M/S RAJASTHAN CABLE INDUSTRIES LIMITED, KOTA V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTA

ITA 1052/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0868 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 11-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Keywords: Unexplained cash credit; Gift; Business expenditure; Income from undisclosed sources; Search and seizure; Principle of natural justice; Opportunity of cross examination; Peak credit; Source of fund; Question of law; Tangible material; Corroborative evidences; Validity of assessment; Accommodation entries; Onus to prove; Bogus loan; Reason to believe; TDS; Set aside; Bogus
• Section: 131; 68; 132; 143(3); 153A; 133(6); 195; 207; 264; 254(2); 64; 43; 48; 73; 72; 13; 153; 119; 22; 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO , JM VK;DJ VIHY LA-@ ITA NO. 1121/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2015-16 M/S RAJASTHAN CABLE INDUSTRIES LIMITED, 4 AND 12, LARGE SCALE INDUSTRIAL AREA, KOTA. CUKE VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, ROOM NO. 212, 2 ND FLOOR, C.R. BUILDING, RAWAT BHATA ROAD, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCR 2599 G VIHYKFKHZ@ ASSESSEE IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 1189/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2016-17 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTA. CUKE VS. M/S RAJASTHAN CABLE INDUSTRIES PVT. LIMITED, 4 & 12, LARGE SCALE INDUSTRIAL AREA, KANSUA ROAD KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCR 2599 G VIHYKFKHZ@ ASSESSEE IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 1052/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2016-17 M/S RAJASTHAN CABLE INDUSTRIES LIMITED, 4 AND 12, LARGE SCALE INDUSTRIAL AREA, KOTA. CUKE VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, ROOM NO. 212, 2 ND FLOOR, C.R. BUILDING, RAWAT BHATA ROAD, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCR 2599 G VIHYKFKHZ@ ASSESSEE IZR;FKHZ@ RESPONDENT ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 2 FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (CA) & SHRI GULSHAN AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT-DR) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23/01/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 27/03/2019 VKNS'K@ ORDER PER: R.C. SHARMA,A.M. THESE ARE THE APPEALS AND CROSS APPEALS BY THE ASSE SSEE AND THE REVENUE FOR THE A.Y. 2015-16 AND 2016-17 RESPECTIVE LY AGAINST THE ORDER PASSED BY THE LD. CIT(A) IN THE MATTER OF ORDER PASS ED U/S 153A READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT). THE GROUNDS TAKEN IN THE APPEALS AND IN THE CROSS APPEA LS BY THE ASSESSEE AND REVENUE ARE AS UNDER: GROUNDS OF ASSESSEES APPEAL FOR THE A.Y. 2015-16 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ID. CIT (A) ERRED IN NOT DECLARING THE ASSESSMENT ORDER AS BAD IN LAW AND VOID AB INITIO. THE FINDINGS OF LD. CIT(A) IN THIS REGAR D ARE PERVERSE AND ERRONEOUS. IT IS CONTENDED THAT THE ID. AO PASSED T HE ASSESSMENT ORDER AGAINST THE DOCTRINE OF AUDI ALTERM PARTEM, VIOLATING THE PRINCIPLE OF NATURAL JUSTICE AND NOT GIVING THE OPP ORTUNITY OF CROSS EXAMINATION OF THE ALLEGED ACCOMMODATION ENTRY PROV IDERS, THEREFORE THE ASSESSMENT ORDER OUGHT TO HELD AS BAD IN LAW AN D DESERVES TO BE ANNULLED. 2. THAT THE ORDER OF THE ID CIT (A), CONFIRMING THE ADDITION MADE BY THE AO IS ARBITRARY, WHIMSICAL, CAPRICIOUS, PERVERSE, B ASED ON NO EVIDENCE OR IRRELEVANT MATERIAL OR IRRELEVANT EVIDENCE, AND AGAINST THE LAW AND FACTS OF THE CASE. THE ADDITION CONFIRMED BY LD.CIT (A) DESERVES TO BE DELETED. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 3 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ID. CIT (A) ERRED IN CONFIRMING THE ADDITIONS MADE U/S 68 O F THE INCOME TAX ACT, 1961 BY : - A) SOLELY RELYING ON THE STATEMENTS OF SOME ALLEGED ACCOMMODATION ENTRY PROVIDERS RECORDED BY SOME OTHE R AUTHORITIES IN SOME OTHER CASES/ACTIONS AND THE OPP ORTUNITY TO CROSS EXAMINATION WAS ALSO NOT PROVIDED TO ASSESSEE . B) GIVING A CONTRADICTORY FINDING THAT A DOUBT IS RAISED ON THE IDENTITY AND GENUINENESS OF THE COMPANY WHOSE NAME IS MENTIONED IN THE STATEMENT OF ACCOMMODATION ENTRY P ROVIDERS AS WELL AS REPORTS OF DDIT (INV.)-KOLKATTA. C) HOLDING THAT THE ASSESSEE HAS NOT ADDUCED ANY EV IDENCE TO REBUT THE ADVERSE FACTUAL FINDING MADE BY THE AO IN THE A SSESSMENT ORDER THOUGH DETAILED PAPER BOOK FOR RELEVANT AY AN D COMMON PAPER BOOKS HAVE BEEN SUBMITTED, AND D) HOLDING THAT INCRIMINATING MATERIAL HAD BEEN FOU ND DURING THE COURSE OF SEARCH OF ACCOMMODATION ENTRY PROVIDER. F URTHER INCRIMINATING MATERIAL HAD BEEN GATHERED BY ISSUING COMMISSION TO DDIT (INV.) KOLKATTA. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) ERRED IN CONFIRMATION THE ADDITION OF RS. 1,50,50,000/- MADE BY ID. AO U/S 68 OF INCOME TAX ACT, 1961 ON ACCOUNT OF UNSECURED LOANS TAKEN FROM FOLLOWING PARTIES AND ERRONEOUSLY HELD THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE U NDER MENTIONED COMPANY IS DOUBTFUL: - NAME OF THE COMPANY FROM WHOM LOAN RECEIVED ADDITION DURING THE YEAR AMOUNT NAME OF ALLEGED ENTRY OPERATOR WHOSE STATEMENT WERE RELIED JALSAGAR COMMERCE PVT. LTD 1,50,50,000 SHRI ANAND SHARMA 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ID. CIT(A) ERRED IN REJECTING THE THEORY OF PEAK CREDIT AND ERRED IN NOT ALLOWING THE BENEFIT OF TELESCOPING, RECYCLING AND ROTATION OF FUNDS. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 4 6. THE ASSESSEE PRAYS FOR LEAVE TO ADD, TO AMEND, T O DELETE, OR MODIFY THE ALL OR ANY GROUNDS OF APPEAL ON OR BEFORE THE H EARING OF APPEAL. GROUNDS OF REVENUES APPEAL FOR THE A.Y. 2016-17 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, I AM DIRECTED TO FILE AN APPEAL IN THE ABOVE MENTIONED CASE BEFORE THE HONB LE 1TAT, JAIPUR ON THE FOLLOWING GROUNDS. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 1,40,00,000/- MADE BY THE AO U/S 68 OF THE IT ACT ON ACCOUNT OF UNEXPL AINED UNSECURED LOANS ALLEGEDLY OBTAINED BY THE ASSESSEE FROM M/S C OMPETENT SECURITIES 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 UN SECURED LOANS BY OBSERVING THAT THE ALLEGED LENDER COMPANY M/S COMPE TENT SECURITIES PVT. LTD. IS NOT SHELL COMPANY WITHOUT CONSIDERING THE FINANCIAL STATEMENTS OF THIS COMPANY. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF UN SECURED LOANS ALLEGEDLY OBTAINED FROM M/S COMPETENT SECURITIES PV T. LTD. MERELY FOR THE REASON THAT EVIDENCES IN THE FORM OF STATEMENT ON OATH OF THE RELEVANT ENTRY OPERATORS WERE NOT AVAILABLE ON RECO RD. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF UN SECURED LOANS ALLEGEDLY OBTAINED FROM M/S COMPETENT SECURITIES PV T. LTD. DESPITE THE FACT THAT THE DIRECTOR OR PRINCIPAL OFFICER OF THIS COMPANY WAS NEVER PRODUCED BEFORE THE AO FOR EXAMINATION DESPIT E NUMBER OF OPPORTUNITIES PROVIDED BY THE AO FOR PRODUCING AND ALSO IGNORING THE FACT THAT THE ASSESSEE NEITHER EXPRESSED ITS INABIL ITY 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 UN SECURED LOANS ALLEGEDLY OBTAINED FROM M/S COMPETENT SECURITIES PV T. LTD. MERELY BY OBSERVING THAT THE ASSESSEE HAS COOPERATED IN ASSES SMENT BY SHOWING HIS WILLINGNESS TO PRODUCE THE DIRECTORS OF LENDER COMPANIES AND SOME DIRECTORS/OFFICERS WERE ALSO PRODUCED BEFORE THE AO DESPITE THE FACT ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 5 THAT EVEN THE DIRECTORS WHICH WERE PRODUCED BEFORE THE AO FAILED TO SUBSTANTIATE THE GENUINENESS OF THE ALLEGED TRANSAC TIONS. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE C1T(A) WAS JUSTIFIED IN DELETING THE ADDITION OF UN SECURED LOANS BY OBSERVING THAT THE ASSESSEE CANNOT BE FASTENED UPON THE BURDEN TO PRODUCE THE LENDERS BEFORE THE AO AND IN NOT CONSID ERING THE DECISION OF THE HONBLE SUPREME COURT IN NAVODAYA CASTLES (P ) LTD VS CIT(2015) 56 TAXMANN.COM 18(SC) WHEN THERE WERE GENUINE CONCE RNS OF THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE 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. GROUNDS OF ASSESSEES APPEAL FOR THE A.Y. 2016-17 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ID. CIT (A) ERRED IN NOT DECLARING THE ASSESSMENT ORDER AS BAD IN LAW AND VOID AB INITIO. THE FINDINGS OF LD. CIT(A) IN THIS REGAR D ARE PERVERSE AND ERRONEOUS. IT IS CONTENDED THAT THE ID. AO PASSED T HE ASSESSMENT ORDER AGAINST THE DOCTRINE OF AUDI ALTERM PARTEM, VIOLATING THE PRINCIPLE OF NATURAL JUSTICE AND NOT GIVING THE OPP ORTUNITY OF CROSS EXAMINATION OF THE ALLEGED ACCOMMODATION ENTRY PROV IDERS, THEREFORE THE ASSESSMENT ORDER OUGHT TO HELD AS BAD IN LAW AN D DESERVES TO BE ANNULLED. 2. THAT THE ORDER OF THE ID CIT (A), CONFIRMING THE ADDITION MADE BY THE AO IS ARBITRARY, WHIMSICAL, CAPRICIOUS, PERVERSE, B ASED ON NO EVIDENCE OR IRRELEVANT MATERIAL OR IRRELEVANT EVIDENCE, AND AGAINST THE LAW AND FACTS OF THE CASE. THE ADDITION CONFIRMED BY LD.CIT (A) DESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ID. CIT (A) ERRED IN CONFIRMING THE ADDITIONS MADE U/S 68 O F THE INCOME TAX ACT, 1961 BY : - A) SOLELY RELYING ON THE STATEMENTS OF SOME ALLEGED ACCOMMODATION ENTRY PROVIDERS RECORDED BY SOME OTHE R AUTHORITIES IN SOME OTHER CASES/ACTIONS AND THE OPP ORTUNITY TO CROSS EXAMINATION WAS ALSO NOT PROVIDED TO ASSESSEE . ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 6 B) GIVING A CONTRADICTORY FINDING THAT A DOUBT IS RAISED ON THE IDENTITY AND GENUINENESS OF THE COMPANY WHOSE NAME IS MENTIONED IN THE STATEMENT OF ACCOMMODATION ENTRY P ROVIDERS AS WELL AS REPORTS OF DDIT (INV.)-KOLKATTA. C) HOLDING THAT THE ASSESSEE HAS NOT ADDUCED ANY EV IDENCE TO REBUT THE ADVERSE FACTUAL FINDING MADE BY THE AO IN THE A SSESSMENT ORDER THOUGH DETAILED PAPER BOOK FOR RELEVANT AY AN D COMMON PAPER BOOKS HAVE BEEN SUBMITTED, AND D) HOLDING THAT INCRIMINATING MATERIAL HAD BEEN FOU ND DURING THE COURSE OF SEARCH OF ACCOMMODATION ENTRY PROVIDER. F URTHER INCRIMINATING MATERIAL HAD BEEN GATHERED BY ISSUING COMMISSION TO DDIT (INV.) KOLKATTA. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) ERRED IN CONFIRMATION THE ADDITION OF RS. 4,55,00,000/- MADE BY ID. AO U/S 68 OF INCOME TAX ACT, 1961 ON ACCOUNT OF UNSECURED LOANS TAKEN FROM FOLLOWING PARTIES AND ERRONEOUSLY HELD THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE U NDER MENTIONED COMPANY IS DOUBTFUL: - NAME OF THE COMPANY FROM WHOM LOAN RECEIVED ADDITION DURING THE YEAR AMOUNT NAME OF ALLEGED ENTRY OPERATOR WHOSE STATEMENT WERE RELIED JALSAGAR COMMERCE PVT. LTD 4,55,00,000 SHRI ANAND SHARMA 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ID. CIT(A) ERRED IN REJECTING THE THEORY OF PEAK CREDIT AND ERRED IN NOT ALLOWING THE BENEFIT OF TELESCOPING, RECYCLING AND ROTATION OF FUNDS. 6. THE ASSESSEE PRAYS FOR LEAVE TO ADD, TO AMEND, T O DELETE, OR MODIFY THE ALL OR ANY GROUNDS OF APPEAL ON OR BEFORE THE H EARING OF APPEAL. 2. AS THE COMMON GROUNDS ARE INVOLVED IN BOTH THE Y EARS UNDER CONSIDERATION, AS TAKEN BY THE ASSESSEE AND THE REV ENUE, THEREFORE ALL ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 7 THE APPEALS ARE BEING HEARD TOGETHER AND FOR THE SA KE OF CONVENIENCE, A COMPOSITE ORDER IS BEING PASSED. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSE E FROM 02.07.2015 TO 04.07.2015. IN COMPLIANCE TO NOTICE U/S 153A OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME ON 16/7/2016 FOR THE A.Y. 20 15-16 DECLARING TOTAL RETURN LOSS OF RS. 2,83,866/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAD RECEIVED UNSECURED LOAN FROM REGISTERED NBFC AND OT HER COMPANIES. THE AO ISSUED SHOW CAUSE NOTICE TO ASSESSEE, CONTENT S OF WHICH WERE REPRODUCED BY AO IN ASSESSMENT ORDER AT PAGE 5-17/A Y 2015-16. THE ASSESSEE FILED DETAILED REPLY OF THE SHOW CAUSE NOTI CE OF THE LD AO, CONTENTS OF WHICH WAS REPRODUCED BY LD AO IN ASSESSM ENT ORDER AT PAGE 17-31/AY 2015-16. WHILE COMPLETING ASSESSMENT AND M AKING THE IMPUGNED ADDITION UNDER SECTION-68 OF THE ACT, THE LD. AO HAS RELIED UPON SOME OF THE DOCUMENTS/INFORMATION/DETAILS/THIR D PARTY INFORMATION/STATEMENT RECORDED BEHIND THE BACK OF T HE ASSESSEE. HOWEVER, THE SAID INFORMATION/DOCUMENTS/STATEMENTS R ECORDED WERE NOT CONFRONTED WITH THE ASSESSEE AND OPPORTUNITY OF CROS S-EXAMINATION OF WITNESSES WAS NOT GIVEN DESPITE OF REPEATED REQUEST O F THE ASSESSEE. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 8 LD. AO CHOSE TO PASS THE IMPUGNED ASSESSMENT ORDER IN DISREGARD TO PRINCIPLES OF NATURAL JUSTICE AND EQUITY. FOLLOWING ADDITIONS WERE MADE IN THE ASSESSMENT FRAMED U/S 153A READ WITH SECTION 153 B/143(3) OF THE ACT: ASSESSME NT YEAR NATURE OF ADDITION DESCRIPTION OF ADDITION ADDITION M ADE AMOUNT TOTAL ADDITIONS FOR THE ASSESSMENT YEAR 2015 - 16 UNSECURED LOAN M/S JALSAGAR COMMERCE PRIVATE LIMITED 1,50,50,000 1,50,50,000 2016 - 17 UNSECURED LOAN M/S JALSAGAR COMMERCE PVT. LTD 4,5 5,00,000 UNSECURED LOAN M/S COMPETENT SECURITIES PVT. LTD 1,40,00,000 5,95,00,000 4. AGAINST THE ABOVE ADDITIONS, THE ASSESSEE APPROA CHED TO THE LD. CIT(A). DURING THE COURSE OF PROCEEDINGS, THE LD CIT (A) VIDE LETTER DATED 21-03-2018 CALLED REMAND REPORT FROM THE AO AND DIR ECTED THE LD AO TO PROVIDE THE COPY OF VARIOUS DOCUMENTS RELIED BY HIM AND TO PROVIDE THE OPPORTUNITY OF CROSS-EXAMINATION OF WITNESS. THE LD A O VIDE LETTER DATED 12-04-2018 PROVIDED COPY OF VARIOUS INQUIRY REPORTS AND ASKED THE ASSESSEE TO INTIMATE THE NAME OF PERSONS REQUIRED F OR CROSS EXAMINATION AND FLEXIBLE TIME FRAME. THE ASSESSEE VIDE LETTER DA TED 20/04/2018 FILED ON 24/04/2018 INTIMATED THE NAME OF PERSONS REQUIRE D FOR CROSS- EXAMINATION. THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE IS ALWAYS AND INSTANTLY AVAILABLE FOR CROSS-EXAMINATION SUBJE CT TO PRIOR INFORMATION OF ONE WEEK. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 9 5. THE AO VIDE LETTER DATED 07/05/2018 ASKED THE ASSESSEE TO FILE POWER OF ATTORNEY OF PERSONS WHO WILL MAKE CROSS EXAM INATION OF WITNESS AND GIVE ASSURANCE TO BEAR ALL THE EXPENSES OF CROSS EXAMINATION INCLUDING COST OF TRAVELLING ETC. THE AS SESSEE VIDE LETTER DATED 18/05/2018 INTIMATED THE AO THAT THE ASSESSEE IS READY TO BEAR THE COST OF CROSS-EXAMINATION AND IT WOULD LIKE TO C ROSS-EXAMINE THE WITNESSES AT KOTA. 6. THE AO SUBMITTED THE REMAND REPORT TO LD CIT(A) VI DE LETTER DATED 21/05/2018, COPY OF WHICH WAS FORWARDED TO ASSES SEE BY LD CIT(A) VIDE LETTER DATED 28/05/2018. HOWEVER, AT THIS STAGE ALSO, OPPORTUNITY OF CROSS-EXAMINATION OF WITNESS WAS NOT G IVEN TO THE ASSESSEE. HOWEVER, THE A.O. ASKED THE LD. CIT(A) TO I SSUE GUIDELINES AND PROCEDURE TO BE FOLLOWED BY HIM FOR CONDUCTING O F CROSS EXAMINATION. 7. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL AS UNDER: ASSESSMENT YEA R NATURE OF ADDITION DESCRIPTION OF ADDITION ADDITION MADE BY AO AMOUNT ADDITION DELETED BY CIT(A) ADDITION SUSTAINED BY CIT(A) 2015 - 16 UNSECURED LOAN M/S JALSAGAR COMMERCE P. LTD. 1,50,50,000 1,50,50,000 2016 - 17 UNSECURED LOAN M/S JALSAGAR COMMERCE P. LTD 4,55,00,000 4,55,00,000 UNSECURED LOAN M/S COMPETENT SECURITIES P. LTD 1,40,00,000 1,40,00,000 ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 10 8. AGAINST THE ABOVE ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US FOR THE A.Y. 2015-19 WHEREAS FOR TH E A.Y. 2016-17 BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEALS BE FORE US. 9. IN THE GROUND NO. 1 OF THE ASSESSEES APPEAL, TH E ASSESSEE HAS CHALLENGED THE VALIDITY OF ASSESSMENT ORDER ON THE GROUND THAT THE AO HAS PASSED THE ASSESSMENT ORDER VIOLATING THE PRINC IPLE OF NATURAL JUSTICE AND NOT GIVING THE OPPORTUNITY OF CROSS EXAMINATION OF THE ALLEGED ACCOMMODATION ENTRY PROVIDERS, THEREFORE THE ASSESS MENT ORDER OUGHT TO HELD AS BAD IN LAW AND DESERVES TO BE ANNULLED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO DE LIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LOWER AUTHOR ITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY THE LD AR AND THE LD. DR DURING THE COURSE OF HEARING BEFORE US IN THE CONTEXT OF FACTU AL MATRIX OF THE CASE. FROM THE RECORD WE FOUND THAT THE ASSESSEE HAD FILED AN APPLICATION FOR PROVIDING VARIOUS DOCUMENTS/MATERIAL/INFORMATION/RE PORTS, RELIED UPON BY THE LD. AO FOR ISSUING SHOW CAUSE NOTICE ALONG WI TH PERMISSION FOR CROSS-EXAMINATION OF WITNESSES, WHOSE STATEMENTS WERE RECORDED BEHIND THE BACK OF THE ASSESSEE AND WERE BEING RELIE D UPON BY THE AO. THE AO DID NOT PROVIDE THE COPY OF VARIOUS DOCUMENTS / ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 11 MATERIAL/INFORMATION/REPORTS RELIED UPON BY HIM. FU RTHER HE DID NOT PROVIDE THE OPPORTUNITY OF CROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON BY HIM NAMELY:- S. NO NAME OF PERSON WHOSE STATEMENT UTILIZED NAME OF COMPANY WHICH WAS TREATED BY AO AS NON GENUINE ON THE BASIS OF STATEMENT 1. ANAND SHARMA (I) M/S JALSAGAR COMME RCE PVT. LTD (II) M/S ROYAL CRYSTAL DEALERS PVT. LTD (III) M/S DOSHI MANAGEMENT PVT. LTD 2. ANKIT BAGRI M/S VSG LEASING AND FINANCE CO. PVT. LTD (NO LOAN OR DEPOSIT TAKEN BY ASSESSEE FROM THIS COMPANY) 3. SHIV SHANKER BANKA M/S VSG LEASING AND FINANCE CO. PVT. LTD (NO LOAN OR DEPOSIT TAKEN BY ASSESSEE FROM THIS COMPANY) 4 HANISH TOSHNIWAL M/S MANGALGAURI VINIMAY PVT LTD M/S QUALITY MERCANTILE PVT LTD (NO LOAN OR DEPOSIT TAKEN BY ASSESSEE FROM THESE COMPANIES) 11. THE LD CIT(A) VIDE LETTER DATED 21-03-2018 CALLED REMAND REPORT FROM THE AO AND DIRECTED THE AO TO PROVIDE THE COPY OF VARIOUS DOCUMENTS RELIED BY HIM AND TO PROVIDE THE OPPORTUN ITY OF CROSS- EXAMINATION OF WITNESS. THE AO VIDE LETTER DATED 12-04-2018 PROVIDED COPY OF VARIOUS INQUIRY REPORTS AND ASKED THE ASSES SEE TO INTIMATE THE NAME OF PERSONS REQUIRED FOR CROSS EXAMINATION AND FLEXIBLE TIME FRAME. THE ASSESSEE VIDE LETTER DATED 20/04/2018 FILED ON 2 4/04/2018 INTIMATED THE NAME OF PERSONS REQUIRED FOR CROSS-EX AMINATION. THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE IS ALWA YS AND INSTANTLY AVAILABLE FOR CROSS-EXAMINATION SUBJECT TO PRIOR IN FORMATION OF ONE WEEK. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 12 12. THE AO SUBMITTED THE REMAND REPORT TO LD CIT(A) V IDE LETTER DATED 21/05/2018, COPY OF WHICH WAS FORWARDED TO ASSES SEE BY LD CIT(A) VIDE LETTER DATED 28/05/2018 FOR A.Y 2016-17. HOWEVER, AT THIS STAGE ALSO, OPPORTUNITY OF CROSS-EXAMINATION OF WITN ESS WAS NOT GIVEN TO THE ASSESSEE AND THE RELEVANT REPORT OF THE AO ON T HIS POINT ASKING LD CIT(A) TO ISSUE DETAILED GUIDELINES AND PROCEDURE TO BE FOLLOWED BY HIM FOR CONDUCT OF CROSS-EXAMINATION. THUS, IT IS CLEAR THAT NEITHER THE ASSESSING OFFICER HAS GIVEN OPPORTUNITY TO CROSS EX AMINE THE WITNESSES NOR THE LD. CIT(A) HAS GIVEN THE SAME. THE ISSUE WITH REGARD TO FINALIZING THE ASSESSMENT WITHOUT GIVING THE OPPORTU NITY TO CROSS EXAMINE HAVE BEEN ELABORATELY DISCUSSED BY THE COOR DINATE BENCH IN ITS DECISION DATED 31/12/2018 IN THE CASE OF M/S KOTA D ALL MILL (IN ITA 997/JPR/2018, FOR A.Y 2010-11 ). 13. FROM THE RECORD WE FOUND THAT THE SHOW CAUSE NOT ICE WAS ISSUED BY THE LD. AO TO THE ASSESSEE ON 06.12.2017. UNDER THE SAID SHOW CAUSE NOTICE, THE ASSESSEE WAS CALLED UPON TO SUBMIT EXPLANATION, IN RESPECT OF PROPOSED ACTION U/S 68 OF THE ACT BY THE LD. AO. A COPY OF THE SAID SHOW CAUSE NOTICE IS PLACED AT THE PAGE NO. 64-75 OF THE PB- I/A.Y 2015-16. ON 11.12.2017, THE ASSESSEE FILED AN APPLICATION PB-I PAGE 125-128/A.Y2015-16 FOR PROVIDING VARIOUS DOCUMENTS/MATERIAL /INFORMATION, RELIED UPON BY THE LD. AO FOR ISSUING SHOW CAUSE NOTICE ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 13 ALONG WITH PERMISSION FOR CROSS-EXAMINATION OF WITNES SES, WHOSE STATEMENTS WERE RECORDED BEHIND THE BACK OF THE ASSE SSEE AND WERE BEING RELIED UPON BY THE LD. AO. HOWEVER, LD. AO NE ITHER PROVIDED ANY OF THE DOCUMENTS SOUGHT BY THE ASSESSEE NOR GRANTED PERMISSION FOR CROSS-EXAMINATION OF THE WITNESSES. ALL THE INQUIRIE S OR MATERIAL IF ANY WAS GATHERED BEHIND THE BACK OF THE ASSESSEE, THEREF ORE, THE SAME CANNOT BE USED AGAINST THE ASSESSEE IF THE OPPORTUN ITY OF EXAMINE AND CONFRONT THE SAME NOT PROVIDED TO THE ASSESSEE. IF THE ASSESSING OFFICER PROPOSES TO ACT ON SUCH MATERIAL AS HE MIGHT HAVE G ATHERED AS A RESULT OF HIS PRIVATE ENQUIRIES BEHIND THE BACK OF THE ASS ESSEE. 