SHAILESH J JOGANI,MUMBAI vs. DCIT CEN CIR 5(3), MUMBAI

1) The Ld. Commissioner of Income Tax (Appeals) erred in sustaining the addition by considering the unsecured loan as bogus amounting to Rs.70,00,000/- on the basis of information received from investigation department and relying on the statements of Mr. Rajendra Jain, Shri Sanjay Chaudhary and Dharmichand Jain given by him during the search. Hence, the same deserves to be deleted.

Briefly stated facts necessary for adjudication of the controversy at hand are : assessee is an individual tax payee earning income from salary, business, capital gains and other sources. On the basis of search and seizure operation conducted on 05.05.2014 by the investigation wing in case of assessee, the case of the assessee was reopened under section 147 & 148 of the Income Tax Act (for short ‘the Act’). The Assessing Officer (AO) made addition of Rs.70,00,000/- by treating the loan taken by the assessee as bogus on the basis of information received from the investigation wing by relying upon the statements of Shri Rajendra Jain, Shri Sanjay Chaudhary and Dharmichand Jain recorded during the search operation. Statement of assessee was also recorded under could not substantiate the genuineness of the unsecured loans taken Ltd., Kangan Jewels Pvt. Ltd. and Maniprabhat Impex Pvt. Ltd. and; that he had taken these unsecured loan entries in lieu of cash.

Assessee carried the matter before the Ld. CIT(A) by way of filing the appeal who has confirmed the addition by dismissing the same. Feeling aggrieved from the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing the present appeal.

We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.

At the very outset it is brought to our notice by the Ld. A.R. for the assessee that the entire addition has been made on the basis Dharmichand Jain recorded under section 132(4) as well as statement of assessee recorded under section 132(4) of the Act, however, the assessee had retracted his statement during assessment proceedings which has not been considered by the AO and brought on record the letter supported with an affidavit letter dated 17.02.2016 issued to the AO containing the factum of retraction of his earlier statement recorded during search proceedings under section 143 of the Act.

When we peruse the impugned order passed by the Ld. CIT(A), particularly para 4.2 it has also come on record that despite availing many opportunities assessee has not brought on record necessary documents. Even the assessment order shows that the entire addition has been made on the basis of statement of assessee as well as statements of Shri Rajendra Jain & ors. under section 132(4) of the Act, but retracted statement of assessee has not been taken into consideration. This factual position has not been controverted by Ld. D.R. for the Revenue.

In these circumstances, we are of the considered view that since retraction statement made by the assessee during search/assessment proceedings, has not been taken into afresh by the AO to decide the controversy once for all.

Resultantly, impugned order passed by the Ld. CIT(A) is set aside, without expressing any opinion on merit, hence case is remitted back to the AO to decide afresh after taking into consideration the retraction statement made by the assessee after providing opportunity of bearing heard to the assessee. Appeal of the assessee is allowed for statistical purposes.