CONYAR FINTRADE P. LTD, MUMBAI V. ASST CIT 8(1), MUMBAI

CO 181/MUM/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7678 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 06-08-2012
• Assessment Year: misc
• Appeal Filed On: 01-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SANJIV DUTT
• Keywords: Business income; Search and seizure; Opportunity of being heard; Principle of natural justice; Accommodation entries; Assessment record; Block assessment; Retraction
• Section: 133A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER & SHRI N K BILLAIYA , AM IT(SS) NO. 35/MUM/2010 (BLOCK ASST YEARS 1993-94 TO 2000--01) & CROSS OBJECTION NO. 181/MUM/2011 THE ASST COMMR OF INCOME TAX 8(1), MUMBAI VS M/S CON-YAR FINTRADE PVT LTD SOLARIS, UNIT NO.109 SAKI VIHAR ROAD ANDHERI (E) MUMBAI 72 (APPELLANT/RESPONDENT ) (RESPONDENT/CROSS OBJECTOR ) PAN NO. AABCC 4279P ASSESSEE BY SHRI SANJIV DUTT REVENUE BY SH HARIDAS BHAT DT.OF HEARING 6 TH AUG 2012 DT OF PRONOUNCEMENT 26 TH , SEPT 2012 PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 4.3.2010 OF THE CI T(A) ARISING FROM THE BLOCK ASSESSMENT U/S 158BD OF THE I T ACT FOR THE BLOCK PERIOD FROM1993-94 TO 2000-01. 2 THE ONLY GROUND RAISED BY THE REVENUE IN THIS APP EAL IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER AMOUNTING TO ` 2,42,07,443/- UNDER THE HEAD PAYMENT MADE OUT OF UNEXPLAINED SOURCE WITHOUT APPRECIATING THE FACTS OF THE CASE. 3 A SEARCH AND SEIZURE U/S 132 OF THE IT ACT WAS CA RRIED AT THE BUSINESS PREMISES OF M/S KALBRO GROUP. A SURVEY U/S 133A WAS ALSO CA RRIED AT THE BUSINESS PREMISES OF SHRI ARVIND CHAUDHARY AN ASSOCIATE OF KALBRO GROUP AND THE DIRECTOR OF ASSESSEE COMPANY ON 21.12.1999. ON THE BASIS OF SEIZED MAT ERIAL, THE ASSESSING OFFICER HAS IT (SS) NO 35 & CO 181/M/2010 M/S CON-YAR FINTRADE PVT LTD . 2 ISSUED NOTICE U/S 158BD TO THE ASSESSEE, WHO HAS FI LED THE RETURN FOR THE BLOCK PERIOD. IN HIS STATEMENT RECORDED DURING THE SURVEY OPERATI ON SHRI ARVIND CHAUDHARY STATED THAT HE HAS GIVEN ACCOMMODATION ENTRIES TO THE KALBRO GROUP. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS WITHD RAWN A SUM OF ` 2,71,07,965/- FROM THE BANK ACCOUNT ON VARIOUS DATES BETWEEN THE PERIOD 4.4.1995 TO 30.12.1999. SOME OF THE CHEQUE ISSUED FROM THIS ACCOUNT WERE CR EDITED TO THE ACCOUNT OF CLOSELY RELATED CONCERN OF SHRI ARVIND CHAUDHARY A ND CASH WAS IMMEDIATELY WITHDRAWN AFTER CREDITING THE AMOUNT. THE ASSESSIN G OFFICER HAS REPRODUCED THE RELEVANT PART OF THE STATEMENT OF SHRI ARVIND