14. THAT NON-PROVIDING THE MATERIAL RELIED UPON BY T HE LD. AO FOR REBUTTING THE SAME AND ALSO NOT AFFORDING OPPORTUNI TY FOR CROSS- EXAMINATION OF WITNESSES BY ASSESSEE IS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THE PURPOSE OF APPEAL WOULD ALSO FRUSTRATED IF VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE IS TAKEN PLACE DURING INITIAL PROCEEDINGS OF ASSESSMENT ITSELF. 15. WITH REGARD TO MERIT OF THE ADDITION, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAD SUBMITTED AMPLE DOC UMENTS DURING ASSESSMENT PROCEEDINGS TO PROVE THE IDENTITY, GENUI NENESS AND CREDITWORTHINESS OF THE UNSECURED LOAN AND IN SUCH D OCUMENTS NO ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 14 DEFECTS WERE POINTED BY LD. AO AND THE SAME WERE REJE CTED ONLY ON SUSPICIOUS, SURMISES, CONJECTURES AND REPLYING SOLE LY ON THE STATEMENTS OF SOME PARTIES. 16. AS PER LD. AR, THE ASSESSMENT ORDER HAS BEEN PA SSED ON THE BASIS OF UNACCEPTABLE, UNREASONABLE, INCORRECT AND MISCON CEIVED INTERPRETATION OF THE VARIOUS JUDICIAL PRONOUNCEMEN TS OF HONBLE APEX COURT AND HONBLE HIGH COURTS AS RELIED UPON BY THE LD. AO, WHICH WAS EXPLAINED BY THE LD A.R. AS UNDER: (I) DHAKESWARI COTTON MILLS LTD V. COMMISSIONER OF INCOM E TAX, WEST BENGAL (1954) 26 ITR 775 (SC): LD. AO HAS PROCEEDED WITH TO PASS THE ASSESSMENT ORD ER IN VIOLATION OF THE PRINCIPLES AND RATIO LAID DOWN BY T HE HONBLE APEX COURT IN THE AFORESAID JUDGMENT. WHILE PLACING RELIANCE UPON THE JUDGMENT OF HONBLE APEX COURT IN CASE DHAKESWARI (SUPRA) , LD. AO DECLINED A CCESS TO THE DOCUMENTS, RELIED UPON BY HIM AND DID NOT AFFOR D OPPORTUNITY FOR CROSS-EXAMINATION OF WITNESSES, STAT EMENTS OF WHICH WERE RECORDED BEHIND THE BACK OF ASSESSEE ON TH E PRETEXT THAT INCOME TAX OFFICER IS NOT FETTERED BY T ECHNICAL RULES OF EVIDENCE AND PLEADINGS AND HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN A COURT OF LAW. HOWEVER, LD. AO FAILED TO APPRECIATE THAT HONBL E APEX COURT IN THE CASE OF DAKESHARI (SUPRA) HAS HELD THA T IN MAKING THE ASSESSMENT THE INCOME TAX OFFICER IS NOT ENTITLED ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 15 TO MAKE A PURE GUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AND ALSO THAT MATERIAL RELIED UPON BY THE INCOME TAX OFFICER SHOUL D BE DISCLOSED TO THE ASSESSEE, WHICH IN THE CASE OF ASSE SSEE, LD. AO FAILED TO DO. THE RELEVANT PARA OF THE ABOVE JUD GMENT IS REPRODUCED BELOW: IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNA L VIOLATED CERTAIN FUNDAMENTAL RULES OF JUSTICE IN REACHING ITS CONCLU SIONS. FIRSTLY, IT DID NOT DISCLOSE TO THE ASSESSEE WHAT INFORMATION HAD B EEN SUPPLIED TO IT BY THE DEPARTMENTAL REPRESENTATIVE. NEXT, IT DID NO T GIVE ANY OPPORTUNITY TO THE COMPANY TO REBUT THE MATERIAL FU RNISHED TO IT BY HIM, AND LASTLY, IT DECLINED TO TAKE ALL THE MATERI AL THAT THE ASSESSEE WANTED TO PRODUCED IN SUPPORT OF HIS CASE. THE RESU LT IS THAT THE ASSESSEE HAD NOT HAD A FAIR HEARING . IN THE RESULT WE ALLOW THIS APPEAL, SET ASIDE THE O RDER OF THE TRIBUNAL AND REMAND THE CASE TO IT WITH DIRECTIONS THAT IN A RRIVING AT ITS ESTIMATE OF GROSS PROFITS AND SALES IT SHOULD GIVE FULL OPPORTUNITY TO THE ASSESSEE TO PLACE ANY RELEVANT MATERIAL ON THE POINT THAT IT HAS BEFORE THE TRIBUNAL, WHETHER IT IS FOUND IN THE BOO KS OF ACCOUNT OR ELSEWHERE AND IT SHOULD ALSO DISCLOSE TO THE ASSES SEE THE MATERIAL ON WHICH THE TRIBUNAL IS GOING TO FOUND ITS ESTIMATE A ND THEN AFFORD HIM FULL OPPORTUNITY TO MEET THE SUBSTANCE OF ANY PRIVA TE ENQUIRIES MADE BY THE INCOME TAX OFFICER IF IT IS INTENDED TO MAKE THE ESTIMATE ON THE FOOT OF THOSE ENQUIRIES . IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT THE RELIA NCE PLACED BY THE LD. AO ON THE JUDGMENT OF HONBLE APEX COURT IN CAS E OF DHAKESWARI (SUPRA) IS MISCONCEIVED. 17. WITH REGARD TO RELIANCE PLACED BY THE A.O. ON T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ROSHAN DI HATT I VS CIT (1977) 107 ITR 938 AND KALE KHAN MOHAMMED HANIF VS CIT (1963) 50 ITR 1 (SC), IT WAS SUBMITTED BY THE LD AR THAT IN THE PRESENT CA SE OF THE ASSESSEE, ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 16 ASSESSEE HAS ALREADY DISCHARGED ITS PRIMA FACIE ONU S TO PROVE THE CASH CREDIT BY FURNISHING RELEVANT DOCUMENTS SUBSTANTIAT ED IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE LD. AO COULD NOT POINT OUT ANY DEFECTS IN THE DOCUMENTS OR MATER IAL SO FURNISHED BY THE ASSESSEE. THE RESPECTIVE LENDERS HAVE ALSO FILED RELEVANT DOCUMENTS WITH LD. AO AND RESPECTIVE AUTHORITIES, IN REPLY TO NOTICE UNDER SECTION- 131 AND 133(6) OF THE ACT. IT IS ALSO PERTINENT TO MENTION THAT NO AUTHORITIES RAISED ANY DOUBT REGARDING THE TRUTHFUL NESS OF THE DOCUMENT, FURNISHED BY THE ASSESSEE OR RESPECTIVE LENDERS. FU RTHERMORE, THE LD. AO DID NOT APPRECIATE THE RATIO DECIDED BY THE HON BLE APEX COURT IN ROSHAN DI HATTI CASE (IBID), WHICH IS REPRODUCED BEL OW: THE TRIBUNAL ACTED WITHOUT ANY MATERIAL OR, IN ANY EVENT, THE FINDING OF FACT REACHED BY THE TRIBUNAL WAS UNREASONABLE OR SU CH THAT NO PERSON ACTING JUDICIALLY AND PROPERLY INSTRUCTED AS TO THE RELEVANT LAW WOULD COME TO SUCH A FINDING. WE ACCORDINGLY ALLOW THE APPEAL, SET ASIDE THE ORDER OF THE HIGH COURT AND ANSWER THE QUESTION REFERRED BY THE TRIBUNAL IN NEGATIVE. THE COMMISSIONER WILL PAY THE COSTS OF TH E APPEAL TO THE ASSESSEE . THE CASE OF ASSESSEE IS SQUARELY COVERED UNDER THE A FORESAID FINDING OF HONBLE APEX COURT. THE JUDGMENT OF KALE KHAN MOHAMM ED HANIF (IBID) IS DISTINCT FROM THE CASE OF ASSESSEE AND HAS NO AP PLICABILITY TO THE ASSESSEE. THE OBSERVATIONS OF HONBLE APEX COURT ARE REPRODUCED BELOW: IT WAS OPEN TO THE ASSESSEE TO RAISE THE QUESTION T HAT THE FINDING THAT THOSE AMOUNTS WERE INCOME RECEIVED FROM UNDISCLOSED SOURCES WAS NOT ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 17 BASED ON ANY EVIDENCE OR WAS, FOR OTHER REASONS, PE RVERSE . AND ALSO THE ASSESSEE ACCEPTED THE DECISION OF THE TRIBUNAL AND DID NOT MOVE THE HIGH COURT TO DIRECT A REFERENCE IN REGARD TO THOSE QUES TIONS UNDER SECTION 66(2). THOSE QUESTIONS, THEREFORE, CANNOT BE RAISED IN THIS COURT. WE HAVE DEED WITH THE REFERENCE MADE ON THE BASIS THAT THE FINDING THAT THE AMOUNTS OF THE CREDIT ENTRIES WERE INCOME RECEIVED FROM UNDISCLOSED SOURCES WAS DISPUTED ONLY ON THE GROUND THAT THE IN COME FROM THE BUSINESS HAD BEEN COMPUTED ON THE BASIS OF AN ESTIM ATE. IN THE CIRCUMSTANCES OF THE CASE WE COULD NOT HAVE DONE AN YTHING ELSE . AS THE LD. A.R. THE DOCUMENTARY PROOF SUBSTANTIATIN G THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION, FURNI SHED BY THE ASSESSEE, REMAINED UNDISPUTED BY THE LD. AO. THUS, P LACING RELIANCE TO THE SAID JUDGMENT WITH THAT OF THE CASE OF ASSESSEE IS A MISCONCEIVED INTERPRETATION OF THE LD. AO. 18. AS PER THE LD AR, THE ASSESSING OFFICER HAS WRON GLY APPLIED THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF CIT VS. DU RGA PRASAD MORE (1971) 82 ITR 540 (SC), IT WAS CONTENDED THAT THE AO, WHILE PLACING RELIANCE UPON THE AFORESAID JUDGMENTS HAS HELD THAT THE THEORY OF PREPONDERANCE OF HUMAN PROBABILITY AS PRONOUNCED BY THE HONBLE APEX COURT IN THE CASE OF CIT V. DURGA PRASAD MORE (1971) 82 ITR 540 AND SUMITI DAYAL V. CIT (1995) 80 TAXMANN 89/214 ITR 801 ( SC) IS OF UTMOST IMPORTANCE. IN THE CASES WHERE IT HAS BEEN ES TABLISHED THAT THE SOURCE COMPANY IS A NEAR PAPER COMPANY SOLELY ENG AGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES, THE PRESUMPTION ON THE BASIS OF HUMAN PROBABILITY IS IMPORTANT. LD. AO HAS PLACED R ELIANCE UPON THE ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 18 OBSERVATION OF HONBLE SUPREME COURT IN CIT V. DURGA PRASAD MORE (1971) 82 ITR 540 THAT IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BE LIEVE THAT THE APPARENT IS NOT THE REAL AND A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AU THORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. HOWEVER, WHILE INTERPRETING THE AFORESAI D JUDGMENT, THE LD. AO FAILED TO CONSIDER THE FINDING OF HONBLE AP EX COURT THAT IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS N OT THE REAL . IN THE CASE OF THE ASSESSEE, ALL THE DOCUMENTARY EVIDENCES WERE PRODUCED BEFORE LD. AO BOTH BY THE ASSESSEE AND BY THE RESPE CTIVE LENDERS AS WELL AND THE DOCUMENTS PRODUCED ARE THE PUBLIC DOCUM ENTS WHICH ARE AVAILABLE ON PUBLIC DOMAIN ITSELF. THESE DOCUMENTS INCLUDE DOCUMENTS FILED WITH ROC, BANK STATEMENTS, ASSESSMENT CARRIED OUT BY THE INCOME TAX DEPARTMENT AND SO ON. THE LD. AO DID NOT POINT OU T ANY DEFECTS IN SUCH DOCUMENTS. IT IS FURTHER MOST IMPORTANTLY REL EVANT TO MENTION HERE THAT THE INCOME TAX DEPARTMENT CARRIED OUT INTENSIVE SEARCH OVER THE ASSESSEE GROUP, HOWEVER, AS A RESULT OF SEARCH NO E VIDENCE WAS FOUND TO PROVE THAT THE ASSESSEE WAS HAVING SOME UNDISCLOS ED INCOME WHICH WAS ROUTED IN BOOKS OF ACCOUNTS IN THE SHAPE OF UNSE CURED LOANS. THUS, ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 19 THE LD. AO MUST HAVE CONSIDERED APPARENT AS REAL AS LD. AO FAILED TO ESTABLISH AND ALSO TO SHOW ANY REASON TO BELIEVE THA T THE APPARENT IS NOT THE REAL. UNLESS AND UNTIL THERE WAS ANY REASON TO DISBELIEVE THE TRUTHFULNESS OF DOCUMENTARY EVIDENCES, THERE WAS NO CASE AND BASIS WITH THE LD. AO TO TREAT THE APPARENT AS NOT REAL ON LY ON THE BASIS OF GUESS, ASSUMPTIONS, PRESUMPTIONS AND SURMISES, WHICH IS NOT PERMISSIBLE UNDER THE LAW. FURTHERMORE, IT WAS THE ON US OF THE LD. AO TO PROVE THAT APPARENT WAS NOT THE REAL, FOR WHICH HE WAS AT LIBERTY TO CALL UPON ANY FURTHER CLARIFICATION AND SUBSEQUENT DOCUM ENTS. SINCE, IT IS NOT PROVED THAT THE DOCUMENTS FURNISHED WERE NOT THE TRU E, NO ASSUMPTION AND PRESUMPTION CAN BE DRAWN THAT THE APPARENT WAS NO T THE REAL. THE TEST OF HUMAN PROBABILITY IS ALSO NOT APPLICABLE IN THE CASE OF ASSESSEE AS REALITY OF THE TRANSACTIONS CARRIED OUT BY THE A SSESSEE IN THE COURSE OF NORMAL BUSINESS ACTIVITIES HAVE BEEN DULY PROVED BE YOND DOUBT WITH THE DOCUMENTARY EVIDENCES AND CONFIRMED BY THE RESPECTI VE LENDERS/PARTIES ALSO AND EVEN ACCEPTABLE BEFORE THE JUDICIAL AUTHO RITIES. 19. WITH REGARD TO THE ASSESSING OFFICERS RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. IND EPENDENT MDIA (P) LTD. 210 TAXMANN 14 (DELHI) (2012), IT WAS THE CONTEN TION OF THE LD AR THAT THOUGH THE LD. AO HAS PLACED RELIANCE UPON THE AFORESAID JUDGMENT TO SUBSTANTIATE HIS ACTION FOR MAKING ADDITION UNDE R SECTION-68 OF THE ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 20 ACT BUT THE ACT OF LD. AO IS DEROGATORY TO THE AFOR ESAID JUDGMENT OF HONBLE HIGH COURT OF DELHI. LD. AO DID NOT PROVIDE OPPORTUNITY TO THE CROSS-EXAMINATION OF SO-CALLED WITNESSES, RELIED UPO N BY LD. AO, WHICH MUST HAVE BEEN ALLOWED AS HELD BY THE HONBLE HIGH C OURT OF DELHI IN THE ABOVE JUDGMENT. THE RELEVANT PARAS ARE REPRODUCE D BELOW: THE TRIBUNAL, HOWEVER, MAY BE JUSTIFIED IN DIRECTIN G THE ASSESSING OFFICER TO AFFORD AN OPPORTUNITY TO THE ASSESSEE OF CROSS-E XAMINATION THE PERSONS WHO HAD ALLEGEDLY GIVEN STATEMENTS BEFORE THE INVES TIGATION WING IMPLICATING THE ASSESSEE IN THE MODUS OPERANDI ADOP TED BY THEM, NAMELY, GIVING OF ACCOMMODATION ENTRIES FOR COMMISSION . THE ASSESSEE APPEARS TO HAVE SOUGHT CROSS-EXAMINATI ON OF THOSE PERSONS BUT THAT OPPORTUNITY WAS NOT GIVEN BY THE ASSESSING OFFICER AS FOUND BY THE TRIBUNAL, A POSITION NOT DISPUTED BEFORE US ON BEHA LF OF THE REVENUE . WE MAY ONLY STATE THAT THE ASSESSING OFFICER SHALL ACT IN ACCORDANCE WITH LAW . SINCE, THE ACT OF THE LD. AO IS NOT IN ACCORDANCE WI TH THE LAW, THE LD. AO FAILED TO APPRECIATE THE RATIO LAID DOWN BY HONB LE COURT WHILE CARRYING OUT ASSESSMENT PROCEEDINGS IN THE INSTANT CASE OF ASSESSEE. AS PER THE LD AR THE RATIO OF THE AFORESAID JUDGMENT R ATHER SUPPORTS THE CONTENTION OF THE ASSESSEE AND PROVES ITS CASE AND NOT THE CASE MADE OUT BY THE LD. AO. 20. THE LD AR ALSO DISTINGUISHED THE FACTS LAID DOWN IN THE CASE OF A. GOVINDARAJULU MUDALIAR VS CIT (1958) 34 ITR 807 (SC), G.R. SIRI RAM VS ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 21 CIT (1975) 98 ITR 337 (P&H), CIT VS. KISHORE LAL & SAN TOSHI LAL (1995) 216 ITR 9 (RAJ). THE DETAILED SUBMISSIONS FILED IN T HIS REGARD IS PLACED ON RECORD. 21. WITH REGARD TO VARIOUS DOCUMENTARY EVIDENCES PL ACED ON RECORD, THE LD AR HAS RELIED ON THE DECISION OF THE COORDIN ATE BENCH IN THE CASE OF M/S KOTA DALL MILL A.Y 2010-11, AY 2011-12, AY 2 012-13, AY 2013-14, AY 2014-15, AY 2015-16 AND AY 2016-17 ASSESSEE'S AP PEAL (ITA NO. 997 TO 1002 AND 1119/JPR/2018) AND DEPARTMENTAL APP EAL (ITA NO. 1057 TO 1062 AND 1210/JPR/2018), WHEREIN THE UNSEC URED LOAN TAKEN BY ASSESSEE FROM VARIOUS COMPANIES WAS DELETED BY HO N'BLE ITAT BY PASSING ORDER DATED 31/12/2018. IN VIEW OF THE FINDI NGS OF HON'BLE ITAT IN THE MAIN GROUP CASE M/S KOTA DALL MILL, IT WAS SU BMITTED THAT IMPUGNED ADDITION MADE BY LD. AO AND CONFIRMED BY L D CIT(A) IS NOT LEGALLY TENABLE. 22. AS PER LD. AR, SO AS TO DISCHARGING OF THE BURD EN U/S 68 OF THE ACT, THE FOLLOWING CASH CREDITOR ARE COVERED BY SUBM ISSION FOR OTHER GROUP CASE OF THE ASSESSEE TABULATED AS UNDER:- NAME OF CASH CREDITORS COVERED BY M/S JALSAGAR COMMERCE PVT. LTD. COVERED KOTA DALL MILL AY 2010-11, 2012-13, 2013-14 ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 22 23. THE LD AR ALSO SUBMITTED THAT THE IMPUGNED ADDIT ION U/S 68 OF THE ACT IS NOT LEGALLY TENABLE IN VIEW OF THE FOLLOWING: I. ASSESSEE DULY DISCHARGED ITS BURDEN CASTED U/S 68 O F THE ACT BY PROVIDING IDENTITY, CREDITWORTHINESS AND GENU INENESS OF THE TRANSACTIONS. II. DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE AND/ OR SUBMITTED BY THE LENDER COMPANY REMAINED UNCONTROVE RTED BY THE LOWER AUTHORITIES DURING ASSESSMENT/APPEAL PROCEEDINGS, THUS VERACITY OF THE DOCUMENTARY EVIDE NCES FORMING PART OF THE RECORD OF THE DEPARTMENT WAS NOT DOUBTED. III. THE LD. AO HAS RELIED UPON STATEMENTS RECORDED BEHIN D THE BACK OF ASSESSEE MUCH BEFORE THE DATE OF THE SEARCH IN SOME OTHER PROCEEDINGS. FURTHER, OPPORTUNITY OF CRO SS EXAMINATION WAS NOT GIVEN EITHER AT ASSESSMENT STAGE OR APPEAL STAGE. IV. FURTHER, SHRI ANAND SHARMA HAS STATED IN THE STATEM ENT THAT ACCOMMODATION ENTRY WAS GIVEN TO M/S JALSAGAR COMMERCE PRIVATE LTD BY ROYAL CRYSTAL DEALERS PVT L TD. HE NOWHERE HAS STATED THAT CASH WAS GIVEN BY THE ASSESSE E OR ACCOMMODATION ENTRY WAS GIVEN BY M/S JALSAGAR COMMER CE PVT. LTD. FURTHER HE HAS NOT ADMITTED IN THE STATE MENT THAT HE HAS CONTROLLING M/S JALSAGAR COMMERCE PVT. LTD. THE LD AO HAS REPRODUCED RELEVANT OF STATEMENT AT PAGE 36 & 38 OF HIS ASSESSMENT ORDER FOR AY 2015-16. THEREFORE, N O ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 23 ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE E VEN ON THE BASIS OF UN-CONFRONTED STATEMENT OF SHRI ANAND SHARMA. AMPLE DOCUMENTS FILED TO PROVE THE IDENTITY, CREDIT WORTHINESS, AND GENUINENESS. DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE ASSESSEE SUBMITTED THE FOLLOWING DOCUMENTS TO PROVE THE IDENT ITY, CREDITWORTHINESS, AND GENUINENESS OF TRANSACTION IN RESPECT OF LOANS TAKEN DURING THE YEAR FROM M/S JALSAGAR COMMERCE P VT. LTD: - AY 2015-16 S. NO. PARTICULARS OF DOCUMENTS S. NO. OF PB WHERE DOCUMENTS ANNEXED AY 2015-16/VOL- II 1 COPY OF ACK. OF ITR OF AY 2015-16 ALONG WITH COMPUTATION SHEET 420-422 2 COPY OF BALANCE SHEET OF AY 2015-16 ALONG WITH ENCLOSURES 423-436 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. 437-443 4 COPY OF CONFIRMATION OF ACCOUNTS FROM THE BOOKS OF UNSECURED LOAN CREDITORS 444 5 COPY OF LEDGER FROM THE BOOKS OF ACCOUNTS OF ASSESSEE 445 6 COPY OF AFFIDAVIT OF MRS SANGEETA SOMANI DIRECTOR OF COMPANY. 446-449 7 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. 450-456 8 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOVE NAMED COMPANY FOR AY 2005-06, AY 2007- 08, AY 2011-12. 2012-13 AND 2014-15. 457-499 9 COPY OF ROC MASTER DATA. 500-501 10 COPY OF PAN CARD. 502 ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 24 11 CERTIFICATE OF INCORPORATION. 503 12 COPY OF CERTIFICATE OF NBFC REGISTRATION. 504 A.Y 2016-17 S. NO. PARTICULARS OF DOCUMENTS S. NO. OF PB WHERE DOCUMENTS ANNEXED AY 2016-17/VOL- II 1 COPY OF ACK. OF ITR OF AY 2016-17 ALONG WITH COMPUTATION SHEET 384-386 2 COPY OF BALANCE SHEET OF AY 2016-17 ALONG WITH ENCLOSURES 387-396 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. 397-443 4 COPY OF CONFIRMATION OF ACCOUNTS FROM THE BOOKS OF UNSECURED LOAN CREDITORS 444-446 5 COPY OF LEDGER FROM THE BOOKS OF ACCOUNTS OF ASSESSEE 447-450 6 COPY OF AFFIDAVIT OF MRS SANGEETA SOMANI DIRECTOR OF COMPANY. 451-454 7 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. 455-461 8 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOVE NAMED COMPANY FOR AY 2005-06, AY 2007- 08, AY 2011-12. 2012-13 AND 2014-15. 462-504 9 COPY OF ROC MASTER DATA. 505-506 10 COPY OF PAN CARD. 507 11 CERTIFICATE OF INCORPORATION. 508 12 COPY OF CERTIFICATE OF NBFC REGISTRATION. 509 ALL THE LOANS WERE RECEIVED THROUGH BANKS AND VERIFI ABLE FROM BANK STATEMENT OF ASSESSEE AS WELL AS BANK STATEMENT OF T HE PARTY. THE ONUS U/S 68 OF THE ASSESSEE IS TO PROVE THE IDENTITY, CA PACITY AND GENUINENESS OF THE TRANSACTIONS HAS BEEN DISCHARGED WHICH MAY BE SEEN FROM THE FOLLOWINGS:- ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 25 I) IDENTITY:- THE ASSESSEE PROVED THE IDENTITY THE COMPANY. THE COM PANY WAS ASSESSED BY INCOME TAX DEPARTMENT U/S 143(3) OF ITAX ACT FOR AY 2005-06, AY 2007-08, AY 2011-12, AY 2012-13 AND AY 2014-15. THE DETAILS OF ASSESSMENT COMPLETED U/S 143(3) IS AS UN DER ASSESSMENT U/S 143(3) NAME OF COMPANY ASSESSME NT YEAR INCOME ASSESSED ASSESSMENT ORDER U/S 143(3) AT PB A.Y 2015-16 M/S JALSAGAR COMMERCE PVT. LTD 2005 - 06 46,890 462 - 464/PB - II) M/S JALSAGAR COMMERCE PVT. LTD 2007 - 08 14,36,430 472 - 473/PB - II) M/S JALSAGAR COMMERCE PVT. LTD 2011 - 12 40,17,339 476 - 480/PB - II) M/S JALSAGAR COMMERCE PVT. LTD 2012 - 13 9,64,69,110 484 - 491/PB - II) M/S JALSAGAR COMMERCE PVT. LTD 2014 - 15 38,20,430 497/PB - II) COPY OF MASTER DATA OF ROC NAME OF COMPANY STATUS OF COMPANY PB PG M/S JALSAGAR COMMERCE PVT. LTD ACTIVE 500/VOL - II/A.Y 2015 - 16 FURTHER BY FILING THE CONFIRMATION, THEIR ITR, BANK STATEMENT AND BALANCE SHEETS, THE IDENTITY OF THE CASH CREDITOR I S PROVED. 24. RELIANCE WAS PLACED BY THE LD AR ON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ARAVALI TRADING CO V/S ITO (2008) 8 DTR (RAJ) 199 WHEREIN IT WAS HELD THAT ONCE THE EXIST ENCE OF THE CREDITORS IS PROVED AND SUCH PERSONS OWN THE CREDITS , THE ASSESSEES ONUS STANDS DISCHARGED AND THE ASSESSEE IS NOT REQU IRED TO PROVE THE ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 26 SOURCE FROM WHICH THE CREDITORS COULD HAVE ACQUIRED THE MONEY DEPOSITED WITH HIM. HONBLE JURISDICTIONAL HIGH COUR T HAS HELD THAT MERELY BECAUSE THE DEPOSITORS EXPLANATION ABOUT TH E SOURCES OF MONEY WAS NOT ACCEPTABLE TO THE AO, IT CANNOT BE PRESUMED THAT THE DEPOSIT MADE BY THE CREDITORS IS MONEY BELONGING TO THE ASS ESSEE ITSELF. II) CREDITWORTHINESS IN ORDER TO PROVE THE CREDITWORTHINESS OF THE CASH C REDITOR, THE ASSESSEE HAS SUBMITTED THE FOLLOWING DOCUMENTS BEFORE THE LOWE R AUTHORITIES. S.NO DESCRIPTION PB 2015 - 16 VOL II PAGE NO. REMARKS 1 ASSESSMENT ORDER U/S 143(3) OF THE LENDER COMPANY ACT FOR AY 2005-06, AY 2007-08, AY 2011-12, AY 2012-13 AND AY 2014-15. 