in providing accommodation entries Jain was engaged in providing accommodation entries Jain was engaged in providing accommodation entries ofvarious natures like unsecured loans, bogus share ofvarious natures like unsecured loans, bogus share ofvarious natures like unsecured loans, bogus share application / capitaland bogus sales and purchases to the application / capitaland bogus sales and purchases to the application / capitaland bogus sales and purchases to the

Shri Narendra S Shah 36 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

beneficiaries spread throughoutIndia. From the information beneficiaries spread throughoutIndia. From the information beneficiaries spread throughoutIndia. From the information received and the material received received and the material received from theOffice of Principal from theOffice of Principal Director of Income Tax (Investigation), Ahmedabad, itis found Director of Income Tax (Investigation), Ahmedabad, itis found Director of Income Tax (Investigation), Ahmedabad, itis found that the assessee is one of the beneficiaries of bogus that the assessee is one of the beneficiaries of bogus that the assessee is one of the beneficiaries of bogus shareapplication from various bogus companies operated by shareapplication from various bogus companies operated by shareapplication from various bogus companies operated by the said ShriPravin Kumar Jain. Thus, the information the said ShriPravin Kumar Jain. Thus, the information the said ShriPravin Kumar Jain. Thus, the information received from the Office ofPrincipal Director of Income Tax received from the Office ofPrincipal Director of Income Tax received from the Office ofPrincipal Director of Income Tax (Investigation), Ahmedabad along withthe evidence collected (Investigation), Ahmedabad along withthe evidence collected (Investigation), Ahmedabad along withthe evidence collected during the search action in case of said ShriPravin Kumar during the search action in case of said ShriPravin Kumar during the search action in case of said ShriPravin Kumar Jain, the AO has reopened the assessments for AYs Jain, the AO has reopened the assessments for AYs Jain, the AO has reopened the assessments for AYs 201112and 201213.Therefore, 201112and 201213.Therefore, it cannot be said that there it cannot be said that there was no tangiblematerial available with the AO to form an was no tangiblematerial available with the AO to form an was no tangiblematerial available with the AO to form an opinion that the incomechargeable to tax has escaped opinion that the incomechargeable to tax has escaped opinion that the incomechargeable to tax has escaped assessment for the years underconsideration. assessment for the years underconsideration. [7.3] Additionally, we may notice that the expression reason [7.3] Additionally, we may notice that the expression reason [7.3] Additionally, we may notice that the expression reason to believecame up for consideration before the Supreme Court came up for consideration before the Supreme Court came up for consideration before the Supreme Court in case of AssistantCommissioner of Income Tax vs. Rajesh in case of AssistantCommissioner of Income Tax vs. Rajesh in case of AssistantCommissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd. inwhich, it was held that such Jhaveri Stock Brokers P. Ltd. inwhich, it was held that such Jhaveri Stock Brokers P. Ltd. inwhich, it was held that such expression cannot be read to mean that theAssessing Officer expression cannot be read to mean that theAssessing Officer expression cannot be read to mean that theAssessing Officer should have finally ascert should have finally ascertained the fact by legalevidence or ained the fact by legalevidence or conclusion. The term reason to believe would mean cause conclusion. The term reason to believe would mean cause conclusion. The term reason to believe would mean cause orjustification. If the Assessing Officer has cause or justification. If the Assessing Officer has cause or justification. If the Assessing Officer has cause or justification to know orsuppose that income had escaped justification to know orsuppose that income had escaped justification to know orsuppose that income had escaped assessment, it can be said to havereason to believe th assessment, it can be said to havereason to believe th assessment, it can be said to havereason to believe that an income has escaped assessment. It wasobserved as under: income has escaped assessment. It wasobserved as under: income has escaped assessment. It wasobserved as under: “16. Section 147 authorises and permits the Assessing “16. Section 147 authorises and permits the Assessing “16. Section 147 authorises and permits the Assessing Officer toassess or reassess income chargeable to tax if he Officer toassess or reassess income chargeable to tax if he Officer toassess or reassess income chargeable to tax if he has reason to believethat income for any assessment year has reason to believethat income for any assessment year has reason to believethat income for any assessment year has escaped assessment. has escaped assessment. Theword reason in the phrase Theword reason in the phrase reason to believe would mean cause orjustification. If the reason to believe would mean cause orjustification. If the reason to believe would mean cause orjustification. If the Assessing Officer has cause or justification to knowor Assessing Officer has cause or justification to knowor Assessing Officer has cause or justification to knowor suppose that income had escaped assessment, it can be said suppose that income had escaped assessment, it can be said suppose that income had escaped assessment, it can be said tohave reason to believe that an income had escaped tohave reason to believe that an income had escaped tohave reason to believe that an income had escaped assessment. Theexpression cannot be read to mean that the ssessment. Theexpression cannot be read to mean that the ssessment. Theexpression cannot be read to mean that the Assessing Officer shouldhave finally ascertained the fact by Assessing Officer shouldhave finally ascertained the fact by Assessing Officer shouldhave finally ascertained the fact by legal evidence or conclusion. Thefunction of the Assessing legal evidence or conclusion. Thefunction of the Assessing legal evidence or conclusion. Thefunction of the Assessing Officer is to administer the statute withsolicitude for the Officer is to administer the statute withsolicitude for the Officer is to administer the statute withsolicitude for the public exchequer wi public exchequer with an inbuilt idea of fairness totaxpayers. th an inbuilt idea of fairness totaxpayers. As As As observed observed observed by by by the the the Supreme Supreme Supreme Court Court Court in in in Central Central Central ProvincesManganese Ore Co. Ltd. v. ITO [1991 (191) ITR ProvincesManganese Ore Co. Ltd. v. ITO [1991 (191) ITR ProvincesManganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiationof action under section 147(a) (as the 662], for initiationof action under section 147(a) (as the 662], for initiationof action under section 147(a) (as the

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provision stood at the relevanttime) fulfillment of th provision stood at the relevanttime) fulfillment of th provision stood at the relevanttime) fulfillment of the two requisite conditions in that regard isessential. At that stage, requisite conditions in that regard isessential. At that stage, requisite conditions in that regard isessential. At that stage, the final outcome of the proceeding is notrelevant. In other the final outcome of the proceeding is notrelevant. In other the final outcome of the proceeding is notrelevant. In other words, at the initiation stage, what is required isreason to words, at the initiation stage, what is required isreason to words, at the initiation stage, what is required isreason to believe, but not the established fact of escapement ofincome. believe, but not the established fact of escapement ofincome. believe, but not the established fact of escapement ofincome. At the stage of issue of notice, the only question is the stage of issue of notice, the only question is the stage of issue of notice, the only question is whetherthere was relevant material on which a reasonable whetherthere was relevant material on which a reasonable whetherthere was relevant material on which a reasonable person could haveformed a requisite belief. Whether the person could haveformed a requisite belief. Whether the person could haveformed a requisite belief. Whether the materials would conclusivelyprove the escapement is not the materials would conclusivelyprove the escapement is not the materials would conclusivelyprove the escapement is not the concern at that stage. This is concern at that stage. This is sobecause the formation of sobecause the formation of belief by the Assessing Officer is within therealm of belief by the Assessing Officer is within therealm of belief by the Assessing Officer is within therealm of subjective satisfaction (see ITO v. Selected Dalurband subjective satisfaction (see ITO v. Selected Dalurband subjective satisfaction (see ITO v. Selected Dalurband CoalCo. Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond CoalCo. Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond CoalCo. Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond Woollen MillsLtd. v. ITO [ 1999 (236) ITR 34 (SC)]. Woollen MillsLtd. v. ITO [ 1999 (236) ITR 34 (SC)]. 7.4 Now, so fa 7.4 Now, so far as the challenge to the impugned notices on r as the challenge to the impugned notices on the ground that the same is on the borrowed information and the ground that the same is on the borrowed information and the ground that the same is on the borrowed information and that AO has not formed an independent opinion and/or belief that AO has not formed an independent opinion and/or belief that AO has not formed an independent opinion and/or belief that the income chargeable to tax has escaped assessment, that the income chargeable to tax has escaped assessment, that the income chargeable to tax has escaped assessment, it is required to be noted that it is required to be noted that on the basis of the information on the basis of the information supplied by/from the office of Principal Director of Income supplied by/from the office of Principal Director of Income supplied by/from the office of Principal Director of Income Tax (Investigation), Ahmedahad, the AO has found that the Tax (Investigation), Ahmedahad, the AO has found that the Tax (Investigation), Ahmedahad, the AO has found that the petitioner - assessee is the beneficiary of accommodation assessee is the beneficiary of accommodation entries provided by one Shri Pravin Kumar Jain. entries provided by one Shri Pravin Kumar Jain. The 40 was The 40 was having with him findings of the Investigating Team based on having with him findings of the Investigating Team based on having with him findings of the Investigating Team based on the material recovered during the search conducted of Shri the material recovered during the search conducted of Shri the material recovered during the search conducted of Shri Pravin Kumar Jain Group. Under the circumstances, it cannot Pravin Kumar Jain Group. Under the circumstances, it cannot Pravin Kumar Jain Group. Under the circumstances, it cannot be said that there was no tangible material available with be said that there was no tangible material available with be said that there was no tangible material available with the AO to prima facie form an opinion/belief that the income to prima facie form an opinion/belief that the income to prima facie form an opinion/belief that the income chargeable to tax has escaped assessment. The transactions chargeable to tax has escaped assessment. The transactions chargeable to tax has escaped assessment. The transactions of the assessee are required to be verified in detail on the of the assessee are required to be verified in detail on the of the assessee are required to be verified in detail on the basis of the material/evidence collected during the search of basis of the material/evidence collected during the search of basis of the material/evidence collected during the search of Shri Pravin Kumar Ja Shri Pravin Kumar Jain Group. The petitioner - assessee is assessee is alleged to be the heneficiary of accommodation entries given alleged to be the heneficiary of accommodation entries given alleged to be the heneficiary of accommodation entries given by Shri Pravin Kumar Jain Group concerns, therefore, the by Shri Pravin Kumar Jain Group concerns, therefore, the by Shri Pravin Kumar Jain Group concerns, therefore, the same are required to be verified in detail. Under the same are required to be verified in detail. Under the same are required to be verified in detail. Under the circumstances and in the facts and circumstan circumstances and in the facts and circumstan circumstances and in the facts and circumstances of the case, it cannot be said that there is non case, it cannot be said that there is non-application of mind application of mind on the part of the AO that while issuing the impugned notices on the part of the AO that while issuing the impugned notices on the part of the AO that while issuing the impugned notices under Section 148 of the IT Act. under Section 148 of the IT Act. 7.5 Now, so far as the submission on behalf of the petitioner 7.5 Now, so far as the submission on behalf of the petitioner 7.5 Now, so far as the submission on behalf of the petitioner that as the transactions w that as the transactions with respect to share applications by ith respect to share applications by

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4 companies/shareholders named in the reasons recorded 4 companies/shareholders named in the reasons recorded 4 companies/shareholders named in the reasons recorded are concerned, the same were verified by the AO at the time are concerned, the same were verified by the AO at the time are concerned, the same were verified by the AO at the time of framing the original assessments and therefore, the of framing the original assessments and therefore, the of framing the original assessments and therefore, the reopening can be said to be on change of opinion reopening can be said to be on change of opinion reopening can be said to be on change of opinion by the subsequent AO is concerned, at the on as sutset it is required subsequent AO is concerned, at the on as sutset it is required subsequent AO is concerned, at the on as sutset it is required to be noted that as such there was no material lable with the to be noted that as such there was no material lable with the to be noted that as such there was no material lable with the A0 at the time of framing original assessments, which are A0 at the time of framing original assessments, which are A0 at the time of framing original assessments, which are now available with the AO received from the office of now available with the AO received from the office of now available with the AO received from the office of principal Director of Income Tax (Investigation), Ahmedabad. rector of Income Tax (Investigation), Ahmedabad. rector of Income Tax (Investigation), Ahmedabad. 7.6 At this stage, decision of the Division Bench of this Court 7.6 At this stage, decision of the Division Bench of this Court 7.6 At this stage, decision of the Division Bench of this Court in the case of Yogendrakumar Gupta v. TO /2014] 46 in the case of Yogendrakumar Gupta v. TO /2014] 46 in the case of Yogendrakumar Gupta v. TO /2014] 46 taxmann.com 56 is required to be referred to and considered. taxmann.com 56 is required to be referred to and considered. taxmann.com 56 is required to be referred to and considered. In the case before the Division In the case before the Division Bench on the basis of Bench on the basis of information from CBI that loans accepted as genuine in information from CBI that loans accepted as genuine in information from CBI that loans accepted as genuine in original assessment were bogus, when the Assessing Officer original assessment were bogus, when the Assessing Officer original assessment were bogus, when the Assessing Officer initiated reassessment proceedings under Section 147 of the initiated reassessment proceedings under Section 147 of the initiated reassessment proceedings under Section 147 of the IT Act beyond 4 years, the Division Bench has observed that IT Act beyond 4 years, the Division Bench has observed that IT Act beyond 4 years, the Division Bench has observed that assumption of jurisdiction on the part of the A0 is based on assumption of jurisdiction on the part of the A0 is based on assumption of jurisdiction on the part of the A0 is based on fresh information, specific and reliable and otherwise fresh information, specific and reliable and otherwise fresh information, specific and reliable and otherwise sustainable under the law, challenge to reassessment sustainable under the law, challenge to reassessment sustainable under the law, challenge to reassessment proceedings warrant no interference and accordingly notice proceedings warrant no interference and accordingly notice proceedings warrant no interference and accordingly notice for reassessment was held t for reassessment was held to be valid. In the case before the o be valid. In the case before the Division Bench. it was the case on behalf of the assessee Division Bench. it was the case on behalf of the assessee Division Bench. it was the case on behalf of the assessee that at the time of original scrutiny assessment, specific that at the time of original scrutiny assessment, specific that at the time of original scrutiny assessment, specific query was raised with regard to unsecured loans and query was raised with regard to unsecured loans and query was raised with regard to unsecured loans and advances received from the company B and these being advances received from the company B and these being advances received from the company B and these being the transactions through the cheques and drafts, there would transactions through the cheques and drafts, there would transactions through the cheques and drafts, there would arise no question of the Assessing Officer not accepting such arise no question of the Assessing Officer not accepting such arise no question of the Assessing Officer not accepting such version of the assessee and not treating them as genuine version of the assessee and not treating them as genuine version of the assessee and not treating them as genuine loans and advances. The relevant observation of the Division loans and advances. The relevant observation of the Division loans and advances. The relevant observation of the Division Bench are in p Bench are in paras 6 to 18. In para 19, the Division Bench aras 6 to 18. In para 19, the Division Bench has further observed that sufficiency of the reasons recorded has further observed that sufficiency of the reasons recorded has further observed that sufficiency of the reasons recorded by the Assessing Officer need not be gone into by this Court. by the Assessing Officer need not be gone into by this Court. by the Assessing Officer need not be gone into by this Court. It is further observed that the AO when forms his belief on It is further observed that the AO when forms his belief on It is further observed that the AO when forms his belief on the basis of subsequent new the basis of subsequent new and specific information that and specific information that the income chargeable to tax has escaped assessment on the income chargeable to tax has escaped assessment on the income chargeable to tax has escaped assessment on account of omission on the part of the assessee to make full account of omission on the part of the assessee to make full account of omission on the part of the assessee to make full and true disclosure of primary facts, he may start and true disclosure of primary facts, he may start and true disclosure of primary facts, he may start reassessment proceedings as fresh facts revealed the non reassessment proceedings as fresh facts revealed the non reassessment proceedings as fresh facts revealed the non- disclosure full and true. Such facts were not previously isclosure full and true. Such facts were not previously isclosure full and true. Such facts were not previously disclosed or it can be said that if previously disclosed, they disclosed or it can be said that if previously disclosed, they disclosed or it can be said that if previously disclosed, they expose untruthfulness of facts revealed. expose untruthfulness of facts revealed.

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7.6.1 The Apex Court in the case of Rajesh Jhaveri Stock 7.6.1 The Apex Court in the case of Rajesh Jhaveri Stock 7.6.1 The Apex Court in the case of Rajesh Jhaveri Stock Brokers (P.)Ltd. (supra) has held that Brokers (P.)Ltd. (supra) has held that at the stage of issuance at the stage of issuance of notice of reopening, the Assessing Officer must have a of notice of reopening, the Assessing Officer must have a of notice of reopening, the Assessing Officer must have a reason to believe and not the established fact of escapement reason to believe and not the established fact of escapement reason to believe and not the established fact of escapement of income in the following manner (headnote); of income in the following manner (headnote); "The expression reason to believe in section 147 would mean "The expression reason to believe in section 147 would mean "The expression reason to believe in section 147 would mean cause or justification. If the Assessing Officer has cause or If or justification. If the Assessing Officer has cause or If or justification. If the Assessing Officer has cause or If the Assessing Officer has cause or justification to know or the Assessing Officer has cause or justification to know or the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said suppose that income had escaped assessment, it can be said suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped to have reason to believe that an income had escaped to have reason to believe that an income had escaped assessment. The expressio assessment. The expression cannot be read to mean that the n cannot be read to mean that the Assessing Officer should have finally ascertained the fact by Assessing Officer should have finally ascertained the fact by Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. What is required is reason to legal evidence or conclusion. What is required is reason to legal evidence or conclusion. What is required is reason to believe but not the established fact of escapement of income. believe but not the established fact of escapement of income. believe but not the established fact of escapement of income. At the stage of issue of notice, the o At the stage of issue of notice, the only question is whether nly question is whether there was relevant material on which a reasonable person there was relevant material on which a reasonable person there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials could have formed a requisite belief. Whether the materials could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern would conclusively prove the escapement is not the concern would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belie at that stage. This is so because the formation of belie at that stage. This is so because the formation of belief is within the realm of subjective satisfaction of the Assessing within the realm of subjective satisfaction of the Assessing within the realm of subjective satisfaction of the Assessing Officer." 7.6.2 In the case of Raymond Woollen Mills Ltd. v. ITO 7.6.2 In the case of Raymond Woollen Mills Ltd. v. ITO 7.6.2 In the case of Raymond Woollen Mills Ltd. v. ITO [19991 236IT 34 (SC), the Court held that in determining [19991 236IT 34 (SC), the Court held that in determining [19991 236IT 34 (SC), the Court held that in determining whether commencement of reassessment proceedings was whether commencement of reassessment proceedings was whether commencement of reassessment proceedings was valid, it has o valid, it has only to be seen whether there was prima facie nly to be seen whether there was prima facie some material on the basis of which the Department could some material on the basis of which the Department could some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the reopen the case. The sufficiency or correctness of the reopen the case. The sufficiency or correctness of the material is not a thing to be considered at suchstage. material is not a thing to be considered at suchstage. material is not a thing to be considered at suchstage. 7.7 In the case of CIT v. Navodaya Castles ( 7.7 In the case of CIT v. Navodaya Castles (P.) Ltd. [20141 P.) Ltd. [20141 367 ITR306/50 taxmann.com 110/226 Taxman 190 (Mag.) 367 ITR306/50 taxmann.com 110/226 Taxman 190 (Mag.) 367 ITR306/50 taxmann.com 110/226 Taxman 190 (Mag.) (Delhi), Delhi High Court observed as under: (Delhi), Delhi High Court observed as under: "13. As we perceive, there are two sets of judgments and "13. As we perceive, there are two sets of judgments and "13. As we perceive, there are two sets of judgments and cases, but these judgments and cases proceed on their own cases, but these judgments and cases proceed on their own cases, but these judgments and cases proceed on their own facts. In one set of cases, facts. In one set of cases, the assessee produced necessary the assessee produced necessary documents/evidence to show and establish identity of the documents/evidence to show and establish identity of the documents/evidence to show and establish identity of the shareholders, bank account from which payment was made, shareholders, bank account from which payment was made, shareholders, bank account from which payment was made, the fact that payments were received thorough banking the fact that payments were received thorough banking the fact that payments were received thorough banking channels, filed necessary affidavits of the shareholders channels, filed necessary affidavits of the shareholders channels, filed necessary affidavits of the shareholders or confirmations of the directors of the shareholder companies, confirmations of the directors of the shareholder companies, confirmations of the directors of the shareholder companies,