CHAU DHARY AT PAGE 2 AND ALSO THE DETAILS OF CASH WITHDRAWN AT PAGE 3 OF THE ASSESSM ENT ORDER. IT WAS FOUND THAT KALBRO GROUPHAS MADE SALES OF ` 19.75 CRORES TO THE GROUP NCONCERN OF SHRI ARVIN D CHAUDHARY AND RECEIVED BACK ` 16.06 CRORES WHICH SHOWS THAT THE GROUP CONCERN OF SHRI ARVIND CHAUDHARY HAS RETAINED 23% OF SALES WITH THAM AND ONLY 77% OF SALES WERE RETURNED BACK TO KALBRO GROUP. THE ASSESSING OFFICER HAS ALSO NOTED THAT SHRI ARVIND CHAUDHARY, IN HIS STATEMENT ADMITTED THAT HI S GROUP HAS RECEIVED ADDITIONAL COMMISSION OF 0.50% ON PURCHASES MADE FROM KALBRO G ROUP. ON THE BASIS OF THESE FACTS, THE ASSESSING OFFICER ASKED TO ASSESSEE TO E XPLAIN AS TO WHY THE 23% OF TOTAL SALES MADE BY KALBRO GROUP AS WELL AS 0.50% COMMISS ION ON PURCHASES MADE TO THE ASSESSEE COMPANY SHOULD NOT BE ADDED AS UNDISCLOSE D INCOME IN THE BLOCK PERIOD. 3.1 IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSES SEE CONTENDED BEFORE THE ASSESSING OFFICER THAT SIR ARVIND CHAUDNARY HAS RET RACTED HIS FIRST STATEMENT AND LATER HE HAS STATED THAT THE TRANSACTIONS WITH KAL BRO GROUP WAS GENUINE. IN THE STATEMENT RECORDING DURING THE SURVEY PROCEEDINGS, SHRI ARVIND CHAUDHARY HAS IT (SS) NO 35 & CO 181/M/2010 M/S CON-YAR FINTRADE PVT LTD . 3 ADMITTED THAT THE ASSESSEE COMPANY HAS PAID AN AMOU NT OF ` 2,42,07,443/- TO KALBRO GROUP IN CASH AGAINST EXCISE DUTY. THE ASSES SING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH PAYMENT AND ALSO THE PAY MENT MADE TO KALBRO GROUP. THE ASSESSING OFFICER HELD THAT THE SOURCE OF PAYME NT WAS NOT EXPLAINED BY THE ASSESSEE. THEREFORE, APART FROM THE 23% BEING RETE NTION MONEY ON PURCHASE AND COMMISSION INCOME AS UNDISCLOSED INCOME, THE ASSES SING OFFICER MADE THE ADDITION OF ` 2 ,42,07,443/- ON ACCOUNT OF PAYMENT MADE OUT OF U NEXPLAINED SOURCES. 3..2 ON APPEAL BEFORE THE CIT(A), THE ASSESSEE REQU ESTED FOR A COPY OF STATEMENT OF SHRI ARVIND CHAUDHARY ON THE BASIS OF WHICH THE ADDITION HAS BEEN MADE. CONSEQUENTLY, THE CIT(A) ASKED THE ASSESSING OFFICE R TO PROVIDE THE COPY OF THE STATEMENT OF SHRI ARVIND CHAUDHARY TO THE ASSESSEE COMPANY. HOWEVER, THE ASSESSING OFFICER SUBMITTED THAT THE COPY OF THE ST ATEMENT OF SHRI ARVIND CHAUDHARY COULD NOT BE FURNISHED TO THE ASSESSEE AS THE SAME WAS NOT AVAILABLE IN THE ASSESSMENT RECORDS AS WELL AS WITH THE DCIT 8(3), WHO WAS HAVING JURISDICTIONAL OVER SHRI ARVIND CHAUDHARY. BY TAKING NOTE OF THIS FACT THAT THE STATEMENT OF SHRI ARVIND CHAUDHARY WAS NOT AVAILABLE WITH THE ASSESSING OFFI CER, THE CIT(A) DELETED THE ADDITION OF ` 2,42,07,443/- MADE ON ACCOUNT OF UNEXPLAINED SOURC ES OF PAYMENT. 