457 - 499 ASSESSED INCOME FOR AY 2012-13 IS RS. 9,64,69,110 2. BANK STATEMENT OF LENDER COMPANY 437 - 443 (FOR AY 2015-16) AND 397-443 (FOR AY 2016-17) BANK STATEMENT SHOWS THE HUGE TRANSACTIONS IN BANK. THERE IS NO CASH DEPOSIT IN ANY OF THE COMPANY PRIOR TO THE LOAN GIVEN TO THE ASSESSEE 3 INCOME TAX RETURN FOR AY 2015-16 420 - 422 LENDER COMPANY DECLARED TOTAL INCOME OF RS. 1,48,15,240/- 4 INCOME TAX RETURN FOR AY 2016-17 384 - 386/A.Y 2016-17 LENDER COMPANY DECLARED TOTAL INCOME OF RS. 1,72,95,720/- 5 AFFIDAVIT OF DIRECTOR 446 - 449 FURTHER, THE COMPANY HAS RAISED SHARE CAPITAL IN VA RIOUS YEARS WHICH WAS ACCEPTED BY INCOME TAX DEPARTMENT IN SCRUTINY AS SESSMENT U/S 143(3) OF I.TAX ACT, SHOWN AS UNDER:- ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 27 ASSESSMENT YEAR SHARE CAPITAL RAISED ASSESSMENT ORDER U/S 143(3) AT PB A.Y 2015-16 1995 - 96 33,00,000 1996 - 97 16,50,000 2005 - 06 7,94,00,000 462 - 464/PB - II) 2008 - 09 2,79,54,863 2010 - 11 1,91,00,000 2011 - 12 1,39,00,000 476 - 480/PB - II) 2012 - 13 1,96,00,000 484 - 491/PB - II) 2014 - 15 11, 05,00,000 497/PB - II) 2015 - 16 7,71,29,500 THERE IS SUFFICIENT SOURCE OF FUNDS WITH THE COMPANY TO GIVE THE UNSECURED LOAN TO THE ASSESSEE. THE CHART SHOWING TH E AMOUNT GIVEN ON UNSECURED LOAN TO THE ASSESSEE VIZ A VIZ OWN FUND S WITH THE COMPANIES ARE AS UNDER: - AY 2015-16 NAME OF THE LENDER COMPANY UNSECURED LOAN RECEIVED SHARE CAPITAL, APPLICATION AND RESERVE & SURPLUS LENDER COMPANY AS ON 31.03.2015 SHARE CAPITAL, APPLICATION AND RESERVE & SURPLUS LENDER COMPANY AS ON 31.03.2014 JALSAGAR COMMERCE PVT LTD 1,50,50,000/ - 38,10,50,840/ - 27,44,00,650/ - AY 2016-17 NAME OF THE INVESTOR COMPANY AMOUNT GIVEN TO ASSESSEE (MAXIMUM BALANCE) SOURCE OF FUNDS WITH INVESTOR COMPANIES AS ON 31.03.2016 SOURCE OF FUNDS WITH INVESTOR COMPANIES AS ON 31.03.2015 SHARE CAPITAL AND RESERVES LOANS SHARE CAPITAL AND RESERVES LOANS JALSAGAR COMMERCE PVT. LTD 9,55,50,000 39,25,96,232 7,63,93,062 38,10,50,841 12,71,18,590 ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 28 FROM THE ABOVE CHART, IT IS CLEAR THAT THE CASH CRE DITOR COMPANY WAS HAVING ITS OWN SHARE CAPITAL, RESERVE & SURPLUS, WHI CH WERE MORE THAN TO THE AMOUNT GIVEN TO THE ASSESSEE. APART FROM THE UNSECURED LOAN GIVEN TO THE ASSESSEE, THIS COMPANY WAS ALSO HAVING INVESTMENTS IN SHARES OF OTHER COMPANIES OR LOANS & ADVANCES TO PA RTIES, THEREFORE FROM THE BANK STATEMENT AS WELL AS FINANCIALS STATEM ENTS OF THE COMPANIES THEIR CREDITWORTHINESS IS DULY PROVED. FUR THER ONCE THE ASSESSEE ABLE TO ESTABLISH THAT HE HAS IN FACT RECE IVED MONEY FROM THIRD PARTY, IT CANT BE BURDENED WITH A FURTHER ONUS OF E STABLISHING THE SOURCE FROM WHICH SUCH THIRD PARTY HAD BEEN ABLE TO OBTAIN THE MONEY. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: - (I) SIDEWAYS INVESTMENT PVT. LTD. VS DCIT 24 TAX WO RLD 146 (JP ITAT) (II) CIT VS. DAULAT RAM RAWATMAL 87 ITR 349 (SC) (III) SARAOGI CREDIT CORP. VS. CIT 103 ITR 344 (P AT) III) GENUINENESS A) THE ASSESSEE SUBMITTED THE CONFIRMATION OF LENDE R (PB PG 444/VOL-II/A.Y 2015-16 AND PB PG 444-446/VOL-II/A.Y 2016-17). B) THE ASSESSEE HAS SUBMITTED THE AFFIDAVIT OF THE DIRECTOR OF THE CASH CREDIT COMPANY (PB PG 446-449/VOL II/ A.Y 2015-16 AND PB PG 451-454/VOL-II/AY 2016-17). C) FURTHER THE COMPANY IS REPAYING THE LOANS. THE M AJOR REPAYMENT OF LOAN WAS MADE IN AY 2016-17. FURTHER, THE ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 29 COMPANY PAID INTEREST TO THE LENDER COMPANY WHICH T HE LD AO TREATED AS GENUINE PAYMENT AS HE MADE NO DISALLOWAN CE AGAINST THE INTEREST PAYMENT. WHEN THE INTEREST PAYMENT IS GENUINE THE LOAN CANNOT BE TREATED AS IN GENUINE. REPAYMENT OF LOAN AND INTEREST PAYMENT NAME OF COMPANY AY OPENING BALANCE LOAN TAKEN DURING THE YEAR INTEREST CREDITED IN A/C DURING THE YEAR LOAN REPAYMENT DURING THE YEAR CLOSING BALANCE M/S JALSAGAR COMMERCE PVT. LTD 15-16 NIL 1,50,50,000 1,66,253 NIL 1,50,50,000 16-17 1,50,50,000 11,93,00,000 41,30,597 12,98,50,000 45,00,000 D) FURTHERMORE, THE DEPARTMENT HAS CARRIED OUT INTE NSIVE SEARCH OPERATIONS OVER THE ASSESSEE AND NO ANY INCR IMINATING MATERIAL WAS FOUND TO SHOW THAT THE MONEY AGAINST U NSECURED LOAN WAS OWN UNDISCLOSED MONEY OF THE COMPANY. NO A NY ENTRY IN BOOKS OF ACCOUNT OR DOCUMENT WAS FOUND SHOWING P AYMENT OF CASH TO THESE INVESTOR COMPANY IN LIEU OF RECEIPT O F CHEQUES FROM THESE COMPANY AGAINST UNSECURED LOAN. THEREFOR E THE GENUINENESS OF THE TRANSACTIONS CANNOT BE DOUBTED. FURTHER, THE TRANSACTIONS ARE REFLECTING IN THE BAN K ACCOUNTS OF RESPECTIVE INVESTOR COMPANY AS WELL AS BANK ACCOUNT OF ASSESSEE. THUS, THE GENUINENESS OF THE TRANSACTIONS CANNOT BE DOUBTED MERELY ON THE BASIS OF GUESS, ASSUMPTIONS A ND PRESUMPTIONS, WITHOUT HAVING ANY OTHER CORROBORATIV E EVIDENCES. E) AS REGARD THE ALLEGED DISCREPANCY ON ACCOUNT OF STATEMENT OF SHRI ANAND SHARMA WHO SAID THAT ACCOMM ODATION ENTRY WAS GIVEN TO M/S JALSAGAR COMMERCE PVT LTD BY ROYAL CRUSTAL DEALERS PRIVATE LTD, THE NECESSARY ADDITION HAS BEEN ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 30 MADE IN THE HANDS OF JALSAGAR COMMERCE PVT LTD FOR AY 2012- 13. (KINDLY SEE PB PG 484-491/VOL- II/AY 2015-16) TREAT ING THE AMOUNT AS INCOME OF M/S JALSAGAR COMMERCE PVT LTD. FROM THE RELEVANT PORTION OF STATEMENT OF SHRI ANAND SHARMA REPRODUCED BY LD AO AT PG 36 & 38 OF HIS ASSESSMENT ORDER A.Y 2015-16 IT APPEARS THAT SHRI ANAND SHARMA HAS NO WHERE STATED THAT HE IS CONTROLLING M/S JALSAGAR COMMERCE PVT. LTD OR M/S J ALSAGAR COMMERCE PVT. LTD HAS GIVEN ACCOMMODATION ENTRY TO THE ASSESSEE COMPANY. THEREFORE, THE STATEMENT OF SHRI ANAND SHARMA IS IRRELEVANT SO FAR AS THE LOAN FROM M/S JA LSAGAR COMMERCE LTD TO ASSESSEE. SOURCE OF SOURCE WAS EXPLAINED BY SUBMITTING THE BA NK STATEMENT OF CREDITORS:- THE LD AR ALSO SUBMITTED THAT INVESTORS ARE CORPORAT E ENTITY AND ARE MAINTAINING PROPER BOOKS OF ACCOUNTS, WHICH ARE SUB JECTED TO STATUTORY AUDIT BY INDEPENDENT AUDITORS AND AUDITED BALANCE S HEET, AND PROFIT AND LOSS ACCOUNT ALONG WITH THE INCOME TAX RETURNS WE RE FILED BEFORE THE ASSESSING OFFICER. THEREFORE, THE PROOF OF THEIR EXI STENCE IS AVAILABLE AS DEMONSTRATED BY THE REGISTRAR OF COMPANIES RECORDS AND THERE IS NO ALLEGATION OR OBSERVATIONS BY THE LD. AO THAT CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE INVESTOR OR COMPANIES OR HAVE B EEN ROUTED THROUGH THE ASSESSEE. A PERUSAL OF BANK STATEMENTS OF INVE STOR'S COMPANIES REVEAL THAT THE 'SOURCE' OF 'SOURCE' WAS ALSO EXPLAI NED AND WAS THROUGH BANKING TRANSACTION. THE DEPOSITS IN THE CREDITORS' BANK ACCOUNTS WERE ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 31 BY BANK TRANSFERS. THUS, IN THE CASE UNDER APPEAL, THE CREDITWORTHINESS OF THE CREDITORS WAS FULLY ESTABLISHED AND THERE CAN BE NO PREPONDERANCE OF PROBABILITIES THAT THESE LOANS WERE IN FACT ACCOMMODATION ENTRIES . THUS IN THE CASE OF ASSESSEE THE SOURCE OF SOURCE IS ALSO AVAILABLE WITH THE DEPARTMENT. NO CONCEALED SOURCE OF INCOME AS A RESULT OF SEARCH AND SURVEY:- DURING THE COURSE OF SEARCH CARRIED OUT OVER THE AS SESSEE GROUP NO DOCUMENT OR EVIDENCE WAS FOUND TO SHOW THAT THE ASSES SEE COMPANY WAS HAVING SOME UNDISCLOSED INCOME. FROM THE RECORD WE FOUND THAT THE ASSESSEE COMPANY WAS NOT HAVING ANY UNDISCLOSED INCOME. DURING THE COURSE OF SEARCH PROCEEDINGS OVER ASSESSEE GROU P CARRIED AS WELL AS POST SEARCH INVESTIGATION AND ASSESSMENT PROCEEDING S NO MATERIAL WAS FOUND BY THE DEPARTMENT AGAINST THE ASSESSEE TO PRO VE THAT THE ASSESSEE COMPANY HAD CHANNELIZED ITS UNACCOUNTED MO NIES IN FORM OF UNSECURED LOANS . THERE IS NO ANY DEPOSIT OF CASH OR SUSPICIOUS FUNDS IN ACCOUNT OF INVESTOR COMPANIES. THE ENTIRE UNSECURED LOAN WAS INVESTED BY THE INVESTOR COMPANY OUT OF FUNDS OWNED BY IT WHI CH IS SUPPORTED BY THE BANK STATEMENTS OF THE RESPECTIVE COMPANY, AFFI DAVITS OF THEIR DIRECTORS ETC. THE BANK STATEMENTS OF THE INVESTOR C OMPANY CLEARLY DEMONSTRATE THAT THERE IS NO CASH DEPOSIT IN BANK A /C OF LENDER ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 32 COMPANY. THE INVESTOR COMPANY WERE INCORPORATED MUCH PRIOR TO INVESTMENT MADE IN ASSESSEE COMPANY AND HAVING THEI R SUFFICIENT NET WORTH. THUS IN THE CASE OF SEARCH ASSESSMENTS NO ADDI TIONS CAN BE MADE WITHOUT HAVING CORROBORATIVE MATERIAL AND EVIDE NCES AS A RESULT OF SEARCH. ALLEGATION OF SHELL COMPANIES WITHOUT MATERIAL IN THE LIGHT OF SUBMISSION, AS AFORESAID, IT WAS SUB MITTED THAT THE ALLEGATION PERTAINING TO THAT THE INVESTMENTS WERE R ECEIVED FROM SHELL COMPANIES IS WITHOUT BASIS, MATERIAL, EVIDENCE AND P URELY BASED ON SURMISES, CONJECTURES, IRRELEVANT MATERIAL. NO ANY POSITIVE MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT THESE INVESTOR COMPA NIES ARE SHELL COMPANY. THE COMPANY IS REGISTERED COMPANY UNDER THE COMPANIES ACT AND IS HAVING AN INDEPENDENT IDENTITY UNDER THE COM PANIES LAW. THEREFORE THE INVESTOR COMPANY CANNOT BE ALLEGED AS SHELL COMPANY WITHOUT HAVING ANY CORROBORATIVE EVIDENCES AND THE S AME ARE GENUINE COMPANY HAVING GENUINE AFFAIRS. ASSESSMENT OF THE I NVESTOR COMPANY WAS COMPLETED U/S 143(3) OF I.TAX ACT, AND THE AO OF THE INVESTOR COMPANY ASSESSED THE COMPANY AS REGULAR COMPANY- NO T AS SHELL COMPANY. THE ROC HAS ALSO NOT CATEGORIZED THE INVEST OR COMPANY AS ' SHELL COMPANY' BUT CATEGORIZED AS 'ACTIVE' COMPANY ' ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 33 NON PRODUCTION OF DIRECTORS FOR PERSONAL APPEARANCE BEFORE THE ASSESSING OFFICER. FURTHER TO SUBMISSIONS MADE ABOVE, THE CRUX OF THE ALLEGATION AND BASIS OF THE ADDITION AS MADE OUT BY THE LD. AO IS THAT S INCE ASSESSEE COULD NOT PRODUCE DIRECTORS OF THE INVESTOR COMPANY, WHICH PROVES THAT THIS COMPANY IS 'SHELL' COMPANY AND ALL THE INVESTMENT M ADE BY THIS COMPANY FALL UNDER THE UNEXPLAINED CREDIT OF THE AS SESSEE. IN THIS RESPECT, AT THE OUTSET IT IS SUBMITTED THAT IT IS A UNIQUE THEORY PROPOUNDED BY LD. AO WITHOUT HAVING ANY FORCE OF LAW. LD. AO HAS MADE THIS OBLIGATION MANDATORY BEYOND THE PROVISION S OF THE SECTION-68 BY EXPANDING THE ONUS ON THE ASSESSEE, BEYOND THE E XPECTATIONS OF PARLIAMENT. THE ASSESSEE HAS NO STATUTORY POWER TO EN FORCE THE PERSONAL PRESENCE OF THE PARTIES. IF POWER TO CALL T HE WITNESS AND EXAMINE HIM ARE NOT EXERCISED JUDICIALLY THAN THE D EPOSIT CANNOT BE CONSIDERED AS UNDISCLOSED INCOME. RELIANCE IS PLAC ED ON THE FOLLOWING DECISIONS. 1) NATHU RAM PREMCHAND VS CIT (1963) 49 ITR 561 (A LL); 2) E.M.C. WORKS P LTD VS ITO ( 1963) 49 ITR 650 (ALL ) 25. AS PER THE LD AR, THE ASSESSEE HAS DISCHARGED I TS ONUS LAID DOWN U/S 68:- ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 34 UNDER SECTION 68, THE ONUS IS ON THE ASSESSEE TO O FFER EXPLANATION WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF ACCO UNT AND IF THE ASSESSEE OFFERS NO EXPLANATION OR THE EXPLANATI ON OFFERED IS NOT IN THE OPINION OF THE AO, SATISFACTORY, THEN SU CH CASH CREDIT IS LIABLE TO BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE OF THAT RELEVANT PREVIOUS YEAR. THIS IS NOT THE CASE WH ERE ASSESSEE HAS NOT PROVIDED RELEVANT DETAILS. IN THIS CASE THE ASSESSEE DISCHARGED ITS ONUS BY FILING THE DOCUMENTS FOR WHIC H THE AO HAS NOT POINTED ANY DISCREPANCY. THERE IS NO MATERIAL WIT H THE LD. AO TO PROVE THE FUNDS RECEIVED BY THE ASSESSEE AS NON- GENUINE AND THE BELIEF OF THE LD. AO IS SOLELY BASED ON SOME RE PORTS OF THE INVESTIGATION WINGS OR SOME STATEMENTS OF THE PARTIE S WHICH ARE NOT ANY WAY CONCERNED WITH THE ASSESSEE. HOWEVER, BEFORE EMBARKING ON THE ALLEGATION OF THE L D. AO, THE LD. AR SUBMITTED HIS SUBMISSIONS ON MERITS IN CASE OF THE LENDER COMPANY IN RESPECT OF WHOM ADDITION WAS MADE, WHICH READS AS FOLL OWS: A) M/S JALSAGAR COMMERCE PVT. LTD. AS WE UNDERSTAND AND ON THE BASIS OF DETAILS/INFORMATION AVAILABLE WITH ASSE SSEE NO SUMMON/NOTICE UNDER SECTION 131 OR 133 (6) OF THE A CT WAS ISSUED TO M/S JALSAGAR COMMERCE PVT. LTD., EITHER B Y THE LD. AO OR BY THE CONCERNED AO OR BY THE DDIT (INV.) KOLKATA, WHICH SHOWS THAT LD. AO HAD NO DOUBT REGARD ING THE VERACITY OF THE DOCUMENTS FURNISHED BY THE ASSE SSEE AS NOTHING HAD BEEN DONE BY THE LD. AO. THUS, ADDITION OF UNSECURED LOAN, PROVIDED BY M/S JALSAGAR COMMERCE P VT. LTD. IS UNREASONABLE, UNTENABLE, WITHOUT ANY BASIS A ND BAD IN LAW ON THIS COUNT ITSELF. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 35 26. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE FOUN D THAT ON THE FOLLOWING THREE REASONS, THE ASSESSING OFFICER HAS N OT ACCEPTED THE UNSECURED LOANS RECEIVED BY THE ASSESSEE AS GENUINE . I) PERSONAL NON ATTENDANCE OF DIRECTORS OF THE COMP ANIES FROM WHOM THE ASSESSEE RECEIVED LOAN. II) REPORT OF THE INVESTIGATION DIRECTORATE REVELIN G THAT TRANSACTION OF KOLKATA BASED COMPANIES IN THE FORM OF UNSECURED LOAN WITH THE ASSESSEE ARE NOT GENUINE. III) STATEMENTS OF VARIOUS ENTRY OPERATORS WHEREIN THEY ADMITTED TO MANAGING THE COMPANIES FROM WHOM THE ASSESSEE RECEI VED LOAN. IN THIS REGARD WE MAY OBSERVE AS UNDER: - I) PERSONAL PRESENCE OF DIRECTORS: WE HAVE DISCUSSED THIS ISSUE HEREINABOVE II) REPORTS OF THE INVESTIGATION DIRECTORATE A) THE INQUIRIES ON WHICH THE LD. AO IS REPLYING A ND ON THE BASIS OF WHICH THE HUGE ADDITION WAS MADE IN THE IN COME OF THE ASSESSEE CANNOT BE TAKEN AS EVIDENCES IN THE CASE OF THE ASSESSEE AS THE SAME WAS NOT CONDUCTED IN TH E CASE OF THE ASSESSEE. THE LD AO MADE THE HUGE ADDIT ION JUST RELYING UPON SUCH INQUIRIES REPORTS WITHOUT HA VING IN POSSESSION THE MATERIAL IN SUPPORT OF SUCH INQUIRIE S AND MAKING INDEPENDENT INQUIRIES IN THIS REGARD. IT IS WELL SETTLED POSITION OF LAW THAT THE LD. AO CANNOT BE G UIDED FOR HIS DECISIONS BY WHAT THE OFFICER PREPARING THE REPORT SAYS. AS PER SECTION 119 (1) (A) EVEN THE CBDT CANN OT ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 36 ISSUE DIRECTIONS OR INSTRUCTIONS TO AN AO SO AS TO REQUIRE ANY INCOME TAX AUTHORITY TO MAKE A PARTICULAR ASSES SMENT OR TO DISPOSE OF A PARTICULAR CASE IN A PARTICULAR MANNER. THE SC IN THE CASE OF RAJESH KUMAR VS DCIT (2006) 1 57 TAXMAN 168 (SC) HAS SAID THAT AN ASSESSMENT ORDER IS THE RESULT OF A JUDICIAL PROCEEDINGS. ACCORDING TO THE APEX COURT, AN ASSESSMENT PROCEEDING IS A JUDICIAL PROCE EDING. OBVIOUSLY, NO ONE CAN HAVE INFLUENCE OR SAY IN THE COURSE OF JUDICIAL PROCEEDINGS THAT A PARTICULAR DECISION SHOULD BE TAKEN IN A PARTICULAR WAY OR MANNER AFFECTING THE INDEPENDENCE OF THE DECISION-MAKING AUTHORITY. THE AO MUST DECIDE THE ISSUE BEFORE HIM ON A PROPER APPREC IATION OF EVIDENCE ADDUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NOT TO BE SWAYED AND CARRIED AWAY UNDER SOME REPORT. HONBLE APEX COURT HAS HELD IN THE CASE OF DAKESHWARI COTTON MILLS LTD VS CIT 26 ITR 7 75- THAT ONE WHO HEARS MUST DECIDE THE CASE.. B) PERUSAL OF ASSESSMENT ORDER SHOWS THAT A.O. HAS REFERRED TO REPORT OF INVESTIGATION WING. THE A.O. HAS TO PA SS THE ASSESSMENT ORDER ON THE BASIS OF HIS OWN OPINION AN D APPLICATION OF MIND. THERE SHOULD HAVE BEEN INDEPEN DENT APPLICATION OF FACTS AFTER PERUSING THE EVIDENCES A ND INFORMATION. REPORT ITSELF CANNOT BE A GROUND TO MA KE ADDITION RELIANCE IS PLACED ON THE DECISION OF HON BLE DELHI HIGH COURT IN CIT V FAIR FINVEST LTD. 357 ITR 146. C) INFORMATION OF INVESTIGATION DIRECTORATE:- ON BARE PERUSAL OF THE DOCUMENTS RELIED UPON AND PROVIDED BY THE LD. AO, IT IS NEEDLESS TO SAY THAT LD. AO ONLY REPRODUCED THE INFORMATION OF INVESTIGATION ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 37 DIRECTORATE WITHOUT CONDUCTING ANY INDEPENDENT ENQU IRY AND DRAWING ANY CONCLUSION ON THE SAME AND EVEN THE INFORMATION OBTAINED UNDER THE AFORESAID LETTERS HA VE NOT BEEN APPRECIATED IN THE RIGHT PERSPECTIVE AND IN TO TO, WHICH SHOWS DISTORTED APPROACH OF LD. AO TOWARDS TH E AFORESAID DOCUMENTS AS WELL. THUS, WITHOUT HAVING A NY DOCUMENTS IN SUPPORT OF THE CONTENTS OF DOCUMENTS, RELIED UPON BY LD. AO, AS AFORESAID, ARE NOT ACCEPT ABLE AND NOT TENABLE AT ALL. D) REPORTS OF THE INVESTIGATION DIRECTORATE: - (I) SHARING OF INFORMATION LETTER OF ACIT/CC-2(1)/S HARING OF INFORMATION/KOL/2016-17 DATED 09.03.2017: (PB-I PG 385- 386/A.Y 2015-16) THIS REPORT IS TOTALLY IRRELEVANT FOR THE ASSESSE E AS NOTHING HAS BEEN SAID IN THE REPORT ABOUT THE ASSESSEE COMPANY. UNDER THE AFORESAID LETTER, A COPY OF THE LEDGER IS STATED TO HAVE BEEN ENCLOSED WHEREIN TWO ENTRIES OF RS. 37,53,50,0 00 FOR THE FY 2010-11 AND RS. 10,05,00,000 FOR THE FY 2011-12 IS STATED TO HAVE BEEN BOGUS ACCOMMODATION ENTRIES, AS PER TH E STATEMENT OF MR. ANAND KUMAR SHARMA. IT IS FURTHER STATED IN THE LETTER THAT SINCE THE ABOVE ENTRY IS BOGUS ENTRY HENCE ALL THE TRANSACTIONS ENTERED INTO BETWEEN THE ABOVE MENTION ED ENTITIES AND THE BENEFICIARY ARE BOGUS ACCOMMODATION ENTRIES IN NATURE. MERELY ON THE BASIS STATEMENT OF A THIRD PERSON, W HO IS NOT HAVING ANY CAPACITY (PROMOTER OR DIRECTOR OR PR INCIPLE OFFICER OR SHARE HOLDER OR CEO/ MANAGER) IN THE COM PANY, GENUINE TRANSACTIONS CANNOT BE HELD AS ACCOMMODATIO N ENTRY. FURTHERMORE, THE STATEMENT OF MR. ANAND KUMAR SHAR MA IS NOT ADMISSIBLE IN LAW INASMUCH AS THE OPPORTUNIT Y FOR CROSS EXAMINATION OF THE WITNESS WAS NOT PROVIDED EVEN AF TER REPEATED REQUEST OF THE ASSESSEE. THE RELIANCE IS PLACED UPO N THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES V/S COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II 2016 (15) SCC 785 (SC): ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 38 FURTHER, THE ASSESSMENT OF M/S JALSAGAR COMMERCE P VT. LTD HAS BEEN CARRIED OUT BY THE DEPARTMENT U/S 143( 3) OF I.TAX ACT FOR VARIOUS ASSESSMENT YEARS AND NO WHERE THIS COMPANY WAS ASSESSED AS ENTRY OPERATOR. (II) INFORMATION RECEIVED FROM THE ITO (INV.), U-3, KOLKATA OF INVESTIGATION DIRECTORATE OF KOLKATA, VIDE LETTER N UMBER ITO (INV.)/U-3, KOL./FIU/2015-16/6470/DATED 30.03.2 016. (PB-I PG 387-388/ A.Y 2015-16) UNDER THE AFORESAID LETTER, ITO HAS INFORMED THE LD . AO THAT DURING THE FY 2011-12 HUGE LOAN BEING RS. 29.47 CRO RE WAS ADVANCED BY M/S MAGNET CAPITAL MARKET LTD. TO M/S K OTA DALL MILL. IT IS HUMBLY SUBMITTED THAT THE AFORESAID LETTER MA INLY PERTAINS STR (SUSPICIOUS TRANSACTION REPORT) RELATING TO M/S MAGNET CAPITAL MARKET LTD. THE ASSESSEE COMPANY HAS NO TRANSACTION WITH M/S MA GNATE CAPITAL MARKET LTD, HENCE THIS REPORT IS TOTALLY IR RELEVANT FOR THE CASE OF ASSESSEE. (III) INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME TAX (INV.), U-1(2), KOLKATA OF INVESTIGATION DIRECT OR OF KOLKATA VIDE LETTER NUMBER DDIT(INV.)