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but thereafter no further inquiries were conducted. The but thereafter no further inquiries were conducted. The but thereafter no further inquiries were conducted. The second set of cases are those where there was evidence and second set of cases are those where there was evidence and second set of cases are those where there was evidence and material to show that the shareholder company was only a material to show that the shareholder company was only a material to show that the shareholder company was only a paper company having paper company having no source of income, but had made no source of income, but had made substantial and huge investments in the form of share substantial and huge investments in the form of share substantial and huge investments in the form of share application money. The assessing officer has referred to the application money. The assessing officer has referred to the application money. The assessing officer has referred to the bank statement, financial position of the recipient aatia) and bank statement, financial position of the recipient aatia) and bank statement, financial position of the recipient aatia) and beneficiary assessee and surrounding circum beneficiary assessee and surrounding circumstances. The stances. The primary requirements, which should be satisfied in such primary requirements, which should be satisfied in such primary requirements, which should be satisfied in such cases cases cases is, is, is, dentification dentification dentification of of of the the the creditors/shareholder, creditors/shareholder, creditors/shareholder, creditworthiness of creditors/shareholder and genuineness creditworthiness of creditors/shareholder and genuineness creditworthiness of creditors/shareholder and genuineness of the transaction. These three requirements have to be of the transaction. These three requirements have to be of the transaction. These three requirements have to be tested not superfic tested not superficially but in depth having regard to the ially but in depth having regard to the human probabilities and normal course of human conduct. human probabilities and normal course of human conduct. human probabilities and normal course of human conduct. 18. Lovely Exports Pvt. Ltd. (supra) was also considered and 18. Lovely Exports Pvt. Ltd. (supra) was also considered and 18. Lovely Exports Pvt. Ltd. (supra) was also considered and distinguished in N.R. Portfolio Pvt. Ltd. (supra) and it was distinguished in N.R. Portfolio Pvt. Ltd. (supra) and it was distinguished in N.R. Portfolio Pvt. Ltd. (supra) and it was held that the entire evidence availabl held that the entire evidence available on record has to be e on record has to be considered, after relying upon CIT v. Nipun Builders and considered, after relying upon CIT v. Nipun Builders and considered, after relying upon CIT v. Nipun Builders and Developers [20131 350 ITR 107 (Delhi), wherein it has been Developers [20131 350 ITR 107 (Delhi), wherein it has been Developers [20131 350 ITR 107 (Delhi), wherein it has been held that a reasonable approach has to be adopted and held that a reasonable approach has to be adopted and held that a reasonable approach has to be adopted and whether initial onus stands discharged would depend upon whether initial onus stands discharged would depend upon whether initial onus stands discharged would depend upon facts and circumstances of each case. In case of private nd circumstances of each case. In case of private nd circumstances of each case. In case of private limited companies, generally persons known to directors or limited companies, generally persons known to directors or limited companies, generally persons known to directors or shareholders, directly or indirectly, buy or subscribe to shareholders, directly or indirectly, buy or subscribe to shareholders, directly or indirectly, buy or subscribe to shares. Upon receipt of money, the share subscribers do not shares. Upon receipt of money, the share subscribers do not shares. Upon receipt of money, the share subscribers do not lose touch and become incommu lose touch and become incommunicado. Call money, nicado. Call money, dividends, warrants, etc. have to be sent and the dividends, warrants, etc. have to be sent and the dividends, warrants, etc. have to be sent and the relationship remains a continuing one. Therefore, an relationship remains a continuing one. Therefore, an relationship remains a continuing one. Therefore, an assessee cannot simply furnish some details and remain assessee cannot simply furnish some details and remain assessee cannot simply furnish some details and remain quiet when summons issued to shareholders remain un quiet when summons issued to shareholders remain un quiet when summons issued to shareholders remain un- served and uncomplied. As served and uncomplied. As a general proposition, it would be a general proposition, it would be improper to universally hold that the assessee cannot plead improper to universally hold that the assessee cannot plead improper to universally hold that the assessee cannot plead that they had received money, but could do nothing more that they had received money, but could do nothing more that they had received money, but could do nothing more and it was for the Assessing Officer to enforce shareholders and it was for the Assessing Officer to enforce shareholders and it was for the Assessing Officer to enforce shareholders attendance in spite of the fact that the sha attendance in spite of the fact that the shareholders were reholders were missing and not available. Their reluctance and hiding may missing and not available. Their reluctance and hiding may missing and not available. Their reluctance and hiding may reflect reflect reflect on on on the the the genuineness genuineness genuineness of of of the the the transaction transaction transaction and and and creditworthiness of the creditor. It would be also incorrect to creditworthiness of the creditor. It would be also incorrect to creditworthiness of the creditor. It would be also incorrect to universally state that an Inspector must be sent to verify the universally state that an Inspector must be sent to verify the universally state that an Inspector must be sent to verify the shareholders/subscribers at the available addresses, though holders/subscribers at the available addresses, though holders/subscribers at the available addresses, though this might be required in some cases. Similarly, it would be this might be required in some cases. Similarly, it would be this might be required in some cases. Similarly, it would be incorrect to state that the Assessing Officer should ascertain incorrect to state that the Assessing Officer should ascertain incorrect to state that the Assessing Officer should ascertain

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and get addresses from the Registrar of Companies website and get addresses from the Registrar of Companies website and get addresses from the Registrar of Companies website or search for the a or search for the addresses of shareholders themselves. ddresses of shareholders themselves. Creditworthiness is not proved by showing issue and receipt Creditworthiness is not proved by showing issue and receipt Creditworthiness is not proved by showing issue and receipt of a cheque or by furnishing a copy of statement of bank of a cheque or by furnishing a copy of statement of bank of a cheque or by furnishing a copy of statement of bank account, when circumstances requires that there should be account, when circumstances requires that there should be account, when circumstances requires that there should be some more evidence of positive nature to sho some more evidence of positive nature to sho some more evidence of positive nature to show that the subscribers had made genuine investment or had, acted as subscribers had made genuine investment or had, acted as subscribers had made genuine investment or had, acted as angel investors after due diligence or for personal reasons. angel investors after due diligence or for personal reasons. angel investors after due diligence or for personal reasons. The final conclusion must be pragmatic and practical, which The final conclusion must be pragmatic and practical, which The final conclusion must be pragmatic and practical, which takes into account holistic view of the entire evidence takes into account holistic view of the entire evidence takes into account holistic view of the entire evidence including the difficulties, which the assessee may face to he difficulties, which the assessee may face to he difficulties, which the assessee may face to unimpeachably unimpeachably unimpeachably establish establish establish creditworthiness creditworthiness creditworthiness of of of the the the shareholders." shareholders." 7.8 Considering the aforesaid decisions of the Hon'ble Apex 7.8 Considering the aforesaid decisions of the Hon'ble Apex 7.8 Considering the aforesaid decisions of the Hon'ble Apex Court as well as decision of the Division Bench of this Court Court as well as decision of the Division Bench of this Court Court as well as decision of the Division Bench of this Court and Delhi High Court an and Delhi High Court and applying the same to the facts of d applying the same to the facts of the case on hand, it cannot he said that there was no the case on hand, it cannot he said that there was no the case on hand, it cannot he said that there was no material before the AO to reopen the assessment. In the material before the AO to reopen the assessment. In the material before the AO to reopen the assessment. In the present case also the reassessment proceedings have been present case also the reassessment proceedings have been present case also the reassessment proceedings have been initiated by the A0 on the basis of material provided initiated by the A0 on the basis of material provided initiated by the A0 on the basis of material provided by the Principal Director of Income Tax (Investigation), Ahmedabad. Principal Director of Income Tax (Investigation), Ahmedabad. Principal Director of Income Tax (Investigation), Ahmedabad. It is also required to be noted that the genuineness of the It is also required to be noted that the genuineness of the It is also required to be noted that the genuineness of the various companies who made share applications are various companies who made share applications are various companies who made share applications are doubted. The assessee is alleged to have been engaged in bogus The assessee is alleged to have been engaged in bogus The assessee is alleged to have been engaged in bogus share applicat share applications from various bogus concerns operated by ions from various bogus concerns operated by Shri Pravin Kumar Jain. The assessee is the beneficiary of Shri Pravin Kumar Jain. The assessee is the beneficiary of Shri Pravin Kumar Jain. The assessee is the beneficiary of the said transactions of share application by those bogus the said transactions of share application by those bogus the said transactions of share application by those bogus concerns. In the wake of information received by the AO, concerns. In the wake of information received by the AO, concerns. In the wake of information received by the AO, when AO formed a belief that the inve when AO formed a belief that the investment made from the stment made from the funding of such companies which are bogus, the AO has funding of such companies which are bogus, the AO has funding of such companies which are bogus, the AO has rightly rightly rightly assumed assumed assumed the the the jurisdiction jurisdiction jurisdiction of of of initiating initiating initiating the the the reassessment proceedings. AO, on the basis of information reassessment proceedings. AO, on the basis of information reassessment proceedings. AO, on the basis of information subsequently having come to his knowledge, recognized subsequently having come to his knowledge, recognized subsequently having come to his knowledge, recognized untruthfulness of untruthfulness of the facts furnished earlier. In the present the facts furnished earlier. In the present case, since both the necessary conditions to reopen the case, since both the necessary conditions to reopen the case, since both the necessary conditions to reopen the assessment have been duly fulfilled, sufficiency of the assessment have been duly fulfilled, sufficiency of the assessment have been duly fulfilled, sufficiency of the reasons is not to be gone into by this Court. Information reasons is not to be gone into by this Court. Information reasons is not to be gone into by this Court. Information furnished at the time of original assessme furnished at the time of original assessment, when by nt, when by subsequent information received from the Principal Director subsequent information received from the Principal Director subsequent information received from the Principal Director of Income Tax (Investigation), Ahmedabad, itself found to be of Income Tax (Investigation), Ahmedabad, itself found to be of Income Tax (Investigation), Ahmedabad, itself found to be

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controverted, the objection to the notice of reassessment controverted, the objection to the notice of reassessment controverted, the objection to the notice of reassessment under section 147 of the IT Act must fail. At this stage, para under section 147 of the IT Act must fail. At this stage, para under section 147 of the IT Act must fail. At this stage, para 20 of the decision in the case of Yogendrakumar Gupta of the decision in the case of Yogendrakumar Gupta of the decision in the case of Yogendrakumar Gupta (supra) is required to be referred to, which reads as under: (supra) is required to be referred to, which reads as under: (supra) is required to be referred to, which reads as under: "20. This Court has examined the belief of the Assessing "20. This Court has examined the belief of the Assessing "20. This Court has examined the belief of the Assessing Officer to a limited extent to inquiry as to whether there was Officer to a limited extent to inquiry as to whether there was Officer to a limited extent to inquiry as to whether there was sufficient material ava sufficient material available on record for the Assessing ilable on record for the Assessing Officer to form a requisite belief whether there was a live link Officer to form a requisite belief whether there was a live link Officer to form a requisite belief whether there was a live link existing of the material and the income chargeable to tax that existing of the material and the income chargeable to tax that existing of the material and the income chargeable to tax that escaped assessment. This does not appear to be the case escaped assessment. This does not appear to be the case escaped assessment. This does not appear to be the case where the Assessing Officer on vague where the Assessing Officer on vague orbothering to form his orbothering to form his own belief in respect of such material. We need to notice that own belief in respect of such material. We need to notice that own belief in respect of such material. We need to notice that the Joint Director, CBI, Mumbai, intimated to the DIT the Joint Director, CBI, Mumbai, intimated to the DIT the Joint Director, CBI, Mumbai, intimated to the DIT (Investigation), Mumbai. A case is registered against Mr.Arun (Investigation), Mumbai. A case is registered against Mr.Arun (Investigation), Mumbai. A case is registered against Mr.Arun Dalmia, Harsh Dalmia and during the search at their Dalmia, Harsh Dalmia and during the search at their Dalmia, Harsh Dalmia and during the search at their residence and office premises, the substantial material esidence and office premises, the substantial material esidence and office premises, the substantial material indicated that 20 dummy companies of Mr.Arun Dalmia were indicated that 20 dummy companies of Mr.Arun Dalmia were indicated that 20 dummy companies of Mr.Arun Dalmia were engaged in money laundering and the income engaged in money laundering and the income-tax evasion. tax evasion. The said entities included Basant Marketing Pvt. Ltd. also. The said entities included Basant Marketing Pvt. Ltd. also. The said entities included Basant Marketing Pvt. Ltd. also. From the analysis of details From the analysis of details furnished and the beneficiaries furnished and the beneficiaries reflected, which are spread across the country, the CIT, reflected, which are spread across the country, the CIT, reflected, which are spread across the country, the CIT, Kolkata, suspected the accommodation entry related to the Kolkata, suspected the accommodation entry related to the Kolkata, suspected the accommodation entry related to the assessment year 2006 assessment year 2006-07 as well, this information has been 07 as well, this information has been provided to Director General of Income provided to Director General of Income-tax, Kolka tax, Kolkata, who in turn, communicated to the Chief Commissioner of Income turn, communicated to the Chief Commissioner of Income turn, communicated to the Chief Commissioner of Income-tax, Ahmedabad. Further revelation of investigation as could be Ahmedabad. Further revelation of investigation as could be Ahmedabad. Further revelation of investigation as could be noticed from the record examined (file) deserves no reflection noticed from the record examined (file) deserves no reflection noticed from the record examined (file) deserves no reflection in this petition. Insistence on the part of the petitioner to in this petition. Insistence on the part of the petitioner to in this petition. Insistence on the part of the petitioner to provide any further material forming the part of investigation rovide any further material forming the part of investigation rovide any further material forming the part of investigation carried out against Dalmias also needs to meet with carried out against Dalmias also needs to meet with carried out against Dalmias also needs to meet with negation, as the law requires supply of information on which negation, as the law requires supply of information on which negation, as the law requires supply of information on which Assessing Assessing Assessing Officer Officer Officer recorded recorded recorded her her her satisfaction, satisfaction, satisfaction, without without without necessitating supply of any necessitating supply of any specific documents. The specific documents. The proceedings initiated under section 147 of the Act would not proceedings initiated under section 147 of the Act would not proceedings initiated under section 147 of the Act would not be rendered void on non be rendered void on non-supply of such document for which supply of such document for which confidentiality is claimed at this stage, following the decision confidentiality is claimed at this stage, following the decision confidentiality is claimed at this stage, following the decision of the Delhi High Court in case of Acorus Unitec of the Delhi High Court in case of Acorus Unitech Wireless (P.) h Wireless (P.) Ltd. (supra). Assumption of jurisdiction on the part of the Ltd. (supra). Assumption of jurisdiction on the part of the Ltd. (supra). Assumption of jurisdiction on the part of the Assessing Officer is since based on fresh information, Assessing Officer is since based on fresh information, Assessing Officer is since based on fresh information, specific and reliable and otherwise sustainable under the specific and reliable and otherwise sustainable under the specific and reliable and otherwise sustainable under the

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law, challenge to reassessment proceedings warrant no law, challenge to reassessment proceedings warrant no law, challenge to reassessment proceedings warrant no interference. interference." 7.9 In view of the aforesaid facts and circumstances of the 7.9 In view of the aforesaid facts and circumstances of the 7.9 In view of the aforesaid facts and circumstances of the case, the decisions of the Hon'ble Supreme Court in the case case, the decisions of the Hon'ble Supreme Court in the case case, the decisions of the Hon'ble Supreme Court in the case of LakhmaniMewal Das (supra); the decision of the Delhi of LakhmaniMewal Das (supra); the decision of the Delhi of LakhmaniMewal Das (supra); the decision of the Delhi High Court in the case of JSRS Udyog Ltd. (supra); Replika High Court in the case of JSRS Udyog Ltd. (supra); Replika High Court in the case of JSRS Udyog Ltd. (supra); Replika Press (P.) Ltd. (s Press (P.) Ltd. (supra) and the decision of this Court in the upra) and the decision of this Court in the case of SarlaRajkumarVerma (supra) shall not be applicable case of SarlaRajkumarVerma (supra) shall not be applicable case of SarlaRajkumarVerma (supra) shall not be applicable to the facts of the case on hand. In the facts and to the facts of the case on hand. In the facts and to the facts of the case on hand. In the facts and circumstances of the case, it cannot be said that the circumstances of the case, it cannot be said that the circumstances of the case, it cannot be said that the reopening of the assessment is on change of opin reopening of the assessment is on change of opin reopening of the assessment is on change of opinion by the subsequent AO. subsequent AO. 7.10 Now, so far as the submission on behalf of the assessee 7.10 Now, so far as the submission on behalf of the assessee 7.10 Now, so far as the submission on behalf of the assessee that the statement of Shri Pravin Kumar Jain, which was that the statement of Shri Pravin Kumar Jain, which was that the statement of Shri Pravin Kumar Jain, which was recorded at the time of search and which is the basis for recorded at the time of search and which is the basis for recorded at the time of search and which is the basis for reopening reopening reopening of of of the the the assessments assessments assessments in in in the the the years years years under under under consideration, was subsequently retracted and therefore, the ration, was subsequently retracted and therefore, the ration, was subsequently retracted and therefore, the reopening of the assessment on such a retracted statement reopening of the assessment on such a retracted statement reopening of the assessment on such a retracted statement cannot be sustained is concerned, at the outset it is required cannot be sustained is concerned, at the outset it is required cannot be sustained is concerned, at the outset it is required to he noted that from the reasons recorded it cannot be said to he noted that from the reasons recorded it cannot be said to he noted that from the reasons recorded it cannot be said that the reopening i that the reopening is solely based upon the statement of Shri s solely based upon the statement of Shri Pravin Kumar Jain, which is subsequently retracted. From Pravin Kumar Jain, which is subsequently retracted. From Pravin Kumar Jain, which is subsequently retracted. From the reasons recorded it appears that the office of the the reasons recorded it appears that the office of the the reasons recorded it appears that the office of the Principal Director of Income Tax (Investigation), Ahmedabad Principal Director of Income Tax (Investigation), Ahmedabad Principal Director of Income Tax (Investigation), Ahmedabad sent the material/evidence collected durin sent the material/evidence collected during the search of g the search of Shri Pravin Kumar Jain and after considering and verifying Shri Pravin Kumar Jain and after considering and verifying Shri Pravin Kumar Jain and after considering and verifying the same and having been found that the petitioner the same and having been found that the petitioner the same and having been found that the petitioner - assessee is the beneficiary of the accommodation entries by assessee is the beneficiary of the accommodation entries by assessee is the beneficiary of the accommodation entries by way of share application from various bogus companies way of share application from various bogus companies way of share application from various bogus companies operated by Sh operated by Shri Pravin Kumar Jain, only thereafter the ri Pravin Kumar Jain, only thereafter the impugned notices under Section 148 of the IT Act are issued impugned notices under Section 148 of the IT Act are issued impugned notices under Section 148 of the IT Act are issued and the assessments for the AYs 2011 and the assessments for the AYs 2011-12 and 2012 12 and 2012-13 are reopened. Even otherwise what will be the effect of the retracted Even otherwise what will be the effect of the retracted Even otherwise what will be the effect of the retracted statement of Shri Pravin Kumar J statement of Shri Pravin Kumar Jain is required to be ain is required to be decided and/or considered at the time of reassessment decided and/or considered at the time of reassessment decided and/or considered at the time of reassessment proceedings. proceedings. 7.11 Now, so far as the reliance placed upon the decision of 7.11 Now, so far as the reliance placed upon the decision of 7.11 Now, so far as the reliance placed upon the decision of the Delhi High Court in the case of Signature Hotels (P) Ltd. the Delhi High Court in the case of Signature Hotels (P) Ltd. the Delhi High Court in the case of Signature Hotels (P) Ltd.

Shri Narendra S Shah 44 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

(supra) by the learned Counsel appearing on (supra) by the learned Counsel appearing on behalf of the behalf of the assessee is concerned, on considering the facts in the said assessee is concerned, on considering the facts in the said assessee is concerned, on considering the facts in the said decision, we are of the opinion that the said decision shall decision, we are of the opinion that the said decision shall decision, we are of the opinion that the said decision shall not be applicable to the facts of the case on hand. In the not be applicable to the facts of the case on hand. In the not be applicable to the facts of the case on hand. In the present case on the basis of the information received from present case on the basis of the information received from present case on the basis of the information received from the office of Principal Director of Income Tax (Investigation), office of Principal Director of Income Tax (Investigation), office of Principal Director of Income Tax (Investigation), Ahmedabad along with the evidence collected during the Ahmedabad along with the evidence collected during the Ahmedabad along with the evidence collected during the search and other findings, the AO has considered the same search and other findings, the AO has considered the same search and other findings, the AO has considered the same and after verifying and considering the material on record it and after verifying and considering the material on record it and after verifying and considering the material on record it has been found by th has been found by the AO that the present assessee is the e AO that the present assessee is the beneficiary of the accommodation entries/bogus share beneficiary of the accommodation entries/bogus share beneficiary of the accommodation entries/bogus share application from various bogus companies operated by Shri application from various bogus companies operated by Shri application from various bogus companies operated by Shri Pravin Kumar Jain. In the affidavit in reply the Revenue has Pravin Kumar Jain. In the affidavit in reply the Revenue has Pravin Kumar Jain. In the affidavit in reply the Revenue has stated in para 3.8 as under: stated in para 3.8 as under: The allegation of The allegation of the assessee is not correct. The case of the the assessee is not correct. The case of the assessee was reopened based on correct facts/law and assessee was reopened based on correct facts/law and assessee was reopened based on correct facts/law and procedural galisrequirements of the Act were duly complied procedural galisrequirements of the Act were duly complied procedural galisrequirements of the Act were duly complied with. The information bravided by The Pr. Director of Income with. The information bravided by The Pr. Director of Income with. The information bravided by The Pr. Director of Income Tax (Investigation), Ahmedabad vide c Tax (Investigation), Ahmedabad vide confidential letter onfidential letter No.PDIT(Inv)/AHD/Pravin Jain/15 No.PDIT(Inv)/AHD/Pravin Jain/15-16 dated 16.06.2015, 16 dated 16.06.2015, was thro roughly perused. The same has been summarized was thro roughly perused. The same has been summarized was thro roughly perused. The same has been summarized in the reasons for reopening recorded prior 10 issuance of in the reasons for reopening recorded prior 10 issuance of in the reasons for reopening recorded prior 10 issuance of section 148 notice. From the same, reason to believe that section 148 notice. From the same, reason to believe that section 148 notice. From the same, reason to believe that income has e income has escaped assessment in concerned AY has been scaped assessment in concerned AY has been logically logically logically derived. derived. derived. Thus, Thus, Thus, only only only after after after deriving deriving deriving requisite requisite requisite satisfaction regarding escapement of income on basis of satisfaction regarding escapement of income on basis of satisfaction regarding escapement of income on basis of information/material supplied by the Pr. Director of Income information/material supplied by the Pr. Director of Income information/material supplied by the Pr. Director of Income Tax (Investigation), Ahmedabad, reopening Tax (Investigation), Ahmedabad, reopening was initiated. was initiated. The same is evident from reasons provided for reopening. The same is evident from reasons provided for reopening. The same is evident from reasons provided for reopening. Information Information Information received received received from from from third third third party, party, party, more more more so so so the the the information collected by Investigation Wing as a consequence information collected by Investigation Wing as a consequence information collected by Investigation Wing as a consequence of search us. 132 of the Act constitutes sufficient material for of search us. 132 of the Act constitutes sufficient material for of search us. 132 of the Act constitutes sufficient material for reopening, if, Assessing Officer after perusing the said ng, if, Assessing Officer after perusing the said ng, if, Assessing Officer after perusing the said information arrives at conclusion that income has escaped information arrives at conclusion that income has escaped information arrives at conclusion that income has escaped assessment. This is precisely the case in present situation. assessment. This is precisely the case in present situation. assessment. This is precisely the case in present situation. Thus, all the allegations made by the petitioner are incorrect Thus, all the allegations made by the petitioner are incorrect Thus, all the allegations made by the petitioner are incorrect in this case. In this re in this case. In this regard il is stated that the findings of the gard il is stated that the findings of the investigation wing are based on an the material recovered investigation wing are based on an the material recovered investigation wing are based on an the material recovered during search conducted on Shri Pravin Kumar Jain group on during search conducted on Shri Pravin Kumar Jain group on during search conducted on Shri Pravin Kumar Jain group on 01.10.2013 in Mumbai. The same was sympathetically 01.10.2013 in Mumbai. The same was sympathetically 01.10.2013 in Mumbai. The same was sympathetically decoded and corroborated by evidence seized d decoded and corroborated by evidence seized d decoded and corroborated by evidence seized during the search. search. search. The The The details details details regarding regarding regarding modus modus modus of of of recording recording recording