3.3 SINCE THE CIT(A) HAS NOT GIVEN ANY SPECIFIC FIN DINGS WITH RESPECT TO THE OTHER ISSUES/ADDITIONS MADE BY THE ASSESSING OFFICER ON A CCOUNT OF RETENTION MONEY ON PURCHASE AND UNDISCLOSED COMMISSION; THEREFORE BOTH THE REVENUE AS WELL AS THE REVENUE ARE AGGRIEVED BY THE IMPUGNED ORDER OF THE CIT(A). THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF ` 2,42,07,443/- WHEREAS THE ASSESSEE, IN ITS IT (SS) NO 35 & CO 181/M/2010 M/S CON-YAR FINTRADE PVT LTD . 4 CROSS OBJECTION IS AGGRIEVED FOR NON ADJUDICATION O F THE OTHER TWO ISSUES/ADDITIONS MADE BY THE ASSESSING OFFICER. 4 BEFORE US, THE LD DR HAS SUBMITTED THAT THE ASSE SSING OFFICER HAS REPRODUCED THE RELEVANT PART OF THE STATEMENT OF SHRI ARVIND C HAUDNARY RECORDED ON 21.12.1999 U/S 133A IN PARA 4 OF THE ASSESSMENT ORDER. THE L D DR HAS SUBMITTED THAT FROM THE STATEMENT, IT IS CLEAR THAT SHRI ARVIND CHAUDHARY A DMITTED THE TRANSACTIONS OF PURCHASE AND SALE ONLY ON PAPER BEING ACCOMMODATION ENTRIES WITHOUT ANY PHYSICAL MOVEMENT OF GOODS FROM KALBRO GROUP TO THE ASSESSEE. THE LD DR HAS FURTHER POINTED OUT THAT AGAINST THESE ACCOMMODATIO N ENTRIES, THE ASSESSEE RECEIVED 0.5% OF COMMISSION WHICH IS ADMITTED BY SH RI ARVIND CHAUDHARY IN THE STATEMENT. THE PAYMENTS ARE RECEIVED AND PAID THRO UGH CROSSED BEARER CHEQUES. EVEN THE YEAR WISE DETAILS OF THE ACCOMMODATION ENT RIES WERE MENTIONED IN THE STATEMENT. THE LD DR HAS FURTHER SUBMITTED THAT ON THE BASIS OF THE STATEMENT RECORDED DURING THE SURVEY AS WELL AS THE SEIZED M ATERIAL, THE ASSESSING OFFICER FOUND FROM THE BANK STATEMENT OF THE ASSESSEE THAT THE ASSESSEE MADE CASH WITHDRAWALS OF ` . 2.71,07,965/- ON VARIOUS DATES BETWEEN R.R.95 TO 30.12.99. THE DETAILS OF THE WITHDRAWALS IN THE NAME OF THE CLOSE LY RELATED PARTIES ARE GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THUS, T HE ASSESSING OFFICER HAS BROUGHT ON RECORD ENOUGH MATERIAL TO PROVE THAT THE ASSESSEE W AS PROVIDED ADJUSTMENT ENTRIES WITHOUT PHYSICAL MOVEMENT OF THE GOODS AND ONLY BY CHANGING THE PAYMENTS THROUGH BEARER CHEQUE. THE LD DR HAS FURTHER CONTE NDED THAT THE RETRACTION OF THE STATEMENT IS AN AFTERTHOUGHT AND IT WAS AFTER A GAP OF 2 MONTHS; THEREFORE, THE SAME CANNOT BE ACCEPTED. IF THE STATEMENT WAS TAK EN UNDER COERCION, THEN THE RETRACTION SHOULD BE IMMEDIATE; BUT THE TIME GAP OF 2 MONTHS SHOWS THAT IT WAS AN AFTERTHOUGHT AND IT MAKES CLEAR THAT THE ASSESSE E MADE A SELF SERVING RETRACTION STATEMENT. HE HAS RELIED UPON THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN IT (SS) NO 35 & CO 181/M/2010 M/S CON-YAR FINTRADE PVT LTD . 