INCOME TAX OFFICER, JAMNAGAR vs. NILESH BIPINCHANDRA MEHTA, JAMNAGAR

5. On the basis of the facts and circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer.

6. That the revenue craves leaves to add, amend, alter or withdraw any ground of appeal.

7. It is therefore prayed that the order of the CIT(A) may kindly be set aside and that of Assessing Officer be restored.

(i) In this case, Information has been passed by Assistant Director of income-tax (Inv.), Jamnagar vide letter No. ADIT(Inv.)/Jam/CLD/2014-15/155 dated 24.03.2015 that FIU-IND-STR was filed in respect of Late Shri Chhotalal Doshi. In this case Late Shri Chhotalal Doshi, Prop. of Abhi Enterprise used to lend his bank accounts to other person for a commission of Rs. 300/- per lakh. Personal Account of Late Shri Chhotalal Doshi and Current Account of M/s. Abhi Enterprise were used to receive unaccounted cash deposits of various parties from all over India and through cash withdrawals/cheques clearance, the cash was handed over to the concerned person. The above mentioned assessee is one of the parties who made transaction with Late Shri Chhotalal Doshl. As per the information forwarded by the ADIT(inv.), Jamnagar the assessee has made transaction of Rs. 2,50,91,260/- with Late Shri Chhotalal Doshl during the year under consideration." Therefor there is escapement of Income exceeding Rs. 1 lakh. Therefore the unexplained investment of Rs. 2,50,91,260/- Is income of the assessee which has escaped taxation, so it proposed to reopen the case u/s. 147 of the Income Tax Act.

(ii) Thus, I have reason to believe that the above transactions were escaped the assessment for A Y 2009-10 of Rs. 2,50,91,260/- due to the reason of failure on the part of the assessee to disclose full and truly all material facts necessary for his assessment. Therefore, action u/s. 147 initiated."

2(a). It was submitted to AO, during the course of assessment that we have not carried out any transactions with Late Shri Chottalal Doshi (Prop of Abhi Enterprise) or his family, we don't know Late Shri Chottalal Doshi (Prop of Abhi Enterprise) or his family. There is no evidence either direct or indirect that we have carried out any transaction with Late Shri Chottalal Doshi (Prop of Abhi Enterprise) or his family. It is clearly seen from reasons recorded that Late Shri Chottalal Doshi (Prop of Abhi Enterprise) to save his own skin from taxation of his unaccounted money /unaccounted transactions have made allegations. Only on the basis of such allegations and without substantially establishing any connection, our case is reopened and addition was made.

2(b). The Revenue was of the belief that the income chargeable to tax has escaped assessment. It is also a fact that the said information provided by the ADIT was completely relied upon by the Ld. AO and made addition of Rs.2,50,91,260/-. On the other hand, the case of the assessee is this that they have not carried out any transactions with said Late Shri Chottalal Doshi or his family neither there is any evidence available with the Revenue to establish the said fact as of the further case made out by the assessee. In fact, in order to save the skin of Late Shri Chottalal Doshi from taxation of his unaccounted money and/or unaccounted transactions, these allegations against the assessee was made. The assessee further requested to provide cross examination of Shri Dharmendra Doshi on the basis of whose statement, the case was reopened and addition was made, which was further denied. Under these circumstances, as no opportunities have been given to the assessee to cross examine the said party, the addition on account of unexplained cash credits in the income of A.Y. 2011-12 of the assessee.

In the books of third person has been claimed to be not sustainable in the eye of law as of the ultimate case made out by the assessee before us. In support of this, he has further relied upon the judgment passed in the matter of Shri Mukeshkumar Vrajlal vs. ITO in & 55/Rjt/2021.

3. That disagreeing by the order for the Ld. AO assessee filed an appeal for CIT (Appeal) Rajkot on 10-01-2017 The Ld. CIT has allowed the appeal of the assessee and deleted the addition in income with following remarks:

7.7 The facts of present case are identical to facts of case relied upon by Jurisdictional ITAT which further on extensively quoted the co-ordinated bench decision on the same facts in other case. The ratio of decision is that one limb of transactions in the case of accommodation entries is reflected in the books and the other limb is in cash which is found only when some incriminating documents is unearthed. The said link in the entries in the diaries with transactions recorded in the books of the assessee which was necessarily required to be done as the appellant has denied any type of transactions with the said entry operator. In absence of any link with the transactions recorded in books of the appellant and the entries in the diaries, it is found that the addition is not sustainable.

7.8 The judicial propriety demands that the decision of higher court is required to be followed by lower authorities. Therefore, respectfully following the decision of Jurisdictional ITAT and coordinated bench ITAT as reproduced above the addition of Rs. 2,50,91,260/- made in this case is deleted. The ground no. 2 which is substantial ground of appeal in terms of quantum is therefore allowed.

4. There that the revenue challenged the legality and validity of order of the Ld. CIT (21-08-2024) by moving an appeal before Ld. ITAT Rajkot. (i) During the course of argument, the Ld. Senior DR has submitted that CIT has wrongly deleted the addition, since all receipt of 2,50,91,260 is said to be the income. The case was reopened on report of ADIT 5

(Jamnagar). A Diary was impounded by the tax authority, where the name of the assessee was appearing according to the statement of son of Shree Chhotelal Doshi, alleging that all entries are belonged to the assessee. The assessee indulged in brass business and it was further submitted that all old cases were set aside.

(ii) On the other side, the Ld. AR of the assessee has submitted that this is a case of 11-12, while the investigation was taken place in 2014 and the ADIT report dated 24-03-2015. The person for whom the search was conducted was already expired in 2010. The statement of son of the Assessee recorded. The Ld. AR Relied on following Judgement :

 Shri Mukeshkumar Vrajlal Akbari at ITAT Rajkot Bench dated 21- 09-2022.  Shri Kanjibhai Tapubhai Patel at ITAT Rajkot Bench dated 25-01- 2023.  Anilkumar Pershottambhai Tala at ITAT Rajkot Bench dated 20-09- 2024.

We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. We have further considered the judgment in the case of Shri Kanjibhai Tapubhai Patel vs ITO, to 105/Rjt/2021 relied upon by the assessee in the case wherein following the case of Shri Mukeshkumar Vrajlal vs. ITO (supra). While granting relief on the identical issue, the Co-ordinate Bench was pleased to observed as follows:

"4. In appeal, Ld. CIT(A), the assessee claimed that the addition cannot be made based on the third party allegations without any evidences and without considering the submissions made after cross examination of the third party. However, the Ld. CIT(A) dismissed the assessee's appeal with the following observations:

8.1 It is seen that the appellant sought cross examination of Shri Dharmendra Doshi son of Late Shri Chhotalal V. Doshi on whose statement the reopening was made. The appellant was provided with an opportunity to cross examine the said Dharmendra Doshi during the assessment proceedings. It is claimed by the appellant that the said Dharmendra Doshi had made entries in the diary based on the directions of his late father and the said Dharmendra Doshi had admitted during the cross examination that he did not know the appellant. It is also claimed by the appellant that the said Dharmendra Doshi has not produced any evidence of persons depositing the cash in their accounts. It is claimed by the appellant the said Dharmendra Doshi had entered the names of various persons only to avoid payments of tax on his own transactions. It is claimed that no liability should be fastened on him without any supporting evidence. The appellant also relied on various case judgements:- (a) Dhakeswari Cotton Mills Ltd. Vs. CIT 26 ITR 775 (SC) (b) Krishna Chand Chela Ram Vs. CIT 125 ITR 713 (SC) (c) Andaman Timber Industries Vs. CIT (2015) 62 Тахmann.com 3 (SC) (d) Ayubkhan Noorkhan Pathan Vs. State of Mharashtra & Ors. (Civil Appeal No. 7728 of 2012 dated 08/11/2012) (e) Khem Chand Vs. Union of India (AIR 1958 SC 300) (1) Amitabh Bansal Vs. ITO Ward-46(4), [2019] 102 taxmann.com 229 (g) CIT Vs. Indrajit Singh Suri [2013] 33 taxmann.com 281 (Guj) (h) PCIT Vs. Kanubhai Maganlal Patel [2017] 79 taxmann.com 257 (Guj) (i) Late Harbhajan Singh Makkar Vs. ACIT (ITAT Delhi) (ITA No. 2451/Del/2015 dated 16/10/2019) (j) State of MP Vs. Chintaman Sadashiv Vaishampayan (AIR 1961 SC 1623)

8.2 The various claims have been analysed. It is a fact that the said Dharmendra Doshi is a Hawala operator and it is unlikely that he would be knowing all the clients who availed his services. He is also not expected to know the persons who have deposited the cash in their bank accounts except for on whose behalf it is deposited, as the same needs to be withdrawn and be given to the beneficiaries. In such Hawala operations, it is not possible for all the records to be maintained in the manner in which the appellant seeks now. In view of the peculiar manner of Hawala operations, the various claims made by the appellant are not acceptable. Therefore, there is a reasonable probability that the said transaction pertains to the appellant based on the entry in the diary and it is also not mandatory under the Income Tax that the evidence should be beyond doubt to assess a transaction. Considering the same, the addition made is upheld and the ground nos. 2 & 3 are dismissed.

5. Before us, the counsel for the assessee submitted that that the said Late Shri Chhotalal V. Doshi who was a Hawala operator has expired and the entire addition was made on the basis of statement of son of Late Shri Chhotalal V. Doshi i.e. Dharmendra Doshi. He submitted that the additions have been made only on the basis of submissions made by Shri Dharmendra Doshi, which cannot be relied upon. He submitted that in the cross examination of Dharmendra Doshi, he could not give any sort of evidences that alleged transactions were carried out by the assessee, and it is only on the basis of oral instructions from his father he has mentioned the assessee's name in the fabricated diary. In cross-examination, therefore Shri Dharmendra Doshi was unable to submit any evidence of whatsoever nature, either direct/indirect/corroborative/substantive to establish that the assessee has carried out any sort of financial transactions with late Shri Chhotalal Doshi (proprietor of Abhi Enterprises). Shri Dharmendra Doshi has only stated that he has written the assessee's name in the diary on the basis of oral instructions from his father late Shri Chhota Lal Doshi who expired on 12-11-2010. Other than oral instruction of his father, he has no evidence to prove that the assessee

has engaged in the financial transactions on the basis of which the additions have been made by the AO. Further, Shri Dharmendra Doshi was unable to submit names of parties who have deposited cash and bank account of late Shri Chhota Lal Doshi (proprietor of Abhi Enterprises). In this regard. counsel for the assessee drew our attention to page 69 of the paper book, wherein Shri Dharmendra Doshi has stated "as have already stated that the amount deposited in said bank account was sales consideration of all businessmen of Jamnagar. I was just providing service to them on commission basis. I don't know about parties who have deposited the amount. Since the said amount represents out of books sales/sale consideration of businessmen of Jamnagar, hence liable to pay taxes on them". The counsel for the assessee relied upon the case of ACIT v. Lata Mangeshkar 97 ITR 696, wherein it was held that entries made in the accounts of third-party regarding payment to the assessee is not sufficient as there is no guarantee that the entries were genuine in absence of any corroborative evidence. The counsel for the assessee submitted that the statement of Shri Dharmendra Doshi was accepted by the ADIT at face value, without any further investigation about the veracity of the answers. In response, Ld. D.R. relied upon the observations made by the AO and CIT in their respective orders.

6.1 In the case of Abhay Kumar Bharamgouda Patil [2018] 96 taxmann.com 377 (Panaji -Trib.), a survey was carried out in case of society carrying on banking business. In course of survey, a diary was impounded which was maintained by one AGM of said society. The Assessing Officer noted that diary contained entries of deposits received from various persons. He thus recorded statement of said AGM, who admitted that said deposits were undisclosed money of depositors and assessee was one of them. On basis of said statement. Assessing Officer made addition of unexplained money to assessee's income. It was noted that said AGM could not even identify persons who brought money to him or denominations in which money was brought. Moreover, survey operations did not bring on record any acknowledgment/receipt in respect of money received from assessee. Further, said AGM could not substantiate his statements by bringing any other credible or corroborative evidence on record. Accordingly, the Tribunal held that in aforesaid circumstances. impugned addition made in hands of assessee deserved to be set aside.

6.2 In the case of Pradeep Amrutlal Runwal v. TRO [2014] 47 taxmann.com 293 (Pune-Trib.), during search proceedings in case of 'D Group', some loose papers were seized wherein certain amounts were written against name of assessee. The Assessing Officer made addition of said amount as undisclosed income in name of assessee. The ITAT held that since no evidence was found relating to existence of any transaction between assessee and 'D Group' and no corroborative evidence was found to suggest that assessee had actually received said amount, no addition could be made merely on basis of noting in loose papers found during search proceedings in case of 'D Group' against name of assessee.

6.3 In the case of Jawaharbhai Atmaram Hathiwala v. ITO [2010] 128 TTJ 36 (Ahmedabad) (UO), the Ahmedabad Tribunal held that where assessee was alleged to have paid a sum as 'on money' for purchase of flat & 55/Rj1/2021 A.Y. 2010-11 & 2011-12 Page No Shri Mukeshkumar Vrajlal Akbari 9 but no evidence could be brought on record by Revenue to show that in fact assessee had paid 'on-money' to developers, and no document containing signature of assessee or handwriting of assessee to corroborate above making of payment by assessee was found during course of search, addition on account of such alleged payment was not justified.

In Result, the appeal for the revenue is hereby dismissed.