/U-1(2), KOL/1 6- 17/4499 DATE 24.03.2017. (PB-I PG 389-390/ A.Y 2015 -16) THE AFORESAID LETTER PERTAINS TO CASH DEPOSIT IN TH E ACCOUNT OF M/S AJAY TRADERS AND TRANSFER OF FUNDS FROM M/S AJA Y TRADERS TO M/S SANGAM DISTRIBUTORS PVT. LTD. THE ASSESSEE COMPANY HAS NO TRANSACTION WITH M/S SA NGAM DISTRIBUTORS PVT. LTD, HENCE THIS REPORT IS TOTALLY IRRELEVANT FOR THE CASE OF ASSESSEE. (IV) INVESTIGATION REPORT OF THE DDIT (INV.), UNIT -1(3) KOLKATA VIDE LETTER NUMBER DDIT (INV)/ UNIT-1(3)/ KOL/ JAIP UR/ COMMISSION/ 2017-18/1867 DATED 28.11.2017. (PB PG 391-399/VOL-I/A.Y 2015-16) . SUBMISSION: SILENT FEATURES OF THE REPORT ARE AS UNDER:- ADMITTED IN THE REPORT THAT NO NOTICE REMAINED UN- SERVED. IT IS HUMBLY SUBMITTED THAT DDIT (INV) IN THE ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 39 AFORESAID LETTER HAS ADMITTED THAT NO NOTICE RETURN ED UN- SERVED BY THE POSTAL AUTHORITIES I.E. ALL THE NOTIC ES, ISSUED BY THE DDIT (INV) WERE DULY SERVED UPON THE RESPECT IVE CREDITORS/INVESTORS COMPANIES, WHICH PROVES THEIR IDENTITY. ADMITTED THAT ALL DETAILS FILED -TAB I IT IS ALSO ADMITTED FACT THAT ALL THE CREDITORS/INVESTORS COMPANIES DUL Y RESPONDED TO THE NOTICES OF DDIT (INV) BY SUBMITTIN G ALL THE REQUISITE DOCUMENTS TO PROVE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. TAB -II HELD PAPER COMPANY BASED ON STATEMENT, NEITHER COPY OF THESE STATEMENTS EXCEPT 4 WAS PROVIDED TO T HE ASSESSEE NOR OPPORTUNITY OF CROSS EXAMINATION/CONFRONTATION WAS GIVEN TO ASSESSEE. TAB -II (PB-I PG 394/A.Y 2015-16) NO NAME OF ENTRY OPERATOR/DUMMY DIRECTORS MENTIONED AGAINST THIS COMPANY M/S JALSAGAR COMMERCE PVT. LTD. SR NO. 1. IN TABLE III AT PB-I PG 397-399/A.Y 2015-16 NAME OF ENTRY OPERATOR MENTIONED AND DUMMY DIRECTOR S MENTIONED BUT THE NAME OF M/S JALSAGAR COMMERCE PVT. LTD IS NOT APPEARING IN TABLE III (V) INVESTIGATION REPORT OF THE DDIT (INV.), UNIT-1 (3), KOLKATA VIDE LETTER NUMBER DDIT (INV)/UNIT- 1(3)/KOL/JAIPUR/COMMISSION/2017-18/1924 DATED 06.12.2017. (PB PG 400-401/VOL-I/A.Y 2015-16) . SUBMISSION: IN THIS LETTER DATED 06.12.2017 THE DATABASE DATA O F ENTRY OPERATOR PREPARED BY THE DIRECTORATE OF INVESTIGATI ON WING HAS BEEN SHARED WITH LD. AO. AT TABLE 1ST AT PB-I PG 400 NAME OF TWO COMPANIES VIZ VSG LEASING & FINANCE COMPANY LTD AND DENIM DEVELOPERS LTD MENTIONED. THE ASSESSEE HAS NO TRANSACTION WITH THESE TWO COMPANIES. HERE ALSO NAM E OF M/S JALSAGAR COMMERCE PVT. LTD NOT APPEARING. AT TABLE II AT PB-I PG 401 NAME OF FIVE COMPANIES MENTIONED. THE ASSESSEE HAD UNSECURED LOAN FROM M/S JALSAGAR COMMERCE PVT. LTD. THE ASSESSEE HAS NO CONCERN WITH OTHER FOUR COMPANIES. IN THIS REPORT I T HAS BEEN MENTIONED THAT DEEPA KRIPLANI IS DIRECTOR OF M/S JALSAGAR COMMERCE PVT. LTD AND MR. ANAND SHARMA/JANARDHAN CHOKHANI IS ENTRY OPERATOR OF THIS COMPANY. THE LD AO HAS PROVIDED OF COPY OF STATEMEN T ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 40 OF SHRI ANAND SHARMA DATED 06-01-2014 (PB PG 76- 81/VOL- I/A.Y 2015-16) AND DATED 06-02-2014 (PB PG 82-85/VOL-I/AY 2015-16) . IN BOTH THE STATEMENTS HE HAS NO WHERE STATED THAT M/S JALSAGAR COMMERCE PVT. LTD WAS PROVIDING ACCOMMODATION ENTRIES. FURTHER, THE ENTIRE DATA BASE IS BASED ON THE STATE MENT RECORDED BEHIND THE BACK OF THE ASSESSEE AT DIFFERE NT OCCASIONS. THE OPPORTUNITY OF CROSS EXAMINATION WAS NOT GIVEN TO THE ASSESSEE, THEREFORE, THE STATEMENT OF ALLEGED ENTRY OPERATOR CANNOT BE UTILIZED FOR ADVERSE INF ERENCE AGAINST THE ASSESSEE. IT IS HUMBLY SUBMITTED THAT NO CONCLUSION, WHATSOEVER IT MAY BE, HAS BEEN DRAWN BY THE AUTHORI TIES AND IT IS MERELY A SHARING OF INFORMATION BY THE IN TERNAL AUTHORITY AND WITHOUT HAVING ANY COGENT EVIDENCES F OR ANY OF THE RELEVANCY WITH THE ASSESSEE, THE SAME CA NNOT BE RELIED UPON. (III) STATEMENT OF 4 ALLEGED ENTRY OPERATORS AS REGARD THE STATEMENT OF 4 ALLEGED ENTRY OPERATOR S, WE SUBMIT AS UNDER:- A) MR. ANAND SHARMA - THE STATEMENT OF MR. ANAND SHARMA WAS RECORDED ON 06.01.2014 AND 06.02.2014. PB-I PG 76-81 & 82-95 /A.Y 2015-16 RESPECTIVELY HE HAS NO WHERE STATED THAT M/S JALSAGAR COMMERCE PVT. LTD HAS PROVIDED ACCOMMODATION ENTRY TO THE ASSESSE E COMPANY. THE STATEMENT OF MR. ANAND SHARMA IS TOTAL LY IRRELEVANT FOR THE CASE OF ASSESSEE. FURTHER THE OPPORTUNITY FOR CROSS EXAMINATION WAS NOT GIVEN TO THE ASSESSEE, THEREFORE, THE STATEMENT OF SHRI ANAND SH ARMA CANNOT BE USED AGAINST THE ASSESSEE. B) MR. HANISH TOSHNIWAL THE STATEMENTS WERE RECORDED ON 11.05.2015, WHEREIN A LIST OF 207 COMPANIES HAS BEEN GIVEN. NAME OF M/S JALSAGAR COMMERCE PVT.LTD I S NOT APPEARING IN THE LIST. THE STATEMENT OF SHRI HA NISH TOSHNIWAL IS TOTALLY IRRELEVANT FOR THE CASE OF ASS ESSEE. HOWEVER, DATA-BASE BY THE DIRECTORATE OF INVESTIGAT ION WING, KOLKATA IS ITSELF CONTRADICTORY. FURTHERMORE, THE STATEMENTS WERE NOT RECORDED IN THE CASE OF ASSESSE E. FURTHER THE OPPORTUNITY FOR CROSS EXAMINATION WAS N OT GIVEN TO THE ASSESSEE, THEREFORE, THE STATEMENT OF SHRI HANISH TOSHNIWAL CANNOT BE USED AGAINST THE ASSESS EE. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 41 C) MR. SHIV SHANKER BANKA THE STATEMENT OF MR. SHIV SHANKAR BANKA WAS RECORDED ON 15.07.2014, IN WHICH HE INDICATED COMPANY M/S VSG LEASING AND FINANCE CO. PVT LTD. IT IS PERTINENT TO MENTION THAT NO TRANSACTION HAS BEEN CARRIED OUT BY THE ASSESSEE WITH THIS COMPANY. THEREFORE THE STATEMENT OF MR. SHIV SHANKAR BANKA I S TOTALLY IRRELEVANT FOR THE CASE OF ASSESSEE. FURTHE R THE OPPORTUNITY FOR CROSS EXAMINATION WAS NOT GIVEN TO THE ASSESSEE, THEREFORE, THE STATEMENT OF SHRI SHIV SHA NKAR BANKA CANNOT BE USED AGAINST THE ASSESSEE. D) MR. ANKIT BAGRI- THE STATEMENT OF MR. BAGRI WAS RECORDED ON 03.07.2014, WHEREIN HE HAS DEPOSED ABOU T THE COMPANY NAMELY M/S CAPLIN DEALCOM PVT. LTD. IT IS PERTINENT TO MENTION THAT NO TRANSACTION HAS BEEN C ARRIED OUT BY THE ASSESSEE WITH THIS COMPANY. THEREFORE TH E STATEMENT OF MR. ANKIT BAGRI IS TOTALLY IRRELEVANT FOR THE CASE OF ASSESSEE. FURTHER THE OPPORTUNITY FOR CROSS EXAMINATION WAS NOT GIVEN TO THE ASSESSEE, THEREFOR E, THE STATEMENT OF SHRI ANKIT BAGRI CANNOT BE USED AGAINS T THE ASSESSEE. AFFIDAVIT SUBMITTED:- IT IS ALSO TO BE APPRECIATED THAT BESIDES SUBMITTI NG SUBSTANTIVE DOCUMENTS WITH THE REPLY BY RESPECTIVE LENDER AS WE LL AS BY THE ASSESSEE, ASSESSEE, IN ORDER TO MAKE HIS CASE, SUBM ITTED AFFIDAVITS OF DIRECTORS M/S JALSAGAR COMMERCE PVT. LTD. (COPY AT PB-II PAGE NO. 446- 449/A.Y 2015-16), WHEREIN THEY CONFIRMED THE FOLLOW ING MAJOR FACTS: - (I) INFORMATION REGARDING BUSINESS ACTIVITY OF THE COMP ANY. (II) BOARD OF DIRECTORS IS NOT WORKING UNDER ANY EXTERNA L INFLUENCE AND NOT APPOINTED BY ANY EXTERNAL PERSON. (III) ADDRESS OF JURISDICTION AO. (IV) INFORMATION REGARDING ISSUANCE OF SHARE CAPITAL BY THE LENDER COMPANY AND DETAILED OF ASSESSMENT CARRIED OUT BY THE RESPE CTIVE AOS. (V) CONFIRMATION IN AFFIDAVIT REGARDING PROVIDING UNSEC URED LOAN AND DETAIL THEREOF. (VI) DETAIL REGARDING SOURCE OF FUNDS OF THE COMPANY. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 42 THOUGH, THE LD. AO HAS MENTIONED A VERY GENERALIZED STATEMENT IN THE SHOW CAUSE NOTICE AS WELL AS IN THE ASSESSMENT ORDE RS AND FAILED TO SUBSTANTIATE ITS CONTENTION INASMUCH AS THE UNSECUR ED LOAN FROM NBFCS. YET THE ASSESSEE DEALT WITH THE EACH AND EVE RY ALLEGATION OF THE LD. AO ELABORATELY TO SHOW THAT EVEN GENERALIZED ST ATEMENTS, OBSERVATIONS AND ALLEGATIONS LEVELED AGAINST THE AS SESSEE COMPANY ARE BASELESS, UNTENABLE, FACTUALLY INCORRECT AND HAVING NO ANY FORCE OF LAW, SO AS TO NOT ACCEPTABLE AGAINST THE ASSESSEE COMPAN Y CONSIDERING THE PRINCIPLE OF EQUITY AND LAW. RECEIPT OF PAYMENT AGAINST UNSECURED LOAN THROUGH B ANKING CHANNEL AS ALREADY SUBMITTED DURING ASSESSMENT PROCEEDINGS , UNSECURED LOAN INVESTED BY NBFC TO THE ASSESSEE COMPANY THROUGH RT GS/ACCOUNT PAYEE CHEQUE. THE PAYMENTS CREDITED IN THE BANK ACC OUNT OF THE ASSESSEE COMPANY. THEREFORE, THE ASSESSEE HAS EXPLA INED THE NATURE AND SOURCE OF THE CREDIT ENTRY AND DISCHARGED THE O NUS TO PROVE THE GENUINENESS OF THE TRANSACTIONS. THE AFORESAID CONT ENTION OF THE ASSESSEE FINDS SUPPORT FROM THE FOLLOWING JUDICIAL PRONOUNCEMENTS: I) CIT V. VARINDER RAWLLEY [2014] 366 ITR 232 (PUNJAB & HARYANA) WHERE ASSESSEE RECEIVED AND RETURNED AMOUNT IN QUES TION BY WAY OF ACCOUNT PAYEE CHEQUES AND TRANSACTION WAS RE FLECTED IN BANK ACCOUNTS OF ASSESSEE AS WELL AS CREDITOR WHO W AS AN INCOME-TAX ASSESSEE, ASSESSEE HAD SUFFICIENTLY EXPL AINED NATURE AND SOURCE OF CREDIT ENTRY AND IN SUCH CASE ENTRY C OULD NOT BE TREATED AS ASSESSEE'S INCOME WHEN DEPARTMENT FAILED TO PROVE TO CONTRARY. II) CIT V. VIJAY KUMAR JAIN [2014] 221 TAXMAN 180 WHERE IT WAS APPARENT FROM MATERIAL ON RECORD THAT LENDERS HAD GRANTED LOAN TO ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 43 AND THEY HAD GOT SUFFICIENT BALANCE IN THEIR ACCOUN T BEFORE ISSUING THOSE CHEQUES, LOAN AMOUNT COULD NOT BE ADD ED TO ASSESSEE'S TAXABLE INCOME UNDER SECTION 68 MERELY O N GROUND THAT LENDERS WERE ENGAGED IN PROVIDING ACCOMMODATIO N ENTRIES ALSO. IN SUPPORT OF THE CONTENTION THAT THE STATEMENT CAN NOT BE TAKEN AS INCRIMINATING MATERIAL, RELIANCE WAS PLACED ON THE F OLLOWING JUDICIAL PRECEDENTS: (I) HONBLE DELHI COURT IN COMMISSIONER OF INCOME TAX V. HARJEEV AGGARWAL (2016) 290 CTR 263 HELD THAT STATEMENTS RECORDED UNDER SECTION 132 (4) OF THE ACT OF THE AC T DO NOT BY THEMSELVES CONSTITUTE INCRIMINATING MATERIAL. (COPY AT CASE LAW PB 496-508 IN CASE OF M/S KOTA DA LL MILL) (II) HONBLE DELHI HIGH COURT [2017] 397 ITR 82 IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI VERSUS BEST INFRASTRUCTURE (INDIA) PVT. LTD WHEREIN IN PAR A 38 OF THE ORDER HAS HELD THAT STATEMENTS RECORDED UNDER SECTION 132 (4) OF THE ACT OF THE ACT DO NOT BY THEMSELVES CON STITUTE INCRIMINATING MATERIAL AS HAS BEEN EXPLAINED BY THI S COURT IN COMMISSIONER OF INCOME TAX V. HARJEEV AGGARWAL (SUP RA). (COPY AT CASE LAW PB 509-523 IN CASE OF M/S KOTA DA LL MILL) THUS THE AS A RESULT OF SEARCH THE DEPARTMENT DID N OT FIND ANY POSITIVE MATERIAL AGAINST THE ASSESSEE TO SHOW THAT THE UNSE CURED LOAN AND SHARE CAPITAL AND SHARE PREMIUM CAPITAL RECEIVED FROM VAR IOUS COMPANIES ARE NOT GENUINE. IN VIEW OF ABOVE SUBMISSION THIS IS TO SUBMIT THAT ORDER PASSED U/S 153A R.W.S. 143(3) OF INCOME TAX ACT, 1961 IS BAD IN LAW, VOID-AB INITIO AND DESERVE TO BE ANNULLED AND THE FINDINGS MADE BY LD CIT(A) DESERVE S TO BE SET ASIDE. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 44 10. IN SUPPORT OF THE PROPOSITION THAT THE ASSESSME NT ORDER PASSED WITHOUT GIVING OPPORTUNITY OF CROSS EXAMINATION AMOU NTS TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, THEREFORE, THE ASSES SMENT ORDER OUGHT TO HAVE BEEN HELD AS BAD IN LAW AND DESERVES TO BE ANNU LLED. RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF M/S BARAN ROL LER FLOUR MILLS PVT. LTD. FOR THE A.Y. 2010-11 AND 2011-12. IT WAS ARGUED BY THE LD AR THAT THE ASSESSEE HAS TAKEN THE SIMILAR GROUND IN THE GR OUP'S MAIN LEAD CASE M/S KOTA DALL MILL (IN ITA 997/JPR/2018, ITA 998/ JPR/2018, ITA 999/JPR/2018, ITA 1000/JPR/2018, ITA 1119/JPR/2018, ITA 1001/JPR/2018 AND ITA 1002/JPR/2018 FOR A.Y 2010-11 TO A.Y 2016- 17). HON'BLE ITAT HAS FOLLOWED ITS FINDINGS ON THIS I SSUE IN ASSESSEE'S ANOTHER GROUP CASE M/S BARAN ROLLER FLOUR MILLS PVT . LTD (IN CO 45/JPR/2018 & CO 46/JPR/2018). THE FACTS AND CIRCUM STANCES OF THIS CASE ARE SAME TO M/S KOTA DALL MILL. THE ASSESSEE R ELIES UPON FINDINGS OF HON'BLE TRIBUNAL IN THE CASE OF M/S KOTA DALL MIL L WHICH IS AT PG 76-87 OF THE ORDER OF HON'BLE ITAT. 11. FROM THE RECORD WE ALSO FOUND THAT THE ASSESSEE MADE REPEATED REQUESTS FOR CROSS EXAMINATION OF WITNESSES. THE LD A O DID NOT PROVIDE THE OPPORTUNITY OF CROSS EXAMINATION OF WITNESSES. TH E ASSESSEE RAISED THIS ISSUE BEFORE LD CIT(A). LD CIT(A) CALLED REMAND REPORT FROM AO AND DIRECTED TO PROVIDE THE ASSESSEE OPPORTUNITY OF CRO SS EXAMINATION. LD ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 45 AO DURING THE REMAND PROCEEDING ASKED THE ASSESSEE THE NAME OF PERSONS TO WHOM THE ASSESSEE WANTS TO CROSS EXAMINE AND TO GIVE ASSURANCE TO BEAR THE EXPENSES OF WITNESSES. THE ASSE SSEE PROVIDED THE NAME OF PERSONS TO WHOM IT WANTS TO CROSS EXAMINE AND GAVE ASSURANCE TO BEAR ALL THE COST RELATING TO CROSS EXAMINATION OF WITNESS. HOWEVER THE LD AO DID NOT PROVIDE THE OPPORTUNITY OF THE CR OSS EXAMINATION AND LD CIT (A) ALSO HELD THAT THERE WAS NO NEED TO GIVE T HE OPPORTUNITY OF CROSS EXAMINATION. THUS, THE LOWER AUTHORITIES VIOLA TED THE PRINCIPLE OF NATURAL JUSTICE, WHICH TENDERS THE ASSESSMENT VOID A B-INITIO. 12. IN SUPPORT OF THE ABOVE PROPOSITION, RELIANCE WA S PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF AN DAMAN TIMBER INDUSTRIES V/S COMMISSIONER OF CENTRAL EXCISE, KOLK ATA-II 2016 (15) SCC 785 (SC) (COPY AT CASE LAW PB 808-811 FILED IN CASE OF M/S KOTA DALL MILL), WHEREIN HON'BLE SUPREME COURT HAS HELD THAT:- ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS -EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNT ED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOUL D BE PERTINENT TO NOTE ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 46 THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATI NG AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUT HORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF TH IS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROS S-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIA L WHICH WOULD NOT BE IN POSSESSION OF THE ASSESSEE THEMSELVES TO EXPL AIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE ASSESSEE WAN TED TO CROSS- EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE ASSES SEE WANTED FROM THEM . II) COMMISSIONER OF INCOME TAX V. ASHWANI GUPTA, 20 10 322 ITR 396 (DEL); THE DELHI HIGH COURT HELD THAT ONCE THERE IS A VIO LATION OF THE PRINCIPLES OF NATURAL JUSTICE INASMUCH AS WHEN ITS SEIZED MATERIAL WAS NOT PROVIDED TO AN ASSESSEE NOR WAS HE PERMITTED TO CROSS EXAMINE A PERSON ON WHOSE STATEMENT THE ASSESSING OFFICER REL IED, IT WOULD AMOUNT TO DEFICIENCY, AMOUNTING TO A DENIAL OF OPPO RTUNITY AND THEREFORE VIOLATION OF PRINCIPLES OF NATURAL JUSTIC E. IN THAT CASE CIT (A) HAD DELETED ADDITION MADE BY THE ASSESSING 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 TH E PARTY CONCERNED. THE DIVISION BENCH HELD THAT ONCE THERE IS VIOLATIO N OF THE PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SEIZED MATERIAL WAS NOT PROVIDED TO THE ASSESSEE NOR WAS GIVEN OPPORTUNITY OF CROSS EXAMINI NG THE PERSON WHOSE STATEMENT WAS BEING USED AGAINST THE ASSESSEE THE ORDER COULD NOT BE SUSTAINED. III) H.R. MEHTA V. ASSISTANT COMMISSIONER OF INCOME TAX 387 ITR 561(BOMBAY) ; ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 47 IN OUR VIEW IN THE LIGHT OF THE FACT THAT THE MONIE S WERE ADVANCED APPARENTLY ACCOUNT PAYEE CHEQUE AND WAS REPAID VIDE ACCOUNT PAYEE CHEQUE THE LEAST THAT THE REVENUE SHOULD HAVE DONE WAS TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO MEET THE CASE AGAINS T 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 SUCH OPPORTUNITY GOES TO ROOT OF THE MATT ER AND STRIKES AT THE VERY FOUNDATION OF THE REASSESSMENT AND THEREFORE R ENDERS THE ORDERS PASSED BY THE CIT (A) AND THE TRIBUNAL VULNERABLE. IN OUR VIEW THE ASSESSEE WAS BOUND TO BE PROVIDED WITH THE MATERIAL USED AGAINST HIM APART FROM BEING PERMITTING HIM TO CROSS EXAMINE TH E DEPONENTS. DESPITE THE REQUEST DATED 15TH FEBRUARY, 1996 SEEKI NG AN OPPORTUNITY TO CROSS EXAMINE THE DEPONENT AND FURNISH THE ASSES SEE WITH COPIES OF STATEMENT AND DISCLOSE MATERIAL, THESE WERE DENIED TO HIM. IN THIS VIEW OF THE MATTER WE ARE INCLINED TO ALLOW THE APPEAL O N THIS VERY ISSUE . IV) DECISION OF HONBLE ITAT JAIPUR BENCH IN THE CASE OF SHRI PRATEEK KOTHARI IN APPEAL NO. 159/JP/16 ORDER DATED 16/12/1 6 (COPY AT CASE LAW PB 827-848 FILED IN CASE OF M/S KOTA DALL MILL) IS APPLICABLE FOR THIS CASE. IN THE CASE OF SHRI PRATE EK KOTHARI THE ASSESSEE HAD REQUESTED FOR CROSS EXAMINATION OF SHR I SANBTOSH CHOUBEY SHRI AJIT SHARMA, SHRI RAJESH KUMAR SINGH AND OTHER PERSONS WHICH WAS DENIED BY THE LD. CIT(A). THE ITAT COORDINATE B ENCH IN THE CASE OF PRATEEK KOTHARI (SUPRA) HAS GIVEN VERDICT THAT W ITHOUT PROVIDING OPPORTUNITY OF CROSS-EXAMINATION OF THE MATERIALS G ATHERED AND STATEMENT RECORDED BEHIND THE ASSESSEE CANNOT BE US ED. IN THIS CASE HONBLE ITAT HAS HELD THAT:- 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 IMPUGNED ASSESSMENT YEAR AN D NOT ACCEPTING THE SAID LOAN TRANSACTION AS A GENUIN E TRANSACTION BY THE ASSESSING OFFICER AND THE RESULT ANT ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 48 ADDITION MADE UNDER SECTION 68 OF THE ACT. UNDISPUT EDLY, THE PRIMARY ONUS TO ESTABLISH GENUINENESS OF THE LO AN TRANSACTION IS ON THE ASSESSEE. IN THE INSTANT CASE , THE ASSESSEE HAS PROVIDED THE NECESSARY EXPLANATION, FURNISHED DOCUMENTARY EVIDENCE IN TERMS OF TAX FILI NGS, AFFIDAVITS AND CONFIRMATION OF THE DIRECTORS, BANK STATEMENTS OF THE LENDER, BALANCE SHEET OF THE LEND ER COMPANY, AND AN INDEPENDENT CONFIRMATION HAS ALSO BEEN OBTAINED BY THE ASSESSING OFFICER TO SATISFY T HE CARDINAL TEST OF IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN TRANSACTION. HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING IN RESP ECT OF SUCH EXPLANATION, DOCUMENTARY EVIDENCE AS WELL AS INDEPENDENT CONFIRMATION. APPARENTLY, THE REASON FO R NOT ACCEPTING THE SAME IS THAT THE ASSESSING OFFICE R WAS IN RECEIPT OF CERTAIN INFORMATION FROM THE INVESTIG ATION WING OF THE TAX DEPARTMENT AS PER WHICH THE TRANSAC TION UNDER CONSIDERATION IS A BOGUS LOAN TRANSACTION. TH E 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 O N THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSA CTION 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 T O ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN RE SPONSE, THE ASSESSEE SUBMITTED THAT SHRI BHANWARLAL JAIN IS NOT KNOWN TO HIM AND REGARDING VARIOUS INCRIMINATING DOCUMENTARY EVIDENCES SEIZED DURING THE COURSE OF SEARCH AND STATEMENTS RECORDED OF SHRI BHANWARLAL J AIN AND OTHER PERSONS, HE SPECIFICALLY REQUESTED THE AO TO PROVIDE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENT OF ALL VARIOUS PERSONS RECORDED IN THIS R EGARD AND PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SUCH PERSONS. HOWEVER, THE AO DIDNT PROVID E TO THE ASSESSEE COPIES OF SUCH INCRIMINATING DOCUME NTS AND STATEMENTS OF VARIOUS PERSONS RECORDED AND ALLO W THE CROSS-EXAMINATION OF ANY OF THESE PERSONS. WHIL E 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 MANAGED BY THEM. THIS ADMISSION AUTOMATICALLY MAKES ALL THE TRANSACTIONS DONE BY TH EM AS MERE PAPER TRANSACTIONS AND IN THESE CIRCUMSTANC ES, FURTHER AS PER THE INFORMATION NAME AND ADDRESS OF ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 49 ASSESSEE AND THE BENAMI CONCERN THROUGH WHICH ACCOMMODATION ENTRY OF UNSECURED LOANS WAS PROVIDED IS APPEARING IN THE LIST OF BENEFICIARIES TO WHOM T HE SAID GROUP HAS PROVIDED. THIS ADMISSION IS SUFFICIENT TO REJECT THE CONTENTIONS OF THE ASSESSEE. FURTHER, REGARDING CROSS EXAMINATION, THE AO STATED THAT TH E RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AND IT DEPENDS UPON THE CIRCUMSTANCES OF EACH CASE AND ALS O ON THE STATUTE CONCERNED. IN THE PRESENT CASE, NO S UCH CIRCUMSTANCES ARE WARRANTED AS IN THE LIST OF BENEFICIARIES TO WHOM ACCOMMODATION ENTRIES WERE PROVIDED BY THE SAID GROUP CATEGORICALLY CONTAINS T HE 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. THE AO FURTHER RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN 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 THE ASSESSEE THAT IF THE ENTRIES AND M ATERIAL ARE GATHERED BEHIND THE BACK OF THE ASSESSEE AND IF THE AO PROPOSES TO ACT ON SUCH MATERIAL AS HE MIGHT HAV E GATHERED AS A RESULT OF HIS PRIVATE ENQUIRIES, HE M UST DISCLOSE ALL SUCH MATERIAL TO THE ASSESSEE AND ALSO ALLOW THE CROSS EXAMINATION 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 NATU RAL JUSTICE STAND VIOLATED IN THE INSTANT CASE. IN OTHE R WORDS, WHERE THE AO DOESNT WANT TO ACCEPT THE EXPLANATION OF THE ASSESSEE AND THE DOCUMENTATION FURNISHED REGARD ING THE GENUINENESS OF THE LOAN TRANSACTION AND INSTEAD WANTS TO RELY UPON THE INFORMATION INDEPENDENTLY RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT IN RESPECT OF INVESTIGATION CARRIED OUT AT A THIRD PARTY, CAN THE SAID INFORMATION BE USED AGAINST THE ASSESS EE WITHOUT SHARING SUCH INFORMATION WITH THE ASSESSEE AND ALLOWING AN OPPORTUNITY TO THE ASSESSEE TO EXAMINE SUCH INFORMATION AND EXPLAIN ITS POSITION ESPECIALLY WHE N THE ASSESSEE HAS REQUESTED THE SAME TO THE ASSESSING OF FICER. 