5 THE CASE OF DR S C GUPTA VS CIT REPORTED IN 248 ITR 782 (ALL) AND SUBMITTED THAT THE HONBLE HIGH COURT HAS HELD THAT THE STATEMENT MADE VOLUNTARILY BY HE ASSESSEE WOULD FORM BASIS OF THE ASSESSMENT AND MERELY THE F ACT THAT THE ASSESSEE RETRACTED THE STATEMENT WOULD NOT MAKE THE STATEMENT UNACCEPT ABLE. HE HAS ALSO RELIED UPON THE DECISION OF MUMBAI BENCHES OF THE TRIBUNA L IN THE CASE OF VIDEO MASTER VS JCIT REPORTED IN 83 ITD 102 (MUM) AND SUBMITTED T HAT WHEN THE ASSESSEE HAS NOT MADE ANY COMPLAINT OR ALLEGATION WITH THE HIGHER AU THORITIES AFTER RECORDING THE STATEMENT DURING THE SURVEY AND SEIZURE ACTION, THE N THE BURDEN OF PROVING THAT THE STATEMENT WAS OBTAINED BY COERCION OR UNDER DURE SS IS ON THE ASSESSEE AND IN THE ABSENCE OF DISCHARGE TO THE SAID BURDEN, THE STATEM ENT MADE BY THE ASSESSEE IS AN ADMISSIBLE EVIDENCE FOR ASSESSMENT OF UNDISCLOSED I NCOME. THE LD DR HAS ALSO FILED COPY OF THE STATEMENT OF SHRI ARVIND CHAUDHARY RECO RDED DURING THE COURSE OF SURVEY AND SEIZURE ACTION. HE HAS RELIED UPON THE DECISION IN THE CASE OF CIT VS OMPRAKASH K JAIN & ORS REPORTED IN 322 ITR 362 AND SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED ANY BOOKS OF ACCOUNT BEFORE THE ASSESS ING OFFICER. EVEN THE ASSESSEE HAS NOT DEMANDED THE STATEMENT DURING THE ASSESSMEN T PROCEEDINGS. HE HAS RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 4.1 ON THE OTHER HAND, THE LD AR HAS SUBMITTED THAT THE ASSESSEE HAS DEMANDED THE STATEMENT WHICH WAS NOT PROVIDED; THEREFORE, TH ERE IS A VIOLATION OF NATURAL JUSTICE AND NO ADDITION CAN BE MADE ON THE BASIS OF A DOCUMENT WITHOUT GIVING THE ASSESSEE AN OPPORTUNITY. HE HAS RELIED UPON THE OR DER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER MADE THE ADDITION OF 100 % OF THE AMOUNT OF WITHDRAWAL AS WELL AS THE PAYMENT WHICH IS NOT JUSTIFIED. IT (SS) NO 35 & CO 181/M/2010 M/S CON-YAR FINTRADE PVT LTD . 6 4.2 AS REGARDING THE CROSS OBJECTION RAISED BY THE ASSESSEE, THE LD AR HAS SUBMITTED THAT THE CIT(A) HAS NOT ADJUDICATED THE R EMAINING TWO ISSUES AND THE FINDING HAS BEEN GIVEN ONLY WITH RESPECT TO THE ADD ITION MADE ON ACCOUNT OF UNEXPLAINED PAYMENT OF ` 2,42,07,433/-. 4.3 IN REBUTTAL, THE LD DR HAS SUBMITTED THAT THE I SSUE HAS BEEN FRAMED BY THE ASSESSING OFFICER ON THE BASIS OF THE MATERIAL INCL UDING THE ENTRIES IN THE BANK ACCOUNT AND THEREFORE, THE ADDITION IS NOT MERELY O N THE BASIS OF STATEMENT. 