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Facts
The assessee filed an appeal challenging the CIT(A)'s order confirming the AO's action of reopening the case and making additions on account of alleged cash loans. The additions were based on statements made during a search and seizure operation against M/s Evergreen Enterprises, where it was alleged that the assessee had received cash loans. However, the primary witness later retracted his statement, and the assessee consistently denied receiving any such loans.
Held
The Tribunal noted that the primary evidence was a retracted statement and that the assessee's name appeared only as a contact person, not as a recipient. The loans were allegedly received by group entities, not the assessee directly. Furthermore, the seized material was not properly provided, and the AO failed to examine the recipient entities. Relying on previous decisions in similar cases, the Tribunal found no substantial evidence to sustain the additions in the assessee's hands.
Key Issues
Whether the additions made by the AO and confirmed by the CIT(A) on account of alleged cash loans are justified in the absence of corroborative evidence and in light of a retracted statement.
Sections Cited
148, 143(3), 147, 69A, 132(4), 131(1), 271D, 269SS
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI BIJAYANANDA PRUSETH
ORDER Per: SHRI. SANDEEP GOSAIN, J.M.: The present appeal has been filed by the assessee challenging the impugned order dt. 30.06.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2012-13. The assessee has raised the following rolls of appeal.
On the facts and circumstances of the case and in law, the Ld. CIT(A) grossly erred in confirming the action of the AO of reopening the case under section 148 of the IT Act, 1961.
2. On the facts and circumstances of the case and in law, the Ld. CIT(A) grossly erred in confirming the action of the AO, the reassessment order passed U/S 143 (3) R.W.S 147 which is Vikas Motiram Desai, Mumbai. against the principles of natural justice and therefore void ab initio.
3. On the facts and circumstances of the case and in law, the Ld. CIT(A) grossly erred in confirming an addition of 52 lakhs, being 50 lakhs on account of alleged cash loans to Evergreen enterprise and 2 lakhs on account of interest on the aforesaid alleged cash loans. I, the appellant Crave leave to add, alter, amend, amplify or delete any of the above mentioned Ground of Appeal on or before or at the Time of hearing.
2. First of all we shall take up ground No. 3 for adjudication, as this ground raised by the assessee relates to challenging the order of Ld. CIT(A) in confirming the additions made by the AO u/s 69A of the Act.
We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records, we noticed that a search an survey action u/s 132 of the Act was carried out in the case of M/s. Evergreen Enterprises. During the search statement of its partners and employees were recorded u/s 132(4) of the Act which disclosed the activities of money lending and borrowing in unaccounted cash. Certain ledgers were also seized which contains the names of lenders / borrowers in codes, it was found that assessee is one of the individual who had lend cash loan to M/s. Evergreen Enterprises whereas on the contrary assessee
4. We noticed that Ld. AR has placed on record and relied upon the decision of Coordinate bench of ITAT, wherein under the identical circumstances and upon the same search, additions were made in certain other cases and all those additions under the identical circumstances were deleted and upheld by the Coordinate Bench of ITAT in the following cases:
DCIT Vs. Vipul Dilip Shah in the operative portion of the said order is reproduced herein below:
We have heard rival submissions of the parties on the issue-in- dispute and perused the relevant material on record. As far as facts mentioned by the Ld. CIT(A) in the impugned order, have not been disputed by the Ld. DR. The Ld. CIT(A) after details finding has deleted the additions observing as under : “6.3 APPELLATE DECISION:- I have considered the facts of the case, submissions and contentions of the assessee as also the order of the AO. Since the assessee had raised various objections, during the course of appellate proceedings, in respect of additions of Rs.3.92 crs. made as unexplained cash loans, the AO was requested to clarify his position vide this office letter dated 10.02.2021, as to why the additions were made in the case of Shri Vipul Shah, when relevant cash loans taken by M/s. Green Bird Enterprises and M/s. P.D, Construction. The AO was also asked to explain that the discrepancy in the loan amount as Vikas Motiram Desai, Mumbai. per Annexure A-2 (at Rs.2.23 cr.) and the information received from Investigation Wing (at Rs. 3.92 cr.). The A0 was also asked to furnish copier of the relevant seized documents on the basis of which additions were made in the hands of the assesse, along with relevant statements, recorded at the time of search. For clarity the relevant portion of letter dated 10.02.2021 is reproduced as under: "2. In the above mentioned case, addition of Rs. 3.92 crore was made on the basis of evidence found during the course of search action on M/s. Evergreen Enterprises group cases, contracted and a managed by Shri Nilesh Bharani. During the course of search action, diary was seized as per Annexure A-2 containing name of the borrowers and amount of loan in coded form. It appears from the statement of Shri Nilesh Bharani recorded on oath wherein he mentioned how figures are mentioned in coded form and were to be to multiplied by 1000 to get real figures. He also mentioned the name of contact person connected to the entities in the said Annexure A-2 at the time of recording of his statement and amount of Rs. 2.23 Crores was shown against the name of M/s. Greenbird and contact person was Shri Vipul Bhai or Vipul Shah.
