Appeal Details
Counselvise Citation
[2019] 118 COUNSELVISE.COM (IT) 4689 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
5 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-02-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Assessment Year
2010-2011
Appeal Filed On
11-09-2018
Judgement Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 1055/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2010-11 M/S JAMMU METALLIC OXIDES PVT. LTD., MULTIMETALS LIMITED CAMPUS, 6/7, LARGE SCALE INDUSTRIAL AREA, KANSUA ROAD, KOTA. CUKE VS. D.C.I.T., CENTRAL CIRCLE, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCJ 6001 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 1208/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2010-11 D.C.I.T., CENTRAL CIRCLE, KOTA. CUKE VS. M/S JAMMU METALLIC OXIDES PVT. LTD., 6/7, MULTIMETALS CAMPUS, LARGE SCALE INDUSTRIAL AREA, KOTA, RAJASTHAN. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCJ 6001 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 1191/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2011-12 D.C.I.T., CENTRAL CIRCLE, KOTA. C UKE VS. M/S JAMMU METALLIC OXIDES PVT. LTD., 6/7, MULTIMETALS CAMPUS, LARGE SCALE INDUSTRIAL AREA, KOTA, RAJASTHAN. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCJ 6001 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 2 IZR;K{KSI.K @ C.O. NO. 49/JP/2018 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 1191/JP/2018) FU/KZKJ.K O' KZ @ ASSESSMENT YEAR: 2011-12 M/S JAMMU METALLIC OXIDES PVT. LTD., MULTIMETALS LIMITED CAMPUS, 6/7, LARGE SCALE INDUSTRIAL AREA, KANSUA ROAD, KOTA. CUKE VS. D.C.I.T., CENTRAL CIRCLE, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCJ 6001 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT 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 : 05/02/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 14/02/2019 VKNS'K@ ORDER PER: BENCH THESE ARE TWO APPEALS BY THE REVENUE FOR THE A.Y. 2 010-11 AND 2011-12, A CROSS APPEAL BY THE ASSESSEE FOR THE A.Y . 2010-11 AND THE CROSS OBJECTION BY THE ASSESSEE FOR THE A.Y. 2011-1 2 DIRECTED AGAINST THE TWO RESPECTIVE ORDERS OF THE LD. CIT(A)-2, UDAIPUR D ATED 02/08/2018 AND 16/07/2018 RESPECTIVELY. 2. ALL THESE APPEALS AND THE C.O. ARE BEING HEARD T OGETHER AND FOR THE SAKE OF CONVENIENCE, A COMPOSITE ORDER IS BEING PAS SED. 3. THE ASSESSEE IS A GROUP CONCERN OF KOTA DALL MILL (KDM) GROUP AND SUBJECTED TO THE SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT, ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 3 1961 (IN SHORT THE ACT) CARRIED OUT ON 02/07/2015. THE A.O. INITIATED THE PROCEEDINGS U/S 153A OF THE ACT IN PURSUANT TO THE SEARCH FOR THE A.Y. 2010-11 AND 2011-12 AND MADE VARIOUS ADDITIONS U/S 68 OF THE ACT ON ACCOUNT OF SHARE APPLICATION MONEY, SPECIAL DEPOSIT S AGAINST THE ISSUE OF PREFERENTIAL EQUITY SHARES TREATING THE SAME AS ACC OMMODATION ENTRIES AVAILED BY THE ASSESSEE FROM THE ENTRY PROVIDERS. TH E ASSESSEE CHALLENGED THE ORDERS PASSED BY THE A.O. BEFORE THE LD. CIT(A) AND CONTENDED THAT THE A.O. HAS MADE THE ADDITION MERELY ON THE BASIS OF THE STATEMENTS RECORDED BY THE INVESTIGATION WING, KOLKATA AND WITH OUT ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE SEARCH AND SEIZ URE ACTION IN THE CASE OF THE ASSESSEE. THE ASSESSEE ALSO RAISED OBJECTION AGAINST THE ADDITIONS MADE BY THE A.O. ON THE GROUND THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY OF CROSS EXAMINATION OF THE WITNESSES WHO SE STATEMENT WAS RELIED UPON BY THE A.O. WHILE PASSING THE ASSESSMENT S. THE LD. CIT(A) DID NOT ACCEPT THESE OBJECTIONS RAISED BY THE ASSESSEE, HOWEVER, ON MERITS OF THE ADDITION, THE LD. CIT(A) HAS DELETED THE MAJOR P ART OF THE ADDITION FOR WHICH THE A.O. WAS NOT HAVING ANY MATERIAL IN HIS POS SESSION BUT CONFIRMED THE ADDITION IN RESPECT OF WHICH THE STATE MENT OF THE ALLEGED ENTRY PROVIDER WAS WITH THE A.O.. THUS, BOTH THE ASSE SSEE AS WELL AS THE REVENUE ARE AGGRIEVED BY THE IMPUGNED ORDERS OF THE LD. CIT(A) AND FILED ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 4 THE CROSS APPEALS AS WELL AS THE CROSS OBJECTIONS FO R THE RESPECTIVE ASSESSMENT YEARS. 4. FIRST WE TAKE UP THE ASSESSEES APPEAL FOR THE A. Y. 2010-11 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ORDER PASSED U/S 153 A READ WITH SECTION 143(3) OF THE IN COME TAX ACT 1961 IS BAD IN LAW, VOID AB-INITIO, AND DESERVES TO BE ANNU LLED AS THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS NOT ABATED AS ON THE DATE OF SEARCH AND CIT (A) ERRED IN HOLDING THAT THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED IN VIEW OF SLPS ADMITTED IN VARIOUS CAS ES. THE ID. CIT (A) FURTHER ERRED IN HOLDING THAT THE ADDITIONS ARE TO BE ADJUDICATED ON MERITS AS PER RELEVANT GROUND OF APPEAL HENCE THE I SSUE REMAINS FOR ACADEMIC DISCUSSION ONLY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E 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 ID CIT(A) IN THIS REGARD AR E PERVERSE AND ERRONEOUS. IT IS CONTENDED THAT THE ID. AO PASSED THE ASSESSME NT ORDER AGAINST THE DOCTRINE OF AUDI ALTERM PARTEM, VIOLATING THE PRI NCIPLE OF NATURAL JUSTICE AND NOT GIVING THE OPPORTUNITY OF CROSS EXA MINATION OF THE ALLEGED ACCOMMODATION ENTRY PROVIDERS, THEREFORE THE ASSESS MENT ORDER OUGHT TO HELD AS BAD IN LAW AND DESERVES TO BE ANNULLED. 3. THAT THE ORDER OF THE ID CIT (A), CONFIRMING THE ADDITION MADE BY THE AO IS ARBITRARY, WHIMSICAL, CAPRICIOUS, PERVERSE, BASE D ON NO EVIDENCE OR IRRELEVANT MATERIAL OR IRRELEVANT EVIDENCE, AND AGA INST THE LAW AND FACTS OF THE CASE. THE ADDITION CONFIRMED BY ID. CIT (A) DESERVES TO BE DELETED. 4. 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 ALLEGE D ACCOMMODATION ENTRY PROVIDERS RECORDED BY SOME OTHER AUTHORITIES IN SOME OTHER CASES/ACTIONS AND THE OPPORTUNITY TO CROSS EXAMINAT ION WAS ALSO NOT PROVIDED TO ASSESSEE. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 5 (B) GIVING A CONTRADICTORY FINDING THAT A DOUBT IS RAISED ON THE IDENTITY AND GENUINENESS OF THE COMPANY WHOSE NAME IS MENTIO NED IN THE STATEMENT OF ACCOMMODATION ENTRY PROVIDERS AS WELL AS REPORTS OF DDIT (INV.)-KOLKATTA. (C) HOLDING THAT THE ASSESSEE HAS NOT ADDUCED ANY E VIDENCE TO REBUT THE ADVERSE FACTUAL FINDING MADE BY THE AO IN THE A SSESSMENT ORDER THOUGH DETAILED PAPER BOOK FOR RELEVANT AY AND COMM ON PAPER BOOKS HAVE BEEN SUBMITTED, AND (D) HOLDING THAT INCRIMINATING MATERIAL HAD BEEN FO UND DURING THE COURSE OF SEARCH OF ACCOMMODATION ENTRY PROVIDER. F URTHER INCRIMINATING MATERIAL HAD BEEN GATHERED BY ISSUING COMMISSION TO DDIT (INV.) KOLKATTA. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ID. CIT(A) ERRED IN CONFIRMATION THE ADDITION OF RS. 26 ,10,000/- MADE BY ID. AO U/S 68 OF INCOME TAX ACT, 1961 ON ACCOUNT OF UNS ECURED LOANS AND SHARE APPLICATION AND SHARE PREMIUM RECEIVED FROM F OLLOWING PARTIES AND ERRONEOUSLY HELD THAT THE IDENTITY, CREDITWORTH INESS AND GENUINENESS OF THE UNDER MENTIONED COMPANY IS DOUBTFUL: - NAME OF THE COMPANY FROM WHOM LOAN RECEIVED AMOUNT NATE OF RECEIPT NAME OF ALLEGED ENTRY OPERATOR WHOSE STATEMENT WERE RELIED JALSAGAR COMMERCE PVT. LTD 16,10,000 UNSECURED LOAN SHRI ANAND SHARMA JALSAGAR COMMERCE PVT. LTD 10,00,000 SHARE APPLICATION AND SHARE PREMIUM SHRI ANAND SHARMA 6. 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. 7. 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 HEARI NG OF APPEAL. 5. GROUND NO.1 OF THE APPEAL IS REGARDING THE ADDIT ION MADE BY THE A.O. WITHOUT INCRIMINATING MATERIAL AND THE ASSESSME NT WAS COMPLETED AND NOT PENDING ON THE DATE OF ORDER. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 6 6. WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL A S THE LD. CIT-DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THIS ISSUE IS COMMON IN ALL THE GROUP CONCERNS OF M/S KOTA DALL MILL. AN IDENTI CAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF M/S KOTA DALL MILL V S DCIT IN ITA NOS. 997 TO 1002/JP/2018, 1119/JP/2018, 1057 TO 1062/JP/2018 AND 1210/JP/2018 VIDE ORDER DATED 31/12/2018, DCIT VS. M/S BARAN ROLL ER FLOUR MILLS P. LTD. IN ITA NO. 1206 & 1207/JP/2018 AND C.O. 45 & 46/JP/ 2018 VIDE ORDER DATED 11/01/2019 AND IN THE CASE OF M/S MULTIMETAL S LIMITED VS DCIT IN ITA NOS. 1024 TO 1026, 1100 TO 1104 & 1230/JP/2018 AND C.O. 38 & 39/JP/2018 VIDE ORDER DATED 29/01/2019 IN PARA 9 AS UNDER: 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. UNDISPUTEDLY THE ASSESSMENT FOR THE A.Y. 2010- 11 TO 2012-13 WERE NOT PENDING ON THE DATE OF SEARC H ON 02/7/2015 AS THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT WERE ALSO COMPLETED PRIOR TO THE DATE OF SEARCH. THUS, T HE ASSESSMENT FOR THESE THREE ASSESSMENT YEARS WERE NOT GOT ABATE D BY VIRTUE OF SEARCH U/S 132 OF THE ACT ON 02/7/2015 AND THEREFOR E THE ASSESSING OFFICER WOULD ASSESS THE TOTAL INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 153A OF THE ACT IN RE SPECT OF THESE THREE ASSESSMENT YEARS HAVING REGARD TO THE FACT TH AT WHETHER ANY INCRIMINATING MATERIAL WAS FOUND OR CAME TO THE KNO WLEDGE OF THE ASSESSING OFFICER DURING THE SEARCH AND SEIZURE PRO CEEDINGS. SINCE THESE ASSESSMENT YEARS WERE NOT PENDING AS ON THE D ATE OF SEARCH, THEREFORE, THE PROCEEDINGS U/S 153A OF THE ACT IN R ESPECT OF THESE THREE ASSESSMENT YEARS WOULD BE IN THE NATURE OF RE ASSESSMENT AND NOT IN THE NATURE OF ASSESSMENT AS IN THE CASE OF THE REMAINING ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 7 ASSESSMENT YEARS IN THE A.Y. 2014-15 AND 2015-16 WH ICH WERE GOT ABATED BY VIRTUE OF SEARCH AND SEIZURE ACTION U/S 1 32 OF THE ACT ON 02/7/2015. AT THE OUTSET WE NOTE THAT THE ASSESSMEN TS FRAMED BY THE ASSESSING OFFICER U/S 153A OF THE ACT IN THE CA SE OF THE ASSESSEE BEFORE US IS SOLELY ON THE BASIS OF THE IN FORMATION RECEIVED FROM THE KOLKATA INVESTIGATION WING WHICH CONTAINS THE STATEMENT OF ONE SHRI ANAND SHARMA IN RESPECT OF SO ME ASSESSMENTS AND THE STATEMENT OF SHRI ANKIT BAGRI I N RESPECT OF SOME OTHER ASSESSMENTS. THUS, UNDISPUTEDLY THE ASSE SSING OFFICER HAS MADE THE ADDITION WHILE COMPLETING THE ASSESSME NT U/S 153A OF THE ACT FOR ALL THE ASSESSMENT YEARS ON THE BASI S OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, K OLKATA AND NOT ON THE BASIS OF ANY MATERIAL OR INFORMATION GATHERE D DURING THE COURSE OF SEARCH AND SEIZURE ACTION IN THE CASE OF THE ASSESSEE. WE FIND THAT THE ASSESSMENT FRAMED BY THE ASSESSING OF FICER AS WELL AS THE ORDERS PASSED BY THE LD. CIT(A) IN THE CASE OF THE ASSESSEE ARE IDENTICAL AND BASED ON SIMILAR FACTS AND CIRCUMSTAN CES AS IN THE CASE OF M/S KOLA DALL MILL PURSUANT TO THE SAME SEA RCH AND SEIZURE ACTION CARRIED OUT ON 02/7/2015. THIS TRIBUNAL IN T HE CASE OF KOTA DALL MILL VS DCIT VIDE ORDER DATED 31/12/2018 IN IT A NOS. 997 TO 1002/JP/2018, 1119/JP/2018, 1057 TO 1062/JP/2018 AN D 1210/JP/2018 HAS CONSIDERED AND DECIDED THIS ISSUE IN PARA 6 AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSMENTS FOR THE AS SESSMENT YEARS 2010- 11 TO 13-14 WERE NOT PENDING ON THE DATE OF SEARCH ON 2 ND JULY, 2015. EVEN IN SOME OF THE ASSESSMENT YEARS ORDERS UNDER S ECTION 143(3) WERE PASSED AND IN OTHER CASES THE ASSESSMENT WAS COMPLE TED UNDER SECTION 143(1) OF THE ACT. THUS THE ASSESSMENTS FOR THE AS SESSMENT YEARS 2010-11 TO 13-14 WERE NOT GOT ABATED BY VIRTUE OF SEARCH UN DER SECTION 132 ON 2 ND ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 8 JULY, 2015 AND THE AO WOULD REASSESS THE TOTAL INCO ME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 153A IN RESPECT OF TH ESE FOUR ASSESSMENT YEARS I.E. 2010-11 TO 13-14. THE PROCEEDINGS UNDER SECTION 153A IN RESPECT OF THESE FOUR ASSESSMENT YEARS WOULD BE IN THE NATURE OF REASSESSMENT AND NOT IN THE NATURE OF ASSESSMENT AS IN THE CASES OF THE REMAINING TWO ASSESSMENT YEARS I.E. 2014-15 AND 15- 16 THOSE WERE GOT ABATED BY VIRTUE OF SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT ON 2 ND JULY, 2015. IT IS A SETTLED PROPOSITION OF LAW TH AT THE ASSESSMENT OR REASSESSMENT UNDER SECTION 153A IN RESPECT OF THE A SSESSMENT YEARS WHICH HAVE ALREADY BEEN COMPLETED AND ASSESSMENT OR DERS HAVE BEEN PASSED DETERMINING THE ASSESSEES TOTAL INCOME, THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED CAN BE MADE O NLY ON THE BASIS OF INCRIMINATING MATERIAL. IN THE ABSENCE OF ANY INCR IMINATING MATERIAL THE COMPLETED ASSESSMENT CAN ONLY BE REITERATED. THE P ROVISIONS OF SECTION 132 READ WITH SECTION 153A OF THE ACT STIPULATE TWO TYPES OF SITUATIONS ONE WHERE THE ASSESSMENT OF ANY ASSESSMENT YEAR FAL LING WITHIN SIX ASSESSMENT YEARS IS PENDING ON THE DATE OF INITIATI ON OF SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A OF THE ACT. THEREFORE, THE ASSESSMENT UNDER SECTION 153A IN RES PECT OF THOSE ASSESSMENT YEARS WHICH STAND ABATED DUE TO THE REAS ON OF PENDING ON THE DATE OF INITIATION OF SEARCH OR REQUISITION SHALL B E THE ORIGINAL/FIRST ASSESSMENT. IN THE SECOND CATEGORY WHERE THE ASSESS MENT OR REASSESSMENT HAS ALREADY BEEN COMPLETED ON THE DATE OF INITIATION OF SEARCH OR MAKING OF REQUISITION AS THE CASE MAY BE, THE ASSESSMENT UNDER SECTION 153A WOULD BE IN THE NATURE OF REASSESSMENT . THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA WHIL E ANALYZING THE PROVISIONS OF SECTION 153A READ WITH SECTION 132 OF THE ACT HAS OBSERVED IN PARA 37 AND 38 AS UNDER :- ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 9 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, REA D WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I . ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERS ON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II . ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE AOS A S A FRESH EXERCISE. III . THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAK ES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEAR S IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEAR S. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUG HT TO TAX'. IV . ALTHOUGH SECTION 15 3 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASS ESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATE RIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL.' V . IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESS MENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMP LETED ASSESSMENT PROCEEDINGS. VI . INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EA CH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECOR D OF THE AO. VII . COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURS E OF ORIGINAL ASSESSMENT. CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005-06 AND 2006-07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD CO MPLETED. SINCE NO ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 10 INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEA RCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. THUS THE HONBLE HIGH COURT HAS HELD THAT IN THE AB SENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CA N BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE HONBLE HIGH COURT HAS ALSO REFERRED THE TERM USED IN SECTION 15 3A AS ASSESS WHICH IS RELATABLE TO ABATED PROCEEDINGS AND THE WORD REASS ESS RELATED TO COMPLETED ASSESSMENT PROCEEDINGS. THEREFORE, THE C OMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR R EQUISITION OF DOCUMENT OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. THE HONBLE DELHI HI GH COURT HAS REITERATED ITS VIEW IN CASE OF PRINCIPAL CIT VS. KURELE PAPER MILLS (SUPRA) IN PARA 1 TO 3 AS UNDER :- 1. THE REVENUE HAS FILED THE APPEAL AGAINST AN ORDER D ATED 14.11.2014 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (ITAT) IN 3761/DEL/2011 PERTAINING TO THE ASSESSMENT YEAR 2002-03. THE QUES TION WAS WHETHER THE LEARNED CIT (APPEALS) HAD ERRED IN LAW AND ON THE F ACTS IN DELETING THE ADDITION OF RS. 89 LACS MADE BY THE ASSESSING OFFIC ER UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 ('ACT') ON BOGUS SHARE CAP ITAL. BUT, THE ISSUE WAS WHETHER THERE WAS ANY INCRIMINATING MATERIAL WH ATSOEVER FOUND DURING THE SEARCH TO JUSTIFY INITIATION OF PROCEEDI NGS UNDER SECTION 153A OF THE ACT. 2. THE COURT FINDS THAT THE ORDER OF THE CIT(APPEALS) REVEALS THAT THERE IS A FACTUAL FINDING THAT 'NO INCRIMINATING EVIDENCE REL ATED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AS IS MANIFEST FROM THE ORDER OF THE AO.' CONSEQUENTLY, IT WAS HELD THAT THE AO W AS NOT JUSTIFIED IN INVOKING SECTION 68 OF THE ACT FOR THE PURPOSES OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAPITAL. 3. AS FAR AS THE ABOVE FACTS ARE CONCERNED, THERE IS N OTHING SHOWN TO THE COURT TO PERSUADE AND HOLD THAT THE ABOVE FACTUAL D ETERMINATION IS PERVERSE. CONSEQUENTLY, AFTER CONSIDERING ALL THE F ACTS AND CIRCUMSTANCES OF THE CASE, THE COURT IS OF THE OPINION THAT NO SU BSTANTIAL QUESTION OF LAW ARISES IN THE IMPUGNED ORDER OF THE ITAT WHICH REQU IRES EXAMINATION. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 11 THE SLP FILED BY THE REVENUE AGAINST THE SAID DECIS ION OF HONBLE DELHI HIGH COURT WAS DISMISSED BY THE HONBLE SUPREME COU RT VIDE ORDER DATED 7 TH DECEMBER, 2015. IN A SUBSEQUENT DECISION, THE HON BLE DELHI HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. MEETA GUTGUT IA HAS AGAIN ANALYZED THIS ISSUE IN PARA 55 TO 71 AS UNDER :- 55. ON THE LEGAL ASPECT OF INVOCATION OF SECTION 153A IN RELATION TO AYS 2000-01 TO 2003-04, THE CENTRAL PLANK OF THE REVENUE'S SUBM ISSION IS THE DECISION OF THIS COURT IN SMT. DAYAWANTI GUPTA ( SUPRA ). BEFORE BEGINNING TO EXAMINE THE SAID DECISION, IT IS NECESSARY TO REVISIT THE LEGAL LAND SCAPE IN LIGHT OF THE ELABORATE ARGUMENTS ADVANCED BY THE REVENUE. 56. SECTION 153A OF THE ACT IS TITLED 'ASSESSMENT IN C ASE OF SEARCH OR REQUISITION'. IT IS CONNECTED TO SECTION 132 WHICH DEALS WITH 'SE ARCH AND SEIZURE'. BOTH THESE PROVISIONS, THEREFORE, HAVE TO BE READ TOGETHER. SE CTION 153A IS INDEED AN EXTREMELY POTENT POWER WHICH ENABLES THE REVENUE TO RE-OPEN AT LEAST SIX YEARS OF ASSESSMENTS EARLIER TO THE YEAR OF SEARCH. IT IS NO T TO BE EXERCISED LIGHTLY. IT IS ONLY IF DURING THE COURSE OF SEARCH UNDER SECTION 132 IN CRIMINATING MATERIAL JUSTIFYING THE RE-OPENING OF THE ASSESSMENTS FOR SIX PREVIOUS YEARS IS FOUND THAT THE INVOCATION OF SECTION 153A QUA EACH OF THE AYS WOULD BE JUSTIFIED. 