Shri Narendra S Shah 45 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

transactions transactions transactions has has has been been been described described described in in in detail detail detail by by by the the the Investigation wing. The relevant part of the same with Investigation wing. The relevant part of the same with Investigation wing. The relevant part of the same with findings of Investigation Wing was summarized in reasons findings of Investigation Wing was summarized in reasons findings of Investigation Wing was summarized in reasons recorded. It was found by the Invest recorded. It was found by the Investigation wing that Pravin igation wing that Pravin Kumar Jain group was engaged in business of providing Kumar Jain group was engaged in business of providing Kumar Jain group was engaged in business of providing accommodation entries through its concerns like Anchal accommodation entries through its concerns like Anchal accommodation entries through its concerns like Anchal PropertiesP. Ltd., Ansh Merchandise P. Ltd., Olive Overseas PropertiesP. Ltd., Ansh Merchandise P. Ltd., Olive Overseas PropertiesP. Ltd., Ansh Merchandise P. Ltd., Olive Overseas P. Ltd., Vanguard Jewels Ltd. etc.It was found that there are P. Ltd., Vanguard Jewels Ltd. etc.It was found that there are P. Ltd., Vanguard Jewels Ltd. etc.It was found that there are bogus transactions to/from account of Anchal Properties P. bogus transactions to/from account of Anchal Properties P. bogus transactions to/from account of Anchal Properties P. Ltd., Ansh Merchandise P. Ltd., Olive OverseasP. Ltd., Ltd., Ansh Merchandise P. Ltd., Olive OverseasP. Ltd., Ltd., Ansh Merchandise P. Ltd., Olive OverseasP. Ltd., Vanguard Jewels Ltd., to the account of the assessee Vanguard Jewels Ltd., to the account of the assessee Vanguard Jewels Ltd., to the account of the assessee company. On basis of corroborative evidence and systematic company. On basis of corroborative evidence and systematic company. On basis of corroborative evidence and systematic investigation, Investigation W investigation, Investigation Wing has given a finding that all ing has given a finding that all such transactions of accommodation entry given by certain such transactions of accommodation entry given by certain such transactions of accommodation entry given by certain Pravin Kumar Jain group concerns such as Anchal Properties Pravin Kumar Jain group concerns such as Anchal Properties Pravin Kumar Jain group concerns such as Anchal Properties P. Ltd., Ansh Merchandise P. Ltd., Olive Overseas P. Ltd., P. Ltd., Ansh Merchandise P. Ltd., Olive Overseas P. Ltd., P. Ltd., Ansh Merchandise P. Ltd., Olive Overseas P. Ltd., Vanguard Vanguard Vanguard Jewels Jewels Jewels Ltd. Ltd. Ltd. are are are accompanied accompanied accompanied with with with bogus bogus bogus transactions by the corresponding other party or the transactions by the corresponding other party or the transactions by the corresponding other party or the beneficiary i.e.Aaspaas Multimedia Ltd. in the present case. beneficiary i.e.Aaspaas Multimedia Ltd. in the present case. beneficiary i.e.Aaspaas Multimedia Ltd. in the present case. At this stage, information collected by Investigation Wing as At this stage, information collected by Investigation Wing as At this stage, information collected by Investigation Wing as a consequence of search us.132 of the Act constituted a consequence of search us.132 of the Act constituted a consequence of search us.132 of the Act constituted sufficient material for r sufficient material for reopening. In CIT v. Rajesh Jhaveri eopening. In CIT v. Rajesh Jhaveri Stock Brokers (P)Ltd. [20071 161 Taxman 316 (SC), it has Stock Brokers (P)Ltd. [20071 161 Taxman 316 (SC), it has Stock Brokers (P)Ltd. [20071 161 Taxman 316 (SC), it has been held that "if the Assessing Officer has cause or been held that "if the Assessing Officer has cause or been held that "if the Assessing Officer has cause or jurisdiction to know or suppose that income has escaped jurisdiction to know or suppose that income has escaped jurisdiction to know or suppose that income has escaped assessment, it can be said to have "reasons to believe assessment, it can be said to have "reasons to believe assessment, it can be said to have "reasons to believe" that an income has escaped assessment. The said expression an income has escaped assessment. The said expression an income has escaped assessment. The said expression cannot be read to mean that the Assessing Officer should cannot be read to mean that the Assessing Officer should cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or have finally ascertained the fact by legal evidence or have finally ascertained the fact by legal evidence or inclusion. The function of the Assessing Officer is to inclusion. The function of the Assessing Officer is to inclusion. The function of the Assessing Officer is to administer the statute with administer the statute with solicitude for the public solicitude for the public exchequer with an in exchequer with an in-built idea of fairness to taxpayer". In built idea of fairness to taxpayer". In view of these facts, it is most humbly submitted that the view of these facts, it is most humbly submitted that the view of these facts, it is most humbly submitted that the allegation or arguments raised by the petitioner are allegation or arguments raised by the petitioner are allegation or arguments raised by the petitioner are incorrect.' Considering the aforesaid facts and circumstan incorrect.' Considering the aforesaid facts and circumstan incorrect.' Considering the aforesaid facts and circumstances it cannot be said that the impugned notices under Section it cannot be said that the impugned notices under Section it cannot be said that the impugned notices under Section 148 of the IT Act and the impugned reassessment 148 of the IT Act and the impugned reassessment 148 of the IT Act and the impugned reassessment proceedings are bad in law. proceedings are bad in law. 7.12 At this stage it is required to be noted that with respect 7.12 At this stage it is required to be noted that with respect 7.12 At this stage it is required to be noted that with respect to another asssessee to another asssessee - Ankit Financial Services Ltd.'s Ankit Financial Services Ltd.'s case (supra) in whose case also on the basis of such information (supra) in whose case also on the basis of such information (supra) in whose case also on the basis of such information received from the office of Principal Director of Income Tax received from the office of Principal Director of Income Tax received from the office of Principal Director of Income Tax

Shri Narendra S Shah 46 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

(Investigation), Ahmedabad and with similar allegation of (Investigation), Ahmedabad and with similar allegation of (Investigation), Ahmedabad and with similar allegation of beneficiary of the accommodation entries/share application beneficiary of the accommodation entries/share application beneficiary of the accommodation entries/share application from the bog from the bogus companies operated by Shri Pravin Kumar us companies operated by Shri Pravin Kumar Jain when the assessment for AY2010 Jain when the assessment for AY2010-11 was sought to be 11 was sought to be reopened and when the same was challenged before this reopened and when the same was challenged before this reopened and when the same was challenged before this Court, the Division Bench of this Court vide judgment and Court, the Division Bench of this Court vide judgment and Court, the Division Bench of this Court vide judgment and order dated 29.12.2016 in Ankit Financial Ser order dated 29.12.2016 in Ankit Financial Ser order dated 29.12.2016 in Ankit Financial Services Ltd.'s case (supra) has dismissed the said petition. case (supra) has dismissed the said petition. 8. In view of the above and for the reasons stated above, it 8. In view of the above and for the reasons stated above, it 8. In view of the above and for the reasons stated above, it cannot be said that the impugned notices under Section 148 cannot be said that the impugned notices under Section 148 cannot be said that the impugned notices under Section 148 of the IT Act are without jurisdiction and/or contrary to of the IT Act are without jurisdiction and/or contrary to of the IT Act are without jurisdiction and/or contrary to section 147 of the section 147 of the IT Act and/or bad in law. Under the IT Act and/or bad in law. Under the circumstances, both the petitions deserve to be dismissed circumstances, both the petitions deserve to be dismissed circumstances, both the petitions deserve to be dismissed and are, accordingly, dismissed. Notice is discharged. Ad and are, accordingly, dismissed. Notice is discharged. Ad and are, accordingly, dismissed. Notice is discharged. Ad- interim relief, if any, stan interim relief, if any, stands vacated forthwith. No costs. ds vacated forthwith. No costs.” 18.2 The Ld. CIT(A) als The Ld. CIT(A) also relied on the decision of the Hon’ble sion of the Hon’ble Gujarat High Court in the case of Ankit Financial Services Ltd. v. 78 Gujarat High Court in the case of Ankit Financial Services Ltd. v. 78 Gujarat High Court in the case of Ankit Financial Services Ltd. v. 78 taxmann.com 58 (Gujarat), Piece Industrial Engineers Pvt. Ltd. v. taxmann.com 58 (Gujarat), Piece Industrial Engineers Pvt. Ltd. v. taxmann.com 58 (Gujarat), Piece Industrial Engineers Pvt. Ltd. v. DCIT 73 taxmann.com 185 and Bright Stars Pvt. Ltd. v. ITO 71 DCIT 73 taxmann.com 185 and Bright Stars Pvt. Ltd. v. ITO 71 DCIT 73 taxmann.com 185 and Bright Stars Pvt. Ltd. v. ITO 71 taxmann.com 64 (Bombay). The relevant p taxmann.com 64 (Bombay). The relevant para of the decisions ara of the decisions reproduced is extracted as under: s extracted as under:

“6.16 In the case of Ankit Financial Services Ltd. Vs. Deputy 6.16 In the case of Ankit Financial Services Ltd. Vs. Deputy 6.16 In the case of Ankit Financial Services Ltd. Vs. Deputy Commissioner of Income Commissioner of Income-tax, Circle 1(1)(2) [2017] 78 tax, Circle 1(1)(2) [2017] 78 taxmann.com 58 (Gujarat), the Hon'ble taxmann.com 58 (Gujarat), the Hon'ble Gujarat High Gujarat High Court has held that where material has held that where material recovered in search of recovered in search of anotherperson indicated that assessee had received bogus anotherperson indicated that assessee had received bogus anotherperson indicated that assessee had received bogus share applications through accommodation entries, since share applications through accommodation entries, since share applications through accommodation entries, since assessee was beneficiary, initiation of re assessee was beneficiary, initiation of re-opening. was opening. was justified. 6.17 It has been held by the Hon'ble Gujarat High Cou 6.17 It has been held by the Hon'ble Gujarat High Cou 6.17 It has been held by the Hon'ble Gujarat High Court in the case ofPeass industrial Engineers (P.) Ltd. Vs. Deputy the case ofPeass industrial Engineers (P.) Ltd. Vs. Deputy the case ofPeass industrial Engineers (P.) Ltd. Vs. Deputy Commissioner of Income Commissioner of Income-tax, [2016] 73 taxmann.com 185 tax, [2016] 73 taxmann.com 185 (Gujarat) (Gujarat) (Gujarat) that that that where where where the the the Assessing Assessing Assessing Officer Officer Officer received received received information from Investigation wing that two well information from Investigation wing that two well information from Investigation wing that two well-known entry operators of country ha entry operators of country have provided bogus entries to ve provided bogus entries to

Shri Narendra S Shah 47 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

various beneficiaries, and assessee was one of such various beneficiaries, and assessee was one of such various beneficiaries, and assessee was one of such beneficiary, Assessing Officer was justified in reopening beneficiary, Assessing Officer was justified in reopening beneficiary, Assessing Officer was justified in reopening assessment. assessment. 6.18 In the case of Bright Star Syntex (P.) Ltd. Vs.Income 6.18 In the case of Bright Star Syntex (P.) Ltd. Vs.Income 6.18 In the case of Bright Star Syntex (P.) Ltd. Vs.Income-tax Officer 9(2)(1) in Writ Petition (L) No. 4 Officer 9(2)(1) in Writ Petition (L) No. 430 of 2016,[2016] 71 30 of 2016,[2016] 71 taxmann.com 64 (Bombay), the Hon'ble Bombay High Court taxmann.com 64 (Bombay), the Hon'ble Bombay High Court taxmann.com 64 (Bombay), the Hon'ble Bombay High Court has held that where on basis of evidences collected and has held that where on basis of evidences collected and has held that where on basis of evidences collected and statement recorded during course of search of entry provider, statement recorded during course of search of entry provider, statement recorded during course of search of entry provider, Assessing Officer had reason to believe that unsecured loans Assessing Officer had reason to believe that unsecured loans Assessing Officer had reason to believe that unsecured loans received eceived eceived by by by assessee assessee assessee from from from certain certain certain persons persons persons escaped escaped escaped assessment, it could not be said that there was change of assessment, it could not be said that there was change of assessment, it could not be said that there was change of opinion. The relevant head notes of the said judgment are as opinion. The relevant head notes of the said judgment are as opinion. The relevant head notes of the said judgment are as under:- "Section 68, read with sections 147 and 143, of the Income "Section 68, read with sections 147 and 143, of the Income "Section 68, read with sections 147 and 143, of the Income- tax Act,1961 tax Act,1961 - Cash credit (Loans by entry provider) redit (Loans by entry provider) - Assessment year2012 Assessment year2012-13 - On the basis of search and On the basis of search and seizure action of P Group, an entry provider, Assessing seizure action of P Group, an entry provider, Assessing seizure action of P Group, an entry provider, Assessing Officer opined that certain creditors of assessee were entities Officer opined that certain creditors of assessee were entities Officer opined that certain creditors of assessee were entities operated by P Group and, therefore, amount credite operated by P Group and, therefore, amount credite operated by P Group and, therefore, amount credited to assessee's account as unsecured loans was, in fact, income assessee's account as unsecured loans was, in fact, income assessee's account as unsecured loans was, in fact, income that had escaped assessment and, thus, had to be taxed that had escaped assessment and, thus, had to be taxed that had escaped assessment and, thus, had to be taxed under section 147 under section 147 - He discarded assessee's contention that He discarded assessee's contention that entities operated by P Group from whom assessee had entities operated by P Group from whom assessee had entities operated by P Group from whom assessee had received loans and advanc received loans and advances was subject matter of inquiry es was subject matter of inquiry during scrutiny assessment proceedings and assessment during scrutiny assessment proceedings and assessment during scrutiny assessment proceedings and assessment order was passed under section 143(3) on basis of evidences order was passed under section 143(3) on basis of evidences order was passed under section 143(3) on basis of evidences furnished by assessee, and that mere statement/confession furnished by assessee, and that mere statement/confession furnished by assessee, and that mere statement/confession by entry provider would not by itself establish tha by entry provider would not by itself establish tha by entry provider would not by itself establish that credits were being non were being non-genuine - Whether on basis of evidences Whether on basis of evidences collected and statement recorded during course of search of collected and statement recorded during course of search of collected and statement recorded during course of search of entry provider, Assessing Officer had reason to believe that entry provider, Assessing Officer had reason to believe that entry provider, Assessing Officer had reason to believe that unsecured loans received from certain persons escaped unsecured loans received from certain persons escaped unsecured loans received from certain persons escaped assessment durin assessment during original assessment under section 143(3) g original assessment under section 143(3) so as to initiate reassessment under section 147/148; it so as to initiate reassessment under section 147/148; it so as to initiate reassessment under section 147/148; it could not be said that there was change of opinion could not be said that there was change of opinion could not be said that there was change of opinion - Held, yes [In favour of revenue]" yes [In favour of revenue]" 6.19 In view of the above binding judicial precedents, I am of 6.19 In view of the above binding judicial precedents, I am of 6.19 In view of the above binding judicial precedents, I am of the considered view that the AC had valid reasons to initiate nsidered view that the AC had valid reasons to initiate nsidered view that the AC had valid reasons to initiate the reassessment proceedings, which were duly recorded the reassessment proceedings, which were duly recorded the reassessment proceedings, which were duly recorded and communicated to the appellant. Thus, the A.0. has and communicated to the appellant. Thus, the A.0. has and communicated to the appellant. Thus, the A.0. has

Shri Narendra S Shah 48 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

rightly rightly rightly assumed assumed assumed jurisdiction jurisdiction jurisdiction and and and correctly correctly correctly initiated initiated initiated proceedings W/s 148 of the Act. Accord proceedings W/s 148 of the Act. Accordingly, the Ground of ingly, the Ground of Appeal No. 1 of the present appeal is dismissed. Appeal No. 1 of the present appeal is dismissed.” 19. We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In the case, dispute and perused the relevant material on record. In the case, dispute and perused the relevant material on record. In the case, the Assessing Officer has reopened the assessment after recording the Assessing Officer has reopened the assessment aft the Assessing Officer has reopened the assessment aft reasons to believe that income escaped assessment ve that income escaped assessment, which has been , which has been reproduced by the Assessing Officer in para 2 of the assessment reproduced by the Assessing Officer in para 2 of the assessment reproduced by the Assessing Officer in para 2 of the assessment order. For ready reference order. For ready reference, the said reasons recorded are the said reasons recorded are reproduced as under: reproduced as under:

“2. The reason for reopening in th 2. The reason for reopening in the case was recorded as e case was recorded as under: "An information has been received from ITO Ward 32(3)(2), "An information has been received from ITO Ward 32(3)(2), "An information has been received from ITO Ward 32(3)(2), Mumbai vide letterNo. ITO32(3)(2)/Information /2018 Mumbai vide letterNo. ITO32(3)(2)/Information /2018 Mumbai vide letterNo. ITO32(3)(2)/Information /2018-19 dated 14.02.2019 dated 14.02.2019 dated 14.02.2019 that that that the bank statement the bank statement the bank statement of M/s of M/s of M/s KalpanikVyapaar Pvt Ltd (AADCK3638E) with ICICI Bank KalpanikVyapaar Pvt Ltd (AADCK3638E) with ICICI Bank KalpanikVyapaar Pvt Ltd (AADCK3638E) with ICICI Bank Ltd. (A/c no Ltd. (A/c no 003505500471), Dahisar Branch for the F.Y 003505500471), Dahisar Branch for the F.Y 2013-14 reveals payment to Shri Narendra Shah on various 14 reveals payment to Shri Narendra Shah on various 14 reveals payment to Shri Narendra Shah on various dates for the 1.4.2013 to 18.02.2014 amounting to dates for the 1.4.2013 to 18.02.2014 amounting to dates for the 1.4.2013 to 18.02.2014 amounting to Rs.4,14,00,000/ Rs.4,14,00,000/- M/s KalpanikVyapaar Pvt. Ltd having M/s KalpanikVyapaar Pvt. Ltd having address 32, Ezra Street, 5 address 32, Ezra Street, 5thFloor, Kolkata has been d Floor, Kolkata has been declared a shell company by SEBIEnquiries have revealed that M/s a shell company by SEBIEnquiries have revealed that M/s a shell company by SEBIEnquiries have revealed that M/s KalpanikVyapar Pvt. Ltd. has been removed/ struck off from KalpanikVyapar Pvt. Ltd. has been removed/ struck off from KalpanikVyapar Pvt. Ltd. has been removed/ struck off from the repister of Companies by the Registrar of Companies, the repister of Companies by the Registrar of Companies, the repister of Companies by the Registrar of Companies, Kolkota and the directors of the said company have also Kolkota and the directors of the said company have also Kolkota and the directors of the said company have also been declared as Dis been declared as Disqualified Directors under section qualified Directors under section 164(2)(a) of the Companies Act. It is pertinent to mention that 164(2)(a) of the Companies Act. It is pertinent to mention that 164(2)(a) of the Companies Act. It is pertinent to mention that the assessee is one of the Directors of the said company the assessee is one of the Directors of the said company the assessee is one of the Directors of the said company declared declared declared disqualified disqualified disqualified director director director by by by ROC. ROC. ROC. Kolkata, Kolkata, Kolkata, On On On verification of the assessees b verification of the assessees bank statement with ank statement with 1CICI Bank Ltd. (OD AC 0156), it is seen that the total credits from d. (OD AC 0156), it is seen that the total credits from d. (OD AC 0156), it is seen that the total credits from M/s KalpanikVyapaar Ltd during the F Y 2013: 14 amount M/s KalpanikVyapaar Ltd during the F Y 2013: 14 amount M/s KalpanikVyapaar Ltd during the F Y 2013: 14 amount to Rs,5,23,00,000/ As per the details available for A.Y 2015 to Rs,5,23,00,000/ As per the details available for A.Y 2015 to Rs,5,23,00,000/ As per the details available for A.Y 2015- 16, a total amount of R 16, a total amount of Rs.13,33,21,520/- appears as appears as unsecured loan from unsecured loan from MsKalpanikVyapaar Put. Ltd. of which MsKalpanikVyapaar Put. Ltd. of which