3. It is however, not understandable as to how the addition was made in the name of Shri Vipul Shah when the borrower was M/s. Greenbird. It appears that, assessee repeatedly requested you to furnish the copies of relevant seized documents but you failed to provide the same to the assessee.
4. Accordingly, You are requested to send me copies of relevant seized record on the basis of which the addition of Rs. 3.92 crores was made as against the evidence of Rs. 2.23 crores found during the search action, along with your comments about makinq addition in the hands of Shri Vipul Shah.
5. A report in the matter may please be submitted by 16.02.2021. 6.4 The Id. A0 vide letter dated 16.02.2021 submitted his report along with copies of letters received from Investigation Vikas Motiram Desai, Mumbai. Wing and statement of Shri Nilesh Bharani. However, the A failed to furnish copies of any seized records, in this regard. The AO also did no furnish any comments, as to why the action was raken in the hands of Vipul Shah and not in the hands of recipient entities. The relevant portion of the AO's report is reproduced here for the sake clarity. "2. In this case an information shared by the DDIT(In.) Unit- 5(4), Mumbai in the case of Shri vipul Dilipbhai Shah having PAN AAHIPS52531 vide letter dated 23.03.2018. (copy of the both letter is enclosed for your goodself ready reference.) 3. During the course of search action u/s. 132 of the Act, and statement recorded on oath u/s. 132(4) of the Act, of Mr. Nilesh Bharani, one of the partner of M/s. Evergreen Enterprises, where Shri Nilesh Bharani admitted that he had raised loan in cash to several individuals and business concerns.
4. One information have below mention details pertain to Vipul D Shah as under:
Hence, it is seen that Shri Vipul D Shah has borrowed cash loan of Rs. 50.00.000/- in the F.Y. 2010-11. 5. Second information have the below mention details pertain to Vipul D. Shah as under:-
Hence, it is seen that Shri Vipul D Shah has borrowed cash loan of Rs.3,42,00,000/- in the F.Y. 2010-11.
Therefore, the addition of Rs. 3,92,00,000/- (Rs. 50,00,000/- + Rs. 3,42,00,000/-) was made on the basis of two information shared by the office of DDIT Unit-5(4), Mumbai vide dated 23.03.2018. (copy of both information is annexed for your good self ready reference).
7. In response to point 4 of your good self letter dated 10.02.2021 this office have not received any seized material pertain to M/s. Evergreen Enterprises. However, the statement of Mr. Nilesh Bharani recorded on 11.10.2017 by the Investigation Wing is available with this office and same is annexed with this letter for your good self ready reference.
Further, copy of the cross examination statement u/s. 131(1) of the Act, 1961 held at this office on 26.12.2018 as requested by the assessee Vipul D Shah is also enclosed with this letter for your goodself ready reference" 6.5 A copy of the AO's report was made available to the assessee for further submissions/rejoinder. The assessee filed further submissions reiterating the earlier position that, there was no evidence against Vipul Shah for making the above additions. For clarity the relevant submission are reproduced as under: In respect of the above we humbly submit as follows:- 1) The said report fully substandate the submissions made earlier by your appellant before your Honors which is reproduced as follows:
Vikas Motiram Desai, Mumbai. a) There is no basis for makins addition of Rs. 3,92,00,000 in the hands of "our appellant Mr. Vimul D. Shah for A.X. 2011- 12 as the information pertains to N/s Greentird Constructions and M/s P.D. Constructions Farther there is no basis for these amounts as there is no seized materiai pertaining to M/s Evergreen Enterprises with the Learned A.O. The staid addition is made simply on the basis of letter received from DDIT Investigation) which is against the Law as held in the case of - Varshaben S Patel VITO (GUN) (HC) (2015) Firalat Chumilat Jain v. ITO (TIAT Mumbai) (2016) ITO v. Paresh Arvind Gandhi (TAT Mumbai) (2015) Khandehwal Construction v. CIT 227 TR 900 (Gau.) b) The learned Addl.CIT attached statement recoded at cross examination on 26/12/2018 in which he denied any such cash transactions. Further, Annexure A-2 and A-5 do not mention Rs.3,92,00,000/- or Rs.50.00.000/- or R$ 3,42,00,000/- It mentioned 22300 against M/s Greenbird. There is no mention of Mr. Vipul Shah in Annexure A-2. Further, Annexure A-5 mentions name of P.D. Construction and Mr. Vipul Shah without amount. c) The learned Addl.CIT attached the statement recorded U/s 131(1) of The Income Tax Act by the Learned A.O. on 26/12/2018 of Mr. Nilesh Bharani in which he has denied naming your appellant or any other party. He has mentioned that he has retracted his statement recorded on oath at the time of search on 11/10/2017 vide letter dated 14/10/2017 as the statement was given under pressure. He has stated that the answers were dictated by search team and these answers are not correct. He has stated that he has not done any cash transaction. Further, he has stated that many Annexures were prepared by search team and statement was not recorded in presence of witnesses. Further, the statement was signed at 5 am and he has signed without understanding as he was in very disturbed state of mind. He has stated that he has not received copy of all seized material
