Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SMT.ANNAPURNA GUPTA & MS. SUCHITRA RAGHUNATH KAMBLE
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the Revenue against order passed by the ld.Commissioner of Income (Appeals), Gandhinagar, Ahmedabad dated 22.10.2019 under section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short] for the Asst.Year 2010-11.
2. Grounds raised are as under: i) "Whether, the Ld. Commissioner of Income-tax(appeals) has erred in law and on facts in deleting the addition ofRs.27,42,50,000/- made by the AO on account of unexplained cash u/s. 68 of the Act ". ii) "Whether, the Ld. Commissioner of Income-tax(appeals) has erred in law and on facts in admitting the additional evidences without drawing satisfaction on one or more of the circumstances laid down in Rule 46A of the I. T. Rules, 1962, when the AO has given ample opportunities to the assessee to furnish the requisite details".
2 iii) "Whether, the Ld. Commissioner of Income-tax(appeals) has erred in law and on facts in admitting the additional evidence merely relying on the decisions without examining heir applicability on the facts of the case of the assessee." iv) Whether, the Ld. Commissioner of Income-tax(appeals) has erred in law and on facts in admitting the additional evidence in respect of cash credits of Rs. 1.80 Crore in respect of Shri R. M. Thakore in violation of . Rule 46A of the Act. v) Whether, the Ld. Commissioner of Income-tax(appeals) has erred in law and on facts in admitting the additional evidence in respect of cash credits of Rs.2.80 crore in respect of Kamal Gohil in violation of Rule 46A of the Act. vi) On the facts and circumstances of the case, the Ld. Commissioner of Income-Tax(appeals) ought to have upheld the order of the Assessing Officer. vii) It is, therefore prayed that the order of the Ld. Commissioner of lncome- tax(Appeals) ma be set aside and that of the Assessing Officer be restored.
3. At the outset itself, it was stated that solitary issue in the present appeal related to addition made to the income of the assessee on account of advances received from various persons during the year amounting in all to Rs.27,42,50,000/-, source of which remained unexplained. The addition was made in the hands of the assessee in terms of provisions of section 68 of the Act, which addition was deleted by the ld.CIT(A).
The facts of the case, as found from the orders of the authorities below are that, the assessee was noted to have received credits in his bank accounts during the impugned year amounting to Rs.27,42,50,000/- which was an unusually large amount of money, and considering the fact that he was non-filer of return of income, his case was reopened for assessment in terms of provisions of section 147 of the Act. This information, of the assessee having received huge amounts of money, was received by the AO from the DDIT(Investigation), Unit-1(3), Ahmedabad who had made inquiries also in relation to this information, and on receiving no response from 3 the assessee with regard to the explanation for the source of deposits in the bank account, the DDIT(Investigation) had passed on the information and finding of his investigation to the AO of the assessee for further action to be taken in this regard. In pursuance to the same reassessment proceedings under section 147 of the Act were initiated on the assessee.
5. The assessment order reveals that several notices were issued to the assessee by the AO during the proceedings, but the assessee did not respond to the same. The AO accordingly made inquiries and collected information from the bank of the assessee where the amounts were found credited in his accounts; the bank being Indian Bank. Due information regarding the details of cheques, along with copies of the said cheques available with the bank, was furnished to the AO, from which it was revealed that the assessee had received Rs.27.42 crores from Ms.Hansaben M. Patel, Shri Mukesh J. Shah, J.P. Fincorp Services P.Ltd. and other parties, details of which were not furnished by the bank, and that all these amounts received were on the same date transferred to two entities i.e. Arham Properties, Rachana Fin P.Ltd. This detail was collated by the AO from the information provided by the bank, which is reproduced at page no.15 of the assessment order as under:
Since the assessee did not co-operate in the assessment proceedings, the AO made inquiries with the persons who had given money to the assessee i.e. Hansa Patel, Shri Mukesh J. Shah and M/s J.P. Fincorp Services P.Ltd. In the inquiry conducted with Shri Mukesh J. Shah, by way of his statement recorded, he stated to have 5 conducted no financial dealing with the assessee nor he claimed to know the assessee, and with regard to the amounts revealed in the bank statement of the assessee to have been given by Shri Mukesh J. Shah to the assessee he stated that he had no bank account in the Indian Bank; that the transaction was conducted by one Shri Asit Shah who had taken his signature and necessary documents to open bank account with Indian Bank and had used for his personal and business purpose, which he was not aware; and that in lieu of his lending his name to Shri Asit Shah, he had got commission of Rs.6.00 lakhs from him.
With respect to Ms.Hansaben M. Patel, the AO issued summons to her, which was returned unserved. An Inspector was deputed to inquire into the matter, and as per this report, it was found that the house where Ms.Hansaben M. Patel used to live on rent, had been vacated by her three-four years ago and her current whereabouts were not known.
With regards amounts received from M/s J.P. Fincorp Services P.Ltd. by the assessee, the said entity confirmed having given Rs.5.00 crores to the assessee during the year, and stated that the transaction was areturn of unsecured loans taken by it from the assessee in the preceding year. The AO noted that no evidence to substantiate this explanation of M/s J.P. Fincorp Services P.Ltd. was furnished by way of balance sheet of the entity of the preceding year, revealing outstanding loans of the assessee to the tune of Rs.5.00 crores.
