JAGRUTI KETAN SHETH,MUMBAI vs. ITO WD 21(1)(2), MUMBAI

The common issue raised in these appeals relates to the addition u/s 68 of the Act involving different creditors. By the time appeals reach the Tribunal, the addition sustained for these assessment years works out to Rs. 8.76 Crs (AY 1999- 2000); Rs. 2.03 Crs (AY 2000-2001) and Rs.16.33 Crs for the AY 2001-2002. The creditors involved are also different for different assessment years. For the AY 1999-2000, three creditors in question are viz (i) Maniram Consultancy and Investment (Rs. 8 Crs); (ii) Sensex Financial Consultancy (Rs. 76,38,084/-) and (iii)

Before us, at the outset, Ld Counsel for the assessee filed the orders of the Tribunal in the case of Smt. Harsha Nelesh K Sheth vs. ITO for the AYs 1999-2000, 2000-01 and 2001-02 in 4868 & 4870/M/2014, dated 30.9.2016, Ld Counsel for the assessee submitted that the said judgment provides the guidelines with reference to the discharge of onus from the assessee’s side in matters relating to section 68 of the Act. Invoking of these provisions is the core issue in all the three appeals under consideration. Further, mentioning that the said order of the Tribunal was not available to the CIT (A), Ld Counsel for the assessee submitted that the matter can be remanded to the file of the AO for deciding the issue afresh in the light of the ratio laid down in the case of Smt. Harsha Nelesh K Sheth (supra). Specifying that some of the creditors are common and there are different new creditors for different assessment years, ld Counsel for the assessee submitted that the principle laid down by the Tribunal, in matters of invoking the provisions of section 68 of the Act, is relevant for deciding the issue afresh by the AO in the remanding proceedings.

We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. After hearing both the parties, we find merit in the argument of the Ld AR that reference to the said ratio relating to the discharge of onus for the purpose of section 68 of the Act. AO is directed to apply the said ratio and also consider the comparability of the facts of the creditors in question qua the creditors decided by the Tribunal in the case of Smt. Harsha Nelesh K Sheth (supra). AO shall grant a reasonable opportunity of being heard to the assessee as per the set principles of natural justice and decide the issue afresh after considering the paper books filed by the assessee as well as the Revenue dated 28.7.2016. With these directions, all the grounds raised by the assessee in all the three appeals are allowed for statistical purposes.