Vikas Motiram Desai, Mumbai. In view of the above, the statement qiven by Mr. Nilesh Bharani on 11/10/2017 cannot be relied upon to make addition of Rs.3,92,00,000/-in the hands of your appellant. 2.) In view of the above, your appellant submits that the Report dated 18/02/2021 of the Additional CIT, Central Range-2, Mumbai fully supports the submissions made earlier by your appellant before your Honors that there is no basis for making addition of R$.3,92,00,000/- in hands of your appellant and it be deleted." 6.6 APPELLATE DECISION:- I have considered the facts of the case and arguments of the assessee as also remand report of the AO. It appears that during the course of search and seizure action in the case of Shri Nilesh Bharani and M/s. Evergeen Enterprises certain details of unaccounted loan transactions with the Parinee group concerns (M/s. Green Bird and M/s. P.D. construction) were found and seized as per Annexure A-2. In the said Annexure, there was figures of 22,300/- written against the name of Green Bird at scrial no.127. Against this the name of contact person was written as Vipulbhai. His mobile no. was also mentioned in seized diary A-5. The figure of 22,300/- was interpreted in light of statement of Shri Nilesh Bharani by the Investigating Officer as Rs.2,23,00,000/. In this regard, a detailed statement of Shri Nilesh Bharani was recorded on oath as on 11.10.2017, wherein he had accepted that, he was engaged in giving cash loans to various persons as per Annexure A-2. Alongwith him, statements of his employees and associates Shri Ashwin Rathod, Shri Jagdish Ramani and Viva Rawate were also recorded, who had also stated that cash loans were being given by Bharani group to various persons, as mentioned in Annexure A-2. The relevant portion of the statement on oath of Shri Nilesh Bharani is reproduced as under for the sake of clarity:- "Q.19 Please explain the nature of business of M/s. Evergreen Enterprise. Ans: In Evergreen Enterprises we arrange private loans for several borrowers and get brokerage income. Usually, interest rate is 15% per annum of the principal amount but it
Vikas Motiram Desai, Mumbai. varies from party to party. Brokerage is usually charged at 0.6% per annum of the principal amount. Brokerage is earned by Evergreen Enterprises only when interest is paid by the borrower party to the lender party. Evergreen ears brokerage income only as the borrowing and Q.71 I am showing you one red colour borrower ledger book found and seized from the premises, 12, Sharda shadan, 7 S.G. Road, Dadar (E), Mumbai- 400014, and marked as annexure-A-2 containing pages marked from 1 540, please confirm. Ans. Sir, I confirm that said red colour borrower ledaer book (Rhata vahi) found and seized from the premises, 12, sharda shadan, 7S.G. Road, Dadar TE), Numbat 400014 and marked as annexure-A-I containing pages marked from 1 to 540. Q.72 Please comment about the content of the said red colour borrower ledger book (Khata vahi) (ound and seized from this premises as mentioned in question 71. Sir, the said book is maintained as borrower ledger account which reflects the borrower-wise loan details given to various borrowers. Sir, on the top of each ledger the name of the borrower along with rate of interest and total amount (in thousands of rupees) lent to the borrower is written. Below this details of all lenders and the amount (in thousands of rupees) lent by lender, code of lender and the date till which interest is paid is maintained. Q.73 Please tell me till when this borrower ledger book as mentioned above is updated till. ANS. Sir the borrower ledger book is updated will 05.10.2017. Q.74 Please stated the name of the persons/borrowers whose ledger accounts are maintained in this borrower ledger book which is found and seized as annexure-A-2 at this premises. Ans. Sir, I am providing a list of names of borrower parties, along with their contact details which is maintained in the Vikas Motiram Desai, Mumbai. above mentioned borrower ledger as Annexure-2 to this statement." 6.7 However, later Shri Nilesh Bharani retracted his statement vide letter dated 14.10.2017 just 3 days after the search action addressed to CIT(Inv.)-2, Mumbai, wherein he stated that the statement as on 11.10.2017 was given under coercion and pressurised mental state of mind. These facts have been mentioned by the AO in para 5.3 of the assessment order. 6.8 During the course of assessment proceedings, the assessee requested for ass examination of Shri Nilesh Bharani. The assessee, also requested for the copies of relevant seized material on the basis of which action was being taken I his case along-with copies of relevant statements, on which the AO was placing reliance. Prior to that the assessee requested for copies of reasons recorded for issue of notice u/s.148 of the Act, which were provided by the AO and the same are reproduced as under for the sake of clarity:- An information was received in this case from DDIT(n.) Unit- 5(4), Mumbai vide letter No. DDIT(n.) Unit-5(4)Sharing of information/2017. Is dated 23.03.2018 stating that evidences gathered during the course of search action at the premise of M/. Evergreen Enterprises in the form of documents seized and statements recorded on oath u/S. 132(4) of the Income Tax Act, 1961 of Mr. Nilesh Bharani, one of the partner of M/S. Evergreen Enterprises and othèr key employees of the concern, revealed that Shri Vipul Dilip Shah has entered into cash or unaccounted transactions from/through Nilesh Bharani/Evergreen Enterprises. As per information received total amount of cash or unaccounted transactions executed during the year under consideration was of Rs. 3,92,00,000/-.