Taking note of the above, the AO found that the genuineness of none of the loan creditors had been established in the present case, and therefore, he held the entire amount of Rs.27.42 crores received by the assessee as income from undisclosed sources under section 6 68 of the Act. His finding in this regard are at para 6.2 to 6.4 of his order.
The matter was carried in appeal before the ld.CIT(A), where the assessee stated that all the amounts received by him were from genuine sources, but since he was suffering from mental depression during the assessment proceedings, he was unable to furnish necessary documents to prove the same before the AO. In the appellate proceedings therefore the assessee furnished additional evidences to prove the genuineness of all the loan creditors, which were entertained by the ld.CIT(A) in terms of Rule 46A of the Income Tax Rules, 1962, and after seeking report of the AO on the additional evidences filed he held that the assessee had established genuineness of the amounts received and deleted the addition made by the AO.
Aggrieved by the same, the Revenue has come up in appeal before us.
Both the parties made their arguments before us.
The ld.counsel for the assessee relied on the finding of the ld.CIT(A), and also referred to the order of the ITAT in the case of the assessees related to the transaction and the decision of the Hon’ble High Court also in the case of related entities wherein identical addition was deleted.
The ld.DR, on the other hand, relied on the order of the AO, and also vehemently objected to the admission of additional evidence by the ld.CIT(A) for adjudicating the issue before him.
14. The objection to the additional evidence admitted by the ld.CIT(A) have been raised by the Revenue in ground No.(ii) to (v). We shall first deal with the objection of the Revenue on this score.
The ld.CIT(A)’s order admitting additional evidence is at para 4.4 and 4.5, as under:
4.4 I have considered the facts of the case, assessment order, remand report and submissions made by the appellant. It is pertinent to mention here that the CIT, Gandhinagar vide his office letter dated has requested for priority hearing but as the A.O. has not submitted the remand report, the appeal could not move on. The remand report has been received on 02-08-2019 in this office and the appellant has filed his rejoinder as late as on 09-10-2019. Further, in this background, I have considered the application of the appellant in respect of admission of additional evidence under Rule 46A. The C.B.D.T. has framed Rule 46A in the Income tax Rules, 1962 w.e.f. 1.4.1993. Under the said Rule, CIT(A) has been permitted to admit fresh evidence only under the following circumstances:- (a) where the Assessing Officer has refused to admit evidence which ought to have been admitted; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer; or (c) where the appellant was prevented by sufficient cause from producing before the Assessing any evidence which is relevant to any ground of appeal; (d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. 4.5 The Hon'ble ITAT, Ahmedabad Bench in the case of Ashokkumar B Patel, has held that the purpose of Rule 46A is to ensure that there is no miscarriage of justice and even if exceptions provided in Rule 46A do not exist, the evidence should be admitted after giving an opportunity to the AO. In his request for admission of the additional evidences, the appellant has stated that as he was suffering from depression at the time of assessment proceedings, he could comply with the requirement of the A.O. Considering this fact, the case of the appellant would fall in clause (b) of the said Rule and therefore, in the interest of natural justice, additional evidences are admitted ignoring the objections raised by the AO in this remand report.
15. We have gone through the above, and we have noted that the ld.CIT(A) has admitted the additional evidences noting the fact that the assessee was not in a position to file all these evidences during the assessment proceedings because of his illness, and considering Rule 46A, sub-clause (b) of the Rules, which require the additional evidences to be admitted where the assessee adduces sufficient cause for not producing the same during the assessment proceedings, the ld.CIT(A) admitted the additional evidence. The ld.DR was unable to pointed out any infirmity in the order of the ld.CIT(A) as above.
In view of the same, we see no infirmity in the order of the ld.CIT(A) in the admitting additional evidences furnished by the assessee. Ground no.(ii) to (v) raised by the Revenue are accordingly dismissed.
Ground No.(i) and (vi) relate to the merits of the addition made in the present case u/s 68 of the Act.
To deal with the same, we have gone through the order of the ld.CIT(A) and have noted the facts there from that the amounts of addition made under section 68 of the Act of Rs.27.42 crores related to the following parties:
“5.2 In the rejoinder to the remand report filed by the appellant on 09-10-2019 vide his letter dated 20.09.2019, the appellant has made counter-arguments to rebut the observations made by the A.O. in the remand report proceedings. The appellant has also furnished the party-wise submissions in respect of the following four persons:-
Sr. No. Name of the person Amount received(Rs.)
Smt. Hansaben M. Patel Rs.18,12,50,,000/-
Shri Mukesh J. Shah Rs.1,50,00,000/-
M/s Ambe Trade Corp Pvt. Ltd. (Formerly Rs.5,00,00,000/- known1 as J.P. Fincorp Services Pvt. Ltd.)