5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER MADE THE ADDITION UN DER THREE HEADS ARE (I) RETAINED MONEY ON PURCHASE BEING 23%; (II) UNDISCLOSED COMMI SSION BEING 0.5% OF PURCHASE AND (II) PAYMENT MADE OUT ON UNEXPLAINED SOURCE AS UNDER: A) RETAINED MONEY ON PURCHASE ` 2,97,85,000/- B) UNDISCLOSED COMMISSION ` 6,47,500/- C) PAYMENT MADE OUT OF UNEXPLAINED SOURCE ` 2,42,07,433/- 5.1 THE ASSESSING OFFICER HAS REPRODUCED THE RELEVA NT PART OF THE STATEMENT OF SHRI ARVIND CHAUDHARY RECORDED ON 21.12.1999 WHEN A SEARCH AND SEIZURE AS WELL AS SURVEY ACTION WAS CARRIED OUT. THERE IS NO AMBI GUITY IN THE STATEMENT OF SHRI ARVIND CHAUDHARY REGARDING THE ENTRIES MADE ONLY ON PAPER WITHOUT PHYSICAL MOVEMENT OF THE GOODS BEING FABRIC AND YARN. IN THE STATEMENT, SHRI ARVIND CHAUDHARY HAS MENTIONED THAT VARIOUS DETAILS INCLUD ING THE RECEIPT OF COMMISSION, WHICH HAS NOT RECORDED IN THE BOOKS OF ACCOUNT AS W ELL AS MODE OF RECEIPT AND PAYMENT WITHOUT MOVING THE GOODS. THESE DETAILS AS PROVIDED IN THE STATEMENT ARE DULY CORROBORATED BY THE ENTRIES IN THE BANK ACCOUN T OF THE ASSESSEE, WHICH CLEARLY SHOWS MOVEMENT OF THE AMOUNT DEPOSITED AND WITHDRAW N THROUGH CROSSED BEARER IT (SS) NO 35 & CO 181/M/2010 M/S CON-YAR FINTRADE PVT LTD . 7 CHEQUES. IT IS ALSO FURTHER CORROBORATED FROM THE RECORDS THAT THE BEARER CHEQUES WERE EN-CASHED BY THE RELATED CONCERNS OF SHRI ARVI ND CHAUDHARY AND THE ASSESSEE COMPANY. THEREFORE, IT CANNOT BE SAID THAT THE AD DITION IN THE BLOCK ASSESSMENT WAS MADE BY THE ASSESSING OFFICER SOLELY ON THE BAS IS OF THE STATEMENT; BUT THESE ADDITIONS WERE MADE ON THE BASIS OF CORROBORATIVE E VIDENCE AND RECORDS IN THE SHAPE OF BANK STATEMENT SHOWING THE ENTRIES IN THE BANK ACCOUNT OF THE ASSESSEE. THEREFORE, THE STATEMENT MADE DURING THE SEARCH AND SURVEY ACTION WAS DULY CORROBORATED BY THE EVIDENCE WHICH WERE DISCOVERED BY THE ASSESSING OFFICER IN THE COURSE OF POST SEARCH AND SURVEY ENQUIRY. 5.2 IT IS PERTINENT TO NOTE THAT THE ONLY DEFENCE A ND PLEA TAKEN BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS WAS RETRACTION OF THE STATEMENT BY SHRI ARVIND CHAUDHARY WITHOUT DISCHARGING ITS BURDEN OF EXPLAIN ING THE SOURCE OF GENUINENESS OF THE TRANSACTION. NOTHING HAS BEEN BROUGHT BEFOR E US OR BEFORE THE AUTHORITIES BELOW THAT SHRI ARVIND CHANDURARY HAS MADE ANY COM PLAINT REGARDING OBTAINING THE STATEMENT DURING THE SEARCH AND SURVEY PROCEEDI NGS BY COERCION OR UNDER DURESS. THEREFORE, RETRACTION OF THE STATEMENT, AF TER A GAP OF 2 MONTHS, IS OBVIOUSLY AN AFTERTHOUGHT STEP TAKEN BY THE ASSESSE E WHICH IS SELF SERVING. HENCE, THE RETRACTION CANNOT BE BELIEVED/ACCEPTED AS IT DO ES NOT INSPIRE CONFIDENCE. 