SUNIL KUMAR TIBREWAL,MUMBAI vs. DCIT-4(3)(1), MUMBAI

The present three Appeals have been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals) - 2 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 14.08.18 for 2 5882 & 5883/Mum/2018 Sunil Kumar Tibrewal, Assessment Year (in short AY) 2010-11, 2011-12 & 2013-14 respectively.

All the three appeals are heard together and all the facts in these appeals are similar, for the sake of convenience, it is disposed of by this common order. To dispose of these appeals, we have taken facts from AY 2010-11.

The brief facts of the case are that assessee filed his return of income for assessment year 2010 – 11 declaring total income at Rs. 8,98,353/- on 31.08.10. Subsequently, AO received information from DGIT(Inv), Mumbai that Shri Pravin Kumar Jain is one of the leading entry providers operating in Mumbai indulging in providing accommodation entries like bogus purchase, sales, unsecured loans, share capital, etc. Thereafter, a search was carried out and it was found that Shri Pravin Kumar Jain involved in various accommodation entries. Based on the information, the assessments of the assessee were reopened u/s 147 of the Act by issuing notice u/s 148 duly served on the assessee. Accordingly, notice u/s 143(2) and 142(1) were issued and served on the assessee. Ld. AR of the assessee submitted that relevant information was filed as called for by the AO. During 3 5882 & 5883/Mum/2018 Sunil Kumar Tibrewal, the course of assessment, AO noticed that assessee has received unsecured loans of Rs. 8 lakhs from the company M/s Ryan International, which is the concern controlled by Shri Pravin Kumar Jain. In this regard, Assessee has submitted the relevant documents relating to these transactions, which were submitted before AO and submitted that these transactions were genuine and the loan was also repaid in the same assessment year. As far as balance outstanding is concerned, assessee has already cleared the unsecure loan before end of this year and balance outstanding is NIL and all the transactions were made through the bank only. Since this transaction was transacted to a concern in which Shri Pravin Kumar Jain is involved, AO has not convinced with the submission of the assessee and accordingly, addition was made u/s 68 of the Act.

Aggrieved with the above order, assessee preferred an appeal before Ld. CIT(A) and Ld. CIT(A) also confirmed the addition based on the reasons given by AO and the findings of DGIT (Inv) in the case of Shri Pravin Kumar Jain and therefore, he sustained the addition made by AO.

Before us, Ld. AR submitted that assessee has taken unsecure loan from the company M/s Ryan International and repaid the same within the assessment year and she brought to our notice the bank statement as per which assessee has received unsecured loan on 25.07.09 through cheque No. 448404 and repaid the same on 25.03.10. Further, she brought to our notice the confirmation of M/s Ryan International and the copy of ledger of the assessee in the books of accounts and bank statement, confirming the above transaction, which was made through bank only. All these informations are part of paper book filed by the assessee which are also submitted before Ld. CIT(A). She submitted that Coordinate bench of ITAT has held in favour of the assessee in various cases in which Shri Pravin Kumar Jain has involved. In this regard, she relied upon the following case law:-

On the other hand learned DR submitted that Shri Pravin Kumar Jain is a hawala operator and he indulged in various transactions involving hawala as well as accommodation entry and assessee has not proved the genuinety of the transactions and he relied upon the orders passed by the revenue authorities.

Considering the rival submissions and material placed on record, we notice, assessee has taken unsecured loan from the 6 5882 & 5883/Mum/2018 Sunil Kumar Tibrewal, Company M/s Ryan International through bank and the same was settled by the assessee within the same assessment year again through the bank only. Assessee has filed before tax authorities, the confirmation of M/s Ryan International, ledger copy in the books of M/s Ryan International and bank statement of assessee as well as M/s Ryan International. These documents indicated that assessee has received loans from M/s Ryan International and settled the same before end of the year. The AO has only considered the accounting entry in the books of accounts and considered the same as accommodation entry without considering the receipt of payment through bank and settlement of the loan by the assessee through bank. Just because this company controlled by Shri Pravin Kumar Jain, all the transactions cannot be termed as accommodation entry unless it is proved. But, in the given case, assessee has taken unsecured loan through bank and repaid the same within the same year. By taking loan and repaying the same through bank, what is the benefit assessee would have got, is there any revenue impact in this transaction and how it will impact the tax collection, nothing was brought on record. Further, AO has made addition only

Further, in the similar case, Coordinate Bench of ITAT in & 4692/Mum/2015 has held as under:-

In the result, the appeals filed by the Revenue are dismissed. 10. Therefore, respectfully following the above decision, we are inclined to accept the contentions of Ld. AR and accordingly, grounds raised by the assesse are allowed.

Since, all the facts are similar in next two assessment years i.e. AY 2011-12 and 2013-14, accordingly these appeals are also allowed.