4. Shri Kamal Gohil Rs.2,80,00,000/-
Total Rs.27,42,50,000/-
With respect to each of the parties the ld.CIT(A) ,after considering the additional evidences filed before him, found that the genuineness of the credits was established. His finding with respect to each such loan creditor is from page no.40 to 47 of the order as under: (A) Smt. Hansaben Manilal Patel (Rs.18,72,00,000/-)
(i) It has been contended by the appellant that all the three ingredients as laid down u/s 68 of the Act viz. identity of the creditor, genuineness of the transaction and the creditworthiness of this lady have been satisfied as the appellant has furnished the bank book of the appellant with bank statement, the details of land sold by Smt. Hansaben M. Patel with copies of sale deeds, bank statement of Smt. Hansaben M. Patel and also the copies of the assessment orders passed by the respective A.O. assessing Smt. Hansaben M. Patel. It has been further contended that the A.O. in the remand report did not refer and discuss these documents nor has given any adverse findings on such details.
(ii) The appellant has filed the copy of bank book and the bank statement of the bank account no.817077613 which is a current bank account maintained with Indian Bank of Navrangpura Branch of Ahmedabad. The compilation of these details revealed that the appellant had deposited the cheques as received from Smt. Hansaben M. Patel on various dates in this bank account as under:-
Sr. Date Amount Batch Credit Cheque no. of No. No. as per the Indian bank Bank account statement of Hansaben M. Patel 1 22/5/2009 70,00,000 112562 525842 2 11/8/2009 2,00,00,000 717608 525872 3 11/8/2009 2,00,00,000 452969 525868 4 11/8/2009 85,00,000 117718 525870 5 11/8/2009 2,00,00,000 943878 525871 6 11/8/2G09 2,00,00,000 512837 525869 7 11/8/2009 1,18,30,000 051089 Not found 8 11/8/2009 44,20,000 051089 525875 9 12/8/2009 2,00,00,000 236100 525869 10 12/8/2009 2,00,00,000 815018 525874 11 12/8/2009 1,00,00,000 937279 525873 12 12/8/2009 1,95,00,000 896677 525866
Total 18,12,50,000 The appellant has also contended that the fact of selling the lands by Smt.Hansaben M. Patel is evident from the copy of the assessment order passed u/s 144 of the act on 23.12.2016 for A.Y.2009-10 by the I.T.O. Ward- 3(3)(2), Ahmedabad wherein the entire sale proceeds of 7 plots of land worked out at Rs.1,02,93,92,0007-have been taxed as short term capital gain. Similarly for A.Y. 2010-11, the appellant has made available the copy of the assessment order passed u/s 144 r.w.s.147 of the Act in the case of Smt. Hansaben M. Patel which also reflected the addition of Rs.33,36,89,804/- being the aggregated amounts credited in the bank account with Indian Bank, Navrangpura Branch, Ahmedabad. It is further contended that from the order passed by ITO. Wd.3(3)(2), in the case of Smt. Hansaben M. Patel, it is established that Smt. Hansaben M. Patel has given a loan to the appellant out of sale proceeds of non-agricultural land. Thus, it is proved on record that whatever fund received in bank account of the appellant is received from her. As her entire receipts which are on account of sale of land have been taxed in her hands, therefore the same should not be taxed once again in the case of appellant. It is further contended that the case of the appellant is covered by various judgments of higher judicial authorities vide which it has been held that if the amount has been received by regular banking channels, such transactions cannot be subjected u/s 68 of the Act.
(iv) The appellant has also filed the copies of sale deeds of the land situated at village Sanathal of Sanand Taluka which were purchased by Smt. Hansaben M. Patel and later on sold to M/s Applewood Estate Pvt. Ltd. and to M/s J.P. Infrastructure Pvt. Ltd. wherein Smt. Hansaben M. Patel received the money as confirming party. As per these details, Smt. Hansaben M. Patel had received an amount of Rs.1,49,52,20,500/- out of which she had made advances to the appellant for Rs.18,12,50,000/- as reflected in the bank account of the appellant as well as the ledger copy of Smt. Hansaben M. Patel.
(v) The appellant has also brought to my notice that in group cases of Surendra M. Shah and other cases, similar addition made in those five cases was deleted by the CIT(A)-5, Ahmedabad. In support of the contention so raised, a copy of appellate order dated 13.03.2018 passed in the case of Shri Surendra M. Shah has been made available in the paper book. I have carefully perused this appellate order and noticed that the addition of Rs.5,00,00,000A made by the A.O. on account alleged non-satisfactory explanation in respect of loan taken from Smt. Hansabet Manilal Patel(the same person as in the case of the appellate also) has been deleted by considering the facts as were identically observed in another case of Shri Asit Surendrabhai Shah-HUF wherein also, the addition of Rs.5,00,00,000/- was deleted by him.
(vi) The appellant's case is further found to be covered by the following judgments:-
A. In the case of Meenaben Lakhani TA No. 104 of 2011, the Hon'ble Gujarat High Court held as under:-
"In our opinion, when the loan has been received by the assessee by way of account payee cheques from depositor under the Income Tax Act and the PAN as well as confirmation by such creditor has been furnished to the Assessing Officer before deciding to proceed further it is the first duty of Assessing Officer to verify from the co - ordinate Assessing Officer of the said lender whether the transactions in question has found place in account of. said lender. If it appear that such transactions has been accepted to be genuine by the Assessing Officer of the said depositor, the Assessing Officer in question cannot dispute any further the transactions which has been accepted to be genuine by coordinate Assessing Officer having jurisdiction to decide question.