5.3 THE HONBLE ALLABAHAD HIGH COURT IN THE CASE OF DR S C GUPTA (SUPRA) HAS OBSERVED AND HELD IN PARAS 5 & 6 AS UNDER: 5 WHAT WAS THE NATURE OF THE DURESS HAS NOT BEEN SPEC IFIED BEFORE US AND HAS ALSO NOT BEEN STATED IN THE APPLICATIONS UN DER CONSIDERATION. THE TRI- BUNALS FINDING IS THAT NO PRESSURE OR DURESS WAS EXER CISED ON THE ASSESSEE. THIS IS A FINDING OF FACT. THAT IN THE STATEMENT DU RING THE SURVEY THE ASSES- SEE HAD OFFERED ADDITIONAL INCOME AS MENTIONED ABOV E, IS ADMITTED EVEN IN THE PRESENT APPLICATIONS IN PARAGRAPH 1 THEREOF. IT (SS) NO 35 & CO 181/M/2010 M/S CON-YAR FINTRADE PVT LTD . 8 6 AS REGARDS THE ASSESSEES CONTENTION THAT THE STATE MENT HAVING BEEN RETRACTED THE ASSESSING OFFICER SHOULD HAVE INDEPENDE NTLY COME TO A CONCLUSION THAT THERE WAS ADDITIONAL INCOME AS SOUGH T TO BE ASSESSED AND THAT THERE WAS NO MATERIAL TO SUPPORT THAT THERE WAS SUCH INCOME, THIS CONTENTION IN OUR VIEW IS NOT CORRECT. AS HELD BY THE SUPREME COURT IN PULLAGODE RUBBER PRODUCE CO. LTD. V. STATE OF KERALA [1973] 91 ITR 18 AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENC E THOUGH IT IS NOT CONCLUSIVE. THEREFORE, A STATEMENT MADE VOLUNTARILY BY THE ASSESSEE COULD FROM THE BASIS OF ASSESSMENT. THE MERE FACT THAT THE ASSESSEE RETRACTED THE STATEMENT COULD NOT MAKE THE STATEMENT UNACCEPTABLE . THE BURDEN LAY ON THE ASSESSEE TO ESTABLISH THAT THE ADMISSION MADE I N THE STATEMENT AT THE TIME OF SURVEY WAS WRONG AND IN FACT THERE WAS NO AD DITIONAL INCOME. THIS BURDEN DOES NOT EVEN SEEM TO HAVE BEEN ATTEMPTED TO BE DISCHARGED. SIMILARLY, P. K. PALWANKAR V. CGT [1979] 117 ITR 768 (MP) AND CIT V. MRS. DORIS S. LUIZ [1974] 96 ITR 646 (KER) ON WHICH ALSO LEARN ED COUNSEL FOR THE ASSES- SEE PLACED RELIANCE ARE OF NO HELP TO THE ASSESSEE. T HE TRIBUNALS ORDER IS CONCLUDED BY FINDINGS OF FACT AND IN OUR VIEW NO QU ESTION OF LAW ARISES. THE APPLICATIONS ARE, ACCORDINGLY, REJECTED. 6 THE FACTS OF THE CASE IN HAND ARE ALSO IDENTICAL TO THE FACTS OF THE CASE BEFORE THE HONBLE HIGH COURT CITED SUPRA. THE ASSESSEE H AS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE ADDITIONAL INCOME ADMITTE D IN THE STATEMENT DURING THE SEARCH AND SURVEY ACTION IS WRONG AND IN FACT THERE WAS NO ADDITIONAL INCOME. WHEN THE ASSESSEE FAILED TO DISCHARGE ITS BURDEN TO ESTABLISH THAT THE ADMISSION MADE IN THE STATEMENT IS FACTUALLY WRONG WITH SUPPO RTING RELEVANT MATERIAL, THEN THE MERE RETRACTION AFTER A GAP OF 2 MONTHS CAN NOT BE ACCEPTED. 7 SIMILARLY, IN THE CASE OF VIDEO MASTER (SUPRA), T HE COORDINATE BENCH OF THE TRIBUNAL HAS TAKEN A SIMILAR VIEW. 8 THE LD CIT(A) HAS DELETED THE ADDITION OF RS. 2,4 2,07,443/- ON THE GROUND THAT THE ASSESSING OFFICER MADE ADDITION ON THE BASIS O F THE STATEMENT OF SHRI ARVIND CHAUDHARY, WHICH WAS NOT AVAILABLE WITH THE ASSESSI NG OFFICER. THE RELEVANT PART OF THE ORDER OF THE LD CIT(A) AS RECORDED IN PARA 3.4 ARE AS UNDER: IT (SS) NO 35 & CO 181/M/2010 M/S CON-YAR FINTRADE PVT LTD . 9 3.4 1 HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT, ORDER OF THE AO AND FACTS OF THE CASE THAT SEARCH AND SEIZURE OPERATION U/S. 132 OF THE I.T. ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF KAIBRO GROUP A ND SURVEY U/S133A ALSO CARRIED OUT AT BUSINESS PREMISES OF SHRI. ARVIND CHA UDHARY, AN ASSOCIATE OF KAIBRO GROUP. DURING THE SURVEY OPERATION, A STATEMENT O F SHRI ARVIND CHAUDHARY WAS RECORDED IN WHICH HE HAS ADMITTED THA T CASH PAYMENT OF RS.2,42,07,443/- WAS GIVEN TO THE APPELLANT COMPANY . HOWEVER, LATER ON SHRI. ARVIND CHAUDHARY HAD RETRACTED HIS STATEMENT AND FILE D AN AFFIDAVIT THAT NO PAYMENT WAS MADE AS STATED IN THE STATEMENT. THE AO HAS NOT ACCEPTED THE RETRACTION OF SHRI. ARVIND CHAUDHARY AND HAS MAD E AN ADDITION OF RS.2,42,07,443/-. DURING THE APPELLATE PROCEEDINGS, T HE APPELLANT HAS CALLED FOR THE COPY OF THE STATEMENT OF SHRI. ARVIND CHOUDHA RY, ON THE BASIS OF WHICH THE ADDITION HAS BEEN MADE. ACCORDINGLY, AO WAS ASKE D TO PROVIDE THE COPY OF STATEMENT OF SHRI. ARVIND CHAUDHARY TO THE A PPELLANT COMPANY. THE AO VIDE HIS LETTER DATED 22/01/2010 HAS SUBMITTED AS UNDER: IT IS SUBMITTED THAT THE D. CIT, CIRCLE 8(3), MUMB AI VIDE HIS LETTER NO.DCIT-8(3)/MISC/TRANSFER/2009..10 DATED 16TH FEBRUA RY, 2010 HAS STATED THAT THE STATEMENT OF SHRI. ARVIND CHAUDHARY RE CORDED DURING THE PROCEEDINGS U/S. 133A/132(1) ARE NOT AVAILABLE IN THEIR RECORDS. THE DY. CIT(A) HAS FURTHER POINTED OUT THE ASSESSMENT IN THE CASE OF MIS RAMA SYNTHETICS AND M/S MIS VIVILON TEXTILES INDUS TRIES LTD. WAS FINALIZED ON THE BASIS OF APPRAISAL REPORT. IN THE CIRCUMSTANCES, IT IS SUBMITTED THAT THE COPIES OF STATEMENT SHRI. ARVIND C HAUDHATY COULD NOT BE FURNISHED TO THE ASSESSEE AS THE SAME ARE NOT AVAILABLE WITH DCIT 8 (3). THEREFORE YOU ARE REQUESTED TO DECIDE THE ISSUE ON MERIT. 