M/S BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTA

CO 45/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7525 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: VIJAY GOYAL C A DHK
• Keywords: Unexplained cash credit; Bogus Share capital; Gift; Revision of order; Business expenditure; Income from undisclosed sources; Search and seizure; Principle of natural justice; Opportunity of cross examination; Earning of tax free income; Question of law; Corroborative evidences; Accommodation entries; Assessment record; Block assessment; Onus to prove; Bogus loan; Revised return; Documents seized; Reassessment proceedings
• Section: 271(1)(c); 143(3); 133A; 153A; 14A; 133(6); 139(5); 143(1); 205; 195; 131; 68; 148; 132; 11; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NOS. 1206 & 1207/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 & 11-12 DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE, KOTA. CUKE VS. M/S. BARAN ROLLER FLOUR MILLS P. LTD. 6/7, MULTIMETALS CAMPUS, LARGE SCALE INDUSTRIAL AREA, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCB 7695 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NOS. 45 & 46/JP/2018 (ARISING IN VK;DJ VIHY LA-@ ITA NOS. 1206 & 1207/JP/2018) FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 & 11-12 M/S. BARAN ROLLER FLOUR MILLS P. LTD. 6/7, MULTIMETALS CAMPUS, LARGE SCALE INDUSTRIAL AREA, KOTA. CUKE VS. DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCB 7695 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01.01.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 11/01/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THESE TWO APPEALS BY THE REVENUE AND CROSS OBJECTIO NS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF THE LD. CIT (A)-2, UDAIPUR BOTH DATED 03.08.2018 FOR THE ASSESSMENT YEARS 2010-11 AND 201 1-12 RESPECTIVELY. FIRST, WE TAKE THE APPEALS OF THE REVENUE WHEREIN THE REVENUE HAS RAISED COMMON GROUNDS 2 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. FOR BOTH THE ASSESSMENT YEARS. THE GROUNDS RAISED B Y THE REVENUE FOR THE ASSESSMENT YEAR 2010-11 ARE AS UNDER :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 1,05,00,000/- MADE BY THE AO U/S 68 OF THE IT ACT O N ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY ALLEGEDLY OB TAINED BY THE ASSESSEE FROM M/S. SANGAM DISTRIBUTORS PVT. LTD . AND M/S. TEAC CONSULTANTS PVT. LTD. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF SHARE APPLICATION MONEY BY OBSERVING THAT THE ALLEGED INV ESTOR COMPANIES M/S. SANGAM DISTRIBUTORS PVT. LTD. AND M/ S. TEAC CONSULTANTS PVT. LTD. ARE NOT SHELL COMPANIES WITHO UT CONSIDERING THE FINANCIAL STATEMENTS OF THESE COMPA NIES. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF UNSECURED LOANS ALLEGEDLY OBTAINED FROM M/S. SANGAM DISTRIBUT ORS PVT. LTD. AND M/S. TEAC CONSULTANTS PVT. LTD. MERELY FOR THE REASON THAT EVIDENCES IN THE FORM OF STATEMENT ON OATH OF THE R ELEVANT ENTRY OPERATORS WERE NOT AVAILABLE ON RECORD. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF UNSECURED LOANS ALLEGEDLY OBTAINED FROM M/S. SANGAM DISTRIBUT ORS PVT. LTD. AND M/S. TEAC CONSULTANTS PVT. LTD. DESPITE THE FAC T THAT THE DIRECTORS OR PRINCIPAL OFFICERS OF THESE COMPANIES WERE NEVER PRODUCED BEFORE THE AO FOR EXAMINATION DESPITE NUMB ER OF OPPORTUNITIES PROVIDED BY THE AO FOR PRODUCING AND ALSO IGNORING THE FACT THAT THE ASSESSEE NEITHER EXPRESS ED ITS INABILITY IN PRODUCING THE LENDERS NOR PRODUCED THEM EITHER. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF UNSECURED LOANS ALLEGEDLY OBTAINED FROM M/S. SANGAM DISTRIBUT ORS PVT. LTD. AND M/S. TEAC CONSULTANTS PVT. LTD. MERELY BY OBSER VING THAT THE ASSESSEE HAS COOPERATED IN ASSESSMENT BY SHOWIN G HIS WILLINGNESS TO PRODUCE THE DIRECTORS OF LENDER COMP ANIES AND SOME DIRECTORS/OFFICERS WERE ALSO PRODUCED BEFORE T HE AO DESPITE THE FACT THAT EVEN THE DIRECTORS WHICH WERE PRODUCED BEFORE THE AO FAILED TO SUBSTANTIATE THE GENUINENES S OF THE ALLEGED TRANSACTIONS. 3 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF UNSECURED LOANS BY OBSERVING THAT THE APPELLANT CANNOT BE FAS TENED UPON THE BURDEN TO PRODUCE THE LENDERS BEFORE THE AO AND IN NOT CONSIDERING THE DECISION OF THE HONBLE SUPREME COU RT IN NAVODAYA CASTLES (P) LTD. VS. CIT (2015) 56 TAXMANN .COM 18 (SC) WHEN THERE WERE GENUINE CONCERNS OF THE GENUIN ENESS OF THE TRANSACTIONS. 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE DISALLOWA NCE OF RS. 1,250/- MADE BY THE AO BY INVOKING THE PROVISIONS O F SECTION 14A OF THE IT ACT. THE APPELLANT CRAVE, LEAVE OR RESERVING THE RIGHT T O AMEND MODIFY, ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. GROUND NOS. 1 TO 6 RELATE TO DELETION OF ADDITIONS ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL AND PREMIUM RECEIVED BY T HE ASSESSEE. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND PA RT OF THE KOTA DALL MILL GROUP AND WAS SUBJECTED TO SEARCH AND SEIZURE OPERATION U NDER SECTION 132 OF THE I.T. ACT CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSE E FROM 2 ND JULY TO 4 TH JULY, 2015. CONSEQUENTLY, THE AO ISSUED A NOTICE UNDER SECTION 153A OF THE IT ACT AND IN COMPLIANCE TO THE SAME, THE ASSESSEE FILED RETURN O F INCOME FOR THESE ASSESSMENT YEARS ON 10.09.2016 AND 30.09.2016 RESPECTIVELY. T HE ASSESSEE RECEIVED SHARE APPLICATION, SHARE CAPITAL AND SHARE PREMIUM FROM S HARE APPLICANT COMPANIES, NAMELY, M/S. SANGAM DISTRIBUTORS PVT. LTD. AND M/S. TEAC CONSULTANTS PVT. LTD. DURING THE YEAR RELEVANT TO ASSESSMENT YEAR 2010-11 AND M/S. ISIS MERCANTILE PVT. LTD. DURING THE YEAR RELEVANT TO ASSESSMENT YEAR 20 11-12. THE AO MADE THE ADDITION UNDER SECTION 68 BY TREATING THE SHARE CAP ITAL AND SHARE PREMIUM RECEIVED FROM THESE COMPANIES AS UNEXPLAINED CASH CREDIT ON THE BASIS OF THE REPORT OF THE 4 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. INVESTIGATION WING KOLKATA. THE AO TREATED THESE C OMPANIES AS SHELL COMPANY AND HELD THAT THESE COMPANIES ARE CONTROLLED BY SHRI AM IT KEDIA, & SHRI ALOK HARLALKA WHO WERE FOUND TO BE BOGUS ENTRY PROVIDERS BY THE I NVESTIGATION WING KOLKATA. ON APPEAL, THE LD. CIT (A) HAS DELETED THE ADDITION MA DE BY THE AO BY CONSIDERING THE FACT THAT THE AO HAS MADE THE DISALLOWANCE MERELY O N THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING KOLKATA AND WITHOU T ANY MATERIAL, EVEN THE STATEMENT OF SO CALLED BOGUS ENTRY PROVIDER. THE L D. CIT (A) HAS SPECIFICALLY NOTED THAT THE AO WAS NOT HAVING THE STATEMENT OF THE ALL EGED ENTRY PROVIDER IN HIS POSSESSION AND, THEREFORE, WHEN THE ASSESSEE PRODUC ED ALL THE RELEVANT DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM, THE A DDITION MADE BY THE AO WAS NOT SUSTAINABLE. 3. BEFORE US, THE LD. CIT D/R HAS SUBMITTED THAT TH E AO HAS RECEIVED THE INFORMATION FROM INVESTIGATION DIRECTORATE, KOLKATA REGARDING INVOLVEMENT OF THE ASSESSEE GROUP IN OBTAINING ENTRIES OF BOGUS SHARE CAPITAL AND SHARE PREMIUM ETC. DETECTED IN THE INVESTIGATION CARRIED OUT BY THE DI T KOLKATA. SUCH INFORMATION WAS RECEIVED EVEN PRIOR TO INITIATION OF PROCEEDINGS UN DER SECTION 153A AND ALSO DURING THE PENDENCY OF PROCEEDINGS UNDER SECTION 153A. ON CE THE AO HAS CONFRONTED THE ASSESSEE WITH THE REPORT OF THE INVESTIGATION WING KOLKATA WHICH STATE THAT SHRI AMIT KEDIA AND SHRI ALOK HARLALKA HAVE ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRIES OF BOGUS SHARE CAPITAL AND SHARE PREMIUM ETC. TO TH E VARIOUS PARTIES THROUGH THEIR COMPANIES AND CONCERNS AND ASSESSEE HAS SHOWN THE S HARE CAPITAL AND SHARE PREMIUM FROM THOSE CONCERNS, THEN ONUS WAS SHIFTED ON THE ASSESSEE TO ESTABLISH 5 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. THE GENUINENESS OF THE TRANSACTIONS OF SHARE CAPITA L AND PREMIUM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO AGAIN COND UCTED ENQUIRIES THROUGH INVESTIGATION WING KOLKATA REGARDING THE GENUINENES S OF THE TRANSACTION AND THE ASSESSEE WAS DULY CONFRONTED WITH THE RESULTS OF AL L THESE ENQUIRIES AND INFORMATION SHARED BY THE INVESTIGATION WING KOLKATA. IN THESE CIRCUMSTANCES AND IN THE INTEREST OF NATURAL JUSTICE, THE ASSESSEE WAS REQUI RED TO PRODUCE THE ALLEGED SHARE APPLICANTS FOR EXAMINATION SO THAT GENUINENESS OF C ASH CREDIT COULD BE VERIFIED BY THE AO. DESPITE PROVIDING SEVERAL OPPORTUNITIES, T HE ASSESSEE MISERABLY FAILED TO PRODUCE ANY CREDITOR. THE ASSESSEE NEVER EXPRESSED ITS INABILITY TO PRODUCE THE ALLEGED INVESTORS NOR THE ASSESSEE REQUESTED THE AO TO ISSUE SUMMON TO THE ALLEGED SHARE APPLICANTS FOR VERIFICATION OF THE GENUINENES S OF THE CASH CREDIT IN THE FORM OF SHARE CAPITAL AND PREMIUM. IT IS EVIDENT THAT THE ASSESSEE NEVER INTENDED TO PRODUCE THE ALLEGED SHARE APPLICANTS. THE LD. D/R HAS FURTHER SUBMITTED THAT THE PRESENT CASE IS NOT ONE WHERE ASSESSEE OBTAINED SMA LL AMOUNT OR INSIGNIFICANT SHARE CAPITAL SO THAT THE ASSESSEE COULD TAKE THE PLEA TH AT IT IS NOT IN A POSITION TO ENSURE PRESENCE OF ALLEGED INVESTORS. THE SIZE OF THE TRA NSACTIONS WHICH ARE TAINTED SHARE CAPITAL AND PREMIUM CONSTITUTE THE MAJOR PORTION OF ENTIRE CAPITAL OF THE ASSESSEE AND OTHER GROUP COMPANIES. THUS THE ASSESSEE HAS F AILED TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THE ADDITION IS NOT MADE MERELY ON THE BASIS OF REPORT OF THE INVES TIGATION WING KOLKATA BUT THE AO CONDUCTED ENQUIRY THROUGH INVESTIGATION WING AND ST ATEMENTS OF ENTRY OPERATORS WERE ALSO RECORDED, THEREFORE, OVERWHELMING EVIDENC ES IN THE POSSESSION OF THE AO INDICATE BOGUS NATURE OF TRANSACTION OF SHARE CAPIT AL AND PREMIUM WHICH HAS BEEN EXTENSIVELY DISCUSSED IN THE ASSESSMENT ORDER. DUR ING THE COURSE OF ASSESSMENT 6 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. PROCEEDINGS, THE ASSESSEE WAS PROVIDED A NUMBER OF OPPORTUNITIES FOR PRODUCING THE ALLEGED INVESTORS FOR VERIFICATION AND FAILURE OF T HE ASSESSEE IN PRODUCING THE INVESTORS IN THE LIGHT OF THE EVIDENCES WAS ENOUGH TO INVOKE THE PROVISIONS OF SECTION 68 OF THE IT ACT. IN SUPPORT OF HIS CONTENTION , HE HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAV ODAYA CASTLES PVT. LTD., 226 TAXMAN 190 (MAG.) AND SUBMITTED THAT THE SLP FILED BY THE ASSESSEE WAS DISMISSED BY THE HONBLE SUPREME COURT REPORTED IN 230 TAXMAN 268 (SC). THUS IT IS EVIDENT THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS TO REBUT THE EVIDENCE UNEARTHED BY THE INVESTIGATION WING KOLKATA WHICH SHOWS THAT THE TRANSACTIONS OF SHARE CAPITAL AND SHARE PREMIUM ARE NOTHING BUT BOGUS ACCOMMODATI ON ENTRIES WHEREIN THE ASSESSEES OWN UNDISCLOSED INCOME HAS BEEN ROUTED I N THE GARB OF SHARE CAPITAL AND PREMIUM ETC. AS REGARDS CROSS EXAMINATION OF THE W ITNESSES, SINCE THE WITNESSES BELONG TO KOLKATA AND STATEMENTS WERE ALSO RECORDED AT KOLKATA BY THE INVESTIGATION WING, THEREFORE, IT WAS NOT POSSIBLE FOR THE AO TO ISSUE SUMMON TO THE WITNESSES FOR CROSS EXAMINATION AT THE OFFICE OF THE AO AT KOTA. THE LD. CIT D/R HAS RELIED UPON THE ORDER OF THE AO. 4. ON THE OTHER HAND, THE LD. A/R OF THE ASSESSEE H AS SUBMITTED THAT THE ASSESSEE RECEIVED SHARE CAPITAL AND SHARE PREMIUM F ROM M/S. SANGAM DISTRIBUTORS PVT. LTD. AND M/S. TEAC CONSULTANTS PVT. LTD. THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE CALLING UPON TO FILE T HE SUPPORTING EVIDENCE. THE ASSESSEE FILED DETAILED REPLY OF THE SHOW CAUSE NOT ICE WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER AT PAGES 20 TO 33 OF THE ASSE SSMENT ORDER. THE LEARNED A/R HAS POINTED OUT THAT THE ASSESSMENTS OF I.E. M/S. S ANGAM DISTRIBUTORS PVT. LTD. AND 7 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. M/S. TEAC CONSULTANTS PVT. LTD. WERE COMPLETED UNDE R SECTION 143(3) BY THEIR ASSESSING OFFICER AND HAS ACCEPTED THESE COMPANIES AS GENUINE COMPANIES. FURTHER, THE LD. A/R HAS SUBMITTED THAT THE ASSESSEE HAS FIL ED AMPLE DOCUMENTS SUCH AS COPY OF THEIR RETURNS, BANK STATEMENTS, CONFIRMATION, AF FIDAVITS, COPY ASSESSMENT ORDER AND COPY OF ROC MASTER DATA WHICH SHOWS THAT THE CO MPANIES ARE UNDER THE CATEGORY ACTIVE/AMALGAMATED. FURTHER, THESE COMP ANIES HAVE RAISED SUBSTANTIAL SHARE CAPITAL WHICH WAS ALSO ACCEPTED BY THEIR ASSE SSING OFFICER. THE LD. A/R SUBMITTED THAT BY FILING THESE DOCUMENTS THE ASSESS EE HAS DISCHARGED ITS BURDEN CAST UNDER SECTION 68 OF THE ACT BY PROVIDING IDENT ITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. ALL THE SHAREHOLD ERS HAVE COMPLIED WITH THE NOTICES/SUMMONS ISSUED BY THE ASSESSING OFFICER/DEP ARTMENT AND ALSO REPLIED TO THE QUERIES RAISED BY THE DEPARTMENT. THEREFORE, THE E XISTENCE OF ALL THE COMPANIES WAS ESTABLISHED WHEN THESE COMPANIES HAVE DULY RESPONDE D TO THE NOTICES ISSUED BY THE DEPARTMENT. THE ASSESSEE PRODUCED ALL RELEVANT DOC UMENTARY EVIDENCES IN SUPPORT OF THE TRANSACTIONS WHICH REMAINED UNCONTROVERTED B Y THE ASSESSING OFFICER DURING THE ASSESSMENT OR APPELLATE PROCEEDINGS. THEREFORE , THE VERACITY OF DOCUMENTARY EVIDENCE FORMING PART OF THE ASSESSMENT RECORD IS N OT DOUBTED. THE ASSESSING OFFICER HAS RELIED UPON STATEMENT RECORDED BY THE I NVESTIGATION WING KOLKATA BEHIND THE BACK OF THE ASSESSEE AND MUCH BEFORE THE DATE O F SEARCH. THE LEARNED A/R HAS SUBMITTED THAT THE ASSESSING OFFICER WAS NOT HAVING STATEMENTS OF THE ALLEGED ENTRY PROVIDERS. FURTHER THE ALLEGED ENTRY PROVIDERS WHO HAVE NOWHERE STATED THAT CASH WAS GIVEN BY THE ASSESSEE. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED THE VARIOUS DOCUMENTS OF SHARE AP PLICANTS, NAMELY, M/S. SANGAM DISTRIBUTORS PVT. LTD. AND M/S. TEAC CONSULTANTS PV T. LTD. ALL THE SHARE CAPITAL AND 8 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. SHARE PREMIUM ETC. WERE RECEIVED THROUGH BANK AND V ERIFIABLE FROM BANK STATEMENT OF THE ASSESSEE AS WELL AS BANK STATEMENTS OF THE S HARE APPLICANTS. THE ONUS UNDER SECTION 68 OF THE ACT IS TO PROVE THE IDENTITY, CAP ACITY AND GENUINENESS OF THE TRANSACTION WHICH HAS BEEN DISCHARGED BY THE ASSESS EE BY PRODUCING THE DOCUMENTARY EVIDENCE AS WELL AS THE NOTICES ISSUED BY THE AO WERE DULY RESPONDED BY THE SHARE APPLICANTS. THE LD. A/R HAS SUBMITTED THAT THE SHARE APPLICANT COMPANIES WERE ASSESSED TO TAX AND THERE WERE ASSES SMENT ORDERS UNDER SECTION 143(3) FOR THE ASSESSMENT YEARS 2005-06, 06-07, 200 7-08, 2012-13, 2013-14 & 2014-15. HE HAS REFERRED TO THE COPIES OF THE ASSE SSMENT ORDERS IN CASE OF M/S. SANGAM DISTRIBUTORS PVT. LTD. AND M/S. TEAC CONSULT ANTS PVT. LTD. FOR ALL THESE ASSESSMENT YEARS AT PAGES 450 TO 469 AND 529 TO 540 OF THE PAPER BOOK RESPECTIVELY. THEREFORE, ONCE THE SHARE APPLICANTS ARE SUBJECTED TO SCRUTINY ASSESSMENT FOR ALL THESE YEARS, THEN THE AO CANNOT TREAT THIS COMPANY AS ONLY PAPER COMPANY AND TRANSACTIONS OF LOAN AS BOGUS TRANSACTI ONS. THESE TRANSACTIONS WERE ACCEPTED BY THE AO IN THE ASSESSMENTS FRAMED UNDER SECTION 143(3) IN THE HAND OF THE SHARE APPLICANTS. FURTHER, THE ASSESSEE FILED ROC MASTER DATA SHOWING THE SHARE APPLICANT COMPANIES UNDER THE CATEGORY ACTIV E/AMALGAMATED. APART FROM THESE EVIDENCES, THE ASSESSEE ALSO FILED CONFIRMATI ON FROM THE SHARE APPLICANTS, THEIR ITR, BANK STATEMENT, BALANCE SHEETS WHICH PROVED TH E IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT I N CASE OF ARAVALI TRADING CO. VS. ITO, 8 DTR 199 (RAJ.) AND SUBMITTED THAT THE HONBL E HIGH COURT HAS HELD THAT ONCE THE EXISTENCE OF SHARE APPLICANTS IS PROVED AND SUC H PERSON OWNS THE CREDIT, THE ASSESSEES ONUS STAND DISCHARGED AND THE ASSESSEE I S NOT REQUIRED TO PROVE THE 9 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. SOURCE FROM WHICH THE SHARE APPLICANTS COULD HAVE A CQUIRED THE MONEY DEPOSITED WITH HIM. EVEN OTHERWISE, WHEN THE SHARE APPLICANT S WERE SUBJECTED TO SCRUTINY ASSESSMENT UNDER SECTION 143(3) WHEREIN THE TRANSAC TIONS OF SHARE CAPITAL AND PREMIUM RECEIPTS WERE ACCEPTED BY THE AO THEN THE C REDITWORTHINESS OF THE SHARE APPLICANTS WAS ALSO ACCEPTED. THE LD. A/R HAS ALSO REFERRED TO THE AVAILABILITY OF THE FUNDS WITH SHARE APPLICANTS BEING SHARE CAPITAL AND PREMIUM RECEIPTS WHICH ARE MUCH MORE THAN THE SHARE APPLICATION MONEY GIVEN TO THE ASSESSEE. THE AO HAS NOT FOUND ANY DISCREPANCY IN THE ACCOUNTS OF THE SH ARE APPLICANTS AND PARTICULARLY THE BANK STATEMENT OF THESE COMPANIES. HENCE TREAT ING THE TRANSACTION AS BOGUS AND IN THE NATURE OF MERE ENTRY PROVIDED AGAINST TH E CASH WITHOUT ANY MATERIAL IS NOT SUSTAINABLE IN LAW. THE SHARE APPLICANTS HAVE GIVEN THE CONFIRMATION OF THE SHARE CAPITAL AND PREMIUM AMOUNT AND, THEREFORE, AD MITTED THE SHARE CAPITAL AND PREMIUM GIVEN TO THE ASSESSEE. THEREFORE, THE FI NDING OF THE AO TREATING THE SHARE CAPITAL AND PREMIUM AS AN ACCOMMODATION ENTRY IS WITHOUT ANY BASIS, MATERIAL EVIDENCE BUT THE SAME IS BASED PURELY ON SURMISES, CONJECTURES AND IRRELEVANT MATERIAL. NO POSITIVE MATERIAL WAS BROUGHT ON RECO RD BY THE AO TO SHOW THE SHARE APPLICANT COMPANY IS A SHELL COMPANY WHEREAS THE AS SESSEE HAS PRODUCED ALL THE RELEVANT DOCUMENTS TO ESTABLISH THE IDENTITY, CREDI TWORTHINESS AND GENUINENESS OF THE TRANSACTION AS WELL AS SHARE APPLICANT. 5. THE NEXT OBJECTION/CONTENTION OF THE LD. A/R IS THAT THE SOLE BASIS OF ADDITION IS THE STATEMENT OF SHRI ANAND SHARMA AND OTHERS WH EREAS THE ASSESSEE WAS NOT GIVEN THE OPPORTUNITY OF CROSS EXAMINATION DESPITE REPEATED REQUESTS AND DEMANDS. THE AO HAS VIOLATED THE PRINCIPLES OF NATURAL JUSTI CE BY NOT PROVIDING THE COPIES OF 10 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. MATERIAL USED AGAINST THE ASSESSEE AT THE ASSESSMEN T STAGE AND FURTHER NOT PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION OF T HE WITNESS DURING THE ASSESSMENT STAGE AS WELL AS APPELLATE STAGE. THOUGH THE LD. C IT (A) CALLED FOR A REMAND REPORT AND ASKED THE AO TO PROVIDE OPPORTUNITY OF CROSS EX AMINATION TO THE ASSESSEE, HOWEVER, AFTER THE REMAND PROCEEDINGS THE AO DID NO T AFFORD AN OPPORTUNITY OF CROSS EXAMINATION RATHER THE AO HAS ASKED THE ASSES SEE TO PRODUCE THE WITNESS INSTEAD OF ALLOWING THE ASSESSEE TO CROSS EXAMINE T HE WITNESS. IN SUPPORT OF HIS CONTENTION, THE LD. A/R HAS RELIED UPON THE DECISIO N OF HONBLE SUPREME COURT IN CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE (2016) 15 SCC 785 (SC). HE HAS ALSO RELIED ON THE DECISION H ONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ASHWANI GUPTA, 322 ITR 396 (DELHI) AND SUBMITTED THAT THE HONBLE HIGH COURT HAS HELD THAT ONCE THERE IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SEIZED MATERIAL IS NOT PROVIDED TO THE ASSESSEE NOR WAS PERMITTED TO CROSS EXAMINE A PERSON ON WHOSE STATEMENT THE AO RE LIED UPON, IT WOULD AMOUNT TO DEFICIENCY AND DENIAL OF NATURAL JUSTICE. THE LD. A/R HAS THEN REFERRED TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F H.R. MEHTA VS. ACIT, 387 ITR 561 (BOMBAY). THUS THE LD. A/R HAS SUBMITTED THAT ONCE THE ASSESSEE HAS ALREADY DISCHARGED ITS PRIMARY ONUS TO PROVE THE SHARE CAPI TAL AND PREMIUM ETC. BY FURNISHING RELEVANT DOCUMENTS, SUBSTANTIATED IDENTI TY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION, THEN THE BURDEN IS SHIFTED ON THE AO TO DISPROVE THE DOCUMENTS PRODUCED BY THE ASSESSEE IN SUPPORT OF TH E CLAIM. THE AO HAS RELIED UPON THE STATEMENT OF SHRI ANAND SHARMA AND OTHERS AND NO MATERIAL WAS BROUGHT ON RECORD TO CONTROVERT THE DOCUMENTARY EVIDENCE FI LED BY THE ASSESSEE. THUS THE LD. A/R HAS STATED THAT THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. SO FAR AS THE 11 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. REPORT OF THE INVESTIGATION WING KOLKATA IS CONCERN ED, THE LD. A/R SUBMITTED THAT REPORT DATED 09.03.2017 AND 30.03.2016 DO NOT PERTA IN TO ASSESSEE AS NOTHING HAS BEEN STATED IN THE REPORT ABOUT THE ASSESSEE. SO FA R REPORT DATED 24.03.2017 IS CONCERNED, WHEREIN IT HAS BEEN STATED THAT THERE WA S CASH DEPOSIT IN THE ACCOUNT OF M/S. AJAY TRADERS AND M/S. AJAY TRADERS HAS TRANSFE RRED THE FUND TO M/S. SANGAM DISTRIBUTORS PVT. LTD. IN THIS REGARD, THE LD. A/R SUBMITTED THAT SINCE THERE WAS NO CASH DEPOSIT IN THE ACCOUNT OF M/S. SANGAM DISTRIBU TORS PVT. LTD., ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE AS THE ASSESSEE I S NOT LIABLE TO EXPLAIN SOURCE OF SOURCE. SO FAR AS THE REPORT DATED 28.11.2017 AND 06.12.2017 ARE CONCERNED, THE LD. A/R SUBMITTED THAT THE ASSESSEE WAS NOT GIVEN A NY MATERIAL OR COPY OF STATEMENT TO SHOW THAT THESE COMPANIES ARE OPERATED AS BOGUS ENTRY PROVIDER. THEREFORE, WITHOUT PROVIDING OPPORTUNITY OF CONFRONTATION, THE ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE BY ALLEGING THAT THE ASSESSEE HAS INTRODUCED ITS UNDISCLOSED INCOME UNDER THE GARB OF SHARE CAPITAL AND SHARE PR EMIUM. THE LD. A/R SUPPORTED ON THE ORDER OF THE LD. CIT (A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. FOR THE ASSESSMENT YEAR 2010-11, THE ASSES SEE RECEIVED SHARE CAPITAL WITH PREMIUM FROM TWO COMPANIES DETAILS OF WHICH ARE AS UNDER :- (1) M/S. SANGAM DISTRIBUTORS PVT. LTD. RS. 90,00,000/- (2) M/S. TEAC CONSULTANTS PVT. LTD. RS. 15,00,000/- THERE IS NO DISPUTE THAT DURING THE COURSE OF SEARC H AND SEIZURE NO INCRIMINATING MATERIAL WAS EITHER FOUND OR SEIZED DISCLOSING ANY UNDISCLOSED INCOME OR INDICATING ANY BOGUS TRANSACTION OF RECEIPT OF SHARE CAPITAL A ND PREMIUM BY THE ASSESSEE FROM THESE TWO COMPANIES. FURTHER, THE AO HAS ALSO NOT REFERRED OR RELIED UPON ANY 12 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. SEIZED DOCUMENT WHILE MAKING THE ADDITION OF THE AM OUNT OF RS. 1,05,00,000/- ON ACCOUNT OF SHARE CAPITAL AND PREMIUM RECEIVED FROM THESE TWO COMPANIES UNDER SECTION 68 OF THE IT ACT. THE SOLE BASIS OF THE AD DITION MADE BY THE AO IS THE INFORMATION RECEIVED FROM THE INVESTIGATION WING KO LKATA WHICH IS ALSO IN TURN IS NOTHING BUT THE NARRATION OF THE STATEMENTS OF VARI OUS PERSONS ALLEGEDLY OPERATORS OF BOGUS ENTRY PROVIDER. THE AO HAS REFERRED TO THE S TATEMENT OF SHRI ANAND SHARMA AND OTHER THREE PERSONS AS MENTIONED IN THE REPORT OF THE INVESTIGATION WING FOR TREATING THE SHARE CAPITAL AND PREMIUM RECEIVED FRO M THESE TWO COMPANIES AS UNDISCLOSED CASH CREDIT BEING THE ASSESSEES OWN UN ACCOUNTED AND UNDISCLOSED INCOME ROUTED IN THE SHAPE OF SHARE CAPITAL AND PRE MIUM. IT IS ALSO NOT DISPUTED THAT THE AO WAS NOT EVEN HAVING THE ALLEGED STATEME NT OF SHRI AMIT KEDIA AND SHRI ALOK HARLALKA BUT ONLY A REFERENCE WAS MADE IN THE REPORT OF THE INVESTIGATION WING. THEREFORE, EXCEPT THE REPORT OF THE INVESTIGATION W ING KOLKATA, THE AO WAS NOT HAVING ANY OTHER MATERIAL IN HIS POSSESSION TO SUPP ORT HIS DECISION OF TREATING THE SHARE CAPITAL AND PREMIUM RECEIVED FROM THESE TWO C OMPANIES AS BOGUS TRANSACTION AND ADDITION UNDER SECTION 68 OF THE ACT. ON THE CONTRARY, THE ASSESSEE HAS PRODUCED THE FOLLOWING DOCUMENTARY EVIDENCE IN SUPP ORT OF THE CLAIM :- M/S TEAC CONSULTANTS PVT. LTD S. NO. PARTICULARS PAPER BOOK PAGE NO. 1 COPY OF ACK. OF ITR OF AY 2010-11 ALONG WITH COMPUTATION SHEET 426-427 2 COPY OF BALANCE SHEET OF AY 2010-11 ALONG WITH ENCLOSURES 428-433 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. 434 13 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 4 CONFIRMATION OF ACCOUNT SHOWING THE TRANSACTION WITH ASSESSEE COMPANY ALONG WITH LEDGERS FROM THE BOOKS OF SHARE APPLICANTS 435-436 5 COPY OF SHARE ALLOTMENT ADVICE 437 6 COPY OF SHARE APPLICATION FORM OF EQUITY SHARE 438 7 COPY OF AFFIDAVIT OF MR JITENDRA SHARMA DIRECTOR OF COMPANY. 439-442 8 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 AND 31.03.2016. 443-449 9 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOVE NAMED COMPANY FOR AY 2005-06, AY 2006- 07, AY 2012-13 AND 2014-15. 450-469 10 COPY OF ROC MASTER DATA. 470-471 11 COPY OF PAN CARD. 472 12 CERTIFICATE OF INCORPORATION. 473 13 COPY OF CERTIFICATE OF NBFC REGISTRATION. 474 14 COPY OF SUMMON NO. 1433 DATED 13.10.2017 AND REMINDER SUMMON NO.-1592 DATED 31.10.2017 ISSUED BY DDIT (INVESTIGATION), UNIT-1(3), KOLKATA U/S 131 OF INCOME TAX ACT, 1961 TO M/S TEAC CONSULTANTS PRIVATE LIMITED. 475-478 15 COPY OF REPLY IN RESPONSE TO SUMMON ISSUED TO TH E COMPANY. 479-481 16 COPY OF LETTER FOR CONFIRMATION OF SOURCE OF FUN DS USED FOR APPLYING THE SHARES ALONG WITH SUPPORTING DOCUMENTS 482-485 M/S SANGAM DISTRIBUTORS PVT. LTD. S. NO. PARTICULARS PAPER BOOK PAGE NO. 1 COPY OF ACK. OF ITR OF AY 2010-11 ALONG WITH COMPUTATION SHEET 486-487 2 COPY OF BALANCE SHEET OF AY 2010-11 ALONG WITH ENCLOSURES 488-489 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. 490 4 CONFIRMATION OF ACCOUNT SHOWING THE TRANSACTION WITH ASSESSEE COMPANY. 491 5 COPY OF SHARE APPLICATION FORM OF EQUITY SHARE 492-493 14 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 6 COPY OF AFFIDAVIT OF MRS NEELAM GAUTAM DIRECTOR O F M/S BIRLA ARTS PVT LTD. ON BEHALF OF AMALGAMATED COMPANY M/S SANGAM DISTRIBUTORS PVT LTD. 494-497 7 COPY OF ORDER DATED 19.07.2014 PASSED BY CALCUTTA HIGH COURT REGARDING AMALGAMATION OF OTHER COMPANIES IN THIS COMPANY 498-524 8 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31.03.2011, 31.03.2012, AND 31.03.2013. 525-528 9 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOVE NAMED COMPANY FOR AY 2006-07, AY 2007- 08 AND 2013-14. 529-540 10 COPY OF ROC MASTER DATA. 541-542 11 COPY OF PAN CARD. 543 12 CERTIFICATE OF INCORPORATION. 544 THUS IT IS MANIFEST FROM THE DETAILS OF THE DOCUMEN TARY EVIDENCE PRODUCED BY THE ASSESSEE THAT THE ASSESSEE ESTABLISHED ITS CLAIM OF GENUINENESS OF THE TRANSACTION AS WELL AS CREDITWORTHINESS OF THESE SHARE APPLICANTS BY SHOWING THE TRANSACTIONS IN THE BOOKS OF ACCOUNTS AND FINANCIAL STATEMENTS OF THE S HARE APPLICANTS, THE AVAILABILITY OF THE FUNDS TO ESTABLISH THE CAPACITY OF THE SHARE AP PLICANTS TO SUBSCRIBE TO THE SHARE CAPITAL OF THE ASSESSEE WITH PREMIUM. FURTHER, THE INCOME TAX RETURNS OF THE SHARE APPLICANTS WERE ALSO FILED WHICH SHOW THAT ALL THE TRANSACTIONS WERE DISCLOSED IN THE RETURN OF INCOME. APART FROM THE CAPACITY OF THE S HARE APPLICANTS, THE ASSESSEE HAS ALSO PRODUCED THE BANK STATEMENTS OF THE SHARE APPL ICANTS TO SHOW THAT THE PAYMENT OF THE MONEY WAS MADE THROUGH BANKING CHANN EL AND THE AO HAS NOT POINTED OUT ANY DISCREPANCY EITHER IN THE BANK ACCO UNT STATEMENTS OF THE SHARE APPLICANTS OR IN THE FINANCIAL STATEMENTS TO SHOW T HAT THERE WAS ANY CORRESPONDING DEPOSITS OF MONEY PRIOR TO THE PAYMENT TO THE ASSES SEE WHICH COULD INDICATE A SLIGHTEST SCOPE OF ASSESSEES OWN MONEY ROUTED THRO UGH SHARE APPLICANTS. THEREFORE, IN THE ABSENCE OF ANY SUCH FINDING OR AN Y SUCH DISCREPANCY IN THE BANK 15 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. ACCOUNT STATEMENTS AND FINANCIAL STATEMENTS, THE AO HAS NOT PRODUCED ANY MATERIAL OR RECORD TO CONTRADICT THE DOCUMENTARY EVIDENCE FI LED BY THE ASSESSEE IN SUPPORT OF THE CLAIM. FURTHER, THERE IS A DECISION OF HONBLE CALCUTTA HIGH COURT IN CASE OF M/S. SANGAM DISTRIBUTORS PVT. LTD. APPROVING THE AMALGAM ATION OF THE COMPANY. THE ASSESSEE ALSO PRODUCED THE CONFIRMATION AND AFFIDAV ITS OF THE DIRECTORS OF THE SHARE APPLICANT COMPANIES APART FROM THE FINANCIAL STATEM ENTS TO SHOW THE SUFFICIENCY OF FUND WITH THE SHARE APPLICANTS AND REGULAR BUSINESS ACTIVITIES AND FLOW OF FUNDS. FURTHER, THE ASSESSEE ALSO PRODUCED THE ROC MASTER DATA OF SHARE APPLICANTS TO SHOW THAT THE STATUS OF THESE COMPANIES AS PER ROC RECORD IS ACTIVE/AMALGAMATED . THE SHARE APPLICANT COMPANIES ARE ALSO REGULARLY ASSESSED TO TAX AND SUBJECT TO SCRUTINY ASSESSMENT. THE ASSESSEE PRODUCED THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) IN RE SPECT OF THE SHARE APPLICANT COMPANIES, DETAILS OF WHICH ARE AS UNDER :- ASSESSMENT U/S 143(3) : NAME OF COMPANY ASSESSMENT YEAR INCOME ASSESSED ASSESSMENT ORDER U/S 143(3) AT PB PG M/S TEAC CONSULTANTS PVT. LTD 2005-06 13,980 451-453 M/S TEAC CONSULTANTS PVT. LTD 2006-07 45,395 454-455 M/S TEAC CONSULTANTS PVT. LTD 2012-13 49,91,290 459-462 M/S TEAC CONSULTANTS PVT. LTD 2014-15 10,14,150 466/ M/S SANGAM DISTRIBUTORS PVT.LTD 2006-07 NIL 530-531 M/S SANGAM DISTRIBUTORS PVT.LTD 2007-08 9,600 534-535 M/S SANGAM 2013-14 6,79,400 538 16 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. DISTRIBUTORS PVT.LTD M/S ISIS MERCANTILE PVT. LTD. 2006-07 6,936/- 500-501 M/S ISIS MERCANTILE PVT. LTD 2013-14 21,81,459/- 502-505 M/S ISIS MERCANTILE PVT. LTD 2014-15 NIL (AMALGAMATED WITH M/S MAGNATE CAPITAL MARKET PVT. LTD.) 509-510 THUS IT IS CLEAR THAT BOTH THE SHARE APPLICANT COMP ANIES ARE REGULARLY ASSESSED AND ASSESSMENT ORDERS UNDER SECTION 143(3) WERE PASSED WHEREIN THE TRANSACTIONS OF INVESTMENT MADE IN THE SHARES OF THE ASSESSEE WERE NOT DISTURBED BY THE AO. HENCE ALL THESE DOCUMENTARY EVIDENCES AS WELL AS THE ADMI TTED FACTS CLEARLY ESTABLISHED THAT THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVIN G THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANTS AS WELL AS GENUINENESS OF THE TRANSACTIONS. THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO CO NTRADICT THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE. THE LD. CIT (APPE ALS) HAS DELETED THE ADDITION IN PARA 5 TO 5.13 AS UNDER :- 5. ON BEING PERUSAL OF REPORTS DATED 28.11.2017 AND 06.12.2017 RECEIVED FROM INVESTIGATION DIRECTORATE, KOLKATA IT REVEALS NO ADVERSE FACTS, DETAILS AND EVIDENCES ARE NOT FOUND IN THE R EPORTS IN RESPECT OF SHARE APPLICATION MONEY AND SHARE PREMIUM RECEIVED FROM M/S SANGAM DISTRIBUTORS PVT. LTD. AND M/S TEAC CONSULTANTS PVT . LTD. AS MENTIONED IN PARA 4.4.7 ABOVE MY FINDINGS ARE AS FOLLOWS:- 5.1 AS DISCUSSED IN PARA 4.4.7 ABOVE, IN RESPECT OF THE INVESTORS NAMELY M/S SANGAM DISTRIBUTORS PVT. LTD. AND M/S TE AC CONSULTANTS 17 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. PRIVATE LIMITED ADVERSE FINDINGS ALONG WITH ELOQUEN T EVIDENCES IN THE FORM OF STATEMENT ON OATH OF RELEVANT ENTRY OPERATO RS ARE NOT VISIBLE IN THE REPORTS DATED 28.11.2017 AND 06.12.2017 FROM IN VESTIGATION DIRECTORATE, KOLKATA AND THEREFORE IT COULD NOT BE TREATED AS SHELL COMPANY. 5.2 AS FAR AS THE LENDER COMPANIES NAMELY, M/S SANG AM DISTRIBUTORS PVT. LTD AND M/S TEAC CONSULTANTS PRIVATE LIMITED I S CONCERNED, IT IS EVIDENT FROM THE DOCUMENTS PLACED ON RECORD THAT NO TICE WAS ISSUED BY DDIT, KOLKATA U/S 131 TO THESE COMPANIES WHICH WAS DULY COMPLIED WITH AND RELEVANT DOCUMENTS WERE FILED. THERE IS NO FACT ON RECORD THAT THE NOTICES REMAINED UNSERVED OR THESE COMPANIES WE RE NOT FOUND EXISTENT ON THE GIVEN ADDRESSES. FURTHERMORE, AFFID AVIT OF THE DIRECTORS WERE ALSO SUBMITTED WHEREIN THE DIRECTORS CONFIRMED INVESTMENT IN SHARES OF THE APPELLANT AND SOURCE OF PROVIDING THE SAID. ALSO, IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT NO STATEMENT /EVIDENCE HAS BEEN RELIED UPON OR PROVIDED BY THE AO FOR SUBSTANTIATIN G THAT THESE COMPANIES ARE CONTROLLED BY THE SO-CALLED ENTRY OPE RATORS. 5.3 FOR THIS INVESTOR NAMELY, M/S SANGAM DISTRIBUT ORS PVT. LTD. AND M/S TEAC CONSULTANTS PRIVATE LIMITED, THE APPELLANT IN DISCHARGE OF ITS ONUS U/S 68 OF THE ACT HAS FILED CONFIRMATION OF AC COUNTS AS WELL AS BANK STATEMENT REFLECTING THE TRANSACTIONS WITH OTHER SU BSTANTIATING DOCUMENTS ALONG WITH ASSESSMENT ORDERS IN CASE OF INVESTOR CO MPANIES, WHICH ARE AVAILABLE AT PAGE NO. 292 TO 389 OF PB. FROM THESE DOCUMENTARY EVIDENCES PLACED ON RECORD, IDENTITY, CREDITWORTHIN ESS AND GENUINENESS OF TRANSACTIONS IS ESTABLISHED. THERE IS NO GAIN S AYING THAT THE ONUS SQUARELY LIES ON THE APPELLANT TO PROVE THE IDENTIT Y, CREDITWORTHINESS AND GENUINENESS OF THE CASH CREDITS. IN THE CASE OF ADD L. CIT V. BAHRI BROS. (P) LTD. [1985] 154 ITR 244 (PAT), THE HON'BLE PATN A HIGH COURT HAS HELD ' IF THE LOANS ARE GIVEN BY AN ACCOUNT PAYING CHEQUE, IT AMOUNTS TO 18 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. IDENTIFICATION OF THE PARTIES AND DISCHARGE OF BURD EN BY THE BORROWER .' IN VIEW OF THE ABOVE, IT IS CLEAR THAT APPELLANT DI SCHARGED ITS BURDEN U/S 68 OF THE ACT. EVEN OTHERWISE, THERE IS NO ADVERSE FINDING OF ANY INVESTIGATION CONDUCTED BY THE DEPARTMENT IN RELATI ON TO THESE COMPANIES. THEREFORE, IN THE ABSENCE OF ANY INDEPEN DENT INQUIRY AND ANY ADVERSE FINDINGS TO REBUT THE EVIDENCES FILED B Y THE APPELLANT, I FIND THAT THE ADDITION IN RESPECT OF SHARE APPLICATION A ND SHARE PREMIUM FROM M/S SANGAM DISTRIBUTORS PVT. LTD. AND M/S TEAC CONSULTANTS PRIVATE LIMITED AMOUNTING TO RS. 1,05,00,000/- IS U NJUSTIFIED; FIRSTLY, ON THE GROUND THAT NO INQUIRIES WERE MADE TO REBUT THE EVIDENCES FILED BY THE APPELLANT AND SECONDLY, ON THE GROUND THAT APPE LLANT DULY DISCHARGED ITS BURDEN CASTED UPON U/S 68 OF THE ACT TO EXPLAIN NATURE AND SOURCE OF THE TRANSACTIONS BY PROVING THE IDENTITY, CREDITWORTHINESS OF CREDITOR AND GENUINENESS OF THE TRANSACTION. IN PAR TICULAR, NONE OF THE MATERIAL OR STATEMENTS HAVE BEEN PROVIDED IN THE AS SESSMENT ORDER WHEREIN NAMES OF THE SAID COMPANIES ARE MENTIONED. NOTABLY, THE TRANSACTIONS WITH THE COMPANY ARE DULY VERIFIABLE F ROM CONFIRMATION OF ACCOUNTS PLACED AT PAGE NO. 296 AND 351 OF PB WITH SUPPORTING BANK STATEMENTS PLACED AT PAGE NO. 295 AND 352 OF PB AND HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS ONLY AND THUS, APPELLA NT HAS DULY PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T HE TRANSACTIONS. 5.4 FURTHERMORE, FROM THE PERUSAL OF DOCUMENTARY EV IDENCES SUBMITTED BY THE APPELLANT, IT IS SEEN THAT TRANSAC TIONS HAVE BEEN DONE THROUGH BANKING CHANNELS AND ON THE DATE OF MAKING OF LOANS, THERE IS BALANCE AVAILABLE IN THE ACCOUNTS OF THE BORROWERS, WHICH PROVES THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. THERE IS NO CASE OF ANY CASH DEPOSITION IN THE ACCOUNT OF ANY OF THE INVESTOR AT THE TIME OF ISSUING CHEQUES/RTGS IN FAVOUR OF THE ASSESSEE. THEREFORE, IN VIEW OF THE SETTLED JUDICIAL PRECEDENT IN CASE OF CIT V. VARINDER RAWLLEY [2014] 366 ITR 232 (PUNJAB & HARYANA), CIT V. 19 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. VIJAY KUMAR JAIN [2014] 221 TAXMAN 180, CIT V. VICT OR ELECTRODES LTD. [2010] 329 ITR 271, ADDL. CIT V. BA HRI BROS. (P) LTD. [1985] 154 ITR 244 (PAT) AND OTHERS AS REFERRED BY THE APPELLANT, I AM OF THE CONSIDERED VIEW THAT APPELLANT DULY DISCHARG ED ITS BURDEN CASTED UPON IT U/S 68 OF THE ACT. IT IS FURTHER SEEN THAT M/S SANGAM DISTRIBUTORS PVT. LTD AND M/S TEAC CONSULTANTS PRIVATE LIMITED D ULY REPLIED TO THE NOTICES ISSUED BY DCIT/DDIT(INV.), KOLKATA IN RESPE CT OF COMMISSION, THESE FACTS REMAIN UNCONTROVERTED BY THE AO. 5.5 THE AO DURING ASSESSMENT PROCEEDINGS TOOK NEGAT IVE INFERENCE FROM THE STATEMENT OF SHRI RAJENDRA AGARWAL RECORDE D DURING SEARCH U/S 132(4) WHEREIN HE MADE DISCLOSURE IN RESPECT OF LON G TERM CAPITAL GAIN IN HIS INDIVIDUAL HANDS. I HAVE GONE THROUGH T HE STATEMENT OF SHRI RAJENDRA AGARWAL AND HIS DISCLOSURE MADE IN HIS STA TEMENT, NOTABLY, THE DISCLOSURE MADE WAS IN HIS PERSONAL CAPACITY ONLY A ND WITH RESPECT TO LTCG ONLY AND NOT IN RESPECT OF ANY OTHER TRANSACTI ONS BE IT BE RECEIPT OF UNSECURED LOANS. FURTHER, RAJENDRA AGARWAL AND A PPELLANT ARE SEPARATE LEGAL ENTITY. THEREFORE, I FIND THAT IN TH E ABSENCE OF ANY NEXUS OF THE STATEMENT OF SHRI RAJENDRA AGARWAL WITH THE APPELLANT OR ITS TOTAL INCOME, THIS BASIS OF ADDITION ADOPTED BY THE AO IS FARFETCHED & CANNOT BE CONCURRED. 5.6 IT IS FURTHER SEEN THAT AO HAS NOT BROUGHT ANY SPECIFIC DEFECT / DISCREPANCIES IN THE DIRECT EVIDENCE BROUGHT ON REC ORD BY THE APPELLANT. THE AO HAS OBSERVED THAT ON THE DATE OF DEBIT IN TH E ACCOUNT STATEMENT OF INVESTOR, THERE IS CORRESPONDING CREDIT ENTRY OF EQUAL AMOUNT, HOWEVER, THIS OBSERVATION OF THE AO IS ITSELF NOT S UFFICIENT TO PROVE BEYOND DOUBT THAT APPELLANT ROUTED ITS UNACCOUNTED INCOME BY THESE COMPANIES RATHER IT PROVES THE SOURCE IN THE HANDS OF THE APPELLANT. IT IS USUAL BUSINESS PRACTICE, WHILE MAKING INVESTMENT, F UNDS ARE REQUIRED TO BE ARRANGED BY THE INVESTOR, THEREFORE REFLECTION O F SUCH ENTRIES IN BANK 20 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. STATEMENT DOESNT LEAD TO DRAW ANY ADVERSE INFERENC E AGAINST THE APPELLANT. NEEDLESS TO SAY THAT APPELLANT IS NOT RE QUIRED TO PROVE SOURCE OF THE SOURCE U/S 68 OF THE ACT IN VIEW OF THE SETT LED JUDICIAL PRECEDENTS. 5.7 IN MY CONSIDERED VIEW, MERE NOT BELIEVING AN EX PLANATION CANNOT LEAD TO A CONCLUSION THAT THE INVESTED AMOUNT IS TH E INCOME OF THE ASSESSEE FROM SOME UNDISCLOSED SOURCES WHILE IN THE PRESENT CASE, NO EVIDENCES OF ANY GENERATION OF UNDISCLOSED INCOME O R THEIR UTILIZATION IN THE FORM OF SHARE APPLICATION AND SHARE PREMIUM HAS BEEN FOUND AND BROUGHT ON RECORD. 5.8 SIMILARLY, I FIND THAT VARIOUS OBSERVATIONS OF THE AO ON BALANCE SHEET / ITR OF THE LENDER COMPANIES ARE MISCONSTRUE D, MISCONCEIVED AND ARE FACTUALLY INCORRECT. I FURTHER FIND THAT THE VA RIOUS OTHER ALLEGATIONS / OBSERVATIONS OF THE AO ARE MISCONCEIVED AND PREMATU RE ONLY AND IN VIEW THE APPELLANTS SUBMISSION MADE IN PARA 10 AS REPRODUCED IN PARA NO. 4.2 OF THIS ORDER, THE SAME DOES NOT LEAD ANY W HERE TO DRAW ANY ADVERSE INFERENCE AGAINST THE APPELLANT. FURTHER, T HE VARIOUS CASE LAWS RELIED UPON BY THE AO ARE DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE AS CATEGORICALLY COUNTERED BY THE APPELLANT IN HIS WRITTEN SUBMISSIONS AS REPRODUCED IN PARA NO. 4.2 ABOVE. 5.9 IT IS SETTLED JUDICIAL PRECEDENTS THAT UNDER TH E INCOME TAX LAW PRIMARY BURDEN U/S 68 OF THE ACT IS ON THE APPELLAN T AND ONCE THIS BURDEN IS DISCHARGED U/S 68 OF THE ACT, NO ADDITION U/S 68 OF THE ACT IS JUSTIFIABLE IN THE HANDS OF THE ASSESSEE IN VIEW OF THE JUDGMENTS IN CASE OF SHREE BARKHA SYNTHETICS LTD. V/S ASSISTANT COMMI SSIONER OF INCOME- TAX (2006) 155 TAXMAN 289 (RAJ.), COMMISSIONER OF INCOME-TAX, JAIPUR -II V. MORANI AUTOMOTIVES (P.) L TD. [2014] 264 CTR 86 (RAJASTHAN-HC), CIT V. ORISSA COR PN. (P.) LTD. [1986) 159 ITR 78/25 TAXMAN 80F (SC), COMMISSIONER OF INCOME-TAX 21 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. V/S MARK HOSPITALS (P.) LTD. [2015] 373 ITR 115 (MA DRAS)(MAG.), COMMISSIONER OF INCOME-TAX, AJMER V. JAI KUMAR BAKL IWAL [2014] 366 ITR 217 (RAJASTHAN), CIT V/S. CREATIVE WORLD TELEF ILMS LTD (2011) 333 ITR 100 (BOM), COMMISSIONER OF INCOME-TAX-I V. PATE L RAMNIKLAL HIRJI [2014] 222 TAXMAN 15 (GUJARAT)(MAG.), PRINCIPAL COM MISSIONER OF INCOME-TAX-4 V. G & G PHARMA INDIA LTD. [2016] 384 ITR 147 (DELHI) REFERRED ABOVE WHICH HAVE BEEN ALSO BEEN FOLLOWED R ECENTLY BY HONBLE DELHI TRIBUNAL IN CASE OF ITO VS. SOFTLINE CREATION S (P) LTD. IN ITA NO. 744/DEL/2012 VIDE ITS ORDER DATED 10.02.2016. FURTH ER, HONBLE APEX COURT AS WELL AS HIGH COURT HAS HELD THAT ONCE THE IDENTITY OF CREDITOR IS ESTABLISHED, THE DEPARTMENT IS FREE TO REOPEN THE A SSESSMENT OF CREDITOR AND NO ADDITION CAN BE MADE IN THE HAND OF BORROWER AS RIGHTLY HELD IN CASE OF CIT V/S LOVELY EXPORTS PVT. LTD. [2008] 216 CTR 195 (SC), COMMISSIONER OF INCOME-TAX V. ROCK FORT METAL & MIN ERALS LTD. [2011] 198 TAXMAN 497 (DELHI), DIVINE LEASING & FIN ANCE LIMITED [2008] 299 ITR 268 (DELHI) CIT V. ORISSA CORPORATIO N (P.) LTD. [1986) 159 ITR 78/25 TAXMAN 80F (SC) AND OTHERS ON THIS QU ESTION OF LAW. 5.10 FURTHER, POWER TO CALL FOR INFORMATION/PRODUCT ION OF EVIDENCES OR ENFORCING ATTENDANCE UNDER THE LAW IS GIVEN TO THE INCOME TAX AUTHORITIES ONLY AND THEREFORE, IN VIEW OF THE JUDGMENT CIT V/S VICTOR ELECTRODES LTD. [2010] 329 ITR 271, THE APPELLANT CANNOT BE FA STENED UPON THE BURDEN TO PRODUCE THE INVESTORS BEFORE THE ASSESSIN G AUTHORITIES THOUGH IN THE INSTANCE CASE, APPELLANT HAS COOPERATED IN A SSESSMENT BY SHOWING HIS WILLINGNESS TO PRODUCE THE DIRECTORS OF INVESTO R COMPANIES AND SOME DIRECTORS/OFFICER WERE ALSO PRODUCED BEFORE THE AO. THUS, IN VIEW OF THE JUDICIAL PRECEDENTS REFERRED ABOVE, UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE IT IS UNTENABLE TO MAKE ANY ADDITI ON FOR ALLEGED NON- APPEARANCE BY THE CONCERNED PERSON BEFORE THE AUTHO RITIES THOUGH THEY COMPLIED WITH THE NOTICES/SUMMON ISSUED TO THEM. 22 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 5.11 IN THE PRESENT CASE IN HAND, I FIND THAT AO AS KED ASSESSEE TO PRODUCE INVESTOR COMPANIES WITHOUT VERIFYING THE FA CTS OF INVESTING MONEY FROM RESPECTIVE JURISDICTION ASSESSING OFFICE R AND WITHOUT VERIFYING THEIR RETURNS OF INCOME AND BALANCE SHEET WHEREIN THESE TRANSACTIONS ARE REPORTED, ACCORDINGLY THE AO HAS N OT FOLLOWED THE PRINCIPLES LAID DOWN UNDER SECTION 68 OF THE ACT. T HE HONBLE GUJRAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TA X V. RANCHHOD JIVABHAI NAKHAVA [2012] 21 TAXMANN.COM 159 (GUJ.) H AS HELD THAT:- ONCE THE ASSESSEE HAS ESTABLISHED THAT HE HAS TAKEN MONEY BY WAY OF ACCOUNT PAYEE CHEQUES FROM THE LENDERS WHO A RE ALL INCOME TAX ASSESSEES WHOSE PAN HAVE BEEN DISCLOSED, THE INITIAL BURDEN UNDER SECTION 68 WAS DISCHARGED. IT FURTHER APPEARS THAT THE ASSESSEE HAD ALSO PRODUCED CONFIRMATION LETTERS GIVEN BY THOSE LENDERS. [PARA 15] ONCE THE ASSESSING OFFICER GETS HOLD OF THE PAN OF THE LENDERS, IT WAS HIS DUTY TO ASCERTAIN FROM THE ASSESSING OFFICE R OF THOSE LENDERS, WHETHER IN THEIR RESPECTIVE RETURNS THEY H AD SHOWN EXISTENCE OF SUCH AMOUNT OF MONEY AND HAD FURTHER S HOWN THAT THOSE AMOUNT OF MONEY HAD BEEN LENT TO THE ASSESSEE . IF BEFORE VERIFYING OF SUCH FACT FROM THE ASSESSING OFFICER O F THE LENDERS OF THE ASSESSEE, THE ASSESSING OFFICER DECIDES TO EXAM INE THE LENDERS AND ASKS THE ASSESSEE TO FURTHER PROVE THE GENUINEN ESS AND CREDITWORTHINESS OF THE TRANSACTION, THE ASSESSING OFFICER DOES NOT FOLLOW THE PRINCIPLE LAID DOWN UNDER SECTION 68 . [PARA 16] IN THE INSTANCE CASE BEFORE ME , THE AO HAS NOT FOL LOWED THE DUE PROCEDURE OF LAW U/S 68 OF THE ACT. THEREFORE, REQU IRING THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE LENDER COMPANY WAS NOT LEGALLY TENABLE IN VIEW OF THE JUDGMENT OF GUJRAT HIGH COURT (SUPRA). 5.12 IT IS NOTED THAT NO CLINCHING EVIDENCES HAS BE EN BROUGHT ON RECORD THAT ANY UNACCOUNTED INCOME WAS ROUTED THROUGH SHAR E APPLICATION AND SHARE PREMIUM BY THE APPELLANT AS NO EVIDENCES AS T O RECEIPT/PAYMENT 23 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. OF CASH FOR RECEIPT OF SHARE APPLICATION AND SHARE PREMIUM WERE FOUND DURING SEARCH IN CASE OF THE APPELLANT. MERE SUSPIC ION HOWSOEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. THUS, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH TO REBUT THE EVIDENCES FILED BY THE APPELLANT, THE IMPUGNED ADDITION MADE IN RESPECT OF SHARE APPLICATION & SHARE PREMIUM U/S 68 OF THE ACT IS LEGALLY UNTENA BLE AND UNJUSTIFIED. 5.13 IN VIEW OF THE ABOVE DISCUSSION OF RELEVANT F ACTS AND FOLLOWING THE SEVERAL RATIOS ON THE SUBJECT FROM HONBLE APEX COURT, HIGH COURTS INCLUDING JURISDICTIONAL HIGH COURTS, TRIBUNALS INC LUDING JURISDICTIONAL TRIBUNALS, THE IMPUGNED ADDITION IN RESPECT OF SHAR E APPLICATION AND SHARE PREMIUM RECEIVED FROM M/S SANGAM DISTRIBUTORS PVT. LTD. AND M/S TEAC CONSULTANTS PRIVATE LIMITED TOTALLING TO RS. 1,05,00,000/- IS NOT SUSTAINABLE AND HENCE THE SAME STANDS DELETED. IN VIEW OF ABOVE THE GROUND NO. 2, 13 TO 18 AND 20 OF APPEAL IS ALLOWED TO THE EXTENT MENTIONED ABOVE. ACCORDINGLY, IN VIEW OF THE ABOVE DISCUSSION AS WEL L AS FACTS AND CIRCUMSTANCES OF THE CASE THE AO HAS MADE THE ADDITION BASED ON THE REPORT OF THE INVESTIGATION WING KOLKATA WHEREAS THE ASSESSEE HAS PRODUCED ALL THE RELEVANT DOCUMENTARY EVIDENCE TO ESTABLISH THE IDENTITY, CREDITWORTHINES S AND GENUINENESS OF THE TRANSACTIONS. HENCE IN THE ABSENCE OF ANY DISCREPA NCY OR OTHERWISE ANY MATERIAL OR RECORD TO SHOW THAT THE ASSESSEES OWN UNACCOUNTED/ UNDISCLOSED INCOME HAS ROUTED THROUGH THE SHARE APPLICANTS, THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. ACCORDINGLY, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT (APPEALS) IN DELETING THE ADDITION. 24 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 7. FOR THE ASSESSMENT YEAR 2011-12, THE ADDITION WA S MADE IN RESPECT OF THE SHARE CAPITAL AND PREMIUM OF RS. 90,00,000/- RECEIV ED FROM M/S. ISIS MERCANTILE PVT. LTD. THE OTHER FACTS REGARDING THIS ISSUE REM AIN IDENTICAL AS FOR THE ASSESSMENT YEAR 2010-11. THE AO HAS MADE THE ADDITION BASED O N THE REPORT OF THE INVESTIGATION WING KOLKATA. HOWEVER, EXCEPT THE SA ID INFORMATION RECEIVED FROM THE INVESTIGATION WING, THE AO WAS NOT HAVING ANY OTHER EVIDENCE OR MATERIAL TO SHOW THAT THE TRANSACTION IS A BOGUS ENTRY PROVIDED BY T HE SHARE APPLICANT. THE ASSESSEE PRODUCED THE FOLLOWING DOCUMENTARY EVIDENCE IN SUPP ORT OF THE CLAIM :- M/S ISIS MERCANTILE PVT. LTD. S. NO. PARTICULARS PB PAGE NO./ AY 2011-12 1 COPY OF ACK. OF ITR OF AY 2011-12 ALONG WITH COMPUTATION SHEET. 430-432 2 COPY OF BALANCE SHEET OF AY 2011-12 ALONG WITH ENCLOSURES. 433-450 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. 451-454 4 CONFIRMATION OF ACCOUNT SHOWING THE TRANSACTION WITH ASSESSEE COMPANY, ALONG WITH LEDGER ACCOUNT FROM THE BOOKS OF SHARE APPLICANTS 455-456 5 COPY OF SHARE ALLOTMENT ADVICE 457 6 COPY OF SHARE APPLICATION FORM OF EQUITY SHARE ALONG WITH FORM 2 458-468 7 COPY OF AFFIDAVIT OF MRS BABITA KRIPLANI DIRECTOR OF COMPANY. 469-472 8 COPY OF ORDER PASSED BY CALCUTTA HIGH COURT REGARDING AMALGAMATION OF OTHER COMPANIES IN THIS COMPANY 473-495 9 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31.03.2011, 31.03.2012, AND 31.03.2013. 496-499 10 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOVE NAMED COMPANY FOR AY 2006-07, AY 2013-14 AND 2014-15. 500-513 25 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 11 COPY OF ROC MASTER DATA. 514-515 12 COPY OF PAN CARD. 516 13 CERTIFICATE OF INCORPORATION. 517 14 COPY OF SUMMON NO. 1444 DATED 13.10.2017 AND REMINDER SUMMON NO. 1584 DATED 31.10.2017 ISSUED BY DDIT (INVESTIGATION), UNIT-1(3), KOLKATA U/S 131 OF INCOME TAX ACT, 1961 TO M/S ISIS MERCANTILES PVT. LTD. 518-521 15 COPY OF REPLY IN RESPONSE TO SUCH SUMMON ALONG WITH DISPATCH PROOF. 522-524 FURTHER, THE ASSESSEE ALSO PRODUCED THE MASTER DATA OF ROC SHOWING THE STATUS OF THE SAID COMPANY AS AMALGAMATED . THE AMALGAMATION WAS DULY APPROVED BY THE HONBLE HIGH COURT. THE FINANCIAL STATUS AND C APACITY TO INVEST IN THE SHARES OF THE ASSESSEE WAS ALSO PROVED BY SHOWING THE SHARE C APITAL OF THE SAID COMPANY RAISED IN THE FINANCIAL YEAR 2005-06 OF RS. 15.42 C RORES, IN THE FINANCIAL YEAR 2010-11 OF RS. 2.5 CRORES AND IN THE FINANCIAL YEAR 2012-13 OF RS. 12.9 CRORES. THE ASSESSMENT ORDERS FOR ALL THESE YEARS EXCEPT ASSESS MENT YEAR 2011-12 WERE ALSO PASSED UNDER SECTION 143(3) OF THE IT ACT AND, THER EFORE, THE AVAILABILITY OF THE FUNDS AS WELL AS THE INVESTMENT MADE BY THE SAID CO MPANY IN THE SHARES OF THE ASSESSEE WERE NOT DISTURBED BY THE DEPARTMENT WHILE COMPLETING THE SCRUTINY ASSESSMENT. HENCE IN VIEW OF OUR FINDING ON THIS I SSUE FOR THE ASSESSMENT YEAR 2010-11 AND AN IDENTICAL FINDING OF THE LD. CIT (AP PEALS) FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, WE DO NOT FIND ANY ERROR OR IL LEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT (A) FOR THE ASSESSMENT YEAR 2011-12. GROUND NO. 7 OF THE DEPARTMENTS APPEAL IS REGARDIN G DELETION OF DISALLOWANCE MADE BY THE AO BY INVOKING THE PROVISI ONS OF SECTION 14A OF THE IT ACT. 26 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 8. THIS ISSUE IS COMMON FOR BOTH THE ASSESSMENT YEARS THOUGH THE AMOUNT OF DISALLOWANCE VARIES. 9. WE HAVE HEARD THE LD. D/R AS WELL AS THE LD. A/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE COMPANY HAS SHOWN OPENING AND CLO SING STOCK OF THE INVESTMENT IN SHARES AT RS. 15 LAC AS ON 31.03.2011 AND RS. 1, 97,53,750/- AS ON 31.03.2012. THE AO HAS MADE A DISALLOWANCE EQUIVALENT TO 1% OF THE AVERAGE INVESTMENT ON ACCOUNT OF EXPENDITURE INCURRED FOR EARNING THE EXE MPT INCOME. ON APPEAL, THE LD. CIT (A) HAS DELETED THE ADDITION IN PARA 8.4 FOR TH E ASSESSMENT YEAR 2010-11 AS UNDER :- 8.4 IN MY CONSIDERED VIEW, THE AO HAS LEGALLY ERRED IN DIRECTLY APPLYING THE PROVISION OF SECTION 14A OF THE ACT, W ITHOUT RECORDING ANY SATISFACTION AS TO THE CORRECTNESS OF THE CLAIM MAD E BY THE APPELLANT. IN THE ASSESSMENT ORDER, THERE IS NO SATISFACTION RECO RDED BY THE AO AS REQUIRED BY SECTION 14A (1) OF THE ACT BEFORE PROCE EDING FURTHER TO MAKE ANY DISALLOWANCE U/S 14A OF THE ACT. FURTHER, IT IS SEEN THAT AO HAS MECHANICALLY APPLIED THE RULE 8D AS AMENDED W.E .F. 02.06.2016, WHICH WAS NOT EVEN APPLICABLE TO RELEVANT ASSESSMEN T YEAR. IN MY CONSIDERED VIEW, THE LAW CANNOT BE APPLIED MECHANIC ALLY AND THAT TOO RETROSPECTIVELY. IT IS SEEN THAT AO HAS NOT ESTABLI SHED ANY NEXUS OF INVESTMENT WITH BORROWED FUNDS, RATHER AVAILABILITY OF SUFFICIENT INTEREST FREE FUNDS JUSTIFIES THE CASE OF THE APPELLANT THAT DISALLOWANCE U/S 14A OF THE ACT IS UNWARRANTED. FURTHER, IT IS SEEN THAT AO HAS NEITHER POINTED OUT NOR GIVEN ANY SPECIFIC FINDINGS IN THE ASSESSME NT ORDER THAT ANY EXEMPT INCOME WAS EARNED DURING THE RELEVANT ASSESS MENT YEAR. THEREFORE, IN VIEW OF THE NON-FULFILLMENT OF SUCH S TATUTORY REQUIREMENT 27 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. AS LAID DOWN IN VARIOUS JUDICIAL PRECEDENTS AND CIR CULARS AS RELIED UPON BY THE A/R IN HIS SUBMISSION, IN MY CONSIDERED VIEW , THE DISALLOWANCE U/S 14A OF THE ACT OF RS. 1250/- IS UNWARRANTED. AC CORDINGLY, THE SAME IS DELETED AND GROUNDS NO. 3 TO 10 OF APPEALS ARE A LLOWED. THERE IS NO DISPUTE THAT THE ASSESSEES OWN INTERES T FREE FUND WAS MANY TIMES MORE THAN THE INVESTMENT MADE FOR BOTH THE ASSESSMENT YE ARS TO THE TUNE OF RS. 15,00,000/- FOR ASSESSMENT YEAR 2010-11 AND RS. 1,9 2,53,750/- FOR THE ASSESSMENT YEAR 2011-12. FURTHER, THERE WAS NO DIVIDEND INCOM E EARNED BY THE ASSESSEE DURING THESE ASSESSMENT YEARS, THEREFORE, IN THE AB SENCE OF ANY EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YEARS UNDER CONSI DERATION, THE DISALLOWANCE MADE BY THE AO BEING 1% OF THE AVERAGE INVESTMENT IS NOT SUSTAINABLE WHEN THERE IS NO SPECIFIC AND IDENTIFIED EXPENDITURE OR FINDING BY T HE AO REGARDING ANY EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING THE EXEMPT INC OME. ACCORDINGLY, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY E RROR OR ILLEGALITY IN THE ORDER OF THE LD. CIT (A) QUA THIS ISSUE. C.O. NOS. 45 & 46/JP/2018 : 10. IN THESE CROSS OBJECTIONS, THE ASSESSEE HAS RAI SED THE FOLLOWING COMMON GROUNDS FOR BOTH THE ASSESSMENT YEARS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE ORDER PASSED U/S 153A READ WITH SECTION 143(3) OF T HE INCOME TAX ACT, 1961 IS BAD IN LAW, VOID-AB-INITIO, AND DE SERVES TO BE ANNULLED AS THE ASSESSMENT FOR THE YEAR UNDER CONSI DERATION WAS NOT ABATED AS ON THE DATE OF SEARCH AND CIT (A) ERRED IN HOLDING THAT THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED IN VIEW OF SLPS ADMITTED IN VARIOUS CASES. THE LD. CIT (A) 28 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. FURTHER ERRED IN HOLDING THAT THE ADDITIONS ARE TO BE ADJUDICATED ON MERITS AS PER RELEVANT GROUND OF APPEAL HENCE TH E ISSUE REMAINS FOR ACADEMIC DISCUSSION ONLY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT (A) ERRED IN NOT DECLARING THE ASSESSMENT O RDER AS BAD IN LAW AND VOID AB INITIO. IT IS CONTENDED THAT THE L D. AO PASSED THE ASSESSMENT ORDER AGAINST THE DOCTRINE OF AUDI ALTERM PARTEM, VIOLATING THE PRINCIPLE OF NATURAL JUSTICE AND NOT GIVING THE OPPORTUNITY OF CROSS EXAMINATION OF THE ALLEGED ACCOMMODATION ENTRY PROVIDERS, THEREFORE, THE ASSES SMENT ORDER OUGHT TO HELD AS BAD IN LAW AND DESERVES TO B E ANNULLED. THE FINDINGS OF LD. CIT (A) IN THIS REGARD ARE PERV ERSE AND ERRONEOUS. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, ANY OF THE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING OF APPEAL. GROUND NO. 1 OF THE CROSS OBJECTION IS REGARDING SUSTAINABILITY OF THE ADDITION MADE BY THE AO IN THE ASSESSMENT FRAME D UNDER SECTION 153A WITHOUT ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION. THIS GROUND IS COMMON F OR BOTH THE ASSESSMENT YEARS. 11. THE ASSESSEE FILED THE RETURN OF INCOME UNDER S ECTION 139(1) FOR THE ASSESSMENT YEAR 2010-11 ON 24.09.2010 AND FOR THE A SSESSMENT YEAR 2011-12 ON 06.09.2011. THE RETURNS FILED BY THE ASSESSEE WERE NOT PENDING AS ON THE DATE OF SEARCH ON 2 ND JULY, 2015. THEREFORE, THE ASSESSMENT WAS COMPLET ED UNDER SECTION 143(1)(A) FOR BOTH THE ASSESSMENT YEARS AND WAS NOT GOT ABATED DUE TO THE SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE IT ACT ON 2 ND JULY, 2015. THE ASSESSEE RAISED THIS OBJECTION BEFORE THE LD. CIT (A), HOWEV ER, THE LD. CIT (APPEALS) HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE DUE TO THE REASON THAT THE SLP FILED BY THE REVENUE AGAINST THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. KABUL CHAWLA, 380 ITR 573 (DELHI) IS PENDING BEFORE THE H ONBLE SUPREME COURT. 29 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 12. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBM ITTED THAT IN COMPLIANCE TO NOTICE UNDER SECTION 153A OF THE IT ACT, THE ASSESS EE SUBMITTED ITS E-RETURN OF INCOME FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12 ON 10 TH SEPTEMBER, 2016 AND 30 TH SEPTEMBER, 2016 RESPECTIVELY DECLARING TOTAL INCOM E WHICH WAS SAME FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12. THE ASSESSEE OBJECTED TO THE PROPOSED ADDITION ON THE GROUND THAT THE SAID STATEMENT RECO RDED BY THE DEPARTMENT IS BEHIND THE BACK OF THE ASSESSEE AND, THEREFORE, THE SAME CANNOT BE USED AGAINST THE ASSESSEE WITHOUT GIVING OPPORTUNITY OF CROSS EX AMINATION OF THE WITNESSES. FURTHER IT WAS CONTENDED SINCE THERE IS NO INCRIMIN ATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION, THEREFORE, THE AO IS NOT EMPOWERED TO MAKE ANY ADDITION IN THE TOTAL INCOME OF THE ASSESSEE. IT IS A SETTLED POSITION OF LAW THAT THERE CANNOT BE A REVIEW UNDER THE GARB OF REASSESS MENT PROCEEDING UNDER SECTION 153A OF THE ACT AND, THEREFORE, THE PROPOSED REASSE SSMENT PROCEEDINGS ARE ABSOLUTELY IN ABUSE OF PROCESS OF LAW, ILLEGAL AND BAD IN LAW. THE PROVISIONS OF SECTION 153A CANNOT BE APPLIED IN RESPECT OF ASSESS MENT WHICH HAS ALREADY BEEN COMPLETED UNLESS SOME INCRIMINATING MATERIAL/INFORM ATION COMES INTO THE POSSESSION/KNOWLEDGE OF THE AO DURING THE COURSE OF SEARCH PROCEEDINGS. SINCE THE ASSESSMENTS FOR THESE FOUR ASSESSMENT YEARS I.E. 20 10-11 AND 2011-12 WERE NOT PENDING AS ON THE DATE OF SEARCH AND THERE IS NO IN CRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH, THEN THE AO IS BOUND TO REASSESS THE TOTAL INCOME AS IT WAS ASSESSED ON THE ORIGINAL RETURN OF INCOME. THOUGH THE AO IS LEGALLY BOUND TO ASSESS OR REASSESS THE TOTAL INCOM E OF SIX YEARS IMMEDIATELY PRECEDING TO THE YEAR OF SEARCH, HOWEVER, THE ASSES SMENTS WHICH ARE PENDING ON THE DATE OF SEARCH GETS ABATED AND THE ASSESSMENTS WHICH WERE NOT PENDING ON THE 30 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. DATE OF SEARCH HAD ATTAINED THE FINALITY AND, THERE FORE, THE ADDITION OVER AND ABOVE THE ASSESSED INCOME CANNOT BE MADE DE HORS THE INCR IMINATING MATERIAL FOUND AT THE TIME OF SEARCH WHILE COMPLETING THE ASSESSMENT UNDE R SECTION 153A OF THE ACT. IF THERE IS NO INCRIMINATING MATERIAL THEN THE ORIGINA L ASSESSMENT MADE CAN BE REITERATED AND NO FURTHER ADDITION IS CALLED FOR OT HERWISE ADDITION CAN ONLY BE MADE ON THE BASIS OF UNDISCLOSED INCOME DERIVED FROM MAT ERIAL/DOCUMENTS SEIZED AS A RESULT OF SEARCH. THE COMPLETED ASSESSMENT CAN BE INTERFERED OR DISTURBED BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A O NLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH AND REQUISITION OF INCOME DISCLOSING UNDISCLOSED INCOME NOT ALREADY DI SCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. THEREFORE, IN THE A BSENCE OF ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARC H AND SEIZURE PROCEEDINGS, THE ADDITIONS MADE BY THE AO DURING THE COURSE OF REASS ESSMENT UNDER SECTION 153A OF THE ACT ARE WITHOUT JURISDICTION AND LIABLE TO BE D ELETED. IN SUPPORT OF HIS CONTENTION THE LD. A/R HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF KABUL CHAWLA, 380 ITR 573 (DELHI) AND SUBMITTED THAT HON BLE HIGH COURT HAS HELD THAT IN CASE OF COMPLETED ASSESSMENT NOT ABATED BY VIRTUE O F SEARCH UNDER SECTION 132 OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIA L, THE SAME CAN BE REITERATED AND, THEREFORE, NO ADDITION COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. THE LD. A/R HAS ALSO RELIED UPON THE FOLLOWING DECISION S :- 1. PRINCIPAL CIT VS. KURELE PAPER MILLS PVT. LTD. (2016) 380 ITR 571 (DELHI) SLP FILED BEFORE THE HONBLE SUPREME COURT WAS D ISMISSED VIDE ORDER DATED 07.12.2015. 31 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 2. PRINCIPAL CIT VS. MEETA GUTGUTIA (2017) 395 ITR 526 (DELHI) SLP FILED BEFORE THE HONBLE SUPREME COURT WAS D ISMISSED VIDE ORDER DATED 2 ND JULY, 2018. 3. JAI STEEL (INDIA) VS. ACIT (2013) 219 TAXMAN 223 (RAJ.) THUS THE LD. A/R HAS SUBMITTED THAT THE HONBLE JUR ISDICTIONAL HIGH COURT HAS HELD THAT THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT UNDER SECTION 153A HAS TO BE READ IN THE CONTEXT OF SECTION 132 OR 132A OF THE I T ACT, IN AS MUCH AS IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SUCH S EARCH OR REQUISITION, THEN THE QUESTION OF REASSESSMENT OF CONCLUDED ASSESSMENT DO ES NOT ARISE, WHICH WOULD REQUIRE MERE REITERATION AND IT IS ONLY IN THE CONT EXT OF ABATED ASSESSMENT UNDER SECOND PROVISO WHICH IS REQUIRED TO BE ASSESSED. T HE UNDERLINED PURPOSE OF MAKING ASSESSMENT OF TOTAL INCOME UNDER SECTION 153A OF TH E ACT IS, THEREFORE, TO ASSESS INCOME WHICH WAS NOT DISCLOSED OR WOULD NOT HAVE BE EN DISCLOSED. THE ASSESSMENT OR REASSESSMENT PROCEEDINGS WHICH HAVE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEES TOTAL INCOME AND, SUCH ORDERS ARE SUBSISTING AT THE TIME WHEN SEARCH OR REQUISITI ON IS MADE, THERE IS NO QUESTION OF ANY ABATED ASSESSMENT SINCE NO PROCEEDINGS WERE PEN DING AND, THEREFORE, THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESS ED WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL. IN THE ABSENCE OF ANY INCR IMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THUS THE LD. A/R HAS SUBMITTED THAT THE AO H AS MADE THE ADDITIONS IN THE ASSESSMENT UNDER SECTION 153A WHEREBY THE COMPLETED ASSESSMENTS HAVE BEEN 32 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. DISTURBED WITHOUT EVEN REFERRING TO ANY INCRIMINATI NG MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH AND SEIZURE UNDER SECTION 132 OF THE ACT. THE ONLY BASIS OF ADDITION IS THE STATEMENT OF THIRD PARTY RECORDED I N THE SEARCH OF THE THIRD PARTY THAT HAS NO CONNECTION WITH THE SEARCH PROCEEDINGS OF TH E ASSESSEE AND, THEREFORE, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND OR SEIZ ED DURING THE SEARCH OF THE ASSESSEE, NO ADDITION CAN BE MADE IN THE ASSESSMENT FRAMED UNDER SECTION 153A OF THE ACT. 13. ON THE OTHER HAND, THE LD. D/R SUBMITTED THAT T HE ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE RELATE TO THE UNEXPLAINED CA SH CREDIT IN THE BOOKS OF ACCOUNT INTRODUCED IN THE GARB OF SHARE CAPITAL AND PREMIUM WHICH IN FACT IS THE RE-ROUTING OF THE ASSESSEES UNDISCLOSED INCOME. IT IS CLEARLY E VIDENT FROM THE INNUMERABLE EVIDENCES WHICH CAME TO THE FORE IN THE NUMEROUS IN VESTIGATIONS, ENQUIRIES, SEARCH AND SURVEY ACTIONS CARRIED OUT BY THE INVESTIGATION WING OF THE DEPARTMENT THAT THE AO RECEIVED INFORMATION FROM THE INVESTIGATION WING KOLKATA REGARDING THE INVOLVEMENT OF ASSESSEE IN OBTAINING ENTRIES OF BOG US SHARE CAPITAL, SHARE PREMIUM ETC. DETECTED IN THE INVESTIGATION CARRIED OUT BY T HE INVESTIGATION WING KOLKATA. SUCH INFORMATION WAS RECEIVED PRIOR TO THE INITIATION OF PROCEEDINGS UNDER SECTION 153A AND ALSO DURING THE PENDENCY OF PROCEEDINGS UNDER S ECTION 153A. ACCORDINGLY, DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER S ECTION 153A, THE AO CONDUCTED FURTHER ENQUIRY ABOUT THE GENUINENESS OF THE TRANSA CTION OF SHARE CAPITAL AND PREMIUM ETC. THE ASSESSEE WAS DULY CONFRONTED WITH THE RESULTS OF ALL THESE ENQUIRIES AND INFORMATION SHARED BY THE INVESTIGATI ON WING. IN THESE CIRCUMSTANCES IT CANNOT BE A CASE OF ADDITION MADE WITHOUT ANY IN CRIMINATING MATERIAL BUT THE AO WAS HAVING SUFFICIENT MATERIAL DISCLOSING THE UNDIS CLOSED AND UNEXPLAINED CASH CREDIT 33 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. INTRODUCED BY THE ASSESSEE IN THE GARB OF SHARE CAP ITAL AND PREMIUM. ONCE THE INSURMOUNTABLE EVIDENCES UNEARTHED BY THE INVESTIGA TION WING KOLKATA WHICH IS THE BASIS OF THE ADDITIONS MADE BY THE AO, THE ASSESSEE WAS REQUIRED TO DISCHARGE ITS ONUS BY PRODUCING THE CONTRARY EVIDENCE OR BY PRODU CING ALLEGED CREDITORS FOR VERIFICATION. THE LD. CIT D/R HAS FURTHER SUBMITTE D THAT THE INFORMATION RECEIVED FROM THE INVESTIGATION WING KOLKATA IS ALSO THE INC RIMINATING MATERIAL FOUND DURING THE SEARCH AND PERTAINS TO THE ASSESSEE DISCLOSING UNDISCLOSED INCOME. THEREFORE, IT IS NOT A CASE OF REASSESSMENT FRAMED BY THE AO UNDE R SECTION 153A WITHOUT ANY INCRIMINATING MATERIAL. THE AO EVEN CONDUCTED FURT HER INVESTIGATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS THROUGH THE INVEST IGATION WING KOLKATA AND, THEREFORE, THE ADDITION IS FULLY BASED ON THE EVIDE NCE IN THE POSSESSION OF THE AO. AS PER THE PROVISIONS OF SECTION 132 READ WITH SECT ION 153A OF THE IT ACT, THE AO HAS TO ASSESS OR REASSESS THE INCOME OF LAST SIX YEARS AND TOTAL INCOME REFERS TO THE SUM TOTAL OF INCOME IN RESPECT OF WHICH A PERSON IS ASS ESSABLE. THE TOTAL INCOME WILL THEREFORE COVER NOT ONLY THE INCOME EMANATING FROM THE DECLARED SOURCE OR ANY MATERIAL OMISSION BEFORE AO BUT FROM ALL SOURCES I NCLUDING UNDISCLOSED ONES OR BASED ON UNPLACED MATERIAL BEFORE THE AO. THE LD. CIT D/R HAS THUS SUBMITTED THAT THE DECISIONS IN THE CASE OF M/S. ALL CARGO GLOBAL LOGISTICS LTD. AS WELL AS KABUL CHAWLA (SUPRA) WERE CHALLENGED BEFORE THE HONBLE S UPREME COURT AND THE HONBLE SUPREME COURT HAS ADMITTED THE SLP FOR EXAMINATION OF THE ISSUE. HENCE THE ISSUE IS STILL PENDING ADJUDICATION BEFORE THE HONBLE SUPRE ME COURT. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 14. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. IN PURSUANT TO THE SAME SEARCH AND SEIZURE ACTION UNDER SECTION 132 CARRIED 34 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. ON 2 ND JULY, 2015, AN IDENTICAL ISSUE WAS CONSIDERED AND DECIDED BY US IN THE CASE OF GROUP CONCERN, NAMELY, M/S. KOTA DALL MILL IN ITA N OS. 997 TO 1002/JP/2018 AND 1119/JP/2018 AND OTHERS VIDE ORDER DATED 31 ST DECEMBER, 2018 AS UNDER :- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2010-11 TO 13-14 WERE NOT PENDING ON THE DATE OF SE ARCH ON 2 ND JULY, 2015. EVEN IN SOME OF THE ASSESSMENT YEARS ORDERS UNDER S ECTION 143(3) WERE PASSED AND IN OTHER CASES THE ASSESSMENT WAS COMPLE TED UNDER SECTION 143(1) OF THE ACT. THUS THE ASSESSMENTS FOR THE AS SESSMENT YEARS 2010-11 TO 13-14 WERE NOT GOT ABATED BY VIRTUE OF SEARCH UN DER SECTION 132 ON 2 ND JULY, 2015 AND THE AO WOULD REASSESS THE TOTAL INCO ME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 153A IN RESPECT OF THESE FOUR ASSESSMENT YEARS I.E. 2010-11 TO 13-14. THE PROCEEDINGS UNDER SECTION 15 3A IN RESPECT OF THESE FOUR ASSESSMENT YEARS WOULD BE IN THE NATURE OF REA SSESSMENT AND NOT IN THE NATURE OF ASSESSMENT AS IN THE CASES OF THE REMAINI NG TWO ASSESSMENT YEARS I.E. 2014-15 AND 15-16 THOSE WERE GOT ABATED BY VIR TUE OF SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT ON 2 ND JULY, 2015. IT IS A SETTLED PROPOSITION OF LAW THAT THE ASSESSMENT OR REASSESSM ENT UNDER SECTION 153A IN RESPECT OF THE ASSESSMENT YEARS WHICH HAVE ALREA DY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEES TOTAL INCOME, THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL. IN THE ABSENCE OF ANY INCRIMINATING MATERIAL THE COMPLETED ASSESSMENT CAN ONLY BE REITERATED. THE PROVISIONS OF SECTION 132 READ WITH SECTION 153A OF THE ACT STIPULATE TWO TYPES OF SITUATIONS ONE WHERE THE ASSESSMENT OF A NY ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IS PENDING ON T HE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION U NDER SECTION 132A OF THE ACT. THEREFORE, THE ASSESSMENT UNDER SECTION 153A IN RESPECT OF THOSE ASSESSMENT YEARS WHICH STAND ABATED DUE TO THE REAS ON OF PENDING ON THE DATE OF INITIATION OF SEARCH OR REQUISITION SHALL B E THE ORIGINAL/FIRST ASSESSMENT. IN THE SECOND CATEGORY WHERE THE ASSESSMENT OR REAS SESSMENT HAS ALREADY 35 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. BEEN COMPLETED ON THE DATE OF INITIATION OF SEARCH OR MAKING OF REQUISITION AS THE CASE MAY BE, THE ASSESSMENT UNDER SECTION 153A WOULD BE IN THE NATURE OF REASSESSMENT. THE HONBLE DELHI HIGH COURT IN T HE CASE OF CIT VS. KABUL CHAWLA WHILE ANALYZING THE PROVISIONS OF SECTION 15 3A READ WITH SECTION 132 OF THE ACT HAS OBSERVED IN PARA 37 AND 38 AS UNDER :- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, REA D WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I . ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PER SON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVAN T TO THE AY IN WHICH THE SEARCH TAKES PLACE. II . ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III . THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN S EPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ON E ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISC LOSED INCOME WOULD BE BROUGHT TO TAX'. IV . ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V . IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CA N BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI . INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A ME RGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY O N THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY O THER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE A O. VII . COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINA TING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSE D INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALR EADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005-06 AND 2006-07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED . SINCE NO INCRIMINATING MATERIAL WAS 36 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAV E BEEN MADE TO THE INCOME ALREADY ASSESSED. THUS THE HONBLE HIGH COURT HAS HELD THAT IN THE AB SENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATE D AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE HONBLE HIGH COURT H AS ALSO REFERRED THE TERM USED IN SECTION 153A AS ASSESS WHICH IS RELATABLE TO A BATED PROCEEDINGS AND THE WORD REASSESS RELATED TO COMPLETED ASSESSMENT PROCEEDI NGS. THEREFORE, THE COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATIN G MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENT OR UNDI SCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. THE HONBLE DELHI HIGH COURT HAS REITERATED ITS VIEW IN CASE OF PRINCIPAL CIT VS . KURELE PAPER MILLS (SUPRA) IN PARA 1 TO 3 AS UNDER :- 1. THE REVENUE HAS FILED THE APPEAL AGAINST AN ORDER D ATED 14.11.2014 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (ITAT) IN 3761/DEL/20 11 PERTAINING TO THE ASSESSMENT YEAR 2002-03. THE QUESTION WAS WHETHER T HE LEARNED CIT (APPEALS) HAD ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDIT ION OF RS. 89 LACS MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TA X ACT, 1961 ('ACT') ON BOGUS SHARE CAPITAL. BUT, THE ISSUE WAS WHETHER THERE WAS ANY INCRIMINATING MATERIAL WHATSOEVER FOUND DURING THE SEARCH TO JUSTIFY INITI ATION OF PROCEEDINGS UNDER SECTION 153A OF THE ACT. 2. THE COURT FINDS THAT THE ORDER OF THE CIT(APPEALS) REVEALS THAT THERE IS A FACTUAL FINDING THAT 'NO INCRIMINATING EVIDENCE RELATED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AS IS MANIFEST FROM THE ORDER OF THE AO.' CONSEQUENTLY, IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN INVOKING SECTION 68 OF THE ACT FOR THE PURPOSES OF MAKING ADDITIONS ON ACCOUNT OF SHARE CA PITAL. 3. AS FAR AS THE ABOVE FACTS ARE CONCERNED, THERE IS N OTHING SHOWN TO THE COURT TO PERSUADE AND HOLD THAT THE ABOVE FACTUAL DETERMINAT ION IS PERVERSE. CONSEQUENTLY, AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES O F THE CASE, THE COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE IMPUGNED ORDER OF THE ITAT WHICH REQUIRES EXAMINATION. THE SLP FILED BY THE REVENUE AGAINST THE SAID DECIS ION OF HONBLE DELHI HIGH COURT WAS DISMISSED BY THE HONBLE SUPREME COURT VIDE ORD ER DATED 7 TH DECEMBER, 2015. IN A SUBSEQUENT DECISION, THE HONBLE DELHI HIGH CO URT IN THE CASE OF PRINCIPAL CIT VS. MEETA GUTGUTIA HAS AGAIN ANALYZED THIS ISSUE IN PARA 55 TO 71 AS UNDER :- 37 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 55. ON THE LEGAL ASPECT OF INVOCATION OF SECTION 153A IN RELATION TO AYS 2000-01 TO 2003-04, THE CENTRAL PLANK OF THE REVENUE'S SUBMISS ION IS THE DECISION OF THIS COURT IN SMT. DAYAWANTI GUPTA ( SUPRA ). BEFORE BEGINNING TO EXAMINE THE SAID DECISION, I T IS NECESSARY TO REVISIT THE LEGAL LANDSCAPE IN LIGHT O F THE ELABORATE ARGUMENTS ADVANCED BY THE REVENUE. 56. SECTION 153A OF THE ACT IS TITLED 'ASSESSMENT IN C ASE OF SEARCH OR REQUISITION'. IT IS CONNECTED TO SECTION 132 WHICH DEALS WITH 'SEARC H AND SEIZURE'. BOTH THESE PROVISIONS, THEREFORE, HAVE TO BE READ TOGETHER. SE CTION 153A IS INDEED AN EXTREMELY POTENT POWER WHICH ENABLES THE REVENUE TO RE-OPEN A T LEAST SIX YEARS OF ASSESSMENTS EARLIER TO THE YEAR OF SEARCH. IT IS NOT TO BE EXER CISED LIGHTLY. IT IS ONLY IF DURING THE COURSE OF SEARCH UNDER SECTION 132 INCRIMINATING MA TERIAL JUSTIFYING THE RE-OPENING OF THE ASSESSMENTS FOR SIX PREVIOUS YEARS IS FOUND THA T THE INVOCATION OF SECTION 153A QUA EACH OF THE AYS WOULD BE JUSTIFIED. 57. THE QUESTION WHETHER UNEARTHING OF INCRIMINATING M ATERIAL RELATING TO ANY ONE OF THE AYS COULD JUSTIFY THE RE-OPENING OF THE ASSESSM ENT FOR ALL THE EARLIER AYS WAS CONSIDERED BOTH IN ANIL KUMAR BHATIA ( SUPRA ) AND CHETAN DAS LACHMAN DAS ( SUPRA ). INCIDENTALLY, BOTH THESE DECISIONS WERE DISCUSSED T HREADBARE IN THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ). AS FAR AS ANIL KUMAR BHATIA ( SUPRA ) WAS CONCERNED, THE COURT IN PARAGRAPH 24 OF THAT DECISION NOTED TH AT 'WE ARE NOT CONCERNED WITH A CASE WHERE NO INCRIMINATING MATERIAL WAS FOUND DURI NG THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE THEREFORE EXPRESS NO OPI NION AS TO WHETHER SECTION 153A CAN BE INVOKED EVEN UNDER SUCH SITUATION'. THAT QUE STION WAS, THEREFORE, LEFT OPEN. AS FAR AS CHETAN DAS LACHMAN DAS ( SUPRA ) IS CONCERNED, IN PARA 11 OF THE DECISION IT WAS OBSERVED: '11. SECTION 153A (1) (B) PROVIDES FOR THE ASSESSME NT OR REASSESSMENT OF THE TOTAL INCOME OF THE SIX ASSESSMENT YEARS IMMEDIATEL Y PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH TOOK PLACE. TO REPEAT, THERE IS NO CONDITION IN THIS SECTION TH AT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND. THIS, HOWEVER, DOES NOT MEAN THAT THE ASSESSMENT UNDER SECTION 153A CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATE RIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL.' 58. IN KABUL CHAWLA ( SUPRA ), THE COURT DISCUSSED THE DECISION IN FILATEX INDIA LTD. ( SUPRA ) AS WELL AS THE ABOVE TWO DECISIONS AND OBSERVED A S UNDER: '31. WHAT DISTINGUISHES THE DECISIONS BOTH IN CIT V. CHETAN DAS LACHMAN DAS ( SUPRA ), AND FILATEX INDIA LTD. V. CIT-IV ( SUPRA ) IN THEIR APPLICATION TO THE PRESENT CASE IS THAT IN BOTH THE SAID CASES THE RE WAS SOME MATERIAL UNEARTHED DURING THE SEARCH, WHEREAS IN THE PRESENT CASE THERE ADMITTEDLY WAS NONE. SECONDLY, IT IS PLAIN FROM A CAREFUL READING OF THE SAID TWO . DECISIONS THAT THEY DO NOT HOLD THAT ADDITIONS CAN BE VALIDLY MADE TO INCOME FORMING THE SUBJECT MATTER OF COMPLETED ASSESSMENTS PRIOR T O THE SEARCH EVEN IF NO INCRIMINATING MATERIAL WHATSOEVER WAS UNEARTHED DUR ING THE SEARCH. 32. RECENTLY BY ITS ORDER DATED 6TH JULY 2015 IN IT A NO. 369 OF 2015 ( PR. COMMISSIONER OF INCOME TAX V. KURELE PAPER MILLS P. LTD. ), THIS COURT DECLINED TO FRAME A QUESTION OF LAW IN A CASE WHERE , IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE SEARC H UNDER SECTION 132 OF THE 38 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. ACT, THE REVENUE SOUGHT TO JUSTIFY INITIATION OF PR OCEEDINGS UNDER SECTION 153A OF THE ACT AND MAKE AN ADDITION UNDER SECTION 68 OF THE ACT ON BOGUS SHARE CAPITAL GAIN. THE ORDER OF THE CIT (A), AFFIR MED BY THE ITAT, DELETING THE ADDITION, WAS NOT INTERFERED WITH.' 59. IN KABUL CHAWLA ( SUPRA ), THE COURT REFERRED TO THE DECISION OF THE RAJAST HAN HIGH COURT IN JAI STEEL (INDIA) V. ASSTT. CIT [2013] 36 TAXMANN.COM 523/219 TAXMAN 223 . THE SAID PART OF THE DECISION IN KABUL CHAWLA ( SUPRA ) IN PARAS 33 AND 34 READS AS UNDER: '33. THE DECISION OF THE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA), JODHPUR V. ACIT ( SUPRA ) INVOLVED A CASE WHERE CERTAIN BOOKS OF ACCOUNTS A ND OTHER DOCUMENTS THAT HAD NOT BEEN PRODUCED IN THE C OURSE OF ORIGINAL ASSESSMENT WERE FOUND IN THE COURSE OF SEARCH. IT W AS HELD WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF THE SEARCH, THE SAME WOULD ALSO BE TAKEN INTO CONSIDERA TION WHILE COMPUTING THE TOTAL INCOME UNDER SECTION 153A OF THE ACT. THE COU RT THEN EXPLAINED AS UNDER: '22. IN THE FIRM OPINION OF THIS COURT FROM A PLAIN READING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPORT OF THE SAID PROVISION, WHICH IS INTRICATELY LINKED WITH SEARCH AND REQUISI TION UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS APPARENT THAT: ( A ) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND ABATE D IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO ACTS UNDER HIS ORIGINAL JURISDIC TION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; ( B ) REGARDING OTHER CASES, THE ADDITION TO THE INCOME T HAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATI NG MATERIAL; AND ( C ) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE.' 34. THE ARGUMENT OF THE REVENUE THAT THE AO WAS FRE E TO DISTURB INCOME DE HORS THE INCRIMINATING MATERIAL WHILE MAKING ASSESSMENT UNDER SECTION 153A OF THE ACT WAS SPECIFICALLY REJECTED BY THE COURT O N THE GROUND THAT IT WAS 'NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISIO N' WHICH WAS IN THE CONTEXT OF SEARCH AND/OR REQUISITION. THE COURT ALS O EXPLAINED THE PURPORT OF THE WORDS 'ASSESS' AND 'REASSESS', WHICH HAVE BEEN FOUND AT MORE THAN ONE PLACE IN SECTION 153A OF THE ACT AS UNDER: '26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTA L INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOL ATION AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' O R 'REASSESS'-HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD ASSESS HAS BEEN USED IN TH E CONTEXT OF AN ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR C OMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS TH EY ARE NOT 39 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPOR T THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL F OUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS.'' 60. IN KABUL CHAWLA ( SUPRA ), THE COURT ALSO TOOK NOTE OF THE DECISION OF THE BOMBAY HIGH COURT IN CIT V. CONTINENTAL WAREHOUSING CORPN (NHAVA SHEVA) LTD. [2015] 58 TAXMANN.COM 78/232 TAXMAN 270/374 ITR 645 (BOM.) WHICH ACCEPTED THE PLEA THAT IF NO INCRIMINATING MATERIAL WAS FOUND DURING THE C OURSE OF SEARCH IN RESPECT OF AN ISSUE, THEN NO ADDITIONS IN RESPECT OF ANY ISSUE CA N BE MADE TO THE ASSESSMENT UNDER SECTION 153A AND 153C OF THE ACT. THE LEGAL POSITIO N WAS THEREAFTER SUMMARIZED IN KABUL CHAWLA ( SUPRA ) AS UNDER: '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHE D REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEAR S PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE. AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE AS SESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSE D INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRIC TLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY R ELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'A SSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A ME RGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS O F THE FINDINGS OF THE SEARCH AND ANY OTHER 40 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. MATERIAL EXISTING OR BROUGH T ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATI NG MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALR EADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 61. IT APPEARS THAT A NUMBER OF HIGH COURTS HAVE CONCU RRED WITH THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ) BEGINNING WITH THE GUJARAT HIGH COURT IN SAUMYA CONSTRUCTION (P.) LTD. ( SUPRA ). THERE, A SEARCH AND SEIZURE OPERATION WAS CARRIE D OUT ON 7TH OCTOBER, 2009 AND AN ASSESSMENT CAME TO BE FRAMED UNDER SECT ION 143(3) READ WITH SECTION 153A(1)(B) IN DETERMINING THE TOTAL INCOME OF THE A SSESSEE OF RS. 14.5 CRORES AGAINST DECLARED INCOME OF RS. 3.44 CRORES. THE ITAT DELETE D THE ADDITIONS ON THE GROUND THAT IT WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND D URING THE COURSE OF THE SEARCH IN RESPECT OF AYS UNDER CONSIDERATION I.E., AY 2006-07 . THE GUJARAT HIGH COURT REFERRED TO THE DECISION IN KABUL CHAWLA ( SUPRA ), OF THE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA) ( SUPRA ) AND ONE EARLIER DECISION OF THE GUJARAT HIGH COUR T ITSELF. IT EXPLAINED IN PARA 15 AND 16 AS UNDER: '15. ON A PLAIN READING OF SECTION 153A OF THE ACT, IT IS EVIDENT THAT THE TRIGGER POINT FOR EXERCISE OF POWERS THEREUNDER IS A SEARCH UNDER SECTION 132 OR A REQUISITION UNDER SECTION 132A OF THE ACT. ONCE A SEARCH OR REQUISITI ON IS MADE, A MANDATE IS CAST UPON THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 153A OF THE ACT TO THE PERSON, REQUIRING HIM TO FURNISH THE RETURN OF INCOME IN RE SPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRE CEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE AND ASSESS OR REASSESS THE SAME. SINCE THE ASSESSME NT UNDER SECTION 153A OF THE ACT IS LINKED WITH SEARCH AND REQUISITION UNDER SECTION S 132 AND 132A OF THE ACT, IT IS EVIDENT THAT THE OBJECT OF THE SECTION IS TO BRING TO TAX THE UNDISCLOSED INCOME WHICH IS FOUND DURING THE COURSE OF OR PURSUANT TO THE SE ARCH OR REQUISITION. HOWEVER, INSTEAD OF THE EARLIER REGIME OF BLOCK ASSESSMENT W HEREBY, IT WAS ONLY THE UNDISCLOSED INCOME OF THE BLOCK PERIOD THAT WAS ASS ESSED, SECTION 153A OF THE ACT SEEKS TO ASSESS THE TOTAL INCOME FOR THE ASSESSMENT YEAR, WHICH IS CLEAR FROM THE FIRST PROVISO THERETO WHICH PROVIDES THAT THE ASSESSING O FFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FAL LING WITHIN SUCH SIX ASSESSMENT YEARS. THE SECOND PROVISO MAKES THE INTENTION OF TH E LEGISLATURE CLEAR AS THE SAME PROVIDES THAT ASSESSMENT OR REASSESSMENT, IF ANY, R ELATING TO THE SIX ASSESSMENT YEARS REFERRED TO IN THE SUB-SECTION PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. SUB-SECTION (2) OF SECTION 153A OF THE ACT PROVIDES THAT IF ANY PROCEEDING OR ANY ORDER OF ASSESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION ( 1) IS ANNULLED IN APPEAL OR ANY OTHER LEGAL PROVISION, THEN THE ASSESSMENT OR REASS ESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAD ABATED UNDER THE SECOND PROVISO WOUL D STAND REVIVED. THE PROVISO THERETO SAYS THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT IF SUCH ORDER OF ANNULMENT IS SET ASIDE. THUS, ANY PROCEEDING OF ASSESSMENT OR RE ASSESSMENT FALLING WITHIN THE SIX ASSESSMENT YEARS PRIOR TO THE SEARCH OR REQUISITION STANDS ABATED AND THE TOTAL INCOME OF THE ASSESSEE IS REQUIRED TO BE DETERMINED UNDER SECTION 153A OF THE ACT. SIMILARLY, SUB-SECTION (2) PROVIDES FOR REVIVAL OF ANY ASSESSM ENT OR REASSESSMENT WHICH STOOD ABATED, IF ANY PROCEEDING OR ANY ORDER OF ASSESSMEN T OR REASSESSMENT MADE UNDER SECTION 153A OF THE ACT IS ANNULLED IN APPEAL OR AN Y OTHER PROCEEDING. 41 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 16. SECTION 153A BEARS THE HEADING 'ASSESSMENT IN C ASE OF SEARCH OR REQUISITION'. IT IS 'WELL SETTLED AS HELD BY THE SUPREME COURT IN A CATENA OF DECISIONS THAT THE HEADING OR THE SECTION CAN BE REGARDED AS A KEY TO THE INTE RPRETATION OF THE OPERATIVE PORTION OF THE SECTION AND IF THERE IS NO AMBIGUITY IN THE LANGUAGE OR IF IT IS PLAIN AND CLEAR, THEN THE HEADING USED IN THE SECTION STRENGTHENS TH AT MEANING. FROM THE HEADING OF SECTION 153. THE INTENTION OF THE LEGISLATURE IS CL EAR, VIZ., TO PROVIDE FOR ASSESSMENT IN CASE OF SEARCH AND REQUISITION. WHEN THE VERY PURPO SE OF THE PROVISION IS TO MAKE ASSESSMENT IN CASE OF SEARCH OR REQUISITION, IT GOE S WITHOUT SAYING THAT THE ASSESSMENT HAS TO HAVE RELATION TO THE SEARCH OR REQUISITION, IN OTHER WORDS, THE ASSESSMENT SHOULD CONNECTED WITH SOMETHING ROUND DURING THE SEARCH OR REQUISITION VIZ., INCRIMINATING MATERIAL WHICH REVEALS UNDISCLOSED INCOME. THUS, WH ILE IN VIEW OF THE MANDATE OF SUB-SECTION (1) OF SECTION 153A OF THE ACT, IN EVER Y CASE WHERE THERE IS A SEARCH OR REQUISITION, THE ASSESSING OFFICER IS OBLIGED TO IS SUE NOTICE TO SUCH PERSON TO FURNISH RETURNS OF INCOME FOR THE SIX YEARS PRECEDING THE A SSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR R EQUISITION IS MADE, ANY ADDITION' OR DISALLOWANCE CAN BE MADE ONLY ON THE BASIS OF MATER IAL COLLECTED DURING THE SEARCH OR REQUISITION, IN CASE NO INCRIMINATING MATERIAL IS F OUND, AS HELD BY THE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) V. ASST. CIT ( SUPRA ), THE EARLIER ASSESSMENT WOULD HAVE TO BE REITERATED, IN CASE WHERE PENDING ASSESS MENTS HAVE ABATED, THE ASSESSING OFFICER CAN PASS ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS DETERMINING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE INCOME D ECLARED IN THE RETURNS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS UNDISCLOSED IN COME, IF ANY, UNEARTHED DURING THE SEARCH OR REQUISITION. IN CASE WHERE A PENDING REAS SESSMENT UNDER SECTION 147 OF THE ACT HAS ABATED, NEEDLESS TO STATE THAT THE SCOPE AN D AMBIT OF THE ASSESSMENT WOULD INCLUDE ANY ORDER WHICH THE ASSESSING OFFICER COULD HAVE PASSED UNDER SECTION 147 OF THE ACT AS WELL AS UNDER SECTION 153A OF THE ACT . ** ** ** 19. ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTEND ED THAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTANDING THAT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INCRIMINATING MATERIAL IS FOUND, IT WOULD BE PERMIS SIBLE TO MAKE ADDITIONS AND DISALLOWANCE IN RESPECT OF AN THE SIX ASSESSMENT YE ARS. IN THE OPINION OF THIS COURT, THE SAID CONTENTION DOES NOT MERIT ACCEPTANCE, INASMUCH AS. THE ASSESSMENT IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IS A SEPARATE AND DISTINCT ASSESSMENT. UNDER SECTION 153A OF THE ACT, ASSESSMENT HAS TO BE MADE IN RELAT ION TO THE SEARCH OR REQUISITION, NAMELY, IN RELATION TO MATERIAL DISCLOSED DURING TH E SEARCH OR REQUISITION. IF IN RELATION TO ANY ASSESSMENT YEAR, NO INCRIMINATING MATERIAL I S FOUND, NO ADDITION OR DISALLOWANCE CAN BE MADE IN RELATION TO THAT ASSESS MENT YEAR IN EXERCISE OF POWERS UNDER SECTION 153A OF THE ACT AND THE EARLIER ASSES SMENT SHALL HAVE TO BE REITERATED. IN THIS REGARD, THIS COURT IS IN COMPLETE AGREEMENT WITH THE VIEW ADOPTED BY THE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) V. ASST. CIT ( SUPRA ). BESIDES, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE RESPONDENT, THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CONCLUDED BY TH E DECISION OF THIS COURT IN THE CASE OF CIT V. JAYABEN RATILAL SORATHIA ( SUPRA ) WHEREIN IT HAS BEEN HELD THAT WHILE IT CANNOT BE DISPUTED THAT CONSIDERING SECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN REOPEN AND/OR ASSESS THE RETURN WITH RESPECT TO SIX PRECEDING YEARS ; HOWEVER, THERE MUST BE SOME INCRIMINATING MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT TO THE SALE TRANSACTIONS IN THE PARTICULAR ASSESSMENT YEAR.' 62. SUBSEQUENTLY, IN DEVANGI ALIAS RUPA ( SUPRA ), ANOTHER BENCH OF THE GUJARAT HIGH COURT REITERATED THE ABOVE LEGAL POSITION FOLLOWING ITS E ARLIER DECISION IN SAUMYA CONSTRUCTION (P.) LTD. ( SUPRA ) AND OF THIS COURT IN KABUL CHAWLA ( SUPRA ). AS FAR AS KARNATAKA HIGH COURT IS 42 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. CONCERNED, IT HAS IN IBC KNOWLEDGE PARK (P.) LTD. ( SUPRA ) FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ) AND HELD THAT THERE HAD TO BE INCRIMINATING MATER IAL QUA EACH OF THE AYS IN WHICH ADDITIONS WERE SOUGHT TO BE MADE PURSU ANT TO SEARCH AND SEIZURE OPERATION. THE CALCUTTA HIGH COURT IN SALASAR STOCK BROKING LTD. ( SUPRA ), TOO, FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ). IN GURINDER SINGH BAWA ( SUPRA ), THE BOMBAY HIGH COURT HELD THAT: '6. . . . . . ONCE AN ASSESSMENT HAS ATTAINED FINAL ITY FOR A PARTICULAR YEAR, I.E., IT IS NOT PENDING THEN THE SAME CANNOT BE SUBJECT TO TAX IN P ROCEEDINGS UNDER SECTION 153A OF THE ACT. THIS OF COURSE WOULD NOT APPLY IF INCRIMIN ATING MATERIALS ARE GATHERED IN THE COURSE OF SEARCH OR DURING PROCEEDINGS UNDER SECTIO N 153A OF THE ACT WHICH ARE CONTRARY TO AND/OR NOT DISCLOSED DURING THE REGULAR ASSESSMENT PROCEEDINGS.' 63. EVEN THIS COURT HAS IN MAHESH KUMAR GUPTA ( SUPRA ) AND RAM AVTAR VERMA ( SUPRA ) FOLLOWED THE DECISION IN KABUL CHAWLA ( SUPRA ). THE DECISION OF THIS COURT IN KURELE PAPER MILLS (P.) LTD. ( SUPRA ) WHICH WAS REFERRED TO IN KABUL CHAWLA ( SUPRA ) HAS BEEN AFFIRMED BY THE SUPREME COURT BY THE DISMISSAL OF THE REVENUE'S SLP ON 7TH DECEMBER, 2015. THE DECISION IN DAYAWANTI GUPTA 64. THAT BRINGS US TO THE DECISION IN SMT. DAYAWANTI GUPTA ( SUPRA ). AS RIGHTLY POINTED OUT BY MR. KAUSHIK, LEARNED COUNSEL APPEARING FOR THE RESP ONDENT, THAT THERE ARE SEVERAL DISTINGUISHING FEATURES IN THAT CASE WHICH MAKES IT S RATIO INAPPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE FIRST PLACE, THE ASSESSEES THE RE WERE ENGAGED IN THE BUSINESS OF PAN MASALA AND GUTKHA ETC. THE ANSWERS GIVEN TO QUESTIO NS POSED TO THE ASSESSEE IN THE COURSE OF SEARCH AND SURVEY PROCEEDINGS IN THAT CASE BRING OU T THE POINTS OF DISTINCTION. IN THE FIRST PLACE, IT WAS STATED THAT THE STATEMENT RECORDED WA S UNDER SECTION 132(4) AND NOT UNDER SECTION 133A. IT WAS A STATEMENT BY THE ASSESSEE HI MSELF. IN RESPONSE TO QUESTION NO. 7 WHETHER ALL THE PURCHASES MADE BY THE FAMILY FIRMS, WERE ENTERED IN THE REGULAR BOOKS OF ACCOUNT, THE ANSWER WAS: 'WE AND OUR FAMILY FIRMS NAMELY M/S. ASSAM SUPARI T RADERS AND M/S. BALAJI PERFUMES GENERALLY TRY TO RECORD THE TRANSACTIONS M ADE IN RESPECT OF PURCHASE, MANUFACTURING AND SALES IN OUR REGULAR BOOKS OF ACC OUNTS BUT IT IS ALSO FACT THAT SOME TIME DUE TO SOME FACTORS LIKE INABILITY OF ACCOUNTA NT, OUR BUSY SCHEDULE AND SOME FAMILY PROBLEMS, VARIOUS PURCHASES AND SALES OF SUP ARI, GUTKA AND OTHER ITEMS DEALT BY OUR FIRMS IS NOT ENTERED AND SHOWN IN THE REGULA R BOOKS OF ACCOUNTS MAINTAINED BY OUR FIRMS.' 65. THEREFORE, THERE WAS A CLEAR ADMISSION BY THE ASSE SSEES IN SMT. DAYAWANTI GUPTA ( SUPRA ) THERE THAT THEY WERE NOT MAINTAINING REGULAR BOOKS OF ACCOUNTS AND THE TRANSACTIONS WERE NOT RECORDED THEREIN. 66. FURTHER, IN ANSWER TO QUESTION NO. 11, THE ASSESSE E IN SMT. DAYAWANTI GUPTA ( SUPRA ) WAS CONFRONTED WITH CERTAIN DOCUMENTS SEIZED DURING THE SEARCH. THE ANSWER WAS CATEGORICAL AND READS THUS: 'ANS:- I HEREBY ADMIT THAT THESE PAPERS ALSO CONTEN D DETAILS OF VARIOUS TRANSACTIONS INCLUDE PURCHASE/SALES/MANUFACTURING TRADING OF GUT KHA, SUPARI MADE IN CASH OUTSIDE BOOKS OF ACCOUNTS AND THESE ARE ACTUALLY UNACCOUNTE D TRANSACTIONS MADE BY OUR TWO FIRMS NAMELY M/S. ASOM TRADING AND M/S. BALAJI PERF UMES.' 67. BY CONTRAST, THERE IS NO SUCH STATEMENT IN THE PRE SENT CASE WHICH CAN BE SAID TO CONSTITUTE AN ADMISSION BY THE ASSESSEE OF A FAILURE TO RECORD ANY TRANSACTION IN THE ACCOUNTS OF THE ASSESSEE FOR THE AYS IN QUESTION. ON THE CONTRARY, THE ASSESSEE HEREIN STATED THAT, HE IS REGULARLY MAINTAINING THE BOOKS OF ACCOUNTS. THE DI SCLOSURE MADE IN THE SUM OF RS. 1.10 CRORES WAS ONLY FOR THE YEAR OF SEARCH AND NOT FOR THE EARLIER YEARS. AS ALREADY NOTICED, THE 43 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE IN THE PRESENT CASE HAVE BEEN ACCEPTED BY THE AO. IN RESPONSE TO QUESTION NO. 16 POSED TO MR. PAW AN GADIA, HE STATED THAT THERE WAS NO POSSIBILITY OF MANIPULATION OF THE ACCOUNTS. IN SMT. DAYAWANTI GUPTA ( SUPRA ), BY CONTRAST, THERE WAS A CHART PREPARED CONFIRMING THAT THERE HA D BEEN A YEAR-WISE NON-RECORDING OF TRANSACTIONS. IN SMT. DAYAWANTI GUPTA ( SUPRA ), ON THE BASIS OF MATERIAL RECOVERED DURING SEARCH, THE ADDITIONS WHICH WERE MADE FOR ALL THE Y EARS WHEREAS ADDITIONS IN THE PRESENT CASE WERE MADE BY THE AO ONLY FOR AY 2004-05 AND NOT ANY OF THE OTHER YEARS. EVEN THE ADDITIONS MADE FOR AYS 2004-05 WERE SUBSEQUENTLY DELETED BY T HE CIT (A), WHICH ORDER WAS AFFIRMED BY THE ITAT. EVEN THE REVENUE HAS CHALLENGED ONLY T WO OF SUCH DELETIONS IN ITA NO. 306/2017. 68. IN PARA 23 OF THE DECISION IN SMT. DAYAWANTI GUPTA ( SUPRA ), IT WAS OBSERVED AS UNDER: '23. THIS COURT IS OF OPINION THAT THE ITAT'S FINDI NGS DO NOT REVEAL ANY FUNDAMENTAL ERROR, CALLING FOR CORRECTION. THE INFERENCES DRAWN IN RESPECT OF UNDECLARED INCOME WERE PREMISED ON THE MATERIALS FOUND AS WELL AS THE STATEMENTS RECORDED BY THE ASSESSEES. THESE ADDITIONS THEREFORE WERE NOT BASEL ESS. GIVEN THAT THE ASSESSING AUTHORITIES IN SUCH CASES HAVE TO DRAW INFERENCES, BECAUSE OF THE NATURE OF THE MATERIALS - SINCE THEY COULD BE SCANTY (AS ONE HABI TUALLY CONCEALING INCOME OR INDULGING IN CLANDESTINE OPERATIONS CAN HARDLY BE E XPECTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG AND IN ALL PROBABILITY BE ANXIOUS TO DO AWAY WITH SUCH EVIDENCE AT THE SHORTEST POSSIBILITY) THE ELEMENT O F GUESS WORK IS TO HAVE SOME REASONABLE NEXUS WITH THE STATEMENTS RECORDED AND D OCUMENTS SEIZED. IN TILLS CASE, THE DIFFERENCES OF OPINION BETWEEN THE CIT (A) ON THE O NE HAND AND THE AO AND ITAT ON THE OTHER CANNOT BE THE SOLE BASIS FOR DISAGREEING WITH WHAT IS ESSENTIALLY A FACTUAL SURMISE THAT IS LOGICAL AND PLAUSIBLE. THESE FINDIN GS DO NOT CALL FOR INTERFERENCE. THE SECOND QUESTION OF LAW IS ANSWERED AGAIN IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE.' 69. WHAT WEIGHED WITH THE COURT IN THE ABOVE DECISION WAS THE 'HABITUAL CONCEALING OF INCOME AND INDULGING IN CLANDESTINE OPERATIONS' AND THAT A PERSON INDULGING IN SUCH ACTIVITIES 'CAN HARDLY BE ACCEPTED TO MAINTAIN METICULOUS BOOK S OR RECORDS FOR LONG.' THESE FACTORS ARE ABSENT IN THE PRESENT CASE. THERE WAS NO JUSTIFICAT ION AT ALL FOR THE AO TO PROCEED ON SURMISES AND ESTIMATES WITHOUT THERE BEING ANY INCRIMINATING MATERIAL QUA THE AY FOR WHICH HE SOUGHT TO MAKE ADDITIONS OF FRANCHISEE COMMISSION. 70. THE ABOVE DISTINGUISHING FACTORS IN SMT. DAYAWANTI GUPTA ( SUPRA ), THEREFORE, DO NOT DETRACT FROM THE SETTLED LEGAL POSITION IN KABUL CHAWLA ( SUPRA ) WHICH HAS BEEN FOLLOWED NOT ONLY BY THIS COURT IN ITS SUBSEQUENT DECISIONS BUT ALSO BY SEVERAL OTHER HIGH COURTS. 71. FOR ALL OF THE AFOREMENTIONED REASONS, THE COURT I S OF THE VIEW THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT THE INVOCATION OF SECTION 153A BY T HE REVENUE FOR THE AYS 2000-01 TO 2003- 04 WAS WITHOUT ANY LEGAL BASIS AS THERE WAS NO INCR IMINATING MATERIAL QUA EACH OF THOSE AYS. THE HONBLE DELHI HIGH COURT HAS CONCURRED WITH THE VIEW AS TAKEN IN CASE OF KABUL CHAWLA (SUPRA) AS WELL AS THE DECISION OF HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF M/S. JAI STEEL INDIA LTD. VS. ACIT (SUPRA). EVEN ON THE ISSUE OF ADDITION MADE BY THE AO IN THE PROCEEDINGS UNDER SECTION 153 A IN RESPECT OF THE ASSESSMENT YEAR WHICH WAS ALREADY COMPLETED ON THE DATE OF SEA RCH, THE HONBLE HIGH COURT HAS HELD THAT IN THE ABSENCE OF ANY MATERIAL WHICH WAS SUBSEQUENTLY UNEARTHED DURING 44 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. THE SEARCH AND WAS NOT ALREADY AVAILABLE TO THE AO, THE ADDITIONS MADE BY THE AO ON ACCOUNT OF SECURITY DEPOSITS WERE RIGHTLY DELETED B Y THE LD. CIT (A). THE RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT IN CASE OF P RINCIPAL CIT VS. MEETA GUTGUTIA (SUPRA) ARE IN PARA 53 AS UNDER :- 53. AT THIS STAGE, IT IS ALSO TO BE NOTICED THAT AN EL ABORATE ARGUMENT WAS MADE BY MR. MANCHANDA ON THE ASPECT OF THE SECURITY DEPOSIT S ACCEPTED BY THE ASSESSEE. THESE WERE OF TWO KINDS - ONE WAS OF REFUNDABLE SEC URITY DEPOSITS AND THE OTHER FOR NON-REFUNDABLE SECURITY DEPOSITS. AS FAR AS THE REF UNDABLE SECURITY DEPOSITS WERE CONCERNED, THE AO HIMSELF IN HIS REMAND REPORT ACCE PTED THEM AS HAVING BEEN DISCLOSED. THIS HAS BEEN NOTICED BY THE CIT (A) IN PARA 7.2.1 OF HIS ORDER FOR AY 2004- 05. AS REGARDS NON-REFUNDABLE SECURITY DEPOSIT, THE CIT (A) ACCEPTED THE AO'S FINDINGS THAT TREATING THE SUM AS 'GOODWILL WRITTEN OFF ON DEFERRED BASIS' WAS NOT CORRECT, HENCE THE ADDITION OF RS. 5,09,343 WAS HEL D TO BE JUSTIFIED AND CORRECT. IT WAS DULY ACCOUNTED FOR UNDER 'LIABILITIES' AND TRANSFER RED TO INCOME IN A PHASED MANNER. THIS WAS NOT DONE BY MANIPULATING THE ACCOUNT BOOKS OF THE ASSESSEE AS ALLEGED BY THE REVENUE. THIS WOULD HAVE BEEN EVIDENT HAD THE R ETURN BEEN PICKED UP FOR SCRUTINY UNDER SECTION 143(3) OF THE ACT. THIS, THE REFORE, WAS NOT MATERIAL WHICH WAS SUBSEQUENTLY UNEARTHED DURING THE SEARCH WHICH WAS NOT ALREADY AVAILABLE TO THE AO. CONSEQUENTLY, THE ADDITIONS SOUGHT TO BE MADE B Y THE AO ON ACCOUNT OF SECURITY DEPOSITS WERE RIGHTLY DELETED BY THE CIT (A). THUS THE ESSENTIAL COROLLARY OF THESE DECISIONS IS THAT NO ADDITION CAN BE MADE IN THE PROCEEDINGS UNDER SECTION 153A IN RESPECT OF THE AS SESSMENTS WHICH WERE COMPLETED PRIOR TO THE DATE OF SEARCH EXCEPT BASED ON SOME IN CRIMINATING MATERIAL UNEARTHED DURING THE SEARCH WHICH WAS NOT ALREADY AVAILABLE T O THE AO. IT IS PERTINENT TO NOTE THAT THE SLP FILED BY THE REVENUE AGAINST THE DECIS ION OF HONBLE DELHI HIGH COURT IN CASE OF PRINCIPAL CIT VS. MEETA GUTGUTIA WAS DISMIS SED VIDE ORDER DATED 2 ND JULY, 2018. THERE ARE SERIES OF DECISIONS ON THIS ISSUE INCLUDING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF M/S. JAI STEEL INDIA VS. ACIT (SUPRA) WHEREIN THE HONBLE HIGH COURT HAS HELD IN PARA 23 TO 30 AS UND ER :- 45 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 23. THE RELIANCE PLACED BY THE COUNSEL FOR THE APPELLA NT ON THE CASE OF ANIL KUMAR BHATIA ( SUPRA ) ALSO DOES NOT HELP THE CASE OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE SAID JUDGMENT READS AS UNDER: '19. UNDER THE PROVISIONS OF SECTION 153A, AS WE HA VE ALREADY NOTICED, THE ASSESSING OFFICER IS BOUND TO ISSUE NOTICE TO THE A SSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASS ESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH THE SEARCH OR REQUISITION WAS MADE. ANOTHER SIGNIFICANT FEATURE OF THIS SECTION IS THAT THE ASSESSING OFFICER IS EMPOWERED TO ASSESS O R REASSESS THE 'TOTAL INCOME' OF THE AFORESAID YEARS. THIS IS A SIGNIFICA NT DEPARTURE FROM THE EARLIER BLOCK ASSESSMENT SCHEME IN WHICH THE BLOCK ASSESSME NT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCE EDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 15 3A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO ASSES S OR REASSESS THE 'TOTAL INCOME' OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT OR DER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOS ED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. 20. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT T O BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESPECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UNDER SECTION 143(1)(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN EXISTENCE, HAVING OB VIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF THE SEARCH/REQUISITION, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INC OME, TAKING NOTE TO THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SE ARCH. FOR THIS PURPOSE, THE FETTERS IMPOSED UPON THE ASSESSING OFFICER BY THE S TRICT PROCEDURE TO ASSUME JURISDICTION TO REOPEN THE ASSESSMENT UNDER SECTION S 147 AND 148, HAVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB-S ECTION (1) OF SECTION 153A OPENS. THE TIME-LIMIT WITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED, AS PROVIDED IN SECTION 149 HAS ALSO BEEN MA DE INAPPLICABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUIRES SAN CTION TO BE OBTAINED BY THE ASSESSING OFFICER BY ISSUE OF NOTICE TO REOPEN THE ASSESSMENT UNDER SECTION 148 HAS ALSO BEEN EXCLUDED IN A CASE COVERE D BY SECTION 153A. THE TIME-LIMIT PRESCRIBED FOR COMPLETION OF AN ASSESSME NT OR REASSESSMENT BY SECTION 153 HAS ALSO BEEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. WITH ALL THE STOPS HAVING BEEN PULLED OUT, TH E ASSESSING OFFICER UNDER SECTION 153A HAS BEEN ENTRUSTED WITH THE DUTY OF BR INGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE IS COVERED BY SECT ION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS, IF NEED B E. 21. NOW THERE CAN BE CASES WHERE AT THE TIME WHEN T HE SEARCH IS INITIATED OR REQUISITION IS MADE, THE ASSESSMENT OR REASSESSMENT PROCEEDINGS RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF TH E SIX ASSESSMENT YEARS MENTIONED ABOVE, MAY BE PENDING. IN SUCH A CASE, TH E SECOND PROVISO TO SUB- SECTION (1) OF SECTION 153A SAYS THAT SUCH PROCEEDI NGS 'SHALL ABATE'. THE REASON IS NOT FAR TO SEEK. UNDER SECTION 153A, THER E IS NO ROOM FOR MULTIPLE ASSESSMENT ORDERS IN RESPECT OF ANY OF THE SIX ASSE SSMENT YEARS UNDER CONSIDERATION. THAT IS BECAUSE THE ASSESSING OFFICE R HAS TO DETERMINE NOT MERELY THE UNDISCLOSED INCOME OF THE ASSESSEE, BUT ALSO THE 'TOTAL INCOME' OF THE ASSESSEE IN WHOSE CASE A SEARCH OR REQUISITION HAS BEEN INITIATED. OBVIOUSLY THERE CANNOT BE SEVERAL ORDERS FOR THE SA ME ASSESSMENT YEAR DETERMINING THE TOTAL INCOME OF THE ASSESSEE. IN OR DER TO ENSURE THIS STATE OF 46 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. AFFAIRS NAMELY, THAT IN RESPECT OF THE SIX ASSESSME NT YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE YEAR IN WHICH THE S EARCH TOOK PLACE THERE IS ONLY ONE DETERMINATION OF THE TOTAL INCOME, IT HAS BEEN PROVIDED IN THE SECOND PROVISO OF SUB-SECTION (1) OF SECTION 153A THAT ANY PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT OF THE ASSESSEE WHICH AR E PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING REQUISITION 'SHA LL ABATE'. ONCE THOSE PROCEEDINGS ABATE, THE DECKS ARE CLEARED, FOR THE A SSESSING OFFICER TO PASS ASSESSMENT ORDERS FOR EACH OF THOSE SIX YEARS DETER MINING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE BOTH THE INCOME DE CLARED IN THE RETURNS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS THE UNDIS CLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQUISITION. THE POS ITION THUS EMERGING IS THAT THE SEARCH IS INITIATED OR REQUISITION IS MADE, THE Y WILL ABATE MAKING WAY FOR THE ASSESSING OFFICER TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN WHICH THE UNDISCLOSED INCOME WOULD ALSO BE INCLUDED, BUT IN CASE WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS HAVE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH ORDERS SUBSISTING AT THE TIME WHEN THE SEA RCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF ANY ABATEMENT SINCE N O PROCEEDINGS ARE PENDING. IN THIS LATTER SITUATION, THE ASSESSING OF FICER WILL REOPEN THE ASSESSMENTS OR REASSESSMENTS ALREADY MADE (WITHOUT HAVING THE NEED TO FOLLOW THE STRICT PROVISIONS OR COMPLYING WITH THE STRICT CONDITIONS OF SECTIONS 147, 148 AND 151) AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE ORDERS PASSED UNDER SECTI ON 153A WOULD BE SIMILAR TO THE ORDERS PASSED IN ANY REASSESSMENT , WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND THE INCOME THAT ESCAPED ASSESSMENT ARE CLUBBED TOGETHER AND ASSESSED AS THE TOTAL INCOME. IN SUCH A CASE, TO REITERATE, THERE IS NO QUESTION OF ANY ABA TEMENT OF THE EARLIER PROCEEDINGS FOR THE SIMPLE REASON THAT NO PROCEEDIN GS FOR ASSESSMENT OR REASSESSMENT WERE PENDING SINCE THEY HAD ALREADY CU LMINATED IN ASSESSMENT OR REASSESSMENT ORDERS WHEN THE SEARCH WAS INITIATE D OR THE REQUISITION WAS MADE.' (EMPHASIS SUPPLIED) 24. THE SAID JUDGMENT ALSO IN NO UNCERTAIN TERMS HOLDS THAT THE REASSESSMENT OF THE TOTAL INCOME OF THE COMPLETED ASSESSMENTS HAVE TO B E MADE TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SE ARCH AND THE INCOME THAT ESCAPED ASSESSMENTS ARE REQUIRED TO BE CLUBBED TOGETHER WIT H THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT AND ASSESSED AS THE TOTAL I NCOME. THE OBSERVATIONS MADE IN THE JUDGMENT CONTRASTING THE PROVISIONS OF DETERMIN ATION OF UNDISCLOSED INCOME UNDER CHAPTER XIVB WITH DETERMINATION OF TOTAL INCO ME UNDER SECTIONS 153A TO 153C OF THE ACT HAVE TO BE READ IN THE CONTEXT OF S ECOND PROVISO ONLY, WHICH DEALS WITH THE PENDING ASSESSMENT/REASSESSMENT PROCEEDING S. THE FURTHER OBSERVATIONS MADE IN THE CONTEXT OF DE NOVO ASSESSMENT PROCEEDIN GS ALSO HAVE TO BE READ IN CONTEXT THAT IRRESPECTIVE OF THE FACT WHETHER ANY I NCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH, THE NOTICE AND CONSEQU ENTIAL ASSESSMENT UNDER SECTION 153A HAVE TO BE UNDERTAKEN. 25. THE ARGUMENT OF THE LEARNED COUNSEL THAT THE AO IS ALSO FREE TO DISTURB INCOME, EXPENDITURE OR DEDUCTION DE HORS THE INCRIMINATING MATERIAL, WHILE MAKING ASSESSMENT UNDER SECTION 153A OF THE ACT IS ALSO NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION WHICH AS NOTICED ABOVE IS ESSENTIALLY IN CONTEXT OF SEARCH AND/OR REQUISITION. THE PROVISIONS OF SECTIONS 153A TO 153C CANNOT BE I NTERPRETED TO BE A FURTHER INNINGS FOR THE AO AND/OR ASSESSEE BEYOND PROVISIONS OF SEC TIONS 139 (RETURN OF INCOME), 139(5) (REVISED RETURN OF INCOME), 147 (INCOME ESCA PING ASSESSMENT) AND 263 (REVISION OF ORDERS) OF THE ACT. 47 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN R ESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECT ION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTIO N AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIB LE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDIN GS AND REASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT A BATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF R EQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MAT ERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. 27. THE ALLAHABAD HIGH COURT IN SMT. SHAILA AGARWAL'S ( SUPRA ) HAS HELD AS UNDER: '19. THE SECOND PROVISO TO SECTION 153A OF THE ACT, REFERS TO ABATEMENT OF THE PENDING ASSESSMENT OR RE-ASSESSMENT PROCEEDINGS . THE WORD 'PENDING' DOES NOT OPERATE ANY SUCH INTERPRETATION, THAT WHER EVER THE APPEAL AGAINST SUCH ASSESSMENT OR REASSESSMENT IS PENDING, THE SAM E ALONG WITH ASSESSMENT OR REASSESSMENT PROCEEDINGS IS LIABLE TO BE ABATED. THE PRINCIPLES OF INTERPRETATION OF TAXING STATUTES DO NOT PERMIT THE COURT TO INTERPRET THE SECOND PROVISO TO SECTION 153A IN A MANNER THAT WHE RE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE COMPLETE, AND THE MATT ER IS PENDING IN APPEAL IN THE TRIBUNAL, THE ENTIRE PROCEEDINGS WILL ABATE. 20. THERE IS ANOTHER ASPECT TO THE MATTER, NAMELY T HAT THE ABATEMENT OF ANY PROCEEDINGS HAS SERIOUS CAUSES AND EFFECT IN AS MUC H AS THE ABATEMENT OF THE PROCEEDINGS, TAKES AWAY ALL THE CONSEQUENCES THAT A RISE THEREAFTER. IN THE PRESENT CASE AFTER DEDUCTING BOGUS GIFTS IN THE REG ULAR ASSESSMENT PROCEEDINGS, THE PROCEEDINGS FOR PENALTY WERE DRAWN UNDER SECTION 271(1)(C) OF THE ACT. THE MATERIAL FOUND IN THE SEARCH MAY BE A GROUND FO R NOTICE AND ASSESSMENT UNDER SECTION 153A OF THE ACT BUT THAT W OULD NOT EFFACE OR TERMINATE ALL THE CONSEQUENCE, WHICH HAS ARISEN OUT OF THE REGULAR ASSESSMENT OR REASSESSMENT RESULTING INTO THE DEMAN D OR PROCEEDINGS OF PENALTY. ' (EMPHASIS SUPPLIED) THE SAID JUDGMENT WHICH ESSENTIALLY DEALS WITH SECO ND PROVISO TO SECTION 153A OF THE ACT ALSO SUPPORTS THE CONCLUSION, WHICH WE HAVE REACHED HEREINBEFORE. 28. IT HAS BEEN OBSERVED BY THE HON'BLE SUPREME COURT IN K.P. VARGHESE V. ITO [1981] 131 ITR 597/7 TAXMAN 13 THAT 'IT IS WELL RECOGNIZED RULE OF CONSTRUCTION THAT A STATUTORY PROVISION MUST BE SO CONSTRUED, IF POSSIBLE THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED.' 29. THE ARGUMENT OF THE COUNSEL FOR THE APPELLANT IF T AKEN TO ITS LOGICAL END WOULD MEAN THAT EVEN IN CASES WHERE THE APPEAL ARISING OU T OF THE COMPLETED ASSESSMENT HAS BEEN DECIDED BY THE CIT(A), ITAT AND THE HIGH COURT , ON A NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE AO WOULD HAVE POWER TO UNDO WHAT HAS BEEN CONCLUDED UP TO THE HIGH COURT. ANY INTERPRETATION WHICH LEAD S TO SUCH CONCLUSION HAS TO BE REPELLED AND/OR AVOIDED AS HELD BY THE HON'BLE SUPR EME COURT IN THE CASE OF K.P. VARGHESE ( SUPRA ). 30. CONSEQUENTLY, IT IS HELD THAT IT IS NOT OPEN FOR T HE ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT BEEN CLAIMED IN THE ORIGINAL ASSESSMENT, WHICH ASSESSMENT ALREADY STANDS COMPLETED, ONLY BECAUSE A ASSESSMENT UNDER SECTION 153A OF THE ACT IN PURSUANCE OF SEARCH OR REQUISITION IS REQUIRED TO BE MADE. 48 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. IN THE CASE IN HAND, THE TRANSACTIONS OF UNSECURED LOANS AS WELL AS INTRODUCTION OF CAPITAL BY THE PARTNERS WERE DULY RECORDED IN THE B OOKS OF ACCOUNT AND AVAILABLE WITH THE AO. FURTHER, DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT ON 2 ND JULY 2015 NO MATERIAL MUCH LESS INCRIMINATING MATERIAL W AS EITHER FOUND OR SEIZED TO DISCLOSE ANY UNDISCLOSED INCOME ON ACCOUNT OF UNSEC URED LOANS OR PARTNERS CAPITAL RECEIVED BY THE ASSESSEE FIRM. THE AO HAS PROPOSED TO MAKE THE ADDITION ON ACCOUNT OF UNSECURED LOANS AND PARTNERS CAPITAL UN DER SECTION 68 BEING UNEXPLAINED CASH CREDIT SOLELY ON THE BASIS OF THE INFORMATION RECEIVED FROM INVESTIGATION WING KOLKATA. IT IS PERTINENT TO NOTE THAT THE SAID IN FORMATION WAS AVAILABLE WITH THE AO PRIOR TO THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT IN CASE OF THE ASSESSEE ON 2 ND JULY, 2015. THEREFORE, EVEN THE SOLE BASIS OF ASSE SSMENTS FRAMED UNDER SECTION 153A OF THE ACT IS THE INFORMATION RECEIVED FROM IN VESTIGATION WING KOLKATA AND STATEMENT OF ONE SHRI ANAND SHARMA, WHO IS STATED T O BE AN ENTRY OPERATOR AND MANAGED VARIOUS CONCERNS/COMPANIES INCLUDING M/S.RO YAL CRYSTAL DEALERS, ONE OF THE LOAN CREDITORS OF THE ASSESSEE. EXCEPT THE SAID STATEMENT AND REPORT OF THE INVESTIGATION WING KOLKATA, THE AO HAS NEITHER REFE RRED TO OR WAS HAVING IN POSSESSION OF ANY MATERIAL TO INDICATE THAT THE UNS ECURED LOANS SHOWN IN THE BOOKS OF ACCOUNTS AS WELL AS PARTNERS CAPITAL RECEIVED B Y THE ASSESSEE ARE NOTHING BUT ASSESSEES OWN UNACCOUNTED AND UNDISCLOSED INCOME R OUTED BACK IN THE GARB OF UNSECURED LOANS AND PARTNERS CAPITAL. THERE IS NO DISPUTE THAT THESE TRANSACTIONS OF UNSECURED LOANS AND PARTNERS CAPITAL CONTRIBUTION ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS AND DISCLOSED IN THE RETURN OF INCOME WHIC H WERE ALREADY COMPLETED AS THE ASSESSMENTS FOR THESE FOUR ASSESSMENT YEARS WERE NO T PENDING ON THE DATE OF SEARCH, THEREFORE, IT IS MANIFEST FROM THE RECORD T HAT DURING THE COURSE OF SEARCH AND SEIZURE UNDER SECTION 132 OF THE ACT IN THE CASE OF THE ASSESSEE NO MATERIAL MUCH LESS THE INCRIMINATING MATERIAL WAS UNEARTHED OR AN Y UNDISCLOSED INCOME WHICH WAS NOT DISCLOSED IN THE BOOKS OF ACCOUNTS WAS DETECTED OR FOUND. THE ONLY INCRIMINATING MATERIAL WHICH WAS REFERRED BY THE AO IS PAGES 21 T O 26 OF ANNEXURE AS-1 IN RESPECT OF LONG TERM CAPITAL GAIN EARNED BY SHRI RA JENDRA AGARWAL AND HIS FAMILY MEMBERS. THE SAID LONG TERM CAPITAL GAIN WAS DISCL OSED BY SHRI RAJENDRA AGARWAL IN HIS STATEMENT UNDER SECTION 132(4) AND, THEREFORE, IT WAS SURRENDERED AND OFFERED TO TAX BY SHRI RAJENDRA AGARWAL AND HIS FAMILY MEMBERS IN THE YEAR OF SEARCH. THE AO HIMSELF HAS NOT MADE ANY ADDITION IN THE HAND OF TH E ASSESSEE ON ACCOUNT OF LONG TERM CAPITAL GAIN WHICH WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE. THUS, 49 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. EXCEPT THE MATERIAL DISCLOSING THE LONG TERM CAPITA L GAIN IN THE HAND OF SHRI RAJENDRA AGARWAL, NO OTHER INCRIMINATING MATERIAL EITHER FOU ND OR REFERRED OR IS THE BASIS OF THE ADDITION MADE BY THE AO WHILE FRAMING THE ASSES SMENT UNDER SECTION 153A OF THE ACT FOR THE ASSESSMENT YEARS 2010-11 TO 13-14. IT IS APPROPRIATE TO REFER RELEVANT PART OF THE ASSESSMENT ORDER IN PARA 12 PA GES 48 TO 50, PARA 19 PAGE 83 AND PARA 22 PAGE 86 AS UNDER :- 12. SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE FI RM HAVE BEEN DULY CONSIDERED. HOWEVER, EVEN THE VERY ELABORATE AND CA SE LAWS LOADED SUBMISSIONS OF THE ASSESSEE ARE TOTALLY OFF THE MAR K. AGAINST THE SELF- SPEAKING FACTS OF THE VERY NATURE OF THE ACTIVITIES OF THE SO CALLED PARTNERS PROVIDING HUGE PARTNERS CAPITAL IN THE MOST UNINTE RESTED MANNER AND PROVIDING HUGE UNSECURED LOANS WITHOUT ANY COLLATER AL OR OTHER SECURITY, THE EMPHASIS OF THE ASSESSEE FIRM IN ITS SUBMISSIONS HA S BEEN ON SEEKING PROTECTION UNDER VARIOUS JUDICIAL DECISIONS EVEN WI THOUT HAVING ANY FACT COHERENCE. THE SUBMISSIONS MADE BY THE ASSESSEE ARE COMPLETELY DEVOID OF MERIT IN THE LIGHT OF THE FOLLOWING FACTS AND CIRCU MSTANCES; A. THE DEPARTMENT HAS VERY SOUND BASIS TO TREAT, THE R ECEIPTS OF UNSECURED LOAN AND PARTNERS CAPITAL FROM THE ABOVE MENTIONED COMPANIES AS BOGUS AND IN GENUINE. THE FINDINGS OF THIS OFFICE AND INV ESTIGATION REPORT OF THE INVESTIGATION DIRECTORATE KOLKATA ARE NOT BASED ON ANY PRESUMPTION, ASSUMPTION, GUESS OR BARE SUSPICION. WHERE THE NATU RE AND SOURCE OF A RECEIPT, WHETHER IT BE OF MONEY OR OTHER PROPERTY, CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OPEN FOR THE REVEN UE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES O N THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE AS ENUMERATED THE HONBLE SUPREME COURT IN THE CASE OF ROSHAN DI HATT I V. CIT (1977) 107 ITR 938 (SC) AND KALE KHAN MOHAMMAD HANIF V. CIT (1 963) 50 ITR 1 (SC). PRIMA FACIE ONUS IS ALWAYS ON THE ASSESSEE TO PROVE THE CASH CREDIT ENTRY FOUND IN THE BOOKS OF ACCOUNT OF THE A SSESSEE. IN LAND MARK CASES LIKE KALE KHAN MOHAMMAD HANIF V CIT (1963) 50 ITR 1 (SC), ROSHAN DI HATTI V CIT (1977) 107 ITR (SC) IT HAS BEEN HELD THAT THE LAW IS WELL SETTLED THAT THE ONUS OF 50 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE, IS ON HIM. WHERE THE NATUR E AND SOURCE THEREOF CANNOT BE EXPLAINED SATISFACTORILY, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE AS SESSEE AND NO FURTHER BURDEN IS ON THE REVENUE TO SHOW THAT TH E INCOME IS FROM ANY PARTICULAR SOURCE. IT MAY ALSO BE POINTED OUT THAT THE BURDEN OF PROOF IS FLUID FOR THE PURPOSES OF SECTIO N 68. ONCE ASSESSEE HAS SUBMITTED BASIC DOCUMENTS RELATING TO IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS THE N AO MUST DO SOME INQUIRY TO CALL FOR MORE DETAILS TO INVOKE SECTION 68. B. THE ASSESSEE FIRM HAS FILED CONFIRMATION LETTERS AN D THIS OFFICE HAS CARRIED OUT FURTHER ENQUIRY TO EXAMINE THE REALITY OF THE T RANSACTIONS. AN ENQUIRY WAS SENT TO THE INVESTIGATION DIRECTORATE KOLKATA A ND IT HAS BEEN ESTABLISHED THAT THESE INVESTOR OR LENDER COMPANIES ARE CONTROLLED BY THE ENTRY OPERATORS. THE STATEMENTS OF VARIOUS ENTRY O PERATORS ARE SUFFICIENT EVIDE4NCES TO SHOW THAT THE UNSECURED LOAN AND PART NERS CAPITAL ARE ASSESSEES OWN UNDISCLOSED INCOME BROUGHT INTO THE BOOKS OF THE ASSESSEE UNDER THE GARB OF UNSECURED LOAN AND PARTN ERS CAPITAL. C. THE DEPARTMENT HAS CARRIED OUT SEARCH OVER THE ASSE SSEE GROUP AND DURING THE COURSE OF SEARCH ACTION U/S 132 OF THE I .T. ACT, 1961, THE INCRIMINATING DOCUMENTS SEIZED DURING SEARCH PROCEE DINGS VIDE PG NO. 21 TO 26 OF ANNEXURE AS-1 OF PARTY B-1, WHEREIN THE DE TAILS OF YEAR-WISE LTCG EARNED BY SHRI RAJENDRA AGRAWAL AND HIS FAMILY MEMBERS, IS MAINTAINED, WHICH DURING SEARCH ACTION HAS BEEN ACC EPTED TO BE BOGUS BY ALL FAMILY MEMBERS IN THEIR RESPECTIVE STATEMENTS. 19. IN VIEW OF ABOVE FACTS OF THE CASE AND IN THE LIGHT OF ABOVE JUDICIAL DECISION, IT IS ESTABLISHED THAT GENUINENESS OF THE TRANSACTION HAS NOT BEEN PROVED. SECTION 68 OF THE I.T. ACT PROVIDES FOR CHA RGING TO INCOME TAX ON ANY SUM CREDITED IN THE BOOKS OF THE ASSESSEE MAINTAINE D FOR ANY PREVIOUS YEAR IF THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED IS NOT, IN THE OPINION OF T HE ASSESSING OFFICER, SATISFACTORY. IT PLACES NO DUTY UPON THE ASSESSING OFFICER TO POINT TO THE SOURCE FROM WHICH THE MONEY WAS RECEIVED BY THE ASS ESSEE. WHERE AN ASSESSEE FAILS TO PROVE SATISFACTORILY THE SOURCE A ND THE NATURE OF CERTAIN AMOUNT OF CREDIT DURING THE ACCOUNTING YEAR, THE IN COME-TAX OFFICER IS 51 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. ENTITLED TO DRAW THE INFERENCE THAT THE RECEIPT ARE OF AN ASSESSABLE NATURE. THUS, THE ASSESSEE IS UNABLE TO DISCHARGE ITS BURDE N OF PROOF BY FAILING TO ESTABLISH LENDERS IDENTITY, FORGET THE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE LENDER. HENCE, THE UNSECUR ED LOANS AND PARTNERS CAPITAL SHOWN TO HAVE BEEN RECEIVED FROM VARIOUS KO LKATA BASED COMPANIES AND OTHER COMPANIES REMAINED UNEXPLAINED. IN THE C IRCUMSTANCES, I AM LEFT WITH NO OPTION THAN TO TAX THE ENTIRE UNEXPLAINED C REDITS BY WAY OF PARTNERS CAPITAL AND UNSECURED LOANS RECEIVED FROM THE PERSO NS MENTIONED IN PARA 5 ABOVE AS UNEXPLAINED CASH CREDITS U/S 68 OF THE INC OME TAX ACT, CHARGEABLE TO TAX AS INCOME OF THE ASSESSEE FIRM FOR THE RESPE CTIVE ASSESSMENT YEARS. 22. AFTER EXAMINATION OF THE INFORMATION AND DETA ILS PLACED ON RECORD AND DISCUSSION WITH THE ASSESSEE, THE TOTAL INCOME OF T HE ASSESSEE IS COMPUTED AS UNDER :- RETURNED INCOME AS PER ITR U/S 153A OF THE ACT. RS. 2,82,83,460/ - ADDITIONS | UNEXPLAINED CASH CREDITS U/S | 68 OF THE ACT IN THE FORM OF | UNSECURED LOAN AND PARTNERS | CAPITAL RS. 67,20,14,999/ - ASSESSED INCOME RS. 70,02,98,459/ - R/O RS. 70,02,98,459/ - THE TOTAL INCOME OF THE ASSESSEE IN THE STATUS OF F IRM FOR ASSESSMENT YEAR 2010-11 RELEVANT TO PREVIOUS YEAR 2009-10 IS ASSESS ED AT RS. 70,02,98,459/- U/S 153A READ WITH SECTION 143(3) OF I.T. ACT, 1961 . THE FORM ITNS-150 SHOWING CALCULATION OF TAX AND INTEREST CHARGEABLE, IF ANY, IS ATTACHED HEREWITH AND FORMS A PART OF THIS ORDER. A NOTICE OF DEMAND U/S 156 OF THE ACT AND CHALLAN FOR PAYMENT OF TAX, IF PAYABLE, IS HEREBY ISSUED. PENALTY NOTICE U/S 274 RWS 271(1)(C) IS ISSUED SEPARATELY. THE ENTIRE FINDING OF THE AO IS BASED ON THE INFORM ATION RECEIVED FROM THE INVESTIGATION WING KOLKATA AND STATEMENT OF SHRI AN AND SHARMA. THE LD. CIT (A) THOUGH HAS NOT DISPUTED THE LEGAL PROPOSITION ON TH IS ISSUE, HOWEVER, THE CONTENTION OF THE ASSESSEE WAS TURNED DOWN MERELY ON THE GROUN D THAT THE SLPS FILED BY THE REVENUE IN THE CASES OF KABUL CHAWLA (SUPRA) AND M/ S. ALL CARGO GLOBAL LOGISTICS 52 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. (SUPRA) ETC. HAVE BEEN ADMITTED FOR DECISION BY THE HONBLE SUPREME COURT. THE RELEVANT PART OF THE FINDING OF THE LD. CIT (A) IN PARA 3.2.2 AND 3.2.4 AT PAGES 35 AND 36 ARE AS UNDER :- 3.2.2 AS PER THE PROVISIONS OF THIS SECTION WHERE A SEARCH IS INITIATED U/S 132 OF THE ACT, THE A.O SHALL ISSUE A NOTICE REQUIRING THE PER SON SEARCHED TO FURNISH HIS RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. ON CE SUCH RETURNS ARE FILED, THE AO HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF SUCH SIX ASSESSMENT YEARS.(EMPHASIS SUPPLIED BY ME). (THE DECISIVE WORDS USED IN THE PROVISIONS ARE TO ' ASSESSEE OR REASSESS THE TOTAL INCOME' ). THE A.O. IS THUS DUTY BOUND TO DETERMINE THE 'TO TAL INCOME' OF THE ASSESSEE FOR SUCH SIX ASSESSMENT YEA RS AND IT IS OBVIOUS THAT 'TOTAL INCOME' REFERS TO THE SUM TOTAL OF INCOME IN RESPEC T OF WHICH A PERSON IS ASSESSABLE. THE TOTAL INCOME THEREFORE WILL COVER NOT ONLY THE INCOME EMANATING FROM DECLARED SOURCES OR ANY MATERIAL PLACED BEFORE THE ASSESSING OFFICER BUT FROM ALL SOURCES INCLUDING THE UNDISCLOSED ONES, OR BASED ON THE UNP LACED MATERIAL BEFORE THE AO. 3.2.3 THE CONCEPT OF ASSESS OR REASSESS AND SHALL ABATE AS CONTEMPLATED U/S 153A IS UNDER HOT JUDICIAL DEBATE. I FIND THAT LEGA LLY, THIS ISSUE IS VERY CONTENTIOUS IN VIEW OF THE DIVERGENT VIEWS OF THE VARIOUS AUTHORIT IES. THE APPELLANT HAS TRIED TO HIGHLIGHT MOST OF THEM. HOWEVER, IT IS EQUALLY PERT INENT TO MENTION HERE THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISIONS OF HON'BL E MUMBAI HIGH COURT IN THE CASE OF M/S ALL CARGO GLOBAL LOGISTICS AS WELL AS CONTIN ENTAL WAREHOUSING (NHAVA SHEVA) LTD., AND SLP HAS BEEN FILED BEFORE THE HON' BLE SUPREME COURT. THE HON'BLE SUPREME COURT HAS GRANTED LEAVE VIDE ORDER DATED 12 .10.2015 AS REPORTED IN 64 TAXMANN.COM 34 (S.C.). SIMILARLY, IN THE CASE OF KA BUL CHAWLA SLP HAS ALSO BEEN FILED. 3.2.4 IN VIEW OF SLPS ADMITTED IN CASE OF KABUL CHAWLA, M/S ALL CARGO GLOBAL LOGISTICS AS WELL AS CONTINENTAL WAREHOUSING (NHAVA SHEVA) LTD., (SUPRA), ASSESSEES CONTENTION CANNOT BE ACCEPTED. MOREOVER, IN ANY CASE, THE ADDITIONS ARE TO BE ADJUDICATED ON MERITS AS PER RELEVANT GROUND OF APP EAL, THE ISSUE RAISED IN THIS GROUND FOR PRESENT REMAINS FOR ACADEMIC DISCUSSION ONLY. A CCORDINGLY, ISSUE RAISED IN GROUND NO. 12 IS DISMISSED. 53 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. THEREFORE, NEITHER IN THE ASSESSMENT ORDER NOR IN T HE ORDER OF THE LD. CIT (A) THERE IS ANY MENTION OR FINDING THAT THE ADDITIONS HAVE BEEN MADE BY THE AO ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE IN THE CASE OF THE ASSESSEE. THE AO HAS SOLELY RELIED UPON THE REPORT OF THE INVESTIGATION WING KOLKATA AND STATEMENT OF ONE SHRI ANAND SHARMA RECO RDED BY THE INVESTIGATION WING DURING THE SURVEY UNDER SECTION 133A OF THE ACT. T HEREFORE, EVEN IF THE INFORMATION/REPORT OF THE INVESTIGATION WING KOLKAT A IS CONSIDERED AS A RELEVANT EVIDENCE, THE SAME CANNOT BE REGARDED AS INCRIMINAT ING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH AND SEIZURE UNDER SECTION 132 OF THE IT ACT IN CASE OF THE ASSESSEE. THE REQUIREMENT FOR MAKING THE ADDITION UNDER SECTION 153A IN THE ASSESSMENT YEARS WHERE THE ASSESSMENT WAS NOT PENDI NG ON THE DATE OF SEARCH AND THE PROCEEDINGS ARE IN THE NATURE OF REASSESSMENT I S ESSENTIALLY THE INCRIMINATING MATERIAL DISCLOSING UNDISCLOSED INCOME WHICH WAS NO T DISCLOSED BY THE ASSESSEE. IN THE CASE IN HAND, THE AO HIMSELF HAS NOT CLAIMED A NY INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE IN THE CASE OF THE AS SESSEE. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE BI NDING PRECEDENTS ON THIS ISSUE IN WHICH THE SLP FILED BY THE REVENUE WAS ALSO DISMISS ED BY THE HONBLE SUPREME COURT, THE ADDITIONS MADE BY THE AO WHILE PASSING T HE ASSESSMENT ORDERS UNDER SECTION 153A FOR THE ASSESSMENT YEARS 2010-11 TO 13 -14 ARE NOT SUSTAINABLE AND ACCORDINGLY THE SAME ARE LIABLE TO BE DELETED. WE ORDER ACCORDINGLY. SINCE THE FACTS INVOLVED AS WELL AS THE CONTENTIONS OF BOTH THE PARTIES FOR BOTH THE ASSESSMENT YEARS ARE SAME, THEREFORE, OUR FINDING I N THE CASE OF KOTA DALL MILL ON THIS ISSUE IS APPLICABLE IN THIS CASE ALSO. ACCORD INGLY, THE ADDITION MADE BY THE AO WITHOUT ANY MATERIAL MUCH LESS THE INCRIMINATING MA TERIAL IS NOT SUSTAINABLE IN LAW. FURTHER, THE REPORT OF THE INVESTIGATION WING KOLKA TA IS ALSO NOT A MATERIAL OR DOCUMENT EITHER FOUND OR DETECTED DURING THE SEARCH AND SEIZURE ACTION IN CASE OF THE ASSESSEE BUT IT PERTAINS TO THE INVESTIGATION C ARRIED OUT BY THE INVESTIGATION WING KOLKATA IN A SEPARATE MATTER. THEREFORE, THE SAID REPORT WILL NOT PARTAKE THE 54 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. CHARACTER OF INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION IN THE CASE OF THE ASSESSEE. HENCE THE ADDITIONS MADE BY THE AO WHILE FRAMING THE ASSESSMENT UNDER SECTION 153A OF THE ACT ARE DELETED FOR WANT OF INCRIMINATING MATERIAL. GROUND NO. 2 OF THE CROSS OBJECTION COMMON FOR BOTH THE ASSESSMENT YEARS IS REGARDING THE VIOLATION OF PRIN CIPLES OF NATURAL JUSTICE FOR NOT GRANTING THE CROSS EXAMINATION OF THE ALLEG ED ACCOMMODATION ENTRY PROVIDER. 15. BEFORE US, THE LD. A/R OF THE ASSESSEE SUBMITTE D THAT THE SOLE BASIS OF ADDITION IS THE REPORT OF INVESTIGATION WING KOLKAT A WHICH IN TURN BASED ON THE STATEMENT OF ONE SH. AMIT KEDIA AND SH. ALOK HARLAL KA WHEREAS THE ASSESSEE WAS NOT GIVEN THE OPPORTUNITY OF CROSS EXAMINATION DESP ITE REPEATED REQUESTS AND DEMANDS. THE AO HAS VIOLATED THE PRINCIPLES OF NAT URAL JUSTICE BY NOT PROVIDING THE COPIES OF MATERIAL USED AGAINST THE ASSESSEE AT THE ASSESSMENT STAGE AND FURTHER NOT PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION OF THE WITNESS DURING THE ASSESSMENT STAGE AS WELL AS APPELLATE STAGE. THOUG H THE LD. CIT (A) CALLED FOR A REMAND REPORT AND ASKED THE AO TO PROVIDE OPPORTUNI TY OF CROSS EXAMINATION TO THE ASSESSEE, HOWEVER, AFTER THE REMAND PROCEEDINGS THE AO DID NOT AFFORD AN OPPORTUNITY OF CROSS EXAMINATION RATHER THE AO HAS ASKED THE ASSESSEE TO PRODUCE THE WITNESS INSTEAD OF ALLOWING THE ASSESSEE TO CRO SS EXAMINE THE WITNESS. IN SUPPORT OF HIS CONTENTION, THE LD. A/R HAS RELIED U PON THE DECISION OF HONBLE SUPREME COURT IN CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE (2016) 15 SCC 785 (SC). HE HAS ALSO RELIED ON THE DECISION HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ASHWANI GUPTA, 32 2 ITR 396 (DELHI) AND SUBMITTED 55 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. THAT THE HONBLE HIGH COURT HAS HELD THAT ONCE THER E IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SEIZED MATERIAL IS NOT PROVIDED TO THE ASSESSEE NOR WAS PERMITTED TO CROSS EXAMINE A PERSON ON WHOSE STATEM ENT THE AO RELIED UPON, IT WOULD AMOUNT TO DEFICIENCY AND DENIAL OF NATURAL JU STICE. THE LD. A/R HAS THEN REFERRED TO THE DECISION OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF H.R. MEHTA VS. ACIT, 387 ITR 561 (BOMBAY). THUS THE LD. A/R HAS S UBMITTED THAT ONCE THE ASSESSEE HAS ALREADY DISCHARGED ITS PRIMARY ONUS TO PROVE THE CASH CREDIT BY FURNISHING RELEVANT DOCUMENTS, SUBSTANTIATED IDENTI TY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION, THEN THE BURDEN IS SHIFTED ON THE AO TO DISPROVE THE DOCUMENTS PRODUCED BY THE ASSESSEE IN SUPPORT OF TH E CLAIM. THE AO HAS RELIED UPON THE STATEMENT OF SHRI ANAND SHARMA AND OTHERS AND NO MATERIAL WAS BROUGHT ON RECORD TO CONTROVERT THE DOCUMENTARY EVIDENCE FI LED BY THE ASSESSEE. THUS THE LD. A/R HAS STATED THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT (A) BE DELETED. 16. ON THE OTHER HAND, THE LD. CIT D/R HAS SUBMITTE D THAT THE AO HAS RECEIVED THE INFORMATION FROM INVESTIGATION DIRECTORATE, KOL KATA REGARDING INVOLVEMENT OF THE ASSESSEE GROUP IN OBTAINING ENTRIES OF BOGUS SHARE CAPITAL, SHARE PREMIUM ETC. DETECTED IN THE INVESTIGATION CARRIED OUT BY THE DI T KOLKATA. SUCH INFORMATION WAS RECEIVED EVEN PRIOR TO INITIATION OF PROCEEDINGS UN DER SECTION 153A AND ALSO DURING THE PENDENCY OF PROCEEDINGS UNDER SECTION 153A. ON CE THE AO HAS CONFRONTED THE ASSESSEE WITH THE REPORT OF THE INVESTIGATION WING KOLKATA AS WELL AS THE STATEMENT OF SHRI ANAND SHARMA AND OTHER PERSONS WHO HAVE ADM ITTED TO HAVE PROVIDED ACCOMMODATION ENTRIES OF BOGUS SHARE CAPITAL AND PR EMIUM ETC. TO THE VARIOUS 56 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. PARTIES THROUGH THEIR COMPANIES AND CONCERNS AND AS SESSEE HAS SHOWN THE SHARE CAPITAL AND PREMIUM FROM THOSE CONCERNS, THEN ONUS WAS SHIFTED ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS OF SH ARE CAPITAL AND PREMIUM ETC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO AGAIN CONDUCTED ENQUIRIES THROUGH INVESTIGATION WING KOLKATA REGARDING THE GE NUINENESS OF THE TRANSACTION AND THE ASSESSEE WAS DULY CONFRONTED WITH THE RESUL TS OF ALL THESE ENQUIRIES AND INFORMATION SHARED BY THE INVESTIGATION WING KOLKAT A. IN THESE CIRCUMSTANCES AND IN THE INTEREST OF NATURAL JUSTICE, THE ASSESSEE WA S REQUIRED TO PRODUCE THE ALLEGED CREDITORS FOR EXAMINATION SO THAT GENUINENESS OF SH ARE CAPITAL AND PREMIUM ETC. COULD BE VERIFIED BY THE AO. DESPITE PROVIDING SEV ERAL OPPORTUNITIES, THE ASSESSEE MISERABLY FAILED TO PRODUCE ANY CREDITOR. THE ASSE SSEE NEVER EXPRESSED ITS INABILITY TO PRODUCE THE ALLEGED CREDITOR NOR THE ASSESSEE RE QUESTED THE AO TO ISSUE SUMMON TO THE ALLEGED CREDITOR FOR VERIFICATION OF THE GEN UINENESS OF THE CASH CREDIT IN THE FORM OF SHARE CAPITAL AND PREMIUM ETC. IT IS EVIDE NT THAT THE ASSESSEE NEVER INTENDED TO PRODUCE THE ALLEGED CREDITOR. THE LD. D/R HAS FURTHER SUBMITTED THAT THE PRESENT CASE IS NOT ONE WHERE ASSESSEE OBTAINED SMA LL LOANS OR INSIGNIFICANT SHARE CAPITAL SO THAT THE ASSESSEE COULD TAKE THE PLEA TH AT IT IS NOT IN A POSITION TO ENSURE PRESENCE OF ALLEGED CREDITORS. THE SIZE OF THE TRA NSACTIONS WHICH ARE TAINTED SHARE CAPITAL AND SHARE PREMIUM ETC. CONSTITUTE THE MAJOR PORTION OF ENTIRE CAPITAL OF THE ASSESSEE AND OTHER GROUP COMPANIES. THUS THE AS SESSEE HAS FAILED TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THE ADDITION IS NOT MADE MERELY ON THE BASIS OF REP ORT OF THE INVESTIGATION WING KOLKATA BUT THE AO CONDUCTED ENQUIRY THROUGH INVEST IGATION WING AND STATEMENTS OF ENTRY OPERATORS WERE ALSO RECORDED, THEREFORE, OVER WHELMING EVIDENCES IN THE 57 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. POSSESSION OF THE AO INDICATE BOGUS NATURE OF TRANS ACTION OF LOAN AND PARTNERS CAPITAL WHICH HAS BEEN EXTENSIVELY DISCUSSED IN THE ASSESSMENT ORDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS PROVIDED A NUMBER OF OPPORTUNITIES FOR PRODUCING THE ALLEGED CREDITORS F OR VERIFICATION AND FAILURE OF THE ASSESSEE IN PRODUCING THE CREDITORS IN THE LIGHT OF THE EVIDENCES WAS ENOUGH TO INVOKE THE PROVISIONS OF SECTION 68 OF THE IT ACT. THE LD. D/R HAS FURTHER SUBMITTED THAT THE REPAYMENT OF LOAN FOR CREDIT ENTRIES ALSO DOES NOT IN ITSELF PROVE THE TRANSACTIONS TO BE GENUINE. SHELL COMPANIES ARE US ED TO PROVIDE ACCOMMODATION ENTRIES AND EVEN REVERSAL OF AN ENTRY DOES NOT IPSO FACTO PROVE THE GENUINENESS OF THE INITIAL CREDIT ENTRY. IN SUPPORT OF HIS CONT ENTION, HE HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAVODAYA CASTLES PVT. LTD., 226 TAXMAN 190 (MAG.) AND SUBMITTED THAT THE SLP FILED BY THE ASSESSEE WAS DISMISSED BY THE HONBLE SUPREME COURT REPORTED IN 230 TAXMAN 268 (SC). THUS IT IS EVIDENT THAT THE ASSESSEE HAS FAILED TO DISCHARG E ITS ONUS TO REBUT THE EVIDENCE UNEARTHED BY THE INVESTIGATION WING KOLKATA WHICH S HOWS THAT THE TRANSACTIONS OF SHARE CAPITAL AND PREMIUM ETC. ARE NOTHING BUT BOGU S ACCOMMODATION ENTRIES WHEREIN THE ASSESSEES OWN UNDISCLOSED INCOME HAS B EEN ROUTED IN THE GARB OF SHARE CAPITAL AND PREMIUM ETC. AS REGARDS CROSS EX AMINATION OF THE WITNESSES, SINCE THE WITNESSES BELONG TO KOLKATA AND STATEMENTS WERE ALSO RECORDED AT KOLKATA BY THE INVESTIGATION WING, THEREFORE, IT WAS NOT POSSI BLE FOR THE AO TO ISSUE SUMMON TO THE WITNESSES FOR CROSS EXAMINATION AT THE OFFICE O F THE AO AT KOTA. THE LD. CIT D/R HAS RELIED UPON THE ORDER OF THE AO. 17. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY US IN THE CASE OF 58 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. GROUP CONCERN, NAMELY, M/S. KOTA DALL MILL IN ITA N OS. 997 TO 1002/JP/2018 AND 1119/JP/2018 AND OTHERS VIDE ORDER DATED 31 ST DECEMBER, 2018 IN PARA 11 AND 11.1 AS UNDER :- 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WE LL AS THE RELEVANT MATERIAL ON RECORD. FOR THE ASSESSMENT YEAR 2010-1 1, THE ASSESSEE HAS CHALLENGED THE ADDITION SUSTAINED BY LD. CIT (A) IN RESPECT OF UNSECURED LOAN FROM M/S. JALSAGAR COMMERCE PVT. LTD. THE OTHER AD DITIONS MADE BY THE AO ON ACCOUNT OF UNSECURED LOANS AS WELL AS PARTNERS CAPITAL FOR THE ASSESSMENT YEAR 2010-11 WERE DELETED BY THE LD. CIT (A) ON THE GROUND THAT THE AO WAS NOT HAVING IN HIS POSSESSION EVEN THE STATEMENT OF THE CONCERNED PERSONS IN SUPPORT OF HIS FINDING THAT THE ALLEGED LOAN AND PA RTNERS CAPITAL IS NOTHING BUT BOGUS ACCOMMODATION ENTRIES. THEREFORE, THE REVENU E HAS CHALLENGED THAT PART OF THE ORDER IN THE CROSS APPEAL. THE LD. A/R OF THE ASSESSEE HAS POINTED OUT THAT FOR THE ASSESSMENT YEAR 2010-11 THERE WAS NO LOAN FROM THE COMPANY CONTROLLED BY SHRI ANAND SHARMA, M/S. ROYAL CRYSTAL DEALERS PVT. LTD. BUT THE ASSESSEE TOOK THE LOAN FROM M/S. JALSA GAR COMMERCE PVT. LTD. WHICH IS NOT THE COMPANY OWNED OR CONTROLLED BY SHR I ANAND SHARMA. THE LD. CIT (A) HAS SUSTAINED THE ADDITION IN RESPECT O F LOAN FROM M/S. JALSAGAR COMMERCE PVT. LTD. IN PARA 5.1 TO 5.12 AS UNDER :- 5.1 IN THIS RESPECT, I FIND THAT SHRI ANAND SHARMA WHOSE STATEMENT IS REPRODUCED AT PAGE 56 OF THE ASSESSMENT ORDER HAS C LEARLY ACCEPTED THAT M/S JALSAGAR COMMERCE PVT. LTD. IS BENEFICIARY COMPANY LIKE KOTA DAL MILL AND BOTH OF THESE WERE PROVIDED BOGUS LOANS/ADVANCES BY ROYAL CRYSTAL DEALER PVT. LTD WHICH IS A PAPER COMPANY CONTROLLED BY HIM . HE FURTHER STATED THAT THE BENEFICIARY PARTY SUCH I.E, M/S JALSAGAR COMMER CE PVT. LTD. GAVE HIM CASH IN LIEU OF WHICH CHEQUES WAS GIVEN BY HIM FOR SOME COMMISSION INCOME. HE ALSO ADMITTED THAT SOME PAPER COMPANIES HAVE SOLD TO BENEFICIARY PARTIES. THOUGH, IN THE INITIAL REPORT DATED 28.11. 2017, M/S JALSAGAR COMMERCE PVT. LTD. WAS TREATED A PARTY IN RAJASTHAN , IN LATER REPORT DATED 06.12.2017 THE ENTRY OPERATOR SHRI ANAND SHARMA WAS LINKED WITH M/S JALSAGAR COMMERCE PVT. LTD. AS PER THE DATA BASE P REPARED BY DIRECTORATE OF 59 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. INVESTIGATIONKOLKATA THE RELEVANT PART OF THE SAI D STATEMENT AS REPRODUCED ON PAGE NO.57 OF THE ASSESSMENT ORDER IS AS UNDER: - 5.2 HOWEVER, IT IS THE SUBMISSION OF THE APPELLANT THAT NO NOTICE UNDER SECTION 131 OR 133(6) OF THE ACT WAS ISSUED TO THIS COMPANY , EITHER BY THE LD. AO OR BY THE CONCERNED AO OR BY THE DDIT (INV.) KOLKATA. ALSO, O N BARE PERUSAL OF THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE NAME OF THE SAID COMP ANIES DOES NOT APPEAR IN THE STATEMENT OF ANY OF THE ENTRY OPERATORS AS REPRODUC ED BY THE AO IN THE ASSESSMENT ORDER. HOWEVER, THE RELEVANT DOCUMENTS INCLUDING TH E LEDGER A/C SHOWING THE TRANSACTIONS WITH APPELLANT COMPANY, SOURCE SHEET O F FUNDS OF TRANSACTIONS MADE WITH 60 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. THE APPELLANT, COPY OF BANK STATEMENT SHOWING THE T RANSACTIONS, ETC. STAND SUBMITTED FOR CONFIRMATION OF THE TRANSACTION OF LOAN WITH TH E APPELLANT. 5.3 IN MY CONSIDERED VIEW, AS THE NAME OF M/S JALSA GAR COMMERCE PVT. LTD. IS CLEARLY MENTIONED AS BENEFICIARY COMPANY IN THE STA TEMENT OF SHRI ANAND SHARMA, AND SHRI ANAND SHARMA IS MENTIONED THAT SOME OF SUC H PAPER COMPANY ARE SOLD TO BENEFICIARY PARTY, IN VIEW OF FACT THAT NAME OF M/ S JALSAGAR COMMERCE PVT. LTD. IS MENTIONED IN THE REPORTS AS DISCUSSED IN PARA 4.4.7 ABOVE, A GENUINE DOUBT IS RAISED ON THE IDENTITY AND GENUINENESS OF COMPANY. FURTHER , THE ADVERSE FACTS POINTED OUT IN THE REPORTS AS DISCUSSED IN PARA 4.4.7 ABOVE FOR ES TABLISHED BACKGROUND OF ALL THESE SHARE HOLDERS / DEPOSITORS BEING THE PUPPET IN THE HAND OF ONE OR OTHER ACCOMMODATION ENTRY PROVIDERS, LAYERING THE TRANSAC TION BY CHEQUE DEPOSIT ON THE SAME DAY OR PRECEDING DAY OF SHARE APPLICATION / DE POSITS, THE ASSERTIONS OF THE AO FOR NO-CREDITWORTHINESS OR IN-ADEQUATE CREDITWORTHI NESS OF THE SO-CALLED SHAREHOLDERS / DEPOSITORS HOLDS FIELDS. DURING THE APPELLATE PROCE EDING BEFORE ME, THOUGH PAPER BOOKS FOR RELEVANT AY AND COMMON PAPER BOOKS HAVE B EEN SUBMITTED, THE SAME DOES NOT ADDUCE ANY EVIDENCE TO REBUT THE ADVERSE FACTUA L FINDING MADE BY THE AO IN THE ASSESSMENT ORDER AS MENTIONED BY ME IN PARA 4.1 ABO VE AND CATEGORICALLY MENTIONED IN THE REPORTS AS DISCUSSED IN PARA 4.4.7 ABOVE. UN DER THESE ADVERSE BACKGROUND OF APPELLANT EMPLOYING MODUS-OPERENDI OF RESORTING ACC OMMODATION ENTRY PROVIDER TO BUILD-UP SHARE CAPITAL / UNSECURED LOANS BY FOUL MEANS, WHAT THE AO IS VEHEMENTLY MAKING THE CASE FOR IS THE LAW ON THE ISSUE-SECTION 68 OF INCOME-TAX ACT HAS TO BE APPLIED BY EVOLVING PERCEPTIONS FOR THE LAW ON THE ISSUE AND NOT ON THE BASIS OF ROUTINE PERCEPTIONS ON THE LAW ON THE ISSUE THAT IS LOSING THEIR RELEVANCE. 5.4 WITH ALL DUE RESPECT TO AUTHORITIES CITED BY TH E APPELLANT FOR CANVASSING HIS STAND POINT, I AM NOT ABLE TO PERSUADE MY CONSCIENC E TO AGREE WITH APPELLANTS ARGUMENTS. IN MY CONSIDERED OPINION, UNDER THE ADVE RSE BACKGROUND OF APPELLANT EMPLOYING MODUS-OPERENDI OF RESORTING ACCOMMODATION ENTRY PROVIDER TO BUILD-UP UNSECURED LOANS AS ESTABLISHED IN THE ASSESSMENT OR DER AS BRIEFLY HIGHLIGHTED IN PARA 4.1 ABOVE, AND ARMED WITH SEVERAL AUTHORITIES ON TH E ISSUE CITED BY THE AO, I FULLY AGREE WITH THE VIEW TAKEN BY AO. HOWEVER, TO FORTIF Y THE FINDING OF THE AO AND TO HIGHLIGHT THE GUIDING PRINCIPLE ON ADJUDICATING NON -GENUINE UNSECURED LOANS RAISED THROUGH ACCOMMODATION ENTRY PROVIERS, I PLACE FURTH ER RELIANCE ON FEW MORE CASE LAWS WITH UNDERLINING THE SIMILARITY OF ADVERSE FAC TS PREVAILING IN THE PRESENT CASE AS FOLLOWS:- 5.5 IN CASE OF SUMAN GUPTA V/S. INCOME TAX OFFICER ITAT, AGRA BENCH (2012) 138 ITD 0153 HELD AS UNDER:- 61 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. THE AO DISCUSSED EACH AND EVERY CREDITOR IN THE ASS ESSMENT ORDER AND THE CRUX OF THE FINDINGS OF THE AO HAD BEEN THAT THERE WERE VERY SM ALL BANK BALANCES IN THE BANK ACCOUNTS OF THE CREDITORS AND THEY WERE HAVING MEAG ER INCOME AND AS SUCH, THEY WERE NOT MEN OF MEANS TO ADVANCE ANY LOAN TO THE ASSESSE E. IT IS WELL SETTLED LAW THAT BURDEN IS UPON THE ASSESSEE TO PROVE INGREDIENTS OF SECTION 68 OF THE ACT BY PROVING IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS, HOWEVER, FAILED TO PROVE THE CRED ITWORTHINESS OF THE CREDITORS WHO WERE HAVING ONLY MEAGER INCOME. NO DETAILS OF THEIR SAVINGS HAVE BEEN FILED. THE ASSESSEE HAS NEVER SHOWN HIS WILLINGNESS TO PRODUCE THE REMAINING CREDITORS FOR EXAMINATION BEFORE THE AO. THEREFORE, THE GENUINENE SS OF THE TRANSACTION COULD NOT HAVE BEEN EXAMINED BY THE AO. THE SMALLNESS OF THE BANK BALANCE IN THE BANK ACCOUNTS OF THE CREDITORS PRIOR TO ISSUE OF CHEQUES WOULD CLEARLY REVEAL THAT THEY WERE NOT HAVING ANY SOURCE AND IT WAS THE MONEY OF THE A SSESSEE WHICH WAS ROUTED THROUGH THE BANK ACCOUNTS OF THE CREDITORS FOR THE PURPOSE OF GIVING CREDITS TO THE ASSESSEE. THESE WERE, THEREFORE, ACCOMMODATION ENTRIES ONLY A ND AS SUCH, COULD NOT BE CONSIDERED AS GENUINE TRANSACTIONS. MERELY BECAUSE THE LOANS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL, IS NOT SACROSANCT TO MAKE A NON-GENUINE TRANSACTION AS GENUINE TRANSACTION. ON CONSIDERATION OF THE FACTS OF THE CASE IN THE LI GHT OF ABOVE DISCUSSION AND DECISION, THERE IS NO JUSTIFICATION TO INTERFERE WITH THE ORD ER OF THE LD. CIT(A). THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF ALL THE CRE DITORS AND NO SOURCE OF THEIR INCOME HAS BEEN FILED. AT THE BEST THE ASSESSEE IS ABLE TO PROVE IDENTITY OF THE CREDITORS, BUT THE ASSESSEE FAILED TO PROVE THE GENUINE CREDIT IN THE MATTER. ALL THE CREDITORS HAVE BEEN RIGHTLY FOUND TO BE MEN OF MEAGER MEANS AND NO SOURCE OF INCOME HAVE BEEN FILED TO PROVE THAT THEY WERE HAVING SUFFICIENT FUNDS OR SAVINGS IN ORDER TO GIVE LOANS TO THE ASSESSEE. ON VERIFICATION OF THE BANK ACCOUN T OF THE DEPOSITORS, IT WAS SPECIFICALLY FOUND THAT THERE WERE NO SUFFICIENT FU NDS AVAILABLE IN THEIR BANK ACCOUNT AND THEY WERE HAVING ONLY SMALL BANK BALANCE, WHICH WAS EVEN NOT SUFFICIENT TO MEET OUT THEIR HOUSEHOLD EXPENSES OR DAY-TO-DAY REQUIREM ENTS. THEREFORE, IT IS UNBELIEVABLE TO ACCEPT THE CONTENTION OF THE ASSESS EE THAT SAID PERSONS WERE HAVING CREDITWORTHINESS TO ADVANCE ANY LOAN TO THE ASSESSE E. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION U/S. 68 OF THE IT ACT. IN T HE PRESENT CASE, THE ASSESSEE HAS NOT ADDUCED ANY SUFFICIENT EVIDENCE BEFORE THE AUTHORIT IES BELOW TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTIONS IN THE MATTER. 62 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. THEREFORE, THE ASSESSEE HAS NOT SATISFIED THE ESSEN TIAL INGREDIENTS OF SECTION 68 OF THE IT ACT. CONCLUSION: MERELY BECAUSE THE LOANS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL, IS NOT SACROSANCT TO MAKE A NON-GENUINE TRANSACTION AS GEN UINE TRANSACTION. THE ABOVE DECISION IS CONFIRMED BY HONBLE ALLAHABA D HIGH COURT VIDE THEIR JUDGMENT IN ITA NO.680/12 VIDE JUDGMENT DATED 07.08 .2012 AND SLP OF ASSESSEE WAS DISMISSED BEFORE THE HONBLE APEX COURT AS REPO RTED IN 2013-LL-0122-69 5.6 HONBLE HIGH COURT OF DELHI IN CASE OF COMMISSI ONER OF INCOME TAX V/S. NAVODAYA CASTLES PVT. LTD. REPORTED AT (2014) 367 I TR 0306 INVOLVING EXACTLY SIMILAR FACTS OBSERVED IN PARA 2, 3 THEN PARA 2 AS UNDER:- 2. THE APPEAL ARISES OUT OF THE IMPUGNED ORDER DATE D 31 ST OCTOBER, 2011, PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, UPHOLDING THE OR DER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) DELETING ADDITION OF RS.54, 00,000/- MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (ACT, FOR SHORT), BY TH E ASSESSING OFFICER ON ACCOUNT OF SHARE APPLICATION. 3. THE ASSESSEE, A COMPANY, HAD FILED THEIR RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 DECLARING LOSS OF RS.1,58,035/- ON 20 TH OCTOBER, 2002, WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON T HE BASIS OF A REPORT SUBMITTED BY THE INVESTIGATION WING THAT THE ASSESSEE WAS A RECI PIENT OF ACCOMMODATION ENTRIES IN FORM OF SHARE APPLICATION MONEY/SHARE CAPITAL/SHARE PREMIUM, NOTICE UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT WAS ISSUED AND SERVED ON 25 TH MARCH, 2009 .. 7. SUMMONS UNDER SECTION 131 OF THE ACT WERE SENT T O THE ALLEGED SHAREHOLDERS AND THEY WERE ASKED TO FURNISH DETAILS ON 10 TH DECEMBER, 2009. DIRECTORS/PRINCIPAL OFFICERS WERE REQUIRED TO PERSONALLY COME AND DEPOS E. THE SUMMONSES, AS PER THE ASSESSMENT ORDER, WERE RECEIVED BACK UNSERVED. AT T HE SAME TIME, THE ASSESSEE FILED DETAILS AND CONFIRMATIONS OF THE ALLEGED SHARE CAPI TAL. EARLIER ON 8 TH DECEMBER, 2009, A DETAILED SHOW CAUSE NOTICE WAS ISSUED, FIXING THE HEARING ON 14 TH DECEMBER, 2009. THE ASSESSEE WAS ASKED TO PRODUCE THE SHAREHOLDERS ALONG WITH THEIR BOOKS OF ACCOUNTS TO SUBSTANTIATE ITS CLAIM OF GENUINENESS O F THE CASH CREDITS. IN FACT ON 10 TH DECEMBER, 2009, AUTHORIZED REPRESENTATIVE HAD APPEA RED AND HE WAS APPRISED THAT 63 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. THE SUMMONS ISSUED TO THE SHAREHOLDERS UNDER SECTIO N 131 HAD BEEN RECEIVED BACK UNSERVED IN FIVE CASES AND HE WAS REQUESTED TO PROV IDE THE PRESENT POSTAL ADDRESS OF THE PARTIES. INTHEMEANWHILE, THE ASSESSING OFFICER MANAGED TO GET HOLD OF THE BANK STATEMENTS OF THE SHAREHOLDERS, WHO HAD ALLEGEDLY M ADE DEPOSITS BY WAY OF CHEQUES AND PAY ORDERS. THE ASSESSMENT ORDER SPECIFICALLY R ECORDS THAT HUGE CASH DEPOSITS IN LACS WERE BEING REGULARLY DEPOSITED IN THE SAID ACC OUNTS AND THEN PAY ORDERS/CHEQUES WERE ISSUED TO THE RESPONDENT ASSESSEE. 8. ON 14 TH DECEMBER, 2009, AUTHORIZED REPRESENTATIVE APPEARED AND STATED THAT THE ASSESSEE WAS UNABLE TO PRODUCE DIRECTORS OR PRINCIP AL OFFICERS OF THE SIX SHAREHOLDER COMPANIES PLEADING THAT THEY WERE NOT SHAREHOLDERS NOW AND SEVEN YEARS HAD PASSED SINCE THE TRANSACTIONS TOOK PLACE. THE ASSESSMENT O RDER RECORDS AND MENTIONS ABOUT THE TRANSACTIONS RECORDED IN THE BANK ACCOUNTS OF T HE SHAREHOLDER/ENTRY OPERATOR COMPANIES TO SHOW AND ESTABLISH THAT THERE WAS IMME DIATE DEPOSIT OF CASH AND THEN ISSUE OF CHEQUES. IT WAS FURTHER MENTIONED THAT THE SE COMPANIES WERE UNDER CONTROL OF ONE MAHESH GARG AND HIS GROUP, WHO WERE OPERATING V ARIOUS ACCOUNTS. THE ASSESSING OFFICER MADE ADDITION OF RS.54,00,000/- U NDER SECTION 68 OF THE ACT AND RS.1,08,000/- AS COMMISSION PAID FOR PROCURING THE SAID SHARES BEING 2% OF RS.54,00,000/-. ................................................... ................................................... .............. .. 11. WE HAVE HEARD THE SENIOR STANDING COUNSEL FOR T HE REVENUE, WHO HAS RELIED UPON DECISIONS OF THE DELHI HIGH COURT IN COMMISSIONER O F INCOME TAX VS. NOVA PROMOTERS AND FINLEASE (P) LTD. [2012] 342 ITR 169 (DELHI), COMMISSIONER OF INCOME TAX VS. N.R. PORTFOLIO PVT. LTD., 206 (2014) DLT 97 (DB) (DEL) AND COMMISSIONER OF INCOME TAX-II VS. MAF ACADEMY P. LT D., 206 (2014) DLT 277 (DB) (DEL). THE AFORESAID DECISIONS MENTIONED ABOVE REFE R TO THE EARLIER DECISIONS OF DELHI HIGH COURT IN COMMISSIONER OF INCOME TAX VS. SOPHIA FINANCE LTD., [1994] 205 ITR 98 (FB)(DELHI), CIT VS. DIVINE LEASING AND FINANCE LIMITED [2008] 299 ITR 268 (DELHI) AND OBSERVATIONS OF THE SUPREME COURT IN CI T VS. LOVELY EXPORTS P. LTD. [2008] 319 ITR (ST.) 5 (SC). 12. THE MAIN SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT ONCE THE ASSESSEE HAD BEEN ABLE TO SHOW THAT THE SHARE HOLDE R COMPANIES WERE DULY INCORPORATED BY THE REGISTRAR OF COMPANIES, THEIR I DENTITY STOOD ESTABLISHED, GENUINENESS OF THE TRANSACTIONS STOOD ESTABLISHED A S PAYMENTS WERE MADE THROUGH ACCOUNTS PAYEE CHEQUES/BANK ACCOUNT; AND MERE DEPOS IT OF CASH IN THE BANK ACCOUNTS 64 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. PRIOR TO ISSUE OF CHEQUE/PAY ORDERS ETC. WOULD ONLY RAISE SUSPICION AND, IT WAS FOR THE ASSESSING OFFICER TO CONDUCT FURTHER INVESTIGATION, BUT IT DID NOT FOLLOW THAT THE MONEY BELONGED TO THE ASSESSEE AND WAS THEIR UNACCOUNTED MONEY, WHICH HAD BEEN CHANNELIZED. 13. AS WE PERCEIVE, THERE ARE TWO SETS OF JUDGMENTS AND CASES, BUT THESE JUDGMENTS AND CASES PROCEED ON THEIR OWN FACTS. IN ONE SET OF CASES, THE ASSESSEE PRODUCED NECESSARY DOCUMENTS/EVIDENCE TO SHOW AND ESTABLISH IDENTITY OF THE SHAREHOLDERS, BANK ACCOUNT FROM WHICH PAYMENT WAS MADE, THE FACT THAT PAYMENTS WERE RECEIVED THOROUGH BANKING CHANNELS, FILED NECESSARY AFFIDAVI TS OF THE SHAREHOLDERS OR CONFIRMATIONS OF THE DIRECTORS OF THE SHAREHOLDER C OMPANIES, BUT THEREAFTER NO FURTHER INQUIRIES WERE CONDUCTED. THE SECOND SET OF CASES A RE THOSE WHERE THERE WAS EVIDENCE AND MATERIAL TO SHOW THAT THE SHAREHOLDER COMPANY W AS ONLY A PAPER COMPANY HAVING NO SOURCE OF INCOME, BUT HAD MADE SUBSTANTIA L AND HUGE INVESTMENTS IN THE FORM OF SHARE APPLICATION MONEY. THE ASSESSING OFFI CER HAS REFERRED TO THE BANK STATEMENT, FINANCIAL POSITION OF THE RECIPIENT AND BENEFICIARY ASSESSEE AND SURROUNDING CIRCUMSTANCES. THE PRIMARY REQUIREMENTS , WHICH SHOULD BE SATISFIED IN SUCH CASES IS, IDENTIFICATION OF THE CREDITORS/SHAR EHOLDER, CREDITWORTHINESS OF CREDITORS/SHAREHOLDER AND GENUINENESS OF THE TRANSA CTION. THESE THREE REQUIREMENTS HAVE TO BE TESTED NOT SUPERFICIALLY BUT IN DEPTH HA VING REGARD TO THE HUMAN PROBABILITIES AND NORMAL COURSE OF HUMAN CONDUCT. 14. CERTIFICATE OF INCORPORATION, PAN NUMBER ETC. A RE RELEVANT FOR PURCHASE OF IDENTIFICATION, BUT HAVE THEIR LIMITATION WHEN THER E IS EVIDENCE AND MATERIAL TO SHOW THAT THE SUBSCRIBER WAS A PAPER COMPANY AND NOT A G ENUINE INVESTOR. IT IS IN THIS CONTEXT, THE SUPREME COURT IN CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) HAD OBSERVED:- NOW WE SHALL PROCEED TO EXAMINE THE VALIDITY OF TH OSE GROUNDS THAT APPEALED TO THE LEARNED JUDGES. IT IS TRUE THAT THE APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE RE ASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THO SE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOC UMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOC UMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES W ERE NOT REQUIRED TO PUT ON 65 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BE FORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS. 15. SUMMARIZING THE LEGAL POSITION IN NOVA PROMOTER S AND FINLEASE (P) LTD.(SUPRA), AND HIGHLIGHTING THE LEGAL EFFECT OF SECTION 68 OF THE ACT, THE DIVISION BENCH HAS HELD AS UNDER:- 32. THE TRIBUNAL ALSO ERRED IN LAW IN HOLDING ASSE SSING OFFICER OUGHT TO HAVE PROVED THAT THE MONIES EMANATED FROM THE COFFE RS OF THE ASSESSEE- COMPANY AND CAME BACK AS SHARE CAPITAL. SECTION 68 PERMITS THE ASSESSING OFFICER TO ADD THE CREDIT APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IF THE LATTER OFFERS NO EXPLANATION REGARDING THE NATU RE AND SOURCE OF THE CREDIT OR THE EXPLANATION OFFERED IS NOT SATISFACTORY. IT PLACES NO DUTY UPON HIM TO POINT TO THE SOURCE FROM WHICH THE MONEY WAS RECEIV ED BY THE ASSESSEE. IN A. GOVINDARAJULU MUDALIAR V CIT, (1958) 34 ITR 807, TH IS ARGUMENT ADVANCED BY THE ASSESSEE WAS REJECTED BY THE SUPREME COURT. VENKATARAMA IYER, J., SPEAKING FOR THE COURT OBSERVED AS UNDER (@ PAGE 81 0):- NOW THE CONTENTION OF THE APPELLANT IS THAT ASSUMI NG THAT HE HAD FAILED TO ESTABLISH THE CASE PUT FORWARD BY HIM, IT DOES NOT FOLLOW AS A MATTER OF LAW THAT THE AMOUNTS IN QUESTION WERE INCOME RECEIVED O R ACCRUED DURING THE PREVIOUS YEAR, THAT IT WAS THE DUTY OF THE DEPARTME NT TO ADDUCE EVIDENCE TO SHOW FROM WHAT SOURCE THE INCOME WAS DERIVED AND WH Y IT SHOULD BE TREATED AS CONCEALED INCOME. IN THE ABSENCE OF SUCH EVIDENC E, IT IS ARGUED, THE FINDING IS ERRONEOUS. WE ARE UNABLE TO AGREE. WHETH ER A RECEIPT IS TO BE TREATED AS INCOME OR NOT, MUST DEPEND VERY LARGELY ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IN THE PRESENT CASE THE RECEIPTS ARE SHOWN IN THE ACCOUNT BOOKS OF A FIRM OF WHICH THE APPELLANT AND GOVINDASWAMY MUDALIAR WERE PARTNERS. WHEN HE WAS CALLED UPON TO GIVE EXPL ANATION HE PUT FORWARD TWO EXPLANATIONS, ONE BEING A GIFT OF RS. 80,000 AN D THE OTHER BEING RECEIPT OF RS. 42,000 FROM BUSINESS OF WHICH HE CLAIMED TO BE THE REAL OWNER. WHEN BOTH THESE EXPLANATIONS WERE REJECTED, AS THEY HAVE BEEN IT WAS CLEARLY UPON TO THE INCOME-TAX OFFICER TO HOLD THAT THE INCOME M UST BE CONCEALED INCOME. THERE IS AMPLE AUTHORITY FOR THE POSITION THAT WHER E AN ASSESSEE FAILS TO PROVE SATISFACTORILY THE SOURCE AND NATURE OF CERTAIN AMO UNT OF CASH RECEIVED 66 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. DURING THE ACCOUNTING YEAR, THE INCOME-TAX OFFICER IS ENTITLED TO DRAW THE INFERENCE THAT THE RECEIPT ARE OF AN ASSESSABLE NAT URE. THE CONCLUSION TO WHICH THE APPELLATE TRIBUNAL CAME APPEARS TO US TO BE AMPLY WARRANTED BY THE FACTS OF THE CASE. THERE IS NO GROUND FOR INTER FERING WITH THAT FINDING, AND THESE APPEALS ARE ACCORDINGLY DISMISSED WITH COSTS. (EMPHASIS SUPPLIED) SECTION 68 RECOGNIZES THE AFORESAID LEGAL POSITION. THE VIEW TAKEN BY THE TRIBUNAL ON THE DUTY CAST ON THE ASSESSING OFFICER BY SECTION 68 IS CONTRARY TO THE LAW LAID DOWN BY THE SUPREME COURT IN THE JUDGM ENT CITED ABOVE. EVEN IF ONE WERE TO HOLD, ALBEIT ERRONEOUSLY AND WITHOUT BE ING AWARE OF THE LEGAL POSITION ADUMBRATED ABOVE, THAT THE ASSESSING OFFIC ER IS BOUND TO SHOW THAT THE SOURCE OF THE UNACCOUNTED MONIES WAS THE COFFER S OF THE ASSESSEE, WE ARE INCLINED TO THINK THAT IN THE FACTS OF THE PRESENT CASE SUCH PROOF HAS BEEN BROUGHT OUT BY THE ASSESSING OFFICER. THE STATEMENTS OF MUKESH GUPTA AND RAJANJASSAL, THE ENTRY PROVIDERS, EXPLAINING THEIR MODUS OPERANDI TO HELP ASSESSEES HAVING UNACCOUNTED MONIES CONVERT THE SA ME INTO ACCOUNTED MONIES AFFORDS SUFFICIENT MATERIAL ON THE BASIS OF WHICH THE ASSESSING OFFICER CAN BE SAID TO HAVE DISCHARGED THE DUTY. THE STATEM ENTS REFER TO THE PRACTICE OF TAKING CASH AND ISSUING CHEQUES IN THE GUISE OF SUBSCRIPTION TO SHARE CAPITAL, FOR A CONSIDERATION IN THE FORM OF COMMISS ION. AS ALREADY POINTED OUT, NAMES OF SEVERAL COMPANIES WHICH FIGURED IN TH E STATEMENTS GIVEN BY THE ABOVE PERSONS TO THE INVESTIGATION WING ALSO FIGURE D AS SHARE-APPLICANTS SUBSCRIBING TO THE SHARES OF THE ASSESSEE-COMPANY. THESE CONSTITUTE MATERIALS UPON WHICH ONE COULD REASONABLY COME TO THE CONCLUS ION THAT THE MONIES EMANATED FROM THE COFFERS OF THE ASSESSEE-COMPANY. THE TRIBUNAL, APART FROM ADOPTING AN ERRONEOUS LEGAL APPROACH, ALSO FAILED T O KEEP IN VIEW THE MATERIAL THAT WAS RELIED UPON BY THE ASSESSING OFFI CER. THE CIT (APPEALS) ALSO FELL INTO THE SAME ERROR. IF SUCH MATERIAL HAD BEEN KEPT IN VIEW, THE TRIBUNAL COULD NOT HAVE FAILED TO DRAW THE APPROPRI ATE INFERENCE. 16. IN THE SAID CASE, THE DIVISION BENCH HAD ALSO E XAMINED THE DECISION OF THE SUPREME COURT IN LOVELY EXPORTS P. LTD. (SUPRA) AND OTHER CASES IN WHICH THE ASSESSEE HAD SUCCEEDED. IT WAS NOTICED THAT IN THE CASE OF LOVELY EXPORTS P. LTD. AFFIDAVITS/CONFIRMATIONS OF SHAREHOLDERS WERE FILED AND INCOME TAX RECORD NUMBERS OF THE SHAREHOLDERS WERE MADE AVAILABLE, BUT THE ASSES SING OFFICER, WHO HAD SUFFICIENT TIME, FAILED TO CARRY OUT INQUIRY AND EXAMINATION. REFERENCE WAS MADE TO THE OBSERVATIONS IN DIVINE LEASING (SUPRA) TO THE EFFEC T THAT THERE CANNOT BE TWO OPINIONS 67 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. ON THE ASPECT THAT THE PERNICIOUS PRACTICE OF CONVE RSION OF UNACCOUNTED MONEY THROUGH THE MASQUERADE OR CHANNEL OF INVESTMENT AS SHARE CAPITAL MUST BE FIRMLY EXCORIATED BY THE REVENUE, BUT WHEN THERE IS PREPON DERANCE OF EVIDENCE TO SHOW ABSENCE OF CULPABILITY, THE ASSESSEE SHOULD NOT BE HARASSED BY THE REVENUE. A DELICATE BALANCE MUST BE MAINTAINED BETWEEN THE TWO INTEREST S. IN DIVINE LEASING (SUPRA), THE FOLLOWING PROPOSITION WAS ELUCIDATED:- IN THIS ANALYSIS, A DISTILLATION OF THE PRECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68 OF THE IT ACT. THE ASSESSED HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CR EDITOR/SUBSCRIBER; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDIT WORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER. (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS RE GISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE A SSESSED. (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADV ERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS T O RESPOND TO ITS NOTICES; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR /SUBSCRIBER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSED N OR SHOULD THE AO TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST THE ASSESSED. (7) THE ASSESSING OFFICER IS DUTY-BOUND TO INVESTIG ATE THE CREDITWORTHINESS OF THE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE TRAN SACTION AND THE VERACITY OF THE REPUDIATION. 17. NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) AF TER REFERRING TO THE DISMISSAL OF SLP AGAINST DIVINE LEASING CASE (SUPRA) OBSERVED AS UNDER:- SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR N AMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SH ARE APPLICATION FORMS AND SHARE HOLDERS REGISTER, SHARE TRANSFER REGISTER ET C. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THE N NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC.68 AND THE RE MEDY OPEN TO THE REVENUE 68 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE W ITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PR ESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF-CONFESSED ACCOMMODATION ENTRY PROVIDE RS, WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCO UNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AN D THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESEN T ONE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE ASSESSING OFFI CER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHORITI ES INTO THE ACTIVITIES OF SUCH ENTRY PROVIDERS. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE- MEDITATED PLAN A SMOKESCREEN CONCEIVED AND EXEC UTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A C ASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHAR GED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE ID ENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GEN UINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT B ACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE O RMATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WI THOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BE FORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD B E A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. 18. LOVELY EXPORTS PVT. LTD.(SUPRA) WAS ALSO CONSID ERED AND DISTINGUISHED IN N.R. PORTFOLIO PVT. LTD. (SUPRA) AND IT WAS HELD THAT TH E ENTIRE EVIDENCE AVAILABLE ON RECORD HAS TO BE CONSIDERED, AFTER RELYING UPON CIT VS. NIPUN BUILDERS AND DEVELOPERS, [2013] 350 ITR 407 (DELHI), WHEREIN IT HAS BEEN HELD THAT A REASONABLE APPROACH HAS TO BE ADOPTED AND WHETHER INITIAL ONUS STANDS DISCHARGED WOULD DEPEND UPON FACTS AND CIRCUMSTANCES OF EACH CASE. I N CASE OF PRIVATE LIMITED COMPANIES, GENERALLY PERSONS KNOWN TO DIRECTORS OR SHAREHOLDERS, DIRECTLY OR INDIRECTLY, BUY OR SUBSCRIBE TO SHARES. UPON RECEIP T OF MONEY, THE SHARE SUBSCRIBERS DO NOT LOSE TOUCH AND BECOME INCOMMUNICADO. CALL MO NEY, DIVIDENDS, WARRANTS, ETC. HAVE TO BE SENT AND THE RELATIONSHIP REMAINS A CONT INUING ONE. THEREFORE, AN ASSESSEE 69 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. CANNOT SIMPLY FURNISH SOME DETAILS AND REMAIN QUIET WHEN SUMMONS ISSUED TO SHAREHOLDERS REMAIN UN-SERVED AND UNCOMPLIED. AS A GENERAL PROPOSITION, IT WOULD BE IMPROPER TO UNIVERSALLY HOLD THAT THE ASSESSEE C ANNOT PLEAD THAT THEY HAD RECEIVED MONEY, BUT COULD DO NOTHING MORE AND IT WAS FOR THE ASSESSING OFFICER TO ENFORCE SHAREHOLDERS ATTENDANCE IN SPITE OF THE FACT THAT THE SHAREHOLDERS WERE MISSING AND NOT AVAILABLE. THEIR RELUCTANCE AND HIDING MAY REFL ECT ON THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. I T WOULD BE ALSO INCORRECT TO UNIVERSALLY STATE THAT AN INSPECTOR MUST BE SENT TO VERIFY THE SHAREHOLDERS/SUBSCRIBERS AT THE AVAILABLE ADDRESSES, THOUGH THIS MIGHT BE RE QUIRED IN SOME CASES. SIMILARLY, IT WOULD BE INCORRECT TO STATE THAT THE ASSESSING OFFI CER SHOULD ASCERTAIN AND GET ADDRESSES FROM THE REGISTRAR OF COMPANIES WEBSITE OR SEARCH FOR THE ADDRESSES OF SHAREHOLDERS THEMSELVES. CREDITWORTHINESS IS NOT PR OVED BY SHOWING ISSUE AND RECEIPT OF A CHEQUE OR BY FURNISHING A COPY OF STATEMENT OF BANK ACCOUNT, WHEN CIRCUMSTANCES REQUIRES THAT THERE SHOULD BE SOME MO RE EVIDENCE OF POSITIVE NATURE TO SHOW THAT THE SUBSCRIBERS HAD MADE GENUINE INVESTME NT OR HAD, ACTED AS ANGEL INVESTORS AFTER DUE DILIGENCE OR FOR PERSONAL REASO NS. THE FINAL CONCLUSION MUST BE PRAGMATIC AND PRACTICAL, WHICH TAKES INTO ACCOUNT H OLISTIC VIEW OF THE ENTIRE EVIDENCE INCLUDING THE DIFFICULTIES, WHICH THE ASSESSEE MAY FACE TO UNIMPEACHABLY ESTABLISH CREDITWORTHINESS OF THE SHAREHOLDERS. 19. IN N.R. PORTFOLIO PVT. LTD. (SUPRA), IT HAS BEE N HELD AS UNDER:- 18. IN THE REMAND REPORT, THE ASSESSING OFFICER RE FERRED TO THE PROVISIONS OF SECTION 68 OF THE ACTAND THEIR APPLICABILITY. THE W ORD IDENTITY AS DEFINED, IT WAS OBSERVED MEANT THE CONDITION OR FACT OF A PE RSON OR THING BEING THAT SPECIFIED UNIQUE PERSON OR THING. THE IDENTIFICATIO N OF THE PERSON WOULD INCLUDE THE PLACE OF WORK, THE STAFF, THE FACT THAT IT WAS ACTUALLY CARRYING ON BUSINESS AND RECOGNITION OF THE SAID COMPANY IN THE EYES OF PUBLIC. MERELY PRODUCING PAN NUMBER OR ASSESSMENT PARTICULARS DID NOT ESTABLISH THE IDENTITY OF THE PERSON. THE ACTUAL AND TRUE IDENTITY OF THE PERSON OR A COMPANY WAS THE BUSINESS UNDERTAKEN BY THEM. THIS A CCORDING TO US IS THE CORRECT AND TRUE LEGAL POSITION, AS IDENTITY, CREDI TWORTHINESS AND GENUINENESS HAVE TO BE ESTABLISHED. PAN NUMBERS ARE ALLOTTED ON THE BASIS OF APPLICATIONS WITHOUT ACTUAL DE FACTO VERIFICATION OF THE IDENTIT Y OR ASCERTAINING ACTIVE NATURE OF BUSINESS ACTIVITY. PAN IS A NUMBER WHICH IS ALLOTTED AND HELPS THE REVENUE KEEP TRACK OF THE TRANSACTIONS. PAN NUMBER IS RELEVANT BUT CANNOT 70 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. BE BLINDLY AND WITHOUT CONSIDERING SURROUNDING CIRC UMSTANCES TREATED AS SUFFICIENT TO DISCHARGE THE ONUS, EVEN WHEN PAYMENT IS THROUGH BANK ACCOUNT. 19. ON THE QUESTION OF CREDIT WORTHINESS AND GENUIN ENESS, IT WAS HIGHLIGHTED THAT THE MONEY NO DOUBT WAS RECEIVED THROUGH BANKIN G CHANNELS, BUT DID NOT REFLECT ACTUAL GENUINE BUSINESS ACTIVITY. THE SHARE SUBSCRIBERS DID NOT HAVE THEIR OWN PROFIT MAKING APPARATUS AND WERE NOT INVO LVED IN BUSINESS ACTIVITY. THEY MERELY ROTATED MONEY, WHICH WAS COMING THROUGH THE BANK ACCOUNTS, WHICH MEANS DEPOSITS BY WAY OF CASH AND ISSUE OF CH EQUES. THE BANK ACCOUNTS, THEREFORE, DID NOT REFLECT THEIR CREDITWO RTHINESS OR EVEN GENUINENESS OF THE TRANSACTION. THE BENEFICIARIES, INCLUDING THE RESPONDENT- ASSESSEE, DID NOT GIVE ANY SHARE-DIVIDEND OR INTERE ST TO THE SAID ENTRY OPERATORS/SUBSCRIBERS. THE PROFIT MOTIVE NORMAL IN CASE OF INVESTMENT WAS ENTIRELY ABSENT. IN THE PRESENT CASE, NO PROFIT OR DIVIDEND WAS DECLARED ON THE SHARES. ANY PERSON, WHO WOULD INVEST MONEY OR GIVE LOAN, WOULD CERTAINLY SEEK RETURN OR INCOME AS CONSIDERATION. THESE FACTS ARE NOT ADVERTED TO AND AS NOTICED BELOW ARE TRUE AND CORRECT. THEY ARE UND OUBTEDLY RELEVANT AND MATERIAL FACTS FOR ASCERTAINING CREDITWORTHINESS AN D GENUINENESS OF THE TRANSACTIONS. 30. WHAT WE PERCEIVE AND REGARD AS CORRECT POSITION OF LAW IS THAT THE COURT OR TRIBUNAL SHOULD BE CONVINCED ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ONUS TO PROVE THE THREE FACTUM IS ON THE ASSESSEE AS THE FACTS ARE WITHIN THE ASSESSEES KNO WLEDGE. MERE PRODUCTION OF INCORPORATION DETAILS, PAN NOS. OR THE FACT THAT TH IRDPERSONS OR COMPANY HAD FILED INCOME TAX DETAILS INCASE OF A PRIVATE LIMITE D COMPANY MAY NOT BE SUFFICIENT WHEN SURROUNDING AND ATTENDING FACTS PRE DICATE A COVER UP. THESE FACTS INDICATE AND REFLECT PROPER PAPER WORK OR DOC UMENTATION BUT GENUINENESS, CREDITWORTHINESS, IDENTITY ARE DEEPER AND OBTRUSIVE. COMPANIES NO DOUBT ARE ARTIFICIAL OR JURISTIC PERSONS BUT THE Y ARE SOULLESS AND ARE DEPENDENT UPON THE INDIVIDUALS BEHIND THEM WHO RUN AND MANAGE THE SAID COMPANIES. IT IS THE PERSONS BEHIND THE COMPANY WHO TAKE THE DECISIONS, CONTROLS AND MANAGE THEM. 20. NOW, WHEN WE GO TO THE ORDER OF THE TRIBUNAL IN THE PRESENT CASE, WE NOTICE THAT THE TRIBUNAL HAS MERELY REPRODUCED THE ORDER OF THE COMMISSIONER 71 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. OF INCOME TAX (APPEALS) AND UPHELD THE DELETION OF THE ADDITION. IN FACT, THEY SUBSTANTIALLY RELIED UPON AND QUOTED THE DECISION O F ITS COORDINATE BENCH IN THE CASE OF MAF ACADEMY P. LTD., A DECISION WHICH H AS BEEN OVERTURNED BY THE DELHI HIGH COURT VIDE ITS JUDGMENT IN C.I.T VS. MAF ACADEMY P.LTD [ (2014) 206 DLT 277). IN THE IMPUGNED ORDER IT IS AC CEPTED THAT THE ASSESSEE WAS UNABLE TO PRODUCE DIRECTORS AND PRINCIPAL OFFIC ERS OF THE SIX SHAREHOLDER COMPANIES AND ALSO THE FACT THAT AS PER THE INFORMA TION AND DETAILS COLLECTED BY THE ASSESSING OFFICER FROM THE CONCERNED BANK, T HE ASSESSING OFFICER HAS OBSERVED THAT THERE WERE GENUINE CONCERNS ABOUT IDE NTITY, CREDITWORTHINESS OF SHAREHOLDERS AS WELL AS GENUINENESS OF THE TRANSACT IONS. 21. IN VIEW OF THE AFORESAID DISCUSSION, WE FEEL TH AT THE MATTER REQUIRES AN ORDER OF REMIT TO THE TRIBUNAL FOR FRESH ADJUDICATION KEEPIN G IN VIEW THE AFORESAID CASE LAW. THE QUESTION OF LAW IS, THEREFORE, ANSWERED IN FAVO UR OF THE REVENUE AND AGAINST THE RESPONDENT-ASSESSEE, BUT WITH AN ORDER OF REMIT TO THE TRIBUNAL TO DECIDE THE WHOLE ISSUE AFRESH. AS REPORTED AT 2015-TIOL-314-SC-IT, IN THE ABOVE CA SE, THE HONBLE SUPREME COURT OBSERVED TO EFFECT THAT MERELY BECAUSE THE ASSESSE E HAS BEEN ABLE TO SHOW THAT THE SHAREHOLDER COMPANIES WERE DULY INCORPORATED AND TH EIR IDENTITY & GENUINENESS STANDS ESTABLISHED, THERE WERE DEPOSITS OF CASH IN THE BANK ACCOUNTS PRIOR TO ISSUE OF CHEQUE OR PAY ORDERS, THE SAME WOULD RAISE SUSPICIO N AND ADDITION CAN BE MADE ON SUCH ACCOUNT 5.7 IT MAY BE MENTIONED THAT AS REPORTED AT 2016-TI OL-207-SC-IT, THE HONBLE SUPREME COURT DISMISSED SLP BY RICK LUNSFORD TRADE & INVESTMENT LTD IN CASE OF RICK LUNSFORD TRADE & INVESTMENT LTD VS CIT UPHOLD ING THAT IT IS OPEN TO THE REVENUE DEPARTMENT TO MAKE ADDITION ON ACCOUNT OF A LLEGED SHARE CAPITAL U/S 68, WHERE THE ASSESSEE COMPANY HAS FAILED TO SHOW GENUI NENESS OF ITS SHAREHOLDERS. 5.8 HONBLE DELHI HIGH COURT IN CASE OF COMMISSIONE R OF INCOME TAX-II V/S MAF ACADEMY PVT. LTD. INVOLVING EXACTLY SIMILAR FAC TS IN ITA 341/2012 DATED 28 TH NOVEMBER, 2013 OBSERVED IN PARA 33 TO 36 AS UNDER: 33. THE ASSESSEE COMPANY IS A PRIVATE LIMITED COMPA NY AND HAD NOT COME OUT WITH ANY PUBLIC ISSUE NOR MADE ANY ADVERTISEMENT FO R ISSUANCE OF SHARE CAPITAL. HOWEVER, IN ONE YEAR THERE IS INFUSION OF SHARE CAPITAL INCLUDING PREMIUM OF RS.4,35,00,000/-, OUT OF WHICH ONLY RS.9 2,00,000/- WAS INFUSED 72 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. FROM THE DIRECTORS/FAMILY MEMBERS OF THE DIRECTORS. THE REMAINING SHARE CAPITAL HAD BEEN INFUSED FROM PARTIES WHICH WERE CO MPLETELY UNRELATED EITHER TO THE ASSESSEE OR TO ANY OF ITS DIRECTORS. IN A PR IVATE LIMITED COMPANY, NORMALLY THE INVESTMENT OF SHARES IS FROM PARTIES O R PERSONS WHO ARE FRIENDS OR RELATIVES OF PROMOTERS/DIRECTORS. 34. IT IS NOTICED THAT THE SHARES HAD FACE VALUE OF RS.100 /- AND WERE ALLOTTED AT A PREMIUM OF RS.100 /- TO RS.200/- AND WERE THEN SUBSEQUENTLY PURCHASED BY THE PROMOTERS/DIRECTORS, WHO HAD ORIGINALLY TRAN SFERRED THESE SHARES AT RS.35 /- PER SHARE. 35. IT IS REALLY SURPRISING THAT A PERSON WHO HAD P URCHASED SHARES AT A PREMIUM OF RS.100 /- TO RS.200/- PER SHARE I.E. AT A PRICE OF RS.200 /- TO RS.300/- PER SHARE, SOLD THE SHARES AT RS.35 /- PER SHARE I.E AT A SUBSTANTIAL LOSS. ANOTHER SURPRISING FACTOR IS THAT THE ENTIRE INVESTMENT HAPPENED DURING A SHORT SPAN OF TIME AND RE-TRANSFER OF THE SHARES TO THE FOUR PROMOTERS/DIRECTORS OF THE COMPANY AT RS.35 /- PER SHARE BY DIFFERENT PARTIES ALSO HAPPENED DURING A SHORT SPAN OF FEW DAYS. THE MODUS OPERANDI AND THE MANNER IN WHICH CASH IS DEPOSITED IN A BANK AND THE N UTILIZED BY WAY OF AN ACCOUNT PAYEE CHEQUE FOR PURCHASE OF SHARES FOR A P REMIUM OF RS.100 /- TO RS.200/- PER SHARE AND THEN THE SALE OF SHARES AT A LOSS CLEARLY ESTABLISHES THAT THE SAID TRANSACTION WAS A CAMOUFLAGE TRANSACT ION. THE ASSESSEE HAS CLEARLY ATTEMPTED TO CAMOUFLAGE THE ACCOMMODATION E NTRIES AND TRIED TO GIVE IT A COLOUR OF PURCHASE OF SHARE CAPITAL AND THEN S ALE OF THE SAME AT A LOSS. THUS THE ASSESSEE'S CAPITAL INCREASED OR WAS ENHANC ED BY A SUBSTANTIAL FIGURE THROUGH THESE DUBIOUS TRANSACTIONS. THIS SHOULD BE AND HAS TO BE CHECKED. 36. OUT OF RS.4.35 CRORES RECEIVED AS SHARE CAPITAL INCLUDING PREMIUM, ONLY RS.92 LACS HAS BEEN RECEIVED FROM THE DIRECTORS OR THEIR FAMILY MEMBERS AND THE REMAINING AMOUNT HAS BEEN RECEIVED FROM PARTIES TOTALLY UNRELATED TO THE ASSESSEE. NOTICES TO SOME OF THE INVESTORS COULD NO T BE SERVED AND EVEN THE INSPECTOR WHO WAS DEPUTED TO SERVE THE SUMMONS STAT ED THAT NONE OF THE ADDRESSES COULD BE FOUND. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE REFUSED TO PRODUCE THE PARTIES WHO HAD INVESTED IN THE SHARE CAPITAL ON THE GROUND THAT THEY WERE NOT IN A POSITION TO PRODUCE THEM. THE FACT THAT THE ASSESSEE FAILED TO PRODUCE THE PERSONS WHO HAD INVE STED TOWARDS SHARE CAPITAL SHOWS THAT THESE WERE PEOPLE WHO WERE COMPL ETELY UNRELATED TO THE ASSESSEE AND AS SUCH, ALL THE ENTRIES WERE MERELY A CCOMMODATION ENTRIES. OTHERWISE, IN A PRIVATE LIMITED COMPANY, IT WOULD N OT HAVE BEEN DIFFICULT ON 73 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. THE PART OF THE ASSESSEE TO PRODUCE PERSONS WHO WER E INVESTING SUBSTANTIAL AMOUNT OF MONEY IN THE COMPANY TOWARDS SHARE CAPITA L. 37. THE ASSESSING OFFICER IN HIS ORDER HAS AS A SAM PLE REFERRED TO THE ENTRIES IN THE ACCOUNT OF SOME OF THE SHARE HOLDERS NOTICIN G THAT THERE ARE CASH DEPOSITS OF THE EXACT AMOUNT FOR WHICH CHEQUE IS SU BSEQUENTLY ISSUED TO THE ASSESSEE. PERUSAL OF THE BANK STATEMENTS CLEARLY ES TABLISHES THAT THESE PARTIES WERE DEPOSITING CASH AND IMMEDIATELY EITHER ON THE SAME DAY OR IN THE NEAR FUTURE WITHDRAWING THE SAME THROUGH A CHEQUE WHICH WAS ISSUED IN FAVOUR OF THE ASSESSEE. THEN HONBLE DELHI HIGH COURT HELD IN PARA 53 TO 5 4 AS UNDER:- 53. IN CONTRAST TO THE ABOVE JUDGMENTS, IN THE PRES ENT CASE, THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IN THE FACTUAL MATRIX, WE HAVE HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE THE INITIAL ONUS AND HAS NOT BEEN ABLE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTION. THOUGH, IN OUR CONSIDERED OPINION, NONE OF THE ABOVE JUDGMENTS, REFERRED TO BY THE ASSESSEE RE SPONDENT, ARE APPLICABLE IN THE FACTS OF THE PRESENT CASE AND IN VIEW OF THE FINDINGS RECORDED BY US HEREINABOVE. 54. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT T HE ASSESSEE HAS NOT DISCHARGED THE ONUS SATISFACTORILY AND THE ADDITION S MADE BY THE ASSESSING OFFICER WERE JUSTIFIED AND SUSTAINABLE . 5.9 HONBLE INCOME TAX APPELLATE TRIBUNAL DELHI BEN CH: 'B IN CASE OF M/S. AMTRAC AUTOMOTIVE INDIA PVT. LTD. VERSUS ACIT, CIRC LE 1(1), INVOLVING EXACTLY SIMILAR FACTS IN THEIR APPELLATE ORDER ITA NO.2920/ DEL/09 FOR A.Y. 2005-06 DATED 31.12.2009 OBSERVED IN PARA 3 & THEN PARA 2 AS UNDE R:- 3. THE ASSESSEE COMPANY IS ENGAGED IN SHARE TRADING IN THE YEAR UNDER CONSIDERATION. IN THE COURSE OF SCRUTINY, THE ASSES SING OFFICER NOTED THAT THE APPELLANT HAS INTRODUCED FRESH SHARE CAPITAL TO THE TUNE OF RS. 15,00,000/- AT A SHARE PREMIUM OF RS. 1,35,00,000/-......... 2.1 THE AO ASKED THE APPELLANT TO FURNISH DETAIL S OF SUCH SHARE HOLDERS MENTIONING THEIR IDENTITY, GENUINENESS OF TRANSACTION AND CRED IT-WORTHINESS. APPELLANT PRODUCED 74 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. CONFIRMATION OF DEPOSIT FROM DIRECTORS OF THE RESPE CTIVE COMPANY, COPIES OF INCOME TAX RETURN FILED AND COPIES OF BANK STATEMENT REFLE CTING THE ABOVE TRANSACTIONS. IN ORDER TO VERIFY THE ENTIRE TRANSACTIONS IN THE ASST T. YEAR 2005-06 LIGHT OF GENUINENESS AND CREDITWORTHINESS, HE ISSUED SUMMONS U/S 131 OF THE ACT TO ALL THE ABOVE 15 PERSONS. THEY WERE ASKED TO PRODUCE THE COPIES OF RETURN FO R AY. 2005-06 AND THEIR LEDGER ACCOUNTS FROM WHICH THE SOURCE OF ABOVE SHAR E APPLICATION MONEY COULD HAVE BEEN VERIFIED. ALL THE ABOVE SUMMONS WERE RETURNED UNSERVED WITH THE COMMENTS FROM THE POSTAL AUTHORITIES AS 'NO SUCH PERSON IN T HE ABOVE ADDRESS'. THE AO ACCORDINGLY BROUGHT THIS FACT TO THE NOTICE OF THE COUNSEL OF THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 18.12.2007 AND HE WAS GIVEN AN OP PORTUNITY TO PRODUCE THE FUNCTIONAL DIRECTORS OF THE ABOVE COMPANIES FOR VER IFICATION. AS MENTIONED IN THE ASSESSMENT ORDER, AFTER CERTAIN ADJOURNMENTS, A LET TER WAS FINALLY FILED FROM THE APPELLANT MENTIONING THAT IT IS NO IN TOUCH OF THE ABOVE SHARE HOLDERS AND THEIR PRESENT WHEREABOUTS ARE NOT KNOWN TO IT. THE APPELL ANT, HOWEVER, RELYING UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SOPHIA FINANCE LTD. IN WHICH THE POWERS OF THE ASSESSING OFFICER WAS NOT PRECLUDED FROM MAKING ENQUIRIES IN SHARE APPLICATION MONEY, SUBMITTED THA T NO ADDITION CAN BE MADE. 2.1.1 THE AO HOWEVER WAS NOT CONVINCED WITH THE SUB MISSION OF THE APPELLANT. HE OBSERVED THAT THAT IT WAS ONLY IN THE COURSE OF ENQ UIRY THAT HE TRIED TO EXAMINE THE ABOVE SHARE APPLICANTS. SINCE THE SUMMONS ISSUED TO SUCH PERSONS REMAINED UNSERVED, IT BECAME THE DUTY OF THE APPELLANT EITHE R TO PRODUCE THEM FOR VERIFICATION OR TO STATE THEIR CORRECT ADDRESSES. IT APPEARS TO BE HIGHLY IMPROPER THAT IN A PRIVATE LTD. COMPANY, THE ASSESSEE IS NOT IN A POSITION TO STATE THE EXACT WHEREABOUTS OR FAIL TO PRODUCE THE PERSONS WHO COLLECTIVELY HOLD MORE T HAN 25% OF ITS TOTAL SHARE HOLDING. HE ALSO OBSERVED THAT MERE FILING OF ASSTT . YEAR 2005-06 CONFIRMATION LETTERS DO NOT ABSOLVE THE APPELLANT FROM ITS ONUS TO PROVE THE CREDIT ENTRIES REFLECTED IN ITS BOOKS OF ACCOUNTS AS HAS BEEN HELD BY HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. UNITED COMMERCIAL & INDUSTRIAL CO. (P) LTD .[1991] 187 ITR 596. HE FURTHER OBSERVED THAT THE FACTS THAT THE AMOUNT WER E PAID BY ACCOUNT PAYEE CHEQUES DO NOT MAKE IT SATISFACTORY AS HELD IN CIT VS. PRECISION FINANCE PVT. LTD. 208 ITR 465 (CAL.). EVEN INCOME -TAX FILE PARTICULARS, WHERE TH E SHARE HOLDER IS ASSESSED TO TAX IS NOT SUFFICIENT AS FOUND IN CIT VS. KORLAY TRADING CO. LTD . 232 ITR 820 (CAL.) 2.1.2 THE AO ALSO REFERRED THE ENQUIRY INITIATED BY INVESTIGATION WING OF THE DEPARTMENT IN AUGUST 2003 WHICH CULMINATED INTO DET ECTION OF MANY ENTRY OPERATORS WHO ARE OPERATING NUMBER OF ACCOUNTS IN THE SAME BA NK/BRANCH OR IN DIFFERENT BRANCHES, IN THE NAMES OF COMPANIES, FIRMS, PROPRIE TARY CONCERNS AND INDIVIDUALS. 75 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. FOR THE OPERATIONS OF THESE BANK ACCOUNTS, FILING I NCOME TAX RETURNS ETC. PERSONS ARE HIRED. LIKE ANY OTHER BUSINESS IT DOES REQUIRES MAN POWER ACCORDING TO THE SCALE OF OPERATION. EXCEPT FOR TWO OR THREE PERSONS WHO ARE REQUIRED REGULARLY TO VISIT BANKS AND DO OTHER SPADE WORK LIKE COLLECTION OF CASH ETC ., MOST OF THE OTHER PERSONS INVOLVED ARE ON PART TIME BASIS. THE PART TIME EMPL OYEES ARE CALLED AS AND WHEN REQUIRED TO SIGN DOCUMENTS, CHEQUE BOOKS ETC. SOME OF THE ENTRY OPERATORS HAVE ALSO ROPED IN THEIR OWN RELATIVES FOR OPERATION OF ENTRY ACCOUNTS AND FILING THE INCOME TAX RETURNS. INTERESTINGLY MOST OF THESE CONCERNS / IND IVIDUALS HAVE OBTAINED PAN FROM THE DEPARTMENT AND ARE FILING RETURNS AS WELL. WHAT IS SHOWN IN THE RETURNS IS NOT THE ACTUAL STATE OF AFFAIRS. FOR EXAMPLE WITH ONE PAN S EVERAL BANK ACCOUNTS ARE SIMULTANEOUSLY ASSTT. YEAR 2005-06 OPERATED AND ONL Y ONE ACCOUNT MIGHT BE SHOWN FOR THE PURPOSE OF AUDIT AND FILING INCOME TAX RETU RNS. THE ENTRY OPERATORS PROVIDE ENTRY IN THE GARB OF SHARE APPLICATION MONEY , GIFTS, LOANS ETC. THROUGH THESE ACCOUNTS, IN LIEU OF CASH, TO ANY PERSON WHO IS HAVING UNACCO UNTED MONEY. 2.1.2.1 THE AO OBSERVED THAT SOME OF THE COMPANIES SHOW ABOVE BY THE APPELLANT AS ITS SHARE HOLDERS WERE FOUND TO HAVE STATED BEFORE INVESTIGATION WING THAT THEY WERE MERE NAME LENDER FOR ADVANCING MONEY. TO QUOTE SOME OF THEM, SHRI RAJESH BANSAL, DIRECTOR OF M/S. RUBICON ASSOCIATES PVT. LTD., SHRI MAHESH GARG, DIRECTOR OF M/S. S.J. HOSIERY PVT. LTD. ETC. HAVE CATEGORICALLY STAT ED BEFORE THE INVESTIGATION WING, IN THEIR STATEMENT TAKEN ON OATH, THAT THEY USED TO TA KE THE AMOUNT IN CASH AND GIVE ENTRIES TO DIFFERENT CONCERNS AS GIFT, LOAN OR SHAR E APPLICATION MONEY. ACCORDING TO AO, TO ENQUIRE INTO THIS ASPECT ALSO, THE APPELLANT WAS ASKED TO PRODUCE THE FUNCTIONAL DIRECTORS OF SUCH SHARE HOLDERS. 2.1.3. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, TH E ASSESSING OFFICER CONCLUDED THAT THE CREDIT IN THE NAME OF THESE SHAREHOLDERS ARE NO T GENUINE AND REPRESENTS UNEXPLAINED CASH CREDITS. ACCORDINGLY HE MADE ADDIT ION OF RS. 1.50 LAKHS TO THE RETURNED INCOME. THEN HONBLE INCOME TAX APPELLATE TRIBUNAL DELHI BE NCH: 'B HELD IN PARA 6 AS UNDER: 6. AS REGARDS GROUND NO. 2, WE FIND THAT THE ASSESS EE HAS STATED TO HAVE RECEIVED FRESH SHARE CAPITAL TO THE TUNE OF RS. 15 LACS AND SHARE PREMIUM OF RS.1,00,35,000/- I.E. A SHARE OF FACE VALUE OF RS. 10/- EACH ISSUED AT A PREMIUM OF RS. 90/- TOTALING TO RS. 100/-. WHEN THE AO ASKED THE APPELLANT TO FURNI SH THE DETAILS THE ASSESSEE PRODUCED SHARE APPLICATION FORMS AND OTHER DETAILS LIKE BANK STATEMENT, COPY OF 76 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. ACKNOWLEDGMENT OF RETURN ETC. HOWEVER WHEN THE AO C ONDUCTED INQUIRY AT THE STATED ADDRESS, SUMMONS WERE RECEIVED BACK UNSERVED WITH T HE POSTAL REMARK 'NO SUCH PERSON IN THE ABOVE ADDRESS'. THIS FACT WAS ASSTT. YEAR 2005-06 BROUGHT TO THE NOTICE OF ASSESSEE ALSO. THEREAFTER THE ASSESSEE EXCEPT PR ODUCING THE PAPERS COULD NOT PROVE EXISTENCE OR AVAILABILITY OF THE RESPECTIVE SHARE A PPLICANTS. WHEN THE IDENTITY OF THE PERSON IS REQUIRED TO BE PROVED SO AS TO EXAMINE WH ETHER IN FACT THEY HAVE APPLIED FOR ALLOTMENT OF SHARES, THE EXISTENCE ITSELF IS NOT PR OVED. THE EXISTENCE OF A PERSON IS NOT MERELY ON PAPER. PARTICULARLY WHEN THE AO REQUIRED THE ASSESSEE TO PRODUCE THE SHARE APPLICANTS AND PARTICULARLY WHEN AT THE STATE D ADDRESS THE SHARE APPLICANTS DO NOT FOUND TO BE EXISTING, IT CANNOT BE SAID THAT TH E AMOUNT RECEIVED BY ASSESSEE IS PROVED TO BE TOWARDS SHARE CAPITAL. THE TRANSACTION CANNOT BE PROVED MERELY ON PAPER. NEITHER BEFORE AO NOR BEFORE LD. CIT (A) THE ASSESS EE COULD MAKE THE SHARE APPLICANTS AVAILABLE. THEREFORE WHEN THE IDENTITY OF THE PERSON ITSELF I S NOT PROVED, THE AMOUNT RECEIVED BY ASSESSEE CANNOT BE CONSIDERE D TO BE GENUINELY RECEIVED. 6.1. IT IS ALSO TO BE NOTED THAT THE ASSESSEE COMPA NY IS STATED TO HAVE ISSUED SHARES AT PREMIUM 9 TIMES ITS FACE VALUE. THE ASSESSEE IS A P RIVATE LIMITED COMPANY. IT HAS NOT ISSUED PROSPECTUS FOR ISSUE OF SHARES NOR UNDER THE COMPANIES ACT 1956, IT CAN INVITE THE PUBLIC TO APPLY FOR AND ALLOT THE SHARES. THE C OMPANY IS PROHIBITED FROM MAKING ANY INVITATION FOR ALLOTMENT OF SHARES. HOW THE PRE MIUM WAS FIXED IS NOT FORTH COMING. LOOKING TO THE BALANCE SHEET OR PAST HISTOR Y OF ASSESSEE, THE ASSESSEE COMPANY HAS NEVER DECLARED DIVIDEND IN THE PAST. TH E COMPANY HAS NO BUSINESS PLANS WHICH CAN RAISE ITS PROFITABILITY IN THE NEAR FUTUR E. THE INCOME DECLARED BY THE ASSESSEE IS ONLY BY WAY OF SHORT TERM CAPITAL GAIN AND THE ASSESSEE DO NOT SEEM TO HAVE CARRIED ON ANY BUSINESS. ASSTT. YEAR 2005-06 IN SUCH CIRCUMSTANCES THE SHARE PREMIUM IS NOT FOUND TO BE JUSTIFIED BY ANY OF THE ACT ON THE PART OF ASSESSEE . THESE FACTS ARE REVEALING MORE THAN THE APPARENT SHOWN ON THE PAPER. ALL THESE FACTS PU T TOGETHER REVEAL THAT NEITHER THE IDENTITY OF THE SHARE APPLICANTS ARE PROVED NOR JUSTIFICATION FOR SHARE PREMIUM HAS BEEN PROVED. IN SUCH CIRCUMSTANCES THE COURT CANNOT PUT BLINKER ON THE EYE AND LOOK ONLY AT THE PAPERS PRESENTED BEFORE IT. THERE IS SO METHING MORE THAN THAT MEETS THE EYE. AS RIGHTLY CONTENDED BY LD. DR IN SUCH SITUATI ON THE OBSERVATION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD M ORE 82 ITR 540 AND IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 801 ARE APT FOR APP LICATION. WE THEREFORE DO NOT FIND ANY REASON TO HOLD THAT THE SHARE CAPITAL RECE IPTS BY ASSESSEE WERE FROM PERSONS 77 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. WHOSE IDENTITY IS ESTABLISHED AND THE AMOUNT IS GEN UINELY RECEIVED TOWARDS SHARE CAPITAL. 5.10 IN A RECENT DECISION IN CASE OF PRINCIPAL COMM ISSIONER OF INCOME VS BIKRAM SINGH IN ITA 55/2017, THE HONBLE HIGH COURT OF DELHI HELD ON 25 AUGUST, 2017 AS UNDER:- 25. THE LAW APPLICABLE TO TRANSACTIONS OF THIS NATU RE IS WELL SETTLED BY THIS COURT IN DIVINE LEASING (SUPRA). BOTH PARTIES HAVE REFERRED TO AND RELIED UPON THIS JUDGMENT. THIS COURT, AFTER ANALYZING THE ENTIRE LAW ON THE S UBJECT IN THE CONTEXT OF SECTION 68 OF THE ACT, HELD AS UNDER: '...16. IN THIS ANALYSIS, A DISTILLATION OF THE PRE CEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68 OF THE IT ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CREDITOR/ SUBSCRIBER; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSM ITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER. (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS REGISTER, SHARED APPLICATION FORMS, SH ARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXP LANATION BY THE ASSESSEE. (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADV ERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND TO ITS NOTICES; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSEE NOR SHOULD THE AO TAKE SUCH REPUDIA TION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST THE ASSESEE. (7) THE ASSESSIN G OFFICER IS DUTY-BOUND TO INVESTIGATE THE CREDITWORTHINESS OF THE CREDITOR /S UBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION.... ' 26. IN DIVINE LEASING (SUPRA), ON THE QUESTION OF B URDEN OF PROOF, THE COURT RELIED UPON CIT V. MUSADDILAL RAM BHAROSE , (1987) 165 ITR 14, TO HOLD THAT THE INITIAL BURDEN IS UPON THE ASSESSEE TO SHOW THE ABSENCE OF FRAUD AND THIS IS NOT DISCHARGED BY THE ASSESSEE TENDERING AN INCREDIBLE AND FANTAST IC EXPLANATION. THE COURT ALSO HELD THAT EVERY EXPLANATION GIVEN BY THE ASSESSEE N EED NOT BE ACCEPTED. 27. IN KAMDHENU (SUPRA), THIS COURT CATEGORICALLY H ELD THAT THE INITIAL BURDEN LIES ON THE ASSESSEE TO ESTABLISH THE IDENTITY OF THE SHARE HOLDERS, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE SHAREHO LDERS. IT IS ONLY AFTER THE INITIAL 78 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. BURDEN IS DISCHARGED THAT THE ONUS SHIFTS TO THE RE VENUE. THIS COURT IN KAMDHENU (SUPRA) REFERRED TO CIT V. SOPHIA FINANCE , 205 ITR 98 WHICH HAD HELD TO THE SAME EFFECT. THE DIVINE LEASING (SUPRA) AND SOPHIA FINAN CE (SUPRA) JUDGMENTS WERE REITERATED BY THIS COURT IN DWARKADHISH (SUPRA). TH US, THE LAW IN RELATION TO SECTION 68 IS WELL SETTLED. ................................................... ................................................... ......................... 43. THE TRANSACTIONS IN THE PRESENT APPEAL ARE YET ANOTHER EXAMPLE OF THE CONSTANT USE OF THE DECEPTION OF LOAN ENTRIES TO BRING UNACC OUNTED MONEY INTO BANKING CHANNELS. THIS DEVICE OF LOAN ENTRIES CONTINUES TO PLAGUE THE LEGITIMATE ECONOMY OF OUR COUNTRY. AS SEEN FROM THE FACTS NARRATED ABOVE, THE TRANSACTIONS HEREIN CLEARLY DO NOT INSPIRE CONFIDENCE AS BEING GENUINE AND ARE SHR OUDED IN MYSTERY, AS TO WHY THE SO-CALLED CREDITORS WOULD LEND SUCH HUGE UNSECURED, INTEREST FREE LOANS - THAT TOO WITHOUT ANY AGREEMENT. IN THE ABSENCE OF THE SAME, THE CREDITORS FAIL THE TEST OF CREDITWORTHINESS AND THE TRANSACTIONS FAIL THE TEST OF GENUINENESS. 5.11 IN MY CONSIDERED VIEW, THE TECHNICAL OBJECTION S RAISED BY THE APPELLANT IN RESPECT OF LOAN FROM M/S JALSAGAR COMMERCE PVT. LTD. ARE OF NO AVAIL TO THE APPELLANT DUE TO FOLLOWING UNDISPUTED FACTS:- I. IT IS UNDISPUTED FACT THAT THE INCOME TAX DEPART MENT HAS MADE TREMENDOUS INVESTIGATIONS IN SUCH SHELL COMPANIES OF KOLKATA, MUMBAI AND DELHI PROVIDING ACCOMMODATION ENTRY AND STATEMENTS MADE BY SEVERAL ACCOMMODATION ENTRY PROVIDERS HAVE BECOME VIRTUALLY IN PUBLIC DOMAIN. IT IS NO ARGUMENT THAT THE AO DID NOT PROVIDE SUCH STATEMENT BEFORE THE ASSESSEMENT O R IN ANY OF THE NOTICES. THESE FACTS WERE WELL KNOWN TO THE APPELLANT GROUP AND IG NORANCE IS MERE PRETENCE. II. MOREOVER, SUCH STATEMENTS ARE SO VOCAL AND UNDE NIABLE THAT AS MENTIONED IN SOME OF THE CASE LAWS ABOVE, CROSS-EXAMINATION OF S UCH ACCOMMODATION ENTRY PROVIDES BY THOUSANDS OF BENEFICIARIES ACROSS INDIA IS NEITHER PRACTICABLE NOR VIABLE AND THEREFORE UNCALLED FOR. III. IT IS UNDISPUTED FACT THAT IN THE STATEMENT DA TED 06.02.2014 SHRI ANAND SHARMA HAD ADMITTED TO BE ONE OF SUCH ACCOMMODATION ENTRY PROVIDERS. THE SUM AND SUBSTANCE OF THE SAID STATEMENT IS THAT THE CONCERN M/S JALSAGAR COMMERCE PVT. LTD. WAS ENGAGED IN THE ACTIVITIES OF PROVIDING ACCOMMOD ATION ENTRIES AND THE APPELLANT HAPPENED TO BE ONE OF SUCH BENEFICIARY OF SUCH CONC ERN. IT IS ALSO ADMITTED FACT THAT SHRI ANAND SHARMA HAD BEEN RUNNING THE AFFAIR OF TH E SAID COMPANY. 79 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. V. THE STATEMENT OF SHRI ANAND SHARMA IN WHICH NAM E OF M/S JALSAGAR COMMERCE PVT. LTD. CANNOT BE COMPLETELY IGNORED SO LELY ON THE LEGAL GROUNDS RAISED BY THE APPELLANT. 5.12 IN VIEW OF ABOVE DISCUSSION, IT IS CLEAR THAT THE INCRIMINATING MATERIAL HAD BEEN FOUND DURING THE COURSE OF SEARCH OF ACCOMMODATION ENTRY PROVIDER. FURTHER INCRIMINATING MATERIAL HAD BEEN GATHERED BY ISSUING COMMISSION TO DDIT (IN V.) KOLKATA, DURING THE ASSESSMENT PROCEEDINGS AND ALL SUCH MATERIAL HAVE BEEN SHARED WITH THE APPELLANT AT LEAST DURING THE REMAND REPORT PROCEEDING. IN VIEW OF NATION-WIDE KN OWN SCAM BY THE ACCOMMODATION ENTRY PROVIDERS OF KOLKATA AND ELSEWHERE BURST BY THE INC OME TAX DEPARTMENT, THERE WAS NO NEED TO PROVIDE OPPORTUNITY FOR CROSS-EXAMINATION OF SAM E ACCOMMODATION ENTRY PROVIDERS. ANY WAY IN THE REJOINDER SUBMISSION TO REMAND REPORT TH E APPELLANT IS ABSOLUTELY SILIENT ON CROSS- EXAMINATION AND BY SUCH CONDUCT HE HAS FORGONE HIS RIGHT TO CROSS-EXAMINE. THEREFORE, THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN FOLLOWED. A S DISCUSSED IN PRECEDING PARAS, UNDER THE FACTS AND CIRCUMSTANCE OF THE CASE, IT COULD NOT BE SAID THAT AO DID NOT FOLLOWED THE BINDING DECISION OF THE HONBLE SUPREME COURT AND THE HONB LE JURISDICTION COURT. THEREFORE, IN VIEW OF ABOVE FACTS DISCUSSED IN PARA 4.1 & 4.4.7, 5.1 T O 5.3 AND LEGAL POSITION APPRISED IN PARA 5.5 TO 5.11 ABOVE, IT IS HELD THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF UNSECURED LOANS AMOUNTING TO RS. 12,36,49,999/- FROM M/S JALSAGAR C OMMERCE PVT. LTD. SUSTAINABLE AND THE SAME IS CONFIRMED. THUS THE ADDITION WAS CONFIRMED BASED ON THE REPORT OF THE DDIT (INV.) KOLKATA. WE FIND THAT THE REPORT OF THE DDIT (INV.) KOLKATA IS ALSO BASED ON THE STATEMENTS OF VARIOUS PERSONS RECORDED DURING THEIR INVESTIGATION AND THE STATEMENT OF SHRI ANAND SHARMA WAS ALSO SENT ALONG WITH THE REPORT OF THE A O. THE LD. CIT (A) HAS CONFIRMED THE ADDITION BECAUSE OF THE REASON THAT T HE STATEMENT OF SHRI ANAND SHARMA WAS VERY MUCH IN THE POSSESSION OF THE AO WH O HAS ADMITTED IN HIS STATEMENT THAT M/S. JALSAGAR COMMERCE PVT. LTD. WAS ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRY. HOWEVER, WE FIND TH AT M/S. JALSAGAR COMMERCE PVT. LTD IS NOT MANAGED OR CONTROLLED BY SHRI ANAND SHARMA, RATHER THE COMPANY M/S. ROYAL CRYSTAL DEALERS PVT. LTD. WAS STATED TO HAVE BEEN OWNED BY SHRI ANAND SHARMA AND IN HIS STATEMENT DATED 6 TH FEBRUARY, 2014 SHRI ANAND SHARMA HAS STATED TO HAVE BEEN PROVIDING ENTRIES FROM M/S. ROYAL CRYS TAL DEALERS PVT. LTD. TO M/S. JALSAGAR COMMERCE PVT. LTD. THEREFORE, THERE IS NO ALLEGATION OR ANY ADMISSION IN THE STATEMENT OF SHRI ANAND SHARMA THAT HE HAS PROV IDED BOGUS LOAN ENTRY TO THE 80 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. ASSESSEE OR ANY GROUP CONCERNS OF THE ASSESSEE. SI NCE THE NAME OF M/S. JALSAGAR COMMERCE WAS CREPTED IN HIS STATEMENT, THE AO HAS P RESUMED THAT THE LOAN PROVIDED BY M/S. JALSAGAR COMMERCE PVT LTD IS NOTHI NG BUT THE BOGUS ACCOMMODATION ENTRY PROVIDED BY SHRI ANAND SHARMA T HROUGH M/S. ROYAL CRYSTAL DEALERS PVT. LTD. THE AO HAS TRIED TO ESTABLISH TH E NEXUS OF THE LOAN RECEIVED BY THE ASSESSEE THROUGH THE STATEMENT OF SHRI ANAND SHARMA WHERE HE HAS PURPORTED TO HAVE PROVIDED THE ALLEGED ENTRY. SINCE THERE IS NO DIRECT ALLEGATION OR ADMISSION OF PROVIDING LOAN BY SHRI ANAND SHARMA TO THE ASSESSEE THROUGH M/S.ROYAL CRYSTAL DEALERS PVT. LTD., THEN EVEN IF THERE IS A POSSIBIL ITY OF BOGUS ACCOMMODATION ENTRY ROUTED THROUGH ANOTHER INTERMEDIARY COMPANY M/S.JAL SAGAR COMMERCE PVT. LTD., IT REQUIRES A DEFINITE LINK OF THE TRANSACTIONS FROM M /S.ROYAL CRYSTAL DEALERS PVT. LTD. TO M/S.JALSAGAR COMMERCE PVT. LTD. AND THEN THE LOAN T O THE ASSESSEE. ONCE THE CHAIN OF TRANSACTIONS AND FLOW OF MONEY FROM ONE ENTITY T O ANOTHER ENTITY AND FINALLY TO THE ASSESSEE HAS NOT BEEN ESTABLISHED, THEN THE ADDITIO N MADE MERELY ON SUSPICION, HOW SO STRONG IT MAY BE, IS NOT SUSTAINABLE. ON THE CO NTRARY, WHEN THE ASSESSEE PRODUCED ALL THE RELEVANT RECORD WHICH CONTAINS THE IR FINANCIAL STATEMENTS, BANK ACCOUNTS STATEMENT OF LOAN CREDITOR, RETURN OF INCO ME, ASSESSMENT ORDERS FRAMED UNDER SECTION 143(3), CONFIRMATION OF THE LOAN CRED ITOR, THEN A PROPER EXAMINATION COULD HAVE VERY WELL ESTABLISHED THE LINK, IF ANY, IN PROVIDING THE ACCOMMODATION ENTRY FROM ONE ENTITY TO ANOTHER AND FINALLY TO THE ASSESSEE. HOWEVER, NO SUCH LINK WAS FOUND IN THE DOCUMENTS AND FINANCIAL STATEMENTS OF THESE COMPANIES, RATHER IN THE BANK ACCOUNT STATEMENT OF LOAN CREDITOR M/S. JA LSAGAR COMMERCE PVT. LTD. THERE WAS NO SUSPICIOUS TRANSACTION OF RECEIVING ANY ENTR Y OR ANY DEPOSIT OF AN EQUAL AMOUNT PRIOR TO GIVING THE LOAN TO THE ASSESSEE. T HE ASSESSEE HAS PAID INTEREST TO THE CREDITOR, WHICH WAS DULY ACCEPTED BY THE AO AS BUSINESS EXPENDITURE. UNDISPUTEDLY, THE ASSESSEE HAS PRODUCED THE INCOME- TAX RECORD OF THE LOAN CREDITOR, BANK STATEMENT, FINANCIAL STATEMENTS INCLUDING BALA NCE SHEET, COPY OF ROC MASTER DATA SHOWING THE STATUS OF LOAN CREDITOR COMPANY AS ACTIVE, CONFIRMATION OF LOAN GIVEN TO THE ASSESSEE. FURTHER, THE AO ISSUED SUMM ONS AND ALSO GOT THE SUMMONS SERVED THROUGH DDIT KOLKATA UNDER SECTION 131 OF TH E IT ACT WHICH WERE DULY RESPONDED BY THE LOAN CREDITOR. EXCEPT THE STATEMEN T OF SHRI ANAND SHARMA AND THE REPORT OF THE INVESTIGATION WING KOLKATA, THE AO HA S NOT BROUGHT ON RECORD ANY OTHER MATERIAL TO CONTROVERT OR DISPROVE THE DOCUME NTARY EVIDENCE PRODUCED BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE LOAN CR EDITOR WAS ASSESSED TO TAX AND THE 81 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. AO COMPLETED THE ASSESSMENT UNDER SECTION 143 (3) F OR VARIOUS ASSESSMENT YEARS WHICH ARE RELEVANT FOR THE ASSESSMENT YEAR UNDER CO NSIDERATION. THE AO IN CASE OF LOAN CREDITOR HAS NOT DISTURBED THE TRANSACTIONS OF LOAN GIVEN BY THIS COMPANY TO THE ASSESSEE. FROM THE FINANCIAL STATEMENTS OF THE L OAN CREDITOR IT IS APPARENT THAT THE LOAN CREDITOR WAS HAVING SUFFICIENT FUNDS TO ADVANC E THE LOAN AMOUNT TO THE ASSESSEE AND ONCE THE SAID FINANCIAL STATEMENTS WERE NOT DIS TURBED, THEN THE CREDITWORTHINESS OF THE LOAN CREDITOR CANNOT BE DOUBTED WHEN IT WAS ACCEPTED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE IT ACT. W E FURTHER NOTE THAT THE AO INSISTED THE ASSESSEE TO PRODUCE THE DIRECTORS OF T HE LOAN PROVIDER COMPANY. THE ASSESEE PRODUCED THE AFFIDAVIT, AND THE NOTICES ISS UED BY THE AO UNDER SECTION 131 AND 133(6) OF THE ACT WERE DULY COMPLIED WITH BY TH E CREDITOR. THE STATEMENT OF THE DIRECTOR OF M/S. ROYAL CRYSTAL DEALERS PVT. LTD. WA S ALSO RECORDED BY THE AO WHEREIN THE DIRECTOR HAS CONFIRMED THE TRANSACTION OF LOAN. THERE ARE VARIOUS REPORTS OF THE DDIT KOLKATA WHICH ARE PLACED AT PAGES 406 TO 422 O F THE PAPER BOOK. WE FIND THAT ALL THESE REPORTS ARE BASED ON THE STATEMENTS RECOR DED DURING THE INVESTIGATION BUT NO DOCUMENTARY EVIDENCE WAS EITHER GATHERED OR HAS BEEN REFERRED IN THESE REPORTS. THEREFORE, EVEN IF THESE REPORTS ARE TO BE TAKEN IN TO CONSIDERATION, THESE ARE NOTHING BUT NARRATION OF THE STATEMENTS OF VARIOUS PERSONS TAKEN DURING THE INVESTIGATION. IT IS WELL SETTLED PRINCIPLE AS WELL AS THE DIRECTIONS OF THE CBDT ISSUED UNDER THE CIRCULARS THAT DURING THE COURSE OF INVESTIGATION, THE DEPARTMENT SHOULD CONCENTRATE AND FOCUS ON COLLECTING DOCUMENTARY EVIDENCE DISCLO SING UNDISCLOSED INCOME INSTEAD OF OBTAINING THE STATEMENT AND THEN SUPPORT OF THEI R CLAIM MERELY ON THE BASIS OF THE STATEMENT. THEREFORE, THE STATEMENTS RECORDED BY T HE DDIT KOLKATA ARE ALSO NOT BASED ON ANY DOCUMENTARY EVIDENCE SO AS TO HAVE AN EVIDENTIARY VALUE FOR SUSTAINING THE ADDITIONS MADE BY THE AO. THE ENTIR E REPORT OF THE INVESTIGATION WING IS BASED ON STATEMENTS RECORDED DURING SURVEY AND SEARCH. ONCE THE ASSESSEE HAS PRODUCED THE DOCUMENTARY EVIDENCE AND PARTICULA RLY THE FINANCIAL STATEMENTS OF THE LOAN CREDITORS, THEIR BANK ACCOUNT STATEMENT, T HEN IN THE ABSENCE OF ANY DISCREPANCY OR FAULT IN THESE FINANCIAL STATEMENTS OR IN THE BANK ACCOUNT STATEMENT TO REFLECT THAT THE TRANSACTIONS IN QUESTION ARE NO THING BUT BOGUS ACCOMMODATION ENTRIES, THE ADDITION MADE BY THE AO IS NOT SUSTAIN ABLE AS IT IS MERELY ON THE BASIS OF SURMISES AND CONJECTURES AND NOT ON ANY TANGIBLE MA TERIAL DISCLOSING THE NON- GENUINENESS OF THE TRANSACTIONS. THE AO HAS NOT DI SPUTED THE TRANSACTIONS ROUTED THROUGH BANKING CHANNEL HAVING SUFFICIENT FUNDS WHI CH IS ALSO SUPPORTED BY THE 82 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. FINANCIAL STATEMENTS AND FURTHER THE ASSESSMENTS OF THE LOAN CREDITOR WERE COMPLETED UNDER SECTION 143(3). THE DETAILS OF LOA NS TAKEN FROM M/S. JALSAGAR COMMERCE PVT. LTD., INTERESTS CREDITED/PAID AND REP AYMENT OF LOAN AMOUNT AS WELL AS CLOSING BALANCE ARE AS UNDER :- NAME OF COMPANY AY OPENING BALANCE LOAN TAKEN DURING THE YEAR INTEREST CREDITED IN LOAN A/C DURING THE YEAR INTEREST CREDITED IN INTEREST PAID /PAYABLE A/C LOAN REPAYMENT/ TDS/TRANSFER IN PARTNER CAPITAL DURING THE YEAR CLOSING BALANCE JALSAGAR COMMERCE PRIVATE LTD 10-11 41,298 34,70,40,000 13,96,176 12,56,558 34,21 ,15,916 51,05,000 JALSAGAR COMMERCE PRIVATE LTD 11-12 51,05,000 77,18,70,000 16,71,599 15,04,439 77 ,18,37,160 53,05,000 JALSAGAR COMMERCE PRIVATE LTD 12-13 53,05,000 78,95,00,000 1,07,08,434 96,37,591 31,72,80,655 47,85,95,188 JALSAGAR COMMERCE PRIVATE LTD 13-14 47,85,95,188 2,76,31,50,000 0 0 2,97,53,40,00 0 26,64,05,188 JALSAGAR COMMERCE PRIVATE LTD 14-15 26,64,05,188 97,34,50,000 0 0 1,24,03,55,188 (5,00,000) JALSAGAR COMMERCE PRIVATE LTD 15-16 0 1,34,89,00,000 49,00,600 44,10,540 1,34,93, 90,060 0 JALSAGAR COMMERCE PRIVATE LTD 16-17 0 87,11,00,000 1,67,23,178 1,50,50,860 87,27, 72,318 0 ALL THESE DETAILS WERE BEFORE THE AO AS ALL THESE A SSESSMENT YEARS WERE PASSED BY THE AO PURSUANT TO THE SEARCH AND SEIZURE ACTION UN DER SECTION 132 OF THE IT ACT. THUS IT IS CLEAR THAT FOR THE ASSESSMENT YEAR 2015- 16 THERE WAS NIL BALANCE ON ACCOUNT OF LOAN TAKEN FROM M/S. JALSAGAR COMMERCE P VT. LTD. AND THE ENTIRE LOAN WAS ALREADY REPAID BY THE ASSESSEE. WE FURTHER NOTE TH AT IT IS NOT THE CASE OF REPAYMENT OF LOAN AFTER THE SEARCH ACTION ON 2 ND JULY, 2015 BUT THERE IS A REGULAR REPAYMENT OF LOAN FOR EACH YEAR AS IT IS EVIDENT FROM THE DETAIL S REPRODUCED ABOVE. THEREFORE, THE TRANSACTIONS OF TAKING LOAN AND REPAYMENT CANNOT BE TREATED AS BOGUS ONCE THE ASSESSEE HAS BEEN REGULARLY REPAYING THE LOAN AMOUN T AND SMALL BALANCE WAS THERE AT THE END OF THE YEAR. ONCE THERE WAS NO BALANCE AT THE END OF THE YEAR ON THE LOAN ACCOUNT, THEN THE ADDITION CANNOT BE MADE BY T REATING THE LOAN TAKEN AND REPAID AS BOGUS TRANSACTION. APART FROM THESE FAC TS, THE ASSESSEE HAS ALSO MADE THE PAYMENT OF INTEREST WHICH WAS ALSO SUBJECTED TO TDS. THIS SHOWS THE GENUINENESS OF THE TRANSACTIONS AND ALL THESE TRANS ACTIONS HAVE TAKEN PLACE PRIOR TO THE DATE OF SEARCH AND DULY RECORDED IN THE BOOKS O F ACCOUNTS AND ALSO SUBJECTED TO ASSESSMENT UNDER SECTION 143(3) FOR SOME OF THE ASS ESSMENT YEARS. THEREFORE, EVEN AS PER THE EVIDENCE PRODUCED BY THE ASSESSEE, THE ALLEGED SUSPICION OF THE AO 83 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. WAS GOT DISPELLED AND IN THE ABSENCE OF ANY CONTRAR Y EVIDENCE EXCEPT THE STATEMENT WHICH IS NOT EVEN A CONCLUSIVE PROOF OF TRANSACTION OF BOGUS ENTRY TO THE ASSESSEE, THE ADDITIONS MADE BY THE AO ARE NOT SUSTAINABLE. 11.1. EVEN OTHERWISE, THE ASSESSMENT ORDER IS SOLEL Y BASED ON THE REPORT OF THE INVESTIGATION WING KOLKATA WHICH IN TURN IS NOTHING BUT THE NARRATION OF THE STATEMENTS RECORDED DURING THE INVESTIGATION AND TH E AO WAS HAVING IN POSSESSION THE STATEMENT OF ONLY SHRI ANAND SHARMA. THEREFORE, ALL THESE PROCEEDINGS CONDUCTED BY THE INVESTIGATION WING KOLKATA WERE AT THE BACK OF THE ASSESSEE AND HENCE THE STATEMENT WHICH IS THE FOUNDATION OF THE REPORT OF THE INVESTIGATION WING KOLKATA AS WELL AS THE ASSESSMENT ORDER CANNOT BE A CCEPTED IN THE ABSENCE OF GIVING AN OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE . WE FIND THAT THE ASSESSEE HAS INSISTED FOR CROSS EXAMINATION DURING THE ASSESSMEN T PROCEEDINGS AND FURTHER DURING THE APPELLATE PROCEEDINGS. THE LD.CIT(A) EVEN CALLE D FOR A REMAND REPORT AND DIRECTED THE AO TO ALLOW CROSS EXAMINATION TO THE A SSESSEE. HOWEVER, THE AO HAS EXPRESSED HIS INABILITY TO ALLOW THE ASSESSEE CROSS EXAMINATION OF THE WITNESSES DUE TO THE REASON THAT THE WITNESSES BELONG TO KOLKATA AND IT IS NOT POSSIBLE FOR AO TO MAKE SUCH ARRANGEMENT. THE LD. CIT(A) HAS FINALLY D ENIED THE CROSS EXAMINATION TO THE ASSESSEE BY GIVING HIS FINDING IN PARA 5.11 AT PAGE 188 ALREADY REPRODUCED IN THE EARLIER PART OF THIS ORDER AND, THEREFORE, THE ONLY REASON FOR DENIAL OF CROSS EXAMINATION BY THE LD.CIT(A) IS THAT THE STATEMENTS ARE SO VOCAL AND UNDENIABLE THAT CROSS EXAMINATION OF SUCH ACCOMMODATION ENTRY PROVI DED BY THOUSANDS OF BENEFICIARIES ACROSS INDIA IS NEITHER PRACTICABLE N OR VIABLE AND THEREFORE UNCALLED FOR. WE FIND THAT THE ASSESSEE HAS DEMANDED THE CROSS EX AMINATION ONLY IN RESPECT OF THE ALLEGED TRANSACTIONS OF LOANS AND NOT FOR THE E NTIRE BUSINESS OF THE ENTRY PROVIDERS PROVIDING THE BOGUS ENTRIES. UNDISPUTEDLY , THE STATEMENT OF SHRI ANAND SHARMA WAS RECORDED BY THE INVESTIGATION WING KOLKA TA AT THE BACK OF THE ASSESSEE, EVEN THE PROCEEDINGS BY THE INVESTIGATION WERE COND UCTED AT THE BACK OF THE ASSESSEE, THEREFORE, THE SAID STATEMENT OF SHRI ANA ND SHARMA CANNOT BE THE SOLE BASIS OF ASSESSMENT WITHOUT GIVING AN OPPORTUNITY O F CROSS EXAMINATION TO THE ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE O F ANDAMAN TIMBER INDUSTRIES VS. CCE (SUPRA) WHILE DEALING WITH THE ISSUE OF VIOLATI ON OF PRINCIPLES OF NATURAL JUSTICE FOR NOT PROVIDING THE OPPORTUNITY OF CROSS EXAMINAT ION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED ON BY THE AO HAS HELD IN PAR A 6 TO 9 AS UNDER :- 84 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. 6. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS -EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND T HAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAI D TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AF ORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE T RIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL T O HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOS E DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. 7. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS -EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OFLEVY OF EXCIS E DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS.WITNESSES AT THE PRI CE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUBJECT-MATTER OF CROSS-EXAMINA TION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COU LD BE THE SUBJECT-MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME UP BEFORE THIS COURT IN CCE V. ANDAMAN TIMBER INDUSTRIES LTD., ORDER DATED 17.3.20 05 WAWS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DE CIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. 8. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WIT H THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW-CAUSE NOTICE. 9. WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. NO COSTS. ONCE THE ASSESSEE HAS DISPUTED THE CORRECTNESS OF T HE STATEMENT AND WANTED TO CROSS EXAMINE THE WITNESS WHICH WAS NOT GIVEN BY TH E AO AS WELL AS LD. CIT (A), THEN THE ORDERS PASSED BASED ON SUCH STATEMENT ARE NOT SUSTAINABLE IN LAW. THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. ASHWANI GUPTA, 322 ITR 396 (DELHI) WHILE DEALING WITH THE ISSUE OF NOT PROVIDING THE OPPORTU NITY TO CROSS EXAMINE THE WITNESSES HAS HELD IN PARA 5 TO 7 AS UNDER :- 5. SECONDLY, IN FACT, A RECTIFICATION APPLICATION BEI NG MA 264/DELHI/2008 UNDER SECTION 254(2) OF THE INCOME-TAX ACT, 1961 HAD BEEN FILED BY THE REVENUE BEFORE THE 85 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. SAID TRIBUNAL. IN THAT ALSO, IN PARAGRAPH ( G ) OF THE MISCELLANEOUS APPLICATION, THE REVENUE HAD SUBMITTED AS UNDER: '( G )BECAUSE, ALTHOUGH FINDINGS OF THE TRIBUNAL ARE FACTUALLY COR RECT BUT THE DECISION OF THE TRIBUNAL IS NOT ACCEPTABLE BECAUSE VIOLATION OF THE CANONS OF NATURAL JUSTICE IN ITSELF IS NOT FATAL ENOUGH SO AS TO JEOPARDIZE THE ENTIRE PROCEEDINGS. IN THE INTEREST OF JUSTICE, THE TRIBUNAL COULD HAVE SET ASIDE THE ASSESSMENT ORDER WITH THE LIMITED PURPOSE OF OFFERI NG ASSESSEE AN OPPORTUNITY TO CROSS-EXAMINE SHRI MANOJ AGGARWAL BEFORE COMPLET ING THE PROCEEDINGS.' [EMPHASIS SUPPLIED] 6. A READING OF THE SAID PARAGRAPH ( G ) MAKES IT CLEAR THAT THE REVENUE HAD ACCEPTED THE FINDINGS OF THE TRIBUNAL ON FACTS AS ALSO THE POSIT ION THAT THERE HAD BEEN A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. HOWEVER, THE REVENUE 'S PLEA WAS THAT THE VIOLATION OF PRINCIPLES OF NATURAL JUSTICE WAS NOT FATAL SO AS T O JEOPARDIZE THE ENTIRE PROCEEDINGS. THE SAID MISCELLANEOUS APPLICATION WAS ALSO REJECTE D BY THE TRIBUNAL BY ITS ORDER DATED 28-11-2008. 7. IN VIEW OF THE FOREGOING CIRCUMSTANCES, WE FEEL TH AT NO INTERFERENCE WITH THE IMPUGNED ORDER IS CALLED FOR. THE TRIBUNAL HAS CORR ECTLY UNDERSTOOD THE LAW AND APPLIED IT TO THE FACTS OF THE CASE. ONCE THERE IS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SEIZED MATERIAL IS NOT PROVIDED TO AN ASSESSEE NOR IS CROSS- EXAMINATION OF THE PERSON ON WHOSE STATEMENT THE AS SESSING OFFICER RELIES UPON, GRANTED, THEN, SUCH DEFICIENCIES WOULD AMOUNT TO A DENIAL OF OPPORTUNITY AND, CONSEQUENTLY, WOULD BE FATAL TO THE PROCEEDINGS. FO LLOWING APPROACH ADOPTED BY US IN SMC SHARE BROKERS LTD.'S CASE ( SUPRA ), WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED ORDER. NO SUBSTANTIAL QUESTION OF LAW ARIS ES FOR OUR CONSIDERATION. THUS THE HONBLE HIGH COURT HAS HELD THAT ONCE THER E IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SEIZED MATERIAL IS NOT PROVIDED TO THE ASSESSEE NOR IS CROSS EXAMINATION OF THE PERSON ON WHOSE STATEMENT THE AO RELIED UPON, GRANTED, THEN, SUCH DEFICIENCIES WOULD AMOUNT TO DENIAL OF O PPORTUNITY AND CONSEQUENTLY WOULD BE FATAL TO THE PROCEEDINGS. THE HONBLE BOM BAY HIGH COURT IN THE CASE OF H.R. MEHTA VS. ACIT, 387 ITR 561 (BOMBAY) HAS ALSO CONSIDERED THE ISSUE OF NOT PROVIDING OPPORTUNITY OF CROSS EXAMINATION IN PARA 11 TO 17 AS UNDER :- 11. WE HAVE THEREFORE PROCEEDED TO HEAR AND DECIDE THE MATTER UNASSISTED BY THE REVENUE. IN THE COURSE OF HIS SUBMISSIONS MR. TRALS HAWALA HAD PRESSED INTO SERVICE INTER ALIA THE DECISION OF THE CALCUTTA HIGH COURT IN MATHER & PLATT (INDIA) LTD. ( SUPRA ) AND SUBMITTED THAT MERELY BECAUSE A PERSON IS NOT FOUND AT AN ADDRESS AFTER SEVERAL YEARS IT CANNOT BE HELD THAT HE IS NO N EXISTENT AND THAT THE ASSESSEE HAD DISCHARGED HIS PRIMARY ONUS BY IDENTIFYING THE SOUR CE OF THE AMOUNT PAID. THE COURT OBSERVED THAT ONCE THE PRIMARY ONUS IS DISCHARGED, THE ONUS SHIFTED TO THE REVENUE TO VERIFY GENUINENESS OF THE TRANSACTION. IN THE PRESE NT CASE NO SUCH EFFORT WAS MADE BY THE REVENUE. WE FIND THAT IN S. HASTIMAL ( SUPRA ) THE MADRAS HIGH COURT OBSERVED THAT AFTER A LAPSE OF SEVERAL YEARS THE ASSESSEE SHOULD NOT BE PLACED UPON THE RACK AND CALLED UPON TO EXPLAIN NOT ONLY MERELY, THE ORIGIN AND SOURCE OF HIS CAPITAL CONTRIBUTION BUT THE ORIGIN OF ORIGIN AND THE SOURC E OF SOURCE AS WELL. IN YET ANOTHER CASE OF BAHRI BROTHERS (P) LTD. ( SUPRA ) THE DIVISION BENCH OF PATNA HIGH COURT 86 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. OBSERVED THAT WHERE THE ASSESSEE UPON WHOM THE INIT IAL BURDEN LIES, PRODUCES BANK CERTIFICATE TO ESTABLISH THAT THE TRANSACTION WAS C ARRIED OUT THROUGH ACCOUNT PAYEE CHEQUES THUS DISCLOSING THE IDENTITY OF THE CREDITO RS AS ALSO THE SOURCE OF INCOME, THE BURDEN SHIFTS ON TO THE DEPARTMENT AND THE DEPARTME NT CANNOT ADD THE CASH CREDITS TO HIS INCOME FROM UNDISCLOSED SOURCE. 12. THE HON'BLE SUPREME COURT IN NEMI CHAND KOTHARI ( SUPRA ) OBSERVED THAT IN ORDER TO ESTABLISH THE RECEIPT OF A CASH CREDIT, TH E ASSESSEE MUST SATISFY THREE CONDITIONS I.E. IDENTITY OF THE CREDITOR, GENUINENE SS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. IN THE INSTANT CA SE BY VIRTUE OF THE FACT THAT THE TRANSACTION WAS COMPLETED BY CHEQUE PAYMENTS, THE A PPELLANT HAS CONTENDED THAT IT HAD SATISFIED ALL THE THREE TESTS. 13. IN KISHANCHAND CHELLARAM ( SUPRA ) WHEREIN THE SUPREME COURT OBSERVED THAT THE REVENUE AUTHORITIES HAD NOT RECORDED THE STATEMENT OF THE MANAGER OF THE BANK AND IT WAS DIFFICULT TO APPRECIATE AS TO WHY IT WAS NOT DO NE AND WHY THE MATTER WAS NOT PROBED FURTHER BY THE REVENUE. 14. THE DELHI HIGH COURT IN ASHWANI GUPTA ( SUPRA )HELD THAT ONCE THERE IS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE INASMUCH AS WH EN ITS SEIZED MATERIAL WAS NOT PROVIDED TO AN ASSESSEE NOR WAS HE PERMITTED TO CRO SS EXAMINE A PERSON ON WHOSE STATEMENT THE ASSESSING OFFICER RELIED, IT WOULD AM OUNT TO DEFICIENCY, AMOUNTING TO A DENIAL OF OPPORTUNITY AND THEREFORE VIOLATION OF PR INCIPLES OF NATURAL JUSTICE. IN THAT CASE CIT (A) HAD DELETED ADDITION MADE BY THE ASSES SING OFFICER SINCE THE ASSESSING OFFICER HAD FAILED TO PROVIDE COPIES OF SEIZED MATE RIAL TO THE ASSESSEE NOR HAD HE ALLOWED THE ASSESSEE TO CROSS-EXAMINE THE PARTY CON CERNED. THE DIVISION BENCH HELD THAT ONCE THERE IS VIOLATION OF THE PRINCIPLES OF N ATURAL JUSTICE INASMUCH AS SEIZED MATERIAL WAS NOT PROVIDED TO THE ASSESSEE NOR WAS G IVEN OPPORTUNITY OF CROSS EXAMINING THE PERSON WHOSE STATEMENT WAS BEING USED AGAINST THE ASSESSEE THE ORDER COULD NOT BE SUSTAINED. 15. IN ANDAMAN TIMBER INDUSTRIES ( SUPRA ) THE SUPREME COURT FOUND THAT THE ADJUDICATING AUTHORITY HAD NOT GRANTED AN OPPORTUNI TY TO THE ASSESSEE TO CROSS EXAMINE THE WITNESSES AND THE TRIBUNAL MERELY OBSER VED THAT THE CROSS EXAMINATION OF THE DEALERS IN THAT CASE, COULD NOT HAVE BROUGHT OU T ANY MATERIAL WHICH WOULD NOT OTHERWISE BE IN POSSESSION OF THE APPELLANT-ASSESSE E. THE SUPREME COURT SET ASIDE THE IMPUGNED ORDER AND OBSERVED THAT IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER O F THE CROSS EXAMINATION AND MAKE THE REMARKS SUCH AS WAS DONE IN THAT CASE. 16. IN THE INSTANT CASE ALTHOUGH THE APPELLANT ASSESSE E HAS CALLED UPON US TO DRAW AN INFERENCE THAT THE BURDEN SHIFTED TO THE REVENUE IN THE PRESENT CASE ONCE IT WAS ESTABLISHED THAT THE PAYMENTS WERE MADE AND REPAID BY CHEQUE WE NEED NOT HASTEN AND ADOPT THAT VIEW AFTER HAVING GIVEN OUR THOUGHT TO VARIOUS ISSUES RAISED AND THE DECISIONS CITED BY MR.TRALSHAWALLA AND FINDING THAT ON A VERY FUNDAMENTAL ASPECT, THE REVENUE WAS NOT JUSTIFIED IN MAKING ADDITION AT THE TIME OF REASSESSMENT WITHOUT HAVING FIRST GIVEN THE ASSESSEE AN OPPORTUNITY TO C ROSS EXAMINE THE DEPONENT ON THE STATEMENTS RELIED UPON BY THE ACIT. QUITE APART FRO M DENIAL OF AN OPPORTUNITY OF CROSS EXAMINATION, THE REVENUE DID NOT EVEN PROVIDE THE MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT SOUGHT TO CONCLUDE THAT THE LO AN WAS A BOGUS TRANSACTION. 17. IN OUR VIEW IN THE LIGHT OF THE FACT THAT THE MONI ES WERE ADVANCED APPARENTLY BY THE ACCOUNT PAYEE CHEQUE AND WAS REPAID VIDE ACCOUN T PAYEE CHEQUE THE LEAST THAT THE REVENUE SHOULD HAVE DONE WAS TO GRANT AN OPPORTUNIT Y TO THE ASSESSEE TO MEET THE CASE AGAINST HIM BY PROVIDING THE MATERIAL SOUGHT TO BE USED AGAINST ASSESSEE IN ARRIVING BEFORE PASSING THE ORDER OF REASSESSMENT. THIS NOT HAVING BEEN DONE, THE DENIAL OF 87 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. SUCH OPPORTUNITY GOES TO ROOT OF THE MATTER AND STR IKES AT THE VERY FOUNDATION OF THE REASSESSMENT AND THEREFORE RENDERS THE ORDERS PASSE D BY THE CIT (A) AND THE TRIBUNAL VULNERABLE. IN OUR VIEW THE ASSESSEE WAS BOUND TO B E PROVIDED WITH THE MATERIAL USED AGAINST HIM APART FROM BEING PERMITTING HIM TO CROS S EXAMINE THE DEPONENTS. DESPITE THE REQUEST DATED 15TH FEBRUARY, 1996 SEEKING AN OP PORTUNITY TO CROSS EXAMINE THE DEPONENT AND FURNISH THE ASSESSEE WITH COPIES OF ST ATEMENT AND DISCLOSE MATERIAL, THESE WERE DENIED TO HIM. IN THIS VIEW OF THE MATTE R WE ARE INCLINED TO ALLOW THE APPEAL ON THIS VERY ISSUE. THUS THE DENIAL OF OPPORTUNITY TO CROSS EXAMINE WAS CONSIDERED BY THE HONBLE HIGH COURT WHICH GOES TO THE ROOT OF THE MATTER AND STRI KES AT THE VERY FOUNDATION OF THE ASSESSMENT AND, THEREFORE, RENDERS THE ASSESSMENT O RDER PASSED BY THE AO NOT SUSTAINABLE. THE LD. A/R HAS SUBMITTED THAT COORDI NATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS. SHRI PRATEEK KOTHARI VIDE ORDER DA TED 16 TH DECEMBER, 2012 IN ITA NO. 159/JP/2016 HAS CONSIDERED THIS ISSUE IN PARA 2 .8 TO 2.11 AS UNDER :- 2.8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. THE TRANSACTION UNDER QUESTION RELATES TO UNSECURED LOANS TAKEN BY THE ASSESSEE AMOUNTING TO RS 1 CRORES FROM M/S MEHUL GEMS PVT LTD DURING THE IMPUNGED ASS ESSMENT YEAR AND NOT ACCEPTING THE SAID LOAN TRANSACTION AS A GE NUINE TRANSACTION BY THE ASSESSING OFFICER AND THE RESULTANT ADDITION MADE UNDER SECTION 68 OF THE ACT. UNDISPUTEDLY, THE PRIMARY ON US TO ESTABLISH GENUINENESS OF THE LOAN TRANSACTION IS ON THE ASSES SEE. IN THE INSTANT CASE, THE ASSESSEE HAS PROVIDED THE NECESSARY EXPLA NATION, FURNISHED DOCUMENTARY EVIDENCE IN TERMS OF TAX FILINGS, AFFID AVITS AND CONFIRMATION OF THE DIRECTORS, BANK STATEMENTS OF T HE LENDER, BALANCE SHEET OF THE LENDER COMPANY, AND AN INDEPENDENT CON FIRMATION HAS ALSO BEEN OBTAINED BY THE ASSESSING OFFICER TO SATI SFY THE CARDINAL TEST OF IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TH E LOAN TRANSACTION. HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY FI NDING IN RESPECT OF SUCH EXPLANATION, DOCUMENTARY EVIDENCE AS WELL AS I NDEPENDENT CONFIRMATION. APPARENTLY, THE REASON FOR NOT ACCEPT ING THE SAME IS THAT THE ASSESSING OFFICER WAS IN RECEIPT OF CERTAI N INFORMATION FROM THE INVESTIGATION WING OF THE TAX DEPARTMENT AS PER WHICH THE TRANSACTION UNDER CONSIDERATION IS A BOGUS LOAN TRA NSACTION. THE SAID INFORMATION RECEIVED FROM THE INVESTIGATION WI NG THUS OVERWEIGHED THE MIND OF THE ASSESSING OFFICER. THE ASSESSING OFFICER STATED THAT THE PRIMARY ONUS IS ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSACTION CLAIMED BY IT AND IF THE INVESTIGATION DONE BY THE DEPARTMENT LEADS TO DOUBT REGARDING THE GENUINENESS OF THE TRANSACTIONS, IT IS INCUMBENT ON THE ASSESSEE T O PRODUCE THE PARTIES ALONGWITH NECESSARY DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN RESPONSE, THE ASSESSEE SUBMI TTED THAT SHRI BHANWARLAL JAIN IS NOT KNOWN TO HIM AND REGARDING V ARIOUS INCRIMINATING DOCUMENTARY EVIDENCES SEIZED DURING T HE COURSE OF SEARCH AND STATEMENTS RECORDED OF SHRI BHANWARLAL J AIN AND OTHER PERSONS, HE SPECIFICALLY REQUESTED THE AO TO PROVID E COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENT OF ALL VARIOU S PERSONS 88 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. RECORDED IN THIS REGARD AND PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SUCH PERSONS. HOWEVER, THE AO DIDNT PROVIDE TO THE ASSESSEE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENTS OF VARIOUS PERSONS RECORDED AND ALLOW THE CROSS-EXAMIN ATION OF ANY OF THESE PERSONS. WHILE DOING SO, THE AO STATED THAT IN HIS STATEMENTS, BHANWARLAL JAIN HAD DESCRIBED THAT THEY ARE INDULGE D IN PROVIDING ACCOMMODATION ENTRIES OF BOGUS UNSECURED LOANS AND ADVANCES THROUGH VARIOUS BENAMI CONCERNS (70) OPERATED AND M ANAGED BY THEM. THIS ADMISSION AUTOMATICALLY MAKES ALL THE TR ANSACTIONS DONE BY THEM AS MERE PAPER TRANSACTIONS AND IN THESE CIR CUMSTANCES, FURTHER AS PER THE INFORMATION NAME AND ADDRESS OF ASSESSEE AND THE BENAMI CONCERN THROUGH WHICH ACCOMMODATION ENTRY OF UNSECURED LOANS WAS PROVIDED IS APPEARING IN THE LIST OF BENE FICIARIES TO WHOM THE SAID GROUP HAS PROVIDED. THIS ADMISSION IS SUFF ICIENT TO REJECT THE CONTENTIONS OF THE ASSEESSE. FURTHER, REGARDING CR OSS EXAMINATION, THE AO STATED THAT THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AND IT DEPENDS UPON THE CIRCUMSTANCES OF EACH CASE AND ALSO ON THE STATUTE CONCERNED. IN THE PRESENT CASE, NO SUCH CIRCUMSTANCES ARE WARRANTED AS IN THE LIST OF BENEFICIARIES TO WHOM A CCOMMODATION ENTRIES WERE PROVIDED BY THE SAID GROUP CATEGORICAL LY CONTAINS THE NAME AND ADDRESS OF THE ASSESSEE. FURTHER THE GROUP HAS CATEGORICALLY ADMITTED TO PROVIDING OF ACCOMMODATIO N ENTRIES OF UNSECURED LOANS THROUGH VARIOUS BENAMI CONCERNS. T HE AO FURTHER RELIED UPON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206(SC) AND HONBLE RAJASTHAN HIGH COURT IN CASE OF RAMESHWARLAL MALI VS. CIT 256 ITR 536(RAJ.) AMONG OTHERS. IN THIS REGARD, IT WAS SUBMITTED BY T HE ASSESSEE THAT IF THE ENTRIES AND MATERIAL ARE GATHERED BEHIND THE BA CK OF THE ASSESSEE AND IF THE AO PROPOSES TO ACT ON SUCH MATERIAL AS H E MIGHT HAVE GATHERED AS A RESULT OF HIS PRIVATE ENQUIRIES, HE M UST DISCLOSE ALL SUCH MATERIAL TO THE ASSESSEE AND ALSO ALLOW THE CROSS E XAMINATION AND IF THIS IS NOT DONE, THE PRINCIPLES OF NATURAL JUSTICE STAND VIOLATED. 2.9 IN LIGHT OF ABOVE DISCUSSIONS, IN OUR VIEW, TH E CRUX OF THE ISSUE AT HAND IS THAT WHETHER THE PRINCIPLE OF NATURAL JUSTI CE STAND VIOLATED IN THE INSTANT CASE. IN OTHER WORDS, WHERE THE AO DOES NT WANT TO ACCEPT THE EXPLANATION OF THE ASSESSEE AND THE DOCUMENTATI ON FURNISHED REGARDING THE GENUINENESS OF THE LOAN TRANSACTION A ND INSTEAD WANTS TO RELY UPON THE INFORMATION INDEPENDENTLY RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT IN RESPECT OF INVESTIGATION CARRIED OUT AT A THIRD PARTY, CAN THE SAID INFORMAT ION BE USED AGAINST THE ASSESSEE WITHOUT SHARING SUCH INFORMATION WITH THE ASSESSEE AND ALLOWING AN OPPORTUNITY TO THE ASSESSEE TO EXAMINE SUCH INFORMATION AND EXPLAIN ITS POSITION ESPECIALLY WHEN THE ASSESS EE HAS REQUESTED THE SAME TO THE ASSESSING OFFICER. 2.10 IN THIS REGARD, THE HONBLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT (1954) 26 ITR 775 (SC) (COPY AT CASE LAW PB 812-818) HAS HELD THAT THE RULE OF LAW ON THIS SUBJECT HAS BEEN FAIRLY AND RIGHTLY STATED BY THE LAHORE HIGH COURT IN THE CASE OF SETH GURMUKH SINQH WHERE IT WAS STATED THAT WHILE PROCEE DING UNDER SUB- SECTION (3) OF SECTION 23, THE INCOME-TAX OFFICER, THOUGH NOT BOUND TO RELY ON EVIDENCE PRODUCED BY THE ASSESSEE AS HE CON SIDERS TO BE FALSE, 89 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. YET IF HE PROPOSES TO MAKE AN ESTIMATE IN DISREGARD OF THAT EVIDENCE, HE SHOULD IN FAIRNESS DISCLOSE TO THE ASSESSEE THE MATERIAL ON WHICH HE IS GOING TO FIND THAT ESTIMATE; AND THAT IN CASE HE PROPOSES TO USE AGAINST THE ASSESSEE THE RESULT OF ANY PRIVATE INQU IRIES MADE BY HIM, HE MUST COMMUNICATE TO THE ASSESSEE THE SUBSTANCE O F THE INFORMATION SO PROPOSED TO BE UTILIZED TO SUCH AN E XTENT AS TO PUT THE ASSESSEE IN POSSESSION OF FULL PARTICULARS OF THE C ASE HE IS EXPECTED TO MEET AND THAT HE SHOULD FURTHER GIVE HIM AMPLE OPPO RTUNITY TO MEET IT. IT WAS HELD IN THAT CASE THAT IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNAL VIOLATED CERTAIN FUNDAMENTAL RULE S OF JUSTICE IN REACHING ITS CONCLUSIONS. FIRSTLY, IT DID NOT DISCL OSE TO THE ASSESSEE WHAT INFORMATION HAD BEEN SUPPLIED TO IT BY THE DEP ARTMENTAL REPRESENTATIVE. NEXT, IT DID NOT GIVE ANY OPPORTUNI TY TO THE COMPANY TO REBUT THE MATERIAL FURNISHED TO IT BY HIM, AND L ASTLY, IT DECLINED TO TAKE ALL THE MATERIAL THAT THE ASSESSEE WANTED TO P RODUCE IN SUPPORT OF ITS CASE. THE RESULT IS THAT THE ASSESSEE HAD NO T HAD A FAIR HEARING. THE HONBLE SUPREME COURT IN CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206 (SC) HAS HELD THAT THE ITO IS NOT BOUND BY ANY TECHNICAL RULES OF THE LAW OF EVIDENCE. IT IS OPEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY PRIVATE ENQUIRY. BUT, IF HE DESIRES TO USE THE MATERIAL SO COLLECTED, THE ASSESSEE MUST BE INF ORMED ABOUT THE MATERIAL AND GIVEN ADEQUATE OPPORTUNITY TO EXPLAIN IT. THE STATEMENTS MADE BY PRAVEEN JAIN AND GROUP WERE MATERIAL ON WHI CH THE IT AUTHORITIES COULD ACT PROVIDED THE MATERIAL WAS DIS CLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RENDER THEIR EXPLANA TION IN THAT REGARD. THE HONBLE SUPREME COURT IN CASE OF KISHINCHAND CH ELLARAM V. CIT (1980) 125 ITR 713 (SC) (COPY AT CASE LAW PB 585-591) HAS HELD THAT WHETHER THERE WAS ANY MATERIAL EVIDENCE TO JUSTIFY THE FINDINGS OF THE TRIBUNAL THAT THE AMOUNT OF RS. 1,0 7,350 SAID TO HAVE BEEN REMITTED BY TILOKCHAND FROM MADRAS REPRESENTED THE UNDISCLOSED INCOME OF THE ASSESSEE. THE ONLY EVIDEN CE ON WHICH THE TRIBUNAL COULD RELY FOR THE PURPOSE OF ARRIVING AT THIS FINDING WAS THE LETTER, DATED 18-2-1955 SAID TO HAVE BEEN ADDRESSED BY THE MANAGER OF THE BANK TO THE ITO. NOW IT IS DIFFICULT TO SEE HOW THIS LETTER COULD AT ALL BE RELIED UPON BY THE TRIBUNAL AS A MATERIAL PIECE OF EVIDENCE SUPPORTIVE OF ITS FINDING. IN THE FIRST PLACE, THIS LETTER WAS NOT DISCLOSED TO THE ASSESSEE BY THE ITO AND EVEN THOUG H THE AAC REPRODUCED AN EXTRACT FROM IT IN HIS ORDER, HE DID NOT CARE TO PRODUCE IT BEFORE THE ASSESSEE OR GIVE A COPY OF IT TO THE ASSESSEE. THE SAME POSITION OBTAINED ALSO BEFORE THE TRIBUNAL AND THE HIGH COURT AND IT WAS ONLY WHEN A SUPPLEMENTAL STATEMENT OF THE CASE WAS CALLED FOR BY THIS COURT BY ITS ORDER, DATED 16-8-1979 THAT, A CCORDING TO THE ITO, THIS LETTER WAS TRACED BY HIM AND EVEN THEN IT WAS NOT SHOWN BY HIM TO THE ASSESSEE BUT IT WAS FORWARDED TO THE TRI BUNAL AND IT WAS FOR THE FIRST TIME AT THE HEARING BEFORE THE TRIBUN AL IN REGARD TO THE PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CA SE THAT THIS LETTER WAS SHOWN TO THE ASSESSEE. IT WILL, THEREFORE, BE S EEN THAT, EVEN IF WE ASSUME THAT THIS LETTER WAS IN FACT ADDRESSED BY TH E MANAGER OF THE BANK TO THE ITO, NO RELIANCE COULD BE PLACED UPON I T, SINCE IT WAS NOT 90 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. SHOWN TO THE ASSESSEE UNTIL AT THE STAGE OF PREPARA TION OF THE SUPPLEMENTAL STATEMENT OF THE CASE AND NO OPPORTUNI TY TO CROSS EXAMINE THE MANAGER OF THE BANK COULD IN THE CIRCUM STANCES BE SOUGHT OR AVAILED OF BY THE ASSESSEE. IT IS TRUE TH AT THE PROCEEDINGS UNDER THE INCOME-TAX LAW ARE NOT GOVERNED BY THE ST RICT RULES OF EVIDENCE AND, THEREFORE, IT MIGHT BE SAID THAT EVEN WITHOUT CALLING THE MANAGER OF THE BANK IN EVIDENCE TO PROVE THIS LETTE R, IT COULD BE TAKEN INTO ACCOUNT AS EVIDENCE. BUT BEFORE THE INCOME-TAX AUTHORITIES COULD RELY UPON IT, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE STATEMENTS C ONTAINED IN IT BY ASKING FOR AN OPPORTUNITY TO CROSS EXAMINE THE MANA GER OF THE BANK WITH REFERENCE TO THE STATEMENTS MADE BY HIM. 2.11 IN LIGHT OF ABOVE PROPOSITION IN LAW AND ESPE CIALLY TAKING INTO CONSIDERATION THE DECISION OF THE HONBLE SUPREME C OURT IN CASE OF C. VASANTLAL & CO. (SUPRA) RELIED UPON BY THE REVEN UE AND WHICH ACTUALLY SUPPORTS THE CASE OF THE ASSESSEE, IN THE INSTANT CASE, THE ASSESSMENT WAS COMPLETED BY THE AO RELYING SOLELY O N THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, S TATEMENT RECORDED U/S 132(4) OF SHRI BHANWARLAL JAIN AND OTHERS, AND VARIOUS INCRIMINATING DOCUMENTARY EVIDENCE FOUND FROM THE S EARCH AND SEIZURE CARRIED OUT BY INVESTIGATION WING, MUMBAI O N THE SHRI BHANWARLAL JAIN GROUP ON 03.10.2013. IT REMAINS UND ISPUTED THAT THE ASSESSEE WAS NEVER PROVIDED COPIES OF SUCH INCRIMIN ATING DOCUMENTS AND STATEMENTS OF SHRI BHANWARLAL JAIN AND VARIOUS PERSONS AND AN OPPORTUNITY TO CROSS EXAMINE SUCH PERSONS THOUGH HE SPECIFICALLY ASKED FOR SUCH DOCUMENTS AND CROSS EXAMINATION. ON THE OTHER HAND, THE BURDEN WAS SOUGHT TO BE SHIFTED ON THE ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHARI, J AIPUR 21 ASSESSEE BY THE A.O. IT IS CLEAR CASE WHERE THE PRINCIPLE OF NATURAL JUSTICE STAND VIOLATED AND THE ADDITIONS MADE UNDER SECTION 68 THEREFORE ARE UNSUSTAINABLE IN THE EYE OF LAW AND WE HEREBY DELET E THE SAME. THE ORDER OF THE LD CIT(A) IS ACCORDINGLY CONFIRMED AND THE GROUND OF THE REVENUE IS DISMISSED. THUS WHEN THE ASSESSEE HAS SPECIFICALLY ASKED FOR C ROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON BY THE AO, THEN T HE DENIAL OF THE OPPORTUNITY TO CROSS EXAMINE WOULD CERTAINLY IN VIOLATION OF PRINC IPLES OF NATURAL JUSTICE AND CONSEQUENTLY RENDERS THE ASSESSMENT ORDER BASED ON SUCH STATEMENT AS NOT SUSTAINABLE IN LAW. HENCE IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE ASSESSEE HAS REPEATEDLY REQUESTED AND DEMANDED THE CROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON BY THE AO IN THE ASSESSMENT ORDER AND FURTHER THE REPORT OF THE DDIT INVESTIGATION KO LKATA IS ALSO BASED ON THE STATEMENT OF SUCH PERSON THEN THE DENIAL OF CROSS E XAMINATION BY THE AO AS WELL AS LD. CIT (A) DESPITE THE FACT THAT THE ASSESSEE WAS READY TO BEAR THE COST OF THE CROSS EXAMINATION OF THE WITNESSES IS A GROSS VIOLATION O F PRINCIPLES OF NATURAL JUSTICE. THUS THE ADDITIONS MADE BY THE AO ON THE BASIS OF SUCH S TATEMENT WITHOUT ANY TANGIBLE 91 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA. MATERIAL IS NOT SUSTAINABLE IN LAW AND LIABLE TO BE DELETED. ACCORDINGLY THE ADDITION MADE BY THE AO IS ALSO DELETED ON MERITS APART FROM THE LEGAL ISSUE DECIDED IN FAVOUR OF THE ASSESSEE. BOTH THE PARTIES HAVE FAIRLY ADMITTED THAT THE FACT AS WELL AS THE ISSUE IS IDENTICAL IN BOTH THE CASES. THEREFORE, IN VIEW OF OUR FINDING O N THIS ISSUE IN THE CASE OF KOTA DALL MILL (SUPRA), WE DECIDE THIS ISSUE IN FAVOUR O F THE ASSESSEE. 18. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMI SSED AND CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 11/01/2 019. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 11/01/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE DCIT, CENTRAL CIRCLE, KOTA. 2. THE RESPONDENT M/S. BARAN ROLLER FLOUR MILLS P VT. LTD., KOTA. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 1206(4) /JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 92 ITA NO. 1206(4)/JP/2018 M/S. BARAN ROLLER FLOUR MILLS PVT. LTD., KOTA.