In the case before us the Assessing Officer did not place any material indicating that the loan has been either disbelieved by the Assessing Officer of the lender or it is not reflected in the lenders account. Such being the position, there was no scope of branding the transaction as "not worthy of credence "
B. In the case of Ranchhod Jivabhai Nakhava in TA No. 50 of 2011, the Hon'ble Gujarat High Court held as under:-
‘In our view, once the assessee has established that he has taken money by way of accounts payee cheques from the lenders who are all income tax assessee whose PAN have been disclosed, the initial burden under the Section 68 of the Act was discharged. It further appears that the assessee has also produced confirmation letters given by those lenders. Once the Assessing Officer gets hold of the PAN of the lenders*, it was his duty to ascertain from the Assessing Officer of those lenders, whether in their respective return they had shown existence of such amount of money and had further shown that those amount of money had been lent to the assessee. If before verifying of such fact from the Assessing Officer of the lenders of the assessee, the Assessing Officer decides to examine the lenders and ask the assessee to further prove the genuineness and creditworthiness of the transaction in our opinion, the Assessing Officer did not follow the principal laid down under Section 68 of the Income Tax Act. If on verification, it was bund that those lenders did not disclose in their income tax return the transaction or that they had not disclosed the aforesaid amount, the Assessing Officer could call for further explanation the assessee to prove the genuineness of the transaction or creditworthiness of the same.
However, without verifying such fact from the income tax return of the ("-editors, the action taken by the Assessing Officer in examining the lender.-; of the assesses was a wrong approach moreover, we find that those lenders have made inconsistent statement as pointed out by the Commissioner of Income Tax (Appeals) and such circumstances, we find both the Commissioner of income lax (Appeals) and the Tribunal were justified seeing aside deletion as the Assessing Officer, without taking step for verification of the Income Tax Return of the creditors, look unnecessary step of further examining those creditors. If the Assessing officers of those creditors are satisfied with the explanation given by the creditors as regards those transaction, the assessing Officer in question has no justification to disbelieve the transaction reflected in the account of the creditors. In other words, the Assessing Officers had no authority to dispute the correctness of assessments of the creditors of the assesse when a co-ordinate Assessing Officer is satisfied with transaction." c. In the case of DCIT V/s Rohini Builders 256 ITR 360(Guj), Hon'ble High Court held as under:-
"substantial Question of Law- cash Credit-Assessee Furnished complete addresses of all the creditors along with GIR numbers /PAN as well as confirmation along with copies of assessment orders passed in the case of individual creditors, wherever available, and copies of returns filed by the creditors bin the remaining cases-All loans were received and repaid by the assessee by account payee cheques along with interest -Tribunal deleted the addition - no substantial question of law arises- appeal of the department dismissed. " d. Apart from the above mentioned judgments of Hon'ble Jurisdictional High Court of Gujarat, the appellant's case has been found to be covered by the following judgments as well:- i) CIT V/s. Meta Chem Industries 245 ITR 160(MP) ii) Nemichand Kolhani v/s CIT 264 ITR 254 (Gauhati) iii) Sona Electirc Co V/s CIT 152 ITR 507(Delhi) iv) Tarn Tarn Pedda Guruna Reddy V/s JCIT 291 ITR 44 (Kar.)
Finding:-
On appraisal of these fresh evidences along with the submissions made by the appellant including the copy of the appellate order of the ClT(A)-5, Ahmedabad passed in the case of Shri Surendra M. Shah and binding judgments of various High Courts, the identity of Smt. Hansaben M. Patel is proved beyond doubt as she appeared before the registering authorities for getting the sale deeds registered as one of the parties to the sale deeds, passing of ex-parte assessment orders for A.Yrs.2,009-10 and 2010-11 wherein the issue of 7 sale deeds has been examined for A.Y.2009-10 and also the credit entries in the bank account with Indian maintained by Smt. Hansaben M. Patel. The amounts of loans have been through account-payee cheques which are evidenced in the bank accounts of appellant as well as of Smt. Hansaben M. Patel which have also been cross verified. Therefore, the second ingredient is also proved. The third ingredient is the creditworthiness of the loan-giver, i.e. Smt. Hansaben M. Patel which is also proved beyond doubt on the strength of the copies of sale deeds filed by the appellant evidencing the payments to Smt. Hansaben M. Patel through cheques which are further strengthened by the copies of all the relevant pages of the bank accounts maintained by Smt. Hansaben M. Patel. It appears to me that if appellant would have been fit at the time of assessment proceedings, the Assessing Officer would not have made the impugned addition of Rs.18,12,50,000/-. However, since the appellant has filed ample details and decisions of various courts in support of the contentions so raised now, the relief as prayed by the appellant for the addition of Rs.18,12,50,000/- is granted and this addition is deleted. Accordingly, the part ground of appeal in relation to this addition is allowed.