9 IT IS EVIDENT FROM THE IMPUGNED ORDER OF THE LD C IT(A) THAT THE ADDITION HAS BEEN DELETED MERELY ON TWO GROUNDS FIRSTLY NON- PR ODUCTION OF THE STATEMENT OF SHRI ARVIND CHAUDHARY BY THE ASSESSING OFFICER AND SECON DLY NO ADDITION WAS MADE IN THE ASSESSMENT OF SHRI ARVIND CHAUDHARY. 9.1 AS REGARDS THE STATEMENT OF SHRI ARVIND CHAUDHA RY, IT IS TO BE NOTED THAT THE ASSESSEE HAS NEVER DEMANDED THE STATEMENT OF SHRI A RVIND CHAUDHARY DURING THE ASSESSMENT PROCEEDINGS. FURTHER, SHRI ARVIND CHAUDH ARY HAS RETRACTED HIS EARLIER STATEMENT, WHICH CLEARLY SHOWS THAT THE ASSESSEE WA S HAVING THE STATEMENT OF SHRI ARVIND CHANDHARY ON THE BASIS OF WHICH THE CONSEQUE NT RETRACTION WAS MADE. EVEN OTHERWISE THE COPY OF THE STATEMENT OF SJHRI A RVIND CHAUDHARY HAS BEEN PRODUCED BEFORE US BY THE LD DR; THEREFORE, THE SA ID INFIRMITY/IRREGULARITY AS FOUND BY IT (SS) NO 35 & CO 181/M/2010 M/S CON-YAR FINTRADE PVT LTD . 10 THE D CIT(A) IS NO MORE EXIST AFTER THE STATEMENT OF SHRI ARVIND CHAUDHARY IS PRODUCED BEFORE US. 9.2 AS REGARDS THE ASSESSMENT OF SHRI ARVIND CHAUDH ARY WHEN ALL THE TRANSACTIONS ARE CARRIED IN THE BANK ACCOUNT OF THE ASSESSEE COM PANY; THEREFORE, THE ASSESSMENT OF SHRI ARVIND CHANDUARY WILL NOT HAVE A NY BEARING ON THE ASSESSMENT OF THE ASSESSEE BEFORE US. 9.4 AS IT IS CLEAR FROM THE IMPUGNED ORDER THAT T HE LD CIT(A) HAS NOT GIVEN A SPECIFIC FINDINGS REGARDING THE OTHER TWO ADDITIONS IN RESPECT OF RETRACTION MONEY ON PURCHASE AND UNDISCLOSED COMMISSION FOR WHICH THE A SSESSEE HAS FILED THE CROSS OBJECTION BEFORE US. 10 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE STATEMENT OF SHRI ARVIND CHAUDHARY , NOW AVAILABLE ON RECORD, AND THE LDCIT(A) HAS NOT ADJUDICATED SOME OF THE ISSUES RAISED BEFORE I T; WE THEREFORE, IN THE INTEREST OF JUSTICE, SET ASIDE THE ORDER OF THE LD CIT(A) AND R EMAND THE MATTER BACK TO HIS RECORD FOR FRESH ADJUDICATION OF THE APPEAL FILED BY THE A SSESSEE AFTER CONSIDERING THE STATEMENT OF SHRI ARVIND CHAUDHARY AND IN THE LIGHT OF OUR ABOVE OBSERVATIONS. 11 NEEDLESS TO SAY, THE ASSESSEE BE GIVEN A REASONA BLE OPPORTUNITY OF BEING HEARD. 12 IN THE RESULT, THE APPEAL FILED BY THE REVENUE A S WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PUR POSE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 26 TH ,DAY OF SEPT 2012. SD/- SD/- ( N K BILLAIYA ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 26 TH , SEPT 2012 RAJ* IT (SS) NO 35 & CO 181/M/2010 M/S CON-YAR FINTRADE PVT LTD . 11 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI