THE ITO, WARD-11(4),, AHMEDABAD vs. SHRI SHAMSHENDER LOHIA, AHMEDABAD

आदेश / O R D E R

PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : This is an appeal by the revenue directed against the order of the Commissioner of Income Tax(Appeals)-XVI, Ahmedabad, dated 12/08/2011 for the Assessment Year (AY) 2008-09.

ITA No. 2607/Ahd/2011 ITO vs. Shri Shamsunder Lohia Asst.Year –2008-09 - 2 -

During the course of assessment proceedings, the assessee has furnished confirmation from the following depositors:- S. Name of the Opening Addition Addl. Payment Closing N. Party Balance (Rs.) Interest (Rs.) Balance (Rs.) (Rs.) (Rs.) 1. Amresh 6,15,351 90,000 24,621 24,621 6,80,730 Ramdinesh Sharma 2. Arvind Ranjeet 5,16,356 75,000 24,081 24,081 5,67,275 Sharma 3. Dipika 0 5,04,636 0 0 5,04,636 Mangalbhai Shah 4. Manjula 3,11,514 1,57,945 17,482 17,482 4,51,977 Shivshankar Mishra 5. Rajni Birendra 6,20,194 90,000 29,464 29,464 6,80,730 Pandey 6. Vishwanath 2,07,676 30,000 10,766 10,766 2,26,910 Ramrekha Sharma 7. Rohit Prahalad 2,00,000 23,342 2,404 2,404 2,20,938 Patel Total 24,71,091 9,70,923 1,08,818 1,08,818 33,33,196

ITA No. 2607/Ahd/2011 ITO vs. Shri Shamsunder Lohia Asst.Year –2008-09 - 3 -

In this connection, it was brought to the notice of the assessee, that there was survey in the case of Shri Lalitkumar Sharma & Others on 31/08/2009. During the course of survey a statement of Shri Ramdinesh Sharma was recorded on oath. In the statement recorded, Shri Ramdinesh Sharma has categorically admitted that he was managing business affairs/bank accounts etc. of 61 persons. Moreover the bank passbooks, blank cheques duly signed etc. have also been found which were impounded during the course of survey. It was also stated that he himself has opened the bank accounts in the name of various persons, operated the bank accounts and also deposited the cash into their accounts and issued cheques to the various persons. The names of the above persons from whom you have obtained the deposit are appeared in the list of 61 persons.

In view of the above, the detailed show cause notice was issued to the assessee on 25.11.2010. It was necessary verified the identity, creditworthiness and genuineness transaction, in the background of the evidences found during the course of survey in the case of Shri Lalitkumar Sharma & Other and particularly, in view of the statement recorded on oath of Shri Ramdinesh Sharma. Therefore, the assessee was requested to produce the 7 persons, in order to verify the identity, creditworthiness and genuineness of transaction. Further, vide above show cause notice dated

ITA No. 2607/Ahd/2011 ITO vs. Shri Shamsunder Lohia Asst.Year –2008-09 - 4 - 23.12.2010, the assessee was also requested to furnish the age wise analysis of the opening balance standing in the name of the above 7 depositor.

The hearing was fixed on 02.12.2010 & 27.12.2010, in the above show cause notice, it was also specifically mentioned that in case was failure to produce the persons and to furnish the Age wise analysis, the amount of Rs.9,70,923/- credited the during the year, and the entire amount of interest of Rs.1,08,818/- including interest on opening balance amounting to Rs.24,71,091/- will be treated as unexplained cash credit u/s 68 of the Act.

In response to the above show cause notice Shri Nirmal Jain, attended on behalf of the assessee on 07.12.2010 and furnished the written reply. Further reply was also furnished on 21.12.2010. In the said reply, it is submitted that the copy of statement of Shri Lalitkumar Sharma & Others has not been enclosed. The above contention of the assessee is not correct during the course of survey the statement of Shri Ramdinesh Sharma was recorded and copy of the said statements has been handed over to Shri Nirmal Jain, A.R. of the assessee. The order sheet entry dated 07.12.2010 has been made which is signed by Shri Nirmal Jain. It was further submitted that no addition can be made on the basis of statement recorded of the third party. The loans have been accepted and repaid to the said parties either during the year or in subsequent

ITA No. 2607/Ahd/2011 ITO vs. Shri Shamsunder Lohia Asst.Year –2008-09 - 5 - years. The complete address as well as PAN the provided, all are assed to tax. Therefore, genuineness of loan should not be doubted.

As regard, to produce the parties, it is submitted that the assessee have no good relation with the said parties now and therefore, it will be not comfortable to produce the parties. Further, it was submitted that "If for a moment your version is accepted then also it cannot be accepted that these person cannot have substantial income/assets to give loan for earning interest. Even if certain entries are found to be non genuine, it will not lead the entire transaction as non genuine since every person will be investing his money in one way or another. Therefore, merely based on statement recorded of third party, no addition should be made for the sake of justice."

The above version of the assessee is nothing but the admission of fact that the depositors have not substantial income/assets to advances the loan for earning interest and certain entries are non genuine.

Regarding disallowance of interest it is submitted that the interest paid and TDS has been deducted and claimed by the depositors and therefore, the disallowance should not be made to avoid double taxation.

ITA No. 2607/Ahd/2011 ITO vs. Shri Shamsunder Lohia Asst.Year –2008-09 - 6 - The submission made by the assessee has been carefully gone through. However, the same is not found acceptable. The main contention of the assessee that the Assessing Officer, is relying upon the statement recorded during the survey of Shri Ramdinesh Sharma. The above contention of the assessee is not correct. In this connection, it is worthwhile to mention here that a survey u/s 133A of the Act was carried out in the case of Shri Lalit S. Sharma & others (Shri Lalit S. Sharma, Manoj R. Sharma, Arvind R. Sharma, Smt. Rajni B. Pandey and Shri Dinesh K. Agarwal) on 31/08/2009 at the office premises, 115 P.B. Parikh Tower, Kankaria, Ahmedabad. During the course of survey proceedings it was noticed that one Shri Ramdinesh Ranjit Sharma was managing the business affairs/bank accounts etc. of all the above persons and persons other than above some of whom were his close relatives/friends as claimed by him. During the course of survey proceedings it was further admitted by him that he himself had opened the bank accounts in the name of all the above persons and operated the bank accounts himself in the name of these persons, deposited cash into their bank accounts and issued cheques to various persons. The modus operandi of the business carried on at 115, P.B. Parekh Tower, Kankaria, Ahmedabad has been explained by Shri Ramdinesh Sharma. He has categorically admitted that opened all the bank accounts in the name of these persons. The cheque books issued by the bank were kept in his custody. He used to avail the signature of the concerned persons on

ITA No. 2607/Ahd/2011 ITO vs. Shri Shamsunder Lohia Asst.Year –2008-09 - 7 - blank cheques and kept them in his custody. He received cash from the persons who were in need of accommodation entries for unsecured loans. The cash so received was deposited in one of the bank account of the above persons. After depositing the cash, the cheque was issued to the concerned parties. The concerned parties would show it as unsecured loan in their books of the account. The assessee has also received unsecured loan from the parties who have been accommodation entry. In the above background the undersigned was of view that the transaction are suspicious and further verification is necessary regarding genuineness of the transaction. In the above background which has also been mentioned in the show cause notice, the undersigned has asked the assessee to produce the persons from whom the loans have been obtained. Therefore, the only filing confirmation and copy of return of income does not prove the genuineness of transaction in the background of adverse materials available with the department, the important evidences found during the course of survey are copy of returns of the depositors, bank passbook and blank cheque book. Therefore, instead of mentioning controversy in the statement, the assessee should produce the persons and prove that the facts mentioned in the statements of Shri Ramdinesh Sharma and evidences found are not prevailing in the case of depositors from whom the assessee has obtained huge loan. The genuineness of the transaction can only be prove after verifying the depositors bank accounts and credit entries in the said bank account is

ITA No. 2607/Ahd/2011 ITO vs. Shri Shamsunder Lohia Asst.Year –2008-09 - 8 - genuine so that the department can established that there is no genuine cash credit vis a vis the assessee can prove that there was a genuine cash credit. This is only reason to ask the assessee to produce the depositors. However, the assessee fails to avail the opportunity accorded to it.

In the above backgrounds and materials available with the department the onus is cast upon the assessee to produce the persons and the assessee cannot absolve himself from the onus cast upon him. The mere filing of confirmation and copy of return of income of depositors does not served the purpose unless and until the facts is verified from the depositors. Therefore, the assessee has not fulfilled the onus cast upon him.

The ample opportunities have been given to the assessee to produce the persons. Because, in the above background and materials available with the department, it is necessary to verify the depositors in respect of accommodation entries have been received or not from the said depositors. However, the assessee fails to produce the depositors. Therefore, it is established beyond doubt that there is no genuine cash credit and thereby the cash credit remains unexplained. Therefore, the amount deposited during the year amounting to Rs.9,70,923/- is treated as unexplained cash credit and the same is added to the total income of the assessee u/s 68 of the Act. Further the assessee has also not

ITA No. 2607/Ahd/2011 ITO vs. Shri Shamsunder Lohia Asst.Year –2008-09 - 9 - furnished the age wise analysis of the opening balance of Rs.24,71,091/- standing in the name of the above depositors. Therefore, the same is treated as received during the year and added to the total income of the assessee as unexplained cash credit. Moreover, since there is no genuine cash credit in the name of the above 7 depositors, the entered interest amounting to Rs.1,08,818/- is also disallowed. We, therefore, set aside the findings of the learned CIT(A) and allow revenue’s appeal.

Sd/- Sd/- एन.के. �ब�लैया महावीर �साद (लेखा सद�य) (�या�यक सद�य) ( MAHAVIR PRASAD ) ( N.K. BILLAIYA ) ACCOUNTANT MEMBER JUDICIAL MEMBER

Ahmedabad; Dated 31/05/2017 Priti Yadav, Sr.PS

ITA No. 2607/Ahd/2011 ITO vs. Shri Shamsunder Lohia Asst.Year –2008-09 - 10 -

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-XVI, Ahmedabad. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad True Copy 1. Date of dictation 31/05/2017 (dictation-pad 1 pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …31/05/2017 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S……. 7. Date on which the file goes to the Bench Clerk………………… 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………