3. Therefore, the AO has a reason to believe that income of Rs.3,92,00,000/- chargeable to tax has escaped assessment for A.Y. 2011-12 within the meaning of clause (c) of Explanation-2 of section 147 of the Income Tax Act, 1961. The income chargeable to tax has escaped assessment on account of failure of the assessee to disclose full and true material Vikas Motiram Desai, Mumbai. facts necessary for assessment of its income for the assessment year under consideration 6.9 Thereafter the assessee filed his objections to the reasons provided by the A vide letter dated 04.07.2018. The assessee filed his objections against the reopening of assessment vide letter dated 06.07.2018. The same were disposed off by the AO vide order dated 27.10.2018 and subsequently he took up the assessment proceedings. 6.10 As the assessee was insisting for cross examination of Nilesha Bharani the A summoned Shri Nilesh Bharani during the assessment proceedings and recorded his statement on oath on 26.12.2018. In the said statement of Shri Nilesh Bharani denied of giving loans to the ssessee group or to Vipulbhai and also stated that statement as on 11.10.2017 was given under pressure and contradicted statement as on 11.10.2017. The relevant portion of his statement is reproduced as under:- Q.3 Please confirm that this statement dated 11.10.2017 was recorded on oath and you were made aware of the consequence of giving false statement on the oath. Yes, I confirm the same. Q.4 Please comment on the contents of the statement. Ans. Answer of the several questions were given in the pressure states of mind. If you allow me I can state those questions. Q.5 Please go through the answer to the question no.2 of the statement recorded on 11.10.2017 which contradicts you answer to above question no.4. Ans. I got distressed after the answer I was giving to the search team that was not acceptable to them. Till then I was in stable state of mind.
Vikas Motiram Desai, Mumbai. Q.6 Please go through the question no. 17 in which you have replied that you had done loan transaction in cash in individual capacity. Ans. In fact I have not done any cash transaction but search team was satisfied with this answer and they pursued on this matter for very long period. Ultimately I was tired and succumbed to the pressure of search team and gave answer as dictated by search team. Q.7 Please go through the answer of the question no. 34 to 44 of the statement dated 11.10.2017, in which you have explained the contents of page no. 263 to 265 of lender ledger which was seized as per annexure A-1. In answer to the above question you have descrihed transactions with Jadhavji Company with specific discretion of the entries. Ans. As I have stated in the answer no. 4 & 6 above, I would like to elaborate. Answers to you question no. 17, 18 and 20 to 90 and also 93 to 99 was not written as per my wish. Search team dictated these answers. So, please understand that answer to these question are not correct. Q.8 Please confirm that the statement recorded on 11.10.2017 was recorded in front of witness 1 and witness 2 (who had also signed on content of every page of statement recorded on 11.10.2017). Ans. When statement was recorded witness were not present in the room. After the statement and many annexure were prepared first I signed on the paper. Subsequently, witness have signed on it. I emphasize the statement was not recorded in the front of the witness. They have merely signed the papers. Q.9 Please substantiate answer given by you to above question that statement was not recorded in presence of witness and you were not in a stable mind with any documentary evidence. Ans. I have no documentary evidence of this matter. Later after the search operation was over I explained whole matter to my tax consultant. Tax consultant was not allowed to be present during the process of search at my home and at my Vikas Motiram Desai, Mumbai. office even after mv request to call them. On advise of my tax consultant I have sent retraction letter addressed to the Commissioner of Income Tax (Inv.)-2, Scindhia House, Ballard estate Mumbai On 14.10.2017. I am handing over the photo copy of the letter to you. Q.10 Please confirm that I am giving this statement in stable state of mind without any pressure or coercion. Ans. I confirm that I am giving this statement in stable state of mind without any pressure or coercion. Q.11 Please confirm that you have stated in end of statement recorded on 11.10.2017 that whatever stated in the statement is true to the best of your knowledge and statement was recorded as per your says. You understood the content of the statement and signed. You also stated that the statement was made in sound state of health and mind. No coercion threat inducement or undue influence brought to bear on you for making that statement recorded on 11.10.2017. Ans. Sir, let me inform some fact. Search operation started at my home on 06.10.2017 and lasted till 11.10.2017. During this time search operation was also going on at my business premises. At home I was literally idle, whereas I am running the company who knows major work and process at my office was not taken to office until the afternoon of 11.10.2017. After reaching to office I came to know from my staff that they were not allowed to go home at first two night of search process. One of my staff person Jagdish Ramani who stays at Dombivali missed last train yet he was compelled to be present next morning at 9 a.m. Some stays at Dombivali missed last train yet he was compelled to be present next morning at 9 a.m. Some staff member were threatened by junior officers about dire consequences. My statement process started since 10 P.M As I have stated in the answer no. 7 of this statement was done at 5 A.M. As I have stated in the answer no. 7 of this statement I was in Very disturbed state of mind, I answered and sign all the papers without really understanding the contents it.