2.10 IN THIS REGARD, THE HONBLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT (1954) 26 ITR 7 75 (SC) (COPY AT CASE LAW PB 812-818 FILED IN CASE OF M/S KOTA DALL MILL) HAS HELD THAT THE RULE OF LAW ON ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 50 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 PROCEEDING UNDER SUB - SECTION (3) OF SECTION 23, THE INCOME-TAX OFFICER, THOUGH NOT BOUND TO RELY ON EVIDENCE PRODUCED BY THE ASSES SEE AS HE CONSIDERS TO BE FALSE, YET IF HE PROPOSES TO MAKE AN ESTIMATE IN DISREGARD OF THAT EVIDENCE, HE SHOULD I N FAIRNESS DISCLOSE TO THE ASSESSEE THE MATERIAL ON W HICH HE IS GOING TO FIND THAT ESTIMATE; AND THAT IN CASE HE PROPOSES TO USE AGAINST THE ASSESSEE THE RESULT OF ANY PRIVATE INQUIRIES MADE BY HIM, HE MUST COMMUNICATE TO THE ASSESSEE THE SUBSTANCE OF THE INFORMATION SO PROPOSED TO BE UTILIZED TO SUCH AN EXTENT 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 OPPORTUNITY TO MEET IT. IT WAS HELD IN THAT CASE THAT IN THIS CASE WE ARE OF THE OPINION THAT THE T RIBUNAL VIOLATED CERTAIN FUNDAMENTAL RULES OF JUSTICE IN RE ACHING ITS CONCLUSIONS. FIRSTLY, IT DID NOT DISCLOSE TO TH E ASSESSEE WHAT INFORMATION HAD BEEN SUPPLIED TO IT BY THE DEPARTMENTAL REPRESENTATIVE. NEXT, IT DID NOT GIVE ANY OPPORTUNITY TO THE COMPANY TO REBUT THE MATERIAL FURNISHED TO IT BY HIM, AND LASTLY, IT DECLINED TO TAKE ALL THE MATERIAL THAT THE ASSESSEE WANTED TO PRODUCE IN SUPPORT OF ITS CASE. THE RESULT IS THAT THE ASSESSE E HAD NOT 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 EVID ENCE. IT IS OPEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY PRIVATE ENQUIRY. BUT, IF HE DESI RES TO USE THE MATERIAL SO COLLECTED, THE ASSESSEE MUST BE INFORMED ABOUT THE MATERIAL AND GIVEN ADEQUATE OPPORTUNITY TO EXPLAIN IT. THE STATEMENTS MADE BY PRAVEEN JAIN AND GROUP WERE MATERIAL ON WHICH THE I T AUTHORITIES COULD ACT PROVIDED THE MATERIAL WAS DISCLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RE NDER THEIR EXPLANATION IN THAT REGARD. THE HONBLE SUPREME COURT IN CASE OF KISHINCHAND CHELLARAM V. CIT (1980) 125 ITR 713 (SC) (COPY AT CASE LAW PB 585-591 FILED IN CASE OF M/S KOTA DALL MILL) HAS HELD THAT WHETHER THERE WAS ANY MATERIAL EVIDENCE TO JUSTIFY THE FINDINGS OF THE TRIBUNAL TH AT THE AMOUNT OF RS. 1,07,350 SAID TO HAVE BEEN REMITTED B Y TILOKCHAND FROM MADRAS REPRESENTED THE UNDISCLOSED ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 51 INCOME OF THE ASSESSEE. THE ONLY EVIDENCE ON WHICH THE TRIBUNAL COULD RELY FOR THE PURPOSE OF ARRIVING AT THIS FINDING WAS THE LETTER, DATED 18-2-1955 SAID TO HAV E BEEN ADDRESSED BY THE MANAGER OF THE BANK TO THE ITO. NO W IT IS DIFFICULT TO SEE HOW THIS LETTER COULD AT ALL BE RELIED UPON BY THE TRIBUNAL AS A MATERIAL PIECE OF EVIDENC E SUPPORTIVE OF ITS FINDING. IN THE FIRST PLACE, THIS LETTER WAS NOT DISCLOSED TO THE ASSESSEE BY THE ITO AND EVEN T HOUGH THE AAC REPRODUCED AN EXTRACT FROM IT IN HIS ORDER, HE DID NOT CARE TO PRODUCE IT BEFORE THE ASSESSEE OR G IVE A COPY OF IT TO THE ASSESSEE. THE SAME POSITION OBTAI NED 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 16-8-1 979 THAT, ACCORDING TO THE ITO, THIS LETTER WAS TRACED BY HIM AND EVEN THEN IT WAS NOT SHOWN BY HIM TO THE ASSESS EE BUT IT WAS FORWARDED TO THE TRIBUNAL AND IT WAS FOR THE FIRST TIME AT THE HEARING BEFORE THE TRIBUNAL IN RE GARD TO THE PREPARATION OF THE SUPPLEMENTAL STATEMENT OF TH E CASE THAT THIS LETTER WAS SHOWN TO THE ASSESSEE. IT WILL, THEREFORE, BE SEEN THAT, EVEN IF WE ASSUME THAT THI S LETTER WAS IN FACT ADDRESSED BY THE MANAGER OF THE BANK TO THE ITO, NO RELIANCE COULD BE PLACED UPON IT, SINCE IT WAS NOT SHOWN TO THE ASSESSEE UNTIL AT THE STAGE OF PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CA SE AND NO OPPORTUNITY TO CROSS EXAMINE THE MANAGER OF THE BANK COULD IN THE CIRCUMSTANCES BE SOUGHT OR AVAILE D OF BY THE ASSESSEE. IT IS TRUE THAT THE PROCEEDINGS UN DER THE INCOME-TAX LAW ARE NOT GOVERNED BY THE STRICT RULES OF EVIDENCE AND, THEREFORE, IT MIGHT BE SAID THAT EVEN WITHOUT CALLING THE MANAGER OF THE BANK IN EVIDENCE TO PROVE THIS LETTER, IT COULD BE TAKEN INTO ACCOUNT A S EVIDENCE. BUT BEFORE THE INCOME-TAX AUTHORITIES COU LD RELY UPON IT, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTU NITY TO CROSS EXAMINE THE MANAGER OF THE BANK WITH REFER ENCE 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 HONB LE SUPREME COURT IN CASE OF C. VASANTLAL & CO. (SUPRA) RELIED UPON BY THE REVENUE AND WHICH ACTUALLY SUPPO RTS 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 WIN G, STATEMENT RECORDED U/S 132(4) OF SHRI BHANWARLAL JA IN ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 52 AND OTHERS, AND VARIOUS INCRIMINATING DOCUMENTARY EVIDENCE FOUND FROM THE SEARCH AND SEIZURE CARRIED OUT BY INVESTIGATION WING, MUMBAI ON THE SHRI BHANWARLA L JAIN GROUP ON 03.10.2013. IT REMAINS UNDISPUTED THA T THE ASSESSEE WAS NEVER PROVIDED COPIES OF SUCH INCRIMINATING 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 SOUG HT TO BE SHIFTED ON THE ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHARI, JAIPUR 21 ASSESSEE BY THE A.O. IT IS CLEAR CASE WHERE THE PRI NCIPLE OF NATURAL JUSTICE STAND VIOLATED AND THE ADDITIONS MADE UNDER SECTION 68 THEREFORE ARE UNSUSTAINABLE IN THE EYE OF LAW AND WE HEREBY DELETE THE SAME. THE ORDER OF THE LD CIT(A) IS ACCORDINGLY CONFIRMED AND THE GROUND O F THE REVENUE IS DISMISSED. 13. IT WAS ALSO ARGUED BY THE LD AR THAT THE ASSESSM ENT ORDER HAS BEEN PASSED ON THE BASIS OF UNACCEPTABLE, UNREASONA BLE, INCORRECT AND MISCONCEIVED INTERPRETATION OF THE VARIOUS JUDICIAL PRONOUNCEMENTS OF HONBLE APEX COURT AND HONBLE HIGH COURTS AS RELIE D UPON BY THE LD. AO, WHICH IS EXPLAINED AS UNDER: (II) DHAKESWARI COTTON MILLS LTD V. COMMISSIONER OF INCO ME TAX, WEST BENGAL (1954) 26 ITR 775 (SC): LD. AO HAS PROCEEDED WITH TO PASS THE ASSESSMENT OR DER IN VIOLATION OF THE PRINCIPLES AND RATIO LAID DOWN BY THE HONBLE A PEX COURT IN THE AFORESAID JUDGMENT. WHILE PLACING RELIANCE UPON THE JUDGMENT OF HONBLE APEX COURT IN CASE DHAKESWARI (SUPRA) , LD. AO DECLINED ACCESS TO THE DOCUMENTS, RELIED UPON BY HIM AND DID NOT AFFORD OPPORTUNITY FOR CROS S-EXAMINATION OF WITNESSES, STATEMENTS OF WHICH WERE RECORDED BEHIND THE BACK OF ASSESSEE ON THE PRETEXT THAT INCOME TAX OFFICER IS NOT FETTERED BY ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 53 TECHNICAL RULES OF EVIDENCE AND PLEADINGS AND HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN A COURT OF LAW. HOWEVER, LD. AO FAILED TO APPRECIATE THAT HONBLE A PEX COURT IN THE CASE OF DAKESHARI (SUPRA) HAS HELD THAT IN MAKING THE AS SESSMENT THE INCOME TAX OFFICER IS NOT ENTITLED TO MAKE A PURE GUESS AN D MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL A ND ALSO THAT MATERIAL RELIED UPON BY THE INCOME TAX OFFICER SHOULD BE DIS CLOSED TO THE ASSESSEE, WHICH IN THE CASE OF ASSESSEE, LD. AO FAI LED TO DO. THE RELEVANT PARA OF THE ABOVE JUDGMENT IS REPRODUCED B ELOW: IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNA L VIOLATED CERTAIN FUNDAMENTAL RULES OF JUSTICE IN REACHING IT S CONCLUSIONS. FIRSTLY, IT DID NOT DISCLOSE TO THE ASSESSEE WHAT I NFORMATION HAD BEEN SUPPLIED TO IT BY THE DEPARTMENTAL REPRESENTAT IVE. NEXT, IT DID NOT GIVE ANY OPPORTUNITY TO THE COMPANY TO REBU T THE MATERIAL FURNISHED TO IT BY HIM, AND LASTLY, IT DEC LINED TO TAKE ALL THE MATERIAL THAT THE ASSESSEE WANTED TO PRODUCED I N SUPPORT OF HIS CASE. THE RESULT IS THAT THE ASSESSEE HAD NOT H AD A FAIR HEARING . IN THE RESULT WE ALLOW THIS APPEAL, SET ASIDE THE O RDER OF THE TRIBUNAL AND REMAND THE CASE TO IT WITH DIRECTIONS THAT IN ARRIVING AT ITS ESTIMATE OF GROSS PROFITS AND SALES IT SHOULD GIVE FULL OPPORTUNITY TO THE ASSESSEE TO PLACE ANY RELEV ANT MATERIAL ON THE POINT THAT IT HAS BEFORE THE TRIBUNAL, WHETH ER IT IS FOUND IN THE BOOKS OF ACCOUNT OR ELSEWHERE AND IT SHOULD ALSO DISCLOSE TO THE ASSESSEE THE MATERIAL ON WHICH THE TRIBUNAL IS GOING TO FOUND ITS ESTIMATE AND THEN AFFORD HIM FULL OPPORTU NITY TO MEET THE SUBSTANCE OF ANY PRIVATE ENQUIRIES MADE BY THE INCOME TAX OFFICER IF IT IS INTENDED TO MAKE THE ESTIMATE ON T HE FOOT OF THOSE ENQUIRIES . ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 54 IN VIEW OF THE ABOVE, IT IS EVIDENT RELIANCE PLACED BY THE LD. AO ON THE JUDGMENT OF HONBLE APEX COURT IN CASE OF DHAKESWAR I (SUPRA) IS MISCONCEIVED. (III) ROSHAN DI HATTI V. CIT (1977) 107 ITR 938 (SC) AND KALE KHAN MOHAMMED HANIF V. CIT [1963] 50 ITR 1 (SC) : THE RELIANCE HAS BEEN PLACED BY THE LD. AO ON THE A FORESAID JUDGMENTS OF HONBLE APEX COURT TO SUBSTANTIATE THAT PRIMA FA CIE ONUS IS ALWAYS ON THE ASSESSEE TO PROVE THE CASH CREDIT ENTRY FOUND I N THE BOOKS OF ACCOUNT OF THE ASSESSEE AND WHERE THE NATURE AND SOURCE THE REOF CANNOT BE EXPLAINED SATISFACTORILY, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN IS ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE. IN THIS CONTEXT, IT IS SUBMITTED THAT IN THE PRESE NT CASE OF THE ASSESSEE, ASSESSEE HAS ALREADY DISCHARGED ITS PRIMA FACIE ONUS TO PROVE THE CASH CREDIT BY FURNISHING RELEVANT DOCUMENTS SU BSTANTIATED IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . THE LD. AO COULD NOT POINTED OUT ANY DEFECTS IN THE DOCUMENTS OR MAT ERIAL SO FURNISHED BY THE ASSESSEE. HOWEVER, LD. AO FAILED TO APPLY RATIO LAID DOWN BY HONBLE APEX COURT THAT BURDEN OF PROOF IS FLUID FO R THE PURPOSES OF SECTION-68. ONCE ASSESSEE HAS SUBMITTED BASIC DOCUM ENTS RELATING TO IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORT HINESS THEN AO MUST DO SOME INQUIRY TO CALL FOR MORE DETAILS TO INVOKE SECTION 68. HOWEVER, IN THE INSTANT CASE OF ASSESSEE, THE BURDEN OF PROO F FOR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WAS DULY DISCHARGED BY THE ASSESSEE BY SUBMITTING ALL THE RELEVANT RECO RDS AND AFFIDAVIT OF RESPECTIVE LENDERS. THE RESPECTIVE LENDERS HAVE ALS O FILED RELEVANT DOCUMENTS WITH LD. AO AND RESPECTIVE AUTHORITIES, I N REPLY TO NOTICE UNDER SECTION-131 AND 133(6) OF THE ACT. IT IS ALSO PERTINENT TO MENTION THAT NO AUTHORITIES RAISED ANY DOUBT REGARDING THE TRUTHFULNESS OF THE DOCUMENT, FURNISHED BY THE ASSESSEE OR RESPECTIVE L ENDERS. THUS, THE RELIANCE PLACED BY THE LD. AO IS NOT ONLY MISCONCEI VED BUT ALSO ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 55 MISINTERPRETATION OF THE LAW LAID DOWN BY HONBLE A PEX COURT. FURTHERMORE, THE LD. AO DID NOT APPRECIATE THE RATI O DECIDED BY THE HONBLE APEX COURT IN ROSHAN DI HATTI CASE (IBID), WHICH IS REPRODUCED BELOW: THE TRIBUNAL ACTED WITHOUT ANY MATERIAL OR, IN ANY EVENT, THE FINDING OF FACT REACHED BY THE TRIBUNAL WAS UNREASO NABLE OR SUCH THAT NO PERSON ACTING JUDICIALLY AND PROPERLY INSTRUCTED AS TO THE RELEVANT LAW WOULD COME TO SUCH A FINDING. W E ACCORDINGLY ALLOW THE APPEAL, SET ASIDE THE ORDER O F THE HIGH COURT AND ANSWER THE QUESTION REFERRED BY THE TRIBU NAL IN NEGATIVE. THE COMMISSIONER WILL PAY THE COSTS OF TH E APPEAL TO THE ASSESSEE . THE CASE OF ASSESSEE IS SQUARELY COVERED UNDER THE AFORESAID FINDING OF HONBLE APEX COURT AS THE FINDING OF THE LD. AO IS UNREASONABLE AND ANY PERSON ACTING JUDICIOUSLY AND PROPERLY INSTRUCTED A S TO THE RELEVANT LAW WOULD NOT HAVE COME TO SUCH A FINDING. THE NON-APPR ECIATING OF FACTS PROPERLY AND NON-APPRECIATION OF RECORD BY LD. AO A ND AS ALSO NOT ADOPTING JUDICIOUS APPROACH HAS RESULTED IN UNREASO NABLE AND ARBITRARY ASSESSMENT ORDER. THE JUDGMENT OF KALE KHAN MOHAMMED HANIF (IBID) IS DISTINCT FROM THE CASE OF ASSESSEE AND HAS NO APPLICABILITY TO THE AS SESSEE. THE OBSERVATIONS OF HONBLE APEX COURT ARE REPRODUCED B ELOW: IT WAS OPEN TO THE ASSESSEE TO RAISE THE QUESTION T HAT THE FINDING THAT THOSE AMOUNTS WERE INCOME RECEIVED FRO M UNDISCLOSED SOURCES WAS NOT BASED ON ANY EVIDENCE O R WAS, FOR OTHER REASONS, PERVERSE . AND ALSO THE ASSESSEE ACCEPTED THE DECISION OF THE TRIBUNAL AND DID NOT MOVE THE HIGH COURT TO DIRECT A REFERENCE IN REGARD TO THOSE QUESTIONS UND ER SECTION 66(2). THOSE QUESTIONS, THEREFORE, CANNOT BE RAISED IN THIS COURT. WE HAVE DEED WITH THE REFERENCE MADE ON THE BASIS THAT ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 56 THE FINDING THAT THE AMOUNTS OF THE CREDIT ENTRIES WERE INCOME RECEIVED FROM UNDISCLOSED SOURCES WAS DISPUTED ONLY ON THE GROUND THAT THE INCOME FROM THE BUSINESS HAD BEEN C OMPUTED ON THE BASIS OF AN ESTIMATE. IN THE CIRCUMSTANCES OF T HE CASE WE COULD NOT HAVE DONE ANYTHING ELSE . IT IS TO THE NOTED THAT THE DOCUMENTARY PROOF SUBST ANTIATING THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIO N, FURNISHED BY THE ASSESSEE, REMAINED UNDISPUTED BY THE LD. AO. THUS, PLACING RELIANCE TO THE SAID JUDGMENT WITH THAT OF THE CASE OF ASSESSEE IS A MISCONCEIVED INTERPRETATION OF THE LD. AO. (IV) COMMISSIONER OF INCOME-TAX V. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) AND SUMATI DAYAL V. COMMISSIONER OF INCOME -TAX [1995] 80 TAXMANN 89/214 ITR 801 (SC) : LD. AO, WHILE PLACING RELIANCE UPON THE AFORESAID J UDGMENTS HAS HELD THAT THE THEORY OF PREPONDERANCE OF HUMAN PROBABILI TY AS PRONOUNCED BY THE HONBLE APEX COURT IN THE CASE OF CIT V. DURGA PRASAD MORE (1971) 82 ITR 540 AND SUMITI DAYAL V. CIT (1995) 80 TAXMAN N 89/214 ITR 801 (SC) IS OF UTMOST IMPORTANCE. IN THE CASES WHERE IT HAS BEEN ESTABLISHED THAT THE SOURCE COMPANY IS A NEAR PAPER COMPANY S OLELY ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES, THE PR ESUMPTION ON THE BASIS OF HUMAN PROBABILITY IS IMPORTANT. LD. AO HAS PLACED RELIANCE UPON THE OBSERVATION OF HONBLE SUPREME COURT IN CIT V. DURGA PRASAD MORE (1971) 82 ITR 540 THAT IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL AND A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITI ES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PROD UCED BEFORE THEM. HOWEVER, IT IS HUMBLY SUBMITTED THAT WHILE INTERPRE TING THE AFORESAID JUDGMENT, THE LD. AO FAILED TO CONSIDER THE FINDING OF HONBLE APEX ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 57 COURT THAT IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE AP PARENT IS NOT THE REAL . IN THE CASE OF THE ASSESSEE, ALL THE DOCUMENTARY E VIDENCES WERE PRODUCED BEFORE LD. AO BOTH BY THE ASSESSEE AND BY THE RESPE CTIVE LENDERS AS WELL AND THE DOCUMENTS PRODUCED ARE THE PUBLIC DOCUMENTS WHICH ARE AVAILABLE ON PUBLIC DOMAIN ITSELF. THESE DOCUMENTS INCLUDE DOCUMENTS FILED WITH ROC, BANK STATEMENTS, ASSESSMENT CARRIED OUT BY THE INCOME TAX DEPARTMENT AND SO ON. THE LD. AO DID NOT POINT OUT ANY DEFECTS IN SUCH DOCUMENTS. IT IS FURTHER MOST IMPORTANTLY RELEVANT TO MENTION HERE THAT THE INCOME TAX DEPARTMENT CARRIED OUT INT ENSIVE SEARCH OVER THE ASSESSEE GROUP AND AS A RESULT OF SEARCH N O EVIDENCE WAS FOUND TO PROVE THAT THE ASSESSEE WAS HAVING SOME UN DISCLOSED INCOME WHICH WAS ROUTED IN BOOKS OF ACCOUNTS IN THE SHAPE OF UNSECURED LOANS . THUS, THE LD. AO MUST HAVE CONSIDERED APPARENT AS REAL AS LD. AO FAILED TO ESTABLISH AND ALSO TO SHOW ANY REASON TO BELIEVE THAT THE APPARENT IS NOT THE REAL. UNLESS AND UNTIL THERE WAS ANY REASON TO DISBELIEVE THE TRUTHFULNESS OF DOCUMENTARY EVIDENCE S, THERE WAS NO CASE AND BASIS WITH THE LD. AO TO TREAT THE APPARENT AS NOT REAL ONLY ON THE BASIS OF GUESS, ASSUMPTIONS, PRESUMPTIONS AND SURMI SES, WHICH IS NOT PERMISSIBLE UNDER THE LAW. FURTHERMORE, IT WAS THE ONUS OF THE LD. AO TO PROVE THAT APPARENT WAS NOT THE REAL, FOR WHICH HE WAS AT LIBERTY TO CALL UPON ANY FURTHER CLARIFICATION AND SUBSEQUENT DOCUM ENTS. SINCE, IT IS NOT PROVED THAT THE DOCUMENTS FURNISHED WERE NOT THE TR UE, NO ASSUMPTION AND PRESUMPTION CAN BE DRAWN THAT THE APPARENT WAS NOT THE REAL. THE TEST OF HUMAN PROBABILITY IS ALSO NOT APPLICABLE IN THE CAS E OF ASSESSEE AS REALITY OF THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE IN THE COURSE OF NORMAL BUSINESS ACTIVITIES HAVE BEEN DULY PROVED BEYOND DO UBT WITH THE DOCUMENTARY EVIDENCES AND CONFIRMED BY THE RESPECTI VE LENDERS/PARTIES ALSO AND EVEN ACCEPTABLE BEFORE THE JUDICIAL AUTHO RITIES. IT SHOWS MISCONCEIVED INTERPRETATION BY THE LD. AO WITHOUT H AVING ANY NEXUS WITH THE FACTS OF THE CASE OF THE ASSESSEE. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 58 (V) COMMISSIONER OF INCOME TAX V. INDEPENDENT MEDIA (P) LTD 210 TAXMANN 14 (DELHI) (2012) THOUGH THE LD. AO HAS PLACED RELIANCE UPON THE AFOR ESAID JUDGMENT TO SUBSTANTIATE HIS ACTION FOR MAKING ADDITION UNDER S ECTION-68 OF THE ACT BUT THE ACT OF LD. AO IS DEROGATORY TO THE AFORESAI D JUDGMENT OF HONBLE HIGH COURT OF DELHI. LD. AO DID NOT PROVIDE OPPORTU NITY TO THE CROSS- EXAMINATION OF SO-CALLED WITNESSES, RELIED UPON BY LD. AO, WHICH MUST HAVE BEEN ALLOWED AS HELD BY THE HONBLE HIGH COURT OF DELHI IN THE ABOVE JUDGMENT. THE RELEVANT PARAS ARE REPRODUCED B ELOW: THE TRIBUNAL, HOWEVER, MAY BE JUSTIFIED IN DIRECTIN G THE ASSESSING OFFICER TO AFFORD AN OPPORTUNITY TO THE A SSESSEE OF CROSS-EXAMINATION THE PERSONS WHO HAD ALLEGEDLY GIV EN STATEMENTS BEFORE THE INVESTIGATION WING IMPLICATIN G THE ASSESSEE IN THE MODUS OPERANDI ADOPTED BY THEM, NAM ELY, GIVING OF ACCOMMODATION ENTRIES FOR COMMISSION . THE ASSESSEE APPEARS TO HAVE SOUGHT CROSS-EXAMINATI ON OF THOSE PERSONS BUT THAT OPPORTUNITY WAS NOT GIVEN BY THE ASSESSING OFFICER AS FOUND BY THE TRIBUNAL, A POSIT ION NOT DISPUTED BEFORE US ON BEHALF OF THE REVENUE . WE MAY ONLY STATE THAT THE ASSESSING OFFICER SHALL ACT IN ACCORDANCE WITH LAW . SINCE, THE ACT OF THE LD. AO IS NOT IN ACCORDANCE W ITH THE LAW, THE LD. AO FAILED TO APPRECIATE THE RATIO LAID DOWN BY HON BLE COURT WHILE CARRYING OUT ASSESSMENT PROCEEDINGS IN THE INSTANT CASE OF ASSESSEE. IT IS HUMBLY SUBMITTED THAT RATIO OF THE AFORESAID JUDGME NT RATHER SUPPORTS THE CONTENTION OF THE ASSESSEE AND PROVES ITS CASE AND NOT THE CASE MADE OUT BY THE LD. AO. (VI) A. GOVINDARAJULU MUDALIAR VS. CIT [1958] 34 ITR 807 (SC) : THE FACTS AND CIRCUMSTANCES OF CASE OF ASSESSEE HAS NO RELEVANCY, EVEN REMOTELY, WITH THE JUDGMENT OF HONBLE APEX COURT, AS RELIED UPON BY ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 59 THE LD. AO. IN THAT CASE THE ASSESSEE DID NOT PROVE HIS VERSION THAT THE GIFT WAS ALLEGED TO HAVE BEEN MADE BY THE ASSESSEE TO HIS AUNT AND BY HER TO HIM. MORE SO, THE CONCLUSION TO WHICH THE APPELL ATE TRIBUNAL CAME AMPLY WARRANTED BY THE FACTS OF THE CASE. FURTHERMO RE, IN THAT CASE IT WAS HELD THAT BUT SEEING THAT IN THIS CASE THE ASSESSEE HAD MOVED THE HIGH COURT AND A DECISION HAS BEEN PRONOUNCED ADVERSE TO HIM AND THIS HAS BECOME FINAL OBVIOUSLY IT WOULD NOT BE OPEN TO HIM TO QUESTION THE CORRECTNESS OF THE DECISION OF THE TRIBUNAL ON GROU NDS WHICH MIGHT HAVE TAKEN IN AN APPEAL AGAINST THE JUDGMENT OF THE HIGH COURT . THUS, THE FACTS AND LAW OF THE AFORESAID CASE HAS NO RELEVANC Y TO THAT OF THE CASE OF THE ASSESSEE. (VII) G.R. SIRI RAM V. CIT (1975) 98 ITR 337 (P&H): THE CASE IS ALSO NOT RELEVANT TO THE CASE OF ASSESS EE INASMUCH AS IN THIS CASE THE ASSESSEE HAD AGREED BEFORE THE ITO THAT TH ERE WAS NO EVIDENCE AVAILABLE WITH THE LADIES IN SUPPORT OF THE CASH CR EDITS MENTIONED ABOVE. THE CASE OF ASSESSEE IS NOT RELEVANT TO THE FACTS, MENTIONED ABOVE. IN THE INSTANT CASE OF ASSESSEE-COMPANY FURNISHED ALL THE DOCUMENTS SHOWING SOURCE OF THE RECEIPT OF THE FUNDS AND ALSO SUBMITT ED DOCUMENTARY EVIDENCES TO SUPPORT ITS VERSION, WHICH REMAINED UN -REBUTTED IN THE HAND OF LD. AO. CONSIDERING THE FACTS REGARDING DISCHARG E OF ONUS BY THE ASSESSEE, THE AFORESAID JUDGMENT, RELIED UPON BY TH E LD. AO HAS NO RELEVANCY. (VIII) CIT V. KISHORI LAL & SANTOSHI LAL (1995) 216 ITR 9 (RAJ.) : THOUGH, THE LD. AO HAS PLACED RELIANCE UPON THE