Shri Narendra S Shah 49 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

only an amount of R8.7,44,71,520/ was received during the only an amount of R8.7,44,71,520/ was received during the only an amount of R8.7,44,71,520/ was received during the F.Y. 2014-15 relevant to A.Y 15 relevant to A.Y 20015-16. Hence, an amount in 16. Hence, an amount in secured loan during F. Y 2013.14 relevant to A.YHence, an ured loan during F. Y 2013.14 relevant to A.YHence, an ured loan during F. Y 2013.14 relevant to A.YHence, an amount of Rs.5,23, amount of Rs.5,23,00,000 has been received from M/ rom M/s2014- 15.It is therefore, evident that the unsecured loan of 15.It is therefore, evident that the unsecured loan of 15.It is therefore, evident that the unsecured loan of Rs.5,23,00,000/ Rs.5,23,00,000/-received received by by the the assessee assessee from from M/s M/s KalpanikVyapaar Pvt. Ltd is not genuineIt is pertinent to KalpanikVyapaar Pvt. Ltd is not genuineIt is pertinent to KalpanikVyapaar Pvt. Ltd is not genuineIt is pertinent to mention here that in this case, the assessee has filed return mention here that in this case, the assessee has filed return mention here that in this case, the assessee has filed return of income for the y of income for the year under consideration, and assessment ear under consideration, and assessment was also made under section 143(3) of the IT Act, 1961. It is was also made under section 143(3) of the IT Act, 1961. It is was also made under section 143(3) of the IT Act, 1961. It is true that the assessee has filed a copy of audited P & L A/c true that the assessee has filed a copy of audited P & L A/c true that the assessee has filed a copy of audited P & L A/c and balance sheet along with the return of income, where and balance sheet along with the return of income, where and balance sheet along with the return of income, where various information / material was d various information / material was disclosed, the requisite isclosed, the requisite material facts as noted above in the reasons for reopening material facts as noted above in the reasons for reopening material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence were embedded in such a manner that material evidence were embedded in such a manner that material evidence could not be discovered by the AO and could not have been could not be discovered by the AO and could not have been could not be discovered by the AO and could not have been discovered discovered discovered with with with due due due diligence, diligence, diligence, accordingly accordingly accordingly attracting attracting attracting provisions of Explanation 1 of Section 147 of the Act". ons of Explanation 1 of Section 147 of the Act". ons of Explanation 1 of Section 147 of the Act". Accordingly, the A.O. came to the conclusion that the income Accordingly, the A.O. came to the conclusion that the income Accordingly, the A.O. came to the conclusion that the income to to the the tune tune of Rs.5,23,00,000/- of Rs.5,23,00,000/ has has been been escaped escaped assessment within the meaning of section 147 of the Act, assessment within the meaning of section 147 of the Act, assessment within the meaning of section 147 of the Act, which entailed into invoking of provisio which entailed into invoking of provisions of section 147 ns of section 147 followed by issuance of notice u/s 148 of the Act after followed by issuance of notice u/s 148 of the Act after followed by issuance of notice u/s 148 of the Act after recording the reasons for such reopening of assessment as recording the reasons for such reopening of assessment as recording the reasons for such reopening of assessment as required under these provisions and obtaining approval u/s required under these provisions and obtaining approval u/s required under these provisions and obtaining approval u/s 151Notice us 148 of the Act dated 29.03.2019 has been 151Notice us 148 of the Act dated 29.03.2019 has been 151Notice us 148 of the Act dated 29.03.2019 has been issued electronically. tronically.” 20. On perusal of the above reasons recorded On perusal of the above reasons recorded, it is evident that it is evident that only information available only information available with the Assessing Officer was payment the Assessing Officer was payment of Rs.4,14,00,000/- to the assessee from a company in which he to the assessee from a company in which he was director. There is no other information wheth was director. There is no other information whether this money was er this money was undisclosed income in the hands of the assessee or any kind of tax undisclosed income in the hands of the assessee or any kind of tax undisclosed income in the hands of the assessee or any kind of tax evasion or accommodation entry or accommodation entry was involved. The Assessing was involved. The Assessing Officer has merely invoked proceedings Officer has merely invoked proceedings u/s 147 of the Act i.e. u/s 147 of the Act i.e. reassessment proceedings reassessment proceedings, on the basis of the information that said ormation that said

Shri Narendra S Shah 50 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

company was struck off from the register of company was struck off from the register of Registrar of Registrar of companies (ROC) and the director was the director was disqualified. In our opinion there . In our opinion there should be live link of the information with the reason to belie link of the information with the reason to believe recorded by link of the information with the reason to belie the Assessing Officer. The Ass the Assessing Officer. The Assessing Officer has mentioned the fact essing Officer has mentioned the fact of unsecured loan from the company M/s KalpanicVyapar Pvt. Ltd. of unsecured loan from the company M/s KalpanicVyapar Pvt. Ltd. of unsecured loan from the company M/s KalpanicVyapar Pvt. Ltd. to the assessee in two financial years i.e. financial year 2013-14 to the assessee in two financial years i.e. financial year 2013 to the assessee in two financial years i.e. financial year 2013 and 2014-15 and formed belief that the unsecured loan received by 15 and formed belief that the unsecured loan received by 15 and formed belief that the unsecured loan received by the assessee from M/s the assessee from M/s KalpanicVypar Pvt. Ltd. was was not genuine. The said information of the loan was already available in the The said information of the loan was already available in the The said information of the loan was already available in the balance sheet and other documents filed along with return of balance sheet and other documents filed along with return of balance sheet and other documents filed along with return of income, which was further subjected to assessment u/s 143(3) of was further subjected to assessment u/s 143(3) of was further subjected to assessment u/s 143(3) of the Act. This fact has also the Act. This fact has also been duly recorded by the Assessing been duly recorded by the Assessing Officer in the reasons recorded. The Assessing Officer however reasons recorded. The Assessing Officer however reasons recorded. The Assessing Officer however further noted that material evidence could not be discovered by the further noted that material evidence could not be discovered by the further noted that material evidence could not be discovered by the Assessing Officer with due diligence and therefore provisions of ith due diligence and therefore provisions of ith due diligence and therefore provisions of section 147 r.w. Explan section 147 r.w. Explanation 1 are attracted. In our opinion . In our opinion, there is no failure on the part of the assessee is no failure on the part of the assessee in disclosing the ing the material truly and fully. The reasons to belief he reasons to belief are mere based on the mere based on the presumption and there is no tangible material to form the belief presumption and there is no tangible material to form the belief presumption and there is no tangible material to form the belief that income escaped assessment. The facts and circumstances of ped assessment. The facts and circumstances of ped assessment. The facts and circumstances of the case relied upon the Ld. CIT(A) are distinguishable. In the case the case relied upon the Ld. CIT(A) are distinguishable. In the case the case relied upon the Ld. CIT(A) are distinguishable. In the case of Raymond woolen mills Ltd Vs ITO (1999) 236 ITR 34 (SC) mond woolen mills Ltd Vs ITO (1999) 236 ITR 34 (SC) mond woolen mills Ltd Vs ITO (1999) 236 ITR 34 (SC) ,the Hon’ble Supreme Court has held Hon’ble Supreme Court has held that there has to be a relevant that there has to be a relevant material on which a reasonable personcould have a reasonable personcould have formed requisite formed requisite

Shri Narendra S Shah 51 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

belief. In the instant case the loan from KalpanicVyapar Pvt. Ltd. to In the instant case the loan from KalpanicVyapar Pvt. Ltd. to In the instant case the loan from KalpanicVyapar Pvt. Ltd. to the assessee was already part of the regular balance sheet filed by the assessee was already part of the regular balance sheet filed by the assessee was already part of the regular balance sheet filed by the assessee and in the information received from the investigation the assessee and in the information received from the investigation the assessee and in the information received from the investigation wing no new facts other than that said company has given loan to wing no new facts other than that said company has given loan to wing no new facts other than that said company has given loan to the assessee, has come out and therefore, there is no relevant has come out and therefore, there is no relevant has come out and therefore, there is no relevant material to form requisite belief that income escaped in the case of material to form requisite belief that income escaped in the case of material to form requisite belief that income escaped in the case of the assessee. In the case of the assessee. In the case of Raymond woolen Mills Ltd (sup Raymond woolen Mills Ltd (supra) ,the Hon’ble Supreme Court the Hon’ble Supreme Court has further held that for determination for determination whether reassessment proceedings are validly initiated, it should be whether reassessment proceedings are validly initiated, it should be whether reassessment proceedings are validly initiated, it should be seen that whether there was prima facie some material to form belief seen that whether there was prima facie some material to form belief seen that whether there was prima facie some material to form belief income has escaped. There is no such prima facie ma facie material or that income has escaped information in the case of assessee which could indicate in the case of assessee which could indicate that in the case of assessee which could indicate income has escaped assessment. The facts and circumstances in income has escaped assessment. The facts and circumstances in income has escaped assessment. The facts and circumstances in the other cases relied upon by the Ld. CIT(A) also are the other cases relied upon by the Ld. CIT(A) also are the other cases relied upon by the Ld. CIT(A) also are distinguishable. In the case there is no such information that distinguishable. In the case there is no such informatio distinguishable. In the case there is no such informatio assessee has received any accommodation entry from M/s assessee has received any accommodation entry from M/s assessee has received any accommodation entry from M/s KalpanicVyapar Pvt. Ltd. KalpanicVyapar Pvt. Ltd. The assessee himself was the director of assessee himself was the director of the said company along with his wife. In view of the above the said company along with his wife. In view of the above the said company along with his wife. In view of the above discussion, we set aside the finding of the Ld. CIT(A) and hold that discussion, we set aside the finding of the Ld. CIT(A) and h discussion, we set aside the finding of the Ld. CIT(A) and h there is no live link of the information there is no live link of the information with that that of the reasons recorded and therefore reassessment proceedings initiated on the recorded and therefore reassessment proceedings initiated on the recorded and therefore reassessment proceedings initiated on the basis of the said reasons recorded are quashed ab initio. The basis of the said reasons recorded are quashed ab initio. The basis of the said reasons recorded are quashed ab initio. The ground No. 1 of the appeal is accordingly allowed. Since we have ground No. 1 of the appeal is accordingly allowed. ground No. 1 of the appeal is accordingly allowed. quashed the reassessment proceedings and therefore adjudication quashed the reassessment proceedings and therefore adjudication quashed the reassessment proceedings and therefore adjudication

Shri Narendra S Shah 52 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

of the ground No. 2 challenging the merit of the of the ground No. 2 challenging the merit of the addition is rendered addition is rendered academic only, therefore, we are not adjudicating upon same and therefore, we are not adjudicating upon same and therefore, we are not adjudicating upon same and dismiss as infructuous dismiss as infructuous, although identical ground , although identical ground No. 1 raised in appeal of the assessee for appeal of the assessee for AY 2015-16 will be dealt in forthcoming dealt in forthcoming paras.

20.1 The ground No. 3 raised by the assessee is in relation to The ground No. 3 raised by the assessee is in relation to The ground No. 3 raised by the assessee is in relation to initiation of penalty u/s 271(1)(c) of the Act initiation of penalty u/s 271(1)(c) of the Act. Since penalty has not ince penalty has not been levied by way of this order by th been levied by way of this order by the Assessing Officer e Assessing Officer, the issue of levy of penalty being premature of levy of penalty being premature, the ground raised by the the ground raised by the assessee is dismissed as infructuous. assessee is dismissed as infructuous.

Assessee’s appeal

Shri Narendra S Shah 53 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

Shri Narendra S Shah 54 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

of the Act was not issued due to limited time available with him for of the Act was not issued due to limited time available with him for of the Act was not issued due to limited time available with him for passing of the assessment order. The Assessing Officer has also passing of the assessment order. The Assessing Officer has also passing of the assessment order. The Assessing Officer has also noted that said co noted that said company M/s KalpanicVyapar Pvt. Ltd. was mpany M/s KalpanicVyapar Pvt. Ltd. was removed/strike off from the register maintained by R from the register maintained by R from the register maintained by Registrar of the companies (ROC) and the director and the directors have been disqualify in terms of have been disqualify in terms of section 164(2)(A) of the Companies Act, 1956. The Assessing Officer section 164(2)(A) of the Companies Act, 1956. The Assessing Officer section 164(2)(A) of the Companies Act, 1956. The Assessing Officer further obtained information from the Income ed information from the Income-tax Department, tax Department, Kolkata to confirm whether said company had filed return of Kolkata to confirm whether said company had filed return of Kolkata to confirm whether said company had filed return of income. The relevant observations by the Assessing Officer are income. The relevant observations by the Assessing Officer are income. The relevant observations by the Assessing Officer are reproduced as under: reproduced as under:

“5.13 It is seen from the images that M/s KalpanikVyapaar 5.13 It is seen from the images that M/s KalpanikVyapaar 5.13 It is seen from the images that M/s KalpanikVyapaar Pvt Ltd has filed its returns of income on 15.11.2017, has filed its returns of income on 15.11.2017, has filed its returns of income on 15.11.2017, whereas the commission u/s 131(1)(d) of the Act was whereas the commission u/s 131(1)(d) of the Act was whereas the commission u/s 131(1)(d) of the Act was issued on 27.10.2017. Thus, it is clear that M/s issued on 27.10.2017. Thus, it is clear that M/s issued on 27.10.2017. Thus, it is clear that M/s KalpanikVyapaar Pvt Ltd has filed its returns of income, KalpanikVyapaar Pvt Ltd has filed its returns of income, KalpanikVyapaar Pvt Ltd has filed its returns of income, after the AO of the said company, has started enqu after the AO of the said company, has started enqu after the AO of the said company, has started enquiries in response to commission us 131(1)(d) of the Act. Therefore, it response to commission us 131(1)(d) of the Act. Therefore, it response to commission us 131(1)(d) of the Act. Therefore, it is nothing but an after though of the assessee to prove that is nothing but an after though of the assessee to prove that is nothing but an after though of the assessee to prove that M/s KalpanikVyapaar Pt Ltd has made its compliance. It is M/s KalpanikVyapaar Pt Ltd has made its compliance. It is M/s KalpanikVyapaar Pt Ltd has made its compliance. It is not out of place to mention here that the returns of M/s not out of place to mention here that the returns of M/s not out of place to mention here that the returns of M/s KalpanikVyapaar Pvt Ltd has been uploaded under the yapaar Pvt Ltd has been uploaded under the yapaar Pvt Ltd has been uploaded under the digital signature of NARENDRA SHAH from Mumbai itself. digital signature of NARENDRA SHAH from Mumbai itself. digital signature of NARENDRA SHAH from Mumbai itself. Thus, it cannot be said that he could not furnish IT Thus, it cannot be said that he could not furnish IT Thus, it cannot be said that he could not furnish IT acknowledgement for AY 2015 acknowledgement for AY 2015-16 of M/s KalpanikVyapaar 16 of M/s KalpanikVyapaar Pt Ltd due to disputes with the said party. It is a Pt Ltd due to disputes with the said party. It is a Pt Ltd due to disputes with the said party. It is also clear that the assessee Shri Narendra Shah is actively that the assessee Shri Narendra Shah is actively that the assessee Shri Narendra Shah is actively participated in day participated in day-to-day business activities of M/s day business activities of M/s KalpanikVyapaar Pt Ltd and he is controlling its business KalpanikVyapaar Pt Ltd and he is controlling its business KalpanikVyapaar Pt Ltd and he is controlling its business affairs. Even a perusal of the bank statement of M/s affairs. Even a perusal of the bank statement of M/s affairs. Even a perusal of the bank statement of M/s KalpanikVyapaar Pt Ltd, it is se KalpanikVyapaar Pt Ltd, it is seen that all the amounts en that all the amounts other than one or two, have been directly transferred to other than one or two, have been directly transferred to other than one or two, have been directly transferred to either the assessee or his relatives or the companies, where either the assessee or his relatives or the companies, where either the assessee or his relatives or the companies, where the assessee is one of the directors. the assessee is one of the directors.

Shri Narendra S Shah 55 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

5.14 As discussed in the above paragraphs, the company 5.14 As discussed in the above paragraphs, the company 5.14 As discussed in the above paragraphs, the company has been declared as has been declared as strike off vide order dated strike off vide order dated 30.06.2017 by ROC, Kolkata. The so called returns for AY 30.06.2017 by ROC, Kolkata. The so called returns for AY 30.06.2017 by ROC, Kolkata. The so called returns for AY 2016-17 & 2017 17 & 2017-18 are filed by the assessee under his 18 are filed by the assessee under his digital signature on 15.11.2017, by the date of which, the digital signature on 15.11.2017, by the date of which, the digital signature on 15.11.2017, by the date of which, the company was legally not in existence as the same has been company was legally not in existence as the same has been company was legally not in existence as the same has been removed from the Registrar. removed from the Registrar.” 23. On further appeal, the Ld. CIT(A) in his detailed finding upheld On further appeal, the Ld. CIT(A) in his detailed finding upheld On further appeal, the Ld. CIT(A) in his detailed finding upheld the addition made by the Assessing Officer observing as under: the addition made by the Assessing Officer observing as under: the addition made by the Assessing Officer observing as under:

“6.2Appellate Decision:I have carefully considered the 6.2Appellate Decision:I have carefully considered the 6.2Appellate Decision:I have carefully considered the factsof the case,assessment order and ma factsof the case,assessment order and material on record. terial on record. The 4O has discussed this issue vide para 5 in his The 4O has discussed this issue vide para 5 in his The 4O has discussed this issue vide para 5 in his assessment order. The assessee has shown loan of Rs. assessment order. The assessee has shown loan of Rs. assessment order. The assessee has shown loan of Rs. 13,33,21,520/ 13,33,21,520/- from M/s KalpanikVyapar Pvt Ltd in the from M/s KalpanikVyapar Pvt Ltd in the balance balance balance sheet. sheet. sheet. During During During the the the course course course of of of assessment assessment assessment proceedings, the assessee was ask proceedings, the assessee was asked to furnish the ledger ed to furnish the ledger confirmations, IT and bank statements of the parties, from confirmations, IT and bank statements of the parties, from confirmations, IT and bank statements of the parties, from whom, the assessee has received the loans. In response to whom, the assessee has received the loans. In response to whom, the assessee has received the loans. In response to the same, the AR of the assessee vide letter dated the same, the AR of the assessee vide letter dated the same, the AR of the assessee vide letter dated 07.09.2017 07.09.2017 07.09.2017 filed filed filed ledger ledger ledger confirmation confirmation confirmation of of of M/s M/s M/s KalpanikVyapar Pt L KalpanikVyapar Pt Ltd duly signed by Mrs. Darshana td duly signed by Mrs. Darshana Narendra Shah in the capacity of one ofors to the said Narendra Shah in the capacity of one ofors to the said Narendra Shah in the capacity of one ofors to the said company. The appellant was requested to furnish theledger company. The appellant was requested to furnish theledger company. The appellant was requested to furnish theledger confirmation for whole year along with IT and bank confirmation for whole year along with IT and bank confirmation for whole year along with IT and bank statement of the concerned party. However, the assessee statement of the concerned party. However, the assessee statement of the concerned party. However, the assessee did not file the requisite details. not file the requisite details. 6.3 The A.O. has reported that further, enquirtes revealed 6.3 The A.O. has reported that further, enquirtes revealed 6.3 The A.O. has reported that further, enquirtes revealed that M/s KalpanikVyapaar Pvt. Ltd having address 32, that M/s KalpanikVyapaar Pvt. Ltd having address 32, that M/s KalpanikVyapaar Pvt. Ltd having address 32, Ezra Street, Sth Floor, Kolkata was declared a Shell Ezra Street, Sth Floor, Kolkata was declared a Shell Ezra Street, Sth Floor, Kolkata was declared a Shell company by SEBI and removed/struck off from the register company by SEBI and removed/struck off from the register company by SEBI and removed/struck off from the register of Companies b the Registrar of Companies, Kolkota and Companies b the Registrar of Companies, Kolkota and Companies b the Registrar of Companies, Kolkota and the directors of the said company also been declared as the directors of the said company also been declared as the directors of the said company also been declared as Disqualified Directors' under section 164(2)(a) of the Disqualified Directors' under section 164(2)(a) of the Disqualified Directors' under section 164(2)(a) of the Companies Act and that the appellant was one of the Companies Act and that the appellant was one of the Companies Act and that the appellant was one of the Directors of the said company declared a Directors of the said company declared as disqualified s disqualified director by ROC Kolkota. The AO on verification of the director by ROC Kolkota. The AO on verification of the director by ROC Kolkota. The AO on verification of the assessee's bank statement with ICICI Bank Ltd., noticed assessee's bank statement with ICICI Bank Ltd., noticed assessee's bank statement with ICICI Bank Ltd., noticed that out of total amount of Rs.13,33,21,520/ that out of total amount of Rs.13,33,21,520/- appeared as appeared as

Shri Narendra S Shah 56 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

unsecured loan from M/s KalpanikVyapaar Pvt. Ltd. an unsecured loan from M/s KalpanikVyapaar Pvt. Ltd. an unsecured loan from M/s KalpanikVyapaar Pvt. Ltd. an amount of Rs.7,44,7 amount of Rs.7,44,71,520/- was received during the F.Y was received during the F.Y 2014-15. Further, during the course of assessment 15. Further, during the course of assessment 15. Further, during the course of assessment proceedings, notices u/s 133(6) dated 14.11.2019 were proceedings, notices u/s 133(6) dated 14.11.2019 were proceedings, notices u/s 133(6) dated 14.11.2019 were sent to Kotak Mahindra Bank and ICICI Bank asking for sent to Kotak Mahindra Bank and ICICI Bank asking for sent to Kotak Mahindra Bank and ICICI Bank asking for bank statements of the appellant for the period 2013 bank statements of the appellant for the period 2013 bank statements of the appellant for the period 2013-14. The same was received and considered by AO. ame was received and considered by AO. 6.4 The AO concluded from the bank statement of ICICI 6.4 The AO concluded from the bank statement of ICICI 6.4 The AO concluded from the bank statement of ICICI bank that the assessee received total credits amounting to bank that the assessee received total credits amounting to bank that the assessee received total credits amounting to Rs. 7,44,71,520/ Rs. 7,44,71,520/- from KalpanikVyapar Pvt.Ltd., which from KalpanikVyapar Pvt.Ltd., which was declared a shell company by SEBI and whose nam was declared a shell company by SEBI and whose nam was declared a shell company by SEBI and whose name was struck off from the register of companies by the was struck off from the register of companies by the was struck off from the register of companies by the Registrar of Companies, Kolkata and the directors of the Registrar of Companies, Kolkata and the directors of the Registrar of Companies, Kolkata and the directors of the said company was also declared as Disqualified Directors said company was also declared as Disqualified Directors said company was also declared as Disqualified Directors u/ 164(2)(a) of the companies Act. The appellant was also u/ 164(2)(a) of the companies Act. The appellant was also u/ 164(2)(a) of the companies Act. The appellant was also found one of the directors of found one of the directors of KalpanikVyapar Pvt. Ltd. KalpanikVyapar Pvt. Ltd. which which which was was was declared declared declared as as as Disqualified Disqualified Disqualified Director Director Director by by by ROC,Kolkata. The assessee's explanation was considered ROC,Kolkata. The assessee's explanation was considered ROC,Kolkata. The assessee's explanation was considered but not accepted by AO. but not accepted by AO. 6.5 Further, in response to the remand report of the AO, the 6.5 Further, in response to the remand report of the AO, the 6.5 Further, in response to the remand report of the AO, the appellant has submitted as under: appellant has submitted as under: "That the loan providing company has not been declared as e loan providing company has not been declared as e loan providing company has not been declared as shell company as mentioned in the Remand Report. In shell company as mentioned in the Remand Report. In shell company as mentioned in the Remand Report. In support of that we have already submitted the list of 331 support of that we have already submitted the list of 331 support of that we have already submitted the list of 331 companies downloaded from the internet site declared as companies downloaded from the internet site declared as companies downloaded from the internet site declared as shell company by Hon'ble SEBt. Instead a shell company by Hon'ble SEBt. Instead a show cause show cause notice has been issued us. 248(1) of the companies act notice has been issued us. 248(1) of the companies act notice has been issued us. 248(1) of the companies act 2013 by the Hon'ble Registrar asking us to show as to why 2013 by the Hon'ble Registrar asking us to show as to why 2013 by the Hon'ble Registrar asking us to show as to why the name of the loan providing company should not be the name of the loan providing company should not be the name of the loan providing company should not be struck off from Register, the copy of the notice enclosed struck off from Register, the copy of the notice enclosed struck off from Register, the copy of the notice enclosed hereto as per Ex 'A: hereto as per Ex 'A: The relevant page where the name of The relevant page where the name of the loan providing company is appearing is submitted the loan providing company is appearing is submitted the loan providing company is appearing is submitted herewith duly marked. herewith duly marked. 2. Since the loan providing company did not file reply to 2. Since the loan providing company did not file reply to 2. Since the loan providing company did not file reply to show cause notice issued u/s. 248(1), the Hon'ble Registrar show cause notice issued u/s. 248(1), the Hon'ble Registrar show cause notice issued u/s. 248(1), the Hon'ble Registrar of companies passed order of companies passed order u/S.248(5) striking off the name u/S.248(5) striking off the name of the loan providing company from its Register. Copy of the of the loan providing company from its Register. Copy of the of the loan providing company from its Register. Copy of the order passed dated 30/06/2017 and the relevant page order passed dated 30/06/2017 and the relevant page order passed dated 30/06/2017 and the relevant page where the name of loan providing company is appearing is where the name of loan providing company is appearing is where the name of loan providing company is appearing is

Shri Narendra S Shah 57 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

submitted herewith duly marked as per Ex 'B' for your submitted herewith duly marked as per Ex 'B' for your submitted herewith duly marked as per Ex 'B' for your honour's perusal and consideration. In view of the above honour's perusal and consideration. In view of the above honour's perusal and consideration. In view of the above your honour will appreciate that the contention of the Ld AO your honour will appreciate that the contention of the Ld AO your honour will appreciate that the contention of the Ld AO that this is a shell company is without any cogent evidence that this is a shell company is without any cogent evidence that this is a shell company is without any cogent evidence hence the genuine loan given by Ms. KalpanikVyapar (P)Ltd hence the genuine loan given by Ms. KalpanikVyapar (P)Ltd hence the genuine loan given by Ms. KalpanikVyapar (P)Ltd should be treated a should be treated as genuine and the ld AO be directed to s genuine and the ld AO be directed to delete the unwarranted addition made to the returned delete the unwarranted addition made to the returned delete the unwarranted addition made to the returned income and oblige." income and oblige." 6.6 From above reply, it appears that the appellant has 6.6 From above reply, it appears that the appellant has 6.6 From above reply, it appears that the appellant has tried to take unwanted benefits of the action of Hon'ble tried to take unwanted benefits of the action of Hon'ble tried to take unwanted benefits of the action of Hon'ble Registrar of companies, in issu Registrar of companies, in issuing show cause notice to the ing show cause notice to the appellant. As per section 248(1) of the companies act 2013 appellant. As per section 248(1) of the companies act 2013 appellant. As per section 248(1) of the companies act 2013 a notice should be sent to the Company and its directors to a notice should be sent to the Company and its directors to a notice should be sent to the Company and its directors to remove the name from Register of Companies with request remove the name from Register of Companies with request remove the name from Register of Companies with request to to to represent represent represent along along along with with with copies copies copies of of of relevant relevant relevant documents.However, facts remained same that since, the .However, facts remained same that since, the .However, facts remained same that since, the loan providing company did not file reply to show cause loan providing company did not file reply to show cause loan providing company did not file reply to show cause notice issued u/s. 248(1), the Hon'ble Registrar of notice issued u/s. 248(1), the Hon'ble Registrar of notice issued u/s. 248(1), the Hon'ble Registrar of companies passed order us. 248(5) striking off the name of companies passed order us. 248(5) striking off the name of companies passed order us. 248(5) striking off the name of the loan providing company fromter. The arg the loan providing company fromter. The argument of the ument of the appellant that the loan providing company has declared as appellant that the loan providing company has declared as appellant that the loan providing company has declared as shell company as mentioned in the Remand Report, is shell company as mentioned in the Remand Report, is shell company as mentioned in the Remand Report, is baseless and cannot be entertained. Further, the claim baseless and cannot be entertained. Further, the claim baseless and cannot be entertained. Further, the claim made by appellant, that in support of this issue it has made by appellant, that in support of this issue it has made by appellant, that in support of this issue it has submitted the list of submitted the list of 331 companies downloaded from the 331 companies downloaded from the internet site declared as shell company by Hon'ble SEB. internet site declared as shell company by Hon'ble SEB. internet site declared as shell company by Hon'ble SEB. This is out of knowledge that why the appellant is This is out of knowledge that why the appellant is This is out of knowledge that why the appellant is misleading the issue. When the fact is clear that the Hon'ble misleading the issue. When the fact is clear that the Hon'ble misleading the issue. When the fact is clear that the Hon'ble Registrar of companies passed order W/s. 248(5) strik Registrar of companies passed order W/s. 248(5) strik Registrar of companies passed order W/s. 248(5) striking off the name of the loan providing company from its Register off the name of the loan providing company from its Register off the name of the loan providing company from its Register i.e. M/s KalpanikVyaparPVt Ltd, why appellant provided i.e. M/s KalpanikVyaparPVt Ltd, why appellant provided i.e. M/s KalpanikVyaparPVt Ltd, why appellant provided list of companie list of companies declared as shell company by S s declared as shell company by SEBI.The appellant has tried poor attempt to mislead the issue. The appellant has tried poor attempt to mislead the issue. The appellant has tried poor attempt to mislead the issue. The relevant relevant page page clearly clearly showing showing name name of of M/s M/s KalpanikVyapar Pvt Ltd, strike off at serial number 5030 KalpanikVyapar Pvt Ltd, strike off at serial number 5030 KalpanikVyapar Pvt Ltd, strike off at serial number 5030 reproduced as under for the sake of clarity: reproduced as under for the sake of clarity: 6.7 The AO had made detailed analysis of this issue. 6.7 The AO had made detailed analysis of this issue. 6.7 The AO had made detailed analysis of this issue. Whereas, during the assessment proceedings the appellant Whereas, during the assessment proceedings the appellant Whereas, during the assessment proceedings the appellant has shown casual approa has shown casual approach. The assessee was asked to ch. The assessee was asked to furnish the ITR and bank statement of M/s KalpanikVyapar furnish the ITR and bank statement of M/s KalpanikVyapar furnish the ITR and bank statement of M/s KalpanikVyapar Put Ltd however, no reply was made and the proceedings Put Ltd however, no reply was made and the proceedings Put Ltd however, no reply was made and the proceedings

Shri Narendra S Shah 58 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

were pending long. The assessee claimed of non were pending long. The assessee claimed of non were pending long. The assessee claimed of non- cooperation of the said party for failure to the notice of the cooperation of the said party for failure to the notice of the cooperation of the said party for failure to the notice of the AO at stage of the assessment proceedings. t stage of the assessment proceedings. 6.8 Besides, from the ledger confirmation fled by appellant 6.8 Besides, from the ledger confirmation fled by appellant 6.8 Besides, from the ledger confirmation fled by appellant the AO noticed that the ledger confirmation was signed by the AO noticed that the ledger confirmation was signed by the AO noticed that the ledger confirmation was signed by the assessee's wife Smt Darshana Narendra Shah in the the assessee's wife Smt Darshana Narendra Shah in the the assessee's wife Smt Darshana Narendra Shah in the capacity of Director / Authorized Signatory. capacity of Director / Authorized Signatory. capacity of Director / Authorized Signatory. Therefore, doubt was created that why IT and bank statement could doubt was created that why IT and bank statement could doubt was created that why IT and bank statement could not produced from a company, where she is one of the not produced from a company, where she is one of the not produced from a company, where she is one of the directors of the said company and had authority to sign on directors of the said company and had authority to sign on directors of the said company and had authority to sign on the ledger confirmations. Thus, it cannot be said that the the ledger confirmations. Thus, it cannot be said that the the ledger confirmations. Thus, it cannot be said that the assessee has disput assessee has dispute with the said company and he could e with the said company and he could not furnish relevant documents. The A0 concluded it as an not furnish relevant documents. The A0 concluded it as an not furnish relevant documents. The A0 concluded it as an excuse taken by the appellant to drag the proceedings to excuse taken by the appellant to drag the proceedings to excuse taken by the appellant to drag the proceedings to hide the fact that M/s KalpanikVyapaar Pvt Lid has not hide the fact that M/s KalpanikVyapaar Pvt Lid has not hide the fact that M/s KalpanikVyapaar Pvt Lid has not filed its return of income for A.Y. 2015 filed its return of income for A.Y. 2015-16. 6.9 To further strengthen the observations with cemented To further strengthen the observations with cemented To further strengthen the observations with cemented evidences, a commission us 131(1)(d) of the Act was issued evidences, a commission us 131(1)(d) of the Act was issued evidences, a commission us 131(1)(d) of the Act was issued to Income Tax Officer, Ward 4(4), Kolkata, who had to Income Tax Officer, Ward 4(4), Kolkata, who had to Income Tax Officer, Ward 4(4), Kolkata, who had jurisdiction over the case of M/s KalpanikVyapaar Pvt Ltd. jurisdiction over the case of M/s KalpanikVyapaar Pvt Ltd. jurisdiction over the case of M/s KalpanikVyapaar Pvt Ltd. In response to the same, the AO re In response to the same, the AO reported that no business ported that no business activities are carried on by M/s KalpanikVyapaar Pvt Ltd activities are carried on by M/s KalpanikVyapaar Pvt Ltd activities are carried on by M/s KalpanikVyapaar Pvt Ltd and it has not filed its return of income after A.Y.2014 and it has not filed its return of income after A.Y.2014 and it has not filed its return of income after A.Y.2014-15. Also reported that he has issued summons w/ 131 of the Also reported that he has issued summons w/ 131 of the Also reported that he has issued summons w/ 131 of the Act to the directors of M/s KalpanikVyapaar Pvt Ltd on Act to the directors of M/s KalpanikVyapaar Pvt Ltd on Act to the directors of M/s KalpanikVyapaar Pvt Ltd on 13.12.2017 for personal attendance, but none appeared 2.2017 for personal attendance, but none appeared 2.2017 for personal attendance, but none appeared before him 6.10 Further, in response to show cause issued by AO the 6.10 Further, in response to show cause issued by AO the 6.10 Further, in response to show cause issued by AO the appellant submitted that the company has filed its return of appellant submitted that the company has filed its return of appellant submitted that the company has filed its return of income, but the copies are not available, berefore, furnished income, but the copies are not available, berefore, furnished income, but the copies are not available, berefore, furnished the copies of a the copies of acknowledgments of ITS for A.Y. 2016 cknowledgments of ITS for A.Y. 2016-17 &and submitted that the transaction stands proved the test &and submitted that the transaction stands proved the test &and submitted that the transaction stands proved the test of genuineness. issions of the was considered, but not of genuineness. issions of the was considered, but not of genuineness. issions of the was considered, but not accepted by A0. to analyzed the issue AO issued accepted by A0. to analyzed the issue AO issued accepted by A0. to analyzed the issue AO issued commission W/s 131(1)(d) of the Act to the Assessing commission W/s 131(1)(d) of the Act to the Assessing commission W/s 131(1)(d) of the Act to the Assessing Officer, having territorial jurisdiction over the case of M/s ficer, having territorial jurisdiction over the case of M/s ficer, having territorial jurisdiction over the case of M/s KalpanikVyapaar Pvt Ltd, wherein he has reported that the KalpanikVyapaar Pvt Ltd, wherein he has reported that the KalpanikVyapaar Pvt Ltd, wherein he has reported that the company has not filed its return of income after AY 2014 company has not filed its return of income after AY 2014 company has not filed its return of income after AY 2014- 15. However, the appellant further contended that M/s 15. However, the appellant further contended that M/s 15. However, the appellant further contended that M/s KalpanikVyapaar Pt Ltd file KalpanikVyapaar Pt Ltd filed its returns of income for A. d its returns of income for A.

Shri Narendra S Shah 59 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

Yrs. Yrs. 2016.17 2016.17 and and 2017-18 2017 18 and and the the copies copies of of acknowledgements of ITS were filed in support of claim acknowledgements of ITS were filed in support of claim acknowledgements of ITS were filed in support of claim from where, it was seen that M/s KalpanikVyapaar Pvt Ltd from where, it was seen that M/s KalpanikVyapaar Pvt Ltd from where, it was seen that M/s KalpanikVyapaar Pvt Ltd filed its returns of income on 15.11.2017. whereas the filed its returns of income on 15.11.2017. whereas the filed its returns of income on 15.11.2017. whereas the commission W/s commission W/s 131)(d) of the Act was issued on 131)(d) of the Act was issued on 27.10.2017 by 10. 27.10.2017 by 10. Thus, it was clearly construed that Ms. Kalpanik. Vyapaar Thus, it was clearly construed that Ms. Kalpanik. Vyapaar Thus, it was clearly construed that Ms. Kalpanik. Vyapaar Pvt Ltd filed its returns of income, after the AO of the said Pvt Ltd filed its returns of income, after the AO of the said Pvt Ltd filed its returns of income, after the AO of the said Company started enquiries in response to commission us. Company started enquiries in response to commission us. Company started enquiries in response to commission us. 131 of the Act. Therefore, it 131 of the Act. Therefore, it was nothing but after though of was nothing but after though of the assessee to prove that M/s KalpanikVyapaar Pt Ltd the assessee to prove that M/s KalpanikVyapaar Pt Ltd the assessee to prove that M/s KalpanikVyapaar Pt Ltd made its compliance. As well, the returns of M/s made its compliance. As well, the returns of M/s made its compliance. As well, the returns of M/s KalpanikVyapaar Pt Ltd was uploaded under the digital KalpanikVyapaar Pt Ltd was uploaded under the digital KalpanikVyapaar Pt Ltd was uploaded under the digital signature of NARENDRA SHAH from Mumbai itself. signature of NARENDRA SHAH from Mumbai itself. signature of NARENDRA SHAH from Mumbai itself. Therefore, the cont Therefore, the contention of the assesse that he cannot ention of the assesse that he cannot furnish IT acknowledgement for AY 2015 furnish IT acknowledgement for AY 2015-16 of M/s 16 of M/s KalpanikVyapaar Pt Ltd due to disputes with the said party KalpanikVyapaar Pt Ltd due to disputes with the said party KalpanikVyapaar Pt Ltd due to disputes with the said party was found fake explanation. The assessee Shri Narendra was found fake explanation. The assessee Shri Narendra was found fake explanation. The assessee Shri Narendra Shah actively particinated in day Shah actively particinated in day-to-das business activi das business activities of M/s KalpanikVyapaarvt Ltd and controlling its business of M/s KalpanikVyapaarvt Ltd and controlling its business of M/s KalpanikVyapaarvt Ltd and controlling its business affairs and on perusal of the bank statement of M/s affairs and on perusal of the bank statement of M/s affairs and on perusal of the bank statement of M/s KalpanikVyapaar Pvt Ltd, revealed that all the amounts KalpanikVyapaar Pvt Ltd, revealed that all the amounts KalpanikVyapaar Pvt Ltd, revealed that all the amounts directly transferred to either the assessee or his relatives or directly transferred to either the assessee or his relatives or directly transferred to either the assessee or his relatives or the companies, where t the companies, where the assessee was one of the he assessee was one of the directors. 6.11 In this case, the assessee has failed to discharge the 6.11 In this case, the assessee has failed to discharge the 6.11 In this case, the assessee has failed to discharge the initial onus casted upon him to prove the genuineness of the initial onus casted upon him to prove the genuineness of the initial onus casted upon him to prove the genuineness of the transactions. The assessee has failed to prove the primary transactions. The assessee has failed to prove the primary transactions. The assessee has failed to prove the primary ingredients to prove the transaction a ingredients to prove the transaction as a genuine. The s a genuine. The assessee in this case has not filed the ITR of the concerned assessee in this case has not filed the ITR of the concerned assessee in this case has not filed the ITR of the concerned party, from whom, he has received such huge loans party, from whom, he has received such huge loans party, from whom, he has received such huge loans notwithstanding to the issuance of various reminders. notwithstanding to the issuance of various reminders. notwithstanding to the issuance of various reminders. Further, as per the findings of the jurisdictional AO also, Further, as per the findings of the jurisdictional AO also, Further, as per the findings of the jurisdictional AO also, M/s KalpanikVy M/s KalpanikVyapaar Pvt Ltd is not in existence and no apaar Pvt Ltd is not in existence and no business business business activities activities activities are are are carried carried carried on on on by by by the the the said said said company.Considering all these facts, an amount of company.Considering all these facts, an amount of company.Considering all these facts, an amount of Rs.7,44,71,520/ Rs.7,44,71,520/- is hereby added to the total income of the is hereby added to the total income of the assessee under section 68 of the Act as unexplained cash assessee under section 68 of the Act as unexplained cash assessee under section 68 of the Act as unexplained cash credits.

Shri Narendra S Shah 60 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

6.12 It is observed that the AO had placed on record the 6.12 It is observed that the AO had placed on record the 6.12 It is observed that the AO had placed on record the entire gamut of finding and there is no further requirement entire gamut of finding and there is no further requirement entire gamut of finding and there is no further requirement for elaboration. The fact cannot be denied that, that for elaboration. The fact cannot be denied that, that for elaboration. The fact cannot be denied that, that MsKalpanikVyapar Pvt. Ltd. has been removed/ struck off MsKalpanikVyapar Pvt. Ltd. has been removed/ struck off MsKalpanikVyapar Pvt. Ltd. has been removed/ struck off from the register of from the register of Companies by the Registrar of Companies by the Registrar of Companies, Kolkota and the directors of the said company Companies, Kolkota and the directors of the said company Companies, Kolkota and the directors of the said company have also been declared as Disqualified Directors and have also been declared as Disqualified Directors and have also been declared as Disqualified Directors and appellant was one of the Directors of the said company appellant was one of the Directors of the said company appellant was one of the Directors of the said company declared as disqualified director by ROC Kolkata. Filing declared as disqualified director by ROC Kolkata. Filing declared as disqualified director by ROC Kolkata. Filing returns of income on 15.11.2017, whereas the commission urns of income on 15.11.2017, whereas the commission urns of income on 15.11.2017, whereas the commission u/s 131(1)d) of the Act was issued on 27.10.2017 by AO, u/s 131(1)d) of the Act was issued on 27.10.2017 by AO, u/s 131(1)d) of the Act was issued on 27.10.2017 by AO, shows appellants meager efforts and further strengthens shows appellants meager efforts and further strengthens shows appellants meager efforts and further strengthens the bogus transaction of the appellant. Thus, it was clearly the bogus transaction of the appellant. Thus, it was clearly the bogus transaction of the appellant. Thus, it was clearly construed that Ms. Kalpank. Vy construed that Ms. Kalpank. Vyapaar Pt Ltd filed its returns apaar Pt Ltd filed its returns of income, after the AO of the said Company started of income, after the AO of the said Company started of income, after the AO of the said Company started enquiries in response to commission u/s. 131 of the Act. In enquiries in response to commission u/s. 131 of the Act. In enquiries in response to commission u/s. 131 of the Act. In view of overall discussion, it can safely be concluded that view of overall discussion, it can safely be concluded that view of overall discussion, it can safely be concluded that the the the loan loan loan accepted accepted accepted by by by the the the appellant appellant appellant from from from M/s M/s M/s KalpanikVyapaar Put Ltd is not a genuine loan. The key yapaar Put Ltd is not a genuine loan. The key yapaar Put Ltd is not a genuine loan. The key ingredients of the transaction viz., identity, genuineness ingredients of the transaction viz., identity, genuineness ingredients of the transaction viz., identity, genuineness and creditworthiness of the transaction have remained and creditworthiness of the transaction have remained and creditworthiness of the transaction have remained unproved. The appellant has failed to submit any credible unproved. The appellant has failed to submit any credible unproved. The appellant has failed to submit any credible documents either before AO or before th documents either before AO or before the undersigned. The e undersigned. The appellant has shown casual approach towards appeal appellant has shown casual approach towards appeal appellant has shown casual approach towards appeal proceedings and failed to establish the genuineness of proceedings and failed to establish the genuineness of proceedings and failed to establish the genuineness of transaction. Thus, it is evident that the unsecured loan of transaction. Thus, it is evident that the unsecured loan of transaction. Thus, it is evident that the unsecured loan of Rs. 7,50,71,520/ received by the assessee from M/s Rs. 7,50,71,520/ received by the assessee from M/s Rs. 7,50,71,520/ received by the assessee from M/s KalpanikVyapaar Pvt. KalpanikVyapaar Pvt. Ltd is not genuine. At appellate state, Ltd is not genuine. At appellate state, the appellant has failed to file any submission with credible the appellant has failed to file any submission with credible the appellant has failed to file any submission with credible evidence, only filing of appeal is not suffice to accept the evidence, only filing of appeal is not suffice to accept the evidence, only filing of appeal is not suffice to accept the claim of appellant. On the contrary AO has made analysis claim of appellant. On the contrary AO has made analysis claim of appellant. On the contrary AO has made analysis of the facts. The contention of the of the facts. The contention of the appellant as made during appellant as made during the assessment proceedings that Shri Narendra Shah and the assessment proceedings that Shri Narendra Shah and the assessment proceedings that Shri Narendra Shah and his wife Smt. Darshana Shah are the only directors of the his wife Smt. Darshana Shah are the only directors of the his wife Smt. Darshana Shah are the only directors of the said Company in which public holding is NIL, is found said Company in which public holding is NIL, is found said Company in which public holding is NIL, is found baseless.The fact remains the same that name was struck baseless.The fact remains the same that name was struck baseless.The fact remains the same that name was struck off from the register of(99611 m the register of(99611-4, by the Registrar of 4, by the Registrar of Companies, Kolkata and the directors of the said company Companies, Kolkata and the directors of the said company Companies, Kolkata and the directors of the said company was also declared as Disqualified Directors w/s 164(2)(a) of was also declared as Disqualified Directors w/s 164(2)(a) of was also declared as Disqualified Directors w/s 164(2)(a) of the companies Act. In view of the overall facts discussed as the companies Act. In view of the overall facts discussed as the companies Act. In view of the overall facts discussed as above addition made of Rs. 7,5 above addition made of Rs. 7,50,71,520/- on account loan on account loan accepted from M/s KalpanikVyapaar Pt Ltd Is upheld. accepted from M/s KalpanikVyapaar Pt Ltd Is upheld. accepted from M/s KalpanikVyapaar Pt Ltd Is upheld. Therefore, this ground of appeal no. 1 is Dismissed. Therefore, this ground of appeal no. 1 is Dismissed. Therefore, this ground of appeal no. 1 is Dismissed.”

