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Income Tax Appellate Tribunal, ‘’ D’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
आदेश/O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad, arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2012-13.
The only issue raised by the assessee is that ld. CIT-A erred in confirming the order of the AO by sustaining the addition of Rs. 1.76 crores by treating the sale proceeds of shares of M/s L.N. Polymer as bogus.
Briefly, the stated facts are that the assessee in the present case is an individual and claimed to be engaged in the business of trading in shares, securities, commodities, and derivatives. The assessee in the year consideration has received an amount of Rs. 1.76 crores from certain companies on account of sale of 80000 shares M/s L.N. Polyester Limited which are detailed as under: 1. Admina Traders Pvt Ltd. Rs. 25 Lakh 2. Alish Traders Pvt Ltd. Rs. 35 Lakh 3. Jaylalitha Commodities Pvt Ltd Rs. 96 Lakh 4. Meritorious Reality Pvt Ltd Rs. 20 Lakh 3.1 The assessee claimed that the impugned shares were purchased on 22-11- 2010 i.e. during the immediately preceding previous year 2010-11 relevant to AY 2011-12 @ 22 per share in direct allotment.
The AO found that the parties/companies from whom the assessee has shown receipt of Rs. 1.76 crore are the companies controlled and managed by the accommodation entry provider namely Shri Shrish Chandrakant Shah. The AO in alleging so referred the statement of several persons including the certain directors of these companies recorded in the course of search and survey proceeding carried at of Shri Shirish Chandrakant Shah, his key employee and various other concern which he allegedly controls and manages, and search operation carried out at Amrapali group and Rajesh Jhaveri Group. Further as a result of search, it was found that Shri Shrish Chandrakant Shah in association with various intermediaries has been providing accommodation entries in the form of share capital & premium, unsecured loan, LTCG and STCL etc. and one such intermediaries was Shri Rajesh Jhaveri through whom accommodation entries were provided to Ahmedabad based client/parties. The name and reference of Shri Rajesh Jhaveri was found in several documents unearthed during the course of search carried out at the premises of Shri Shirish Chandrakant Shah. An excel sheet was maintained in accounting form by Shri Chandrakant Shah in the name of Rajesh Jhaveri showing cash receipt from him and accommodation entry provided through cheques to several against such cash receipt of Shri Rajesh Jhaveri was also found. In the impugned excel sheet, the name of the present assessee was also found as party to whom cheques were paid from the companies controlled by Shri Chandrakant Shah against the cash receipt. The entry made in the impugned excel sheet matched with the receipt shown by the assessee in her/his books.
4.1 In view of the above, the AO rejected the explanation and details such as PAN, confirmation, bank statement and financial statement of companies as discussed mentioned above. Thus, the AO made the addition of Rs. 1.76 crore received by the assessee as unexplained cash credit under section 68 of the Act.
4.2 On appeal by the assessee, the learned CIT(A) confirmed the addition made by the AO by observing as under: It is observed that AO has made addition under Section 68 of the Act for loan take n from various companies which were managed by Mr.Shirish Shah and his group to provide accommodative entries. The above referred addition made by AO is as per provisions of the Act, as discussed herein above, and for the sake of comprehensiveness major arguments considered while adjudicating the appeal is summarized as under: (1) Mr. Shirish Shah managed and controlled 212 compananies from whom real business. Loan taken by Assessee Company was from alt is observed companies managed by him. (supra) (ii) During the course of search/survey carried out at the various premises of Mr. Shirish Shah and his companies and various statements recorded during the course of search including statement of Mr. Shirish Shah and various other key persons, as discussed in preceding paras, clearly prove entire modus operandi of providing accommodative entries to various recipients including the appellant. The records of providing accommodation entries were maintained by Shri Shirish Chandrakant Shah in 'Cash Sheet' as well as in various account maintained in the name of intermediaries who had introduced clients to Shri Shirish Chandrakant Shah. On perusal of these sheets and the statement of Shri Shirish Chandrakant Shah and his employees established that the main intermediary through whom clients of Ahmedabad availed accommodation entries from Shri Shirish
Chandrakant Shah was Shri Rajesh N. Jhaveri (key person of Rajesh Jhaveri Group). It was also established that in the cash sheets seized from Shri Shirish Chandrakant Shah, entries against the name "rajesh Jhaveri", "n navkar", "R JHAVERI", "RAJESH JHAVERI" and "N NAVKAR (sawaca)" related to Shri Rajesh Jhaveri
(iii) The directors of various companies managed by Mr. Shirish Shah were dummy directors which are accepted to be true by such directors in affidavits filed at various stages including before Investigation Department.
(iv) During the course of search at the premises of Mr. Shirish Shah, various incriminating material including cash sheets were found which prove that they have provided various types of accommodative entries against cheques and vice versa. The sample copies of such loose papers are reproduced in preceding para which support the view that the appellant has taken accommodation entry above referred parties. The copies of relevant statements are also reproduced in preceding para which support the contention of AO that Appellant has taken accommodative entries.
(v) The entire modus operandi of cash receipt against accommodative entries were explained by Mr. Shirish Shah and Mr. Praveen Jain and such facts are elaborately discussed herein above. It is observed that addition under Section 68 of the Act made in the hands of Mr. Pavan Sanghvi was also confirmed by Hon'ble Ahmedabad ITAT, as discussed herein above. The above referred decision was also upheld by Hon'ble High Court and SLP of Department was dismissed by Hon'ble Supreme Court.
