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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
PER OM PRAKASH KANT, AM
This appeal by the Revenue is directed against order dated 24/11/2016 passed by the Ld. Commissioner of Income-Tax (Appeal)-10, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds:
1. "Whether, on the facts and circumstances of the case and in the law, the Ld. CIT(A) has erred in allowing the appeal of the M/s Shreeji Multitrade Pvt. Ltd. M/s Shreeji Multitrade Pvt. Ltd. 2 ITA NO. 1530/M/2017 assessee without considering the assessee without considering the provisions of section 68 of the provisions of section 68 of the I.T. Act and onus to prove the genuineness of the transaction." I.T. Act and onus to prove the genuineness of the transaction." I.T. Act and onus to prove the genuineness of the transaction." "Whether, on the facts and circumstances of the case and in the "Whether, on the facts and circumstances of the case and in the "Whether, on the facts and circumstances of the case and in the law, the Ld. CIT(A) has erred in allowing relief to the assessee law, the Ld. CIT(A) has erred in allowing relief to the assessee law, the Ld. CIT(A) has erred in allowing relief to the assessee despite the failure of the despite the failure of the assessee to prove the genuineness of the assessee to prove the genuineness of the transaction, identity of the cash creditor and creditworthiness of transaction, identity of the cash creditor and creditworthiness of transaction, identity of the cash creditor and creditworthiness of the creditor." the creditor."
2. Briefly stated facts of the case are that during the year under stated facts of the case are that during the year under stated facts of the case are that during the year under consideration a sum of consideration a sum of ₹2,00,00,000/-was shown to have been was shown to have been received by the assessee company on 04/05/2011 from M/s ed by the assessee company on 04/05/2011 from M/s ed by the assessee company on 04/05/2011 from M/s Innovative Spinning and Knitting Private Limited. During scrutiny Innovative Spinning and Knitting Private Limited. During scrutiny Innovative Spinning and Knitting Private Limited. During scrutiny proceedings, the Assessing Officer Assessing Officer on verification of the bank on verification of the bank statement found this sum statement found this sum as received on 04/05/2011 4/05/2011 through RTGS and out of the same, the assessee , the assessee transferred ₹1,99,75,000/ 1,99,75,000/- to M/s Garandiose Jewelry Jewelry Private Limited on same date Private Limited on same date. The assessee however submitted however submitted that in books of account the credit of ₹1,40,00,000/- was transferred and recorded against was transferred and recorded against to M/s Aqua was transferred and recorded against Glitters marketing Private Limited ( Private Limited (i.e. associate concern of M/s i.e. associate concern of M/s Innovative Spinning ng and Knitting Private Limited Private Limited), which was M/s Shreeji Multitrade Pvt. Ltd. M/s Shreeji Multitrade Pvt. Ltd. 3 ITA NO. 1530/M/2017 further transferred to M/s Mumbai Gems and diamonds Private to M/s Mumbai Gems and diamonds Private to M/s Mumbai Gems and diamonds Private Limited (i.e. an associate concern o Limited (i.e. an associate concern of the assessee). For verification of . For verification of the parties, the Assessing Officer Assessing Officer issued notice under section 133(6) issued notice under section 133(6) of the Income-Tax Act, 1961 (in short ‘the Act’) Act, 1961 (in short ‘the Act’), however those , however those notices returned back returned back by the postal authority with the remark “not by the postal authority with the remark “not available”. The Assessing Officer Assessing Officer vide letter dated 05/03/2015 asked 05/03/2015 asked the assessee to produce the principal officer of the M/s Innovative the assessee to produce the principal officer of the M/s Innovative the assessee to produce the principal officer of the M/s Innovative Spinning and Knitting Private Limited, however the assessee failed Spinning and Knitting Private Limited, however the assessee failed Spinning and Knitting Private Limited, however the assessee failed to produce the same. In view of the to produce the same. In view of the Assessing Officer Assessing Officer, the identity & creditworthiness of the parties who provided some of s of the parties who provided some of ₹2.00 crores s of the parties who provided some of to the assessee could not be established and genuineness of the to the assessee could not be established and genuineness of the to the assessee could not be established and genuineness of the transaction also could not be proved and therefore he added the transaction also could not be proved and therefore he added the transaction also could not be proved and therefore he added the sum of ₹2.00 crores as unexplained cash credit due to failure on the crores as unexplained cash credit due to failure on the crores as unexplained cash credit due to failure on the part of the assessee in discharging his the assessee in discharging his onus in terms of section 68 of in terms of section 68 of the Act, relying on the decision of the Hon’ble Punjab and Haryana relying on the decision of the Hon’ble Punjab and Haryana relying on the decision of the Hon’ble Punjab and Haryana
M/s Shreeji Multitrade Pvt. Ltd. M/s Shreeji Multitrade Pvt. Ltd. 4 ITA NO. 1530/M/2017 High Court in the case of High Court in the case of Blowell Auto P Ltd Vs CIT reported in Blowell Auto P Ltd Vs CIT reported in 219 ITR 185.