Shri Narendra S Shah 61 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

“1) This Company Petition has been filed by Mr. Narendra 1) This Company Petition has been filed by Mr. Narendra 1) This Company Petition has been filed by Mr. Narendra Shah Suryakant, one of the shareholders of M/S KALPANIK Shah Suryakant, one of the shareholders of M/S KALPANIK Shah Suryakant, one of the shareholders of M/S KALPANIK VYAPAAR PRIVATE LIMITED, u/s. 252(3) of the Companies VYAPAAR PRIVATE LIMITED, u/s. 252(3) of the Companies VYAPAAR PRIVATE LIMITED, u/s. 252(3) of the Companies Act, 2013 for restoration of name of the struck off company Act, 2013 for restoration of name of the struck off company Act, 2013 for restoration of name of the struck off company in the register of c in the register of companies, maintained in the office of the ompanies, maintained in the office of the Registrar of Companies, West Bengal. It is stated that the Registrar of Companies, West Bengal. It is stated that the Registrar of Companies, West Bengal. It is stated that the name of the Company was struck off on 30.06.2017. name of the Company was struck off on 30.06.2017. name of the Company was struck off on 30.06.2017. 2) It is contended that the Company had not filed the 2) It is contended that the Company had not filed the 2) It is contended that the Company had not filed the Financial Statements and Annual Returns of the Comp Financial Statements and Annual Returns of the Comp Financial Statements and Annual Returns of the Company from the financial year ended 2013 from the financial year ended 2013-14, 2014-15, 2015 15, 2015-16, 2016-17, 17, 2017-18, 2017 2018-19 and 2019-20 20 due due to to inadvertent mistake on part of the management and has inadvertent mistake on part of the management and has inadvertent mistake on part of the management and has produced copies of the said financial statements. Therefore, produced copies of the said financial statements. Therefore, produced copies of the said financial statements. Therefore, though the Company was running its though the Company was running its business but the business but the Company did not file its Financial Statements and Annual Company did not file its Financial Statements and Annual Company did not file its Financial Statements and Annual Returns with the Registrar of Companies, West Bengal, for Returns with the Registrar of Companies, West Bengal, for Returns with the Registrar of Companies, West Bengal, for the relevant financial years and has produced copies of the the relevant financial years and has produced copies of the the relevant financial years and has produced copies of the said financial statements. IT Acknowledgement and Bank said financial statements. IT Acknowledgement and Bank said financial statements. IT Acknowledgement and Bank statement has also been produced. Upon the said has also been produced. Upon the said has also been produced. Upon the said contentions, the Ld. Counsel for the petitioner prayed for contentions, the Ld. Counsel for the petitioner prayed for contentions, the Ld. Counsel for the petitioner prayed for passing of an order for restoration of the name of the passing of an order for restoration of the name of the passing of an order for restoration of the name of the appellant company. appellant company.

Shri Narendra S Shah 62 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

3) Notice was issued to the Registrar of Companies, West 3) Notice was issued to the Registrar of Companies, West 3) Notice was issued to the Registrar of Companies, West Bengal. The Registrar of Co Bengal. The Registrar of Companies, West Bengal has mpanies, West Bengal has submitted its report at the Registry with copy to the submitted its report at the Registry with copy to the submitted its report at the Registry with copy to the petitioner. It was stated in the report that only after petitioner. It was stated in the report that only after petitioner. It was stated in the report that only after compliance of the requirements to be met under Section 248 compliance of the requirements to be met under Section 248 compliance of the requirements to be met under Section 248 of the Companies Act, 2013, Registrar of Companies, West of the Companies Act, 2013, Registrar of Companies, West of the Companies Act, 2013, Registrar of Companies, West Bengal has struck off the name of the petitioner company l has struck off the name of the petitioner company l has struck off the name of the petitioner company from the register maintained by the Registrar of Companies from the register maintained by the Registrar of Companies from the register maintained by the Registrar of Companies West Bengal. West Bengal. 4) ROC, West Bengal has not objected to this application for 4) ROC, West Bengal has not objected to this application for 4) ROC, West Bengal has not objected to this application for restoration of the name of the company. On perusal of the restoration of the name of the company. On perusal of the restoration of the name of the company. On perusal of the application, application, we are satisfied that the name of the company we are satisfied that the name of the company should be restored to the register. Therefore, this petition should be restored to the register. Therefore, this petition should be restored to the register. Therefore, this petition deserves deserves deserves sympathetic sympathetic sympathetic consideration. consideration. consideration. Accordingly, Accordingly, Accordingly, the the the present petition is allowed on the following terms: present petition is allowed on the following terms:- - a) a) a) The The The Registrar Registrar Registrar of of of Companies, Companies, Companies, West West West Bengal, Bengal, Bengal, the respondent herein, is directed to restore the original status respondent herein, is directed to restore the original status respondent herein, is directed to restore the original status of the petitioner company as if the name of the Company of the petitioner company as if the name of the Company of the petitioner company as if the name of the Company had not been struck off from the register of Companies with had not been struck off from the register of Companies with had not been struck off from the register of Companies with the resultant and consequential actions like changing status the resultant and consequential actions like changing status the resultant and consequential actions like changing status of petitioner company from 'struck off' to 'Active'. r company from 'struck off' to 'Active'. b) The Petitioner Company is directed to file all pending b) The Petitioner Company is directed to file all pending b) The Petitioner Company is directed to file all pending statutory documents) including Annual Accounts and statutory documents) including Annual Accounts and statutory documents) including Annual Accounts and Annual returns for the period 2013 Annual returns for the period 2013-14, 2014-15, 2015 15, 2015-16, 2016-17, 2017 17, 2017-18, 2018-19 and 2019-20 along with 20 along with prescribed fees/additional fee/fine as decided by Registrar prescribed fees/additional fee/fine as decided by Registrar prescribed fees/additional fee/fine as decided by Registrar of Companies, West Bengal within 45 days from the date of Companies, West Bengal within 45 days from the date of Companies, West Bengal within 45 days from the date on which its name is restored on the register of companies on which its name is restored on the register of companies on which its name is restored on the register of companies maintained by the Registrar of Companies, West Bengal. maintained by the Registrar of Companies, West Bengal. maintained by the Registrar of Companies, West Bengal. c) The restoration of the C c) The restoration of the Company's name is also subject to ompany's name is also subject to the payment of cost of Rs. 70,000 / the payment of cost of Rs. 70,000 /- (Rupees Seventy (Rupees Seventy Thousand only) through online payment in www.mca.gov.in Thousand only) through online payment in www.mca.gov.in Thousand only) through online payment in www.mca.gov.in under miscellaneous fee by mentioning particulars as under miscellaneous fee by mentioning particulars as under miscellaneous fee by mentioning particulars as "Payment of cost for restoration of company pursuant to "Payment of cost for restoration of company pursuant to "Payment of cost for restoration of company pursuant to orders of NCLT in CP No. 252/KB/2021". s of NCLT in CP No. 252/KB/2021". d) The petitioner is directed to deliver a certified copy of this d) The petitioner is directed to deliver a certified copy of this d) The petitioner is directed to deliver a certified copy of this order with Registrar of Companies, West Bengal within order with Registrar of Companies, West Bengal within order with Registrar of Companies, West Bengal within thirty days of the receipt of this order. thirty days of the receipt of this order.

Shri Narendra S Shah 63 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

e) On such delivery and after due compliance with the e) On such delivery and after due compliance with the e) On such delivery and after due compliance with the above directions, the Registrar of Companies, West Bengal directions, the Registrar of Companies, West Bengal directions, the Registrar of Companies, West Bengal is directed to publish the order in the Official Gazette under is directed to publish the order in the Official Gazette under is directed to publish the order in the Official Gazette under his office name and seal; his office name and seal; f) This order is confined to the violations, which ultimately This order is confined to the violations, which ultimately This order is confined to the violations, which ultimately led to the impugned action of striking off the name o led to the impugned action of striking off the name o led to the impugned action of striking off the name of the Company, and it will not come in the way of Registrar of Company, and it will not come in the way of Registrar of Company, and it will not come in the way of Registrar of Companies, West Bengal to take appropriate action(s) in Companies, West Bengal to take appropriate action(s) in Companies, West Bengal to take appropriate action(s) in accordance with law, for any other violations / offences, if accordance with law, for any other violations / offences, if accordance with law, for any other violations / offences, if any, committed by the petitioner company prior to or during any, committed by the petitioner company prior to or during any, committed by the petitioner company prior to or during the period the n the period the name of the Company remained struck off. ame of the Company remained struck off.” 24.1 Thus, the said company is Thus, the said company is no more in the list of the companies no more in the list of the companies removed or struck off or struck off from the register of the R Registrar of the companies and it is being a live company. and it is being a live company. The basis of the The basis of the d CIT(A) that assessee has been held to be Assessing officer and l Assessing officer and ld CIT(A) that assessee has been held to be shell company by the SEBI is thus unsubstantiated fact and can’t shell company by the SEBI is thus unsubstantiated fact and can’t shell company by the SEBI is thus unsubstantiated fact and can’t be relied. The Assessing officer of the said company has duly be relied. The Assessing officer of the said company has duly be relied. The Assessing officer of the said company has duly verified the return of income filed by that company and in remand verified the return of income filed by that company and in remand verified the return of income filed by that company and in remand also the Assessing Officer could not point out any adverse fact other fficer could not point out any adverse fact other fficer could not point out any adverse fact other than allegation of being a shell company. than allegation of being a shell company. The addition has been The addition has been made mainly for the reason that assessee company was stricken mainly for the reason that assessee company was stricken off mainly for the reason that assessee company was stricken orremoved from the register of the removed from the register of the Registrar of the compan egistrar of the companies (ROC). Since, the company has the company has now been revived by the National been revived by the National Company Law Tribunal on the prayer of the Company Law Tribunal on the prayer of the company, company, we set aside the finding of ld CIT(A) the finding of ld CIT(A) and delete the addition made. and delete the addition made. The ground No. 1 of the appeal of the assessee is accordingly allowed. No. 1 of the appeal of the assessee is accordingly allowed. No. 1 of the appeal of the assessee is accordingly allowed.

Shri Narendra S Shah 64 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

43CA of the Act. The brief facts qua the issue in dispute are that 43CA of the Act. The brief facts qua the issue in dispute are that 43CA of the Act. The brief facts qua the issue in dispute are that the assessee was a trader of real estate properties during the the assessee was a trader of real estate properties during the the assessee was a trader of real estate properties during the relevant assessment year sment year. The assessee sold certain units of real he assessee sold certain units of real estate for consideration lower than the value adopted by the stamp estate for consideration lower than the value adopted by the stamp estate for consideration lower than the value adopted by the stamp duty valuation department department. The list of relevant units is reproduced . The list of relevant units is reproduced as under:

Unit No. Market Value Market Value Agreement Value Difference Difference C-6 63570 6357000 6350000 7000 D-6 4640000 4640000 3039000 1601000 1601000 D-5 4979000 4979000 4987200 291800 B-10 4015000 4015000 3500000 515000 B-11 4015000 4015000 3500000 515000 Total 2929800 2929800 25.1 The Assessing Officer noted that in view of deeming provisions The Assessing Officer noted that in view of deeming provisions The Assessing Officer noted that in view of deeming provisions u/s 43CA of the Act u/s 43CA of the Act,if the sale consideration reported reported by the assessee is less than the value as per the stamp valuation authority, assessee is less than the value as per the stamp valuation authority assessee is less than the value as per the stamp valuation authority then value as stamp valuation then value as stamp valuation shall be deemed to be shall be deemed to be sale consideration received consideration received as a result of transfer of property by the as a result of transfer of property by the assessee. Accordingly Accordingly, the Ld. Assessing Officer treated difference fficer treated difference between the sale consideration between the sale consideration reported by the assessee and the by the assessee and the value of the properties assessed by the stamp duty valuation value of the properties assessed by the stamp duty valuation value of the properties assessed by the stamp duty valuation authority for addition u/s 43CA of the Act. On further appeal, the authority for addition u/s 43CA of the Act. On further appeal, the authority for addition u/s 43CA of the Act. On further appeal, the Ld. CIT(A) also upheld the addition ob Ld. CIT(A) also upheld the addition observing as under: serving as under:

“8.2 from above, it can be concluded that he entire 8.2 from above, it can be concluded that he entire 8.2 from above, it can be concluded that he entire approach of the Assessing Officer is correct. I do not find approach of the Assessing Officer is correct. I do not find approach of the Assessing Officer is correct. I do not find any force in appellants claim that request of referring the any force in appellants claim that request of referring the any force in appellants claim that request of referring the matter to Valuation officer was not opted by AO. Other matter to Valuation officer was not opted by AO. Other matter to Valuation officer was not opted by AO. Other than the bold assertion that the sale consideration shown ld assertion that the sale consideration shown ld assertion that the sale consideration shown

Shri Narendra S Shah 65 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

by the appellant was correct value, nothing has been by the appellant was correct value, nothing has been by the appellant was correct value, nothing has been brought on record either before 10 or before undersigned brought on record either before 10 or before undersigned brought on record either before 10 or before undersigned by way of documentary evidences to substantiate his by way of documentary evidences to substantiate his by way of documentary evidences to substantiate his claim with respect to the difference in stamp d claim with respect to the difference in stamp duty value uty value and market value. Therefore, it cannot be said that the and market value. Therefore, it cannot be said that the and market value. Therefore, it cannot be said that the value adopted by the stamp valuation authority was value adopted by the stamp valuation authority was value adopted by the stamp valuation authority was higher than the fair market value, at which, the land was higher than the fair market value, at which, the land was higher than the fair market value, at which, the land was sold by the assessee. Further, the assessee has also not sold by the assessee. Further, the assessee has also not sold by the assessee. Further, the assessee has also not rebutted the adoption of rebutted the adoption of sale value as per stamp valuation sale value as per stamp valuation for the purpose of capital gain before the registering for the purpose of capital gain before the registering for the purpose of capital gain before the registering authorities. 8.3 As is well known, section SOC would enable the 8.3 As is well known, section SOC would enable the 8.3 As is well known, section SOC would enable the revenue to bring to tax by way of deemed capital gain revenue to bring to tax by way of deemed capital gain revenue to bring to tax by way of deemed capital gain difference between the stamp valuation and the s difference between the stamp valuation and the s difference between the stamp valuation and the sale price of a capital asset. For obvious reasons, this provision of of a capital asset. For obvious reasons, this provision of of a capital asset. For obvious reasons, this provision of section 50C would not apply in case of a builder for whom section 50C would not apply in case of a builder for whom section 50C would not apply in case of a builder for whom immovable property is in nature of stock immovable property is in nature of stock-in-trade and not trade and not capital asset. To overcome this difficulty, the legislature capital asset. To overcome this difficulty, the legislature capital asset. To overcome this difficulty, the legislature had inserted section 43CA under Finance Act, 2013 with d section 43CA under Finance Act, 2013 with d section 43CA under Finance Act, 2013 with effect from 1 effect from 1-4-2014. This provision enables the revenue to 2014. This provision enables the revenue to tax the income arising out of sale of stock and stamp tax the income arising out of sale of stock and stamp tax the income arising out of sale of stock and stamp valuation of such stock would substitute the actual receipt valuation of such stock would substitute the actual receipt valuation of such stock would substitute the actual receipt thereof. The AO has rightly made the a thereof. The AO has rightly made the addition under ddition under section 43CA when the appellant has shown the sale section 43CA when the appellant has shown the sale section 43CA when the appellant has shown the sale consideration less than the Stamp duty valuation. It is consideration less than the Stamp duty valuation. It is consideration less than the Stamp duty valuation. It is observed that the AO had placed on record all facts of observed that the AO had placed on record all facts of observed that the AO had placed on record all facts of finding and there is no further requirement for elaboration. finding and there is no further requirement for elaboration. finding and there is no further requirement for elaboration. As well, appellant As well, appellant has failed on its part to place any has failed on its part to place any credible documentary evidence before the undersigned credible documentary evidence before the undersigned credible documentary evidence before the undersigned during the appellate proceedings.Moreover, appellant has during the appellate proceedings.Moreover, appellant has during the appellate proceedings.Moreover, appellant has not turned around to contradict the view of undersigned not turned around to contradict the view of undersigned not turned around to contradict the view of undersigned and discharged its onus by filing only piece of paper and discharged its onus by filing only piece of paper and discharged its onus by filing only piece of paper which are not sufficient to change the mind of undersigned. In are not sufficient to change the mind of undersigned. In are not sufficient to change the mind of undersigned. In view of the above facts the claim of appellant cannor he view of the above facts the claim of appellant cannor he view of the above facts the claim of appellant cannor he arowed and addition made u/s.43CA of Income tax Act, is arowed and addition made u/s.43CA of Income tax Act, is arowed and addition made u/s.43CA of Income tax Act, is upheld. 26. We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. Before us, the e and perused the relevant material on record. Before us, the e and perused the relevant material on record. Before us, the Ld. Counsel of the assessee has made two submissions. Firstly, he Ld. Counsel of the assessee has made two submissions Ld. Counsel of the assessee has made two submissions

Shri Narendra S Shah 66 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

submitted that legislature w.e.f. 01.04.2019 inserted a proviso to submitted that legislature w.e.f. 01.04.2019 inserted a proviso to submitted that legislature w.e.f. 01.04.2019 inserted a proviso to sub-section 1 of section 50C which provides that where the va section 1 of section 50C which provides that where the value section 1 of section 50C which provides that where the va adopted or assessed adopted or assessed by the stamp valuation authority does not valuation authority does not exceed 105% of the consideration of the consideration as a result of the transfer as a result of the transfer of property, then, consideration property, then, consideration so received shall be deemed to be full so received shall be deemed to be full value of consideration. This permitted limit of 5% difference has value of consideration. This permitted limit of 5% value of consideration. This permitted limit of 5% been further extended to 10% by the been further extended to 10% by the legislature w.e.f. legislature w.e.f. 1/4/2021 by way of Finance Act, 2020. way of Finance Act, 2020. The said amendment in provisions of The said amendment in provisions of section 50C has been held to retrospective by the decision of section 50C has been held to retrospective by the section 50C has been held to retrospective by the coordinate bench in the case of Maria Fennandes Cheryl Vs ITO coordinate bench in the case of Maria Fennandes Cheryl coordinate bench in the case of Maria Fennandes Cheryl reported in (2021) 187 ITD 738 (Mum) and reported in (2021) 187 ITD 738 (Mum) and Tribunal, Kolkata Bench , Kolkata Bench in the case ofChandra Prakash Jhunjhunwala Vs DCIT in ITA No. Chandra Prakash Jhunjhunwala Vs DCIT in ITA No. Chandra Prakash Jhunjhunwala Vs DCIT in ITA No. 2351/Kol/2017. Therefore herefore, wherever difference in stamp in stamp duty valuation and transaction value valuation and transaction value of property is within limit of within limit of 10%, no addition is called for u/s 50C addition is called for u/s 50C of the Act. This permissible limit of of the Act. This permissible limit of 10% is equally applicable to section 43CA of the Act in view being 10% is equally applicable to section 43CA of the Act in view 10% is equally applicable to section 43CA of the Act in view both the provisions are pari materia and evident form the second both the provisions are pari materia and evident form the second both the provisions are pari materia and evident form the second proviso to section 43CA of the Act, which has proviso to section 43CA of the Act, which has been introduced wef been introduced wef 1/4/2019. The assessee requested that this aspect of 10% The assessee requested that this aspect of 10% The assessee requested that this aspect of 10% difference has not been examined by the lower authorities, therefore difference has not been examined by the lower authorities, therefore difference has not been examined by the lower authorities, therefore matter might be restored to the ld AO for deciding afresh.Secondly, matter might be restored to the ld AO for deciding afresh. matter might be restored to the ld AO for deciding afresh. the Ld. Counsel of the assessee submitted the Ld. Counsel of the assessee submitted that there was a prior that there was a prior agreement in respect of sale of units agreement in respect of sale of units, which was entered in earlier which was entered in earlier years and substantial payment was already received by the years and substantial payment was already received by the years and substantial payment was already received by the

Shri Narendra S Shah 67 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

assessee. The Ld. Counsel referred to section 43CA(3) of the Act assessee. The Ld. Counsel referred to section 43CA(3) of the Act assessee. The Ld. Counsel referred to section 43CA(3) of the Act wherever prior agreement along with payme wherever prior agreement along with payment through banking nt through banking channel has been entered entered before the date of the registration, before the date of the registration, then value as on the date of such agreement, should be considered as value as on the date of such agreement, should be considered as value as on the date of such agreement, should be considered as value for the purpose of stamp duty valuation. The Ld. Counsel value for the purpose of stamp duty valuation. The Ld. Counsel value for the purpose of stamp duty valuation. The Ld. Counsel submitted that in the case of the submitted that in the case of the assessee accordingly the value for accordingly the value for the purpose of stamp duty valuation should be taken as on the date the purpose of stamp duty valuation should be taken as on the date the purpose of stamp duty valuation should be taken as on the date the agreement entered into the agreement entered into for the sale of the properties. In view of the sale of the properties. In view of the above two prayers of the assessee, we feel it appropriate to the above two prayers of the assessee, we feel it appropriate to the above two prayers of the assessee, we feel it appropriate to restore this issue back to t restore this issue back to the file of the Assessing Officer for he file of the Assessing Officer for verifying the contention of the assessee and decide the issue in verifying the contention of the assessee and decide the issue in verifying the contention of the assessee and decide the issue in accordance with law. The ground No. 2 of the appeal of the assessee accordance with law. The ground No. 2 of the appeal of the assessee accordance with law. The ground No. 2 of the appeal of the assessee is accordingly allowed for statistical purposes. is accordingly allowed for statistical purposes.

