ITO 3(3)(4), MUMBAI vs. HARSH DALMIA, MUMBAI

O R D E R

Per Amarjit Singh, Judicial Member

6807/Mum/2018 Harsh Dalmia 1. “Whether on the facts and circumstance of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Unexplained Cash Credit of Rs. 58,20,000/- made u/s. 68 of the I.T. Act, 1961 without appreciating the fact that the said addition was made on account of failure of assessee in substantiating the creditworthiness in respect of the loans shown from M/s. Basant Marketing Pvt. Ltd. In the balance sheet. 2. “The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. 3. “The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.”

2. The brief facts of the case are that the assessee filed its return of income on 11/07/2011 declaring total income to the tune of Rs. 2,31,010/-. Thereafter the information received from DCIT, Central Circle- XXVIII, Kolkatta vide letter dated 12/02/2013 intimating to ITO-12(2)(4), Mumbai that the assessee Harsh Dalmia was the beneficiary to the tune of Rs. 1,14,85,500/- from the group of companies namely M/s. Basant Marketing Pvt. Ltd who was assessed to tax with them who provided the accommodation entries. Notice u/s 147 & 148 of the Income tax Act, 1961 was issued and served upon the assessee and the reasons for reopening is hereby reproduced as under:-

“ intimation has been received from Dy Commissioner of Income Tax (Central)- XXVIII, Kolkatta as per letter No. DCIT/CC-XXVIII/Kol/BMPL/2012-13/535 dtd 12.02.2013 stating therein that the ADIT (Investigation), Unit-VII (1) & (2), Mumbai, vide his letter No. ADIT (Inv) / U-VII(1)/A.Dalmia/2011-12 dated 28.12.2011, had informed that consequent to the searches by CBI at the residence and office premises of M S Bali and Dalmiya’s, and the prima facie substantial material found by CBI, indicating 20 dummy companies of Mr. Arun Dalmiya engaged in money laundering and Income-tax evasion, one of which is M/s. Basant Marketing (P) Ltd., and thus requested their office to identify the beneficiaries who had taken accommodation entry from M/s. Basant Marketing (P.) Ltd., and inform the respective Assessing Officers for necessary action. It was further stated in the same letter, that the names of beneficiaries would appear in the list of Sundry Debtors (where entries have been given in the form of alleged sales, Loans and Advances (where entries have been given in the form of alleged loans) & investments (where entries have been given in the form of shre capital). The assessee’s name appears as beneficiary in the list of loans and advances (given in the form of alleged loan), sundry debtors, investment of M/s. Basant Mrketing (P) Ltd. (dummy company) amounting to Rs. 1,14,85,500/- for AY 2009-10. As the assesee’s name appears as beneficiary, in the list of M/s. Basant Marketing (P.) Ltd. The said amount of Rs. 1,14,85,500/- has to be brought to tax, which ahs escaped assessment.

6807/Mum/2018 Harsh Dalmia The return of income for AY 2009-10 has been filed by the assessee on 11.07.2011 declaring total income of Rs. 2,31,010/- with this charge. As per copy fo return of income during the year the assessee has shown the income from salaries amounting to Rs. 2,29,000/- and income from to her sources at Rs. 19,726/-. Apart from this, no any income has been offered by the assessee under any heads of income. In view of aforesaid. I have reasons to believe that income chargeable to tax to the extent of Rs. 11485500/- has escaped assessment within the meaning of provision of sec. 147 of Income Tax Act, 1961 and hence, I propose to re-open the assessment for AY 2009-10 by issuing notice u/s. 148 of the Income Tax act, 1961. Issue notice u/s. 148 of the Income Tax act, 1961 to the assessee.

ISSUE NO.1 4. The Ld. Representative of the revenue has argued that the CIT(A) wrongly deleted the unexplained loan in sum of Rs. 58,20,000/- u/s 68 of the I.T. Act, 1961, therefore, the finding of the CIT(A) is not justifiable hence is liable to be set aside in the interest of the justice. However, on the other hand the Ld. Representative of the assessee has strongly relied upon the order passed by the CIT(A) in question. Ld. Representative of the assessee has also relied upon the decision of Hon’ble ITAT in for A.Y. 2010- 11, dated 09.11.2018, ITA.No. 146/Mum/2016 for A.Y. 2006-07, dated 28.02.2018 and ITA.No. 1498 to 1501/Mum/2017, dated 21.12.2018 in which the transactions from M/s Basant Marketing Pvt.Ltd. has been treated as genuine. Before going on further we deem it necessary to advert the finding of the CIT(A) on record:- 5.2.1 This relates to addition of Rs. 58,20,000/- u/s. 68 made by the assessing officer in respect of amounts received from a group concern, M/s. Basant Marketing Pvt.Ltd.