57. THE QUESTION WHETHER UNEARTHING OF INCRIMINATING M ATERIAL RELATING TO ANY ONE OF THE AYS COULD JUSTIFY THE RE-OPENING OF THE ASSESSM ENT FOR ALL THE EARLIER AYS WAS CONSIDERED BOTH IN ANIL KUMAR BHATIA ( SUPRA ) AND CHETAN DAS LACHMAN DAS ( SUPRA ). INCIDENTALLY, BOTH THESE DECISIONS WERE DISCUSSE D THREADBARE IN THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ). AS FAR AS ANIL KUMAR BHATIA ( SUPRA ) WAS CONCERNED, THE COURT IN PARAGRAPH 24 OF THAT DE CISION NOTED THAT 'WE ARE NOT CONCERNED WITH A CASE WHERE NO INCRIMINATING MATERI AL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE THEREFOR E EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN BE INVOKED EVEN UNDER SUCH SITUATION'. THAT QUESTION WAS, THEREFORE, LEFT OPEN. AS FAR AS CHETAN DAS LACHMAN DAS ( SUPRA ) IS CONCERNED, IN PARA 11 OF THE DECISION IT WAS OBSERVED: '11. SECTION 153A (1) (B) PROVIDES FOR THE ASSESSME NT OR REASSESSMENT OF THE TOTAL INCOME OF THE SIX ASSESSMENT YEARS IMMEDI ATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH TOOK PLACE. TO REPEAT, THERE IS NO CONDITION IN THIS SEC TION THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILA BLE WITH THE ASSESSING OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND. THIS, HOWEVER, DOES NOT MEAN THAT THE ASSESSMENT UNDER SECTION 153A CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATE RIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL.' 58. IN KABUL CHAWLA ( SUPRA ), THE COURT DISCUSSED THE DECISION IN FILATEX INDIA LTD. ( SUPRA ) AS WELL AS THE ABOVE TWO DECISIONS AND OBSERVED A S UNDER: ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 12 '31. WHAT DISTINGUISHES THE DECISIONS BOTH IN CIT V. CHETAN DAS LACHMAN DAS ( SUPRA ), AND FILATEX INDIA LTD. V. CIT-IV ( SUPRA ) IN THEIR APPLICATION TO THE PRESENT CASE IS THAT IN BOTH THE SAID CASES THERE WAS SOME MATERIAL UNEARTHED DURING THE SEARCH, WHEREAS IN THE PRESENT CASE THERE ADMITTEDLY WAS NONE. SECONDLY, IT IS PLAIN FROM A CAREFUL READ ING OF THE SAID TWO . DECISIONS THAT THEY DO NOT HOLD THAT ADDITIONS CAN BE VALIDLY MADE TO INCOME FORMING THE SUBJECT MATTER OF COMPLETED ASSE SSMENTS PRIOR TO THE SEARCH EVEN IF NO INCRIMINATING MATERIAL WHATSOEVER WAS UNEARTHED DURING THE SEARCH. 32. RECENTLY BY ITS ORDER DATED 6TH JULY 2015 IN IT A NO. 369 OF 2015 ( PR. COMMISSIONER OF INCOME TAX V. KURELE PAPER MILLS P. LTD. ), THIS COURT DECLINED TO FRAME A QUESTION OF LAW IN A CASE WHERE , IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE SEARC H UNDER SECTION 132 OF THE ACT, THE REVENUE SOUGHT TO JUSTIFY INITIATION O F PROCEEDINGS UNDER SECTION 153A OF THE ACT AND MAKE AN ADDITION UNDER SECTION 68 OF THE ACT ON BOGUS SHARE CAPITAL GAIN. THE ORDER OF THE CIT ( A), AFFIRMED BY THE ITAT, DELETING THE ADDITION, WAS NOT INTERFERED WIT H.' 59. IN KABUL CHAWLA ( SUPRA ), THE COURT REFERRED TO THE DECISION OF THE RAJAST HAN HIGH COURT IN JAI STEEL (INDIA) V. ASSTT. CIT [2013] 36 TAXMANN.COM 523/219 TAXMAN 223 . THE SAID PART OF THE DECISION IN KABUL CHAWLA ( SUPRA ) IN PARAS 33 AND 34 READS AS UNDER: '33. THE DECISION OF THE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA), JODHPUR V. ACIT ( SUPRA ) INVOLVED A CASE WHERE CERTAIN BOOKS OF ACCOUNTS AND OTHER DOCUMENTS THAT HAD NOT BEEN PRODUCED IN T HE COURSE OF ORIGINAL ASSESSMENT WERE FOUND IN THE COURSE OF SEARCH. IT W AS HELD WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF THE SEARCH, THE SAME WOULD ALSO BE T AKEN INTO CONSIDERATION WHILE COMPUTING THE TOTAL INCOME UNDE R SECTION 153A OF THE ACT. THE COURT THEN EXPLAINED AS UNDER: '22. IN THE FIRM OPINION OF THIS COURT FROM A PLAIN READING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPORT OF THE SAID PROV ISION, WHICH IS INTRICATELY LINKED WITH SEARCH AND REQUISITION UNDE R SECTIONS 132 AND 132A OF THE ACT, IT IS APPARENT THAT: ( A ) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND ABATE D IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO ACTS UNDER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSM ENTS HAVE TO BE MADE; ( B ) REGARDING OTHER CASES, THE ADDITION TO THE INCOME T HAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATI NG MATERIAL; AND ( C ) IN ABSENCE OF A NY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 13 AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MA DE.' 34. THE ARGUMENT OF THE REVENUE THAT THE AO WAS FRE E TO DISTURB INCOME DE HORS THE INCRIMINATING MATERIAL WHILE MAKING ASSESSMENT UNDER SECTION 153A OF THE ACT WAS SPECIFICALLY REJECTED B Y THE COURT ON THE GROUND THAT IT WAS 'NOT BORNE OUT FROM THE SCHEME O F THE SAID PROVISION' WHICH WAS IN THE CONTEXT OF SEARCH AND/OR REQUISITI ON. THE COURT ALSO EXPLAINED THE PURPORT OF THE WORDS 'ASSESS' AND 'RE ASSESS', WHICH HAVE BEEN FOUND AT MORE THAN ONE PLACE IN SECTION 153A O F THE ACT AS UNDER: '26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTA L INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSM ENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS'-HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE W ORD ASSESS HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND REASSES S HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT A BATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERPRETA TION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONL Y BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH OR REQUISITION OF DOCUMENTS.'' 60. IN KABUL CHAWLA ( SUPRA ), THE COURT ALSO TOOK NOTE OF THE DECISION OF THE BOMBAY HIGH COURT IN CIT V. CONTINENTAL WAREHOUSING CORPN (NHAVA SHEVA) LTD. [2015] 58 TAXMANN.COM 78/232 TAXMAN 270/374 ITR 645 (BOM.) WHICH ACCEPTED THE PLEA THAT IF NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH IN RESPECT OF AN ISSUE, THEN NO ADDITIONS IN RESPECT OF ANY ISSUE CAN BE MADE TO THE ASSESSMENT UNDER SECTION 153A AND 153C OF TH E ACT. THE LEGAL POSITION WAS THEREAFTER SUMMARIZED IN KABUL CHAWLA ( SUPRA ) AS UNDER: '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SE ARCHED REQUIRING HIM TO F ILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 14 III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. TH E AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE. AFOREMENTIO NED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS TH ERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH TH E DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUG H SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR O THER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELA TED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHO UT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT H AS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMP LETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MA DE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOS E PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEED INGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A ME RGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF TH E SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT O N THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRI MINATING MATERIAL UNEARTHED DURING TH E COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR U NDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 61. IT APPEARS THAT A NUMBER OF HIGH COURTS HAVE CONCU RRED WITH THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ) BEGINNING WITH THE GUJARAT HIGH COURT IN SAUMYA CONSTRUCTION (P.) LTD. ( SUPRA ). THERE, A SEARCH AND SEIZURE OPERATION WAS CARRIE D OUT ON 7TH OCTOBER, 2009 AND AN ASSESSMENT CAME TO BE F RAMED UNDER SECTION 143(3) READ WITH SECTION 153A(1)(B) IN DETERMINING THE TOT AL INCOME OF THE ASSESSEE OF RS. 14.5 CRORES AGAINST DECLARED INCOME OF RS. 3.44 CRO RES. THE ITAT DELETED THE ADDITIONS ON THE GROUND THAT IT WAS NOT BASED ON AN Y INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH IN RESPECT OF AYS U NDER CONSIDERATION I.E., AY 2006- 07. THE GUJARAT HIGH COURT REFERRED TO THE DECISION IN KABUL CHAWLA ( SUPRA ), OF THE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA) ( SUPRA ) AND ONE EARLIER DECISION OF THE GUJARAT HIGH COURT ITSELF. IT EXPLAINED IN PARA 15 AND 16 AS UNDER: ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 15 '15. ON A PLAIN READING OF SECTION 153A OF THE ACT, IT IS EVIDENT THAT THE TRIGGER POINT FOR EXERCISE OF POWERS THEREUNDER IS A SEARCH UNDER SECTION 132 OR A REQUISITION UNDER SECTION 132A OF THE ACT. ONCE A S EARCH OR REQUISITION IS MADE, A MANDATE IS CAST UPON THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 153A OF THE ACT TO THE PERSON, REQUIRING HI M TO FURNISH THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MA DE AND ASSESS OR REASSESS THE SAME. SINCE THE ASSESSMENT UNDER SECTION 153A O F THE ACT IS LINKED WITH SEARCH AND REQUISITION UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS EVIDENT THAT THE OBJECT OF THE SECTION IS TO BRING TO TAX THE UN DISCLOSED INCOME WHICH IS FOUND DURING THE COURSE OF OR PURSUANT TO THE SEARC H OR REQUISITION. HOWEVER, INSTEAD OF THE EARLIER REGIME OF BLOCK ASSESSMENT W HEREBY, IT WAS ONLY THE UNDISCLOSED INCOME OF THE BLOCK PERIOD THAT WAS ASS ESSED, SECTION 153A OF THE ACT SEEKS TO ASSESS THE TOTAL INCOME FOR THE ASSESS MENT YEAR, WHICH IS CLEAR FROM THE FIRST PROVISO THERETO WHICH PROVIDES THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF E ACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. THE SECOND PROVIS O MAKES THE INTENTION OF THE LEGISLATURE CLEAR AS THE SAME PROVIDES THAT ASS ESSMENT OR REASSESSMENT, IF ANY, RELATING TO THE SIX ASSESSMENT YEARS REFERRED TO IN THE SUB-SECTION PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 1 32 OR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. SUB-SECTION (2) OF SECTION 153A OF THE ACT PROVIDES THAT IF ANY PROCEEDING OR ANY ORDER OF ASSESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) IS ANNULLED IN APPEAL OR ANY OTHER LEGAL PROVISION, THEN THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAD ABATED UNDER THE SECOND PROVISO WOULD STAND REVIVED . THE PROVISO THERETO SAYS THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT IF SUC H ORDER OF ANNULMENT IS SET ASIDE. THUS, ANY PROCEEDING OF ASSESSMENT OR REASSE SSMENT FALLING WITHIN THE SIX ASSESSMENT YEARS PRIOR TO THE SEARCH OR REQUISI TION STANDS ABATED AND THE TOTAL INCOME OF THE ASSESSEE IS REQUIRED TO BE DETE RMINED UNDER SECTION 153A OF THE ACT. SIMILARLY, SUB-SECTION (2) PROVIDES FOR RE VIVAL OF ANY ASSESSMENT OR REASSESSMENT WHICH STOOD ABATED, IF ANY PROCEEDING OR ANY ORDER OF ASSESSMENT OR REASSESSMENT MADE UNDER SECTION 153A OF THE ACT IS ANNULLED IN APPEAL OR ANY OTHER PROCEEDING. 16. SECTION 153A BEARS THE HEADING 'ASSESSMENT IN C ASE OF SEARCH OR REQUISITION'. IT IS 'WELL SETTLED AS HELD BY THE SU PREME COURT IN A CATENA OF DECISIONS THAT THE HEADING OR THE SECTION CAN BE RE GARDED AS A KEY TO THE INTERPRETATION OF THE OPERATIVE PORTION OF THE SECT ION AND IF THERE IS NO AMBIGUITY IN THE LANGUAGE OR IF IT IS PLAIN AND CLE AR, THEN THE HEADING USED IN THE SECTION STRENGTHENS THAT MEANING. FROM THE HEAD ING OF SECTION 153. THE INTENTION OF THE LEGISLATURE IS CLEAR, VIZ., TO PRO VIDE FOR ASSESSMENT IN CASE OF SEARCH AND REQUISITION. WHEN THE VERY PURPOSE OF TH E PROVISION IS TO MAKE ASSESSMENT IN CASE OF SEARCH OR REQUISITION, IT GOE S WITHOUT SAYING THAT THE ASSESSMENT HAS TO HAVE RELATION TO THE SEARCH OR RE QUISITION, IN OTHER WORDS, THE ASSESSMENT SHOULD CONNECTED WITH SOMETHING ROUND DU RING THE SEARCH OR REQUISITION VIZ., INCRIMINATING MATERIAL WHICH REVE ALS UNDISCLOSED INCOME. THUS, WHILE IN VIEW OF THE MANDATE OF SUB-SECTION ( 1) OF SECTION 153A OF THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 16 ACT, IN EVERY CASE WHERE THERE IS A SEARCH OR REQUI SITION, THE ASSESSING OFFICER IS OBLIGED TO ISSUE NOTICE TO SUCH PERSON TO FURNIS H RETURNS OF INCOME FOR THE SIX YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR REQUISITION IS MADE, ANY ADD ITION' OR DISALLOWANCE CAN BE MADE ONLY ON THE BASIS OF MATERIAL COLLECTED DURING THE SEARCH OR REQUISITION, IN CASE NO INCRIMINATING MATERIAL IS FOUND, AS HELD BY THE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) V. ASST. CIT ( SUPRA ), THE EARLIER ASSESSMENT WOULD HAVE TO BE REITERATED, IN CASE WHERE PENDING ASSESS MENTS HAVE ABATED, THE ASSESSING OFFICER CAN PASS ASSESSMENT ORDERS FOR EA CH OF THE SIX YEARS DETERMINING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE INCOME DECLARED IN THE RETURNS, IF ANY, FURNISHED BY THE A SSESSEE AS WELL AS UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQU ISITION. IN CASE WHERE A PENDING REASSESSMENT UNDER SECTION 147 OF THE ACT H AS ABATED, NEEDLESS TO STATE THAT THE SCOPE AND AMBIT OF THE ASSESSMENT WOULD IN CLUDE ANY ORDER WHICH THE ASSESSING OFFICER COULD HAVE PASSED UNDER SECTION 1 47 OF THE ACT AS WELL AS UNDER SECTION 153A OF THE ACT. ** ** ** 19. ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTEND ED THAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTANDING THAT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INCRIMINATING MATERIAL IS FOUND, IT WOULD BE PERMISSIBLE TO MAKE ADDITIONS AND DISALLOWANCE IN RESPECT OF AN TH E SIX ASSESSMENT YEARS. IN THE OPINION OF THIS COURT, THE SAID CONTENTION DOES NOT MERIT ACCEPTANCE, INASMUCH AS. THE ASSESSMENT IN RESPECT OF EACH OF T HE SIX ASSESSMENT YEARS IS A SEPARATE AND DISTINCT ASSESSMENT. UNDER SECTION 153 A OF THE ACT, ASSESSMENT HAS TO BE MADE IN RELATION TO THE SEARCH OR REQUISI TION, NAMELY, IN RELATION TO MATERIAL DISCLOSED DURING THE SEARCH OR REQUISITION . IF IN RELATION TO ANY ASSESSMENT YEAR, NO INCRIMINATING MATERIAL IS FOUND , NO ADDITION OR DISALLOWANCE CAN BE MADE IN RELATION TO THAT ASSESS MENT YEAR IN EXERCISE OF POWERS UNDER SECTION 153A OF THE ACT AND THE EARLIE R ASSESSMENT SHALL HAVE TO BE REITERATED. IN THIS REGARD, THIS COURT IS IN COM PLETE AGREEMENT WITH THE VIEW ADOPTED BY THE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) V. ASST. CIT ( SUPRA ). BESIDES, AS RIGHTLY POINTED OUT BY THE LEARNED C OUNSEL FOR THE RESPONDENT, THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CONCLUDED BY THE DECISION OF THIS COURT IN THE CASE OF CIT V. JAYABEN RATILAL SORATHIA ( SUPRA ) WHEREIN IT HAS BEEN HELD THAT WHILE IT CANNOT BE DI SPUTED THAT CONSIDERING SECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN REOPEN AND/OR ASSESS THE RETURN WITH RESPECT TO SIX PRECEDING YEARS ; HOWEVE R, THERE MUST BE SOME INCRIMINATING MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT TO THE SALE TRANSACTIONS IN THE PARTICULAR ASSESSMENT YEAR .' 62. SUBSEQUENTLY, IN DEVANGI ALIAS RUPA ( SUPRA ), ANOTHER BENCH OF THE GUJARAT HIGH COURT REITERATED THE ABOVE LEGAL POSITION FOLLOWING ITS EARLIER DECISION IN SAUMYA CONSTRUCTION (P.) LTD. ( SUPRA ) AND OF THIS COURT IN KABUL CHAWLA ( SUPRA ). AS FAR AS KARNATAKA HIGH COURT IS CONCERNED, IT HAS IN IBC KNOWLEDGE PARK (P.) LTD. ( SUPRA ) FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ) AND HELD THAT THERE HAD ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 17 TO BE INCRIMINATING MATERIAL QUA EACH OF THE AYS IN WHICH ADDITIONS WERE SOUGHT TO BE MADE PURSUANT TO SEARCH AND SEIZURE OPERATION. T HE CALCUTTA HIGH COURT IN SALASAR STOCK BROKING LTD. ( SUPRA ), TOO, FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ). IN GURINDER SINGH BAWA ( SUPRA ), THE BOMBAY HIGH COURT HELD THAT: '6. . . . . . ONCE AN ASSESSMENT HAS ATTAINED FINAL ITY FOR A PARTICULAR YEAR, I.E., IT IS NOT PENDING THEN THE SAME CANNOT BE SUBJECT TO TAX IN PROCEEDINGS UNDER SECTION 153A OF THE ACT. THIS OF COURSE WOULD NOT A PPLY IF INCRIMINATING MATERIALS ARE GATHERED IN THE COURSE OF SEARCH OR D URING PROCEEDINGS UNDER SECTION 153A OF THE ACT WHICH ARE CONTRARY TO AND/O R NOT DISCLOSED DURING THE REGULAR ASSESSMENT PROCEEDINGS.' 63. EVEN THIS COURT HAS IN MAHESH KUMAR GUPTA ( SUPRA ) AND RAM AVTAR VERMA ( SUPRA ) FOLLOWED THE DECISION IN KABUL CHAWLA ( SUPRA ). THE DECISION OF THIS COURT IN KURELE PAPER MILLS (P.) LTD. ( SUPRA ) WHICH WAS REFERRED TO IN KABUL CHAWLA ( SUPRA ) HAS BEEN AFFIRMED BY THE SUPREME COURT BY THE DIS MISSAL OF THE REVENUE'S SLP ON 7TH DECEMBER, 2015. THE DECISION IN DAYAWANTI GUPTA 64. THAT BRINGS US TO THE DECISION IN SMT. DAYAWANTI GUPTA ( SUPRA ). AS RIGHTLY POINTED OUT BY MR. KAUSHIK, LEARNED COUNSEL APPEARI NG FOR THE RESPONDENT, THAT THERE ARE SEVERAL DISTINGUISHING FEATURES IN THAT CASE WH ICH MAKES ITS RATIO INAPPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE FIRST PLACE, THE ASSESSEES THERE WERE ENGAGED IN THE BUSINESS OF PAN MASALA AND GUTKHA ETC. THE ANSW ERS GIVEN TO QUESTIONS POSED TO THE ASSESSEE IN THE COURSE OF SEARCH AND SURVEY PRO CEEDINGS IN THAT CASE BRING OUT THE POINTS OF DISTINCTION. IN THE FIRST PLACE, IT WAS S TATED THAT THE STATEMENT RECORDED WAS UNDER SECTION 132(4) AND NOT UNDER SECTION 133A. IT WAS A STATEMENT BY THE ASSESSEE HIMSELF. IN RESPONSE TO QUESTION NO. 7 WHETHER ALL THE PURCHASES MADE BY THE FAMILY FIRMS, WERE ENTERED IN THE REGULAR BOOKS OF ACCOUNT , THE ANSWER WAS: 'WE AND OUR FAMILY FIRMS NAMELY M/S. ASSAM SUPARI T RADERS AND M/S. BALAJI PERFUMES GENERALLY TRY TO RECORD THE TRANSAC TIONS MADE IN RESPECT OF PURCHASE, MANUFACTURING AND SALES IN OUR REGULAR BO OKS OF ACCOUNTS BUT IT IS ALSO FACT THAT SOME TIME DUE TO SOME FACTORS LIK E INABILITY OF ACCOUNTANT, OUR BUSY SCHEDULE AND SOME FAMILY PROBLEMS, VARIOUS PURCHASES AND SALES OF SUPARI, GUTKA AND OTHER ITEMS DEALT BY OUR FIRMS IS NOT ENTERED AND SHOWN IN THE REGULAR BOOKS OF ACCOUNTS MAINTAINED B Y OUR FIRMS.' 