On further appeal, the assessee submitted before the Ld. On further appeal, the assessee submitted On further appeal, the assessee submitted CIT(A) that director of M/s Innovative spinning and knitting Private CIT(A) that director of M/s Innovative spinning and knitting Private CIT(A) that director of M/s Innovative spinning and knitting Private Limited Sh Pushpesh Kumar Pushpesh Kumar Baid was absconding as per the was absconding as per the newspapers and therefore he could not be produced. The Ld. CIT(A) newspapers and therefore he could not be produced. The Ld. CIT(A) newspapers and therefore he could not be produced. The Ld. CIT(A) deleted the addition observing as under: deleted the addition observing as under:
“4.2. I have carefully considered the facts of the case and the submissions have carefully considered the facts of the case and the submissions have carefully considered the facts of the case and the submissions of the Id.AR. I have also gone through the decisions relied on by the AO Id.AR. I have also gone through the decisions relied on by the AO Id.AR. I have also gone through the decisions relied on by the AO and the ld.AR. As and the ld.AR. As seen from the facts of the case an amount of Rs. 1.40 seen from the facts of the case an amount of Rs. 1.40 crores was shown as advance crores was shown as advance against goods under trade payable in the nder trade payable in the balance sheet entry under Current balance sheet entry under Current Liabilities (outstanding amount at Liabilities (outstanding amount at the year-end). Thus, there is no doubt about this end). Thus, there is no doubt about this transaction and credit transaction and credit to be given to M/s Mumbai Gems and Diamonds P Ltd as per to be given to M/s Mumbai Gems and Diamonds P Ltd as per to be given to M/s Mumbai Gems and Diamonds P Ltd as per internal directions and in view directions and in view of the fact that certain sales were also made by of the fact that certain sales were also made by M/s Mumbai Gems and Diamonds P Ltd to M/s Aqua Glitters Marketing Mumbai Gems and Diamonds P Ltd to M/s Aqua Glitters Marketing Mumbai Gems and Diamonds P Ltd to M/s Aqua Glitters Marketing P Ltd. With regard to Rs. 60 lakhs the amount was adjusted in the regard to Rs. 60 lakhs the amount was adjusted in the regard to Rs. 60 lakhs the amount was adjusted in the accounts of M/s Baid accounts of M/s Baid Electronics Distribution P Ltd as journal entry Electronics Distribution P Ltd as journal entry against payment of Rs. 80 lakhs on st payment of Rs. 80 lakhs on 6/6/2011 as seen from the ledger 6/6/2011 as seen from the ledger copy of M/s Baid Electronics Distribution P Ltd copy of M/s Baid Electronics Distribution P Ltd found in the books of found in the books of assessee company. Therefore credit for this amount also to be assessee company. Therefore credit for this amount also to be assessee company. Therefore credit for this amount also to be given. Since these transfer of credits have taken place with Since these transfer of credits have taken place with the directions of the directions of M/s Shreeji Multitrade Pvt. Ltd. M/s Shreeji Multitrade Pvt. Ltd. 5 ITA NO. 1530/M/2017 M/s Innovative Spinning and Knitting P Ltd. credit for Rs.2 cores to be Innovative Spinning and Knitting P Ltd. credit for Rs.2 cores to be Innovative Spinning and Knitting P Ltd. credit for Rs.2 cores to be given in the hands of M/s Innovative Spinning and Knitting P Ltd. hands of M/s Innovative Spinning and Knitting P Ltd. hands of M/s Innovative Spinning and Knitting P Ltd. With regard to the AO's reservation that the appellant was not having With regard to the AO's reservation that the appellant was not having With regard to the AO's reservation that the appellant was not having sufficient funds to make such sufficient funds to make such payments, I'm in full agreement with the payments, I'm in full agreement with the Id.AR that balance in the bank account is not required since the balance in the bank account is not required since the balance in the bank account is not required since the book entry as per internal directions.” adjustment is only through adjustment is only through book entry as per internal directions.