(B) Shri Mukesh J. Shah(Rs.1,50,00,000/-) (i) As per the copy of ledger account of Shri Mukesh J. Shah as appearing in the books of the appellant, this person has given loan of Rs.1,50,00,000/- on 12.8.2009 through cheque drawn on Indian Bank. The copy of bank account no.757306721 maintained with Indian Bank, Navrangpura Branch, Ahmedabad has reflected the debit entry on this account by Cheque no.525932 on 12.08.2009. The copy of the assessment order passed in the case of this person for A.Y.2010-11 has also been made available which has been carefully perused. In the said assessment order dated 26.12.2017 passed u/s 144 of the Act and aggregated credit entries of Rs.6,80,50,635/- made in the said bank account were treated as unexplained and addition of Rs.6,80,50,635/- was made by the I.T.O: Ward- 5(3)(4), Ahmedabad. The appellant has filed the copies of four sale deeds of the lands sold by Shri Mukesh J. Shah which reflected that he has sold the pieces of land situated at Sanathal village of Sanand Taluka and all the four sale deeds were registered with the S.R.O., Sanand on 03.07.2018 and all the payments were received by Shri Mukesh J. Shah through cheques drawn on Citi Bank and issued by M/s Applewood Estate Pvt. Ltd. ii) Finding:-
On appraisal of these fresh evidences along with the submissions made by the appellant, the identity of Shri Mukesh J. Shah is proved beyond doubt as he appeared before the registering authorities for getting the sale deeds registered as one of the parties to the sale deeds,-passing of an ex-parte assessment order for A.Y.2010-11 wherein the issue of the credit entries in the bank account with Indian Bank maintained by Shri Mukesh J. Shah has been examined by that A.O. The amounts of loans have been given through account-payee cheques which are evidenced in the bank accounts of the appellant as well as of Shri Mukesh J. Shah which have also been cross verified. Therefore, the second irfgredient is also proved. The third ingredient is the creditworthiness of the loan-giver, i.e. Shri Mukesh J. Shah which is also proved beyond doubt on the strength of the copies of sale deeds filed by the appellant evidencing the payments to Shri Mukesh J. Shah through cheques which are further strengthened by the copies of all the relevant pages of the bank accounts maintajned by Shri Mukesh J. Shah. Now, since the facts of loan transactions made with Shri Mukesh J Shah are similar to those of Smt. Hansaben Manilal Patel alongwith the case laws relied as mentioned in the findings given above and as the appellant has filed ample details in support of the contentions so raised, the relief as prayed by the appellant for the addition of Rs.1,50,00,000/- is granted and this addition is deleted. Accordingly, the part ground of appeal in relation to this addition is allowed.
(C) M/s Ambe Trade Corp Pvt. Ltd.(Rs.5.00,00,000/-)
(i) The appellant has filed the copies of contra confirmation account for F.Ys. 2008-09 and 2009-10 i.e. for assessment years 2009-10 and 2010-11, copy of acknowledgement of return of Income for these years, copy of bank statement of appellant, certificate from ROC for change of name and copies of balance-sheets as on 31.03.2009 & 31.03.2010 of this company formerly known as J.P. Fincorp Services Pvt. Ltd. This company has provided loan of Rs.5,00,00,000/- to the appellant through cheque no.529602 drawn on Indian Bank on 28.02.2009 (falling in the assessment year 2009-10) and this loan has been repaid to the appellant in the next year vide cheque nos.453657, 453658 and 453659 issued for Rs.2,00,00 00 Rs.2,00,00,000 and Rs.1,00,00,000/- drawn on Indian Bank and thus, the |oai account was squared up during the year under consideration. The A.O. has a\so noted these facts in the assessment order on the basis of details furnished directly by this company. However, still the A.O. did not believe the same to be true only for the reason that the confirmation was given in the changed name of the company i.e. M/s Ambe Trade Corp. Pvt. Ltd. for which, the appellant has now furnished the documentary evidences also.
Finding:-
Since the loan transactions are through banking channels and taken by the appellant in the assessment year 2009-10 for Rs.5,00,00,000/- which stood repaid in the assessment year under consideration, the same are to be treated as genuine. Further, in the remand report also, the A.O. has not doubted these transactions to be non-genuine. Considering these facts, the addition of Rs.5,00,00,000/- in "respect of opening loan balance of Rs.5,00,00,000/- in the books of the appellant as well as the giver-company is deleted. Accordingly, the part ground of appeal in relation to this addition is allowed.
(D) Shri Kamal Gohil(Rs.2,80,00,000/-)
(i) In the assessment order, the A.O. has mentioned and reproduced relevant part of information and findings of DDIT(INV) Unit 1(3)
Ahmedabad (pages 2 to 4 of the assessment order). Such information and finding does not show any transaction by or from R M Thakor with the appellant. The A.O. has issued summons to various parties on 20- 11-2017: In the list of such persons, name of R M Thakor is not found. On going through the entire assessment order, the A.O. has not given any finding or discussed anything about additions of Rs. 1,80,00,000/- allegedly received from R M Thakor. However, it is noticed that Shri Kamal M. Gohil has given the loan of Rs.2,80,00,000/- through two cheques drawn on Indian Bank on 22.05.2009. The appellant has contended that this person has also received the money as the .confirming party of land situated at Sanathal village of Sanand Taluka which was to M/s Applewoods Estate Pvt. Ltd. as per the copy of sale deed no.663 registered on 21.02.2009. As-per this sale deed, Shri Kamal Manubhai Gohil has received the amount of Rs.8,44,69,500/- as confirming party out of total sale consideration of Rs.9,20,20,500/-. On the strength of these documents, the appellant has contended that the identity, genuineness of the transactions and the creditworthiness of the person giving loans have been proved. In the remand report, the A.O. has pointed out that the ledger copy of account of Shri R.M. Thakor was not filed but it was the ledger account copy of Shri Kamal Gohil and therefore, the same cannot be accepted. Finding:- This person has also received the money through banking channels and advanced the sum of Rs.2,80,00,000/- within three months of executing the sale deed on 21.02.2009. Therefore, all the three ingredients, i.e. identity before the registering authority, genuineness of transactions being routed through banking channel and the creditworthiness by way of having sufficient fund on account of money received as confirming party are proved. Therefore, the addition of Rs.2,80,00,000/- cannot be treated as unexplained in view of these fresh evidences coupled with the judicial decisions mentioned above in this order, hence deleted. Accordingly, the part ground of appeal is allowed.”
19. A perusal of the above would reveal that with respect to each of the parties, the ld.CIT(A) noted the fact that- • all the amounts had come through banking channels; • that they were identified by the bank, as coming from respective parties, persons/entities, and • on the basis of the additional evidences filed it was noted by the ld.CIT(A) in the cases of Ms.Hansaben M. Patel, Shri Mukesh J. Shah, and Kamal Gohil, source of amounts advanced to the parties was from sale of land by them. The documents
16 pertaining to the sale of land was also furnished by the assessee to the ld.CIT(A) which were sent to the AO for examination, and no adverse remarks were made by the AO with respect to the same. The above facts have remained uncontroverted before us. Moreover the fact that the AO examined the source of loans advanced by these parties, i.e by selling lands, and had no adverse comments to make, clinches the issue in favour of the assessee.
Therefore, with respect to the individuals, i.e Ms.Hansaben M. Patel, Shri Mukesh J. Shah, and Kamal Gohil, we are in complete agreement with the ld.CIT(A) that the genuineness of the loans advanced stood duly established; with identity, genuineness and credit-worthiness of the transactions being demonstrated by the assessee.
With regard to the amounts received by the assessee from M/s Ambe Trade Corp. Ltd., the ld.CIT(A) noted that said entity to have confirmed the fact of giving this amount to the assessee by way of returning the loan received by it from the assessee in the preceding years. The ld.CIT(A) has also noted that the AO did not doubt these transactions to be non-genuine, and basis this observation and finding, the ld.CIT(A) deleted the addition made by the AO, holding the transaction to be non-genuine.
The ld.DR was unable to controvert the factual finding of the ld.CIT(A).
We therefore see no reason to interfere in the order of the ld.CIT(A) deleting the addition made under section 68 of the Act amounting to Rs.27.42 crores.
Having found so, we have also gone through the orders passed by the Hon’ble Gujarat High Court in the case of M/s.Ambe Tradecorp P.Ltd. Tax Appeal No.318 of 2022 dated 11.07.2022 and M/s Rachna Finlease P.Ltd. Tax Appeal No.787 of 2023 dated 4.12.2023. The ld.counsel for the assessee pointed out that these entities were noted to have given/received amounts from the assessee. He drew our attention to the order of the AO wherein in the table, as reproduced above, the fact of the amount received by the assessee, being advanced to M/s Rachna Finlease P.Ltd. and received from Ambe Trade Corp earlier known as M/s JP Fincorp Services P.Ltd, is noted. Ld.counsel for the first drew our attention to the order of the Hon’ble High Court in the case of M/s Ambe Trade Corp P.Ltd. He drew our attention to the facts noted by the Hon’ble Gujarat High Court in the said case, wherein it was found that M/s Ambe Tradecorp had received Rs.39.05 crores as share application money from M/s Rachna Finlease P.Ltd. That M/s Rachna Finlease in turn had sourced this from amounts advanced to it by Ms.Hansaben M. Patel and Shri Ramesh G. Thakor, the assessee before us. These facts are noted at para 3 & 5 of the Hon’ble High Court’s order as under:
“3. The facts are that, a search was undertaken under section 132 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') in one JP Iscon group on 25.2.2016 as well as the respondent assesee which is one of the group of companies of JP Iscon Group. The respondent assessee filed its original Return of Income on 9.8.2011 declaring total income of Rs. 2,82,902/-. The case was subsequently reopened under section 147 of the Act upon receipt of the information from the investigating wing. The said information was in respect of credits received from one M/s. Rachna Finlease Pvt. Ltd. . Thereupon, the income of the assessee came to be reassessed after making addition of Rs. 39,05,50,000/- under section 68 of the Act treating the same towards unexplained credit receipts from the said M/s. Rachna Finlease Pvt. Ltd.. Order was passed on 13.12.2019 under section 147 of the Act. The assessee company filed appeal before the Commissioner of Income Tax (Appeals) which was allowed by the Appellate Authority as per order dated 27.5.2017. The Revenue thereafter preferred appeal before the Tribunal against the order of the Appellate Authority. The Tribunal dismissed the Appeal.
3.1 Before the Assessing Officer, the case of the assessee was that it received the share application money from M/s. Rachna Finlease Pvt. Ltd. as per the ledger account during the period from 1.4.2009 to 31.3.2010 and that the said amount was paid back fully to the said M/s. Rachna Finlease Pvt. Ltd. in the financial year 2010-2011 relevant to the Assessment Year 2011-2012. It was the case of the assessee that the credit was recorded in the Books and was paid back also. Accordingly to the Assessing Officer, the explanation given by the assessee was not satisfactory to prove the creditworthiness of the creditor, that is M/s. Rachna Finlease Pvt. Ltd.”