7.1 Appellate Decision: I have carefully considered the facts 7.1 Appellate Decision: I have carefully considered the facts 7.1 Appellate Decision: I have carefully considered the facts of the case, assessment order and material on rec of the case, assessment order and material on rec of the case, assessment order and material on record. The AO has discussed this issue vide para 7 of assessment AO has discussed this issue vide para 7 of assessment AO has discussed this issue vide para 7 of assessment

Shri Narendra S Shah 68 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

order. As per AIR information received by AD, the appellant order. As per AIR information received by AD, the appellant order. As per AIR information received by AD, the appellant has made cash deposits in the savings bank account has made cash deposits in the savings bank account has made cash deposits in the savings bank account maintained with Kotak Mahindra Bank. On being asked to maintained with Kotak Mahindra Bank. On being asked to maintained with Kotak Mahindra Bank. On being asked to explain the source of cash explain the source of cash deposits, it was submitted by the deposits, it was submitted by the assessee that the cash deposits so made are out of the cash assessee that the cash deposits so made are out of the cash assessee that the cash deposits so made are out of the cash withdrawals, in support of which, he filed extract of the cash withdrawals, in support of which, he filed extract of the cash withdrawals, in support of which, he filed extract of the cash book, as per which, the available cash balance in hand as on book, as per which, the available cash balance in hand as on book, as per which, the available cash balance in hand as on 28.02.2015 was Rs.38,32,528/ 28.02.2015 was Rs.38,32,528/-, whereas the cash balance the cash balance shown in the balance sheet as on 31.03.2015 was shown in the balance sheet as on 31.03.2015 was shown in the balance sheet as on 31.03.2015 was R$.2,93,004/ R$.2,93,004/-As the cash book for the month of March, 2015 As the cash book for the month of March, 2015 was not available in the file, the appellant was requested to was not available in the file, the appellant was requested to was not available in the file, the appellant was requested to file the cash book for the month of March, 2015 and reconcile file the cash book for the month of March, 2015 and reconcile file the cash book for the month of March, 2015 and reconcile the difference. In response to the same, the appellant filed ference. In response to the same, the appellant filed ference. In response to the same, the appellant filed the cash book for the whole year. It was noticed from the the cash book for the whole year. It was noticed from the the cash book for the whole year. It was noticed from the cash book of March, 2015 that other than two or three cash book of March, 2015 that other than two or three cash book of March, 2015 that other than two or three entries, all the entries in respect of the cash payments were entries, all the entries in respect of the cash payments were entries, all the entries in respect of the cash payments were made on 31.03.2015, the last made on 31.03.2015, the last date of financial year which date of financial year which raised a suspicion in the mind of the A.O. about the raised a suspicion in the mind of the A.O. about the raised a suspicion in the mind of the A.O. about the genuineness of the expenditure incurred. The appellant genuineness of the expenditure incurred. The appellant genuineness of the expenditure incurred. The appellant claimed to have made salary payments in cash on claimed to have made salary payments in cash on claimed to have made salary payments in cash on 31.03.2015 but no documentary evidences were furnished 31.03.2015 but no documentary evidences were furnished 31.03.2015 but no documentary evidences were furnished before the A to before the A to prove the genuineness of the expenditure. The prove the genuineness of the expenditure. The appellant was further requested to furnish the complete appellant was further requested to furnish the complete appellant was further requested to furnish the complete details of all the persons, to whom, he has paid salary. details of all the persons, to whom, he has paid salary. details of all the persons, to whom, he has paid salary. Further, in response to show cause the appellant submitted Further, in response to show cause the appellant submitted Further, in response to show cause the appellant submitted his explanation as under: his explanation as under: "As regards your query that cash payments have been made your query that cash payments have been made on 31.03.2015towards salary, but not supported by any on 31.03.2015towards salary, but not supported by any on 31.03.2015towards salary, but not supported by any documentary evidences, hence raises a suspicion. In this documentary evidences, hence raises a suspicion. In this documentary evidences, hence raises a suspicion. In this regard, it is submitted that assessee's accountant has regard, it is submitted that assessee's accountant has regard, it is submitted that assessee's accountant has passed the entry on 31.03.2015 in respect of passed the entry on 31.03.2015 in respect of passed the entry on 31.03.2015 in respect of payments made to security guards for protecting various properties. made to security guards for protecting various properties. made to security guards for protecting various properties. Since the property has not been developed the expenses paid Since the property has not been developed the expenses paid Since the property has not been developed the expenses paid to security guard towards salary has been capitalized in to security guard towards salary has been capitalized in to security guard towards salary has been capitalized in respective property. In support of the same, please find respective property. In support of the same, please find respective property. In support of the same, please find herewith the herewith the copy of the ledger account of respective copy of the ledger account of respective property, wherein the amount has been capitalized as per Ex property, wherein the amount has been capitalized as per Ex property, wherein the amount has been capitalized as per Ex F. A perusal of which your good offices will appreciate that F. A perusal of which your good offices will appreciate that F. A perusal of which your good offices will appreciate that since expenses has not been claimed as revenue, but has since expenses has not been claimed as revenue, but has since expenses has not been claimed as revenue, but has genuinely been incurred and capitalize genuinely been incurred and capitalized to protect it from d to protect it from encroachment, no adverse view thereof should be taken and encroachment, no adverse view thereof should be taken and encroachment, no adverse view thereof should be taken and

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no addition as proposed be made to the returned income. no addition as proposed be made to the returned income. no addition as proposed be made to the returned income. "Shri Narendra S. Shah, A.Y.2015 "Shri Narendra S. Shah, A.Y.2015-16." 7.2 The explanation of the appellant 7.2 The explanation of the appellant 7.2 The explanation of the appellant was carefully was carefully was carefully considered by the A.0., but foun considered by the A.0., but found to be not accepted by AO d to be not accepted by AO by observing as under: by observing as under: "Assessee has claimed the said expenses have not been "Assessee has claimed the said expenses have not been "Assessee has claimed the said expenses have not been claimed as revenue.The submissions made by the AR of the claimed as revenue.The submissions made by the AR of the claimed as revenue.The submissions made by the AR of the assessee are on wrong footing, prima facie, it is clearly assessee are on wrong footing, prima facie, it is clearly assessee are on wrong footing, prima facie, it is clearly observed from the P & L A/C that the observed from the P & L A/C that the assessee has debited assessee has debited an amount of Rs.20,63,000/ an amount of Rs.20,63,000/- as salary expenses. Thus, it as salary expenses. Thus, it cannot be said that the expenditure has not been claimed as cannot be said that the expenditure has not been claimed as cannot be said that the expenditure has not been claimed as revenue. The assessee has also failed to furnish the salary revenue. The assessee has also failed to furnish the salary revenue. The assessee has also failed to furnish the salary register and complete details of persone, to whom, he has register and complete details of persone, to whom, he has register and complete details of persone, to whom, he has paid salaries at the last paid salaries at the last-day of the financial year. Further, day of the financial year. Further, the assessee could not furnish any justifiable explanation on the assessee could not furnish any justifiable explanation on the assessee could not furnish any justifiable explanation on the situations led him to make the payment at the fag the situations led him to make the payment at the fag the situations led him to make the payment at the fag-end of the financial year. Thus, the genuineness of the expenses the financial year. Thus, the genuineness of the expenses the financial year. Thus, the genuineness of the expenses remained unpr remained unproved. 7.3 Without prejudice to the above findings, it is further 7.3 Without prejudice to the above findings, it is further 7.3 Without prejudice to the above findings, it is further noticed that assessee has shown the plots of lands, in noticed that assessee has shown the plots of lands, in noticed that assessee has shown the plots of lands, in respect of which, he claimed to have paid the salary, have respect of which, he claimed to have paid the salary, have respect of which, he claimed to have paid the salary, have been been been shown shown shown in in in the the the balance balance balance sheet sheet sheet under under under the the the head"INVESTMENTS" and not the under head"INVESTMENTS" and not the under the head "WORK IN the head "WORK IN PROGRESS O CLOSING WIP". The assessee is treating these PROGRESS O CLOSING WIP". The assessee is treating these PROGRESS O CLOSING WIP". The assessee is treating these assets as his personal assets only in the balance sheet and assets as his personal assets only in the balance sheet and assets as his personal assets only in the balance sheet and he has not converted these assets into stock in trade and he has not converted these assets into stock in trade and he has not converted these assets into stock in trade and thus the question of capitalizing the said expenditure does thus the question of capitalizing the said expenditure does thus the question of capitalizing the said expenditure does not arise. 7.4 On careful consideration, I donot find justification in the 7.4 On careful consideration, I donot find justification in the 7.4 On careful consideration, I donot find justification in the above action of the A.O. Once, the appellant has given an above action of the A.O. Once, the appellant has given an above action of the A.O. Once, the appellant has given an explanation regarding entries of cash payments (to the explanation regarding entries of cash payments (to the explanation regarding entries of cash payments (to the watchman of guarding various properties) as on 31.03.2015, watchman of guarding various properties) as on 31.03.2015, watchman of guarding various properties) as on 31.03.2015, the AO is re the AO is required to examine the security guards or made quired to examine the security guards or made further verification before coming to the conclusion that the further verification before coming to the conclusion that the further verification before coming to the conclusion that the salary expenses of Rs. 20,63,000/ salary expenses of Rs. 20,63,000/-debited in the P&L. A/c debited in the P&L. A/c represent either cash expenses as claimed above or non represent either cash expenses as claimed above or non represent either cash expenses as claimed above or non- genuine/bogus in nature. There is n genuine/bogus in nature. There is no relevance of the issue o relevance of the issue that that that whether whether whether the the the plots/projects plots/projects plots/projects are are are represented represented represented as as as "Investment" or "work in progress", because what is "Investment" or "work in progress", because what is "Investment" or "work in progress", because what is

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disallowed is the salary expenses already debited in the disallowed is the salary expenses already debited in the disallowed is the salary expenses already debited in the P&L A/c. Hence, the disallowance of Rs. 18,50,000/ P&L A/c. Hence, the disallowance of Rs. 18,50,000/ P&L A/c. Hence, the disallowance of Rs. 18,50,000/- deserved to be dele deserved to be deleted. Thus, ground of appeal No. 2 is ted. Thus, ground of appeal No. 2 is Allowed.” 29. We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute and perused the relevant material on record. The issue in dispute and perused the relevant material on record. The issue in dispute is

regarding payment of salary expenses of Rs.18,50,000/ of salary expenses of Rs.18,50,000/ of salary expenses of Rs.18,50,000/- shown by the assessee as incurred through cash in the month of March 2015. s incurred through cash in the month of March 2015. s incurred through cash in the month of March 2015. The assessee has shown source of the said expenditure through The assessee has shown source of the said expenditure through The assessee has shown source of the said expenditure through cash book produced d before the Assessing Officer. The Assessing before the Assessing Officer. The Assessing the expenditure for salary made in cash on Officer did not believe believe the expenditure for salary made in cash on 31.03.2015, particularly, in respect of security guard etc. and held articularly, in respect of security guard etc. and held articularly, in respect of security guard etc. and held that the salary expenses the salary expenses were unexplained. In our opinion, when unexplained. In our opinion, when the source of the said salary expenses is explained by way of cash the source of the said salary expenses is explained by way of cash the source of the said salary expenses is explained by way of cash book, there was no reason for the Assessing Officer there was no reason for the Assessing Officer, to make there was no reason for the Assessing Officer addition for unexplained expenditure. addition for unexplained expenditure. When source of the When source of the expenditure is explained through cash book s explained through cash book, in our opinion, there is in our opinion, there is no error in the order of the Ld. CIT(A) on the issue in dispute and no error in the order of the Ld. CIT(A) on the issue in dispute and no error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we upho old same. The ground No. 1 of the ap ld same. The ground No. 1 of the appeal of the Revenue is accordingly dismissed. Revenue is accordingly dismissed.

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finding of the Ld. CIT finding of the Ld. CIT(A) on the issue in dispute is reproduced as (A) on the issue in dispute is reproduced as under:

“9.1 Appellate Decision: I have carefully considered the facts 9.1 Appellate Decision: I have carefully considered the facts 9.1 Appellate Decision: I have carefully considered the facts of the case, assessment order and material on record. The of the case, assessment order and material on record. The of the case, assessment order and material on record. The issue raised is against the Non issue raised is against the Non-Benuine Sundry Creditors. The Benuine Sundry Creditors. The 10 from the deals sub 10 from the deals submited by appellant observed that it has mited by appellant observed that it has shown sundry creditors to the tune of Rs.3,34,66,000/ shown sundry creditors to the tune of Rs.3,34,66,000/ shown sundry creditors to the tune of Rs.3,34,66,000/- in the books of M/ Siddhivinayak Developers, one of his proprietary books of M/ Siddhivinayak Developers, one of his proprietary books of M/ Siddhivinayak Developers, one of his proprietary concerns. During the course of assessment proceedings, the concerns. During the course of assessment proceedings, the concerns. During the course of assessment proceedings, the assessee was asked to furnish the assessee was asked to furnish the complete details and aging complete details and aging of sundry creditors. In response to the same, the assessee of sundry creditors. In response to the same, the assessee of sundry creditors. In response to the same, the assessee submitted the name, address and PAN of the parties, but submitted the name, address and PAN of the parties, but submitted the name, address and PAN of the parties, but failed to give the corresponding amount due to the parties. failed to give the corresponding amount due to the parties. failed to give the corresponding amount due to the parties. Further, close scrutiny of the details revealed that o Further, close scrutiny of the details revealed that o Further, close scrutiny of the details revealed that out of 9 parties 5 parties were operated from the same premises parties 5 parties were operated from the same premises parties 5 parties were operated from the same premises having address at B having address at B-208, Shantivan-II, Raheja Township, II, Raheja Township, Malad(E), Mumbai. Malad(E), Mumbai. a) M/s BloomdaleFinvest a) M/s BloomdaleFinvest b) M/s Divy Dhwani Investment b) M/s Divy Dhwani Investment c) M/s Nayan Trade Resources c) M/s Nayan Trade Resources d) M/s Tinal Pharmaceuticals d) M/s Tinal Pharmaceuticals e) M/s Lalita Exports Lalita Exports f) M/s Plumeti Exports f) M/s Plumeti Exports 9.2 The AO found that the above entities were primarily 9.2 The AO found that the above entities were primarily 9.2 The AO found that the above entities were primarily engaged in the business of investments, pharmaceuticals and engaged in the business of investments, pharmaceuticals and engaged in the business of investments, pharmaceuticals and exports and the assessee being a builder by profession, no exports and the assessee being a builder by profession, no exports and the assessee being a builder by profession, no rationale between the nature of business of rationale between the nature of business of the assessee and the assessee and the above entities, found the transactions to be suspicious. To the above entities, found the transactions to be suspicious. To the above entities, found the transactions to be suspicious. To further strengthen the case, the Inspector of charge was further strengthen the case, the Inspector of charge was further strengthen the case, the Inspector of charge was deputed to serve the notice us 133(6) of the Act personally deputed to serve the notice us 133(6) of the Act personally deputed to serve the notice us 133(6) of the Act personally wherein, he reported that he found the premises locked an wherein, he reported that he found the premises locked an wherein, he reported that he found the premises locked and the local enquiries with the watchmen of the building revealed the local enquiries with the watchmen of the building revealed the local enquiries with the watchmen of the building revealed that it was a pure residential complex of Raheja Township that it was a pure residential complex of Raheja Township that it was a pure residential complex of Raheja Township and no business activities being carried on from these and no business activities being carried on from these and no business activities being carried on from these

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premises. Thus, the A0 come to the conclusion that all the premises. Thus, the A0 come to the conclusion that all the premises. Thus, the A0 come to the conclusion that all the entities were non e entities were non existing, not carrying out any business xisting, not carrying out any business activities and all the sundry creditors were non activities and all the sundry creditors were non- -genuine and thus the assessee need not to repay the liabilities. thus the assessee need not to repay the liabilities. thus the assessee need not to repay the liabilities. 9.3 Upon careful verification of the section 41(1) of the Act, the 9.3 Upon careful verification of the section 41(1) of the Act, the 9.3 Upon careful verification of the section 41(1) of the Act, the find the action of the AO not only a find the action of the AO not only against the clear provisions gainst the clear provisions of the statute but unjustified and lacks merit. For the sake of of the statute but unjustified and lacks merit. For the sake of of the statute but unjustified and lacks merit. For the sake of clarity, the said provision is reproduced as under clarity, the said provision is reproduced as under- "41. (1) Where an allowance or deduction has been made in "41. (1) Where an allowance or deduction has been made in "41. (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expend the assessment for any year in respect of loss, expend the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred trading liability incurred by the assessee (hereinafter referred trading liability incurred by the assessee (hereinafter referred to as the first to as the first-mentioned person) and subsequently during any mentioned person) and subsequently during any previous year previous year (a)the first-mentioned person has obtained, whether in cashor mentioned person has obtained, whether in cashor mentioned person has obtained, whether in cashor in any other manner whatsoever, any amount i in any other manner whatsoever, any amount i in any other manner whatsoever, any amount in respect of such19 loss or expenditure or some benefit in respect of such such19 loss or expenditure or some benefit in respect of such such19 loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the trading liability by way of remission or cessation thereof, the trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit amount obtained by such person or the value of benefit amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of accruing to him shall be deemed to be profits and gains of accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income iness or profession and accordingly chargeable to income iness or profession and accordingly chargeable to income- tax as the income of that previous year, whether the business tax as the income of that previous year, whether the business tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction or profession in respect of which the allowance or deduction or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or has been made is in existence in that year or not; or has been made is in existence in that year or not; or (b)the successor in bu (b)the successor in business has obtained, whether in cash siness has obtained, whether in cash orin any other manner whatsoever, any amount in respect of orin any other manner whatsoever, any amount in respect of orin any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first which loss or expenditure was incurred by the first which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability person or some benefit in respect of the trading liability person or some benefit in respect of the trading liability referred to in clause (a) by way of rem referred to in clause (a) by way of remission or cessation ission or cessation thereof, the amount obtained by the successor in business or thereof, the amount obtained by the successor in business or thereof, the amount obtained by the successor in business or the value of benefit accruing to the successor in business shall the value of benefit accruing to the successor in business shall the value of benefit accruing to the successor in business shall be deemed to be profits and gains of the business or be deemed to be profits and gains of the business or be deemed to be profits and gains of the business or profession, and accordingly chargeable to income profession, and accordingly chargeable to income profession, and accordingly chargeable to income-tax as the income of that previous year. income of that previous year. Explanation 1 Explanation 1-For the purposes of this sub- -section, the expression"loss or expenditure or some benefit in respect of expression"loss or expenditure or some benefit in respect of expression"loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation any such trading liability by way of remission or cessation any such trading liability by way of remission or cessation thereof" shall include the remission or cessat thereof" shall include the remission or cessation of any liability ion of any liability by a unilateral act by the first by a unilateral act by the first-mentioned person under clause mentioned person under clause