65. THEREFORE, THERE WAS A CLEAR ADMISSION BY THE ASSE SSEES IN SMT. DAYAWANTI GUPTA ( SUPRA ) THERE THAT THEY WERE NOT MAINTAINING REGULAR BOOK S OF ACCOUNTS AND THE TRANSACTIONS WERE NOT RECORDED THEREIN. 66. FURTHER, IN ANSWER TO QUESTION NO. 11, THE ASSESSE E IN SMT. DAYAWANTI GUPTA ( SUPRA ) WAS CONFRONTED WITH CERTAIN DOCUMENTS SEIZED DURI NG THE SEARCH. THE ANSWER WAS CATEGORICAL AND READS THUS: 'ANS:- I HEREBY ADMIT THAT THESE PAPERS ALSO CONTEN D DETAILS OF VARIOUS TRANSACTIONS INCLUDE PURCHASE/SALES/MANUFACTURING T RADING OF GUTKHA, ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 18 SUPARI MADE IN CASH OUTSIDE BOOKS OF ACCOUNTS AND T HESE ARE ACTUALLY UNACCOUNTED TRANSACTIONS MADE BY OUR TWO FIRMS NAME LY M/S. ASOM TRADING AND M/S. BALAJI PERFUMES.' 67. BY CONTRAST, THERE IS NO SUCH STATEMENT IN THE PRE SENT CASE WHICH CAN BE SAID TO CONSTITUTE AN ADMISSION BY THE ASSESSEE OF A FAILUR E TO RECORD ANY TRANSACTION IN THE ACCOUNTS OF THE ASSESSEE FOR THE AYS IN QUESTIO N. ON THE CONTRARY, THE ASSESSEE HEREIN STATED THAT, HE IS REGULARLY MAINTA INING THE BOOKS OF ACCOUNTS. THE DISCLOSURE MADE IN THE SUM OF RS. 1.10 CRORES WAS O NLY FOR THE YEAR OF SEARCH AND NOT FOR THE EARLIER YEARS. AS ALREADY NOTICED, THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE IN THE PRESENT CASE HAVE BEEN ACCEPTED BY THE AO. IN RESPONSE TO QUESTION NO. 16 POSED TO MR. PAWAN GADIA, HE STATED THAT THERE WAS NO POSSIBILITY OF MANIPULATION OF THE ACCOUNTS. IN SMT. DAYAWANTI GUPTA ( SUPRA ), BY CONTRAST, THERE WAS A CHART PREPARED CONFIRMING THAT THERE HA D BEEN A YEAR-WISE NON- RECORDING OF TRANSACTIONS. IN SMT. DAYAWANTI GUPTA ( SUPRA ), ON THE BASIS OF MATERIAL RECOVERED DURING SEARCH, THE ADDITIONS WHI CH WERE MADE FOR ALL THE YEARS WHEREAS ADDITIONS IN THE PRESENT CASE WERE MADE BY THE AO ONLY FOR AY 2004-05 AND NOT ANY OF THE OTHER YEARS. EVEN THE ADDITIONS MADE FOR AYS 2004-05 WERE SUBSEQUENTLY DELETED BY THE CIT (A), WHICH ORDER WA S AFFIRMED BY THE ITAT. EVEN THE REVENUE HAS CHALLENGED ONLY TWO OF SUCH DE LETIONS IN ITA NO. 306/2017. 68. IN PARA 23 OF THE DECISION IN SMT. DAYAWANTI GUPTA ( SUPRA ), IT WAS OBSERVED AS UNDER: '23. THIS COURT IS OF OPINION THAT THE ITAT'S FINDI NGS DO NOT REVEAL ANY FUNDAMENTAL ERROR, CALLING FOR CORRECTION. THE INFE RENCES DRAWN IN RESPECT OF UNDECLARED INCOME WERE PREMISED ON THE MATERIALS FOUND AS WELL AS THE STATEMENTS RECORDED BY THE ASSESSEES. THESE ADDITIO NS THEREFORE WERE NOT BASELESS. GIVEN THAT THE ASSESSING AUTHORITIES IN S UCH CASES HAVE TO DRAW INFERENCES, BECAUSE OF THE NATURE OF THE MATERIALS - SINCE THEY COULD BE SCANTY (AS ONE HABITUALLY CONCEALING INCOME OR INDU LGING IN CLANDESTINE OPERATIONS CAN HARDLY BE EXPECTED TO MAINTAIN METIC ULOUS BOOKS OR RECORDS FOR LONG AND IN ALL PROBABILITY BE ANXIOUS TO DO AW AY WITH SUCH EVIDENCE AT THE SHORTEST POSSIBILITY) THE ELEMENT OF GUESS WORK IS TO HAVE SOME REASONABLE NEXUS WITH THE STATEMENTS RECORDED AND D OCUMENTS SEIZED. IN TILLS CASE, THE DIFFERENCES OF OPINION BETWEEN THE CIT (A) ON THE ONE HAND AND THE AO AND ITAT ON THE OTHER CANNOT BE THE SOLE BASIS FOR DISAGREEING WITH WHAT IS ESSENTIALLY A FACTUAL SURMISE THAT IS LOGICAL AND PLAUSIBLE. THESE FINDINGS DO NOT CALL FOR INTERFERENCE. THE SE COND QUESTION OF LAW IS ANSWERED AGAIN IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE.' 69. WHAT WEIGHED WITH THE COURT IN THE ABOVE DECISION WAS THE 'HABITUAL CONCEALING OF INCOME AND INDULGING IN CLANDESTINE O PERATIONS' AND THAT A PERSON INDULGING IN SUCH ACTIVITIES 'CAN HARDLY BE ACCEPTE D TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG.' THESE FACTORS ARE ABSENT IN T HE PRESENT CASE. THERE WAS NO JUSTIFICATION AT ALL FOR THE AO TO PROCEED ON SURMI SES AND ESTIMATES WITHOUT THERE BEING ANY INCRIMINATING MATERIAL QUA THE AY FOR WHICH HE SOUGHT TO MAKE ADDITIONS OF FRANCHISEE COMMISSION. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 19 70. THE ABOVE DISTINGUISHING FACTORS IN SMT. DAYAWANTI GUPTA ( SUPRA ), THEREFORE, DO NOT DETRACT FROM THE SETTLED LEGAL POSITION IN KABUL CHAWLA ( SUPRA ) WHICH HAS BEEN FOLLOWED NOT ONLY BY THIS COURT IN ITS SUBSEQU ENT DECISIONS BUT ALSO BY SEVERAL OTHER HIGH COURTS. 71. FOR ALL OF THE AFOREMENTIONED REASONS, THE COURT I S OF THE VIEW THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT THE INVOCATION OF SEC TION 153A BY THE REVENUE FOR THE AYS 2000-01 TO 2003-04 WAS WITHOUT ANY LEGAL BA SIS AS THERE WAS NO INCRIMINATING MATERIAL QUA EACH OF THOSE AYS. THE HONBLE DELHI HIGH COURT HAS CONCURRED WITH THE VIEW AS TAKEN IN CASE OF KABUL CHAWLA (SUPRA) AS WELL AS THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. JAI STEEL INDIA LTD. VS. ACIT (SUPRA). EVEN ON THE ISSUE OF ADDITION MADE BY THE AO IN THE PROCEED INGS UNDER SECTION 153A IN RESPECT OF THE ASSESSMENT YEAR WHICH WAS AL READY COMPLETED ON THE DATE OF SEARCH, THE HONBLE HIGH COURT HAS HELD THAT IN THE ABSENCE OF ANY MATERIAL WHICH WAS SUBSEQUENTLY UNEARTHED DURIN G THE SEARCH AND WAS NOT ALREADY AVAILABLE TO THE AO, THE ADDITIONS MADE BY THE AO ON ACCOUNT OF SECURITY DEPOSITS WERE RIGHTLY DELETED B Y THE LD. CIT (A). THE RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT IN CASE OF PRINCIPAL CIT VS. MEETA GUTGUTIA (SUPRA) ARE IN PARA 53 AS UNDER :- 53. AT THIS STAGE, IT IS ALSO TO BE NOTICED THAT AN EL ABORATE ARGUMENT WAS MADE BY MR. MANCHANDA ON THE ASPECT OF THE SECURITY DEPO SITS ACCEPTED BY THE ASSESSEE. THESE WERE OF TWO KINDS - ONE WAS OF REFU NDABLE SECURITY DEPOSITS AND THE OTHER FOR NON-REFUNDABLE SECURITY DEPOSITS. AS FAR AS THE REFUNDABLE SECURITY DEPOSITS WERE CONCERNED, THE AO HIMSELF IN HIS REMA ND REPORT ACCEPTED THEM AS HAVING BEEN DISCLOSED. THIS HAS BEEN NOTICED BY THE CIT (A) IN PARA 7.2.1 OF HIS ORDER FOR AY 2004-05. AS REGARDS NON-REFUNDABLE SEC URITY DEPOSIT, THE CIT (A) ACCEPTED THE AO'S FINDINGS THAT TREATING THE SUM AS 'GOODWILL WRITTEN OFF ON DEFERRED BASIS' WAS NOT CORRECT, HENCE THE ADDITION OF RS. 5,09,343 WAS HELD TO BE JUSTIFIED AND CORRECT. IT WAS DULY ACCOUNTED FOR UNDER 'LIABILITIES' AND TRANSFERRED TO INCOME IN A PHASED MANNER. THIS WAS NOT DONE BY MANIPULATING THE ACCOUNT BOOKS OF THE ASSESSEE AS ALLEGED BY THE REVENUE. THIS WOULD HAVE BEEN EVIDENT HAD THE RETURN BEEN PICKED UP FOR SCRU TINY UNDER SECTION 143(3) OF THE ACT. THIS, THEREFORE, WAS NOT MATERIAL WHICH WA S SUBSEQUENTLY UNEARTHED DURING THE SEARCH WHICH WAS NOT ALREADY AVAILABLE T O THE AO. CONSEQUENTLY, THE ADDITIONS SOUGHT TO BE MADE BY THE AO ON ACCOUNT OF SECURITY DEPOSITS WERE RIGHTLY DELETED BY THE CIT (A). ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 20 THUS THE ESSENTIAL COROLLARY OF THESE DECISIONS IS THAT NO ADDITION CAN BE MADE IN THE PROCEEDINGS UNDER SECTION 153A IN RESPE CT OF THE ASSESSMENTS WHICH WERE COMPLETED PRIOR TO THE DATE OF SEARCH EX CEPT BASED ON SOME INCRIMINATING MATERIAL UNEARTHED DURING THE SEARCH WHICH WAS NOT ALREADY AVAILABLE TO THE AO. IT IS PERTINENT TO NOTE THAT THE SLP FILED BY THE REVENUE AGAINST THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF PRINCIPAL CIT VS. MEETA GUTGUTIA WAS DISMISSED VIDE ORDER DATED 2 ND JULY, 2018. THERE ARE SERIES OF DECISIONS ON THIS ISSUE INCLUDING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF M/S. J AI STEEL INDIA VS. ACIT (SUPRA) WHEREIN THE HONBLE HIGH COURT HAS HELD IN PARA 23 TO 30 AS UNDER:- 23. THE RELIANCE PLACED BY THE COUNSEL FOR THE APPELLA NT ON THE CASE OF ANIL KUMAR BHATIA ( SUPRA ) ALSO DOES NOT HELP THE CASE OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE SAID JUDGMENT READS AS UNDER: '19. UNDER THE PROVISIONS OF SECTION 153A, AS WE HA VE ALREADY NOTICED, THE ASSESSING OFFICER IS BOUND TO ISSUE NO TICE TO THE ASSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEA R FALLING WITHIN THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEA RCH OR REQUISITION WAS MADE. ANOTHER SIGNIFICANT FEATURE OF THIS SECTI ON IS THAT THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSES S THE 'TOTAL INCOME' OF THE AFORESAID YEARS. THIS IS A SIGNIFICA NT DEPARTURE FROM THE EARLIER BLOCK ASSESSMENT SCHEME IN WHICH THE BL OCK ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULA R ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE A SSESSMENTS. UNDER SECTION 153A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO ASSESS OR REASSESS THE 'TOTAL IN COME' OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER I N RESPECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. 20. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT T O BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED I N RESPECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UN DER SECTION 143(1)(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN EXISTENCE, HAVING OBVIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF THE SEARCH/REQUISITION, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INC OME, TAKING NOTE TO THE UNDISCLOSED INCOME, IF ANY, UNEARTHED D URING THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 21 SEARCH. FOR THIS PURPOSE, THE FETTERS IMPOSED UPON THE ASS ESSING OFFICER BY THE STRICT PROCEDURE TO ASSUME JURISDICT ION TO REOPEN THE ASSESSMENT UNDER SECTIONS 147 AND 148, HAVE BEEN RE MOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB-SECTION (1) OF S ECTION 153A OPENS. THE TIME-LIMIT WITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED, AS PROVIDED IN SECTION 149 HAS ALSO BEEN MADE INAPPLICABLE BY THE NON OBSTANTE CLAUSE. SECTION 15 1 WHICH REQUIRES SANCTION TO BE OBTAINED BY THE ASSESSING O FFICER BY ISSUE OF NOTICE TO REOPEN THE ASSESSMENT UNDER SECTION 14 8 HAS ALSO BEEN EXCLUDED IN A CASE COVERED BY SECTION 153A. THE TIM E-LIMIT PRESCRIBED FOR COMPLETION OF AN ASSESSMENT OR REASS ESSMENT BY SECTION 153 HAS ALSO BEEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. WITH ALL THE STOPS HAVING BEEN PULLED OUT, THE ASSESSING OFFICER UNDER SECTION 153A HAS BEEN ENTRU STED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSE SSEE WHOSE CASE IS COVERED BY SECTION 153A, BY EVEN MAKING REASSESS MENTS WITHOUT ANY FETTERS, IF NEED BE. 21. NOW THERE CAN BE CASES WHERE AT THE TIME WHEN T HE SEARCH IS INITIATED OR REQUISITION IS MADE, THE ASSESSMENT OR REASSESSMENT PROCEEDINGS RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF THE SIX ASSESSMENT YEARS MENTIONED ABOVE, MAY BE PENDING. IN SUCH A CASE, THE SECOND PROVISO TO SUB- SECTION (1) OF SECTION 153A SAYS THAT SUCH PROCEEDINGS 'SHALL ABAT E'. THE REASON IS NOT FAR TO SEEK. UNDER SECTION 153A, THERE IS NO ROOM FOR MULTIPLE ASSESSMENT ORDERS IN RESPECT OF ANY OF THE SIX ASSESSMENT YEARS UNDER CONSIDERATION. THAT IS BECAUSE THE ASSE SSING OFFICER HAS TO DETERMINE NOT MERELY THE UNDISCLOSED INCOME OF THE ASSESSEE, BUT ALSO THE 'TOTAL INCOME' OF THE ASSESS EE IN WHOSE CASE A SEARCH OR REQUISITION HAS BEEN INITIATED. OBVIOUSLY THERE CANNOT BE SEVERAL ORDERS FOR THE SAME ASSESSMENT YEAR DETERMI NING THE TOTAL INCOME OF THE ASSESSEE. IN ORDER TO ENSURE THIS STA TE OF AFFAIRS NAMELY, THAT IN RESPECT OF THE SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE YEAR IN WHICH THE S EARCH TOOK PLACE THERE IS ONLY ONE DETERMINATION OF THE TOTAL INCOME , IT HAS BEEN PROVIDED IN THE SECOND PROVISO OF SUB-SECTION (1) O F SECTION 153A THAT ANY PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT OF THE ASSESSEE WHICH ARE PENDING ON THE DATE OF INITIATIO N OF THE SEARCH OR MAKING REQUISITION 'SHALL ABATE'. ONCE THOSE PROCEE DINGS ABATE, THE DECKS ARE CLEARED, FOR THE ASSESSING OFFICER TO PAS S ASSESSMENT ORDERS FOR EACH OF THOSE SIX YEARS DETERMINING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE BOTH THE INCOME DE CLARED IN THE RETURNS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQU ISITION. THE POSITION THUS EMERGING IS THAT THE SEARCH IS INITIA TED OR REQUISITION IS MADE, THEY WILL ABATE MAKING WAY FOR THE ASSESSI NG OFFICER TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN WHICH THE UNDISCLOSED INCOME WOULD ALSO BE INCLUDED, BUT IN CASE WHERE TH E ASSESSMENT ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 22 OR REASSESSMENT PROCEEDINGS HAVE ALREADY BEEN COMPL ETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH ORDERS SUBSISTING AT THE TIME WHEN THE SEARCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF ANY ABATEMENT SINCE NO PROCEEDINGS ARE PENDING. IN THIS LATTER SI TUATION, THE ASSESSING OFFICER WILL REOPEN THE ASSESSMENTS OR RE ASSESSMENTS ALREADY MADE (WITHOUT HAVING THE NEED TO FOLLOW THE STRICT PROVISIONS OR COMPLYING WITH THE STRICT CONDITIONS OF SECTIONS 147, 148 AND 151) AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE ORDERS PASSED UNDER SECTION 15 3A WOULD BE SIMILAR TO THE ORDERS PASSED IN ANY REASSESSMENT, W HERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND THE INCOME THAT ESCAPED ASSESSMENT ARE CLUBBED TOGETHER AND ASSESSED AS THE TOTAL INCOME. IN SUCH A CASE, TO REITERATE, THERE IS NO QUESTION OF ANY ABATEMENT OF THE EARLIER PROCEEDINGS FOR THE SIMPLE REASON THAT NO PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT WERE PENDING SINCE THEY HAD ALREADY CULMINATED IN ASSESSMENT OR REASSESSMENT ORDERS WHEN THE SEARCH WAS INITIATED OR THE REQUISI TION WAS MADE.' (EMPHASIS SUPPLIED) 24. THE SAID JUDGMENT ALSO IN NO UNCERTAIN TERMS HOLDS THAT THE REASSESSMENT OF THE TOTAL INCOME OF THE COMPLETED A SSESSMENTS HAVE TO BE MADE TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH AND THE INCOME THAT ESCAPED ASSESSMENTS ARE REQUIRED TO BE CLUBBED TOGETHER WITH THE TOTAL INCOME DETERMINED IN THE OR IGINAL ASSESSMENT AND ASSESSED AS THE TOTAL INCOME. THE OBSERVATIONS MADE IN THE JUDGMENT CONTRASTING THE PROVISIONS OF DETERMINATION OF UNDI SCLOSED INCOME UNDER CHAPTER XIVB WITH DETERMINATION OF TOTAL INCOME UND ER SECTIONS 153A TO 153C OF THE ACT HAVE TO BE READ IN THE CONTEXT OF S ECOND PROVISO ONLY, WHICH DEALS WITH THE PENDING ASSESSMENT/REASSESSMEN T PROCEEDINGS. THE FURTHER OBSERVATIONS MADE IN THE CONTEXT OF DE NOVO ASSESSMENT PROCEEDINGS ALSO HAVE TO BE READ IN CONTEXT THAT IR RESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH, THE NOTICE AND CONSEQUENTIAL ASSESSMENT UNDER SECTI ON 153A HAVE TO BE UNDERTAKEN. 25. THE ARGUMENT OF THE LEARNED COUNSEL THAT THE AO IS ALSO FREE TO DISTURB INCOME, EXPENDITURE OR DEDUCTION DE HORS THE INCRIM INATING MATERIAL, WHILE MAKING ASSESSMENT UNDER SECTION 153A OF THE ACT IS ALSO NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION WHICH AS NOTI CED ABOVE IS ESSENTIALLY IN CONTEXT OF SEARCH AND/OR REQUISITION . THE PROVISIONS OF SECTIONS 153A TO 153C CANNOT BE INTERPRETED TO BE A FURTHER INNINGS FOR THE AO AND/OR ASSESSEE BEYOND PROVISIONS OF SECTIONS 13 9 (RETURN OF INCOME), 139(5) (REVISED RETURN OF INCOME), 147 (INCOME ESCA PING ASSESSMENT) AND 263 (REVISION OF ORDERS) OF THE ACT. 26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTA L INCOME IN RESPECT OF ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 23 EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSM ENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE W ORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND RE ASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD N OT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERP RETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONL Y BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH OR REQUISITION OF DOCUMENTS. 27. THE ALLAHABAD HIGH COURT IN SMT. SHAILA AGARWAL'S ( SUPRA ) HAS HELD AS UNDER: '19. THE SECOND PROVISO TO SECTION 153A OF THE ACT, REFERS TO ABATEMENT OF THE PENDING ASSESSMENT OR RE-ASSESSMEN T PROCEEDINGS. THE WORD 'PENDING' DOES NOT OPERATE AN Y SUCH INTERPRETATION, THAT WHEREVER THE APPEAL AGAINST SU CH ASSESSMENT OR REASSESSMENT IS PENDING, THE SAME ALONG WITH ASSESS MENT OR REASSESSMENT PROCEEDINGS IS LIABLE TO BE ABATED. TH E PRINCIPLES OF INTERPRETATION OF TAXING STATUTES DO NOT PERMIT THE COURT TO INTERPRET THE SECOND PROVISO TO SECTION 153A IN A MANNER THAT WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE COMPLETE , AND THE MATTER IS PENDING IN APPEAL IN THE TRIBUNAL, THE EN TIRE PROCEEDINGS WILL ABATE. 20. THERE IS ANOTHER ASPECT TO THE MATTER, NAMELY T HAT THE ABATEMENT OF ANY PROCEEDINGS HAS SERIOUS CAUSES AND EFFECT IN AS MUCH AS THE ABATEMENT OF THE PROCEEDINGS, TAKES AWA Y ALL THE CONSEQUENCES THAT ARISE THEREAFTER. IN THE PRESENT CASE AFTER DEDUCTING BOGUS GIFTS IN THE REGULAR ASSESSMENT PRO CEEDINGS, THE PROCEEDINGS FOR PENALTY WERE DRAWN UNDER SECTION 27 1(1)(C) OF THE ACT. THE MATERIAL FOUND IN THE SEARCH MAY BE A GROUND FO R NOTICE AND ASSESSMENT UNDER SECTION 153A OF THE ACT BUT TH AT WOULD NOT EFFACE OR TERMINATE ALL THE CONSEQUENCE, WHICH HAS ARISEN OUT OF THE REGULAR ASSESSMENT OR REASSESSMENT RESULTING IN TO THE DEMAND OR PROCEEDINGS OF PENALTY. ' (EMPHASIS SUPPLIED) THE SAID JUDGMENT WHICH ESSENTIALLY DEALS WITH SECO ND PROVISO TO SECTION 153A OF THE ACT ALSO SUPPORTS THE CONCLUSION, WHICH WE HAVE REACHED HEREINBEFORE. 28. IT HAS BEEN OBSERVED BY THE HON'BLE SUPREME COURT IN K.P. VARGHESE V. ITO [1981] 131 ITR 597/7 TAXMAN 13 THAT 'IT IS WELL RECOGNIZED RULE OF CONSTRUCTION THAT A STATUTORY PR OVISION MUST BE SO CONSTRUED, IF POSSIBLE THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED.' ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 24 29. THE ARGUMENT OF THE COUNSEL FOR THE APPELLANT IF T AKEN TO ITS LOGICAL END WOULD MEAN THAT EVEN IN CASES WHERE THE APPEAL ARIS ING OUT OF THE COMPLETED ASSESSMENT HAS BEEN DECIDED BY THE CIT(A) , ITAT AND THE HIGH COURT, ON A NOTICE ISSUED UNDER SECTION 153A O F THE ACT, THE AO WOULD HAVE POWER TO UNDO WHAT HAS BEEN CONCLUDED UP TO THE HIGH COURT. ANY INTERPRETATION WHICH LEADS TO SUCH CONCLUSION H AS TO BE REPELLED AND/OR AVOIDED AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE ( SUPRA ). 30. CONSEQUENTLY, IT IS HELD THAT IT IS NOT OPEN FOR T HE ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT BEEN C LAIMED IN THE ORIGINAL ASSESSMENT, WHICH ASSESSMENT ALREADY STANDS COMPLET ED, ONLY BECAUSE A ASSESSMENT UNDER SECTION 153A OF THE ACT IN PURSUAN CE OF SEARCH OR REQUISITION IS REQUIRED TO BE MADE. IN THE CASE IN HAND, THE TRANSACTIONS OF UNSECURED LOANS AS WELL AS INTRODUCTION OF CAPITAL BY THE PARTNERS WERE DULY R ECORDED IN THE BOOKS OF ACCOUNT AND AVAILABLE WITH THE AO. FURTHER, DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT ON 2 ND JULY 2015 NO MATERIAL MUCH LESS INCRIMINATING MATERIAL WAS EITHER FOUND OR SEIZED T O DISCLOSE ANY UNDISCLOSED INCOME ON ACCOUNT OF UNSECURED LOANS OR PARTNERS CAPITAL RECEIVED BY THE ASSESSEE FIRM. THE AO HAS PROPOSED TO MAKE THE ADDITION ON ACCOUNT OF UNSECURED LOANS AND PARTNERS CAPITAL UNDER SECTION 68 BEING UNEXPLAINED CASH CREDIT SOLELY ON THE BASIS O F THE INFORMATION RECEIVED FROM INVESTIGATION WING KOLKATA. IT IS P ERTINENT TO NOTE THAT THE SAID INFORMATION WAS AVAILABLE WITH THE AO PRIOR TO THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT IN CASE OF THE ASSESSE E ON 2 ND JULY, 2015. THEREFORE, EVEN THE SOLE BASIS OF ASSESSMENTS FRAME D UNDER SECTION 153A OF THE ACT IS THE INFORMATION RECEIVED FROM INVESTI GATION WING KOLKATA AND STATEMENT OF ONE SHRI ANAND SHARMA, WHO IS STATED T O BE AN ENTRY OPERATOR AND MANAGED VARIOUS CONCERNS/COMPANIES INC LUDING M/S.ROYAL CRYSTAL DEALERS, ONE OF THE LOAN CREDITORS OF THE A SSESSEE. EXCEPT THE SAID STATEMENT AND REPORT OF THE INVESTIGATION WING KOLK ATA, THE AO HAS NEITHER REFERRED TO OR WAS HAVING IN POSSESSION OF ANY MATERIAL TO INDICATE THAT THE UNSECURED LOANS SHOWN IN THE BOOKS OF ACCO UNTS AS WELL AS PARTNERS CAPITAL RECEIVED BY THE ASSESSEE ARE NOTH ING BUT ASSESSEES OWN ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 25 UNACCOUNTED AND UNDISCLOSED INCOME ROUTED BACK IN T HE GARB OF UNSECURED LOANS AND PARTNERS CAPITAL. THERE IS NO DISPUTE THAT THESE TRANSACTIONS OF UNSECURED LOANS AND PARTNERS CAPIT AL CONTRIBUTION ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS AND DISCLOSED IN THE RETURN OF INCOME WHICH WERE ALREADY COMPLETED AS THE ASSESSMENTS FOR THESE FOUR ASSESSMENT YEARS WERE NOT PENDING ON THE DATE OF SE ARCH, THEREFORE, IT IS MANIFEST FROM THE RECORD THAT DURING THE COURSE OF SEARCH AND SEIZURE UNDER SECTION 132 OF THE ACT IN THE CASE OF THE ASS ESSEE NO MATERIAL MUCH LESS THE INCRIMINATING MATERIAL WAS UNEARTHED OR AN Y UNDISCLOSED INCOME WHICH WAS NOT DISCLOSED IN THE BOOKS OF ACCOUNTS WA S DETECTED OR FOUND. THE ONLY INCRIMINATING MATERIAL WHICH WAS REFERRED BY THE AO IS PAGES 21 TO 26 OF ANNEXURE AS-1 IN RESPECT OF LONG TERM CAPI TAL GAIN EARNED BY SHRI RAJENDRA AGARWAL AND HIS FAMILY MEMBERS. THE SAID LONG TERM CAPITAL GAIN WAS DISCLOSED BY SHRI RAJENDRA AGARWAL IN HIS STATE MENT UNDER SECTION 132(4) AND, THEREFORE, IT WAS SURRENDERED AND OFFER ED TO TAX BY SHRI RAJENDRA AGARWAL AND HIS FAMILY MEMBERS IN THE YEAR OF SEARCH. THE AO HIMSELF HAS NOT MADE ANY ADDITION IN THE HAND OF TH E ASSESSEE ON ACCOUNT OF LONG TERM CAPITAL GAIN WHICH WAS FOUND DURING TH E COURSE OF SEARCH AND SEIZURE. THUS, EXCEPT THE MATERIAL DISCLOSING THE LONG TERM CAPITAL GAIN IN THE HAND OF SHRI RAJENDRA AGARWAL, NO OTHER INCRIMI NATING MATERIAL EITHER FOUND OR REFERRED OR IS THE BASIS OF THE ADDITION M ADE BY THE AO WHILE FRAMING THE ASSESSMENT UNDER SECTION 153A OF THE AC T FOR THE ASSESSMENT YEARS 2010-11 TO 13-14. IT IS APPROPRIATE TO REFER RELEVANT PART OF THE ASSESSMENT ORDER IN PARA 12 PAGES 48 TO 50, PARA 19 PAGE 83 AND PARA 22 PAGE 86 AS UNDER :- 12. SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE FI RM HAVE BEEN DULY CONSIDERED. HOWEVER, EVEN THE VERY ELABORATE AND CA SE LAWS LOADED SUBMISSIONS OF THE ASSESSEE ARE TOTALLY OFF THE MAR K. AGAINST THE SELF- SPEAKING FACTS OF THE VERY NATURE OF THE ACTIVITIES OF THE SO CALLED PARTNERS PROVIDING HUGE PARTNERS CAPITAL IN THE M OST UNINTERESTED MANNER AND PROVIDING HUGE UNSECURED LOANS WITHOUT A NY COLLATERAL OR ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 26 OTHER SECURITY, THE EMPHASIS OF THE ASSESSEE FIRM I N ITS SUBMISSIONS HAS BEEN ON SEEKING PROTECTION UNDER VARIOUS JUDICIAL D ECISIONS EVEN WITHOUT HAVING ANY FACT COHERENCE. THE SUBMISSIONS MADE BY THE ASSESSEE ARE COMPLETELY DEVOID OF MERIT IN THE LIGHT OF THE FOLL OWING FACTS AND CIRCUMSTANCES; A. THE DEPARTMENT HAS VERY SOUND BASIS TO TREAT, THE R ECEIPTS OF UNSECURED LOAN AND PARTNERS CAPITAL FROM THE ABOVE MENTIONED COMPANIES AS BOGUS AND IN GENUINE. THE FINDINGS OF THIS OFFICE AND INVESTIGATION REPORT OF THE INVESTIGATION DIRECTORA TE KOLKATA ARE NOT BASED ON ANY PRESUMPTION, ASSUMPTION, GUESS OR BARE SUSPICION. WHERE THE NATURE AND SOURCE OF A RECEIPT, WHETHER I T BE OF MONEY OR OTHER PROPERTY, CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OPEN FOR THE REVENUE TO HOLD THAT IT IS THE INCO ME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW T HAT THE INCOME IS FROM ANY PARTICULAR SOURCE AS ENUMERATED THE HONBL E SUPREME COURT IN THE CASE OF ROSHAN DI HATTI V. CIT (1977) 107 IT R 938 (SC) AND KALE KHAN MOHAMMAD HANIF V. CIT (1963) 50 ITR 1 (SC ). PRIMA FACIE ONUS IS ALWAYS ON THE ASSESSEE TO PROVE THE CASH CREDIT ENTRY FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN LAND MARK CASES LIKE KALE KHAN MOHAMM AD HANIF V CIT (1963) 50 ITR 1 (SC), ROSHAN DI HATTI V CIT (1977) 107 ITR (SC) IT HAS BEEN HELD THAT THE LAW I S WELL SETTLED THAT THE ONUS OF PROVING THE SOURCE OF A SU M OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE, I S ON HIM. WHERE THE NATURE AND SOURCE THEREOF CANNOT BE EXPLAINED SATISFACTORILY, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHE R BURDEN IS ON THE REVENUE TO SHOW THAT THE INCOME IS FROM A NY PARTICULAR SOURCE. IT MAY ALSO BE POINTED OUT THAT THE BURDEN OF PROOF IS FLUID FOR THE PURPOSES OF SECTIO N 68. ONCE ASSESSEE HAS SUBMITTED BASIC DOCUMENTS RELATIN G TO IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORT HINESS THEN AO MUST DO SOME INQUIRY TO CALL FOR MORE DETAI LS TO INVOKE SECTION 68. B. THE ASSESSEE FIRM HAS FILED CONFIRMATION LETTERS AN D THIS OFFICE HAS CARRIED OUT FURTHER ENQUIRY TO EXAMINE THE REALITY OF THE TRANSACTIONS. AN ENQUIRY WAS SENT TO THE INVESTIGATION DIRECTORAT E KOLKATA AND IT HAS BEEN ESTABLISHED THAT THESE INVESTOR OR LENDER COMPANIES ARE CONTROLLED BY THE ENTRY OPERATORS. THE STATEMENTS OF VARIOUS ENTRY OPERATORS ARE SUFFICIENT EVIDENCES TO SHOW THAT THE UNSECURED LOAN AND PARTNERS CAPITAL ARE ASSESSEES OWN UNDISCLOSE D INCOME BROUGHT ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 27 INTO THE BOOKS OF THE ASSESSEE UNDER THE GARB OF UN SECURED LOAN AND PARTNERS CAPITAL. C. THE DEPARTMENT HAS CARRIED OUT SEARCH OVER THE ASSE SSEE GROUP AND DURING THE COURSE OF SEARCH ACTION U/S 132 OF THE I .T. ACT, 1961, THE INCRIMINATING DOCUMENTS SEIZED DURING SEARCH PROCEE DINGS VIDE PG NO. 21 TO 26 OF ANNEXURE AS-1 OF PARTY B-1, WHEREIN THE DETAILS OF YEAR- WISE LTCG EARNED BY SHRI RAJENDRA AGRAWAL AND HIS F AMILY MEMBERS, IS MAINTAINED, WHICH DURING SEARCH ACTION HAS BEEN ACCEPTED TO BE BOGUS BY ALL FAMILY MEMBERS IN THEIR RESPECTIVE STA TEMENTS. 19. IN VIEW OF ABOVE FACTS OF THE CASE AND IN THE LIGHT OF ABOVE JUDICIAL DECISION, IT IS ESTABLISHED THAT GENUINENESS OF THE TRANSACTION HAS NOT BEEN PROVED. SECTION 68 OF THE I.T. ACT PROVIDES FO R CHARGING TO INCOME TAX ON ANY SUM CREDITED IN THE BOOKS OF THE ASSESSE E MAINTAINED FOR ANY PREVIOUS YEAR IF THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED IS NOT, I N THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY. IT PLACES NO DUTY UPON THE ASSESSING OFFICER TO POINT TO THE SOURCE FROM WHICH THE MONEY WAS RECEIVED BY THE ASSESSEE. WHERE AN ASSESSEE FAILS TO PROVE SATISFA CTORILY THE SOURCE AND THE NATURE OF CERTAIN AMOUNT OF CREDIT DURING THE A CCOUNTING YEAR, THE INCOME-TAX OFFICER IS ENTITLED TO DRAW THE INFERENC E THAT THE RECEIPT ARE OF AN ASSESSABLE NATURE. THUS, THE ASSESSEE IS UNABLE TO DISCHARGE ITS BURDEN OF PROOF BY FAILING TO ESTABLISH LENDERS ID ENTITY, FORGET THE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE LENDER. HENCE, THE UNSECURED LOANS AND PARTNERS CAPITAL SHOWN TO HAVE BEEN RECEIVED FROM VARIOUS KOLKATA BASED COMPANIES AND OTHER COMP ANIES REMAINED UNEXPLAINED. IN THE CIRCUMSTANCES, I AM LEFT WITH N O OPTION THAN TO TAX THE ENTIRE UNEXPLAINED CREDITS BY WAY OF PARTNERS CAPITAL AND UNSECURED LOANS RECEIVED FROM THE PERSONS MENTIONED IN PARA 5 ABOVE AS UNEXPLAINED CASH CREDITS U/S 68 OF THE INCOME TAX A CT, CHARGEABLE TO TAX AS INCOME OF THE ASSESSEE FIRM FOR THE RESPECTIVE A SSESSMENT YEARS. 22. AFTER EXAMINATION OF THE INFORMATION AND DETA ILS PLACED ON RECORD AND DISCUSSION WITH THE ASSESSEE, THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER :- RETURNED INCOME AS PER ITR U/S 153A OF THE ACT. RS. 2,82,83,460/ - ADDITIONS| UNEXPLAINED CASH CREDITS U/S |68 OF THE ACT IN THE FORM OF |UNSECURED LOAN AND PARTNERS |CAPITAL R S. 67,20,14,999/ - ASSESSED INCOME RS. 70,02,98,459/ - R/O RS. 70,02,98,459/ - ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 28 THE TOTAL INCOME OF THE ASSESSEE IN THE STATUS OF F IRM FOR ASSESSMENT YEAR 2010-11 RELEVANT TO PREVIOUS YEAR 2009-10 IS A SSESSED AT RS. 70,02,98,459/- U/S 153A READ WITH SECTION 143(3) OF I.T. ACT, 1961. THE FORM ITNS-150 SHOWING CALCULATION OF TAX AND INTERE ST CHARGEABLE, IF ANY, IS ATTACHED HEREWITH AND FORMS A PART OF THIS ORDER . A NOTICE OF DEMAND U/S 156 OF THE ACT AND CHALLAN FOR PAYMENT OF TAX, IF PAYABLE, IS HEREBY ISSUED. PENALTY NOTICE U/S 274 RWS 271(1)(C) IS ISS UED SEPARATELY. THE ENTIRE FINDING OF THE AO IS BASED ON THE INFORM ATION RECEIVED FROM THE INVESTIGATION WING KOLKATA AND STATEMENT OF SHRI AN AND SHARMA. THE LD. CIT (A) THOUGH HAS NOT DISPUTED THE LEGAL PROPOSITI ON ON THIS ISSUE, HOWEVER, THE CONTENTION OF THE ASSESSEE WAS TURNED DOWN MERELY ON THE GROUND THAT THE SLPS FILED BY THE REVENUE IN THE CA SES OF KABUL CHAWLA (SUPRA) AND M/S. ALL CARGO GLOBAL LOGISTICS (SUPRA) ETC. HAVE BEEN ADMITTED FOR DECISION BY THE HONBLE SUPREME COURT. THE REL EVANT PART OF THE FINDING OF THE LD. CIT (A) IN PARA 3.2.2 AND 3.2.4 AT PAGES 35 AND 36 ARE AS UNDER :- 3.2.2 AS PER THE PROVISIONS OF THIS SECTION WHERE A SEARCH IS INITIATED U/S 132 OF THE ACT, THE A.O SHALL ISSUE A NOTICE REQUIR ING THE PERSON SEARCHED TO FURNISH HIS RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. ONCE SUCH RETURNS ARE FILED, T HE AO HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF SUCH SIX ASSESSMENT YE ARS.(EMPHASIS SUPPLIED BY ME). (THE DECISIVE WORDS USED IN THE PROVISIONS ARE TO ' ASSESSEE OR REASSESS THE TOTAL INCOME' ). THE A.O. IS THUS DUTY BOUND TO DETERMINE THE 'TOTAL INCOME' OF THE ASSESSEE FOR SUCH SIX ASSESSM ENT YEARS AND IT IS OBVIOUS THAT 'TOTAL INCOME' REFERS TO THE SUM TOTAL OF INCOME IN RESPECT OF WHICH A PERSON IS ASSESSABLE. THE TOTAL INCOME THER EFORE WILL COVER NOT ONLY THE INCOME EMANATING FROM DECLARED SOURCES OR ANY MATERIAL PLACED BEFORE THE ASSESSING OFFICER BUT FROM ALL SOURCES I NCLUDING THE UNDISCLOSED ONES, OR BASED ON THE UNPLACED MATERIAL BEFORE THE AO. 3.2.3 THE CONCEPT OF ASSESS OR REASSESS AND SHALL ABATE AS CONTEMPLATED U/S 153A IS UNDER HOT JUDICIAL DEBATE. I FIND THAT LEGALLY, THIS ISSUE IS VERY CONTENTIOUS IN VIEW OF THE DIVERGENT VIEWS OF THE VARIOUS AUTHORITIES. THE APPELLANT HAS TRIED TO HIGHLIGHT M OST OF THEM. HOWEVER, IT IS EQUALLY PERTINENT TO MENTION HERE THAT THE DEPAR TMENT HAS NOT ACCEPTED ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 29 THE DECISIONS OF HON'BLE MUMBAI HIGH COURT IN THE C ASE OF M/S ALL CARGO GLOBAL LOGISTICS AS WELL AS CONTINENTAL WAREHOUSING (NHAVA SHEVA) LTD., AND SLP HAS BEEN FILED BEFORE THE HON'BLE SUPREME C OURT. THE HON'BLE SUPREME COURT HAS GRANTED LEAVE VIDE ORDER DATED 12 .10.2015 AS REPORTED IN 64 TAXMANN.COM 34 (S.C.). SIMILARLY, IN THE CASE OF KABUL CHAWLA SLP HAS ALSO BEEN FILED. 3.2.4 IN VIEW OF SLPS ADMITTED IN CASE OF KABUL CHAWLA, M/S ALL CARGO GLOBAL LOGISTICS AS WELL AS CONTINENTAL WAREHOUSING (NHAVA SHEVA) LTD., (SUPRA), ASSESSEES CONTENTION CANNOT BE ACCEPTED. MOREOVER, IN ANY CASE, THE ADDITIONS ARE TO BE ADJUDICATED ON MERITS AS PE R RELEVANT GROUND OF APPEAL, THE ISSUE RAISED IN THIS GROUND FOR PRESENT REMAINS FOR ACADEMIC DISCUSSION ONLY. ACCORDINGLY, ISSUE RAISED IN GROUN D NO. 12 IS DISMISSED. THEREFORE, NEITHER IN THE ASSESSMENT ORDER NOR IN T HE ORDER OF THE LD. CIT (A) THERE IS ANY MENTION OR FINDING THAT THE ADDITI ONS HAVE BEEN MADE BY THE AO ON THE BASIS OF ANY INCRIMINATING MATERIAL F OUND DURING THE COURSE OF SEARCH AND SEIZURE IN THE CASE OF THE ASSESSEE. THE AO HAS SOLELY RELIED UPON THE REPORT OF THE INVESTIGATION WING KOLKATA A ND STATEMENT OF ONE SHRI ANAND SHARMA RECORDED BY THE INVESTIGATION WIN G DURING THE SURVEY UNDER SECTION 133A OF THE ACT. THEREFORE, EVEN IF T HE INFORMATION/REPORT OF THE INVESTIGATION WING KOLKATA IS CONSIDERED AS A RELEVANT EVIDENCE, THE SAME CANNOT BE REGARDED AS INCRIMINATING MATERI AL UNEARTHED DURING THE COURSE OF SEARCH AND SEIZURE UNDER SECTION 132 OF THE IT ACT IN CASE OF THE ASSESSEE. THE REQUIREMENT FOR MAKING THE ADDITI ON UNDER SECTION 153A IN THE ASSESSMENT YEARS WHERE THE ASSESSMENT W AS NOT PENDING ON THE DATE OF SEARCH AND THE PROCEEDINGS ARE IN THE N ATURE OF REASSESSMENT IS ESSENTIALLY THE INCRIMINATING MATERIAL DISCLOSIN G UNDISCLOSED INCOME WHICH WAS NOT DISCLOSED BY THE ASSESSEE. IN THE CAS E IN HAND, THE AO HIMSELF HAS NOT CLAIMED ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE IN THE CASE OF THE ASSESSEE. AC CORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE BI NDING PRECEDENTS ON THIS ISSUE IN WHICH THE SLP FILED BY THE REVENUE WA S ALSO DISMISSED BY THE HONBLE SUPREME COURT, THE ADDITIONS MADE BY THE AO WHILE PASSING THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 30 ASSESSMENT ORDERS UNDER SECTION 153A FOR THE ASSESS MENT YEARS 2010-11 TO 13-14 ARE NOT SUSTAINABLE AND ACCORDINGLY THE SA ME ARE LIABLE TO BE DELETED. WE ORDER ACCORDINGLY. THE FOUNDATION OF THE ASSESSMENT ORDER IS THE INFOR MATION RECEIVED FROM THE INVESTIGATION WING, KOLKATA AND STATEMENT OF SHRI ANAND SHARMA AND SHRI ANKIT BAGRI IN RESPECT OF THE DIFFE RENT TRANSACTIONS OF UNSECURED LOAN/SPECIAL DEPOSITS FOR ISSUING SPEC IAL PREFERENTIAL EQUITY SHARES. THE LD. CIT(A) THOUGH HAS NOT DISPUT ED THE LEGAL PROPOSITION ON THIS ISSUE, HOWEVER, THE GROUND RAIS ED BY THE ASSESSEE WAS DISMISSED MERELY ON THE REASON THAT TH E SLP FILED BY THE REVENUE IN THE CASE OF CIT VS. KABUL CHAWLA (SU PRA) AND M/S ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) HAVE BEEN ADMIT TED FOR DECISION BY THE HON'BLE SUPREME COURT. THE RELEVANT FINDINGS OF LD. CIT(A) IN THE CASE OF KOTA DALL MILL HAS BEEN REPRODUCED BY T HE TRIBUNAL IN THE ORDER CITED (SUPRA) AND WE FIND THAT AN IDENTICAL F INDING HAS BEEN GIVEN BY THE LD. CIT(A) IN THE CASE OF ASSESSEE. TH EREFORE, NEITHER IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS REF ERRED OR RELIED UPON ANY INCRIMINATING MATERIAL FOUND DURING THE CO URSE OF SEARCH AND SEIZURE ACTION IN THE CASE OF ASSESSEE NOR THE LD. CIT(A) HAS DISPUTED THIS FACT THAT THE ASSESSING OFFICER WAS N OT HAVING ANY INCRIMINATING MATERIAL IN HIS POSSESSION FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION IN THE CASE OF THE ASSESSEE WHICH HAS DISCLOSED ANY UNACCOUNTED OR UNDISCLOSED INCOME OF THE ASSESSEE. THE INFORMATION RECEIVED FROM THE INVESTI GATION WING, KOLKATA AS WELL AS THE STATEMENT OF SHRI ANAND SHAR MA AND SHRI ANKIT BAGRI CANNOT BE REGARDED AS INCRIMINATING MAT ERIAL UNEARTHED DURING THE COURSE OF SEARCH AND SEIZURE U/S 132 OF THE ACT IN THE CASE OF THE ASSESSEE. HENCE, IN VIEW OF THE DECISIO NS/BINDING PRECEDENTS AS RELIED UPON BY THE LD AR AND ALSO CON SIDERED BY THIS ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 31 TRIBUNAL IN THE CASE OF KOTA DALL MILL (SUPRA), WE HAVE NO REASON TO TAKE A DIFFERENT VIEW ON THIS ISSUE. ACCORDINGLY, B Y FOLLOWING THE EARLIER DECISION OF THIS TRIBUNAL IN THE CASE OF GR OUP CONCERN M/S KOTA DALL MILL WE HOLD THAT THE ADDITION MADE BY THE ASS ESSING OFFICER WHILE PASSING THE ASSESSMENT ORDERS FOR THE A.Y. 20 10-11 TO 2012-13 U/S 153A OF THE ACT ARE NOT SUSTAINABLE AND LIABLE TO BE DELETED. HENCE, THIS GROUND OF THE ASSESSEES APPEAL IS ALLO WED. THEREFORE, IN VIEW OF THE EARLIER ORDERS OF THIS TRIBU NAL ON THIS ISSUE WE HOLD THAT THE ADDITION MADE BY THE A.O. U/S 153A OF THE ACT IS NOT SUSTAINABLE AND LIABLE TO BE DELETED WHEN THE ASSESS MENT FOR THE A.Y. 2010-11 WAS COMPLETED U/S 143(3) OF THE ACT AND WAS N OT PENDING AS ON THE DATE OF SEARCH ON 02/7/2015. THIS GROUND OF THE ASSESSEES APPEAL STANDS ALLOWED. 7. GROUND NO.2 OF THE APPEAL IS REGARDING THE VIOLA TION OF PRINCIPLES OF NATURAL JUSTICE DUE TO NON-ALLOWING THE CROSS EXAMIN ATION OF THE WITNESS, WHOSE STATEMENT WAS RELIED UPON BY THE ASSESSEE. 8. WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL A S THE LD CIT-DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. WE NOTE THAT AFTER CONSIDERING THE DETAILED ARGUMENTS OF BOTH THE PART IES, THE TRIBUNAL IN THE OTHER GROUP CASES HAVE CONSIDERED AND DECIDED THIS ISSUE INCLUDING THE CASE OF M/S MULTIMETALS LIMITED VS DCIT (SUPRA) IN P ARA 14 AS UNDER: ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 32 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WE LL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE AS SESSEE DEMANDED THE CROSS EXAMINATION OF THE WITNESSES, TH EREFORE, STATEMENTS HAVE BEEN RELIED UPON BY THE ASSESSING O FFICER WHILE FRAMING THE ASSESSMENTS UNDER CONSIDERATION. THE LD . CIT(A) THOUGH WHILE CALLING THE REMAND REPORT OF THE ASSES SING OFFICER DIRECTED TO ALLOW THE CROSS EXAMINATION TO THE ASSE SSEE, HOWEVER, WHEN THE ASSESSING OFFICER HAS EXPRESSED HIS INABIL ITY TO PRODUCE THE WITNESSES FOR CROSS EXAMINATION, THE LD. CIT(A) HAS FINALLY REJECTED THE OBJECTION RAISED BY THE ASSESSING OFFI CER. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY US IN THE CASE OF KOTA DALL MILL (SUPRA) VIDE ORDER DATED 31/12/2018 IN PARA 11.1 AS UNDER: 11.1. EVEN OTHERWISE, THE ASSESSMENT ORDER IS SOLE LY BASED ON THE REPORT OF THE INVESTIGATION WING KOLKATA WHICH IN TURN IS NOTHING BUT THE NARRATION OF THE STATEMENTS RECORDED DURING THE INVESTIGATION AN D THE AO WAS HAVING IN POSSESSION THE STATEMENT OF ONLY SHRI ANAND SHAR MA. THEREFORE, ALL THESE PROCEEDINGS CONDUCTED BY THE INVESTIGATION WI NG KOLKATA WERE AT THE BACK OF THE ASSESSEE AND HENCE THE STATEMENT WH ICH IS THE FOUNDATION OF THE REPORT OF THE INVESTIGATION WING KOLKATA AS WELL AS THE ASSESSMENT ORDER CANNOT BE ACCEPTED IN THE ABSENCE OF GIVING AN OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. W E FIND THAT THE ASSESSEE HAS INSISTED FOR CROSS EXAMINATION DURING THE ASSESSMENT PROCEEDINGS AND FURTHER DURING THE APPELLATE PROCEE DINGS. THE LD.CIT(A) EVEN CALLED FOR A REMAND REPORT AND DIRECTED THE AO TO ALLOW CROSS EXAMINATION TO THE ASSESSEE. HOWEVER, THE AO HAS EX PRESSED HIS INABILITY TO ALLOW THE ASSESSEE FOR CROSS EXAMINATION OF THE WITNESSES DUE TO THE REASON THAT THE WITNESSES BELONG TO KOLKATA AND IT IS NOT POSSIBLE FOR AO TO MAKE SUCH ARRANGEMENT. THE LD. CIT(A) HAS FINALL Y DENIED THE CROSS EXAMINATION TO THE ASSESSEE BY GIVING HIS FINDING I N PARA 5.11 AT PAGE 188 ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 33 ALREADY REPRODUCED IN THE EARLIER PART OF THIS ORDE R 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 E XAMINATION OF SUCH ACCOMMODATION ENTRY PROVIDED BY THOUSANDS OF BENEFI CIARIES ACROSS INDIA IS NEITHER PRACTICABLE NOR VIABLE AND THEREFORE UNC ALLED FOR. WE FIND THAT THE ASSESSEE HAS DEMANDED THE CROSS EXAMINATION ONL Y IN RESPECT OF THE ALLEGED TRANSACTIONS OF LOANS AND NOT FOR THE ENTIR E BUSINESS OF THE ENTRY PROVIDERS PROVIDING THE BOGUS ENTRIES. UNDISPUTEDLY , THE STATEMENT OF SHRI ANAND SHARMA WAS RECORDED BY THE INVESTIGATION WING KOLKATA AT THE BACK OF THE ASSESSEE, EVEN THE PROCEEDINGS BY THE I NVESTIGATION WERE CONDUCTED AT THE BACK OF THE ASSESSEE, THEREFORE, T HE SAID STATEMENT OF SHRI ANAND SHARMA CANNOT BE THE SOLE BASIS OF ASSES SMENT WITHOUT GIVING AN OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE . THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES VS. CCE (SUPRA) WHILE DEALING WITH THE ISSUE OF VIOLATION OF PRINCI PLES 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 :- 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 TW O WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE S TATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NO T GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID P LEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE T RIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTE NABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DE ALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSS ESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX- FACTORY PRICES REMAIN ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 34 STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS W ORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOS E DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. 7. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS- EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS WITNESSES AT THE PRICE WHICH IS MENTIONED I N THE PRICE LIST ITSELF COULD BE THE SUBJECT-MATTER OF CROSS-EXAMINATION. T HEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT- MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARK S AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCC ASION WHEN THE MATTER CAME UP BEFORE THIS COURT IN CCE V. ANDAMAN TIMBER INDUSTRIES LTD., ORDER DATED 17.3.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. 8. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MA TERIAL 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. ONCE THE ASSESSEE HAS DISPUTED THE CORRECTNESS OF T HE STATEMENT AND WANTED TO CROSS EXAMINE THE WITNESS WHICH WAS NOT G IVEN BY THE AO AS WELL AS LD. CIT (A), THEN THE ORDERS PASSED BASED O N SUCH STATEMENT ARE NOT SUSTAINABLE IN LAW. THE HONBLE DELHI HIGH COUR T IN CASE OF CIT VS. ASHWANI GUPTA, 322 ITR 396 (DELHI) WHILE DEALING WI TH THE ISSUE OF NOT PROVIDING THE OPPORTUNITY TO CROSS EXAMINE THE WITN ESSES HAS HELD IN PARA 5 TO 7 AS UNDER :- 5. SECONDLY, IN FACT, A RECTIFICATION APPLICATION BEI NG MA 264/DELHI/2008 UNDER SECTION 254(2) OF THE INCOME-TAX ACT, 1961 HA D BEEN FILED BY THE REVENUE BEFORE THE SAID TRIBUNAL. IN THAT ALSO, IN PARAGRAPH ( G ) OF THE MISCELLANEOUS APPLICATION, THE REVENUE HAD SUBMITTE D AS UNDER: '( G )BECAUSE, ALTHOUGH FINDINGS OF THE TRIBUNAL ARE FACTUALLY CORRECT BUT THE DECISION OF THE TRIBUNAL IS NOT ACC EPTABLE BECAUSE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 35 VIOLATION OF THE CANONS OF NATURAL JUSTICE IN ITSEL F IS NOT FATAL ENOUGH SO AS TO JEOPARDIZE THE ENTIRE PROCEEDINGS. IN THE INTEREST OF JUSTICE, THE TRIBUNAL COULD HAVE SET ASIDE THE ASSE SSMENT ORDER WITH THE LIMITED PURPOSE OF OFFERING ASSESSEE AN OPPORTU NITY 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 A LSO THE POSITION THAT THERE HAD BEEN A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. HOWEVER, THE REVENUE'S PLEA WAS THAT THE VIOLATION OF PRINCIPLES OF NATURAL JUSTICE WAS NOT FATAL SO AS TO JEOPARDIZE THE ENTIRE PROCEEDING S. THE SAID MISCELLANEOUS APPLICATION WAS ALSO REJECTED BY THE TRIBUNAL BY IT S 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 INAS MUCH AS SEIZED MATERIAL IS NOT PROVIDED TO AN ASSESSEE NOR IS CROSS-EXAMINATIO N OF THE PERSON ON WHOSE STATEMENT THE ASSESSING OFFICER RELIES UPON, GRANTED, THEN, SUCH DEFICIENCIES WOULD AMOUNT TO A DENIAL OF OPPORTUNIT Y AND, CONSEQUENTLY, WOULD BE FATAL TO THE PROCEEDINGS. FOLLOWING APPROA CH ADOPTED BY US IN SMC SHARE BROKERS LTD.'S CASE ( SUPRA ), WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED ORDER. NO SUBSTANTIAL QUESTION OF LAW 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 MA TERIAL IS NOT PROVIDED TO THE ASSESSEE NOR IS CROSS EXAMINATION OF THE PER SON ON WHOSE STATEMENT THE AO RELIED UPON, GRANTED, THEN, SUCH D EFICIENCIES WOULD AMOUNT TO DENIAL OF OPPORTUNITY AND CONSEQUENTLY WO ULD BE FATAL TO THE PROCEEDINGS. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF H.R. MEHTA VS. ACIT, 387 ITR 561 (BOMBAY) HAS ALSO CONSIDERED THE ISSUE OF NOT PROVIDING OPPORTUNITY OF CROSS EXAMINATION IN PARA 11 TO 17 AS UNDER :- 11. WE HAVE THEREFORE PROCEEDED TO HEAR AND DECIDE THE MATTER UNASSISTED BY THE REVENUE. IN THE COURSE OF HIS SUBMISSIONS MR . 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 YEA RS IT CANNOT BE HELD THAT HE IS NON EXISTENT AND THAT THE ASSESSEE HAD DISCHA RGED HIS PRIMARY ONUS BY IDENTIFYING THE SOURCE OF THE AMOUNT PAID. THE COUR T OBSERVED THAT ONCE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 36 THE PRIMARY ONUS IS DISCHARGED, THE ONUS SHIFTED TO THE REVENUE TO VERIFY 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 SHOULD NOT BE PLACED UPON THE RACK AND CALLED UPON TO EXPLAIN NOT ONLY MERELY, THE ORIGIN AND SOURCE OF HIS CAPITAL CONTRIBUTION BUT T HE ORIGIN OF ORIGIN AND THE SOURCE OF SOURCE AS WELL. IN YET ANOTHER CASE O F BAHRI BROTHERS (P) LTD. ( SUPRA ) THE DIVISION BENCH OF PATNA HIGH COURT OBSERVED T HAT WHERE THE ASSESSEE UPON WHOM THE INITIAL BURDEN LIES, PRO DUCES BANK CERTIFICATE TO ESTABLISH THAT THE TRANSACTION WAS CARRIED OUT T HROUGH ACCOUNT PAYEE CHEQUES THUS DISCLOSING THE IDENTITY OF THE CREDITO RS AS ALSO THE SOURCE OF INCOME, THE BURDEN SHIFTS ON TO THE DEPARTMENT AND THE DEPARTMENT CANNOT ADD THE CASH CREDITS TO HIS INCOME FROM UNDISCLOSED SOURCE. 12. THE HON'BLE SUPREME COURT IN NEMI CHAND KOTHARI ( SUPRA ) OBSERVED THAT IN ORDER TO ESTABLISH THE RECEIPT OF A CASH CR EDIT, THE ASSESSEE MUST SATISFY THREE CONDITIONS I.E. IDENTITY OF THE CREDI TOR, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. I N THE INSTANT CASE BY VIRTUE OF THE FACT THAT THE TRANSACTION WAS COMPLET ED BY CHEQUE PAYMENTS, THE APPELLANT HAS CONTENDED THAT IT HAD SATISFIED A LL 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 APPRECI ATE AS TO WHY IT WAS NOT DONE AND WHY THE MATTER WAS NOT PROBED FURTHER BY T HE REVENUE. 14. THE DELHI HIGH COURT IN ASHWANI GUPTA ( SUPRA )HELD THAT ONCE THERE IS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IN ASMUCH 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 O FFICER RELIED, IT WOULD AMOUNT TO DEFICIENCY, AMOUNTING TO A DENIAL O F OPPORTUNITY AND THEREFORE VIOLATION OF PRINCIPLES OF NATURAL JUSTIC E. IN THAT CASE CIT (A) HAD DELETED ADDITION MADE BY THE ASSESSING OFFICER NEIT HER SINCE THE ASSESSING OFFICER HAD FAILED TO PROVIDE COPIES OF SEIZED MATE RIAL TO THE ASSESSEE NOR HAD HE ALLOWED THE ASSESSEE TO CROSS-EXAMINE THE PA RTY CONCERNED. THE DIVISION BENCH HELD THAT ONCE THERE IS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SEIZED MATERIAL WAS NOT PROVIDE D TO THE ASSESSEE NOR WAS GIVEN OPPORTUNITY OF CROSS EXAMINING THE PERSON WHOSE STATEMENT WAS BEING USED AGAINST THE ASSESSEE THE ORDER COULD NOT BE SUSTAINED. 15. IN ANDAMAN TIMBER INDUSTRIES ( SUPRA ) THE SUPREME COURT FOUND THAT THE ADJUDICATING AUTHORITY HAD NOT GRANTED AN OPPOR TUNITY TO THE ASSESSEE TO CROSS EXAMINE THE WITNESSES AND THE TRIBUNAL MER ELY OBSERVED THAT THE CROSS EXAMINATION OF THE DEALERS IN THAT CASE, COUL D NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT OTHERWISE BE IN POSSES SION OF THE APPELLANT- ASSESSEE. THE SUPREME COURT SET ASIDE THE IMPUGNED ORDER AND OBSERVED THAT IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO P RESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS EXAMINATIO N AND MAKE THE REMARKS SUCH AS WAS DONE IN THAT CASE. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 37 16. IN THE INSTANT CASE ALTHOUGH THE APPELLANT ASSESSE E HAS CALLED UPON US TO DRAW AN INFERENCE THAT THE BURDEN SHIFTED TO THE REVENUE IN THE PRESENT CASE ONCE IT WAS ESTABLISHED THAT THE PAYMENTS WERE MADE AND REPAID BY CHEQUE WE NEED NOT HASTEN AND ADOPT THAT VIEW AFTER HAVING GIVEN OUR THOUGHT TO VARIOUS ISSUES RAISED AND THE DECISIONS CITED BY MR. TRALSHAWALLA AND FINDING THAT ON A VERY FUNDAMENTAL ASPECT, THE REVENUE WAS NOT JUSTIFIED IN MAKING ADDITION AT THE TIME OF REASSESSMENT WITHOUT HAVING FIRST GIVEN THE ASSESSEE AN OPPORTUNITY TO C ROSS EXAMINE THE DEPONENT ON THE STATEMENTS RELIED UPON BY THE ACIT. QUITE APART FROM DENIAL OF AN OPPORTUNITY OF CROSS EXAMINATION, THE REVENUE DID NOT EVEN PROVIDE THE MATERIAL ON THE BASIS OF WHICH THE DEPA RTMENT 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 AGAINS T HIM BY PROVIDING THE MATERIAL SOUGHT TO BE USED AGAINST ASSESSEE IN ARRI VING BEFORE PASSING THE ORDER OF REASSESSMENT. THIS NOT HAVING BEEN DONE, T HE DENIAL OF SUCH OPPORTUNITY GOES TO ROOT OF THE MATTER AND STRIKES AT THE VERY FOUNDATION OF THE REASSESSMENT AND THEREFORE RENDERS THE ORDERS P ASSED BY THE CIT (A) AND THE TRIBUNAL VULNERABLE. IN OUR VIEW THE ASSESS EE WAS BOUND TO BE PROVIDED WITH THE MATERIAL USED AGAINST HIM APART F ROM BEING PERMITTING HIM TO CROSS EXAMINE THE DEPONENTS. DESPITE THE REQ UEST DATED 15TH FEBRUARY, 1996 SEEKING AN OPPORTUNITY TO CROSS EXAM INE THE DEPONENT AND FURNISH THE ASSESSEE WITH COPIES OF STATEMENT AND D ISCLOSE MATERIAL, THESE WERE DENIED TO HIM. IN THIS VIEW OF THE MATTER WE A RE INCLINED TO ALLOW THE APPEAL ON THIS VERY ISSUE. THUS THE DENIAL OF OPPORTUNITY TO CROSS EXAMINE WAS CONSIDERED BY THE HONBLE HIGH COURT WHICH GOES TO THE ROOT OF THE MA TTER AND STRIKES AT THE VERY FOUNDATION OF THE ASSESSMENT AND, THEREFOR E, RENDERS 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 CONSIDERED THIS ISSUE IN PARA 2.8 T O 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 IMPUGNED ASS ESSMENT YEAR AND NOT ACCEPTING THE SAID LOAN TRANSACTION AS A GENUINE TRANSACTION BY THE ASSESSING OFFICER AND THE RESULT ANT ADDITION MADE UNDER SECTION 68 OF THE ACT. UNDISPUTEDLY, THE PRIMARY ONUS TO ESTABLISH GENUINENESS OF THE LOAN TRANSACTI ON IS ON THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 38 ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE HAS PRO VIDED THE NECESSARY EXPLANATION, FURNISHED DOCUMENTARY EVIDEN CE IN TERMS OF TAX FILINGS, AFFIDAVITS AND CONFIRMATION O F THE DIRECTORS, BANK STATEMENTS OF THE LENDER, BALANCE SHEET OF THE LENDER COMPANY, AND AN INDEPENDENT CONFIRMATION HAS ALSO B EEN OBTAINED BY THE ASSESSING OFFICER TO SATISFY THE CA RDINAL TEST OF IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE L OAN TRANSACTION. HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING IN RESPECT OF SUCH EXPLANATION, DOCUMENTARY EVIDENCE AS WELL AS INDEPENDENT CONFIRMATION. APPARENTLY, THE R EASON FOR NOT ACCEPTING THE SAME IS THAT THE ASSESSING OFFICE R WAS IN RECEIPT OF CERTAIN INFORMATION FROM THE INVESTIGATI ON WING OF THE TAX DEPARTMENT AS PER WHICH THE TRANSACTION UNDER CONSIDERATION IS A BOGUS LOAN TRANSACTION. THE SAID INFORMATION RECEIVED FROM THE INVESTIGATION WING THUS OVERWEIGH ED THE MIND OF THE ASSESSING OFFICER. THE ASSESSING OFFICER STA TED THAT THE PRIMARY ONUS IS ON THE ASSESSEE TO ESTABLISH THE GE NUINENESS OF THE TRANSACTION CLAIMED BY IT AND IF THE INVESTIGAT ION DONE BY THE DEPARTMENT LEADS TO DOUBT REGARDING THE GENUINENESS OF THE TRANSACTIONS, IT IS INCUMBENT ON THE ASSESSEE TO PR ODUCE THE PARTIES ALONGWITH NECESSARY DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN RESPONSE, THE AS SESSEE SUBMITTED THAT SHRI BHANWARLAL JAIN IS NOT KNOWN TO HIM AND REGARDING VARIOUS INCRIMINATING DOCUMENTARY EVIDENC ES SEIZED DURING THE COURSE OF SEARCH AND STATEMENTS RECORDED OF SHRI BHANWARLAL JAIN AND OTHER PERSONS, HE SPECIFICALLY REQUESTED THE AO TO PROVIDE COPIES OF SUCH INCRIMINATING DOCU MENTS AND STATEMENT OF ALL VARIOUS PERSONS RECORDED IN THIS R EGARD AND PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXA MINE SUCH PERSONS. HOWEVER, THE AO DIDNT PROVIDE TO THE ASSE SSEE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENTS OF V ARIOUS PERSONS RECORDED AND ALLOW THE CROSS-EXAMINATION OF ANY OF THESE PERSONS. WHILE DOING SO, THE AO STATED THAT IN HIS STATEMENTS, BHANWARLAL JAIN HAD DESCRIBED THAT THEY ARE INDULGED IN PROVIDING ACCOMMODATION ENTRIES OF BOGU S UNSECURED LOANS AND ADVANCES THROUGH VARIOUS BENAMI CONCERNS (70) OPERATED AND MANAGED BY THEM. THIS AD MISSION AUTOMATICALLY MAKES ALL THE TRANSACTIONS DONE BY TH EM AS MERE PAPER TRANSACTIONS AND IN THESE CIRCUMSTANCES, FURT HER AS PER THE INFORMATION NAME AND ADDRESS OF ASSESSEE AND TH E BENAMI CONCERN THROUGH WHICH ACCOMMODATION ENTRY OF UNSECU RED LOANS WAS PROVIDED IS APPEARING IN THE LIST OF BENE FICIARIES TO WHOM THE SAID GROUP HAS PROVIDED. THIS ADMISSION IS SUFFICIENT TO REJECT THE CONTENTIONS OF THE ASSESSEE. FURTHER , REGARDING CROSS EXAMINATION, THE AO STATED THAT THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AND IT DEPENDS UPON THE CIRCUMSTANCES OF EACH CASE AND ALSO ON THE STATUTE CONCERNED. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 39 IN THE PRESENT CASE, NO SUCH CIRCUMSTANCES ARE WARR ANTED AS IN THE LIST OF BENEFICIARIES TO WHOM ACCOMMODATION ENT RIES WERE PROVIDED BY THE SAID GROUP CATEGORICALLY CONTAINS T HE NAME AND ADDRESS OF THE ASSESSEE. FURTHER THE GROUP HAS CATE GORICALLY ADMITTED TO PROVIDING OF ACCOMMODATION ENTRIES OF U NSECURED LOANS THROUGH VARIOUS BENAMI CONCERNS. THE AO FURT HER RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE C ASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206(SC) AND HONBLE RAJASTHAN HIGH COURT IN CASE OF RAMESHWARLAL MALI V S. 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 HAVE GATHERED A S A RESULT OF HIS PRIVATE ENQUIRIES, HE MUST DISCLOSE ALL SUCH MA TERIAL TO THE ASSESSEE AND ALSO ALLOW THE CROSS EXAMINATION AND I F THIS IS NOT DONE, THE PRINCIPLES OF NATURAL JUSTICE STAND VIOLA TED. 2.9 IN LIGHT OF ABOVE DISCUSSIONS, IN OUR VIEW, TH E CRUX OF THE ISSUE AT HAND IS THAT WHETHER THE PRINCIPLE OF NATURAL JU STICE STAND VIOLATED IN THE INSTANT CASE. IN OTHER WORDS, WHERE THE AO DOESNT WANT TO ACCEPT THE EXPLANATION OF THE ASSES SEE AND THE DOCUMENTATION FURNISHED REGARDING THE GENUINENESS O F THE LOAN TRANSACTION AND INSTEAD WANTS TO RELY UPON THE INFO RMATION INDEPENDENTLY RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT IN RESPECT OF INVESTIGATION CARRIED OUT AT A THIRD PARTY, CAN THE SAID INFORMATION BE USED AGAINST THE ASSESSEE WITHOUT SHARING SUCH INFORMATION WITH THE ASSESSEE AND ALLOWING AN OPPORTUNITY TO THE ASSESSEE TO EXAMINE SUCH INFORMATION AND EXPLAIN ITS POSITION ESPECIALLY 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 AND RIGHTLY STA TED 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 BOUN D TO RELY ON EVIDENCE PRODUCED BY THE ASSESSEE AS HE CONSIDERS T O BE FALSE, YET IF HE PROPOSES TO MAKE AN ESTIMATE IN DISREGARD OF THAT EVIDENCE, HE SHOULD IN FAIRNESS DISCLOSE TO THE ASS ESSEE THE MATERIAL ON WHICH HE IS GOING TO FIND THAT ESTIMATE ; AND THAT IN CASE HE PROPOSES TO USE AGAINST THE ASSESSEE THE RE SULT OF ANY PRIVATE INQUIRIES MADE BY HIM, HE MUST COMMUNICATE TO THE ASSESSEE THE SUBSTANCE OF THE INFORMATION SO PROPOS ED TO BE UTILIZED TO SUCH AN EXTENT AS TO PUT THE ASSESSEE I N POSSESSION OF FULL PARTICULARS OF THE CASE HE IS EXPECTED TO MEET AND THAT HE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 40 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 FUNDAMENTAL RULES OF JUST ICE IN REACHING ITS CONCLUSIONS. FIRSTLY, IT DID NOT DISCL OSE TO THE ASSESSEE WHAT INFORMATION HAD BEEN SUPPLIED TO IT B Y THE DEPARTMENTAL REPRESENTATIVE. NEXT, IT DID NOT GIVE ANY OPPORTUNITY TO THE COMPANY TO REBUT THE MATERIAL FU RNISHED TO IT BY HIM, AND LASTLY, IT DECLINED TO TAKE ALL THE MAT ERIAL THAT THE ASSESSEE WANTED TO PRODUCE IN SUPPORT OF ITS CASE. THE RESULT IS THAT THE ASSESSEE 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 B OUND BY ANY TECHNICAL RULES OF THE LAW OF EVIDENCE. IT IS O PEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY P RIVATE ENQUIRY. BUT, IF HE DESIRES TO USE THE MATERIAL SO COLLECTED, THE ASSESSEE MUST BE INFORMED ABOUT THE MATERIAL AND GI VEN 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 DIS CLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RENDER THEIR EXP LANATION 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 OF THE TR IBUNAL THAT THE AMOUNT OF RS. 1,07,350 SAID TO HAVE BEEN REMITT ED BY TILOKCHAND FROM MADRAS REPRESENTED THE UNDISCLOSED INCOME OF THE ASSESSEE. THE ONLY EVIDENCE ON WHICH THE TRI BUNAL COULD RELY FOR THE PURPOSE OF ARRIVING AT THIS FIND ING WAS THE LETTER, DATED 18-2-1955 SAID TO HAVE BEEN ADDRESSED BY THE MANAGER OF THE BANK TO THE ITO. NOW IT IS DIFFICULT TO SEE HOW THIS LETTER COULD AT ALL BE RELIED UPON BY THE TRIB UNAL AS A MATERIAL PIECE OF EVIDENCE SUPPORTIVE OF ITS FINDIN G. IN THE FIRST PLACE, THIS LETTER WAS NOT DISCLOSED TO THE ASSESSE E 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 ASS ESSEE OR GIVE A COPY OF IT TO THE ASSESSEE. THE SAME POSITION OBT AINED ALSO BEFORE THE TRIBUNAL AND THE HIGH COURT AND IT WAS O NLY WHEN A SUPPLEMENTAL STATEMENT OF THE CASE WAS CALLED FOR BY THIS COURT BY ITS ORDER, DATED 16-8-1979 THAT, ACCORDING TO THE ITO, THIS LETTER WAS TRACED BY HIM AND EVEN THEN IT WAS NOT SHOWN BY HIM TO THE ASSESSEE BUT IT WAS FORWARDED T O THE TRIBUNAL AND IT WAS FOR THE FIRST TIME AT THE HEARI NG BEFORE THE TRIBUNAL IN REGARD TO THE PREPARATION OF THE SUPPLE MENTAL STATEMENT OF THE CASE THAT THIS LETTER WAS SHOWN TO THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 41 ASSESSEE. IT WILL, THEREFORE, BE SEEN THAT, EVEN IF WE ASSUME THAT THIS LETTER WAS IN FACT ADDRESSED BY THE MANAG ER OF THE BANK TO THE ITO, NO RELIANCE COULD BE PLACED UPON I T, SINCE IT WAS NOT SHOWN TO THE ASSESSEE UNTIL AT THE STAGE OF PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CASE AND NO OP PORTUNITY TO CROSS EXAMINE THE MANAGER OF THE BANK COULD IN T HE CIRCUMSTANCES BE SOUGHT OR AVAILED OF BY THE ASSESS EE. IT IS TRUE THAT THE PROCEEDINGS UNDER THE INCOME-TAX LAW ARE NOT GOVERNED BY THE STRICT RULES OF EVIDENCE AND, THERE FORE, 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 AS EVIDENCE. BUT BEFORE THE INCOME-TAX AUTH ORITIES COULD RELY UPON IT, THEY WERE BOUND TO PRODUCE IT B EFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTUNITY TO CRO SS EXAMINE THE MANAGER OF THE BANK WITH REFERENCE TO THE STATE MENTS MADE BY HIM. 2.11 IN LIGHT OF ABOVE PROPOSITION IN LAW AND ESPE CIALLY TAKING INTO CONSIDERATION THE DECISION OF THE HONBLE SUPREME C OURT IN CASE OF C. VASANTLAL & CO. (SUPRA) RELIED UPON BY T HE REVENUE AND WHICH ACTUALLY SUPPORTS THE CASE OF THE ASSESSE E, IN THE INSTANT CASE, THE ASSESSMENT WAS COMPLETED BY THE A O RELYING SOLELY ON THE INFORMATION RECEIVED FROM THE INVESTI GATION WING, STATEMENT RECORDED U/S 132(4) OF SHRI BHANWARLAL JA IN AND OTHERS, AND VARIOUS INCRIMINATING DOCUMENTARY EVIDE NCE FOUND FROM THE SEARCH AND SEIZURE CARRIED OUT BY INVESTIG ATION WING, MUMBAI ON THE SHRI BHANWARLAL JAIN GROUP ON 03.10.2 013. IT REMAINS UNDISPUTED THAT THE ASSESSEE WAS NEVER PROV IDED COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENTS OF S HRI BHANWARLAL JAIN AND VARIOUS PERSONS AND AN OPPORTUN ITY TO CROSS EXAMINE SUCH PERSONS THOUGH HE SPECIFICALLY A SKED FOR SUCH DOCUMENTS AND CROSS EXAMINATION. ON THE OTHER HAND, THE BURDEN WAS SOUGHT TO BE SHIFTED ON THE ITA NO. 159/ JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHARI, J AIPUR 21 ASSESSEE BY THE A.O. IT IS CLEAR CASE WHERE THE PRI NCIPLE OF NATURAL JUSTICE STAND VIOLATED AND THE ADDITIONS MA DE UNDER SECTION 68 THEREFORE ARE UNSUSTAINABLE IN THE EYE O F LAW AND WE HEREBY DELETE THE SAME. THE ORDER OF THE LD CIT(A) IS ACCORDINGLY CONFIRMED AND THE GROUND OF THE REVENUE IS DISMISSED. THUS WHEN THE ASSESSEE HAS SPECIFICALLY ASKED FOR C ROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON BY THE AO, THEN THE DENIAL OF THE OPPORTUNITY TO CROSS EXAMINE WOULD CE RTAINLY IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND CONSEQUENTLY REND ERS THE ASSESSMENT ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 42 ORDER BASED ON SUCH STATEMENT AS NOT SUSTAINABLE IN LAW. HENCE IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHERE TH E ASSESSEE HAS REPEATEDLY REQUESTED AND DEMANDED THE CROSS EXAMINA TION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON BY THE AO IN 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) DESPIT E THE FACT THAT THE ASSESSEE WAS READY TO BEAR THE COST OF THE CROSS EX AMINATION OF THE WITNESSES IS A GROSS VIOLATION OF PRINCIPLES OF NAT URAL JUSTICE. THUS THE ADDITIONS MADE BY THE AO ON THE BASIS OF SUCH STATE MENT WITHOUT ANY TANGIBLE MATERIAL IS NOT SUSTAINABLE IN LAW AND LIA BLE TO BE DELETED. ACCORDINGLY THE ADDITION MADE BY THE AO IS ALSO DEL ETED ON MERITS APART FROM THE LEGAL ISSUE DECIDED IN FAVOUR OF THE ASSES SEE. THE FACTS AND CIRCUMSTANCES IN BOTH THE CASES ARE I DENTICAL AND THEREFORE, FOLLOWING THE EARLIER ORDER OF THIS TRIB UNAL IN CASE OF KOTA DALL MILL, WE HOLD THAT THE ADDITION MADE BY THE AS SESSING OFFICER ON THE BASIS OF THE INFORMATION/REPORT OF THE DDIT (IN VESTIGATION), KOLKATA AS WELL AS THE STATEMENTS OF SHRI ANAND SHA RMA AND SHRI ANKIT BAGRI WITHOUT GIVING AN OPPORTUNITY OF CROSS EXAMINATION IS NOT SUSTAINABLE AS THE ADDITION IS SOLELY BASED ON THE STATEMENT AND INFORMATION WHICH IS NOTHING BUT SUMMARY OF STATEME NTS RECORDED BY THE DDIT(INV), KOLKATA. HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. GROUND NO. 2 OF THE APPEAL IS D ECIDED IN FAVOUR OF THE ASSESSEE. FOLLOWING THE EARLIER ORDERS OF THIS TRIBUNAL, THIS I SSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 43 9. GROUNDS NO. 3 TO 5 OF THE APPEAL ARE REGARDING T HE ADDITION MADE U/S 68 OF THE ACT IN RESPECT OF THE UNSECURED LOAN AND SHARE CAPITAL RECEIVED FROM M/S JALSAGAR COMMERCE PVT. LTD. WE HA VE HEARD THE LD AR OF THE ASSESSEE AS WELL AS THE LD. CIT-DR AND CONSID ERED THE RELEVANT MATERIAL ON RECORD. THE ISSUE OF ADDITION MADE ON AC COUNT OF UNSECURED LOAN TAKEN FROM M/S JALSAGAR COMMERCE PVT. LTD. WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF KOTA DALL MILL VS DCIT (SUPR A) VIDE ORDER DATED 31/12/2018 AND THEREAFTER IN THE CASE OF M/S MULTIM ETALS LIMITED VS. DCIT (SUPRA) VIDE ORDER DATED 29/01/2019 AS UNDER: 25. WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WEL L AS THE LD. CIT-DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ISSUE OF ADDITION MADE ON ACCOUNT OF UNSECURED LOAN TAKEN FR OM M/S JALSAGAR COMMERCE PVT. LTD. WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF KOTA DALL MILL VS DCIT (SUPRA) VIDE ORDER D ATED 31/12/2018 AND THEREAFTER IN THE CASE OF M/S MULTIMETALS LIMIT ED VS. DCIT (SUPRA) VIDE ORDER DATED 29/01/2019 WHEREIN THE TRI BUNAL HAS CONSIDERED THIS ISSUE IN PARA 18 AS UNDER: 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WE LL AS RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER HAS MADE THE ADDITION S IN RESPECT OF THE UNSECURED LOAN FROM M/S JALSAGAR COMMERCE PVT. LTD. AS WELL AS M/S TEAC CONSULTANTS PVT. LTD. BY TREATING THE SAME AS ACCOM MODATION ENTRIES. THE ASSESSING OFFICER FOR THE A.Y. 2010-11 HAS RELIED U PON THE STATEMENT OF SHRI ANAND SHAMA WHICH WAS RECORDED BY THE KOLKATA INVESTIGATION WING AND THEN FORWARDED TO THE ASSESSING OFFICER. ON APP EAL, THE LD. CIT(A) DELETED THE ADDITION IN RESPECT OF M/S TEAC CONSULT ANTS PVT. LTD. BY NOTING ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 44 THE FACT THAT THE ASSESSING OFFICER WAS NOT EVEN HA VING ANY STATEMENT OF ALLEGED ENTRY OPERATOR CONTROLLING M/S TEAC CONSULT ANTS PVT. LTD.. THE LD. CIT(A) CONFIRMED THE ADDITION OF UNSECURED LOAN FRO M M/S JALSAGAR COMMERCE PVT. LTD. BECAUSE THE ASSESSING OFFICER WA S HAVING THE STATEMENT OF SHRI ANAND SHARMA AND ACCEPTED THAT M/ S JALSAGAR COMMERCE PVT. LTD. IS BENEFICIARY OF ACCOMMODATION ENTRIES. AT THE OUTSET WE NOTE THAT THAT THE IDENTICAL ISSUE OF UNSECURED LOAN TAKEN FROM THE M/S JALSAGAR COMMERCE PVT. LTD. WAS CONSIDERED BY U S IN CASE OF KOTA DALL MILL (SUPRA) IN PARA 11 AS UNDER: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WE LL AS THE RELEVANT MATERIAL ON RECORD. FOR THE ASSESSMENT YEAR 2010-11, THE AS SESSEE HAS CHALLENGED THE ADDITION SUSTAINED BY LD. CIT (A) IN RESPECT OF UNSECURED LOAN FROM M/S. JALSAGAR COMMERCE PVT. LTD. THE OTHER ADDITIO NS MADE BY THE AO ON ACCOUNT OF UNSECURED LOANS AS WELL AS PARTNERS CAP ITAL FOR THE ASSESSMENT YEAR 2010-11 WERE DELETED BY THE LD. CIT (A) ON THE GROUND THAT THE AO WAS NOT HAVING IN HIS POSSESSION EVEN T HE STATEMENT OF THE CONCERNED PERSONS IN SUPPORT OF HIS FINDING THAT TH E ALLEGED LOAN AND PARTNERS CAPITAL IS NOTHING BUT BOGUS ACCOMMODATIO N ENTRIES. THEREFORE, THE REVENUE HAS CHALLENGED THAT PART OF THE ORDER I N THE CROSS APPEAL. THE LD. A/R OF THE ASSESSEE HAS POINTED OUT THAT FO R THE ASSESSMENT YEAR 2010-11 THERE WAS NO LOAN FROM THE COMPANY CONTROLL ED BY SHRI ANAND SHARMA, M/S. ROYAL CRYSTAL DEALERS PVT. LTD. BUT TH E ASSESSEE TOOK THE LOAN FROM M/S. JALSAGAR COMMERCE PVT. LTD. WHICH IS NOT THE COMPANY OWNED OR CONTROLLED BY SHRI ANAND SHARMA. THE LD. CIT (A) HAS SUSTAINED THE ADDITION IN RESPECT OF LOAN FROM M/S. JALSAGAR COMMERCE PVT. LTD. IN PARA 5.1 TO 5.12 AS UNDER :- 5.1 IN THIS RESPECT, I FIND THAT SHRI ANAND SHARMA WHOSE STATEMENT IS REPRODUCED AT PAGE 56 OF THE ASSESSMENT ORDER HAS C LEARLY ACCEPTED THAT M/S JALSAGAR COMMERCE PVT. LTD. IS BENEFICIARY COMP ANY LIKE KOTA DAL ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 45 MILL AND BOTH OF THESE WERE PROVIDED BOGUS LOANS/AD VANCES BY ROYAL CRYSTAL DEALER PVT. LTD WHICH IS A PAPER COMPANY CO NTROLLED BY HIM. HE FURTHER STATED THAT THE BENEFICIARY PARTY SUCH I.E. M/S JALSAGAR COMMERCE PVT. LTD. GAVE HIM CASH IN LIEU OF WHICH CHEQUES WA S GIVEN BY HIM FOR SOME COMMISSION INCOME. HE ALSO ADMITTED THAT SOME PAPER COMPANIES HAVE SOLD TO BENEFICIARY PARTIES. THOUGH, IN THE IN ITIAL REPORT DATED 28.11.2017, M/S JALSAGAR COMMERCE PVT. LTD. WAS TRE ATED A PARTY IN RAJASTHAN, IN LATER REPORT DATED 06.12.2017 THE ENT RY OPERATOR SHRI ANAND SHARMA WAS LINKED WITH M/S JALSAGAR COMMERCE PVT. L TD. AS PER THE DATA BASE PREPARED BY DIRECTORATE OF INVESTIGATION KOLKA TA THE RELEVANT PART OF THE SAID STATEMENT AS REPRODUCED ON PAGE NO.57 O F THE ASSESSMENT ORDER IS AS UNDER: - ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 46 5.2 HOWEVER, IT IS THE SUBMISSION OF THE APPELLANT THAT NO NOTICE UNDER SECTION 131 OR 133(6) OF THE ACT WAS ISSUED TO THIS COMPANY, EITHER BY THE LD. AO OR BY THE CONCERNED AO OR BY THE DDIT (INV.) KOLKAT A. ALSO, ON BARE PERUSAL OF THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE NAME O F THE SAID COMPANIES DOES NOT APPEAR IN THE STATEMENT OF ANY OF THE ENTRY OPERATO RS AS REPRODUCED BY THE AO IN THE ASSESSMENT ORDER. HOWEVER, THE RELEVANT DOCUMEN TS INCLUDING THE LEDGER A/C SHOWING THE TRANSACTIONS WITH APPELLANT COMPANY, SO URCE SHEET OF FUNDS OF TRANSACTIONS MADE WITH THE APPELLANT, COPY OF BANK STATEMENT SHOWING THE TRANSACTIONS, ETC. STAND SUBMITTED FOR CONFIRMATION OF THE TRANSACTION OF LOAN WITH THE APPELLANT. 5.3 IN MY CONSIDERED VIEW, AS THE NAME OF M/S JALSA GAR COMMERCE PVT. LTD. IS CLEARLY MENTIONED AS BENEFICIARY COMPANY IN THE STA TEMENT OF SHRI ANAND SHARMA, AND SHRI ANAND SHARMA IS MENTIONED THAT SOME OF SUC H PAPER COMPANY ARE SOLD TO BENEFICIARY PARTY, IN VIEW OF FACT THAT NAME OF M/S JALSAGAR COMMERCE PVT. LTD. IS MENTIONED IN THE REPORTS AS DISCUSSED IN PA RA 4.4.7 ABOVE, A GENUINE DOUBT IS RAISED ON THE IDENTITY AND GENUINENESS OF COMPAN Y. FURTHER, THE ADVERSE FACTS POINTED OUT IN THE REPORTS AS DISCUSSED IN PARA 4.4 .7 ABOVE FOR ESTABLISHED BACKGROUND OF ALL THESE SHARE HOLDERS / DEPOSITORS BEING THE PUPPET IN THE HAND OF ONE OR OTHER ACCOMMODATION ENTRY PROVIDERS, LAYERIN G THE TRANSACTION BY CHEQUE DEPOSIT ON THE SAME DAY OR PRECEDING DAY OF SHARE A PPLICATION / DEPOSITS, THE ASSERTIONS OF THE AO FOR NO-CREDITWORTHINESS OR IN- ADEQUATE CREDITWORTHINESS OF THE SO-CALLED SHAREHOLDERS / DEPOSITORS HOLDS FIELD S. DURING THE APPELLATE PROCEEDING BEFORE ME, THOUGH PAPER BOOKS FOR RELEVA NT AY AND COMMON PAPER BOOKS HAVE BEEN SUBMITTED, THE SAME DOES NOT ADDUCE ANY EVIDENCE TO REBUT THE ADVERSE FACTUAL FINDING MADE BY THE AO IN THE ASSES SMENT ORDER AS MENTIONED BY ME IN PARA 4.1 ABOVE AND CATEGORICALLY MENTIONED IN THE REPORTS AS DISCUSSED IN PARA 4.4.7 ABOVE. UNDER THESE ADVERSE BACKGROUND OF APPELLANT EMPLOYING MODUS- OPERENDI OF RESORTING ACCOMMODATION ENTRY PROVIDER TO BUILD-UP SHARE CAPITAL / UNSECURED LOANS BY FOUL MEANS, WHAT THE AO IS VEHEMENTLY MAKING TH E CASE FOR IS THE LAW ON THE ISSUE-SECTION 68 OF INCOME-TAX ACT H AS TO BE APPLIED BY EVOLVING ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 47 PERCEPTIONS FOR THE LAW ON THE ISSUE AND NOT ON THE BASIS OF ROUTINE PERCEPTIONS ON THE LAW ON THE ISSUE THAT IS LOSING THEIR RELEVANCE . 5.4 WITH ALL DUE RESPECT TO AUTHORITIES CITED BY TH E APPELLANT FOR CANVASSING HIS STAND POINT, I AM NOT ABLE TO PERSUADE MY CONSCIENC E TO AGREE WITH APPELLANTS ARGUMENTS. IN MY CONSIDERED OPINION, UNDER THE ADVE RSE BACKGROUND OF APPELLANT EMPLOYING MODUS-OPERENDI OF RESORTING ACCOMMODATION ENTRY PROVIDER TO BUILD- UP UNSECURED LOANS AS ESTABLISHED IN THE ASSESSMENT ORDER AS BRIEFLY HIGHLIGHTED IN PARA 4.1 ABOVE, AND ARMED WITH SEVERAL AUTHORITIES ON THE ISSUE CITED BY THE AO, I FULLY AGREE WITH THE VIEW TAKEN BY AO. HOWEVER, TO FORTIFY THE FINDING OF THE AO AND TO HIGHLIGHT THE GUIDING PRINCIPLE ON ADJUDICAT ING NON-GENUINE UNSECURED LOANS RAISED THROUGH ACCOMMODATION ENTRY PROVIDERS, I PLACE FURTHER RELIANCE ON FEW MORE CASE LAWS WITH UNDERLINING THE SIMILARITY OF ADVERSE FACTS PREVAILING IN THE PRESENT CASE AS FOLLOWS:- 5.5 IN CASE OF SUMAN GUPTA V/S. INCOME TAX OFFICER ITAT, AGRA BENCH (2012) 138 ITD 0153 HELD AS UNDER:- THE AO DISCUSSED EACH AND EVERY CREDITOR IN THE ASS ESSMENT ORDER AND THE CRUX OF THE FINDINGS OF THE AO HAD BEEN THAT THERE WERE VER Y SMALL BANK BALANCES IN THE BANK ACCOUNTS OF THE CREDITORS AND THEY WERE HAVING MEAGER INCOME AND AS SUCH, THEY WERE NOT MEN OF MEANS TO ADVANCE ANY LOAN TO T HE ASSESSEE. IT IS WELL SETTLED LAW THAT BURDEN IS UPON THE ASSESSEE TO PROVE INGRE DIENTS OF SECTION 68 OF THE ACT BY PROVING IDENTITY AND CREDITWORTHINESS OF THE CRE DITORS AND GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS, HOWEVER, FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITORS WHO WERE HAVING ONLY MEAGER INCOME. N O DETAILS OF THEIR SAVINGS HAVE BEEN FILED. THE ASSESSEE HAS NEVER SHOWN HIS W ILLINGNESS TO PRODUCE THE REMAINING CREDITORS FOR EXAMINATION BEFORE THE AO. THEREFORE, THE GENUINENESS OF THE TRANSACTION COULD NOT HAVE BEEN EXAMINED BY THE AO. THE SMALLNESS OF THE BANK BALANCE IN THE BANK ACCOUNTS OF THE CREDITORS PRIOR TO ISSUE OF CHEQUES WOULD CLEARLY REVEAL THAT THEY WERE NOT HAVING ANY SOURCE AND IT WAS THE MONEY OF THE ASSESSEE WHICH WAS ROUTED THROUGH THE BANK ACCOUNTS OF THE CREDITORS FOR THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 48 PURPOSE OF GIVING CREDITS TO THE ASSESSEE. THESE WE RE, THEREFORE, ACCOMMODATION ENTRIES ONLY AND AS SUCH, COULD NOT BE CONSIDERED A S GENUINE TRANSACTIONS. MERELY BECAUSE THE LOANS HAVE BEEN RECEIVED THROUGH BANKIN G CHANNEL, IS NOT SACROSANCT TO MAKE A NON-GENUINE TRANSACTION AS GENUINE TRANSA CTION. ON CONSIDERATION OF THE FACTS OF THE CASE IN THE LI GHT OF ABOVE DISCUSSION AND DECISION, THERE IS NO JUSTIFICATION TO INTERFERE WI TH THE ORDER OF THE LD. CIT(A). THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS O F ALL THE CREDITORS AND NO SOURCE OF THEIR INCOME HAS BEEN FILED. AT THE BEST THE ASSESSEE IS ABLE TO PROVE IDENTITY OF THE CREDITORS, BUT THE ASSESSEE FAILED TO PROVE THE GENUINE CREDIT IN THE MATTER. ALL THE CREDITORS HAVE BEEN RIGHTLY FOUND T O BE MEN OF MEAGER MEANS AND NO SOURCE OF INCOME HAVE BEEN FILED TO PROVE THAT THEY WERE HAVING SUFFICIENT FUNDS OR SAVINGS IN ORDER TO GIVE LOANS TO THE ASSE SSEE. ON VERIFICATION OF THE BANK ACCOUNT OF THE DEPOSITORS, IT WAS SPECIFICALLY FOUN D THAT THERE WERE NO SUFFICIENT FUNDS AVAILABLE IN THEIR BANK ACCOUNT AND THEY WERE HAVING ONLY SMALL BANK BALANCE, WHICH WAS EVEN NOT SUFFICIENT TO MEET OUT THEIR HOUSEHOLD EXPENSES OR DAY-TO-DAY REQUIREMENTS. THEREFORE, IT IS UNBELIEVA BLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT SAID PERSONS WERE HAVING CREDITWO RTHINESS TO ADVANCE ANY LOAN TO THE ASSESSEE. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION U/S. 68 OF THE IT ACT. IN THE PRESENT CASE, THE ASSESSEE HAS NOT ADDU CED ANY SUFFICIENT EVIDENCE BEFORE THE AUTHORITIES BELOW TO PROVE THE CREDITWOR THINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS IN THE MATTER. THER EFORE, THE ASSESSEE HAS NOT SATISFIED THE ESSENTIAL INGREDIENTS OF SECTION 68 O F THE IT ACT. CONCLUSION: MERELY BECAUSE THE LOANS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL, IS NOT SACROSANCT TO MAKE A NON-GENUINE TRANSACTION AS GEN UINE TRANSACTION. THE ABOVE DECISION IS CONFIRMED BY HONBLE ALLAHABA D HIGH COURT VIDE THEIR JUDGMENT IN ITA NO.680/12 VIDE JUDGMENT DATED 07.08 .2012 AND SLP OF ASSESSEE WAS DISMISSED BEFORE THE HONBLE APEX COURT AS REPO RTED IN 2013-LL-0122-69 5.6 HONBLE HIGH COURT OF DELHI IN CASE OF COMMISSI ONER OF INCOME TAX V/S. NAVODAYA CASTLES PVT. LTD. REPORTED AT (2014) 367 I TR 0306 INVOLVING EXACTLY SIMILAR FACTS OBSERVED IN PARA 2, 3 THEN PARA 2 AS UNDER:- ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 49 2. THE APPEAL ARISES OUT OF THE IMPUGNED ORDER DATE D 31 ST OCTOBER, 2011, PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, UPHOLDING THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) DELETING ADDIT ION OF RS.54,00,000/- MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (ACT, FOR SHORT), BY T HE ASSESSING OFFICER ON ACCOUNT OF SHARE APPLICATION. 