Before as the Ld. counsel Ld. counsel of the assessee has filed a paper book of the assessee has filed a paper book containing pages 1to 107 which s 1to 107 which interalia include newspaper reports include newspaper reports on Pushpesh Kumar Baid, i.e. director of M/ Kumar Baid, i.e. director of M/s Innovative Spinning Innovative Spinning and Knitting Private Limited etc. Private Limited etc. The Ld. counsel of the assessee submitted that all the documents in support of nature and source of submitted that all the documents in support of nature and source of submitted that all the documents in support of nature and source of the transaction has already been submitted and the credit is by way the transaction has already been submitted and the credit is by way the transaction has already been submitted and the credit is by way of a bank transactions and therefore, Ld. CIT(A) has correctly of a bank transactions and therefore, Ld. CIT(A) has correctly of a bank transactions and therefore, Ld. CIT(A) has correctly deleted the addition. deleted the addition.
On the contrary, the y, the Ld. DR submitted that it was not verifiable DR submitted that it was not verifiable as to the entity from the payment of as to the entity from the payment of ₹2.00 crores was received in the crores was received in the bank account of the assessee. He submitted that the director of M/s bank account of the assessee. He submitted that the director of M/s bank account of the assessee. He submitted that the director of M/s Innovative Spinning Innovative Spinning and Knitting Private Limited was not even Private Limited was not even
M/s Shreeji Multitrade Pvt. Ltd. M/s Shreeji Multitrade Pvt. Ltd. 6 ITA NO. 1530/M/2017 produced during the ced during the appellate proceeding also nor any audited proceeding also nor any audited accounts or income tax return et accounts or income tax return etc. of said concern have been of said concern have been filed before the lower authorities. authorities. Therefore, the Ld. CIT(A) is not Ld. CIT(A) is not justified in deleting the addition. justified in deleting the addition.
We have heard rival submissio We have heard rival submission of the parties on the issue in n of the parties on the issue in dispute and perused the relevant material on record. The assessee dispute and perused the relevant material on record. The assessee dispute and perused the relevant material on record. The assessee in its books of accounts has shown receipt of in its books of accounts has shown receipt of ₹2.00 crores from M crores from M/s Innovative Spinning Innovative Spinning and Knitting Private Limited. Further the Private Limited. Further the assessee has shown this assessee has shown this amount as transferred in the name of s transferred in the name of another two entities. All these three entities were not found at the another two entities. All these three entities were not found at the another two entities. All these three entities were not found at the addresses provided by the assessee addresses provided by the assessee, during verification by the during verification by the Assessing Officer invoking section 133(6) of the invoking section 133(6) of the Act. On being asked, . On being asked, the assessee also failed to produce the director of M/s innovative failed to produce the director of M/s innovative failed to produce the director of M/s innovative spinning and knitting Private Limited. Even during spinning and knitting Private Limited. Even during spinning and knitting Private Limited. Even during appellate proceedings, the assessee failed to produce him before the proceedings, the assessee failed to produce him before the proceedings, the assessee failed to produce him before the lower authorities. In our opinion, by way of merely authorities. In our opinion, by way of merely stating that said person that said person
M/s Shreeji Multitrade Pvt. Ltd. M/s Shreeji Multitrade Pvt. Ltd. 7 ITA NO. 1530/M/2017 was absconding and therefore nding and therefore he could not be produced before the he could not be produced before the Assessing Officer is not sufficient to discharge is not sufficient to discharge onus under section 68 under section 68 of the Act. It is the onus onus on the assessee to explain the identity and on the assessee to explain the identity and creditworthiness of the person from whom credit is shown t creditworthiness of the person from whom credit is shown t creditworthiness of the person from whom credit is shown to have been received and also to establish genuineness of the transaction. been received and also to establish genuineness of the transaction. been received and also to establish genuineness of the transaction. In the facts and circumstances of the case, the assessee has failed to circumstances of the case, the assessee has failed to circumstances of the case, the assessee has failed to substantiate with evidences to explain all the three ingredients of substantiate with evidences to explain all the three ingredients of substantiate with evidences to explain all the three ingredients of section 68 of the Act Act, therefore the Ld. CIT(A) is not justified in IT(A) is not justified in deleting the addition. Accordingly deleting the addition. Accordingly, we set aside the order of the Ld. we set aside the order of the Ld. CIT(A) on the issue in dispute and uphold the order of the CIT(A) on the issue in dispute and uphold the order of the CIT(A) on the issue in dispute and uphold the order of the Ld. Assessing Officer. The ground of the appeal of the . The ground of the appeal of the Revenue is . The ground of the appeal of the accordingly allowed. accordingly allowed.
In the result, the appeal of the In the result, the appeal of the Revenue is allowed. allowed.