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(a) or the successor in business under Clause (b) of that sub (a) or the successor in business under Clause (b) of that sub (a) or the successor in business under Clause (b) of that sub- section by way of writing off such liability in his accounts." section by way of writing off such liability in his accounts." section by way of writing off such liability in his accounts." 9.4 As can be seen from the provisions thatthe 9.4 As can be seen from the provisions thatthe benefit which benefit which an assessee obtains by way of remission or cessation of a an assessee obtains by way of remission or cessation of a an assessee obtains by way of remission or cessation of a trading liabllity in a later year, in respect of which he has trading liabllity in a later year, in respect of which he has trading liabllity in a later year, in respect of which he has obtained a deduction in an earlier year in computing business obtained a deduction in an earlier year in computing business obtained a deduction in an earlier year in computing business income, is governed by section 41) which is specific provisi income, is governed by section 41) which is specific provisi income, is governed by section 41) which is specific provision governing factual situation. Hon'ble Supreme Court in the case governing factual situation. Hon'ble Supreme Court in the case governing factual situation. Hon'ble Supreme Court in the case of Chief CIT v. Kesaria Tea Co. Lid12002] 122 Taxman 91 of Chief CIT v. Kesaria Tea Co. Lid12002] 122 Taxman 91 of Chief CIT v. Kesaria Tea Co. Lid12002] 122 Taxman 91 (SC), whiling examining the said provision has clearly held (SC), whiling examining the said provision has clearly held (SC), whiling examining the said provision has clearly held that in order to apply section 41(1), the following points are to that in order to apply section 41(1), the following points are to that in order to apply section 41(1), the following points are to be kept in view: in view: (1) in the course of assessment for an earlier year, allowance (1) in the course of assessment for an earlier year, allowance (1) in the course of assessment for an earlier year, allowance or deduction has been made in respect of trading liability or deduction has been made in respect of trading liability or deduction has been made in respect of trading liability incurred by the assessee; incurred by the assessee; (2) subsequently, a benefit is obtained in respect of such (2) subsequently, a benefit is obtained in respect of such (2) subsequently, a benefit is obtained in respect of such trading liability by way of remission or trading liability by way of remission or cessation thereof cessation thereof during the year in which such event occurred; during the year in which such event occurred; (3) in that situation the value of the benefit accruing to the (3) in that situation the value of the benefit accruing to the (3) in that situation the value of the benefit accruing to the assessee is deemed to be the profits and gains of business assessee is deemed to be the profits and gains of business assessee is deemed to be the profits and gains of business which otherwise would not be his income; which otherwise would not be his income; (4) such value of the benefi (4) such value of the benefit is made chargeable to income t is made chargeable to income-tax as the income of theprevious year in which such benefit was as the income of theprevious year in which such benefit was as the income of theprevious year in which such benefit was obtained. 9.5 Therefore, it has to be brought on record by the A0, before 9.5 Therefore, it has to be brought on record by the A0, before 9.5 Therefore, it has to be brought on record by the A0, before invoking provisions of sec. 41(1), that an allowance or invoking provisions of sec. 41(1), that an allowance or invoking provisions of sec. 41(1), that an allowance or deduction has been claimed in t deduction has been claimed in the in any previous year in he in any previous year in respect of loss, expenditure or trading liability reflected respect of loss, expenditure or trading liability reflected respect of loss, expenditure or trading liability reflected therein. Hon'ble Apex Court in the case of Tirunelveli Motor therein. Hon'ble Apex Court in the case of Tirunelveli Motor therein. Hon'ble Apex Court in the case of Tirunelveli Motor Bus Service Co. (P.)Ltd. v. CIT [1970] 78 IT 55 (SC) has clearly Bus Service Co. (P.)Ltd. v. CIT [1970] 78 IT 55 (SC) has clearly Bus Service Co. (P.)Ltd. v. CIT [1970] 78 IT 55 (SC) has clearly held that it is not open to the Revenue to held that it is not open to the Revenue to refer to section 41(1) refer to section 41(1) for charging the tax on the receipt by the assessee by refund for charging the tax on the receipt by the assessee by refund for charging the tax on the receipt by the assessee by refund or otherwise of such expenditure in a subsequent year, unless or otherwise of such expenditure in a subsequent year, unless or otherwise of such expenditure in a subsequent year, unless it is proved that an allowance or deduction has been made in it is proved that an allowance or deduction has been made in it is proved that an allowance or deduction has been made in the assessment in any previous year in respect o the assessment in any previous year in respect o the assessment in any previous year in respect of loss, expenditure or trading liability. It is further seen that Hon'ble expenditure or trading liability. It is further seen that Hon'ble expenditure or trading liability. It is further seen that Hon'ble Gujarat High Court in the case of CIT. Bharat Iron & Steel Gujarat High Court in the case of CIT. Bharat Iron & Steel Gujarat High Court in the case of CIT. Bharat Iron & Steel

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Industries [1993] 199 ITR 67 (Guj.) (FB) that Section 41(1) Industries [1993] 199 ITR 67 (Guj.) (FB) that Section 41(1) Industries [1993] 199 ITR 67 (Guj.) (FB) that Section 41(1) introduces a fiction. The fiction is an indivisible one. It can introduces a fiction. The fiction is an indivisible one. It can introduces a fiction. The fiction is an indivisible one. It cannot be enlarged by importing another fiction, namely, that if the be enlarged by importing another fiction, namely, that if the be enlarged by importing another fiction, namely, that if the amount was obtainable or receivable during the previous year, amount was obtainable or receivable during the previous year, amount was obtainable or receivable during the previous year, it must be deemed to have been obtained or received during it must be deemed to have been obtained or received during it must be deemed to have been obtained or received during that year. The only meaning that can be attached to the words that year. The only meaning that can be attached to the words that year. The only meaning that can be attached to the words 'obtained, whether in cash or in any other manner ed, whether in cash or in any other manner ed, whether in cash or in any other manner whatsoever, any amount in respect of such loss or whatsoever, any amount in respect of such loss or whatsoever, any amount in respect of such loss or expenditure' incurred in any previous year, clearly refers to expenditure' incurred in any previous year, clearly refers to expenditure' incurred in any previous year, clearly refers to the actual receiving of the cash of that amount. The amount the actual receiving of the cash of that amount. The amount the actual receiving of the cash of that amount. The amount may be actually received or it may be adj may be actually received or it may be adjusted by way of an usted by way of an adjustment entry or a credit note or in any other form when adjustment entry or a credit note or in any other form when adjustment entry or a credit note or in any other form when the cash or the equivalent of the cash can be said to have the cash or the equivalent of the cash can be said to have the cash or the equivalent of the cash can be said to have been received by the assessee. But it must be obtaining the been received by the assessee. But it must be obtaining the been received by the assessee. But it must be obtaining the actual amount which is contemplated by the Legislature whe actual amount which is contemplated by the Legislature whe actual amount which is contemplated by the Legislature when it used the words has obtained, whether in cash or in any it used the words has obtained, whether in cash or in any it used the words has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss other manner whatsoever, any amount in respect of such loss other manner whatsoever, any amount in respect of such loss or expenditure in the past. or expenditure in the past. 9.6 There is nothing on record which suggest that the 9.6 There is nothing on record which suggest that the 9.6 There is nothing on record which suggest that the appellant, in the instant case, has claimed or availed appellant, in the instant case, has claimed or availed appellant, in the instant case, has claimed or availedany allowance or deduction to the extent of Rs.3,34,66,000/ allowance or deduction to the extent of Rs.3,34,66,000/ allowance or deduction to the extent of Rs.3,34,66,000/- as reflected in the accounts as outstanding credits from the five reflected in the accounts as outstanding credits from the five reflected in the accounts as outstanding credits from the five parties mentioned in the order, in any previous year in respect parties mentioned in the order, in any previous year in respect parties mentioned in the order, in any previous year in respect of loss, expenditure or trading liability reflected therein. of loss, expenditure or trading liability reflected therein. of loss, expenditure or trading liability reflected therein. Hon'ble Delhi High Court in the case of Steel & General Mills ble Delhi High Court in the case of Steel & General Mills ble Delhi High Court in the case of Steel & General Mills Co. Ltd. V. CIT [1974] 96 IT 438 (Delhi) has clearly held that Co. Ltd. V. CIT [1974] 96 IT 438 (Delhi) has clearly held that Co. Ltd. V. CIT [1974] 96 IT 438 (Delhi) has clearly held that the the the burden burden burden is is is on on on department department department to to to prove prove prove that that that allowance/deduction has been given earlier allowance/deduction has been given earlier "A refund obtained by the assessee will attract se "A refund obtained by the assessee will attract se "A refund obtained by the assessee will attract section 41(1) only if an allowance or deduction had been given for this only if an allowance or deduction had been given for this only if an allowance or deduction had been given for this amount in the earlier assessment years. The burden lies upon amount in the earlier assessment years. The burden lies upon amount in the earlier assessment years. The burden lies upon the department to prove that an allowance or deduction had the department to prove that an allowance or deduction had the department to prove that an allowance or deduction had been given for this amount to the assessee in the earlier been given for this amount to the assessee in the earlier been given for this amount to the assessee in the earlier assessment years." nt years." 9.7 Unless and until, the A records a finding of the fact that 9.7 Unless and until, the A records a finding of the fact that 9.7 Unless and until, the A records a finding of the fact that the appellant has claimed such benefits in the preceding the appellant has claimed such benefits in the preceding the appellant has claimed such benefits in the preceding years, no such disallowance of outstanding balance is years, no such disallowance of outstanding balance is years, no such disallowance of outstanding balance is possible. There is no requirement in the act for detailed possible. There is no requirement in the act for detailed possible. There is no requirement in the act for detailed enquiry. As h enquiry. As held by Hon'ble Kerala High Court in CIT v. eld by Hon'ble Kerala High Court in CIT v. AncherryPavooKakku [1986] 160 IT 88 (Ker.)section 41(1) does AncherryPavooKakku [1986] 160 IT 88 (Ker.)section 41(1) does AncherryPavooKakku [1986] 160 IT 88 (Ker.)section 41(1) does

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not warrant a detailed enquiry whereby an assessee can be not warrant a detailed enquiry whereby an assessee can be not warrant a detailed enquiry whereby an assessee can be nsalled upon to produce his books of account and other nsalled upon to produce his books of account and other nsalled upon to produce his books of account and other documents to establish his case, as in documents to establish his case, as in the case of a regular the case of a regular assessment; the allowance or deduction made inthat year. assessment; the allowance or deduction made inthat year. assessment; the allowance or deduction made inthat year. the assessment for any year can be ascertained from the the assessment for any year can be ascertained from the the assessment for any year can be ascertained from the order of assessment for order of assessment for that year. 9.8Considering the totality of facts and circumstances of issue 9.8Considering the totality of facts and circumstances of issue 9.8Considering the totality of facts and circumstances of issue involved, in my consid involved, in my considered opinion, the AO has incorrectly ered opinion, the AO has incorrectly made made disallowance disallowance of of Rs. Rs. 3,34,66,000/ 3,34,66,000/-invoking invoking the the provisions of sec. 414) of the Act. Hence, the said provisions of sec. 414) of the Act. Hence, the said provisions of sec. 414) of the Act. Hence, the said disallowance/addition is directed to be deleted. Thus, ground disallowance/addition is directed to be deleted. Thus, ground disallowance/addition is directed to be deleted. Thus, ground of appeal no. 4 is allowed. of appeal no. 4 is allowed.” 31. We have heard rival s We have heard rival submission of the parties on the issue in ubmission of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that the Assessing Officer has treated the sundry creditors appearing in the Assessing Officer has treated the sundry creditors appearing in the Assessing Officer has treated the sundry creditors appearing in the balance sheet as benefit arising due to the write off of the the balance sheet as benefit arising due to the write off of the the balance sheet as benefit arising due to the write off of the sundry creditors. The Assessing Officer issued notice u/s . The Assessing Officer issued notice u/s 133(6) of . The Assessing Officer issued notice u/s the Act and made local inquiries and found that those parties were the Act and made local inquiries and found that those parties the Act and made local inquiries and found that those parties not available at the said address the said addresses, therefore those parties therefore those parties were not existing and hence were not genuine. were not genuine. In our opinion, section 41(1) In our opinion, section 41(1) of the Act cannot be invoked unilaterally and the Assessing Officer of the Act cannot be invoked unilaterally and the Assessing Officer of the Act cannot be invoked unilaterally and the Assessing Officer has to show as how the liability was no longer payable by the as how the liability was no longer payable by the as how the liability was no longer payable by the assessee and why assessee has not assessee and why assessee has not written off the sundry creditor written off the sundry creditors in the books of accounts of the assessee in the books of accounts of the assessee. No such exercise . No such exercise has not carried out by the Assessing Officer, therefore by the Assessing Officer, therefore by the Assessing Officer, therefore, the requisite conditions of section 41(1) of the Act have not been met by the conditions of section 41(1) of the Act have not been conditions of section 41(1) of the Act have not been Assessing Officer. Accordingly, we do not find any error in the order Accordingly, we do not find any error in the order Accordingly, we do not find any error in the order

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of the Ld. CIT(A) in deleting the addition. The gro n deleting the addition. The ground No. 2 Revenue und No. 2 Revenue is accordingly dismissed. is accordingly dismissed.

Shri Narendra S Shah 77 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

7.2Appellate Decision: 7.2Appellate Decision:-I have considered the facts of the I have considered the facts of the case, assessment order and details filed case, assessment order and details filed by the appellant. by the appellant. This ground of appeal relates to disallowance of donation This ground of appeal relates to disallowance of donation This ground of appeal relates to disallowance of donation made to Scientific Research Organisation. The appellant has made to Scientific Research Organisation. The appellant has made to Scientific Research Organisation. The appellant has made donations to two different entities firstly, Vivekananda made donations to two different entities firstly, Vivekananda made donations to two different entities firstly, Vivekananda Yoga AnusandhanaSemsthana, Hyderabadamounting to Yoga AnusandhanaSemsthana, Hyderabadamounting to Yoga AnusandhanaSemsthana, Hyderabadamounting to Rs.21,00,000/ 000/- and secondly, Rural Development Society, and secondly, Rural Development Society, Hyderabad amounting to Rs. 10,00,000/ Hyderabad amounting to Rs. 10,00,000/-. Since appellant . Since appellant failed to submit all the details before AO the present addition failed to submit all the details before AO the present addition failed to submit all the details before AO the present addition was made. It is surprise to see that the appellant has was made. It is surprise to see that the appellant has was made. It is surprise to see that the appellant has returned returned a a business business income income in in negative nega tive figure figure at at Rs.24,97,453/ Rs.24,97,453/- and has claimed a deduction for donation of and has claimed a deduction for donation of an amount of Rs. 31,00,000/ an amount of Rs. 31,00,000/- which is higher than the which is higher than the business income returned. Normally, the human tendency is business income returned. Normally, the human tendency is business income returned. Normally, the human tendency is to donate the amount less than its income. to donate the amount less than its income. 7.3 It is worth mentioning 7.3 It is worth mentioning here that in its rejoinder, in here that in its rejoinder, in response to remand report the appellant has contradicted response to remand report the appellant has contradicted response to remand report the appellant has contradicted with the view taken by AO. AO has discussed that one of the with the view taken by AO. AO has discussed that one of the with the view taken by AO. AO has discussed that one of the employees misused his position and funds were returned to employees misused his position and funds were returned to employees misused his position and funds were returned to appellant in cash. In contradiction to the above t appellant in cash. In contradiction to the above the appellant he appellant has made plain statement that, during the year under has made plain statement that, during the year under has made plain statement that, during the year under consideration consideration consideration the the the appellant appellant appellant gave gave gave Rs.21,00,000/- Rs.21,00,000/ Rs.21,00,000/ to

Shri Narendra S Shah 78 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

Vivekanand Yoga AnusandhanaSamsthana, Hyderabad by Vivekanand Yoga AnusandhanaSamsthana, Hyderabad by Vivekanand Yoga AnusandhanaSamsthana, Hyderabad by way of a/c payee cheque donation and the appellant is not way of a/c payee cheque donation and the appellant is not way of a/c payee cheque donation and the appellant is not concerned as far as irregulari concerned as far as irregularities are concerned for the ties are concerned for the reason that he has given the donation by drawing a/c payee reason that he has given the donation by drawing a/c payee reason that he has given the donation by drawing a/c payee cheque cheque cheque in in in favour favour favour of of of Vivekanand Vivekanand Vivekanand Yoga Yoga Yoga AnusandhanaSamasthana and the assessee is not aware of AnusandhanaSamasthana and the assessee is not aware of AnusandhanaSamasthana and the assessee is not aware of misuse of the position by employee. Further contended that misuse of the position by employee. Further contended that misuse of the position by employee. Further contended that there is not an iota there is not an iota of evidence that the donation amount was of evidence that the donation amount was returned in cash to assessee and as far as entries in the returned in cash to assessee and as far as entries in the returned in cash to assessee and as far as entries in the books of a/c of Trust and opening of bank a/c's by the books of a/c of Trust and opening of bank a/c's by the books of a/c of Trust and opening of bank a/c's by the employee are concerned assessee has no control hence employee are concerned assessee has no control hence employee are concerned assessee has no control hence having no implication as far as genuine donation having no implication as far as genuine donation having no implication as far as genuine donation is concerned. Hence no comments are offered on this count. concerned. Hence no comments are offered on this count. concerned. Hence no comments are offered on this count. 7.4 From above it can be seen that, the appellant has replied 7.4 From above it can be seen that, the appellant has replied 7.4 From above it can be seen that, the appellant has replied in casual manner and no efforts are made to produce any in casual manner and no efforts are made to produce any in casual manner and no efforts are made to produce any material in the form of evidence at assessment stage as well material in the form of evidence at assessment stage as well material in the form of evidence at assessment stage as well at appellate proc at appellate proceedings. Therefore, I am not in position to eedings. Therefore, I am not in position to accept the contention made by the appellant. Further, at accept the contention made by the appellant. Further, at accept the contention made by the appellant. Further, at assessment stage, in respect of Rural Development Society, assessment stage, in respect of Rural Development Society, assessment stage, in respect of Rural Development Society, Hyderabad the appellant was requested to produce proof of Hyderabad the appellant was requested to produce proof of Hyderabad the appellant was requested to produce proof of deduction claimed us 35(1) of the IT.A deduction claimed us 35(1) of the IT.Act, 1961. However, the ct, 1961. However, the assessee failed to produce any additional evidence that the assessee failed to produce any additional evidence that the assessee failed to produce any additional evidence that the said societies are approved for the purposes of sub said societies are approved for the purposes of sub said societies are approved for the purposes of sub-section () of Section 35 of the I.T. Act, 1961 for the F.Y.2015 of Section 35 of the I.T. Act, 1961 for the F.Y.2015 of Section 35 of the I.T. Act, 1961 for the F.Y.2015-16. During the appellate proceedings also no cogent, vali the appellate proceedings also no cogent, valid, reliable or d, reliable or credible evidence or material are produced before the credible evidence or material are produced before the credible evidence or material are produced before the undersigned. It is further observed that during the appellate undersigned. It is further observed that during the appellate undersigned. It is further observed that during the appellate proceedings, proceedings, proceedings, the the the appellant appellant appellant has has has relied relied relied upon upon upon certain certain certain judgements viz, Motilal DayabhaiIhaveri& Sons VS ACIT lin judgements viz, Motilal DayabhaiIhaveri& Sons VS ACIT lin judgements viz, Motilal DayabhaiIhaveri& Sons VS ACIT lin ITA No.3453/M/20 ITA No.3453/M/2018 & 1584/Mum/20191, Vora Financial 18 & 1584/Mum/20191, Vora Financial Series Pvt. Ltd.( ITA No.532/M/2019) and Kitchen Essentials Series Pvt. Ltd.( ITA No.532/M/2019) and Kitchen Essentials Series Pvt. Ltd.( ITA No.532/M/2019) and Kitchen Essentials VS ACIT (ITA No. 6672/M/2013). However, facts and ratio of VS ACIT (ITA No. 6672/M/2013). However, facts and ratio of VS ACIT (ITA No. 6672/M/2013). However, facts and ratio of these judgements are distinguishable. These judgements are these judgements are distinguishable. These judgements are these judgements are distinguishable. These judgements are related to withdraws of recognisation of t related to withdraws of recognisation of the institutions with he institutions with retrospective effect.However, the disallowance in the However, the disallowance in the retrospective effect. present case is on account of non present case is on account of non-furnishing of furnishing of requisite documents to establish approval of the requisite documents to establish approval of the requisite documents to establish approval of the societies for the purpose of sec. 35() of the Act. These societies for the purpose of sec. 35() of the Act. These societies for the purpose of sec. 35() of the Act. These documents are not produced documents are not produced before the assessment or before the assessment or appellate appellate appellate proceedings. proceedings. proceedings. Hence, Hence, Hence, the the the disallowance disallowance disallowance deserved to be sustained. deserved to be sustained. In view of the above facts the In view of the above facts the

Shri Narendra S Shah 79 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

claim of appellant cannot be allowed and addition made claim of appellant cannot be allowed and addition made claim of appellant cannot be allowed and addition made u/s.35(ii) of Income tax Act, is upheld. u/s.35(ii) of Income tax Act, is upheld.” 35. Before us, the Ld. Counsel Before us, the Ld. Counsel of the assessee submitted that the of the assessee submitted that the assessee is willing to produce the required documents and assessee is willing to produce the required documents and assessee is willing to produce the required documents and therefore, the matter may be restored to the file of the Ld. Assessing therefore, the matter may be restored to the file of the Ld. Assessing therefore, the matter may be restored to the file of the Ld. Assessing Officer. In view of the prayer of the assessee and in the interest of the prayer of the assessee and in the interest of the prayer of the assessee and in the interest of the substantial justice ce, we feel appropriate to restore the issue back we feel appropriate to restore the issue back to the file of the Ld. Assessing Officer for verification of the requisite to the file of the Ld. Assessing Officer for verification of the requisite to the file of the Ld. Assessing Officer for verification of the requisite approvals of the societies for the purpose of section 35(ii) of the Act approvals of the societies for the purpose of section 35( approvals of the societies for the purpose of section 35( and decide the issue in accordance with law. The ground No. 2 of and decide the issue in accordance with law. The ground No. and decide the issue in accordance with law. The ground No. the appeal of the assessee is accordingly allowed for statistical the appeal of the assessee is accordingly allowed for statistical the appeal of the assessee is accordingly allowed for statistical purposes.

ITA No. Asst. Year Asst. Year Appeal of the Result Assessee/Revenue 2006/M/2022 2009 2009-10 Assessee’s Appeal Allowed for statistical Allowed for statistical purpose purpose 2005/M/2022 2009 2009-10 Assessee’s Appeal Allowed partly Allowed partly 2566/M/2022 2013 2013-14 Revenue’s Appeal dismissed dismissed 2007/M/2022 2014 2014-15 Assessee’s Appeal allowed allowed

Shri Narendra S Shah 80 ITA Nos. 2005 to 2007/M/2022 & 2003 to ITA Nos. 2005 to 2007/M/ 2004/M/2004, 2566 & 2315/M/2022 2004/M/2004, 2566 & 2315/M/2022

2003/M/2022 2015 2015-16 Assessee’s Appeal Allowed Allowed partly partly for for statistical purpose statistical purpose 2315/M/2022 2015 2015-16 Revenue’s Appeal dismissed dismissed 2004/M/2022 2016 2016-17 Assessee’s Appeal Allowed for statistical Allowed for statistical purpose purpose

Order pronounced in the open Court on nounced in the open Court on 30/06/2023. /06/2023.

Sd/ Sd/- Sd/ Sd/- (VIKAS AWASTHY VIKAS AWASTHY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 30/06/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai