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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI R.C. SHARMA, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R Per Sandeep Gosain, J. M.: There are three appeals under consideration. These appeals are filed by the assessee against the orders of CIT(A)- 32, dated 02.05.2014, for the Asst Year: 1999-2000, 2000-01& 2001-02. Since, the issues raised in these three appeals are identical, except for year of assessment therefore for the sake of convenience; they are clubbed, heard and disposed of by this consolidated order.
1) The Learned Commissioner of Income Tax (Appeal) 32-Mumbai has erred in sustaining the addition of Rs.76,63,084/ - made by the assessing officer U/s 68 of the Tax Act as unexplained the cash credit of the following loan creditors. a) Sensex Financial Consultancy Rs.76,38,084/ - b) Giltedge Management Services Ltd Rs. 25,000/- Rs. 76,63,084/- 2) He ought to have considered the appellant submission as regards to production of documentary evidence in support of the loan taken from the above parties during the course of assessment proceeding. 3) The assessee craves leave to add, alter or amend the Ground of Appeal and submit a detailed Statement of facts and case laws relied upon at the time of the hearing.
2. The brief facts of the case are that in this case notice u/s 148 was issued on 30.07.2002 and consequent assessment was completed on 15.09.2003 u/s 147 r.w.s. 143(3) of the Act determining a total income at Rs.77,33,644/- additions on account of unexplained cash credits from two companies i.e. Sensex Financial Consultancy of Rs.76,38,084/- and Giltedge Management Services ltd. of Rs.25,000/- being unproved loans claimed to have been received by the assessee.
3. In the first quantum appeal the CIT(A) dismissed the appeal filed by the assessee and confirm the addition made by AO. However, on further appeal, the Hon’ble ITAT ‘C’ Bench, Mumbai vide their combined order nos. ITA Nos.
1566,1567 & 1568 /Mum/2005, and ITA Nos. 1570,1571 and directed the AO to decide the issue afresh, after providing reasonable opportunity of being heard to the assessee. It was made clear by the Hon’ble ITAT that assessee must prove the origin of the amount of loan received by it conclusively along with its rotation. These directions were issued by the ITAT since Shri Ketan Seth along with his group concerns, were found to be in collusion with the Janata Sahakari Bank Ltd. had indulged in paper transaction routed from one account to another.
While abiding the directions of Hon’ble ITAT, AO asked the assessee to prove the origin of money. In this process AO issue fresh notices u/s 142(1) to the assessee thereby calling upon them to furnish necessary details and documentary evidence. In addition notice u/s 133(6) were also issued to the creditors i.e. Sensex Financial Consultancy (‘Sensex’) and Giltedge Management Services Ltd. (‘Giltedge’). The assessee submitted reply as well as details demanded by the AO.
After hearing the parties, the AO was of the view that the assessee has not been able to discharge the onus to prove the creditworthiness and the genuineness of the transaction and accordingly arrived at the conclusion that the cash credit in the books of assessee remained unproved and amount of Rs.76,38,084/- from Sensex Financial Consultancy and Rs.25,000/- from Giltedge Management Services (‘Giltedge’) were added to the income of the assessee u/s 68 of the act.
Aggrieved by the order of the AO, assessee filed the appeal before CIT(A) and the CIT(A) after considering the case of the assessee had dismissed the same vide order dated 02.05.2014.
Aggrieved by the order of CIT(A), the assessee filed the present appeal before us on the grounds mentioned herein above.
Ground No.1 to 3
Since all the grounds raised by the assessee are inter-connected and inter- related therefore, we thought it fit to dispose off the same through the present common order. The impugned question before us for decision is that as to whether the assessee had followed the directions of ITAT ‘C’ Bench, Mumbai given vide their combined orders in & 1568 /Mum/2005, ITA No1569/Mum/2005 and ITA Nos. 1570,1571 & 1572/Mum/2005 dated 18-01- 2012 set aside the orders of the lower authorities and directed the AO to decide the issues afresh, after providing reasonable opportunity of being heard to the assessee.
The operative para is reproduced below for the sake of reference:
"5. ... Both these concerns are group concerns of Shri Ketan Sheth who was involved in the securities scam and assessee is also part of the same group. The said Shri Ketan Sheth was directed to be produced before the lower authorities but could not be produced because of his judicial custody with C.B.l The learned A.R. stated that now he is out on bail. On a specific question about the present status of securities scam involving Shri Ketan Sheth, the learned A.R. could not throw any light on the same. The origin of the entire amount as added by the A.O. u/s 68 in the case of this assessee in this year and other years as well as other assessees involved in this batch of appeals appears to be loan from Janata
5 4868 &4870/Mum/14 Smt. Harsha Nilesh Sheth Vs. ITO Sahakari Bank Limited of 20 crore. This bank is also involved in the above scam for rotation of various funds pertaining to Ketan Sheth group of assessees. As it is a case under investigation by C.B.l involving Ketan Sheth group of assessees alleging rotation of various funds pertaining to the said group, it is but natural that the paper transactions would definitely be routed from one account to another. But the mere fact that the transactions have been recorded in the books of account does not per se prove the genuineness of the transactions more specifically when Shri Ketan Sheth himself is involved in the scam and further the bank which initially allegedly advanced loan to Shri Ketan Sheth is also part of the scam. Under such circumstances unless the origin of the amount is conclusively proved, there is no point in accepting the rotation of funds from one concern to another and from one hand to another. Not only the origin of the money, but also its rotation needs to be property explained by the assessee. As the persons advancing loans to the assessee and the assessee herself are part of the Ketan Sheth group of assessees, who are involved in the securities scam and the final view taken in that scam has not been brought to our notice, we are handicapped in deciding this issue at our end. In our considered opinion, the ends of justice will meet adequately if the impugned order is set aside the matter is restored to the file of A.O. We order accordingly and direct him to decide this issue as per law after allowing a reasonable opportunity of being heard to the assessee. " In the afore mentioned order the ITAT had directed that the assessee must prove the origin of the amount of loan received by it conclusively along with its rotation.
We have heard the counsels for both the parties on this ground and we have also perused the material placed on record as well as the orders passed by the revenue authorities. Now the impugned question before us is to decide as to whether the assessee has complied with the directions issued by Hon’ble ITAT in the first round of litigation. In this context ld. AR representing the assessee submitted that Shri Ketan Sheth who is the partner in the firm i.e. that is Sensex Financial Consultancy is brother in law of the assessee and Sensex Financial Consultancy hereinabove referred to as “Sensex” as having its own PAN No. proprietor of Ketan Sheth and Company (proprietary concern) and the said firm had availed overdraft/ credit facility sanctioned from Janata Sahakari Bank Ltd. vide sanction letter dated 21.08.1998. Ld. AR also drawn our attention to page no. 27 which contains sanction letter dated 21.08.1998 in favour of Ketan Sheth by Janata Sahakari Bank Ltd. and at page no. 2 of paper book which contains bank statement of Ketan Sheth and page no.26 of paper book which contains balancesheet of Ketan Sheth shown loan of Rs.75 lakhs given to Sensex. The ld. AR also drawn our attention to page no.12 of paper book which contains bank statement of Ketan Sheth and Company showing loan amount to the assessee and bank statement of assessee reflecting receipts of Rs.75 lakhs. It was further submitted by ld. AR that the above factual position have already been confirmed by the ITO in his remand report dated 01.03.2004 prepared during the course of the appellate proceedings in the first round. It was further submitted that assessee has discharged his primary onus of proving the source of funds as well as the source of source of funds. The entries from whom the funds have been received are assessed to income tax. It was further argued that the loan to Harsha Sheth has been reflected in the books of respective ledger and the Ketan Sheth in his capacity as partner of “Sensex” also filed confirmation thereby confirming the transaction in response to the notice u/s 133(6) of the Act. Ld. AR further submitted that since ought to be deleted.
8.1 On the other hand ld. DR relied upon the orders passed by lower authorities.
8.2 After considering the rival contentions, we are of the considered view that the AO as well as CIT(A) while passing their respective orders have categorically mentioned that the loan sanction of cash credit of Rs.20 crores was made to Ketan Sheth and Co. and the document in relation thereof is of no consequence, since the loan received by the assessee was pertaining to period 01.04.1998 to 31.03.1999 relevant to AY 1999-2000 whereas the loan sanction letter pertain to F.Y.
01.04.1999 to 31.03.2000 relevant to AY 2000-200. However before us for the first time specific stand has been taken regarding the loan sanction letter dated 21.08.1998 for overdraft/credit facility for sanction of loan in favour of Ketan Sheth and Co. by Janata Sahakari Bank the document of which is at page no. 27 of paper book and thereafter Ketan Sheth advanced loan of Rs.3 lakhs to Sensex Financial Consultancy on 04.02.1999 and on 04.2.99 sensex advanced loan of Rs.75 lakhs to the assessee.
Since the crucial point involves in the present case is with regard to the origin of amount of loan received by the assessee along with its rotation. In this respect we have also noted that no inquiry has been conducted by the AO from Janta Sahakari Bank when it has already submitted on record that the Janta not part of scam. Therefore, now it has become more necessary to verify the facts of AO regarding the sanction overdraft/credit facility upto 10 crore by Janta Sahakari Bank to Ketan Sheth and payment of advance of loan of Rs.3 crores by Ketan Sheth to Sensex. In this regard all papers have been placed before us.
Therefore, considering the facts as well as documents placed before us we set aside the matter to the file of AO with the direction to verify the afore mentioned facts and in case the said facts and documents are found correct then it would be presumed that the assessee has discharge his primary onus and therefore addition of Rs.7,38,784/- would be deleted.
8.3 Now, coming to the afore said loan of Rs.25,000/- from Giltedge Management services is concerned, in this respect we have perused the bank statement of Giltedge Management services which is at page no.30 of the paper book with respect to payment of Rs.25,000 on 4.5.1998. In this context, we noticed that “Giltedge” was a non banking finance company and has advanced loan of Rs.25,000/- to the assessee, in this respect bank statement has already been placed on record and even during the course of assessment proceeding before AO in response to notice u/s 133(6) of the Act, “Giltedge” submitted its return of income and copy of bank statement reflecting receipt of Rs.25,000. Since from the in the case of “Giltedge” and the said amount has been paid through cheque which itself prove the origin of amount. Therefore, after analysing the facts of the present case wherein the assessee has discharged its primary onus, we delete the additions of Rs.25,000/-.
In the result, the appeal filed by the assessee is partly allowed.
ITA No. 4868/Mum/2014 (A.Y. 2000-01)
As far as facts of is concerned the same are identical however, the assessee has challenged the additions made by revenue authorities u/s 68 of the Act as loan received from Ketan Sheth and Co. of Rs.21,79,027/- and Nilesh of Rs. 2,25,000/- to obtain Rs.24,04,027/-. Since all the grounds raised by the assessee are inter-connected and inter-related therefore we thought it fit to dispose off the same through the present appeal.
Ld. AR appearing on behalf of assessee drawn our attention to the paper book containing copy of sanction letter dated 03.12.1999 with respect to overdraft/credit facility upto Rs.20crores by Janta Sahakari Bank to Ketan Sheth and Co. which is at page no. 14 -15 of paper book. Ld. AR also drawn our attention to Bank statement of Ketan Sheth and Co. reflecting advance of Rs. 7,25,000/- to the assessee which is at page no.3 and Bank Statement of Ketan Sheth and Co. reflecting advance of Rs.16,70,680/- to the assessee and of paper book and statement of assessee’s account in the books of Ketan Sheth and Co. as on 31.03.2001 confirmed by the assessee which is at page no.2. In addition our attention was also drawn to Audited accounts of Ketan Sheth and Co. for FY 2000-01 whether the assessee’s name is reflected under loans and advances and accounts which filed with the return of income of Ketan Sheth and Co. have been accepted by the department. The said documents are annexed at page no. 4 & 5 of the paper book. Ld. AR further submitted that during the year the assessee had borrowed fund and even repaid in part loan from Ketan Sheth who is a proprietary concern of Ketan Sheth and Co who is assessee’s brother in law. Ld. AR further drawn our attention to the confirmation from the assessee to Nila Sheth in respect of payment of Rs.2,25,000/- which is at page no. 18 of paper book and bank statement of assessee reflecting the receipt of Rs.2,25,000/- which is at page no.20 of paper book.
After hearing arguments of both the parties and after considering materials on record as well as orders passed by Hon’ble ITAT, we are of the considered view that above factual position has been verified by ITO in the remand report dated 01.03.2004 in the first round of proceedings. The assessee has proved the source of funds as well as the source of the source in the case of loan received from Ketan Sheth and Co. Since the loan has already been partially repaid during the year and even the loan has been reflected in the accounts of Ketan Sheth and Co. filed along with the return of income and accepted as such by ITO. No enquiry has been conducted in the case of the lender and source of funds has been accepted. The bench was also confirmed that there was no progress in the ‘scam’ proceedings against Ketan Sheth. Since the documents in , we have set aside the matter to the file of AO with the direction to verify the afore mentioned facts and documents and since the facts in the present case in respect of the amount lended by Ketan Sheth are applicable mutatis mutandis. Therefore, similar directions are given in the present case while setting aside the matter to the file of AO with the direction to verify the afore mentioned facts and documents and the said facts and if documents are found correct then it would be presumed that the assessee have discharged her primary onus and therefore additions of Rs.21,79,027/- ought to be deleted.
As far as loan paid by Nila Sheth of Rs.2,25,000/- is concerned, in this respect, required documents have already been perused by us which is in the shape of confirmation from the assessee to Nila Sheth at page no.11 and bank statement of the assessee reflecting the receipt of Rs.2,25,000/- which is at page no.20 of the paper book and the above factual position has been verified by the ITO in its remand report. Moreover, it is also reflected in the documents that there was 12 4868 &4870/Mum/14 Smt. Harsha Nilesh Sheth Vs. ITO sufficient balance in the account of Nila Sheth and Nila Sheth has paid the amount of Rs.2,25,000/- through cheque which is also reflected in her bank statement. Therefore, after considering the facts of the case, wherein the assessee has discharged her primary onus, hence we delete the additions of Rs.2,25,000/-. ITA No. 4870/Mum/2014 (A.Y. 2000-01) 10. After analyzing the above orders in 4868/Mum/2014, we find that identical question involved in the present case have already been decided in above ITA No.4867/Mum/2014 and 4868/Mum/2014. Therefore respectfully following our own decision in the above ITA’s and in order to maintain judicial consistency which is applicable mutatis mutandis in the case of the assessee with the same directions in respect of Ketan Sheth and Co., Nilesh Sheth and Giltedge Financial and Management Services as given in ITA No. 4867/Mum/2014 and 4868/Mum/2014. In the net result, the appeals filed by the assessee are partly allowed. Order pronounced in the open court on 30th September, 2016