Vikas Motiram Desai, Mumbai. Q.12 Please provide/show any proof in support of answer to above question no.11 Ans. Although I have no proof in support of answer to question no. 11 whatever I have said is fact. Q.13 As You are in sound state of mind and not under any pressure coercion please answer im respect of question no . 34 to 100 of the statement recorded on 11. 10. 2017. Ans. Sir, please show me page no. 263 to 265 of the lender ledger of annexure-I as stated in the question no. 34 Q.14 Please confirm that you or any of your representative have received copy of all the seized material and statements. Ans. I or any of my representative have not received copy of all the seized material. Q.15. Have you appointed any representative in your search case. Ans. I have appointed C.A Vinod Kumar Bindal & Co. as my representative in the search case. Q.16 Please provide the address of the above representative as answered in Q. no.
Ans. 503, Dalamal Chamber, 29, New Marine Lines, Mumbai-20. Q.17 Please provide your appropriate date and time to inspect the seized material and explain the content related to Vipul D Shah considering that this case is limited by time which is going to get time barred on 31. 12. 2018. Ans. Tomorrow I.e. on 27. 12. 2018, I am going out of town and returning on o3. 01.2019 so, please keep any date between 04. 01.2019 and 09.01. 2019 to explain the content related to Vipul D. shah. 0.18 It is found from Central Circle - 4(1), Mumbai that you have received all the seized material so you are requested go through the content of seized material and provide answer to all the question asked in statement recorded on 11. 10.2017 and contents were name of Vipul D. Shah, P D Construction and Green Bird is Vikas Motiram Desai, Mumbai. mentioned in seized material. As you have stated that you are not in town before 03.01.2019 so you are requested to send answers in writing to queries mentioned above in this question on or before 28.12.2018 directly to the office of the DCIT-CC-2(3), Mumbai or you can mail on email id MUMBAI.DCIT.CEN2.3@IINCOMETAX.GOV.IN. Please confirm. Ans. Sir, right now my wife in hospital and tomorrow I am going out of town, it is really difficult to comply this matter within two days but I will try my level best to reply regarding the matter of Vipul D Shah and Group." 6.11 Subsequently, cross examination of Shri Milesh Bharani was done by Shri Vipul Shah , wherein loan given in cash by him to assessee group was confronted. However, Shri Nilesh Bharani denied of giving any loan to the present assesse or to his group concerns. Thereafter, specific transactions in the name of Greenbird of Rs.50 lacs and P.D. Constructions of Rs.3.42 crs were asked to him. However, once again Shri Nilesh Bharani denied of giving any loan to the present assessee or his group entities. For clarity, the relevant portion of cross examination is reproduced as under: - Q.1. You have stated in the statement qiven on oath before the Income Tax Authorities that you are in the business of giving/arranging loans. Is is correct, please confirm? (Asked by Vipul D. Shah) Ans. Yes, I am finance broker. Q.2 Have you given any loan in cash to me and/or to my group? (Asked by Vipul D. Shah) Ans. No. I have not given or taken any loan in cash to you and/or your group. (by Nilesh Bharani) Q.3 Is it correct? (Asked by Vipul D. Shah) Ams As staled in Answer 2 of the question 2, 1 have not given any cast loan ho you and or your group entites namely Green Bird/P.D. Constructions (by Nilesh Bharani)" 6.12 Therefore, Nilesh Bharani denied of giving any loan to Vipul Shah, the present assessee or to M/S. Greenbird or m/S. P.D. Construction. The cross examination of Nilesh Bharani ended at the above note. 6.13 I have considered the entire gämut of evidences and arguments made by the assessee as also by the AO and observations of the A and his Remand report. From the perusal of the letter dated 23.03.2018 of the DDIT Inv.) Mumbai, it is quite clear that recipient of the loans were M/s. Greenbird (Rs.50 lacs) and M/s. P.D. Constructions (R$.3.42 crs.) and not Shri Vipul Shah. Shri Vipul Shah's name was appearing only as contact person and for the simple reason that he was to be a partner/director of the said concerns and both Greenbird and P.D. Constructions were his group entities. Therefore, it is not understandable as to why the Id. AO chose to re-open the assessment and to make additions in the case of Vipul Shah and not in the case of M/s. Greenbird Vikas Motiram Desai, Mumbai. Pvt. Ltd. (PAN- AABCG5483D) and P.D. Constructions Pvt.Ltd. (PAN- AAECP5447M). It is gathered that, both these entities are being assessed to tax with the same AO and therefore, there is no reason as to why the AO could not have