AFO RESAID JUDGMENT BUT ACT OF THE LD. AO IS CONTRARY TO THE RATIO LAID DOW N BY THE HONBLE HIGH COURT OF RAJASTHAN IN THE AFORESAID JUDGMENT. THE R ELEVANT PARA FROM THE AFORESAID JUDGMENT IS REPRODUCED BELOW: IN THE ASSESSMENT PROCEEDINGS, THE INCOME TAX OFFIC ER IS SUPPOSED TO FOLLOW THE PRINCIPLE OF NATURAL JUSTICE AND WHEN A NOTICE IS GIVEN TO THE ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 60 ASSESSEE TO EXPLAIN SUCH AN ENTRY, THE EXPLANATION WHICH HAS BEEN GIVEN HAS TO BE TAKEN INTO CONSIDERATION . IN THE INSTANT CASE OF ASSESSEE, LD. AO HAS ACTED I N UTTER DISREGARD TO THE PRINCIPLE OF NATURAL JUSTICE AND NEITHER CONSIDERED DOCUMENTARY EVIDENCES NOR CONSIDERED THE EXPLANATION OF THE ASSESSEE. FUR THERMORE, LD. AO WITHOUT APPRECIATING WHAT HAS BEEN HELD IN THE AFOR ESAID JUDGMENT OF HONBLE COURT HAS ACTED IN DEROGATORILY TO THE AFOR ESAID PRONOUNCEMENT ITSELF. IT HAS CLEARLY BEEN HELD BY THE HONBLE COURT THAT IF THE EXPLANATION IS NOT SUPPORTED BY ANY DOCUMENTARY OR OTHER EVIDENCE, THEN THE DEEMING FICTION CREDITED BY SECTION-68 CAN BE INVOKED . IN THE INSTANT CASE OF THE ASSESSEE AMPLE DOCUMENTA RY EVIDENCES WERE SUBMITTED BY THE ASSESSEE AS WELL AS BY THE LENDER COMPANIES. MORE SO, THE LENDER COMPANIES EXECUTED AFFIDAVITS DULY SUPPO RTED BY THE RELEVANT RECORDS AND THE SAME WERE SUBMITTED TO THE LD. AO A LONG WITH THE EXPLANATION. FURTHERMORE, THE RESPECTIVE LENDERS DU LY COMPLIED WITH THE NOTICES UNDER SECTION-131 AND/OR SECTION-133 OF THE ACT. THUS, CONSIDERING THE RATIO LAID DOWN BY THE HONBLE COUR T THE INVOKING OF SECTION-68 BY THE LD. AO IS UNLAWFUL. (IX) P.V. RAGHAVA REDDY V. CIT (1956) 29 ITR 942 AND M. M. A.K. MOHINDEEN THAMBAY & CO. V. CIT (1959) 36 ITR 481 : THE AFORESAID CASES, RELIED UPON BY THE LD. AO HAVE NO RELEVANCY TO THE CASE OF ASSESSEE. IN THIS CASE THE HONBLE COURT HE LD THAT THE QUESTION OF BURDEN OF PROOF CANNOT BE MADE TO DEPEND EXCLUSIVEL Y UPON THE FACT OF A CREDIT ENTRY IN THE NAME OF THE ASSESSEE OR IN THE NAME OF A THIRD PARTY. IN EITHER CASE, THE BURDEN LIES UPON THE ASSESSEE TO E XPLAIN THE CREDIT ENTRY, THOUGH THE ONUS MIGHT SHIFT TO THE ITO UNDER CERTAI N CIRCUMSTANCES. IN THE INSTANT CASE OF THE ASSESSEE, THE ASSESSEE DISC HARGED ITS ONUS AND BURDEN OF PROOF, IN RESPECT OF UNSECURED LOAN OBTAI NED BY IT BY SUBMITTING ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 61 DOCUMENTARY EVIDENCES OF THE RESPECTIVE LENDERS BEF ORE THE LD. AO FOR SUBSTANTIATING IDENTITY, CREDITWORTHINESS AND GENUI NENESS OF THE TRANSACTIONS. THE DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE REMAINED UN-REBUTTED, THEREFORE, ONUS REMAINED SHIF TED TO THE LD. AO, WHICH WAS NOT DISCHARGED BY LD. AO. THERE IS CLEAR DISTINCTION BETWEEN TWO TYPES OF MATTERS (1) WHERE THE EXPLANATION AND EVIDENCES ARE PRODUCED BY AN ASSESSEE AND (2) WHERE NO EXPLANATIO N AND EVIDENCES ARE PRODUCED BY THE ASSESSEE. SINCE, THE ASSESSEE CASE FALLS UNDER (1) ABOVE, THE CASE RELIED UPON BY THE LD. AO IS DISTINCT AND NOT APPLICABLE TO THE CASE OF THE ASSESSEE. MORE SO, THE LD. AO HAS NOT M ADE OUT A CASE THAT THE AMOUNT STANDING IN THEIR NAME OR IN CREDIT DID NOT BELONG TO LENDER BUT BELONG TO THE ASSESSEE, WHICH WAS PRIMA FACIE CASE MADE OUT DEPARTMENT IN BOTH THE JUDGMENTS RELIED UPON BY THE LD. AO. (X) SHANKER INDUSTRIES V. ADDL CIT (1978) 114 ITR 689 ( CAL.) : WHILE PLACING RELIANCE UPON THE AFORESAID JUDGMENT, LD. AO HAS TRIED TO SUBSTANTIATE ITS ACTION UNDER SECTION-68 OF THE ACT . HOWEVER, LD. AO FAILED TO DISCHARGE ITS ONUS, AS LAID DOWN BY THE H ONBLE COURT IN THIS JUDGMENT. THE RELEVANT PARA FROM THE AFORESAID JUDG MENT IS REPRODUCED BELOW: WE WOULD LIKE TO OBSERVE THAT THE LAW ON THIS POINT IS NOW WELL SETTLED. IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE TRANSACTION WHICH RESULTS IN A CASH CREDIT IN HIS BOOKS OF ACCOUNT. S UCH PROOF INCLUDES PROOF OF THE IDENTITY OF HIS CREDITOR, THE CAPACITY OF SU CH CREDITOR TO ADVANCE THE MONEY AND, LASTLY, THE GENUINENESS OF THE TRANSACTI ON. THESE THINGS MUST BE PROVED PRIMA FACIE BY THE ASSESSEE AND ONLY AFTE R THE ASSESSEE HAS ADDUCED EVIDENCE TO ESTABLISH PRIMA FACIE THE AFORE SAID, THE ONUS SHIFTS ON THE DEPARTMENT . 14. IN VIEW OF ABOVE, IT WAS CONTENDED THAT THE CASE S CITED BY AO ARE ENTIRELY DISTINGUISHED FROM THOSE THE ASSESSEES CAS E OR AO FAILED TO APPLY THE RATIO LAID DOWN BY THE HONBLE COURTS IN T HOSE CITED CASES, AS ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 62 SUCH NO RELIANCE SHOULD BE PLACED ON THE CASES, HAV ING NO RELEVANCY WITH THE ASSESSEE CASE. HOWEVER, MOST OF THE CASES, C ITED BY THE AO ARE SUPPORTING THE CONTENTION OF THE ASSESSEE. 15. ON THE OTHER HAND, THE LD. CIT-DR HAS VEHEMENTL Y ARGUED THAT THE AMOUNT OF UNSECURED LOAN AND SHARE CAPITAL WAS T AKEN FROM THE SHELL COMPANY AND THE DEPARTMENT HAS EVIDENCES IN T HE FORM OF STATEMENT OF SHRI ANAND SHARMA WHEREIN HE HAS STATED THAT ALL THESE COMPANIES ARE INVOLVED IN PROVIDING ACCOMMODATION E NTRIES, ACCORDINGLY, THE A.O. WAS JUSTIFIED IN MAKING THE AD DITION WITH RESPECT TO THE AMOUNT RECEIVED AS UNSECURED LOAN FROM M/S JALS AGAR COMMERCE PVT. LTD. AS WELL AS M/S COMPETENT SECURITIES PVT. L TD. HE HAS FURTHER CONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DE LETING THE ADDITION MADE IN RESPECT OF LOAN TAKEN FROM M/S COMPETENT SE CURITIES PVT. LTD. 16. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CA REFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LOWER AU THORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY THE LD. AR AND LD. DR DURING THE COURSE OF HEARING BEFORE US IN THE CONTEXT OF FACTU AL MATRIX OF THE CASE. FROM THE RECORD WE FOUND THAT DURING THE ASSESSMENT YEAR 2015-16 AND 2016-17 THE ASSESSEE HAS TAKEN UNSECURED LOAN OF RS . 1,50,500/- AND ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 63 RS. 4,55,00,000 RESPECTIVELY FROM M/S JALSAGAR COMM ERCE PVT. LTD.. IN A.Y. 2016-17, THE ASSESSEE HAS TAKEN UNSECURED LOAN OF RS. 1.40 CRORES FROM M/S COMPETENT SECURITIES PVT. LTD.. THE LOAN SO TAKEN WAS PAID WITHIN THE SAME FINANCIAL YEAR ALONGWITH INTEREST. HO WEVER, THE A.O. HAS ALLOWED THE INTEREST EXPENDITURE BUT THE ADDED THE A MOUNT OF LOAN TAKEN FROM M/S COMPETENT SECURITIES PVT. LTD. WHICH HAS BEEN DELETED BY THE LD. CIT(A) AFTER GIVING DETAILED FINDING. SO FAR AS THE AMOUNT OF LOAN TAKEN FROM M/S JALSAGAR COMMERCE PVT. LTD. IS CONCERNED, WE FOUND THAT THE COORDINATE BENCH IN ITS DECISION DAT ED 31/12/2018 IN THE CASE OF KOTA DALL MILL VS. DCIT FOR THE A.Y. 2010-11 TO 2015-16 HAVE DELETED THE SIMILAR ADDITION MADE WITH RESPECT TO TH E AMOUNT TAKEN FROM M/S JALSAGAR COMMERCE PVT. LTD.. THE TRIBUNAL HAVE DE ALT WITH THE ISSUE THREADBARE AND AFTER CONTROVERTING EACH AND EVERY F INDING/OBSERVATION OF THE A.O. AND THE LD. CIT(A), DELETED THE ADDITION . THE PRCISED OBSERVATION OF THE TRIBUNAL WAS AS UNDER: THUS THE ADDITION WAS CONFIRMED BASED ON THE REPOR T 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 AO. THE LD. CIT (A) HAS CONFIRMED THE ADDITION BECAUSE OF THE REASON THAT THE STATEMENT OF SHRI ANAND SHARMA WAS VERY MUCH IN THE POSSESSION OF THE AO WHO HAS ADMITTED IN HIS STATEMENT THAT M/S. JALSAGA R COMMERCE PVT. LTD. WAS ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRY. HOWEVER, WE FIND THAT M/S. JALSAGAR COMMERCE PVT. LTD IS NOT MANAGED OR CONTROLLED BY SHRI ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 64 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 HAV E BEEN PROVIDING ENTRIES FROM M/S. ROYAL CRYSTAL DEALERS PVT. LTD. T O M/S. JALSAGAR COMMERCE PVT. LTD. THEREFORE, THERE IS NO ALLEGATION OR ANY ADMISSION IN THE STATEMENT OF SHRI ANAND SHARMA THAT HE HAS PROVIDED BOGUS LOAN E NTRY TO THE ASSESSEE OR ANY GROUP CONCERNS OF THE ASSESSEE. SINCE 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 ESTA BLISH THE NEXUS OF THE LOAN RECEIVED BY THE ASSESSEE THROUGH THE STATEMENT OF S HRI 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 A NAND SHARMA TO THE ASSESSEE THROUGH M/S.ROYAL CRYSTAL DEALERS PVT. LTD., THEN E VEN IF THERE IS A POSSIBILITY OF BOGUS ACCOMMODATION ENTRY ROUTED THROUGH ANOTHER IN TERMEDIARY COMPANY M/S.JALSAGAR COMMERCE PVT. LTD., IT REQUIRES A DEFI NITE LINK OF THE TRANSACTIONS FROM M/S.ROYAL CRYSTAL DEALERS PVT. LTD. TO M/S. JA LSAGAR COMMERCE PVT. LTD. AND THEN THE LOAN TO THE ASSESSEE. ONCE THE CHAIN OF TRANSACTIONS AND FLOW OF MONEY FROM ONE ENTITY TO ANOTHER ENTITY AND FINALLY TO THE ASSESSEE HAS NOT BEEN ESTABLISHED, THEN THE ADDITION MADE MERELY ON SUSPICION, HOW SO STRONG IT MAY BE, IS NOT SUSTAINABLE. ON THE CONTRARY, WHEN THE ASSESSEE PRODUCED ALL THE RELEVANT RECORD WHICH CONTAINS THEIR FINANCIAL STATEMENTS, BANK ACCOUNTS STATEMENT OF LOAN CREDITOR, RETURN OF INCOME, ASSES SMENT ORDERS FRAMED UNDER SECTION 143(3), CONFIRMATION OF THE LOAN CREDITOR, 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 AN D FINANCIAL STATEMENTS OF THESE COMPANIES, RATHER IN THE BANK ACCOUNT STATEME NT OF LOAN CREDITOR M/S. JALSAGAR COMMERCE PVT. LTD. THERE WAS NO SUSPICIOUS TRANSACTION OF RECEIVING ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 65 ANY ENTRY OR ANY DEPOSIT OF AN EQUAL AMOUNT PRIOR T O GIVING THE LOAN TO THE ASSESSEE. THE ASSESSEE HAS PAID INTEREST TO THE CR EDITOR, WHICH WAS DULY ACCEPTED BY THE AO AS BUSINESS EXPENDITURE. UNDISP UTEDLY, THE ASSESSEE HAS PRODUCED THE INCOME-TAX RECORD OF THE LOAN CREDITOR , BANK STATEMENT, FINANCIAL STATEMENTS INCLUDING BALANCE SHEET, COPY OF ROC MAS TER DATA SHOWING THE STATUS OF LOAN CREDITOR COMPANY AS ACTIVE, CONFIR MATION OF LOAN GIVEN TO THE ASSESSEE. FURTHER, THE AO ISSUED SUMMONS AND ALSO GOT THE SUMMONS SERVED THROUGH DDIT KOLKATA UNDER SECTION 131 OF THE IT AC T WHICH WERE DULY RESPONDED BY THE LOAN CREDITOR. EXCEPT THE STATEMEN T OF SHRI ANAND SHARMA AND THE REPORT OF THE INVESTIGATION WING KOLKATA, T HE AO HAS NOT BROUGHT ON RECORD ANY OTHER MATERIAL TO CONTROVERT OR DISPROVE THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE LOAN CREDITOR WAS ASSESSED TO TAX AND THE AO COMPLETED THE ASSESSMENT UNDER SECTION 143 (3) FOR VARIOUS ASSESSMENT YEARS WHICH ARE RELEVANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE AO IN CASE OF LOAN CREDITOR HA S NOT DISTURBED THE TRANSACTIONS OF LOAN GIVEN BY THIS COMPANY TO THE A SSESSEE. FROM THE FINANCIAL STATEMENTS OF THE LOAN CREDITOR IT IS APPARENT THAT THE LOAN CREDITOR WAS HAVING SUFFICIENT FUNDS TO ADVANCE THE LOAN AMOUNT TO THE ASSESSEE AND ONCE THE SAID FINANCIAL STATEMENTS WERE NOT DISTURBED, THEN THE C REDITWORTHINESS OF THE LOAN CREDITOR CANNOT BE DOUBTED WHEN IT WAS ACCEPTED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE IT ACT. WE FURTH ER NOTE THAT THE AO INSISTED THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE LOAN P ROVIDER COMPANY. THE ASSESSEE PRODUCED THE AFFIDAVIT, AND THE NOTICES IS SUED BY THE AO UNDER SECTION 131 AND 133(6) OF THE ACT WERE DULY COMPLIED WITH B Y THE CREDITOR. THE STATEMENT OF THE DIRECTOR OF M/S. ROYAL CRYSTAL DEA LERS PVT. LTD. WAS ALSO RECORDED BY THE AO WHEREIN THE DIRECTOR HAS CONFIRM ED THE TRANSACTION OF LOAN. THERE ARE VARIOUS REPORTS OF THE DDIT KOLKATA WHICH ARE PLACED AT PAGES 406 TO 422 OF THE PAPER BOOK. WE FIND THAT ALL THESE REPOR TS ARE BASED ON THE STATEMENTS RECORDED DURING THE INVESTIGATION BUT NO DOCUMENTARY EVIDENCE WAS EITHER GATHERED OR HAS BEEN REFERRED IN THESE R EPORTS. THEREFORE, EVEN IF ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 66 THESE REPORTS ARE TO BE TAKEN INTO CONSIDERATION, T HESE ARE NOTHING BUT NARRATION OF THE STATEMENTS OF VARIOUS PERSONS TAKE N 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 EVI DENCE DISCLOSING UNDISCLOSED INCOME INSTEAD OF OBTAINING THE STATEME NT AND THEN SUPPORT OF THEIR CLAIM MERELY ON THE BASIS OF THE STATEMENT. THEREFORE, THE STATEMENTS RECORDED BY THE DDIT KOLKATA ARE ALSO NOT BASED ON ANY DOCUMENTARY EVIDENCE SO AS TO HAVE AN EVIDENTIARY VALUE FOR SUSTAINING T HE ADDITIONS MADE BY THE AO. THE ENTIRE REPORT OF THE INVESTIGATION WING IS BASE D ON STATEMENTS RECORDED DURING SURVEY AND SEARCH. ONCE THE ASSESSEE HAS PRO DUCED THE DOCUMENTARY EVIDENCE AND PARTICULARLY THE FINANCIAL STATEMENTS OF THE LOAN CREDITORS, THEIR BANK ACCOUNT STATEMENT, THEN IN THE ABSENCE OF ANY DISCREPANCY OR FAULT IN THESE FINANCIAL STATEMENTS OR IN THE BANK ACCOUNT S TATEMENT TO REFLECT THAT THE TRANSACTIONS IN QUESTION ARE NOTHING BUT BOGUS ACCO MMODATION ENTRIES, THE ADDITION MADE BY THE AO IS NOT SUSTAINABLE 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 FU NDS WHICH IS ALSO SUPPORTED BY THE FINANCIAL STATEMENTS AND FURTHER THE ASSESSM ENTS OF THE LOAN CREDITOR WERE COMPLETED UNDER SECTION 143(3). THE DETAILS O F LOANS TAKEN FROM M/S. JALSAGAR COMMERCE PVT. LTD., INTERESTS CREDITED/PAI D AND REPAYMENT 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 ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 67 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 1,50,50,86 0 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 UNDER 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 COMMERC E PVT. LTD. AND THE ENTIRE LOAN WAS ALREADY REPAID BY THE ASSESSEE. WE FURTHE R NOTE THAT 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 EV IDENT FROM THE DETAILS REPRODUCED ABOVE. THEREFORE, THE TRANSACTIONS OF TA KING LOAN AND REPAYMENT CANNOT BE TREATED AS BOGUS ONCE THE ASSESSEE HAS BE EN REGULARLY REPAYING THE LOAN AMOUNT 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 A CCOUNT, THEN THE ADDITION CANNOT BE MADE BY TREATING THE LOAN TAKEN AND REPAI D AS BOGUS TRANSACTION. APART FROM THESE FACTS, THE ASSESSEE HAS ALSO MADE THE PAYMENT OF INTEREST WHICH WAS ALSO SUBJECTED TO TDS. THIS SHOWS THE GEN UINENESS OF THE TRANSACTIONS AND ALL THESE TRANSACTIONS HAVE TAKEN PLACE PRIOR T O THE DATE OF SEARCH AND DULY RECORDED IN THE BOOKS OF ACCOUNTS AND ALSO SUBJECTE D TO ASSESSMENT UNDER SECTION 143(3) FOR SOME OF THE ASSESSMENT YEARS. T HEREFORE, EVEN AS PER THE EVIDENCE PRODUCED BY THE ASSESSEE, THE ALLEGED SUSP ICION OF THE AO WAS GOT DISPELLED AND IN THE ABSENCE OF ANY CONTRARY EVIDEN CE 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 SUST AINABLE. 11.1. EVEN OTHERWISE, THE ASSESSMENT ORDER IS SOLEL Y BASED ON THE REPORT OF THE INVESTIGATION WING KOLKATA WHICH IN TURN IS NOT HING BUT THE NARRATION OF THE STATEMENTS RECORDED DURING THE INVESTIGATION AND TH E AO WAS HAVING IN ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 68 POSSESSION THE STATEMENT OF ONLY SHRI ANAND SHARMA. THEREFORE, ALL THESE PROCEEDINGS CONDUCTED BY THE INVESTIGATION WING KOL KATA WERE AT THE BACK OF THE ASSESSEE AND HENCE THE STATEMENT WHICH IS THE F OUNDATION OF THE REPORT OF THE INVESTIGATION WING KOLKATA AS WELL AS THE ASSES SMENT ORDER CANNOT BE ACCEPTED IN THE ABSENCE OF GIVING AN OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS INSISTED F OR CROSS EXAMINATION DURING THE ASSESSMENT PROCEEDINGS AND FURTHER DURING THE A PPELLATE PROCEEDINGS. THE LD.CIT(A) EVEN CALLED FOR A REMAND REPORT AND DIREC TED THE AO TO ALLOW CROSS EXAMINATION TO THE ASSESSEE. HOWEVER, THE AO HAS EX PRESSED HIS INABILITY TO ALLOW THE ASSESSEE CROSS EXAMINATION OF THE WITNESS ES 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 DENIED 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 PROVIDED BY THOUSANDS OF BENEFICIARIES ACROSS INDIA IS NEITHER PRACTICABLE N OR VIABLE AND THEREFORE UNCALLED FOR. WE FIND THAT THE ASSESSEE HAS DEMANDED THE CR OSS EXAMINATION ONLY IN RESPECT OF THE ALLEGED TRANSACTIONS OF LOANS AND NO T FOR THE ENTIRE BUSINESS OF THE ENTRY PROVIDERS PROVIDING THE BOGUS ENTRIES. UNDISP UTEDLY, THE STATEMENT OF SHRI ANAND SHARMA WAS RECORDED BY THE INVESTIGATION WING KOLKATA AT THE BACK OF THE ASSESSEE, EVEN THE PROCEEDINGS BY THE INVESTIGA TION WERE CONDUCTED AT THE BACK OF THE ASSESSEE, THEREFORE, THE SAID STATEMENT OF SHRI ANAND SHARMA CANNOT BE THE SOLE BASIS OF ASSESSMENT WITHOUT GIVING AN O PPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. CCE (SUPRA) WHILE DEA LING WITH THE ISSUE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE FOR NOT PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED ON BY THE AO HAS HELD IN PARA 6 TO 9 AS UNDER :- ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 69 6. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS -EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNT ED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOUL D BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATI NG AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUT HORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF TH IS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROS S-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIA L WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXP LAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WA NTED TO CROSS- EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPEL LANT WANTED FROM THEM. 7. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESS ES AND WANTED TO DISCREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANT ED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE A DJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAIN TAINED 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.WITNE SSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUBJECT-MATTER OF CROSS- EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICA TING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT-MATTER O F THE CROSS- EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE . WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATT ER CAME UP BEFORE THIS COURT IN CCE V. ANDAMAN TIMBER INDUSTRIES LTD. , ORDER DATED 17.3.2005 WAWS PASSED REMITTING THE CASE BACK TO TH E TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S 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 WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY I TS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ON LY 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. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 70 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 O PPORTUNITY 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-T AX ACT, 1961 HAD BEEN FILED BY THE REVENUE BEFORE THE 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 CORRECT BUT THE DECISION OF THE TRIBUNAL IS NOT ACC EPTABLE BECAUSE VIOLATION OF THE CANONS OF NATURAL JUSTICE IN ITSELF IS NOT FATAL ENOUGH SO AS TO JEOPARDIZE THE ENTIRE PROCEED INGS. IN THE INTEREST OF JUSTICE, THE TRIBUNAL COULD HAVE SET AS IDE THE ASSESSMENT ORDER WITH THE LIMITED PURPOSE OF OFFERI NG ASSESSEE AN OPPORTUNITY TO CROSS-EXAMINE SHRI MANOJ AGGARWAL BEFORE COMPLETING 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 POSITION THAT THERE HAD BEEN A VIOLATION OF PRINCIPLES OF NA TURAL JUSTICE. HOWEVER, THE REVENUE'S PLEA WAS THAT THE VIOLATION OF PRINCI PLES OF NATURAL JUSTICE WAS NOT FATAL SO AS TO JEOPARDIZE THE ENTIRE PROCEE DINGS. THE SAID MISCELLANEOUS APPLICATION WAS ALSO REJECTED 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 CORRECTLY UNDERSTOOD THE LAW AND APPLIED IT TO THE FACTS OF T HE CASE. ONCE THERE IS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IN ASMUCH AS SEIZED MATERIAL IS NOT PROVIDED TO AN ASSESSEE NOR IS CROS S-EXAMINATION OF THE PERSON ON WHOSE STATEMENT THE ASSESSING OFFICER REL IES 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 SUB STANTIAL QUESTION OF LAW ARISES 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 N OT PROVIDED TO THE ASSESSEE NOR IS CROSS EXAMINATION OF THE PERSON ON WHOSE STATEME NT THE AO RELIED UPON, ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 71 GRANTED, THEN, SUCH DEFICIENCIES WOULD AMOUNT TO DE NIAL OF OPPORTUNITY AND CONSEQUENTLY WOULD BE FATAL TO THE PROCEEDINGS. TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF H.R. MEHTA VS. ACIT, 387 ITR 5 61 (BOMBAY) HAS ALSO CONSIDERED THE ISSUE OF NOT PROVIDING OPPORTUNITY O F 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 SUB MISSIONS MR. TRALSHAWALA 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 NON EXIS TENT AND THAT THE ASSESSEE HAD DISCHARGED HIS PRIMARY ONUS BY IDENTIF YING THE SOURCE OF THE AMOUNT PAID. THE COURT OBSERVED THAT ONCE THE P RIMARY ONUS IS DISCHARGED, THE ONUS SHIFTED TO THE REVENUE TO VERI FY GENUINENESS OF THE TRANSACTION. IN THE PRESENT 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 SH OULD NOT BE PLACED UPON THE RACK AND CALLED UPON TO EXPLAIN NOT ONLY M ERELY, THE ORIGIN AND SOURCE OF HIS CAPITAL CONTRIBUTION BUT THE ORIG IN OF ORIGIN AND THE SOURCE OF SOURCE AS WELL. IN YET ANOTHER CASE OF BAHRI BROTHERS (P) LTD. ( SUPRA ) THE DIVISION BENCH OF PATNA HIGH COURT OBSERVED T HAT WHERE THE ASSESSEE UPON WHOM THE INITIAL BURDEN LIE S, PRODUCES BANK CERTIFICATE TO ESTABLISH THAT THE TRANSACTION WAS C ARRIED OUT THROUGH ACCOUNT PAYEE CHEQUES THUS DISCLOSING THE IDENTITY OF THE CREDITORS AS ALSO THE SOURCE OF INCOME, THE BURDEN SHIFTS ON TO THE DEPARTMENT AND THE DEPARTMENT CANNOT ADD THE CASH CREDITS TO HIS I NCOME 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, THE ASSESSEE MUST SATISFY THREE CONDITIONS I.E. IDENTIT Y OF THE CREDITOR, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. IN THE INSTANT CASE BY VIRTUE OF THE FACT THAT THE TRA NSACTION WAS COMPLETED BY CHEQUE PAYMENTS, THE APPELLANT HAS CONTENDED THA T IT HAD SATISFIED ALL THE THREE TESTS. 13. IN KISHANCHAND CHELLARAM ( SUPRA ) WHEREIN THE SUPREME COURT OBSERVED THAT THE REVENUE AUTHORITIES HAD NOT RECOR DED THE STATEMENT OF THE MANAGER OF THE BANK AND IT WAS DIFFICULT TO APP RECIATE AS TO WHY IT WAS NOT DONE AND WHY THE MATTER WAS NOT PROBED FURT HER 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 WHEN ITS SEIZED MATERIAL WAS NOT PROVIDED TO AN ASSESSEE NOR WAS HE PERMITTED TO CROSS EXAMINE A PERSON ON WHOSE STATEMENT THE ASSES SING OFFICER ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 72 RELIED, IT WOULD AMOUNT TO DEFICIENCY, AMOUNTING TO A DENIAL OF OPPORTUNITY AND THEREFORE VIOLATION OF PRINCIPLES O F NATURAL JUSTICE. IN THAT CASE CIT (A) HAD DELETED ADDITION MADE BY THE ASSESSING OFFICER SINCE THE ASSESSING OFFICER HAD FAILED TO PROVIDE C OPIES OF SEIZED MATERIAL TO THE ASSESSEE NOR HAD HE ALLOWED THE ASS ESSEE TO CROSS- EXAMINE THE PARTY CONCERNED. THE DIVISION BENCH HEL D THAT ONCE THERE IS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE I NASMUCH AS SEIZED MATERIAL WAS NOT PROVIDED TO THE ASSESSEE NOR WAS G IVEN OPPORTUNITY OF CROSS EXAMINING THE PERSON WHOSE STATEMENT WAS BEIN G 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 OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE WITNESSES AND THE TRI BUNAL MERELY OBSERVED THAT THE CROSS EXAMINATION OF THE DEALERS IN THAT CASE, COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT O THERWISE BE IN POSSESSION OF THE APPELLANT-ASSESSEE. THE SUPREME C OURT SET ASIDE THE IMPUGNED ORDER AND OBSERVED THAT IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUB JECT MATTER OF 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 PAYME NTS 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 FUNDAMEN TAL ASPECT, THE REVENUE WAS NOT JUSTIFIED IN MAKING ADDITION AT THE TIME OF REASSESSMENT WITHOUT HAVING FIRST GIVEN THE ASSESSEE AN OPPORTUN ITY TO CROSS EXAMINE THE DEPONENT ON THE STATEMENTS RELIED UPON BY THE A CIT. QUITE APART FROM 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 LOAN 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 REPA ID VIDE ACCOUNT PAYEE CHEQUE THE LEAST THAT THE REVENUE SHOULD HAVE DONE WAS TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO MEET THE CASE AGA INST HIM BY PROVIDING THE MATERIAL SOUGHT TO BE USED AGAINST AS SESSEE IN ARRIVING BEFORE PASSING THE ORDER OF REASSESSMENT. THIS NOT HAVING BEEN DONE, THE DENIAL OF SUCH OPPORTUNITY GOES TO ROOT OF THE MATTER AND STRIKES AT THE VERY FOUNDATION OF THE REASSESSMENT AND THEREFO RE RENDERS THE ORDERS PASSED BY THE CIT (A) AND THE TRIBUNAL VULNERABLE. IN OUR VIEW THE ASSESSEE WAS BOUND TO BE PROVIDED WITH THE MATERIAL USED AGAINST HIM APART FROM BEING PERMITTING HIM TO CROSS EXAMINE TH E DEPONENTS. DESPITE THE REQUEST DATED 15TH FEBRUARY, 1996 SEEKI NG AN OPPORTUNITY TO CROSS EXAMINE THE DEPONENT AND FURNISH THE ASSES SEE WITH COPIES OF STATEMENT AND DISCLOSE MATERIAL, THESE WERE DENIED TO HIM. IN THIS VIEW OF THE MATTER WE ARE INCLINED TO ALLOW THE APPEAL O N THIS VERY ISSUE. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 73 THUS THE DENIAL OF OPPORTUNITY TO CROSS EXAMINE WAS CONSIDERED BY THE HONBLE HIGH COURT WHICH GOES TO THE ROOT OF THE MATTER AND STRIKES AT THE VERY FOUNDATION OF THE ASSESSMENT AND, THEREFORE, RENDER S THE ASSESSMENT ORDER PASSED BY THE AO NOT SUSTAINABLE. THE LD. A/R HAS SUBMITTED THAT COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS. SHRI PRATEEK KOTHARI VIDE ORDER DATED 16 TH DECEMBER, 2012 IN ITA NO. 159/JP/2016 HAS CONSIDER ED 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 ASSESSMENT YEAR AN D NOT ACCEPTING THE SAID LOAN TRANSACTION AS A GENUIN E TRANSACTION BY THE ASSESSING OFFICER AND THE RESULT ANT ADDITION MADE UNDER SECTION 68 OF THE ACT. UNDISPUT EDLY, THE PRIMARY ONUS TO ESTABLISH GENUINENESS OF THE LO AN TRANSACTION IS ON THE ASSESSEE. IN THE INSTANT CASE , THE ASSESSEE HAS PROVIDED THE NECESSARY EXPLANATION, FURNISHED DOCUMENTARY EVIDENCE IN TERMS OF TAX FILI NGS, AFFIDAVITS AND CONFIRMATION OF THE DIRECTORS, BANK STATEMENTS OF THE LENDER, BALANCE SHEET OF THE LEND ER COMPANY, AND AN INDEPENDENT CONFIRMATION HAS ALSO BEEN OBTAINED BY THE ASSESSING OFFICER TO SATISFY T HE CARDINAL TEST OF IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN TRANSACTION. HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING IN RESP ECT OF SUCH EXPLANATION, DOCUMENTARY EVIDENCE AS WELL AS INDEPENDENT CONFIRMATION. APPARENTLY, THE REASON FO R NOT ACCEPTING THE SAME IS THAT THE ASSESSING OFFICE R WAS IN RECEIPT OF CERTAIN INFORMATION FROM THE INVESTIG ATION WING OF THE TAX DEPARTMENT AS PER WHICH THE TRANSAC TION UNDER CONSIDERATION IS A BOGUS LOAN TRANSACTION. TH E 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 O N THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSA CTION 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 T O ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN RE SPONSE, THE ASSESSEE SUBMITTED THAT SHRI BHANWARLAL JAIN IS NOT KNOWN TO HIM AND REGARDING VARIOUS INCRIMINATING ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 74 DOCUMENTARY EVIDENCES SEIZED DURING THE COURSE OF SEARCH AND STATEMENTS RECORDED OF SHRI BHANWARLAL J AIN AND OTHER PERSONS, HE SPECIFICALLY REQUESTED THE AO TO PROVIDE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENT OF ALL VARIOUS PERSONS RECORDED IN THIS R EGARD AND PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SUCH PERSONS. HOWEVER, THE AO DIDNT PROVID E TO THE ASSESSEE COPIES OF SUCH INCRIMINATING DOCUME NTS AND STATEMENTS OF VARIOUS PERSONS RECORDED AND ALLO W THE CROSS-EXAMINATION OF ANY OF THESE PERSONS. WHIL E 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 MANAGED BY THEM. THIS ADMISSION AUTOMATICALLY MAKES ALL THE TRANSACTIONS DONE BY TH EM AS MERE PAPER TRANSACTIONS AND IN THESE CIRCUMSTANC ES, 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 BENEFICIARIES TO WHOM T HE SAID GROUP HAS PROVIDED. THIS ADMISSION IS SUFFICIENT TO REJECT THE CONTENTIONS OF THE ASSEESSE. FURTHER, REGARDING CROSS EXAMINATION, THE AO STATED THAT TH E RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AND IT DEPENDS UPON THE CIRCUMSTANCES OF EACH CASE AND ALS O ON THE STATUTE CONCERNED. IN THE PRESENT CASE, NO S UCH CIRCUMSTANCES ARE WARRANTED AS IN THE LIST OF BENEFICIARIES TO WHOM ACCOMMODATION ENTRIES WERE PROVIDED BY THE SAID GROUP CATEGORICALLY CONTAINS T HE 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. THE AO FURTHER RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN 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 THE ASSESSEE THAT IF THE ENTRIES AND M ATERIAL ARE GATHERED BEHIND THE BACK OF THE ASSESSEE AND IF THE AO PROPOSES TO ACT ON SUCH MATERIAL AS HE MIGHT HAV E GATHERED AS A RESULT OF HIS PRIVATE ENQUIRIES, HE M UST DISCLOSE ALL SUCH MATERIAL TO THE ASSESSEE AND ALSO ALLOW THE CROSS EXAMINATION AND IF THIS IS NOT DONE, THE PRINCIPLES OF NATURAL JUSTICE STAND VIOLATED. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 75 2.9 IN LIGHT OF ABOVE DISCUSSIONS, IN OUR VIEW, TH E CRUX OF THE ISSUE AT HAND IS THAT WHETHER THE PRINCIPLE OF NATU RAL JUSTICE STAND VIOLATED IN THE INSTANT CASE. IN OTHE R WORDS, WHERE THE AO DOESNT WANT TO ACCEPT THE EXPLANATION OF THE ASSESSEE AND THE DOCUMENTATION FURNISHED REGARD ING THE GENUINENESS OF THE LOAN TRANSACTION AND INSTEAD WANTS TO RELY UPON THE INFORMATION INDEPENDENTLY RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT IN RESPECT OF INVESTIGATION CARRIED OUT AT A THIRD PARTY, CAN THE SAID INFORMATION BE USED AGAINST THE ASSESS EE WITHOUT SHARING SUCH INFORMATION WITH THE ASSESSEE AND ALLOWING AN OPPORTUNITY TO THE ASSESSEE TO EXAMINE SUCH INFORMATION AND EXPLAIN ITS POSITION ESPECIALLY WHE N THE ASSESSEE HAS REQUESTED THE SAME TO THE ASSESSING OF FICER. 2.10 IN THIS REGARD, THE HONBLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT (1954) 26 ITR 7 75 (SC) (COPY AT CASE LAW PB 812-818) HAS HELD THAT THE RULE OF LAW ON THIS SUBJECT HAS BEEN FAIRLY AN D RIGHTLY STATED BY THE LAHORE HIGH COURT IN THE CASE OF SETH GURMUKH SINQH WHERE IT WAS STATED THAT WHILE PROCEEDING UNDER SUB-SECTION (3) OF SECTION 23, THE INCOME-TAX OFFICER, THOUGH NOT BOUND TO RELY ON EVIDENCE PRODUCED BY THE ASSESSEE AS HE CONSIDERS T O BE FALSE, YET IF HE PROPOSES TO MAKE AN ESTIMATE IN DI SREGARD 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 AGAIN ST THE ASSESSEE THE RESULT OF ANY PRIVATE INQUIRIES MADE B Y HIM, HE MUST COMMUNICATE TO THE ASSESSEE THE SUBSTANCE O F THE INFORMATION SO PROPOSED TO BE UTILIZED TO SUCH AN EXTENT AS TO PUT THE ASSESSEE IN POSSESSION OF FULL PARTICULARS OF THE CASE HE IS EXPECTED TO MEET AND THAT HE SHOULD FURTHER GIVE HIM AMPLE OPPORTUNITY TO MEET I T. IT WAS HELD IN THAT CASE THAT IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNAL VIOLATED CERTAIN FUNDAMEN TAL RULES OF JUSTICE IN REACHING ITS CONCLUSIONS. FIRST LY, IT DID NOT DISCLOSE TO THE ASSESSEE WHAT INFORMATION HAD B EEN SUPPLIED TO IT BY THE DEPARTMENTAL REPRESENTATIVE. NEXT, IT DID NOT GIVE ANY OPPORTUNITY TO THE COMPANY TO REBU T THE MATERIAL FURNISHED TO IT BY HIM, AND LASTLY, IT DEC LINED TO TAKE ALL THE MATERIAL THAT THE ASSESSEE WANTED TO P RODUCE IN SUPPORT OF ITS CASE. THE RESULT IS THAT THE ASSE SSEE HAD NOT 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 ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 76 NOT BOUND BY ANY TECHNICAL RULES OF THE LAW OF EVID ENCE. IT IS OPEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY PRIVATE ENQUIRY. BUT, IF HE DESI RES TO USE THE MATERIAL SO COLLECTED, THE ASSESSEE MUST BE INFORMED ABOUT THE MATERIAL AND GIVEN ADEQUATE OPPORTUNITY TO EXPLAIN IT. THE STATEMENTS MADE BY PRAVEEN JAIN AND GROUP WERE MATERIAL ON WHICH THE I T AUTHORITIES COULD ACT PROVIDED THE MATERIAL WAS DISCLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RE NDER THEIR EXPLANATION IN THAT REGARD. THE HONBLE SUPREME COURT IN CASE OF KISHINCHAND CHELLARAM 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 O F THE TRIBUNAL THAT THE AMOUNT OF RS. 1,07,350 SAID TO HA VE BEEN REMITTED BY TILOKCHAND FROM MADRAS REPRESENTED THE UNDISCLOSED INCOME OF THE ASSESSEE. THE ONLY EVIDENCE 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 MANAGE R 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 FINDIN G. IN THE FIRST PLACE, THIS LETTER WAS NOT DISCLOSED TO T HE ASSESSEE BY THE ITO AND EVEN THOUGH THE AAC REPRODUCED AN EXTRACT FROM IT IN HIS ORDER, HE DID NOT CARE TO PRODUCE IT BEFORE THE ASSESSEE OR GIVE A CO PY OF IT TO THE ASSESSEE. THE SAME POSITION OBTAINED ALSO BE FORE THE TRIBUNAL AND THE HIGH COURT AND IT WAS ONLY WHE N A SUPPLEMENTAL STATEMENT OF THE CASE WAS CALLED FOR B Y THIS COURT BY ITS ORDER, DATED 16-8-1979 THAT, ACCORDING TO THE ITO, THIS LETTER WAS TRACED BY HIM AND EVEN THE N IT WAS NOT SHOWN BY HIM TO THE ASSESSEE BUT IT WAS FORWARDED TO THE TRIBUNAL AND IT WAS FOR THE FIRST TIME AT THE HEARING BEFORE THE TRIBUNAL 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 SEEN THAT, EVEN IF WE ASSUME THAT THI S LETTER WAS IN FACT ADDRESSED BY THE MANAGER OF THE BANK TO THE ITO, NO RELIANCE COULD BE PLACED UPON IT, SINCE IT WAS NOT SHOWN TO THE ASSESSEE UNTIL AT THE STAGE OF PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CA SE AND NO OPPORTUNITY TO CROSS EXAMINE THE MANAGER OF THE BANK COULD IN THE CIRCUMSTANCES BE SOUGHT OR AVAILE D OF BY THE ASSESSEE. IT IS TRUE THAT THE PROCEEDINGS UN DER THE INCOME-TAX LAW ARE NOT GOVERNED BY THE STRICT RULES OF ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 77 EVIDENCE AND, THEREFORE, IT MIGHT BE SAID THAT EVEN WITHOUT CALLING THE MANAGER OF THE BANK IN EVIDENCE TO PROVE THIS LETTER, IT COULD BE TAKEN INTO ACCOUNT A S EVIDENCE. BUT BEFORE THE INCOME-TAX AUTHORITIES COU LD RELY UPON IT, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTU NITY TO CROSS EXAMINE THE MANAGER OF THE BANK WITH REFER ENCE 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 HONB LE SUPREME COURT IN CASE OF C. VASANTLAL & CO. (SUPRA) RELIED UPON BY THE REVENUE AND WHICH ACTUALLY SUPPO RTS 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 WIN G, STATEMENT RECORDED U/S 132(4) OF SHRI BHANWARLAL JA IN AND OTHERS, AND VARIOUS INCRIMINATING DOCUMENTARY EVIDENCE FOUND FROM THE SEARCH AND SEIZURE CARRIED OUT BY INVESTIGATION WING, MUMBAI ON THE SHRI BHANWARLA L JAIN GROUP ON 03.10.2013. IT REMAINS UNDISPUTED THA T THE ASSESSEE WAS NEVER PROVIDED COPIES OF SUCH INCRIMINATING 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 SOUG HT TO BE SHIFTED ON THE ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHARI, JAIPUR 21 ASSESSEE BY THE A.O. IT IS CLEAR CASE WHERE THE PRI NCIPLE OF NATURAL JUSTICE STAND VIOLATED AND THE ADDITIONS MADE UNDER SECTION 68 THEREFORE ARE UNSUSTAINABLE IN THE EYE OF LAW AND WE HEREBY DELETE THE SAME. THE ORDER OF THE LD CIT(A) IS ACCORDINGLY CONFIRMED AND THE GROUND O F 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 THE DENIAL OF THE OPPORTUNITY TO CROSS EXAMINE WOULD CERTAINLY IN VIO LATION OF PRINCIPLES OF NATURAL JUSTICE AND CONSEQUENTLY RENDERS THE ASSESSMENT ORD ER BASED ON SUCH STATEMENT AS NOT SUSTAINABLE IN LAW. HENCE IN VIEW OF THE FA CTS AND CIRCUMSTANCES OF THE CASE WHERE THE ASSESSEE HAS REPEATEDLY REQUESTED AN D DEMANDED THE CROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON BY THE AO IN ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 78 THE ASSESSMENT ORDER AND FURTHER THE REPORT OF THE DDIT INVESTIGATION KOLKATA IS ALSO BASED ON THE STATEMENT OF SUCH PERSON THEN THE DENIAL OF CROSS EXAMINATION BY THE AO AS WELL AS LD. CIT (A) DESPITE THE FACT T HAT THE ASSESSEE WAS READY TO BEAR THE COST OF THE CROSS EXAMINATION OF THE WITNE SSES IS A GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THUS THE ADDITIONS MADE BY THE AO ON THE BASIS OF SUCH STATEMENT WITHOUT ANY TANGIBLE MATERIAL IS NOT SUSTAINABLE IN LAW AND LIABLE TO BE DELETED. ACCORDINGLY THE ADDITION MAD E BY THE AO IS ALSO DELETED ON MERITS APART FROM THE LEGAL ISSUE DECIDED IN FAVOUR OF THE ASSESSEE. 17. WE HAD CAREFULLY GONE THROUGH THE ABOVE ORDER OF THE TRIBUNAL IN THE CASE OF KOTA DALL MILL VS. DCIT (SUPRA) WITH RESP ECT TO THE VERY SAME SEARCH AND SEIZURE ACTION TAKEN WITH RESPECT TO THE AMOUNT TAKEN FROM M/S JALSAGAR COMMERCE PVT. LTD. AFTER HAVING SIMILA R OBSERVATION AS IN THE INSTANT CASE BEFORE US, THE A.O. HAS MADE THE A DDITION WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A). WE FOUND THAT THE TRIBUNAL HAVE DEALT WITH THE ISSUE THREADBARE AND AFTER CONTROVERTING EA CH AND EVERY OBJECTION OF THE ASSESSING OFFICER AND THE LD. CIT(A ) HAVE CONFIRMED THE ADDITION AND ALSO DEALING WITH ALL THE JUDICIAL PRON OUNCEMENTS REFERRED BY THE LD. CIT(A) DELETED THE ADDITION SO MADE WITH R ESPECT TO THE LOAN TAKEN FROM M/S JALSAGAR COMMERCE PVT. LTD.. AS THE FACTS AND CIRCUMSTANCES DURING THE BOTH THE ASSESSMENT YEAR U NDER CONSIDERATION I.E. A.Y. 2015-16 AND 2016-17 ARE PARI MATERIAL, RE SPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE GROUP CASES, WE DO N OT FIND ANY MERIT IN ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 79 THE ADDITION SO MADE IN RESPECT OF LOAN TAKEN FROM M/S JALSAGAR COMMERCE PVT. LTD. 18. IN THE RESULT, APPEALS OF THE ASSESSEE IN BOTH THE YEARS ARE ALLOWED. 19. IN THE APPEAL FOR THE A.Y. 2016-17, THE REVENUE IS AGGRIEVED FOR DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINE D UNSECURED LOAN TAKEN FROM M/S COMPETENT SECURITIES PVT. LTD.. 20. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CA REFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUN D THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS ALSO TAK EN LOAN FROM M/S COMPETENT SECURITIES PVT. LTD. AMOUNTING TO RS. 1.4 0 CRORES. WE FOUND THAT THE LOAN WAS REPAID IN FULL TO THE LENDER DURIN G THE SAME FINANCIAL YEAR. WE ALSO FOUND THAT THE A.O. HAS ALLOWED THE IN TEREST EXPENDITURE CLAIMED BY THE ASSESSEE IN RESPECT OF THE LOAN TAKE N FROM M/S COMPETENT SECURITIES PVT. LTD. WHICH WAS REPAID BY 02 /3/2016 WITH INTEREST. THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS CL EARLY SHOWING LOAN TAKEN ON INTEREST PAYMENT AND REPAYMENT OF LOAN WITH INTEREST. AFTER HAVING THE FOLLOWING OBSERVATION, THE LD. CIT(A) HAS DELETED THE ADDITION BY HOLDING AS UNDER: ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 80 '5. COMING TO THE SECOND CLASS CONTAINING LOANS FRO M M/S COMPETENT SECURITIES PRIVATE LIMITED AND WHERE ADVERSE FACTS, DETAILS AND EVIDENCES ARE NOT FOUND IN THE REPORTS DATED 28.11.2017 AND 0 6.12.2017 FROM INVESTIGATION DIRECTORATE, KOLKATA AS MENTIONED IN PARA 3.4.8 MENTIONED ABOVE, MY FINDINGS ARE AS FOLLOWS:- 5.1 AS FAR AS THE LENDER COMPANIES NAMELY, M/S COMP ETENT SECURITIES PRIVATE LIMITED IS CONCERNED, IT IS EVIDENT FROM THE DOCUME NTS PLACED ON RECORD THAT NOTICE 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 UNSERVE D OR THESE COMPANIES WERE NOT FOUND EXISTENT ON THE GIVEN ADDRESSES. FUR THERMORE, AFFIDAVIT OF THE DIRECTORS WERE ALSO SUBMITTED WHEREIN THE DIREC TORS CONFIRMED PROVIDING UNSECURED LOAN TO THE APPELLANT AND SOURC E OF PROVIDING THE SAID LOAN. ALSO, IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT NO STATEMENT/EVIDENCE HAS BEEN RELIED UPON OR PROVIDED BY THE AO FOR SUBSTANTIATING THAT THESE COMPANIES ARE CONTROLLED BY THE SO-CALLED ENTRY OPERATORS. 5.2 FOR THE UNSECURED COMPANY NAMELY, M/S COMPETENT SECURITIES PRIVATE LIMITED, THE APPELLANT IN DISCHARGE OF ITS ONUS U/S 68 OF THE ACT HAS FILED CONFIRMATION OF ACCOUNTS AS WELL AS BANK STATEMENT REFLECTING THE TRANSACTIONS WITH OTHER SUBSTANTIATING DOCUMENTS AL ONG WITH ASSESSMENT ORDERS IN CASE OF LENDER COMPANY, WHICH ARE AVAILAB LE AT PAGE NO. 400- 436 OF PB. FROM THESE DOCUMENTARY EVIDENCES PLACED ON RECORD, IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS IS ESTABLISHED. THERE IS NO GAIN SAYING THAT THE ONUS SQUARELY LIES ON THE A PPELLANT TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE C ASH CREDITS. IN THE CASE OF ADDL. CIT V. BAHRI BROS. (P) LTD. [1985] 154 ITR 244 (PAT), THE HON'BLE PATNA HIGH COURT HAS HELD 'IF THE LOANS ARE GIVEN B Y AN ACCOUNT PAYING CHEQUE, IT AMOUNTS TO IDENTIFICATION OF THE PARTIES AND DISCHARGE OF ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 81 BURDEN BY THE BORROWER.' IN VIEW OF THE ABOVE, IT I S CLEAR THAT APPELLANT DISCHARGED ITS BURDEN U/S 68 OF THE ACT. EVEN OTHER WISE, THERE IS NO ADVERSE FINDING OF ANY INVESTIGATION CONDUCTED BY T HE DEPARTMENT IN RELATION TO THESE COMPANIES. THEREFORE, IN THE ABSE NCE OF ANY INDEPENDENT INQUIRY AND ANY ADVERSE FINDINGS TO REB UT THE EVIDENCES FILED BY THE APPELLANT, I FIND THAT THE BALANCE ADDITION IN RESPECT OF UNSECURED LOANS COMPANY NAMELY M/S COMPETENT SECURITIES PRIVA TE LIMITED TOTALLING TO RS. 1,40,00,000/- IS UNJUSTIFIED; FIRSTLY, ON TH E GROUND THAT NO INQUIRIES WERE MADE TO REBUT THE EVIDENCES FILED BY THE APPEL LANT AND SECONDLY, ON THE GROUND THAT APPELLANT DULY DISCHARGED ITS BURDE N CASTED UPON U/S 68 OF THE ACT TO EXPLAIN NATURE AND SOURCE OF THE TRAN SACTIONS BY PROVING THE IDENTITY, CREDITWORTHINESS OF CREDITOR AND GENUINEN ESS OF THE TRANSACTION. IN PARTICULAR, NONE OF THE MATERIAL OR STATEMENTS H AVE BEEN PROVIDED IN THE ASSESSMENT ORDER WHEREIN NAMES OF THE SAID COMP ANIES ARE MENTIONED. NOTABLY, THE TRANSACTIONS WITH THE SAID COMPANY IS DULY VERIFIABLE FROM CONFIRMATION PLACED AT PAGE NO. 40 5 OF PB WITH SUPPORTING BANK STATEMENTS PLACED AT PAGE NO. 402-4 04 OF PB AND HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS ONLY AND THUS, APPELLANT HAS DULY PROVED THE IDENTITY, CREDITWORTHINESS AND GENU INENESS OF THE TRANSACTIONS. 5.3 FURTHERMORE, FROM THE PERUSAL OF DOCUMENTARY EV IDENCES SUBMITTED BY THE APPELLANT, IT IS SEEN THAT TRANSACTIONS HAVE BE EN DONE THROUGH BANKING CHANNELS AND ON THE DATE OF MAKING OF LOAN, THERE IS BALANCE AVAILABLE IN THE ACCOUNTS OF THE LENDER, WHICH PROV ES THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THERE IS NO C ASE OF ANY CASH DEPOSITION IN THE ACCOUNT OF ANY OF THE CREDITORS A T 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 RAWLL EY [2014] 366 ITR 232 (PUNJAB & HARYANA), CIT V. VIJAY KUMAR JAIN [20 14] 221 TAXMAN ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 82 180, CIT V. VICTOR ELECTRODES LTD. [2010] 329 ITR 2 71, ADDL. CIT V. BAHRI BROS. (P) LTD. [1985] 154 ITR 244 (PAT) AND OTHERS AS REFERRED BY THE APPELLANT, I AM OF THE CONSIDERED VIEW THAT APPELLA NT DULY DISCHARGED ITS BURDEN CASTED UPON IT U/S 68 OF THE ACT. IT IS FURT HER SEEN THAT M/S COMPETENT SECURITIES PRIVATE LIMITED HAVE DULY REPLIED TO THE NOTICES ISSUED BY DCIT/DDIT(INV.), KOLKATA IN RESPECT OF CO MMISSION, THESE FACTS REMAIN UNCONTROVERTED BY THE AO. 5.4 THE AO DURING ASSESSMENT PROCEEDINGS TOOK NEGAT IVE INFERENCE FROM THE STATEMENT OF SHRI RAJENDRA AGARWAL RECORDED DURING SEARCH U/S 132(4) WHEREIN HE MADE DISCLOSURE IN RESPECT OF LONG TERM CAPITAL GAIN IN HIS INDIVIDUAL HANDS. I HAVE GONE THROUGH THE STATEMENT OF SHRI RAJENDRA AGARWAL AND HIS DISCLOSURE MADE IN HIS STATEMENT, N OTABLY, THE DISCLOSURE MADE WAS IN HIS PERSONAL CAPACITY ONLY AND WITH RES PECT TO LTCG ONLY AND NOT IN RESPECT OF ANY OTHER TRANSACTIONS BE IT BE R ECEIPT OF UNSECURED LOANS. FURTHER, RAJENDRA AGARWAL IS NOT A DIRECTOR IN THE APPELLANT COMPANY. THEREFORE, I FIND THAT IN THE ABSENCE OF A NY NEXUS OF THE STATEMENT OF SHRI RAJENDRA AGARWAL WITH THE APPELLA NT COMPANY OR ITS TOTAL INCOME, THIS BASIS OF ADDITION ADOPTED BY THE AO IS FARFETCHED & CANNOT BE CONCURRED. 5.5 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 CREDITOR, THERE IS CORRESPONDING CREDIT ENTRY OF EQUAL AMOUNT, HOWEVER, THIS OBSERVATION OF THE AO IS ITSELF NOT SUFFICIENT TO PROVE BEYOND DOUBT THAT APPELLANT ROUTED ITS UNACCOUNTED INCOME BY THE SE COMPANIES RATHER IT PROVES THE SOURCE IN THE HANDS OF THE APPELLANT. IT IS USUAL BUSINESS PRACTICE, WHILE MAKING LOAN, FUNDS ARE REQUIRED TO BE ARRANGED BY THE LENDER, THEREFORE REFLECTION OF SUCH ENTRIES IN BAN K STATEMENT DOESNT LEAD TO DRAW ANY ADVERSE INFERENCE AGAINST THE APPELLANT . NEEDLESS TO SAY THAT ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 83 APPELLANT IS NOT REQUIRED TO PROVE SOURCE OF THE SO URCE U/S 68 OF THE ACT IN VIEW OF THE SETTLED JUDICIAL PRECEDENTS. 5.6 IN MY CONSIDERED VIEW, MERE NOT BELIEVING AN EX PLANATION CANNOT LEAD TO A CONCLUSION THAT THE UNSECURED LOAN RECEIVED BY TH E ASSESSEE IS THE INCOME OF THE ASSESSEE FROM SOME UNDISCLOSED SOURCE S WHILE IN THE PRESENT CASE, NO EVIDENCES OF ANY GENERATION OF UND ISCLOSED INCOME OR THEIR UTILIZATION IN THE FORM OF UNSECURED LOAN HAS BEEN FOUND AND BROUGHT ON RECORD. 5.7 SIMILARLY, I FIND THAT VARIOUS OBSERVATIONS OF THE AO ON BALANCE SHEET / ITR OF THE COMPANIES ARE MISCONSTRUED, MISCONCEIVED AND ARE FACTUALLY INCORRECT. I FURTHER FIND THAT THE VARIOUS OTHER AL LEGATIONS / OBSERVATIONS OF THE AO ARE MISCONCEIVED AND PREMATURE ONLY AND IN V IEW THE APPELLANTS SUBMISSION MADE IN PARA 10 II) & 14 AS REPRODUCED I N PARA NO. 3.2 OF THIS ORDER, THE SAME DOES NOT LEAD ANY WHERE TO DRAW ANY ADVERSE INFERENCE AGAINST THE APPELLANT. FURTHER, THE VARIOUS CASE LA WS RELIED UPON BY THE AO ARE DISTINGUISHABLE FROM THE FACTS OF THE PRESEN T CASE AS CATEGORICALLY COUNTERED BY THE APPELLANT IN HIS WRITTEN SUBMISSIO NS AS MENTIONED IN PARA NO. 3.2 ABOVE. 5.8 IT IS SETTLED JUDICIAL PRECEDENTS THAT UNDER TH E INCOME TAX LAW PRIMARY BURDEN U/S 68 OF THE ACT IS ON THE APPELLANT AND ON CE 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 COMMISSIONER O F INCOME-TAX (2006) 155 TAXMAN 289 (RAJ.), COMMISSIONER OF INCOME-TAX, JAIPUR -II V. MORANI AUTOMOTIVES (P.) LTD. [2014] 264 CTR 86 (RAJ ASTHAN-HC), CIT V. ORISSA CORPN. (P.) LTD. [1986) 159 ITR 78/25 TAX MAN 80F (SC), COMMISSIONER OF INCOME-TAX V/S MARK HOSPITALS (P.) LTD. [2015] 373 ITR 115 (MADRAS)(MAG.), COMMISSIONER OF INCOME-TAX, AJM ER V. JAI KUMAR ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 84 BAKLIWAL [2014] 366 ITR 217 (RAJASTHAN), CIT V/S. CREATIVE WORLD TELEFILMS LTD (2011) 333 ITR 100 (BOM), COMMISSIONE R OF INCOME-TAX-I V. PATEL RAMNIKLAL HIRJI [2014] 222 TAXMAN 15 (GUJARAT )(MAG.), PRINCIPAL COMMISSIONER OF INCOME-TAX-4 V. G & G PHARMA INDIA LTD. [2016] 384 ITR 147 (DELHI) REFERRED ABOVE WHICH HAVE BEEN ALSO BEE N FOLLOWED RECENTLY BY HONBLE DELHI TRIBUNAL IN CASE OF ITO VS. SOFTLI NE CREATIONS (P) LTD. IN ITA NO. 744/DEL/2012 VIDE ITS ORDER DATED 10.02.201 6. FURTHER, 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 ASSESSMENT 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. [2 008] 216 CTR 195 (SC), COMMISSIONER OF INCOME-TAX V. ROCK FORT METAL & MIN ERALS LTD. [2011] 198 TAXMAN 497 (DELHI), DIVINE LEASING & FINANCE LI MITED [2008] 299 ITR 268 (DELHI) CIT V. ORISSA CORPORATION (P.) LTD. [19 86) 159 ITR 78/25 TAXMAN 80F (SC) AND OTHERS ON THIS QUESTION OF LAW. 5.9 FURTHER, POWER TO CALL FOR INFORMATION/PRODUCTI ON 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. VICTOR ELECTRODES LTD. [2010] 329 ITR 271, THE APPELLANT CANNOT BE FASTENE D UPON THE BURDEN TO PRODUCE THE LENDERS BEFORE THE ASSESSING AUTHORITIE S THOUGH IN THE INSTANCE CASE, APPELLANT HAS COOPERATED IN ASSESSME NT BY SHOWING HIS WILLINGNESS TO PRODUCE THE DIRECTORS OF LENDER COMP ANIES 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. 5.10 IN THE PRESENT CASE IN HAND, I FIND THAT AO AS KED ASSESSEE TO PRODUCE LENDER COMPANIES WITHOUT VERIFYING THE FACTS OF LEN DING MONEY FROM ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 85 RESPECTIVE JURISDICTION ASSESSING OFFICER AND WITHO UT VERIFYING THEIR RETURNS OF INCOME AND BALANCE SHEET WHEREIN THESE TRANSACTI ONS ARE REPORTED, ACCORDINGLY THE AO HAS NOT FOLLOWED THE PRINCIPLES LAID DOWN UNDER SECTION 68 OF THE ACT. THE HONBLE GUJRAT HIGH COUR T IN THE CASE OF COMMISSIONER OF INCOME-TAX V. RANCHHOD JIVABHAI NAK HAVA [2012] 21 TAXMANN.COM 159 (GUJ.) HAS HELD THAT:- ONCE THE ASSESSEE HAS ESTABLISHED THAT HE HAS TAKEN MONEY BY WAY OF ACCOUNT PAYEE CHEQUES FROM THE LENDERS WHO ARE ALL INCOME TAX ASSESSEES WHOSE PAN HAVE BEEN DISCLOSED, THE INITIA L BURDEN UNDER SECTION 68 WAS DISCHARGED. IT FURTHER APPEARS THAT THE ASSESSEE HAD ALSO PRODUCED CONFIRMATION LETTERS GIVEN BY THOSE L ENDERS. [PARA 15] ONCE THE ASSESSING OFFICER GETS HOLD OF THE PAN OF THE LENDERS, IT WAS HIS DUTY TO ASCERTAIN FROM THE ASSESSING OFFICER OF THOSE LENDERS, WHETHER IN THEIR RESPECTIVE RETURNS THEY HAD SHOWN EXISTENCE OF SUCH AMOUNT OF MONEY AND HAD FURTHER SHOWN THAT THOSE AM OUNT OF MONEY HAD BEEN LENT TO THE ASSESSEE. IF BEFORE VERIFYING OF SUCH FACT FROM THE ASSESSING OFFICER OF THE LENDERS OF THE ASSESSEE, T HE ASSESSING OFFICER DECIDES TO EXAMINE THE LENDERS AND ASKS THE ASSESSE E TO FURTHER PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE TRANSAC TION, THE ASSESSING OFFICER DOES NOT FOLLOW THE PRINCIPLE LAID DOWN UND ER SECTION 68. [PARA 16] IN THE INSTANCE CASE BEFORE ME, THE AO HAS NOT FOLL OWED 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 GUJARAT HIGH COURT (SUPRA). 5.11 IT IS NOTED THAT NO CLINCHING EVIDENCES HAS BE EN BROUGHT ON RECORD THAT ANY UNACCOUNTED INCOME WAS ROUTED THROUGH UNSECURE D LOAN BY THE APPELLANT AS NO EVIDENCES AS TO RECEIPT/PAYMENT OF CASH FOR RECEIPT OF LOAN WERE FOUND DURING SEARCH IN CASE OF THE APPELL ANT. MERE SUSPICION HOWSOEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. THU S, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH TO R EBUT THE EVIDENCES FILED BY THE APPELLANT, THE IMPUGNED ADDITION MADE IN RESPECT OF UNSECURED LOAN U/S 68 OF THE ACT IS LEGALLY UNTENAB LE AND UNJUSTIFIED. ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 86 5.12 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 INCLUDING JU RISDICTIONAL TRIBUNALS, THE IMPUGNED ADDITION IN RESPECT OF LOAN FROM M/S COMPE TENT SECURITIES PRIVATE LIMITED TOTALLING TO RS 1,40,00,000/- IS N OT SUSTAINABLE AND HENCE THE SAME STANDS DELETED. THUS, GROUND NO. 2 OF APPE AL IS PARTLY ALLOWED.' 21. THE REVENUE IS IN FURTHER APPEAL BEFORE US AGAIN ST DELETION OF ADDITION MADE ON ACCOUNT OF LOAN TAKEN FROM M/S COM PETENT SECURITIES PVT. LTD.. 22. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CA REFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LOWER AU THORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY THE LD. AR AND LD. DR DURING THE COURSE OF HEARING BEFORE US IN THE CONTEXT OF FACTU AL MATRIX OF THE CASE. WE FOUND THAT THE COORDINATE BENCH IN THE CASE OF G ROUP CONCERN NAMELY M/S KOTA DALL MILL (SUPRA) VIDE ITS ORDER 31 /12/2018 DELETED THE SIMILAR ADDITION MADE IN THE ASSESSMENT YEAR 2015-1 6 AND 2016-17. THE PRCISED OBSERVATION OF THE TRIBUNAL WAS AS UNDER: 30. IN THE REVENUES CROSS APPEAL THE ISSUE ON ACC OUNT OF UNSECURED LOANS FROM TWO PARTNERS, NAMELY, M/S. COMPETENT SECURITIE S AND M/S. INTELLECTUAL BUILDERS FOR THE ASSESSMENT YEARS 2015 -16 AND 16-17 WERE DELETED BY THE LD. CIT (A) ON THE GROUND THAT THE A O HAS NOT BROUGHT ANY MATERIAL OR DOCUMENTARY EVIDENCE TO ESTABLISH T HAT THE TRANSACTIONS ARE BOGUS ACCOMMODATION ENTRIES AS THE RE WAS NO ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 87 STATEMENT OF ANY PERSON OF ALLEGED ENTRY OPERATOR H AVING CONTROL OVER THESE COMPANIES OR MANAGING THESE COMPANIES. 31. AN IDENTICAL ISSUE WAS INVOLVED IN ALL THE ASSE SSMENT YEARS OF THE REVENUE WHEREIN THE LD. CIT (A) HAS DELETED THE ADD ITIONS FOR WANT OF ANY DOCUMENTARY EVIDENCE OR ANY OTHER MATERIAL IN S UPPORT OF THE FINDING OF THE AO. THEREFORE, IN VIEW OF OUR FINDI NG ON THIS ISSUE IN ASSESSMENT YEAR 2010-11, THE FINDING OF THE LD. CIT (A) IS UPHELD. 23. WE HAD ALSO GONE THROUGH THE FINDINGS RECORDED BY THE LD. CIT(A) IN DELETING THE ADDITION AND FOUND THAT NO CLINCHIN G EVIDENCE WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER FOR HOLD ING THAT THE LOAN GIVEN BY THE M/S COMPETENT SECURITIES PVT. LTD. WAS BOGUS. THE ASSESSEE PROVED THE IDENTITY THE COMPANY. THE COMPAN Y WAS ASSESSED BY INCOME TAX DEPARTMENT U/S 143(3) OF ITAX ACT. THE D ETAILS OF ASSESSMENT COMPLETED U/S 143(3) IS AS UNDER A) ASSESSMENT U/S 143(3) NAME OF COMPANY ASSESSMENT YEAR INCOME ASSESSED ASSESSMENT ORDER U/S 143(3) AT PB 2016-17 PG-VOL-II M/S COMPETENT SECURITIES PVT LTD 2009-10 94,600 538-539 M/S COMPETENT SECURITIES PVT LTD 2010-11 2,08,099 544 M/S COMPETENT SECURITIES PVT LTD 2014-15 9,06,648 547-550 B) COPY OF MASTER DATA OF ROC NAME OF COMPANY CATEGORY OF COMPANY AS PER MASTER DATA OF ROC PB A.Y 2016-17 M/S COMPETENT SECURITIES ACTIVE 554/VOL-II ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 88 PVT LTD II) CREDITWORTHINESS IN ORDER TO PROVE THE CREDITWORTHINESS OF THE CASH CREDITOR, THE ASSESSEE HAS SUBMITTED THE FOLLOWING DOCUMENTS BEFORE THE LO WER AUTHORITIES. M/S COMPETENT SECURITIES PVT. LTD S.NO DESCRIPTION PB 2016-17 VOL II PAGE NO. REMARKS 1 ASSESSMENT ORDER U/S 143(3) OF THE LENDER COMPANY ACT FOR AY 2009-10, AY 2010-11, & AY 2014-15 537-553 ASSESSED INCOME FOR AY 2014-15 IS RS. 9,06,648/- 2. BANK STATEMENT OF LENDER COMPANY 521-523 BANK STATEMENT SHOWS THE HUGE TRANSACTIONS IN BANK. THERE IS NO CASH DEPOSIT IN ANY OF THE COMPANY PRIOR TO THE LOAN GIVEN TO THE ASSESSEE 3 INCOME TAX RETURN FOR AY 2016-17 510-512 INCOME DECLARED FOR A.Y 2016-17 RS. 1,92,28,760/- 4 AFFIDAVIT OF DIRECTOR 526-529 FURTHER, THE COMPANY HAS RAISED SHARE CAPITAL IN VA RIOUS YEARS WHICH WAS ASSESSED BY INCOME TAX DEPARTMENT IN SCRUTINY ASSESSMENT U/S 143(3) OF ITAX ACT, SHOWN AS UNDER:- M/S COMPETENT SECURITIES PVT. LTD. ASSESSMENT YEAR FINANCIAL YEAR SHARE CAPITAL RAISED ASSESSMENT ORDER U/S 143(3) AT PB PG 1994-95 1993-94 3,00,000 - 2000-01 1999-00 24,50,000 - 2009-10 2008-09 98,36,50,000 538-539/VOL-II/AY 2016-17 THERE IS SUFFICIENT SOURCE OF FUNDS WITH THE COMPAN Y TO GIVE THE UNSECURED LOAN TO THE ASSESSEE. THE CHART SHOWING T HE AMOUNT GIVEN ON UNSECURED LOAN TO THE ASSESSEE VIZ A VIZ OWN FUNDS WITH THE COMPANIES ARE AS UNDER: - ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 89 NAME OF THE INVESTOR COMPANY AMOUNT GIVEN TO ASSESSEE (MAXIMUM BALANCE) SOURCE OF FUNDS WITH INVESTOR COMPANIES AS ON 31.03.2016 SOURCE OF FUNDS WITH INVESTOR COMPANIES AS ON 31.03.2015 SHARE CAPITAL AND RESERVES LOANS SHARE CAPITAL AND RESERVES LOANS COMPETENT SECURITIES PVT. LTD 1,40,00,000 100,12,04,52 2 47,00,000 98,83,92,562 50,00,000 FROM THE ABOVE CHART, IT IS CLEAR THAT THE CASH CRE DITOR COMPANY WAS HAVING ITS OWN SHARE CAPITAL, RESERVE & SURPLUS, WH ICH WERE MORE THAN TO THE AMOUNT GIVEN TO THE ASSESSEE. III) GENUINENESS A) THE ASSESSEE SUBMITTED THE CONFIRMATION OF LENDER (PB PG 524 /VOL-II/A.Y 2016-17. B) THE ASSESSEE HAS SUBMITTED THE AFFIDAVIT OF THE DI RECTOR OF THE CASH CREDIT COMPANY (PB PG 526-529/VOL II/ A.Y 2016-17. C) REPAYMENT OF LOAN:- FURTHER THE COMPANY IS REPAYING THE LOANS. THE ENTI RE LOAN WAS SQUARED UP DURING THE YEAR ITSELF. D) INTEREST PAYMENT TREATED AS GENUINE BY LD AO FURTHER, THE COMPANY PAID INTEREST TO THE LENDER CO MPANY WHICH THE LD AO TREATED AS GENUINE PAYMENT AS HE MADE NO DISALLO WANCE AGAINST THE INTEREST PAYMENT. WHEN THE INTEREST PAYMENT IS GENU INE THE LOAN CANNOT BE TREATED AS IN GENUINE. REPAYMENT OF LOAN AND INTEREST PAYMENT NAME OF COMPANY AY OPENING BALANCE LOAN TAKEN DURING THE YEAR INTEREST CREDITED IN A/C DURING THE YEAR LOAN REPAYMENT DURING THE YEAR CLOSING BALANCE M/S COMPETENT SECURITIES PVT. LTD 16-17 NIL 1,40,00,000 4,96,721 1,40,00,000 NIL ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 90 E) FURTHERMORE, THE DEPARTMENT HAS CARRIED OUT INTE NSIVE SEARCH OPERATIONS OVER THE ASSESSEE AND NO ANY INCRIMINATI NG MATERIAL WAS FOUND TO SHOW THAT THE MONEY AGAINST UNSECURED LOAN WAS OWN UNDISCLOSED MONEY OF THE COMPANY. NO ANY ENTRY IN B OOKS OF ACCOUNT OR DOCUMENT WAS FOUND SHOWING PAYMENT OF CASH TO TH ESE INVESTOR COMPANY IN LIEU OF RECEIPT OF CHEQUES FROM THESE CO MPANY AGAINST UNSECURED LOAN. THEREFORE THE GENUINENESS OF THE TR ANSACTIONS CANNOT BE DOUBTED. FURTHER, THE TRANSACTIONS ARE REFLECTING IN THE BA NK ACCOUNTS OF RESPECTIVE INVESTOR COMPANY AS WELL AS BANK ACCOUNT OF ASSESSEE. THUS, THE GENUINENESS OF THE TRANSACTIONS CANNOT BE DOUBTED MERELY ON THE BASIS OF GUESS, ASSUMPTIONS AND PRESUMPTIONS, W ITHOUT HAVING ANY OTHER CORROBORATIVE EVIDENCES. THE FOLLOWING DOCUMENTS WERE FURNISHED BY THE RESPE CTIVE INVESTOR COMPANY TO THE DDIT (INV.) UNIT-1(3), KOLKATA: (I) COPY OF CERTIFICATE OF INCORPORATION, PAN CARD (II) ASSESSMENT ORDER PASSED UNDER SECTION 143(3). (III) COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURNS AND A UDITED ACCOUNTS FOR THE PERIOD FROM ASSESSMENT YEAR 2010-1 1 TO ASSESSMENT YEAR 2016-17 (IV) DETAILS PERTAINING TO THE TRANSACTIONS CARRIED OUT WITH M/S KDM GROUP CONCERNS ALONG WITH COPIES OF LEDGER ACCOUNT, SHARE ALLOTMENT ADVICE AND LOAN CONFIRMATION, SHARE SALE LETTER ALONG WITH SHARE TRANSFER FORM PERTAINING TO THE AFORESAI D TRANSACTIONS. (V) SHEET SHOWING DETAILS REGARDING SOURCES OF FUND ALO NG WITH HIGHLIGHTED BANK STATEMENT REFLECTING THE TRANSACTI ONS WITH KDM GROUP. SOURCE OF SOURCE WAS EXPLAINED BY SUBMITTING THE BA NK STATEMENT OF CREDITORS:- ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 91 WE ALSO OBSERVE THAT INVESTOR IS CORPORATE ENTITY AND IS MAINTAINING PROPER BOOKS OF ACCOUNTS, WHICH ARE SUBJECTED TO STATUTORY AUDIT BY INDEPENDENT AUDITORS AND AUDITED BALANCE SHEET, AND PROFIT AND LOSS ACCOUNT ALONG WITH THE INCOME TAX RETURNS WERE FILED BEFORE THE ASSESSING OFFICER. THEREFORE, THE PROOF OF THEIR EXISTENCE IS AVAILABLE AS DEMONSTRAT ED BY THE REGISTRAR OF COMPANIES RECORDS AND THERE IS NO ALLEGATION OR OBS ERVATIONS BY THE LD. AO THAT CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE INVESTOR OR COMPANIES OR HAVE BEEN ROUTED THROUGH THE ASSESSEE. A PERUSAL OF BANK STATEMENTS OF INVESTOR'S COMPANIES REVEAL THAT THE 'SOURCE' OF 'S OURCE' WAS ALSO EXPLAINED AND WAS THROUGH BANKING TRANSACTION. THE DEPOSITS I N THE CREDITORS' BANK ACCOUNTS WERE BY BANK TRANSFERS. THUS, IN THE CASE UNDER APPEAL, THE CREDITWORTHINESS OF THE CREDITORS WAS FULLY ESTABLI SHED AND THERE CAN BE NO PREPONDERANCE OF PROBABILITIES THAT THESE LOANS WER E IN FACT ACCOMMODATION ENTRIES . THUS IN THE CASE OF ASSESSEE THE SOURCE OF SOURCE I S ALSO AVAILABLE WITH THE DEPARTMENT. WE ALSO FOUND THAT M/S COMPETENT SECURITIES PVT. LT D. HAD ALSO FILED CONFIRMATION OF ACCOUNT AS WELL AS BANK STATEMENT RE FLECTING THE TRANSACTION WITH OTHER SUBSTANTIATING DOCUMENTS ALON GWITH ASSESSMENT ORDERS. AFTER CONSIDERING THE VARIOUS DOCUMENTS PLA CED ON RECORD, THE LD. CIT(A) RECORDED A FINDING TO THE FACT THAT THE I DENTITY, CREDITWORTHINESS AND GENUINENESS IS DULY ESTABLISHED . DETAILED FINDING SO RECORDED BY THE LD. CIT(A) ARE AS PER MATERIAL ON RE CORD WHICH HAS NOT BEEN CONTROVERTED BY THE LD CIT-DR, ACCORDINGLY, WE DO NOT REQUIRE ANY INTERFERENCE ON OUR PART. ACCORDINGLY, WE UPHOLD THE FINDING OF THE LD. CIT(A) ITA 1121, 1189 & 1052/JP/2018_ M/S RAJASTHAN CABLE INDUSTRIES LTD. VS DCIT 92 24. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MARCH, 2019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 TH MARCH, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE ASSESSEE- M/S RAJASTHAN CABLE INDUSTRIES LIMITED , KOTA. 2. IZR;FKHZ @ THE RESPONDENT- THE DCIT, CENTRAL CIRCLE, KOTA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1121, 1189 & 1052/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR