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Income Tax Appellate Tribunal, INDORE BENCH,
Before: SHRI C.M.GARG & SHRI O.P.MEENA
आदेश /O R D E R
PER O.P. MEENA, ACCOUTANT MEMEBR. This appeal filed by the assessee is directed against the order of Learned Commissioner of Income-tax (Appeals)-II, Bhopal [in short “the CIT (A)”] dated 20-12-2013 pertaining to Assessment Year 2009- 10, which in turn has arisen from the order dated 19-12-2010 passed by the ITO 3(2) Bhopal (in short “the AO”) under section 143 (3) of Income Tax Act, 1961 (in short ‘the Act’). The assessee has taken following grounds of appeal:- 1. The Ld. CIT (A) has erred in maintaining the addition of Rs. 40,00,000/- paid on account of purchase of house.
Smt. Rajani Madan vs. ITO 3(2) Bhopal / I.T.A. No.199/Ind/2014/A.Y.:09-10 Page 2 of 8
1.1. It was proved before the lower authorities about the
source of the said money, which is paid through the bank
cheques and mentioned in the registered transfer document. 1.2. The addition of Rs. 40,00,000/- may please be deleted. 2. The Ld. CIT (A) has erred in maintaining the addition of Rs.
39,82,000/- being paid to son Shri Ashok Madan.
2.1 It was proved before the lower authorities that the source of
money raised through bank loans and as such, the source was
totally explained. 2.2 The addition of Rs.39,82,000/- may please be deleted.
Ground no. 1 and ground no. 2 relates to addition of Rs. 40
lakhs being amount paid for purchase of house and Rs. 39.82
Lakh as unexplained unsecured loans taken by the assessee.
These are being considered together.
Succinctly, facts as culled out from the orders of lower
authorities are that the assessee is individual derives income from
salary from Ujala Electrical Ltd. and interest income. The assessee
filed return of income on 30-07-2009 declaring total income of Rs.
3,52,048/-. The AIR information reflected that the assessee had
purchased a immovable property during the year. Therefore, the
assessee was asked to submit copy of registry and relevant
document. On verification, these documents , the AO noticed that
the assessee has purchased Plot No. 258, Sector-II, Shakti Nagar,
Bhopal, is situated next to the property of the assessee`s son which
Smt. Rajani Madan vs. ITO 3(2) Bhopal / I.T.A. No.199/Ind/2014/A.Y.:09-10 Page 3 of 8
are the residential unit of whole of the Madan family, and the
assessee has purchased the same from M/s. Oxford Cables and
Metals Pvt.(in short OCMPL) The Shri Neeraj Thakur, the so-called
director of OCMPL, signs the registered deed on 16.03.2009. The AO
issued summons to Shri Neeraj Thakur to attend his office on
26.12.2011 with complete details of sale and purchase of immovable
property, but failed to attend nor furnished any reasons for non-
attendance. Therefore, Inspector was deputed to search Shri Neeraj
Thakur. On 28-12-2011, the Inspector has submitted a report that
Shri Neeraj Thakur is merely an employee to the firm M/s. Ujala
Electricals of Shri V. K. Madan and he is residing at Shanti Niketan,
Govindpura, Bhopal. On enquiry, Shri Neeraj Thakur does not recall
his connection with M/s. OCMPL and possession of said property
Plot No. 258, Sector –II, Shakti Nagar, Bhopal. As per Central
Excise Department survey carried out in year 2008, also submitted a
report that there was no business being carried out at the premises
of M/s. OCMPL and the said company has not taken even electricity
connection. This company was located in the same complex where
M/s. VKM Electrical Ltd. of Shri V.K. Madan is reported to have been
running. The AO observed that as per Central Excise Department
report M/s. Oxford Cables and Metals Pvt. Ltd. is a totally bogus
company established by V. K. Madan in order to pass entries. In
view of these facts, the AO held that the Plot No. 258 , is a benami
property of Shri V. K, Madan and Smt. Rajani Madan Registered in
the name of M/s. OCMPL in whom Shri Neeraj Thakur has been
Smt. Rajani Madan vs. ITO 3(2) Bhopal / I.T.A. No.199/Ind/2014/A.Y.:09-10 Page 4 of 8
made as a director of the said company. The AO also found that the
assessee has took loan of Rs. 40 Lakh to purchase this property from
HDFC Bank. This amount has been credited to ICICI Bank account
of M/s. OCMPL from where, this amount transferred to M/s. VKM
Electricals and M/s. Ujala Electricals Ltd.. From where the said
amount was, credited back to the account of Smt. Rajani Madan and
same has been given to Shri Ashish Madan as unsecured loan. In
turn, Shri Ashish Madan has credited back the same amount in the
account of M/s. OCMPL. Thus, this transaction clearly established
nexus of fake companies. The AO has allowed various opportunity to
prove genuineness of transfer of the property but failed to
substantiate by documentary evidence. Hence, the AO treated the
investment of Rs. 40 Lakh as unexplained investment under section
69C of the Act. The AO further made an addition of Rs. 39, 82,000/-
on account of unsecured loan given to Shri Ashish Madan. The
source of assessee`s income is only salary of Rs. 3,52,052/- from
Ujala Electricals. Therefore, the AO concluded that deposit made in
her account were from unexplained sources as the creditworthiness
and genuineness was not established.
Being, aggrieved the assessee filed an appeal before the ld. CIT
(A). During the course of appellate proceedings, the same
submissions were reiterated which have been reproduced by the ld.
CIT (A) in his order. The Ld. CIT (A) observed that M/s. OCMPL has
three shareholder namely Shri Anil Sheth, Ramesh Yeli and Shri
Neeraj Thakur. Shri Ashish Madan, son of the assessee, is also
Smt. Rajani Madan vs. ITO 3(2) Bhopal / I.T.A. No.199/Ind/2014/A.Y.:09-10 Page 5 of 8
Managing Director whereas Shri Neeraj Thakur is director of the said
OCMPL. In the search carried out on 05.12.2008 by Central Excise,
it was found that the assessee without electricity connection carrying
out some manufacturing activity of aluminum wires, however, said
company was failed to record the accounting receipts of input and
furnished goods. Further, Shri V. K. Madan was operating the bank
account. Thus, it shows that dubious circuitous fund flow mostly in
cash. The Ld. CIT (A) also noticed that the said OCMPL had disclosed
unsecured loans of Rs. 1.35 crores and share application money in
the name of 200 individuals. The Ld. CIT (A) had held that the so-
called director of M/s. OCMPL are dummy director and are
employees of the assessee group companies/ firms. This was
apparent from the statement recorded by Central Excise authorities
of these persons. Considering, these facts, the addition of Rs. 40
Lakh and Rs. 39.82 lakhs were came to be confirmed.
Being, aggrieved the assessee filed this appeal before the
Tribunal. Before us, the Ld. A.R. submitted that various cheques as
mentioned in registered document by Shri Ashish Madan, which was
returned back to him by cheque of HDFC on 31.03.2009, made the
payment of Rs. 40 Lakh. The assessee has raised a loan from ICICI
bank. Thus, all transactions are routed through banking channels.
The assessee also received substantial amount from her son Shri
Manish Madan who is settled in Australia which was also through
cheques. The AO made addition of Rs. 40 lakhs under section 69C
and Rs. 39.82 lakhs as unsecured loan from unexplained sources.
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However, the AO made remarks that Shri Neeraj Thakur is merely an
employee of the firm of Shri V. K Madan and no business activity
found during excise survey. All these remarks were irrelevant for
framing assessment of the assessee. With regard to addition of
Rs.39.82 Lakh, the AO did not bother to look in to the details filed by
the assessee and submissions made before him. He gave undue
importance for the extraneous event about survey of the Central
Excise, which has nothing to do with the case of the assessee.
Therefore, it was contended that there is direct evidence of payments
made by cheques through banking channel and loan taken as
repayment made by the assessee. Hence, no addition is called for.
Per contra, the Ld. D.R. submitted that registered sale deeds
has been signed by Shri Neeraj Thakur , so called director who has
avoided his presence before the AO whereas the Inspector of
Department has find out that he is merely an employee of Shri VK
Madan and does not have any connection with M/s. OCMPL.
Further, the AO had found that the amount of loan taken and repaid
has been circuitously routed through bank account of various family
members, whereas the assessee is merely a salaried employee
drawing salary of Rs. 3.5 Lakh per annum only. Further, the
assessee has failed to produce necessary evidence and avail the
opportunity of being heard allowed to her. Nor she had filed any
evidence in her support to disprove the findings recorded by Central
Excise Authorities during survey. Therefore, it was contended that
transaction is not genuine; hence, the lower authorities were justified
Smt. Rajani Madan vs. ITO 3(2) Bhopal / I.T.A. No.199/Ind/2014/A.Y.:09-10 Page 7 of 8
in making the addition of Rs. 40 Lakh and Rs. 39.82 lakhs in the
case of the assessee.
We have heard the rival submissions of both the parties and
have perused the material available on record. We find that the sole
signatory of registered document Shri Neeraj Thakur has failed to
appear before the AO to verify the genuineness of transfer of Plot No.
258 of Shakti Nagar. Whereas, as per report submitted by the
Inspector of Department, he is merely an employee of Shri V. K
Madan. Shri Neeraj Thakur has also denied having any connection
with M/s. OCMPL. Further, we find that the transaction of loans
have travelled through banking channel by taking various circuitous
routes, which has not been properly examined to establish the
genuineness of transaction. Further, survey proceedings undertaken
by the Central Excise have revealed that no business activity were
carried out by the M/s. OCMPL. It is also noticed from the
statement dtd. 30.04.2009 of Shri Anil Sethi that he does not have
any connection with M/s. OCMPL, M/s. VKM and is not holding any
directorial position. Further Shri Ramesh Yeli and Shri Neeraj
Thakur were found to be working as accountant only. We also
noticed that the Ld. A.R. of the assessee submitted that the AO has
failed to look in to the evidence produced before him and
submissions made by the assessee. In view of these facts and
circumstances, we are of the considered opinion that the entire issue
of addition of Rs. 40 Lakh as well as Rs. 39.82 Lakhs is required to
be revisited by the AO. Therefore, in exercise of power conferred
Smt. Rajani Madan vs. ITO 3(2) Bhopal / I.T.A. No.199/Ind/2014/A.Y.:09-10 Page 8 of 8
under Rule 28 of Tribunal Rules, we restore this appeal to the file of
Ld. AO for allowing proper opportunity of being heard in accordance
with law. Nevertheless, to mention that the assessee will produce
Shri Neeraj Thakur, Shri Anil Sethi and Shri Ramesh Yeli before the
AO for examination. The assessee would also produce the copies of
all bank accounts, which are relevant to explain the circuitous
transaction routed through various banks and concerns and as
required by the AO. The AO will examine the genuineness and legal
existence of M/s. OCMPL and the loan transaction undertaken by
the assessee. Nevertheless, to mention that the assessee will
cooperate in the assessment proceedings and file necessary
evidences on which he wants to rely upon. Accordingly, we restore
both the issues for fresh adjudication to be made de-novo
assessment the file of the Assessing Officer with the direction that
the assessee be afforded proper opportunity to present her case as
well as the assessee is to extend all possible cooperation in the
disposal of the case.
In the result, the appeal is allowed for statistical purposes.
The order pronounced in the open Court on 20.03.2017.
Sd/- Sd/-
(सी.एम.गग�)/(C.M. GARG) ( ओ.पी.मीना) /(O.P.MEENA) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER
Dated: 20th March, 2017/op