initiated relevant proceedings in the hands of these entities. However, as far as the case of Vipul Shah is concerned, in my considered view he could not be held liable for unsecured loan transactions done by his group entities. In fact neither the Investigating Officer nor the AO recorded the statement of Vipul Shah in this regard, to ascertain his version of things. It appears that Sri Nilesh Bharani had nowhere stated in his statement on oath that he had given loan to Shri Vipul Shah. In fact, the seized record of Annexure A-1 and A-2 indicate that loan was taken by M/s. Greenbird Pvt. Ltd. and Shri Vipulbhai was only mentioned as contact person and not as recipient. It appears that some further information of similar nature was gathered in the case of M/s. P.D. Construction Pvt. Ltd. another entity of the assessee group. Needless, to say that both M/s. Greenbird Pvt. Ltd. and M/s. P.D. Construction Pvt. Ltd. are assessed with the same AO. So, it is not clear as to why the AO chose to proceed against the present assessee and not against the recipient entities. In fact even whatever Nilesh Bharani stated at the time of search, as is reproduced in the foregoing paras was retracted by him three days later and further during the assessment proceedings also he had denied of giving any loan to Vipul Shah or his group entities, when his statement was recorded. 6.14 It is further relevant to mention over here that seized records in this case are not readily available either with the present AO or the AO of Shri Nilesh Bharani/Evergreen, where these evidence were said to have been seized. In fact the A0 has communicated in his Remand report that he had not received any seized material pertaining to M/s. Evergreen Enterprises, on the basis of which these additions were proposed. It is relevant to mention over here that the assessee time and again kept requesting the AO for copies of relevant seized material, but he failed to do so and in fact directed the assessee to appear before the AO of Shri Nilesh Bharani/Evergreen Enterprise assessed in Central Range-4, Mumbai. However, from there also, the assessee failed to get Vikas Motiram Desai, Mumbai. copies of the relevant seized material. Under these circumstances, the present AO of Shri Nilesh Bharani, in Central Range-4, DCIT-4(1) Mumbai, was telephonically requested to send across the copies of relevant evidence, but he failed to do so and therefore, it is not possible for me to verify as to how exactly the relevant entries were appearing in the seized records. Since, Shri Vipul Shah's name is appearing only as a contact person and not as recipient person, even as per letter of DDIT(Inv.), in my considered view, no additions could have been made in his hands. The same is therefore, directed to be deleted. 16.14 However, the AO is advised to examine these transactions in the hands of M/s. P.D. Constructions and M/s. Greenbird Pvt. Ltd., in accordance with the law and take suitable action, after considering all relevant material.” 4.1 We find that the Ld. CIT(A) has deleted the addition mainly in view of the following reasons : (i) The Assessing Officer himself has recorded in the reasons to belief that cash loan was received by the two firms M/s Green Bird Pvt. Ltd. and P.D. Construction and name of the assessee was appearing in which contact person. Evidently if the loan has been received by the partnership firm/company wherein the assessee is a partner or director, the said loan cannot be added in the hands of the assessee. The Ld. CIT(A) has rightly advised the Assessing Officer to consider examination of the transactions in the hands of M/s P.D. Construction and M/s Green Bird Pvt. Ltd for any suitable action. (ii) The original statement of Shri Nilesh Bharani were never provided to the assessee despite repeated request for inspection of the original statement, wherein he stated of provided cash loan to two concerns namely P.D. Construction and M/d Green Bird Pvt. Ltd. (iii) Shri Nilesh Bharani even retracted his statement made u/s 132(4) of providing cash loan to two concerns. (iv) During the cross-examination by the assessee Shri Nilesh Bharani denied of giving any cash loan to the assessee or his concerns. (v) When the issue-in-dispute is in respect of the receipt of loan and source of which is already available on record, it is not understandable how Vikas Motiram Desai, Mumbai. the same become undisclosed income in the hands of the assessee, as source of the same, is already within the knowledge of the Income Tax Department. 4.2 In view of the above discussion, we do not find any error in the order of the Ld. CIT(A) on the issue-in-dispute and accordingly, we uphold the same. The grounds raised
by the Revenue are accordingly dismissed.