6807/Mum/2018 Harsh Dalmia (BMPL). I have decided similar issue in appellants appeal for AY 2008-09 wherein also BMPL was involved. The operative part of that order is reproduced below. “In the instant case, loan from the same group company BMPL is under question, therefore, my decision in respect of BMPL cited above is also valid in the instant appeal. The appellant had discharged onus and the assessing officer has not brought anything on record to negate identity, creditworthiness or genuineness of transactions with BMPL but has instead made the addition on certain conjectures and surmises. Therefore, an addition of Rs. 41,00,000/- is deleted. This ground of appeal is allowed.” 5.2.2 The facts and circumstances in the instant assessment year are identical except for the amount. Therefore, following my decision for A.Y. 2008-09, addition of Rs. 58,20,000/- u/s. 68 is deleted. This ground of appeal is allowed.

4. On appraisal of the above mentioned finding, we noticed that the CIT(A) has deleted the additions on the basis of the decision in the assesee’s own case for AY 2008-09. The identity, creditworthiness and genuineness of the transactions has been doubted. On appraisal of the order passed by the Hon’ble ITAT relied by the assessee bearing for A.Y. 2010- 11, dated 09.11.2018, ITA.No. 146/Mum/2016 for A.Y. 2006-07, dated 28.02.2018 and ITA.No. 1498 to 1501/Mum/2017, dated 21.12.2018. We find that the identity, credit worthiness and genuineness of the BMPL is not in dispute. Sufficient evidence has been given in these cases to prove the identity, genuineness and creditworthiness of the M/s Basant Marketing Pvt.Ltd. The CIT(A) has specifically pointed out this fact that no evidence is on record to which identity, creditworthiness and genuineness of the claim of the loan can be doubted. Taking into account was all these facts and circumstances, we are of the view that CIT(A) has decided the matter of the controversy judiciously in correctly which is not liable to be interfere with at this appellate stage. Accordingly, these issues are decided in favour of the assessee against the revenue.

6807/Mum/2018 Harsh Dalmia ISSUE NOS. 2 & 3 Issue no. 2 and 3 are formal in nature which no require and adjudication.

In the result, the appeal filed by the revenue is hereby dismissed. The revenue has filed the present appeal against the order dated 17/09/2018 passed by the Ld. Commissioner of Income-Tax (Appeals)-8 hereinafter called [CIT(A)], Mumbai, relevant to the A.Y 2010-11.

The revenue has raised the following grounds: -

1. Whether on the facts and in the circumstances of the case and in law, the Ld. C1T(A) was right in holding that the AO has erred in making addition of Rs.2,63,000/- to the returned income in terms of section 68 of the Act not being satisfied with the genuineness of credit? 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in deleting the addition of Rsr2,63,000/- holding that the appellant had discharged initial onus to establish identity, creditworthiness and genuineness of the transactions and since the AO had not faulted the confirmations filed before him, the entire addition was merely based on suspicion regarding BMPL which does not stand? 3. Whether on the facts and in the circumstances of the case and in law, the Ld. C1T(A) was right in deleting the addition of Rs,2,63,000/- without appreciating that specific information was received from the Investigation Wing, Mumbai stating that as per specific information received from the CBI, ACB, Mumbai, the assessee was involved in entering into bogus transaction with M/s Basant Marketing Private Limited? 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in deleting the addition of Rs.2,63,000/- relying on the decision of the Hon'ble 1TAT in assessee's case for AY 2008-09 without appreciating that the decision of the Hon'ble IT AT was not accepted by' the Re venue, but appeal was not filed following CBDT Instructions applicable at that time due to low tax effect? 5. The appellant prays that the order of C1T(A) on the above grounds be set aside and that of Assessing Officer be restored. 6. The appellant craves leave to amend, alter, delete or add grounds which may be 7. The facts of the present case are quite similar to the fact of the case as narrated above while deciding the therefore, there is no need to repeat the same. However, the figure is different.