It could be seen from the facts of the case that the assessee had submitted Pan Card, Ledger Confirmation, his own bank statement and bank statement of M/s. Rachna Finlease Pvt. Ltd. to demonstrate that amount was received through banking channel. Before the Appellate Authority, the assesee could establish that M/s. Rachna Finlease Pvt. Ltd. had received money from one Smt. Hansaben H. Patel and from one Shri Rameshbhai Thakore and the said factumm was fortifiable from the bank statement of the creditor M/s. Rachna Finlease Pvt. Ltd. It was noted by the Appellate Authority that the said aspect was recorded by the 5.1 Assessing Officer also in paragraph No. 6.1.3 of its order, which reads as under:
On verification of the bank book of Rachna Finlease Pvt. Ltd. it is found that the fund have travelled within minutes of being credited from the bank account of Hansaben H. Patel and Rameshbhai Thakor and immediately the funds have landed in the bank account of JP Fincorp Services Pvt. Ltd. (Renamed as Ambe Tradecorp Pvt. Ltd.).
5.2 It could be said that the finding of the Assessing Officer that the identity and creditworthiness of said party was not proved, was devoid of any basis, on the contrary, the facts established by the assessee suggested otherwise. The genuineness of transaction was shown by producing bank statements and also by explaining the source of fund at the hands of the party.
5.3 The Appellate Tribunal dismissed the Appeal of the Revenue on the said count holding and observing as under:
It was alleged by the Assessing Officer that the amount received by the assessee represents the accommodation entries from M/s. Rachna Finlease Pvt. Ltd. for the reason that such company was not filling its income tax return. In this connection, we find that the finding of the Assessing Officer is not correct to some extent. It is for the reason that the company namely M/s. Rachna Finlease Pvt. Ltd. has filed income tax return in response to the notice issued under section 148 of the Act and accordingly the assessment was completed under section 147 read with section 143(3) of the Act where huge additions were made in the hands of the company on account of unexplained cash credit under section 68 of the Act.
5.4 The Tribunal further stated that the findings of the Assessing Officer was not correct, observing thus, Furthermore, once the source of fund in the hands of above company was held as explained by learned CIT(A) then amount received by the assessee from that company cannot be held as unexplained under section 68 of the Act in the absence of contrary information. Likewise, there cannot be addition of one item in the hands of two different persons."
He, thereafter, drew our attention to the fact that this addition made in the case of M/s Ambe Tradecorp had been consistently deleted both by the ld.CIT(A) and the ITAT, finding the genuineness of the same to be established, and the department’s appeal against the order of the ITAT was dismissed by the Hon’ble High Court. He drew our attention to para 6 of the High Court’s order as under: “6. Learned senior advocate attempted in vain to contend that the creditworthiness and genuineness of said M/s. Rachna Finlease Pvt. Ltd. was not established and that towards the share application money, the said party was a non-filer assessee company. It was sought to be argued that when the amount was given towards share application money, the assessee was not free from suspicion. Once the Books of Accounts and the facts reflected therein showed the source of the fund and the identity of the party and the aspect that Books of Accounts of the assessee also reflected the receipt and the amount was repaid by the assessee, it was not open to the Assessing Officer to raise doubts about the creditworthiness of the creditor. The Assessing Officer ignored the relevant material.”
He, thereafter, took us through the order of the Hon’ble High Court in the case of M/s Rachna Finlease P.Ltd. (supra) which in the facts before the Hon’ble Court, had received amounts from the same persons from which the assessee before us had received i.e. Shri Mukesh J. Shah, Ambe Tradecorp P.Ltd./ J.P. Fincorp Services P.Ltd., Shri Kamal Gohil and Ms.Hansaben M. Patel. The addition in the case of M/s Rachna Finlease by the AO had consistently been deleted by 20 the ld.CIT(A) and the ITAT and confirmed by the Hon’ble High Court at para 11 of its order as under:
[11] Keeping in mind the aforesaid decision as well as keeping in mind that Smt. Hansaben Manilal Patel has already been substantially taxed and Ramesh G. Thakor's addition also deleted the learned CIT (A) as the source was clearly proved by the assessee. In our considered opinion, the appellate authority as well as the Income Tax Appellate Tribunal concurrently reversed the findings of the Assessing Officer on the said count, and thus, it could not be said that any question much less any substantial question of law arises in the appeal. Accordingly, the present appeal is devoid of any merit and is dismissed.”
The ld.counsel for the assessee contended that when the amounts received from Shri Ramesh G. Thakor, the assessee before us, was found to be genuine in the case of M/s Ambe Tradecorp and amounts received by M/s Rachna Finlease from the same parties as that received by the assessee before us found genuine by the Hon’ble Gujarat High Court, there was no occasion for making addition in the hands of the assessee under section 68 of the Act.
We are in complete agreement with the ld.counsel for the assessee on this score. Both these entities i.e. M/s Ambe Tradecorp and Rachna Finlease had transacted with the assessee either by way of advancing the amounts to the assessee or receiving money from the assessee, and in both the cases the Hon’ble High Court have found money to have come from the genuineness sources. Therefore, the order of the Hon’ble High Court strengthens the case of the assessee.
We have also gone through the order of the ITAT in the cases of Asit Surendrabhai Shah and others in and others dated 2.8.2023. We have also considered the facts in the case of the assessee, and also that in the case of Ambe Tradecorp and Rachna Finlease adjudicated by the Hon’ble Gujarat High Court. What transpires from the facts of the said cases is that there was search conducted in the JP Iscon group and the case made out by the Revenue was that the said assessee had resorted to illegal means to bring in unaccounted money in its books of accounts. The alleged modus operandi adopted being that land was bought and sold within a short span of time of 13 days by one Ms.Hansaben M. Patel who was a non-filer of the return. The land was bought for a small amount, but was sold within this short span for Rs.149.52 crores, and this money immediately was transferred by her to other accounts which included the assessee, Shri Ramesh Thakor and others and ultimately reached the companies of JP ISCON group. The allegation of the department was that in this manner unaccounted incomes of the JP ISCON group was brought into their books as loans and advances/ share application money received. All these facts are noted in the order of the ITAT at para-4 to 5.1 as under: “4.1. The assessee during the course of reassessment proceedings, submitted Ledger account of Smt. Hansaben M. Patel, Copy of the bank statement reflecting the transaction with Smt. Hansaben M. Patel, Copy of Return of Income for A.Y. 2009-10 filed by Smt. Hansaben M. Patel and her bank statement reflecting the above transaction with the assessee. Further the assessee also filed copy of confirmation received from Smt. Hansaben M. Patel and repayment of loan in the next financial year through Account Payee Cheques with bank statements. 4.2. The assessee also clarified that he has not paid any interest on the above loan taken from Smt. Hansaben M. Patel. Thus the assessee claimed that he has proved the identity of Smt. Hansaben M. Patel, genuineness of the transaction and creditworthiness of the creditor, who sold her lands at Sanand District, Ahmedabad for Rs. 149,52,20,000/-. Thus the assessee pleaded the provisions of section 68 does not attract and relied upon various case laws in support of his claim.
5. The above submission was not accepted by the A.O. since Smt. Hansaben M. Patel has never filed her Return of Income, except only for the AY 2009-10. Even for the AY 2009-10, she has filed Return of Income of Rs.8,65,250/-. The assessee has not provided computation of income, but submitted only copy of acknowledgement of the Return of Income. Further, on verification of bank statement of Smt. Hansaben M. Patel maintained with Indian Bank, it is seen that there is continues in and out credit and debit entry throughout the year. The sale considerations received of various lands have been immediately or within a day or two was debited from her account. Thus, it can be seen that Smt. Hansaben M. Patel has transferred money to the various concerns of the Asit Shah, JP Infrastructure Pvt. Ltd. and dummy companies of JP Iscon Group like Rachana Finelease Pvt. Ltd., which again proves that Smt. Hansaben M. Patel has worked as an accommodation entry provider and she was used by the assessee for providing accommodation entries to JP Iscon Group.
5.1. In view of these facts, the submission of the assessee that Smt. Hansaben M. Patel owned lands in her own name is proved wrong. Even it is accepted that Smt. Hansaben M. Patel has in reality had her own lands and sold it to M/s. Applewoods Estate Pvt. Ltd. then also no capital gain on such transaction had been offered in the Return of Income filed by her in the AY 2009-10. In view of the fact that the lands which was claimed to be sold by Smt. Hansaben M. Patel were in fact not her own lands, it has become necessary to verify when and from whom this lands were purchased by her. On verification, it is revealed that lands situated at Block nos. 111, 112, 114, 115, 116, 117 and 121/A, was purchased by Smt. Hansaben M. Patel from the original land owners during the FY 2008-09 itself on a single day i.e. on 20.06.2008 and out of these total seven blocks 6 blocks except 117 was sold to M/s. Applewoods Estate Pvt. Ltd. on a single day i.e. on 03.07.2008, it means that Smt. Hansaben M. Patel has sold the lands to M/s. Applewoods Estate Pvt. Ltd. just within 13 days after purchased from original land owners.”
These facts are reiterated in the order of the Hon’ble Gujarat High Court noted above by us.
It is evident from the above that the case of the department is that the JP Iscon group of companies had devised means for bringing in unaccounted income into their books by routing money through the hands of one Hansaben M. Patel by showing abnormally huge capital gains earned by transacting in land that too in a short span of 13 days, and this money being on the same day transferred by her to various parties / entities and finally reaching into the hands of ultimate beneficiary, i.e the JP ISCON group companies. This being the case of the department, there is no reason for treating the amounts received by the intermediaries as their undisclosed income.
The assessee in the present case, Shri Ramesh G. Thakor, being alleged intermediary, having as a matter of fact advanced all amounts received as loan to either M/s Rachna Finlease or M/s. Arham
23 Properties there was, we hold, no occasion to treat the amounts received by the assessee as his undisclosed income.
With the above observation and finding, we uphold the order of the ld.CIT(A) deleting the entire addition made of Rs.27.42 crores in the hands of the assessee under section 68 of the Act.
Grounds of appeal of the Revenue are dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Court on 11th July, 2024 at Ahmedabad.