5. Now we take up the appeal of the Revenue in ITA No. 1277/Mum/2021. The grounds raised by the Revenue are reproduced as under:
1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A), erred in deleting the addition of Rs.3,92,00,000/- made in the hand of Mr. Vipul D. Shah u/s 271D of the Income Tax Act, 1961 without appreciating the fact that assessee did not discharge its duty to explain the fact that Rs.3,92,00,000/- were duly accounted and offered for tax.
6. We find that the Assessing Officer has on the one hand added cash loan alleged to receipt by the assessee as unexplained cash credit of the assessee as its income and on the other hand, also levied penalty u/s 271D of the Act in contravention of provision of section 269SS of the Act i.e. receipt of the loan otherwise then by account payee cheque. The Ld. CIT(A) has deleted the penalty. In view of the fact that the addition u/s 69A for receipt of cash loan itself was deleted and therefore said penalty u/s 271D for receiving cash loan in violation of provision of section 269SS cannot be survive.
7. We concur with the finding of the Ld. CIT(A). As we have already upheld the order of the Ld. CIT(A) in deleting the addition in quantum proceedings and therefore, we do not find any error in the order of the Ld. CIT(A) on the issue-in- dispute and accordingly we uphold the same. The grounds of the appeal of the Revenue are accordingly dismissed.
8. As far as cross-objection of the assessee is concerned same are rendered academic in nature and therefore accordingly dismissed as infructuous.
9. In the result, the appeals of the Revenue as well as cross-objection of the assessee are dismissed. ACIT Vs. Abbas Ismail Contractor in the operative portion of the said order is reproduced herein below:
Vikas Motiram Desai, Mumbai.
From the above grounds, it is observed that the addition is made under section 69A of the Income Tax Act. As this is the departmental appeal, the Ld. DR initiated the case and argued that since Mr. Nilesh Bharani and the employees of M/s. Evergreen Enterprises have stated on oath that various persons including the appellant availed cash loan from Mr. Nilesh Bharani and hence the addition under section 69A of the Act should be upheld on account of cash loan taken by the appellant. The Ld. DR has heavily relied on the assessment order and grounds of appeal
mentioned in this Departmental appeal.
3. The Ld. AR of the appellant has taken the Bench to the provisions of section 69A of the Act which is reproduced below :- "Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year."
4. The Ld. AR has argued that section 69A of the Act is not applicable to him for the following reasons :- a) The Department is making an allegation that the appellant took cash loans from Mr. Nilesh Bharani and others. If it is a loan, the same cannot be added under section 69A of the Act because it is explained source. b) If it is a cash loan, as alleged by the Revenue, the addition cannot be made under section 69A of the Act. The relevant sections for violation of section 269SS of the Act is mentioned under section 271D of the Act which is a penalty section. The Revenue never raised these violations. c) The parties who gave the statements have already retracted and hence there is no validity to these statements.
Vikas Motiram Desai, Mumbai. d) In similar circumstances, in earlier assessment years 2012- 13 and 2013-14, the additions made by the Ld. AO were already deleted by the ITAT vide orders in and ITA No. 5435/Mum/2024. e) In similar circumstances, the ITAT Mumbai has deleted the additions in the cases of other assessees who were alleged to have taken loans.
Mayurbhai Kanjan Shah. f) The Ld. AR of the appellant filed written submissions in which several other cases were cited for the proposition that merely based on the statements of other parties, additions cannot be made without corroborate evidences.
5. The Bench has given thoughtful consideration to the arguments of both parties and decided to delete the addition made by the Ld. AO for the following reasons:- a) The Ld. AO made the addition under section 69A of the Act and this section is not applicable in the aforesaid circumstances because there is no unexplained money, even if the statements of Nilesh Bharani are correct. The money is explained, even as per Revenue because it was mentioned that appellant took loans. b) The appellant had been denying that they have not taken any cash loans from the beginning. c) The Ld. CIT(A) has adjudicated that no value can be attached to the retracted statements based on which additions were made. e) In the similar circumstances, the additions were made in the hands of appellant for earlier assessment years as mentioned in this order and the same were deleted by the Coordinate Benches of Mumbai. f) Neither the creditor nor the debtor has accepted these transactions and except the retracted statement of Mr. Nilesh Bharani, there is no corroborate material with the Department.
7. Following the judicial discipline, the addition made in this year also is deleted.
Vikas Motiram Desai, Mumbai. Mayur Kanjibhai Shah Vs. ITO, in the operative portion of the said order is reproduced herein below: We observe that the Assessing Officer made the additions mainly on the ground that Shri Nilesh Bharani in his statement recorded under section 132(4) of the Act has admitted that he was in the business of lending / borrowing money in cash (unaccounted and undisclosed business). Further, in the course of scarch, a diary has been seized wherein inter-alia following entries have been recorded and the Assessee's name is also appearing in the same diary in coded word.) For clarity ready reference, we are again reproducing the entries relied upon by the Assessing Officer:- "i) Code 'E/11/N'- ii) Name as per Ledger 'NENSIBHI ELLA' iii. Coded Amount (in '000) - 32500 iv) Contact person 'NANCYBHAI - v) F.Y. 2011-12 10. It is an admitted fact that the Assessing Officer has not entertained the Assessee's request for cross examination of Shri Nilesh Bharani / M/s Evergreen Enterprises and also it is a fact that Shri Nilesh Bharani subsequently retracted his statement. Therefore, his statement made earlier become doubtful as claimed by the Assessee and cannot be relied as substantive evidence. Even otherwise, we have failed to understand that how the name as mentioned in the said diary, as 'NENSIBHI ELLA' can be attributed to the Assessee's name. Further, how the coded amount of Rs.32,500 can be construed, as Rs.3,25,000,00/-. Further, how the Assessee is connected with the said narration of entries written in diary. Further, as per Assessee's claim, the mobile number noted in said diary is even otherwise do not belong to the Assessee and the Assessing Officer also failed to verify the owner of the said number to connect with the Assessee.
We by giving thoughtful consideration to specific facts and circumstances of the case, are of the considered view, that retracted statement of Shri Nilesh Bharani/ M/s Evergreen Vikas Motiram Desai, Mumbai. Enterprises who otherwise neither named nor specified the role and also not connected the Assessee specifically and the aforesaid facts/entries made in the diary as noted above by us, in fact, is not at all substantive material to make and sustain the addition as done by the authorities below in this case and, therefore, we are inclined to delete the addition. Consequently, the addition under consideration stands deleted.
After having considered the facts of the present case and also taking into consideration the decision of the Coordinate bench of ITAT in the above mentioned cases, we found that in the present case as well, the additions were made mainly on the ground that Shri Nilesh Bharani in his statement recorded u/s 132(4) of the Act had admitted that he was in the business of lending / borrowing money in cash (un accounted and un disclosed) 6. We observe that the Assessing Officer made the additions mainly on the ground that Shri Nilesh Bharani in his statement recorded under section 132(4) of the Act had admitted that he was in the business of lending / borrowing money in cash (unaccounted and undisclosed business). Further, in the course of search, a diary had been seized wherein inter-alia entries have been recorded and the Assessee's name was also appearing in the same diary in coded word.
It is an admitted fact that the Assessing Officer has not entertained the Assessee's request for cross examination of Shri Nilesh Bharani / M/s Evergreen Enterprises and also it is a fact that Shri Nilesh Bharani subsequently retracted Vikas Motiram Desai, Mumbai. his statement. Therefore, his statement made earlier become doubtful as claimed by the Assessee and cannot be relied as substantive evidence. Even otherwise, we have failed to understand that how the name as mentioned in the said diary, as ‘Nen D/56/V’ can be attributed to the Assessee's name. Further, how the Assessee is connected with the said narration of entries written in diary. Further, as per Assessee's claim, the mobile number noted in said diary is even otherwise do not belong to the Assessee and the Assessing Officer also failed to verify the owner of the said number to connect with the Assessee.
8. Therefore considering the decision of the Coordinate bench in the case of Mayur Kanjibhai Shah (supra) and also considering the to specific facts and circumstances of the case, we are of the considered view, that retracted statement of Shri Nilesh Bharani/ M/s Evergreen Enterprises who otherwise neither named nor specified the role and also not connected the Assessee specifically and the aforesaid facts/entries made in the diary as noted above by us, in fact, is not at all substantive material to make and sustain the addition as done by the authorities below in this case. Therefore, following the doctrine of binding precedents, which demands that the decision of the coordinate Bench is binding thus following the consistent line of judicial precedents we are inclined to delete the addition. Thus this ground stands allowed and Vikas Motiram Desai, Mumbai. consequently, the addition under consideration stands deleted.
The other grounds raised
by the assessee needs no adjudication at this stage as the same have now became academic in nature.