(vi) In preceding paras, circumstantial evidences being investigation carried out by SEBI, DGCI, Crime Investigation Department, GST Intel Unit are brought on record which also prove beyond doubt that Mr. Shirish Shah was entry provider and loan received by Appellant from companies managed by him is not genuine.
(vii) The appellant has relied upon the confirmation, bank statement, return of income of depositors to substantiate its argument that transaction made by it was genuine. However, this contention of Appellant cannot be accepted for the reason that financial statements of depositors, as discussed herein above clearly prove that such companies have not earned significant income in relevant Assessment Years and which prove beyond doubt that creditworthiness of depositors is in doubt.
(viii) Mere receipt transaction through account payee cheque by Assessee does not make loan transaction genuine, as various incriminating materials found during the course of search at the premises of Mr. Shirish Shah prove that such transactions are not genuine, cash was transferred or received against cheque amount and RTGS received in bank account of various companies is layered within his infrastructure and finally paid in the form of one-time or long term/short term capital gains in accommodation entries.
(ix) The decision of Hon'ble Madhya Pradesh High Court in the case of Chain House International Pvt. Limited, ratio of such decision cannot be made applicable to present, as in the appellant's case no affidavits or confirmation of Mr. Shirish Shah was filed which proved that transaction made by the appellant is genuine, whereas in case before Hon'ble Madhya Pradesh High Court, all the investor companies and directors have confirmed their transactions against notices us 133(6) of the Act. In the present case during the course of assessment proceedings, the AO had asked to the appellant to produce the directors of the companies from whom loans/ICD were taken but of directors remained present. It is observed that Jurisdictional High Court in the case of Amrapali Fincap Limited (supra) has upheld the Order of Hon'ble Settlement Commission in connection with entries taken from Mr. Shirish Shah and Group
(x) A holistic approach is required to be made, test of preponderance of probability has to be applied and while deciding these facts, the evidences discussed herein above against Mr. Shirish Shah cannot be ignored.
(xi) Various judicial pronouncements discussed in preceding paras clearly prove that transaction made by the appellant is non-genuine. The decision referred herein above includes the decision of Jurisdictional High Court in the case of Mr. Pavan Sanghvi, one of the main persons of Mr. Shirish Shah Group, decision of Hon'ble Mumbai ITAT in the case Zodiac Developers wherein loan was taken from Shirish Shah Group.
(xii) Considering the peculiar facts of the case and direct decision Hon'ble Gujarat High Court in the case of Amrapali Fincap Limited (supra) upholding the Order of Hon'ble Settlement Commission of denying cross examination of Mr. Shirish Shah, mere fact that cross examination was not provided to Assessee would not render the Assessment Order as infructuous order. On the contrary AO has asked to produce the relevant directors of the depositors for verification in assessment Proceedings but none of the directors have remained present. Even Mr. Shirish Shah was not produced before the Assessing Officer to prove that statement given by him during the course or search and admitting that various companies managed by him were bogus is incorrect.
In view of holistic consideration of all the facts, as discussed herein above, the various pleas in the ground of appeal taken by the appellant are rejected and the action of the AO in making addition of Rs. 1,76,00,000/- under Section 68 of the Act is justified and hence confirmed. Thus, the ground of appeal no. 1 is dismissed.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
The learned AR before us filed a paper book running from pages 1 to 234 and contended that there was an identical issue in the group case of the assessee which was accepted by the revenue as genuine and no addition of whatsoever was made in the assessment framed under section 143(3) of the Act. Accordingly, the learned AR submitted that the revenue cannot take contradictory stand in the identical facts and circumstances. Once the revenue has accepted the identical transaction as genuine than the revenue cannot take identical transaction as bogus until and unless some distinguishable facts are brought on record. But it is not so in the given case. Thus, it was the contention of the landed AR that the facts being identical to the case of Smt. In the case of Viali Vicky Jhaveri and therefore no addition is warranted.
On the other hand, the learned DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the proceeds on sale of shares of M/s L.N. Polyester Limited to 4 parties mentioned somewhere in the preceding paragraph was treated as bogus and manipulated, leading to the addition under section 68 of the Act by the AO. The view of the AO was based on certain factors which have been elaborated in the preceding paragraph. Subsequently, the learned CIT (A) upheld the finding of the AO.
8.1 At the outset we note that in the case of the daughter in-law of the assessee namely Smt. Viali Vicky Jhaweri during the year also sold 75,000 shares of M/s L.N. Polyester Limited for Rs. 1.65 crore to M/s Admina Traders Pvt Ltd., one of the companies out of 4 to whom the assessee sold shares of M/s L.N. Polyester Limited. The assessment of the Smt. Viali Vicky Jhaveri was reopened by the same AO who made assessment in case of the assessee based on the finding of search operation carried out in case of Shri Chandrakant Shah. During the reassessment proceedings, Smt. Virali Vicky Jhaveri made an identical submission as made by the present assessee. The AO, who also happens to be the AO of the present assessee, accepted the explanation furnished by Smt. Virali Vicky Jhaveri and accepted the return income without making any adjustment on account of sale of shares of M/s L.N. Polyester Limited. On the contrary the same AO in the case of present assessee treated sale proceeds of shares of M/s L.N. Polyester as bogus and made addition under section 68 of the Act. Thus, AO has taken contrary stand for same transaction. In our considered opinion once, the AO has accepted the genuineness of identical transaction in group cases of the assessee, the AO cannot take contrary stand in the case of the present assessee. The principle of consistency should be followed in the cases where identical facts/transactions are involved. Therefore, we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed.
In the result, the appeal filed by the assesee is hereby allowed.
Order pronounced in the Court on 10/06/2024 at Ahmedabad.