3. THE ASSESSEE, A COMPANY, HAD FILED THEIR RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 DECLARING LOSS OF RS.1,58,035/- ON 20 TH OCTOBER, 2002, WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUE NTLY, ON THE BASIS OF A REPORT SUBMITTED BY THE INVESTIGATION WING THAT THE ASSESS EE WAS A RECIPIENT OF ACCOMMODATION ENTRIES IN FORM OF SHARE APPLICATION MONEY/SHARE CAPITAL/SHARE PREMIUM, NOTICE UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT WAS ISSUED AND SERVED ON 25 TH MARCH, 2009 .. 7. SUMMONS UNDER SECTION 131 OF THE ACT WERE SENT T O THE ALLEGED SHAREHOLDERS AND THEY WERE ASKED TO FURNISH DETAILS ON 10 TH DECEMBER, 2009. DIRECTORS/PRINCIPAL OFFICERS WERE REQUIRED TO PERSO NALLY COME AND DEPOSE. THE SUMMONSES, AS PER THE ASSESSMENT ORDER, WERE RECEIV ED BACK UNSERVED. AT THE SAME TIME, THE ASSESSEE FILED DETAILS AND CONFIRMAT IONS OF THE ALLEGED SHARE CAPITAL. EARLIER ON 8 TH DECEMBER, 2009, A DETAILED SHOW CAUSE NOTICE WAS I SSUED, FIXING THE HEARING ON 14 TH DECEMBER, 2009. THE ASSESSEE WAS ASKED TO PRODUCE THE SHAREHOLDERS ALONG WITH THEIR BOOKS OF ACCOUNTS TO SUBSTANTIATE ITS CLAIM OF GENUINENESS OF THE CASH CREDITS. IN FACT ON 10 TH DECEMBER, 2009, AUTHORIZED REPRESENTATIVE HAD APPEARED AND HE WAS APPRISED THA T THE SUMMONS ISSUED TO THE SHAREHOLDERS UNDER SECTION 131 HAD BEEN RECEIVED BA CK UNSERVED IN FIVE CASES AND HE WAS REQUESTED TO PROVIDE THE PRESENT POSTAL ADDRESS OF THE PARTIES. IN THE MEANWHILE, THE ASSESSING OFFICER MANAGED TO GET HOL D OF THE BANK STATEMENTS OF THE SHAREHOLDERS, WHO HAD ALLEGEDLY MADE DEPOSITS B Y WAY OF CHEQUES AND PAY ORDERS. THE ASSESSMENT ORDER SPECIFICALLY RECORDS T HAT HUGE CASH DEPOSITS IN LACS WERE BEING REGULARLY DEPOSITED IN THE SAID ACCOUNTS AND THEN PAY ORDERS/CHEQUES WERE ISSUED TO THE RESPONDENT ASSESSEE. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 50 8. ON 14 TH DECEMBER, 2009, AUTHORIZED REPRESENTATIVE APPEARED AND STATED THAT THE ASSESSEE WAS UNABLE TO PRODUCE DIRECTORS OR PRI NCIPAL OFFICERS OF THE SIX SHAREHOLDER COMPANIES PLEADING THAT THEY WERE NOT S HAREHOLDERS NOW AND SEVEN YEARS HAD PASSED SINCE THE TRANSACTIONS TOOK PLACE. THE ASSESSMENT ORDER RECORDS AND MENTIONS ABOUT THE TRANSACTIONS RECORDED IN THE BANK ACCOUNTS OF THE SHAREHOLDER/ENTRY OPERATOR COMPANIES TO SHOW AND ES TABLISH THAT THERE WAS IMMEDIATE DEPOSIT OF CASH AND THEN ISSUE OF CHEQUES . IT WAS FURTHER MENTIONED THAT THESE COMPANIES WERE UNDER CONTROL OF ONE MAHE SH GARG AND HIS GROUP, WHO WERE OPERATING VARIOUS ACCOUNTS. THE ASSESSING OFFI CER MADE ADDITION OF RS.54,00,000/- UNDER SECTION 68 OF THE ACT AND RS.1 ,08,000/- AS COMMISSION PAID FOR PROCURING THE SAID SHARES BEING 2% OF RS.54,00, 000/-. ................................................... ................................................... .............. .. 11. WE HAVE HEARD THE SENIOR STANDING COUNSEL FOR T HE REVENUE, WHO HAS RELIED UPON DECISIONS OF THE DELHI HIGH COURT IN COMMISSIO NER OF INCOME TAX VS. NOVA PROMOTERS AND FINLEASE (P) LTD. [2012] 342 ITR 169 (DELHI), COMMISSIONER OF INCOME TAX VS. N.R. PORTFOLIO PVT. LTD., 206 (2014) DLT 97 (DB) (DEL) AND COMMISSIONER OF INCOME TAX-II VS. MAF ACADEMY P. LT D., 206 (2014) DLT 277 (DB) (DEL). THE AFORESAID DECISIONS MENTIONED ABOVE REFER TO THE EARLIER DECISIONS OF DELHI HIGH COURT IN COMMISSIONER OF IN COME TAX VS. SOPHIA FINANCE LTD., [1994] 205 ITR 98 (FB)(DELHI), CIT VS . DIVINE LEASING AND FINANCE LIMITED [2008] 299 ITR 268 (DELHI) AND OBSE RVATIONS OF THE SUPREME COURT IN CIT VS. LOVELY EXPORTS P. LTD. [2008] 319 ITR (ST.) 5 (SC). 12. THE MAIN SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT ONCE THE ASSESSEE HAD BEEN ABLE TO SHOW THAT THE SHARE HOLDE R COMPANIES WERE DULY INCORPORATED BY THE REGISTRAR OF COMPANIES, THEIR I DENTITY STOOD ESTABLISHED, GENUINENESS OF THE TRANSACTIONS STOOD ESTABLISHED A S PAYMENTS WERE MADE THROUGH ACCOUNTS PAYEE CHEQUES/BANK ACCOUNT; AND MERE DEPOS IT OF CASH IN THE BANK ACCOUNTS PRIOR TO ISSUE OF CHEQUE/PAY ORDERS ETC. W OULD ONLY RAISE SUSPICION AND, IT WAS FOR THE ASSESSING OFFICER TO CONDUCT FURTHER INVESTIGATION, BUT IT DID NOT ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 51 FOLLOW THAT THE MONEY BELONGED TO THE ASSESSEE AND WAS THEIR UNACCOUNTED MONEY, WHICH HAD BEEN CHANNELIZED. 13. AS WE PERCEIVE, THERE ARE TWO SETS OF JUDGMENTS AND CASES, BUT THESE JUDGMENTS AND CASES PROCEED ON THEIR OWN FACTS. IN ONE SET OF CASES, THE ASSESSEE PRODUCED NECESSARY DOCUMENTS/EVIDENCE TO SHOW AND E STABLISH IDENTITY OF THE SHAREHOLDERS, BANK ACCOUNT FROM WHICH PAYMENT WAS M ADE, THE FACT THAT PAYMENTS WERE RECEIVED THOROUGH BANKING CHANNELS, F ILED NECESSARY AFFIDAVITS OF THE SHAREHOLDERS OR CONFIRMATIONS OF THE DIRECTORS OF THE SHAREHOLDER COMPANIES, BUT THEREAFTER NO FURTHER INQUIRIES WERE CONDUCTED. THE SECOND SET OF CASES ARE THOSE WHERE THERE WAS EVIDENCE AND MATERIAL TO SHOW THAT THE SHAREHOLDER COMPANY WAS ONLY A PAPER COMPANY HAVING NO SOURCE O F INCOME, BUT HAD MADE SUBSTANTIAL AND HUGE INVESTMENTS IN THE FORM OF SHA RE APPLICATION MONEY. THE ASSESSING OFFICER HAS REFERRED TO THE BANK STATEMEN T, FINANCIAL POSITION OF THE RECIPIENT AND BENEFICIARY ASSESSEE AND SURROUNDING CIRCUMSTANCES. THE PRIMARY REQUIREMENTS, WHICH SHOULD BE SATISFIED IN SUCH CAS ES IS, IDENTIFICATION OF THE CREDITORS/SHAREHOLDER, CREDITWORTHINESS OF CREDITOR S/SHAREHOLDER AND GENUINENESS OF THE TRANSACTION. THESE THREE REQUIREMENTS HAVE T O BE TESTED NOT SUPERFICIALLY BUT IN DEPTH HAVING REGARD TO THE HUMAN PROBABILITIES A ND NORMAL COURSE OF HUMAN CONDUCT. 14. CERTIFICATE OF INCORPORATION, PAN NUMBER ETC. A RE RELEVANT FOR PURCHASE OF IDENTIFICATION, BUT HAVE THEIR LIMITATION WHEN THER E IS EVIDENCE AND MATERIAL TO SHOW THAT THE SUBSCRIBER WAS A PAPER COMPANY AND NO T A GENUINE INVESTOR. IT IS IN THIS CONTEXT, THE SUPREME COURT IN CIT VS. DURGA PR ASAD MORE [1971] 82 ITR 540 (SC) HAD OBSERVED:- NOW WE SHALL PROCEED TO EXAMINE THE VALIDITY OF TH OSE GROUNDS THAT APPEALED TO THE LEARNED JUDGES. IT IS TRUE THAT THE APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE RE ASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF T HOSE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS I N DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECI TALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME REC ITALS MADE IN A ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 52 DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBI NG WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WH ILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS. 15. SUMMARIZING THE LEGAL POSITION IN NOVA PROMOTER S AND FINLEASE (P) LTD.(SUPRA), AND HIGHLIGHTING THE LEGAL EFFECT OF S ECTION 68 OF THE ACT, THE DIVISION BENCH HAS HELD AS UNDER:- 32. THE TRIBUNAL ALSO ERRED IN LAW IN HOLDING ASSE SSING OFFICER OUGHT TO HAVE PROVED THAT THE MONIES EMANATED FROM THE COFFE RS OF THE ASSESSEE- COMPANY AND CAME BACK AS SHARE CAPITAL. SECTION 68 PERMITS THE ASSESSING OFFICER TO ADD THE CREDIT APPEARING IN TH E BOOKS OF ACCOUNT OF THE ASSESSEE IF THE LATTER OFFERS NO EXPLANATION RE GARDING THE NATURE AND SOURCE OF THE CREDIT OR THE EXPLANATION OFFERED IS NOT SATISFACTORY. IT PLACES NO DUTY UPON HIM TO POINT TO THE SOURCE FROM WHICH THE MONEY WAS RECEIVED BY THE ASSESSEE. IN A. GOVINDARAJULU MUDAL IAR V CIT, (1958) 34 ITR 807, THIS ARGUMENT ADVANCED BY THE ASSESSEE WAS REJECTED BY THE SUPREME COURT. VENKATARAMA IYER, J., SPEAKING FOR THE COURT OBSER VED AS UNDER (@ PAGE 810):- NOW THE CONTENTION OF THE APPELLANT IS THAT ASSUMI NG THAT HE HAD FAILED TO ESTABLISH THE CASE PUT FORWARD BY HIM, IT DOES NOT FOLLOW AS A MATTER OF LAW THAT THE AMOUNTS IN QUESTION WERE INCOME RECEIVED O R ACCRUED DURING THE PREVIOUS YEAR, THAT IT WAS THE DUTY OF THE DEPARTME NT TO ADDUCE EVIDENCE TO SHOW FROM WHAT SOURCE THE INCOME WAS DERIVED AND WHY IT SHOULD BE TREATED AS CONCEALED INCOME. IN THE ABSENCE OF SUCH EVIDENCE, IT IS ARGUED, THE FINDING IS ERRONEOUS. WE ARE UNABLE TO AGREE. W HETHER A RECEIPT IS TO BE TREATED AS INCOME OR NOT, MUST DEPEND VERY LARGE LY ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IN THE PRESENT CASE THE RECEIPTS ARE SHOWN IN ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 53 THE ACCOUNT BOOKS OF A FIRM OF WHICH THE APPELLANT AND GOVINDASWAMY MUDALIAR WERE PARTNERS. WHEN HE WAS CALLED UPON TO GIVE EXPLANATION HE PUT FORWARD TWO EXPLANATIONS, ONE BEING A GIFT OF R S. 80,000 AND THE OTHER BEING RECEIPT OF RS. 42,000 FROM BUSINESS OF WHICH HE CLAIMED TO BE THE REAL OWNER. WHEN BOTH THESE EXPLANATIONS WERE REJEC TED, AS THEY HAVE BEEN IT WAS CLEARLY UPON TO THE INCOME-TAX OFFICER TO HOLD THAT THE INCOME MUST BE CONCEALED INCOME. THERE IS AMPLE AUTHORITY FOR THE POSITION THAT WHERE AN ASSESSEE FAILS TO PROVE SATISFACTORILY THE SOURCE AND NATURE OF CERTAIN AMOUNT OF CASH RECEIVED DURING THE ACCOUNTI NG YEAR, THE INCOME- TAX OFFICER IS ENTITLED TO DRAW THE INFERENCE THAT THE RECEIPT ARE OF AN ASSESSABLE NATURE. THE CONCLUSION TO WHICH THE APPELLATE TRIBUNAL CAM E APPEARS TO US TO BE AMPLY WARRANTED BY THE FACTS OF THE CASE. THERE IS NO GROUND FOR INTERFERING WITH THAT FINDING, AND THESE APPEALS ARE ACCORDINGLY DISMISSED WITH COSTS.(EMPHASIS SUPPLIED) SECTION 68 RECOGNIZES THE AFORESAID LEGAL POSITION. THE VIEW TAKEN BY THE TRIBUNAL ON THE DUTY CAST ON THE ASSESSING OFFICER BY SECTIO N 68 IS CONTRARY TO THE LAW LAID DOWN BY THE SUPREME COURT IN THE JUDGMENT CITED ABO VE. EVEN IF ONE WERE TO HOLD, ALBEIT ERRONEOUSLY AND WITHOUT BEING AWARE OF THE L EGAL POSITION ADUMBRATED ABOVE, THAT THE ASSESSING OFFICER IS BOUND TO SHOW THAT THE SOURCE OF THE UNACCOUNTED MONIES WAS THE COFFERS OF THE ASSESSEE, WE ARE INCLINED TO THINK THAT IN THE FACTS OF THE PRESENT CASE SUCH PROOF HAS BEE N BROUGHT OUT BY THE ASSESSING OFFICER. THE STATEMENTS OF MUKESH GUPTA AND RAJAN JASSAL, T HE ENTRY PROVIDERS, EXPLAINING THEIR MODUS OPERANDI TO HELP ASSESSEES HAVING UNACCOUNTED MONIES CONVERT THE SAME INTO ACCOUNTED MONIES AFFORDS SUFF ICIENT MATERIAL ON THE BASIS OF WHICH THE ASSESSING OFFICER CAN BE SAID TO HAVE DIS CHARGED THE DUTY. THE STATEMENTS REFER TO THE PRACTICE OF TAKING CASH AND ISSUING CHEQUES IN THE GUISE OF SUBSCRIPTION TO SHARE CAPITAL, FOR A CONSIDERATION IN THE FORM OF COMMISSION. AS ALREADY POINTED OUT, NAMES OF SEVERAL COMPANIES WHI CH FIGURED IN THE STATEMENTS GIVEN BY THE ABOVE PERSONS TO THE INVESTIGATION WIN G ALSO FIGURED AS SHARE- APPLICANTS SUBSCRIBING TO THE SHARES OF THE ASSESSE E-COMPANY. THESE CONSTITUTE MATERIALS UPON WHICH ONE COULD REASONABLY COME TO T HE CONCLUSION THAT THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 54 MONIES EMANATED FROM THE COFFERS OF THE ASSESSEE-CO MPANY. THE TRIBUNAL, APART FROM ADOPTING AN ERRONEOUS LEGAL APPROACH, ALSO FAI LED TO KEEP IN VIEW THE MATERIAL THAT WAS RELIED UPON BY THE ASSESSING OFFI CER. THE CIT (APPEALS) ALSO FELL INTO THE SAME ERROR. IF SUCH MATERIAL HAD BEEN KEPT IN VIEW, THE TRIBUNAL COULD NOT HAVE FAILED TO DRAW THE APPROPRIATE INFERENCE. 16. IN THE SAID CASE, THE DIVISION BENCH HAD ALSO E XAMINED THE DECISION OF THE SUPREME COURT IN LOVELY EXPORTS P. LTD. (SUPRA) AND OTHER CASES IN WHICH THE ASSESSEE HAD SUCCEEDED. IT WAS NOTICED THAT IN THE CASE OF LOVELY EXPORTS P. LTD. AFFIDAVITS/CONFIRMATIONS OF SHAREHOLDERS WERE FILED AND INCOME TAX RECORD NUMBERS OF THE SHAREHOLDERS WERE MADE AVAILABLE, BU T THE ASSESSING OFFICER, WHO HAD SUFFICIENT TIME, FAILED TO CARRY OUT INQUIRY AN D EXAMINATION. REFERENCE WAS MADE TO THE OBSERVATIONS IN DIVINE LEASING (SUPRA) TO THE EFFECT THAT THERE CANNOT BE TWO OPINIONS ON THE ASPECT THAT THE PERNICIOUS P RACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE MASQUERADE OR CHANNEL OF INVESTMENT AS SHARE CAPITAL MUST BE FIRMLY EXCORIATED BY THE REVENUE, B UT WHEN THERE IS PREPONDERANCE OF EVIDENCE TO SHOW ABSENCE OF CULPAB ILITY, THE ASSESSEE SHOULD NOT BE HARASSED BY THE REVENUE. A DELICATE BALANCE MUST BE MAINTAINED BETWEEN THE TWO INTERESTS. IN DIVINE LEASING (SUPRA), THE FOLLO WING PROPOSITION WAS ELUCIDATED:- IN THIS ANALYSIS, A DISTILLATION OF THE PRECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68 OF THE IT ACT. THE ASSESSED HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CREDITOR/SUBSCRIBER; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTE D THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDIT WORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER. (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS REGISTER, SHARE APPLICATION FORMS, SHA RE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXP LANATION BY THE ASSESSED. (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS T O RESPOND TO ITS NOTICES; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUB SCRIBER DENIES OR REPUDIATES ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 55 THE TRANSACTION SET UP BY THE ASSESSED NOR SHOULD T HE AO TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST T HE ASSESSED. (7) THE ASSESSING OFFICER IS DUTY-BOUND TO INVESTIGATE THE CREDITWORT HINESS OF THE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE TRANSACT ION AND THE VERACITY OF THE REPUDIATION. 17. NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) AF TER REFERRING TO THE DISMISSAL OF SLP AGAINST DIVINE LEASING CASE (SUPRA) OBSERVED AS UNDER:- SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADDRES SES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSI NG OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC.68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION O F MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF-CONFESSED ACCOMMODATION ENTRY PROVIDE RS, WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT TH EIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE A SSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT O NE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDI CATED BY VALID MATERIAL MADE AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF I NVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH EN TRY PROVIDERS. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE-MEDITATED PLAN A SMOKE SCREEN CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A C ASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESS EE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE IDENTITY AND ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 56 CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GEN UINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN H IS POSSESSION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE CA SE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF T RUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. 18. LOVELY EXPORTS PVT. LTD.(SUPRA) WAS ALSO CONSID ERED AND DISTINGUISHED IN N.R. PORTFOLIO PVT. LTD. (SUPRA) AND IT WAS HELD THAT TH E ENTIRE EVIDENCE AVAILABLE ON RECORD HAS TO BE CONSIDERED, AFTER RELYING UPON CIT VS. NIPUN BUILDERS AND DEVELOPERS, [2013] 350 ITR 407 (DELHI), WHEREIN IT HAS BEEN HELD THAT A REASONABLE APPROACH HAS TO BE ADOPTED AND WHETHER I NITIAL ONUS STANDS DISCHARGED WOULD DEPEND UPON FACTS AND CIRCUMSTANCE S OF EACH CASE. IN CASE OF PRIVATE LIMITED COMPANIES, GENERALLY PERSONS KNOWN TO DIRECTORS OR SHAREHOLDERS, DIRECTLY OR INDIRECTLY, BUY OR SUBSCRIBE TO SHARES. UPON RECEIPT OF MONEY, THE SHARE SUBSCRIBERS DO NOT LOSE TOUCH AND BECOME INCO MMUNICADO. CALL MONEY, DIVIDENDS, WARRANTS, ETC. HAVE TO BE SENT AND THE R ELATIONSHIP REMAINS A CONTINUING ONE. THEREFORE, AN ASSESSEE CANNOT SIMPL Y FURNISH SOME DETAILS AND REMAIN QUIET WHEN SUMMONS ISSUED TO SHAREHOLDERS RE MAIN UN-SERVED AND UNCOMPLIED. AS A GENERAL PROPOSITION, IT WOULD BE I MPROPER TO UNIVERSALLY HOLD THAT THE ASSESSEE CANNOT PLEAD THAT THEY HAD RECEIV ED MONEY, BUT COULD DO NOTHING MORE AND IT WAS FOR THE ASSESSING OFFICER TO ENFORC E SHAREHOLDERS ATTENDANCE IN SPITE OF THE FACT THAT THE SHAREHOLDERS WERE MISSIN G AND NOT AVAILABLE. THEIR RELUCTANCE AND HIDING MAY REFLECT ON THE GENUINENES S OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. IT WOULD BE ALSO INCORRECT TO UNIVERSALLY STATE THAT AN INSPECTOR MUST BE SENT TO VERIFY THE SHAREH OLDERS/SUBSCRIBERS AT THE AVAILABLE ADDRESSES, THOUGH THIS MIGHT BE REQUIRED IN SOME CASES. SIMILARLY, IT WOULD BE INCORRECT TO STATE THAT THE ASSESSING OFFI CER SHOULD ASCERTAIN AND GET ADDRESSES FROM THE REGISTRAR OF COMPANIES WEBSITE OR SEARCH FOR THE ADDRESSES OF SHAREHOLDERS THEMSELVES. CREDITWORTHINESS IS NOT PROVED BY SHOWING ISSUE AND RECEIPT OF A CHEQUE OR BY FURNISHING A COPY OF STAT EMENT OF BANK ACCOUNT, WHEN ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 57 CIRCUMSTANCES REQUIRES THAT THERE SHOULD BE SOME MO RE EVIDENCE OF POSITIVE NATURE TO SHOW THAT THE SUBSCRIBERS HAD MADE GENUIN E INVESTMENT OR HAD, ACTED AS ANGEL INVESTORS AFTER DUE DILIGENCE OR FOR PERSONAL REASONS. THE FINAL CONCLUSION MUST BE PRAGMATIC AND PRACTICAL, WHICH TAKES INTO A CCOUNT HOLISTIC VIEW OF THE ENTIRE EVIDENCE INCLUDING THE DIFFICULTIES, WHICH T HE ASSESSEE MAY FACE TO UNIMPEACHABLY ESTABLISH CREDITWORTHINESS OF THE SHA REHOLDERS. 19. IN N.R. PORTFOLIO PVT. LTD. (SUPRA), IT HAS BEE N HELD AS UNDER:- 18. IN THE REMAND REPORT, THE ASSESSING OFFICER RE FERRED TO THE PROVISIONS OF SECTION 68 OF THE ACT AND THEIR APPLICABILITY. T HE WORD IDENTITY AS DEFINED, IT WAS OBSERVED MEANT THE CONDITION OR FAC T OF A PERSON OR THING BEING THAT SPECIFIED UNIQUE PERSON OR THING. THE ID ENTIFICATION OF THE PERSON WOULD INCLUDE THE PLACE OF WORK, THE STAFF, THE FACT THAT IT WAS ACTUALLY CARRYING ON BUSINESS AND RECOGNITION OF TH E SAID COMPANY IN THE EYES OF PUBLIC. MERELY PRODUCING PAN NUMBER OR ASSE SSMENT PARTICULARS DID NOT ESTABLISH THE IDENTITY OF THE PERSON. THE ACTUAL AND TRUE IDENTITY OF THE PERSON OR A COMPANY WAS THE BUSINESS UNDERTAKEN BY THEM. THIS ACCORDING TO US IS THE CORRECT AND TRUE LEGAL POSIT ION, AS IDENTITY, CREDITWORTHINESS AND GENUINENESS HAVE TO BE ESTABLI SHED. PAN NUMBERS ARE ALLOTTED ON THE BASIS OF APPLICATIONS WITHOUT A CTUAL DE FACTO VERIFICATION OF THE IDENTITY OR ASCERTAINING ACTIVE NATURE OF BUSINESS ACTIVITY. PAN IS A NUMBER WHICH IS ALLOTTED AND HEL PS THE REVENUE KEEP TRACK OF THE TRANSACTIONS. PAN NUMBER IS RELEVANT B UT CANNOT BE BLINDLY AND WITHOUT CONSIDERING SURROUNDING CIRCUMSTANCES T REATED AS SUFFICIENT TO DISCHARGE THE ONUS, EVEN WHEN PAYMENT IS THROUGH BANK ACCOUNT. 19. ON THE QUESTION OF CREDIT WORTHINESS AND GENUIN ENESS, IT WAS HIGHLIGHTED THAT THE MONEY NO DOUBT WAS RECEIVED TH ROUGH BANKING CHANNELS, BUT DID NOT REFLECT ACTUAL GENUINE BUSINE SS ACTIVITY. THE SHARE SUBSCRIBERS DID NOT HAVE THEIR OWN PROFIT MAKING AP PARATUS AND WERE NOT INVOLVED IN BUSINESS ACTIVITY. THEY MERELY ROTATED MONEY, WHICH WAS COMING THROUGH THE BANK ACCOUNTS, WHICH MEANS DEPOS ITS BY WAY OF CASH ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 58 AND ISSUE OF CHEQUES. THE BANK ACCOUNTS, THEREFORE, DID NOT REFLECT THEIR CREDITWORTHINESS OR EVEN GENUINENESS OF THE TRANSAC TION. THE BENEFICIARIES, INCLUDING THE RESPONDENT-ASSESSEE, DID NOT GIVE ANY SHARE-DIVIDEND OR INTEREST TO THE SAID ENTRY OPERATORS/SUBSCRIBERS. T HE PROFIT MOTIVE NORMAL IN CASE OF INVESTMENT WAS ENTIRELY ABSENT. IN THE P RESENT CASE, NO PROFIT OR DIVIDEND WAS DECLARED ON THE SHARES. ANY PERSON, WH O WOULD INVEST MONEY OR GIVE LOAN, WOULD CERTAINLY SEEK RETURN OR INCOME AS CONSIDERATION. THESE FACTS ARE NOT ADVERTED TO AND AS NOTICED BELO W ARE TRUE AND CORRECT. THEY ARE UNDOUBTEDLY RELEVANT AND MATERIAL FACTS FO R ASCERTAINING CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. 30. WHAT WE PERCEIVE AND REGARD AS CORRECT POSITION OF LAW IS THAT THE COURT OR TRIBUNAL SHOULD BE CONVINCED ABOUT THE IDE NTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ONUS TO PROVE THE THREE FACTUM IS ON THE ASSESSEE AS THE FACTS ARE WITHIN THE ASSESSE ES KNOWLEDGE. MERE PRODUCTION OF INCORPORATION DETAILS, PAN NOS. OR TH E FACT THAT THIRD PERSONS OR COMPANY HAD FILED INCOME TAX DETAILS INC ASE OF A PRIVATE LIMITED COMPANY MAY NOT BE SUFFICIENT WHEN SURROUND ING AND ATTENDING FACTS PREDICATE A COVER UP. THESE FACTS INDICATE AND REFLECT PROPER PAPER WORK OR DOCUMENTATION BUT GENUINENESS, CREDITWORTHI NESS, IDENTITY ARE DEEPER AND OBTRUSIVE. COMPANIES NO DOUBT ARE ARTIFI CIAL OR JURISTIC PERSONS BUT THEY ARE SOULLESS AND ARE DEPENDENT UPO N THE INDIVIDUALS BEHIND THEM WHO RUN AND MANAGE THE SAID COMPANIES. IT IS THE PERSONS BEHIND THE COMPANY WHO TAKE THE DECISIONS, CONTROLS AND MANAGE THEM. 20. NOW, WHEN WE GO TO THE ORDER OF THE TRIBUNAL IN THE PRESENT CASE, WE NOTICE THAT THE TRIBUNAL HAS MERELY REPRODUCED THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) AND UPHELD THE DELETION OF THE ADDITI ON. IN FACT, THEY SUBSTANTIALLY RELIED UPON AND QUOTED THE DECISION OF ITS COORDINA TE BENCH IN THE CASE OF MAF ACADEMY P. LTD., A DECISION WHICH HAS BEEN OVERTURN ED BY THE DELHI HIGH COURT VIDE ITS JUDGMENT IN C.I.T VS. MAF ACADEMY P.LTD [ (2014) 206 DLT 277). IN THE IMPUGNED ORDER IT IS ACCEPTED THAT THE ASSESSEE WAS UNABLE TO PRODUCE DIRECTORS ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 59 AND PRINCIPAL OFFICERS OF THE SIX SHAREHOLDER COMPA NIES AND ALSO THE FACT THAT AS PER THE INFORMATION AND DETAILS COLLECTED BY THE AS SESSING OFFICER FROM THE CONCERNED BANK, THE ASSESSING OFFICER HAS OBSERVED THAT THERE WERE GENUINE CONCERNS ABOUT IDENTITY, CREDITWORTHINESS OF SHAREH OLDERS AS WELL AS GENUINENESS OF THE TRANSACTIONS. 21. IN VIEW OF THE AFORESAID DISCUSSION, WE FEEL TH AT THE MATTER REQUIRES AN ORDER OF REMIT TO THE TRIBUNAL FOR FRESH ADJUDICATION KEE PING IN VIEW THE AFORESAID CASE LAW. THE QUESTION OF LAW IS, THEREFORE, ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE RESPONDENT-ASSESSEE, BUT WITH AN ORDER OF REMIT TO THE TRIBUNAL TO DECIDE THE WHOLE ISSUE AFRESH. AS REPORTED AT 2015-TIOL-314-SC-IT, IN THE ABOVE CA SE, THE HONBLE SUPREME COURT OBSERVED TO EFFECT THAT MERELY BECAUSE THE A SSESSEE HAS BEEN ABLE TO SHOW THAT THE SHAREHOLDER COMPANIES WERE DULY INCORPORAT ED AND THEIR IDENTITY & GENUINENESS STANDS ESTABLISHED, THERE WERE DEPOSITS OF CASH IN THE BANK ACCOUNTS PRIOR TO ISSUE OF CHEQUE OR PAY ORDERS, THE SAME WO ULD RAISE SUSPICION AND ADDITION CAN BE MADE ON SUCH ACCOUNT 5.7 IT MAY BE MENTIONED THAT AS REPORTED AT 2016-TI OL-207-SC-IT, THE HONBLE SUPREME COURT DISMISSED SLP BY RICK LUNSFOR D TRADE & INVESTMENT LTD IN CASE OF RICK LUNSFORD TRADE & INVESTMENT LTD VS CIT UPHOLDING THAT IT IS OPEN TO THE REVENUE DEPARTMENT TO MAKE ADDITION ON ACCOUNT OF ALLEGED SHARE CAPITAL U/S 68, WHERE THE ASSESSEE COMPANY HAS FAIL ED TO SHOW GENUINENESS OF ITS SHAREHOLDERS. 5.8 HONBLE DELHI HIGH COURT IN CASE OF COMMISSIONE R OF INCOME TAX-II V/S MAF ACADEMY PVT. LTD. INVOLVING EXACTLY SIMILAR FAC TS IN ITA 341/2012 DATED 28 TH NOVEMBER, 2013 OBSERVED IN PARA 33 TO 36 AS UNDER: 33. THE ASSESSEE COMPANY IS A PRIVATE LIMITED COMPA NY AND HAD NOT COME OUT WITH ANY PUBLIC ISSUE NOR MADE ANY ADVERTISEMENT FO R ISSUANCE OF SHARE CAPITAL. HOWEVER, IN ONE YEAR THERE IS INFUSION OF SHARE CAP ITAL INCLUDING PREMIUM OF RS.4,35,00,000/-, OUT OF WHICH ONLY RS.92,00,000/- WAS INFUSED FROM THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 60 DIRECTORS/FAMILY MEMBERS OF THE DIRECTORS. THE REMA INING SHARE CAPITAL HAD BEEN INFUSED FROM PARTIES WHICH WERE COMPLETELY UNRELATE D EITHER TO THE ASSESSEE OR TO ANY OF ITS DIRECTORS. IN A PRIVATE LIMITED COMPANY, NORMALLY THE INVESTMENT OF SHARES IS FROM PARTIES OR PERSONS WHO ARE FRIENDS O R RELATIVES OF PROMOTERS/DIRECTORS. 34. IT IS NOTICED THAT THE SHARES HAD FACE VALUE OF RS.100 /- AND WERE ALLOTTED AT A PREMIUM OF RS.100 /- TO RS.200/- AND WERE THEN SUBS EQUENTLY PURCHASED BY THE PROMOTERS/DIRECTORS, WHO HAD ORIGINALLY TRANSFERRED THESE SHARES AT RS.35 /- PER SHARE. 35. IT IS REALLY SURPRISING THAT A PERSON WHO HAD P URCHASED SHARES AT A PREMIUM OF RS.100 /- TO RS.200/- PER SHARE I.E. AT A PRICE OF RS.200 /- TO RS.300/- PER SHARE, SOLD THE SHARES AT RS.35 /- PER SHARE I.E AT A SUBS TANTIAL LOSS. ANOTHER SURPRISING FACTOR IS THAT THE ENTIRE INVESTMENT HAPPENED DURIN G A SHORT SPAN OF TIME AND RE- TRANSFER OF THE SHARES TO THE FOUR PROMOTERS/DIRECT ORS OF THE COMPANY AT RS.35 /- PER SHARE BY DIFFERENT PARTIES ALSO HAPPENED DURING A SHORT SPAN OF FEW DAYS. THE MODUS OPERANDI AND THE MANNER IN WHICH CASH IS DEPO SITED IN A BANK AND THEN UTILIZED BY WAY OF AN ACCOUNT PAYEE CHEQUE FOR PURC HASE OF SHARES FOR A PREMIUM OF RS.100 /- TO RS.200/- PER SHARE AND THEN THE SAL E OF SHARES AT A LOSS CLEARLY ESTABLISHES THAT THE SAID TRANSACTION WAS A CAMOUFL AGE TRANSACTION. THE ASSESSEE HAS CLEARLY ATTEMPTED TO CAMOUFLAGE THE ACCOMMODATI ON ENTRIES AND TRIED TO GIVE IT A COLOUR OF PURCHASE OF SHARE CAPITAL AND THEN S ALE OF THE SAME AT A LOSS. THUS THE ASSESSEE'S CAPITAL INCREASED OR WAS ENHANCED BY A SUBSTANTIAL FIGURE THROUGH THESE DUBIOUS TRANSACTIONS. THIS SHOULD BE AND HAS TO BE CHECKED. 36. OUT OF RS.4.35 CRORES RECEIVED AS SHARE CAPITAL INCLUDING PREMIUM, ONLY RS.92 LACS HAS BEEN RECEIVED FROM THE DIRECTORS OR THEIR FAMILY MEMBERS AND THE REMAINING AMOUNT HAS BEEN RECEIVED FROM PARTIES TOT ALLY UNRELATED TO THE ASSESSEE. NOTICES TO SOME OF THE INVESTORS COULD NO T BE SERVED AND EVEN THE INSPECTOR WHO WAS DEPUTED TO SERVE THE SUMMONS STAT ED THAT NONE OF THE ADDRESSES COULD BE FOUND. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE REFU SED TO PRODUCE THE PARTIES WHO HAD INVESTED IN THE SHAR E CAPITAL ON THE GROUND THAT THEY WERE NOT IN A POSITION TO PRODUCE THEM. THE FA CT THAT THE ASSESSEE FAILED TO PRODUCE THE PERSONS WHO HAD INVESTED TOWARDS SHARE CAPITAL SHOWS THAT THESE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 61 WERE PEOPLE WHO WERE COMPLETELY UNRELATED TO THE AS SESSEE AND AS SUCH, ALL THE ENTRIES WERE MERELY ACCOMMODATION ENTRIES. OTHERWISE, IN A PRIVATE LIMITED COMPANY, IT WOULD NOT HAVE BEEN DIFFICULT ON THE PA RT OF THE ASSESSEE TO PRODUCE PERSONS WHO WERE INVESTING SUBSTANTIAL AMOUNT OF MO NEY IN THE COMPANY TOWARDS SHARE CAPITAL. 37. THE ASSESSING OFFICER IN HIS ORDER HAS AS A SAM PLE REFERRED TO THE ENTRIES IN THE ACCOUNT OF SOME OF THE SHARE HOLDERS NOTICING T HAT THERE ARE CASH DEPOSITS OF THE EXACT AMOUNT FOR WHICH CHEQUE IS SUBSEQUENTLY I SSUED TO THE ASSESSEE. PERUSAL OF THE BANK STATEMENTS CLEARLY ESTABLISHES THAT THE SE PARTIES WERE DEPOSITING CASH AND IMMEDIATELY EITHER ON THE SAME DAY OR IN THE NE AR FUTURE WITHDRAWING THE SAME THROUGH A CHEQUE WHICH WAS ISSUED IN FAVOUR OF THE ASSESSEE. THEN HONBLE DELHI HIGH COURT HELD IN PARA 53 TO 5 4 AS UNDER:- 53. IN CONTRAST TO THE ABOVE JUDGMENTS, IN THE PRES ENT CASE, THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IN THE FACTUAL MATRIX, WE HAVE HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE THE INITIAL ONUS AND HAS NOT BEEN ABLE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE SHARE APPLICA NTS AND THE GENUINENESS OF THE TRANSACTION. THOUGH, IN OUR CONSIDERED OPINION, NONE OF THE ABO VE JUDGMENTS, REFERRED TO BY THE ASSESSEE RESPONDENT, ARE APPLICA BLE IN THE FACTS OF THE PRESENT CASE AND IN VIEW OF THE FINDINGS RECORDED BY US HER EINABOVE. 54. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT T HE ASSESSEE HAS NOT DISCHARGED THE ONUS SATISFACTORILY AND THE ADDITIONS MADE BY T HE ASSESSING OFFICER WERE JUSTIFIED AND SUSTAINABLE . 5.9 HONBLE INCOME TAX APPELLATE TRIBUNAL DELHI BEN CH: 'B IN CASE OF M/S. AMTRAC AUTOMOTIVE INDIA PVT. LTD. VERSUS ACIT, CIRC LE 1(1), INVOLVING EXACTLY SIMILAR FACTS IN THEIR APPELLATE ORDER ITA NO.2920/ DEL/09 FOR A.Y. 2005-06 DATED 31.12.2009 OBSERVED IN PARA 3 & THEN PARA 2 AS UNDE R:- 3. THE ASSESSEE COMPANY IS ENGAGED IN SHARE TRADING IN THE YEAR UNDER CONSIDERATION. IN THE COURSE OF SCRUTINY, THE ASSES SING OFFICER NOTED THAT THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 62 APPELLANT HAS INTRODUCED FRESH SHARE CAPITAL TO THE TUNE OF RS. 15,00,000/- AT A SHARE PREMIUM OF RS. 1,35,00,000/-......... 2.1 THE AO ASKED THE APPELLANT TO FURNISH DETAIL S OF SUCH SHARE HOLDERS MENTIONING THEIR IDENTITY, GENUINENESS OF TRANSACTI ON AND CREDIT-WORTHINESS. APPELLANT PRODUCED CONFIRMATION OF DEPOSIT FROM DIR ECTORS OF THE RESPECTIVE COMPANY, COPIES OF INCOME TAX RETURN FILED AND COPI ES OF BANK STATEMENT REFLECTING THE ABOVE TRANSACTIONS. IN ORDER TO VERI FY THE ENTIRE TRANSACTIONS IN THE ASSTT. YEAR 2005-06 LIGHT OF GENUINENESS AND CR EDITWORTHINESS, HE ISSUED SUMMONS U/S 131 OF THE ACT TO ALL THE ABOVE 15 PERS ONS. THEY WERE ASKED TO PRODUCE THE COPIES OF RETURN FOR AY. 2005-06 AND TH EIR LEDGER ACCOUNTS FROM WHICH THE SOURCE OF ABOVE SHARE APPLICATION MONEY C OULD HAVE BEEN VERIFIED. ALL THE ABOVE SUMMONS WERE RETURNED UNSERVED WITH THE C OMMENTS FROM THE POSTAL AUTHORITIES AS 'NO SUCH PERSON IN THE ABOVE ADDRESS '. THE AO ACCORDINGLY BROUGHT THIS FACT TO THE NOTICE OF THE COUNSEL OF T HE ASSESSEE VIDE ORDER SHEET ENTRY DATED 18.12.2007 AND HE WAS GIVEN AN OPPORTUNITY TO PRODUCE THE FUNCTIONAL DIRECTORS OF THE ABOVE COMPANIES FOR VERIFICATION. AS MENTIONED IN THE ASSESSMENT ORDER, AFTER CERTAIN ADJOURNMENTS, A LETTER WAS FIN ALLY FILED FROM THE APPELLANT MENTIONING THAT IT IS NO IN TOUCH OF THE ABOVE SHAR E HOLDERS AND THEIR PRESENT WHEREABOUTS ARE NOT KNOWN TO IT. THE APPELLANT, HOW EVER, RELYING UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SOPHIA FINANCE LTD. IN WHICH THE POWERS OF THE ASSESSING OFFICER WAS NOT PRECLUDED FROM MAKING ENQUIRIES IN SHARE APPLICATION MONEY, SUBMITTED THA T NO ADDITION CAN BE MADE. 2.1.1 THE AO HOWEVER WAS NOT CONVINCED WITH THE SUB MISSION OF THE APPELLANT. HE OBSERVED THAT THAT IT WAS ONLY IN THE COURSE OF ENQ UIRY THAT HE TRIED TO EXAMINE THE ABOVE SHARE APPLICANTS. SINCE THE SUMMONS ISSUED TO SUCH PERSONS REMAINED UNSERVED, IT BECAME THE DUTY OF THE APPELLANT EITHE R TO PRODUCE THEM FOR VERIFICATION OR TO STATE THEIR CORRECT ADDRESSES. IT APPEARS TO BE HIGHLY IMPROPER THAT IN A PRIVATE LTD. COMPANY, THE ASSESSEE IS NOT IN A POSITION TO STATE THE EXACT WHEREABOUTS OR FAIL TO PRODUCE THE PERSONS WHO COLL ECTIVELY HOLD MORE THAN 25% OF ITS TOTAL SHARE HOLDING. HE ALSO OBSERVED THAT M ERE FILING OF ASSTT. YEAR 2005-06 CONFIRMATION LETTERS DO NOT ABSOLVE THE APPELLANT F ROM ITS ONUS TO PROVE THE CREDIT ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 63 ENTRIES REFLECTED IN ITS BOOKS OF ACCOUNTS AS HAS BEEN HELD BY HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. UNITED COMMERCIAL & INDUSTRIAL CO. (P) LTD .[1991] 187 ITR 596. HE FURTHER OBSERVED THAT THE F ACTS THAT THE AMOUNT WERE PAID BY ACCOUNT PAYEE CHEQUES DO NOT MAKE IT SATISF ACTORY AS HELD IN CIT VS. PRECISION FINANCE PVT. LTD. 208 ITR 465 (CAL.). EVEN INCOME -TAX FILE PARTICULARS, WHERE THE SHARE HOLDER IS ASSESSED TO TAX IS NOT SU FFICIENT AS FOUND IN CIT VS. KORLAY TRADING CO. LTD . 232 ITR 820 (CAL.) 2.1.2 THE AO ALSO REFERRED THE ENQUIRY INITIATED BY INVESTIGATION WING OF THE DEPARTMENT IN AUGUST 2003 WHICH CULMINATED INTO DET ECTION OF MANY ENTRY OPERATORS WHO ARE OPERATING NUMBER OF ACCOUNTS IN T HE SAME BANK/BRANCH OR IN DIFFERENT BRANCHES, IN THE NAMES OF COMPANIES, FIRM S, PROPRIETARY CONCERNS AND INDIVIDUALS. FOR THE OPERATIONS OF THESE BANK ACCOUNTS, FILING INCOME TAX RETURNS ETC. PERSONS ARE HIRED. LIKE ANY OTHER BUSINESS IT DOES REQUIRES MANPOWER ACCORDING TO THE SCALE OF OPERATION. EXCEPT FOR TWO OR THREE PERSONS WHO ARE REQUIRED REGULARLY TO VISIT BANKS AND DO OTHER SPAD E WORK LIKE COLLECTION OF CASH ETC., MOST OF THE OTHER PERSONS INVOLVED ARE ON PAR T TIME BASIS. THE PART TIME EMPLOYEES ARE CALLED AS AND WHEN REQUIRED TO SIGN D OCUMENTS, CHEQUE BOOKS ETC. SOME OF THE ENTRY OPERATORS HAVE ALSO ROPED IN THEI R OWN RELATIVES FOR OPERATION OF ENTRY ACCOUNTS AND FILING THE INCOME TAX RETURNS . INTERESTINGLY MOST OF THESE CONCERNS / INDIVIDUALS HAVE OBTAINED PAN FROM THE D EPARTMENT AND ARE FILING RETURNS AS WELL. WHAT IS SHOWN IN THE RETURNS IS NOT THE ACTUAL STA TE OF AFFAIRS. FOR EXAMPLE WITH ONE PAN SEVERAL BANK ACCOUNTS ARE SIMU LTANEOUSLY ASSTT. YEAR 2005-06 OPERATED AND ONLY ONE ACCOUNT MIGHT BE SHOW N FOR THE PURPOSE OF AUDIT AND FILING INCOME TAX RETURNS. THE ENTRY OPERATORS PROVIDE ENTRY IN THE GARB OF SHARE APPLICATION MONEY , GIFTS, LOANS ETC. THROUGH THESE ACCOUNTS, IN LIEU OF CASH, TO ANY PERSON WHO IS HAVING UNACCOUNTED MONEY. 2.1.2.1 THE AO OBSERVED THAT SOME OF THE COMPANIES SHOW ABOVE BY THE APPELLANT AS ITS SHARE HOLDERS WERE FOUND TO HAVE STATED BEFO RE INVESTIGATION WING THAT THEY WERE MERE NAME LENDER FOR ADVANCING MONEY. TO QUOTE SOME OF THEM, SHRI RAJESH BANSAL, DIRECTOR OF M/S. RUBICON ASSOCIATES PVT. LT D., SHRI MAHESH GARG, DIRECTOR OF M/S. S.J. HOSIERY PVT. LTD. ETC. HAVE C ATEGORICALLY STATED BEFORE THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 64 INVESTIGATION WING, IN THEIR STATEMENT TAKEN ON OAT H, THAT THEY USED TO TAKE THE AMOUNT IN CASH AND GIVE ENTRIES TO DIFFERENT CONCER NS AS GIFT, LOAN OR SHARE APPLICATION MONEY. ACCORDING TO AO, TO ENQUIRE INTO THIS ASPECT ALSO, THE APPELLANT WAS ASKED TO PRODUCE THE FUNCTIONAL DIREC TORS OF SUCH SHARE HOLDERS. 2.1.3. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, TH E ASSESSING OFFICER CONCLUDED THAT THE CREDIT IN THE NAME OF THESE SHAREHOLDERS A RE NOT GENUINE AND REPRESENTS UNEXPLAINED CASH CREDITS. ACCORDINGLY HE MADE ADDIT ION OF RS. 1.50 LAKHS TO THE RETURNED INCOME. THEN HONBLE INCOME TAX APPELLATE TRIBUNAL DELHI BE NCH: 'B HELD IN PARA 6 AS UNDER: 6. AS REGARDS GROUND NO. 2, WE FIND THAT THE ASSESS EE HAS STATED TO HAVE RECEIVED FRESH SHARE CAPITAL TO THE TUNE OF RS. 15 LACS AND SHARE PREMIUM OF RS.1,00,35,000/- I.E. A SHARE OF FACE VALUE OF RS. 10/- EACH ISSUED AT A PREMIUM OF RS. 90/- TOTALING TO RS. 100/-. WHEN THE AO ASKED T HE APPELLANT TO FURNISH THE DETAILS THE ASSESSEE PRODUCED SHARE APPLICATION FOR MS AND OTHER DETAILS LIKE BANK STATEMENT, COPY OF ACKNOWLEDGMENT OF RETURN ETC. HO WEVER WHEN THE AO CONDUCTED INQUIRY AT THE STATED ADDRESS, SUMMONS WE RE RECEIVED BACK UNSERVED WITH THE POSTAL REMARK 'NO SUCH PERSON IN THE ABOVE ADDRESS'. THIS FACT WAS ASSTT. YEAR 2005-06 BROUGHT TO THE NOTICE OF ASSESSEE ALSO . THEREAFTER THE ASSESSEE EXCEPT PRODUCING THE PAPERS COULD NOT PROVE EXISTEN CE OR AVAILABILITY OF THE RESPECTIVE SHARE APPLICANTS. WHEN THE IDENTITY OF T HE PERSON IS REQUIRED TO BE PROVED SO AS TO EXAMINE WHETHER IN FACT THEY HAVE A PPLIED FOR ALLOTMENT OF SHARES, THE EXISTENCE ITSELF IS NOT PROVED. THE EXISTENCE O F A PERSON IS NOT MERELY ON PAPER. PARTICULARLY WHEN THE AO REQUIRED THE ASSESSEE TO P RODUCE THE SHARE APPLICANTS AND PARTICULARLY WHEN AT THE STATED ADDRESS THE SHA RE APPLICANTS DO NOT FOUND TO BE EXISTING, IT CANNOT BE SAID THAT THE AMOUNT RECE IVED BY ASSESSEE IS PROVED TO BE TOWARDS SHARE CAPITAL. THE TRANSACTION CANNOT BE PR OVED MERELY ON PAPER. NEITHER BEFORE AO NOR BEFORE LD. CIT (A) THE ASSESS EE COULD MAKE THE SHARE APPLICANTS AVAILABLE. THEREFORE WHEN THE IDENTITY OF THE PERSON ITSELF I S NOT PROVED, THE AMOUNT RECEIVED BY ASSESSEE CANNOT BE C ONSIDERED TO BE GENUINELY RECEIVED. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 65 6.1. IT IS ALSO TO BE NOTED THAT THE ASSESSEE COMPA NY IS STATED TO HAVE ISSUED SHARES AT PREMIUM 9 TIMES ITS FACE VALUE. THE ASSESSEE IS A PRIVATE LIMITED COMPANY. IT HAS NOT ISSUED PROSPECTUS FOR ISSUE OF SHARES NOR U NDER THE COMPANIES ACT 1956, IT CAN INVITE THE PUBLIC TO APPLY FOR AND ALLOT THE SHARES. THE COMPANY IS PROHIBITED FROM MAKING ANY INVITATION FOR ALLOTMENT OF SHARES. HOW THE PREMIUM WAS FIXED IS NOT FORTH COMING. LOOKING TO THE BALAN CE SHEET OR PAST HISTORY OF ASSESSEE, THE ASSESSEE COMPANY HAS NEVER DECLARED D IVIDEND IN THE PAST. THE COMPANY HAS NO BUSINESS PLANS WHICH CAN RAISE ITS P ROFITABILITY IN THE NEAR FUTURE. THE INCOME DECLARED BY THE ASSESSEE IS ONLY BY WAY OF SHORT TERM CAPITAL GAIN AND THE ASSESSEE DO NOT SEEM TO HAVE CARRIED ON ANY BUS INESS. ASSTT. YEAR 2005-06 IN SUCH CIRCUMSTANCES THE SHARE PREMIUM IS NOT FOUND TO BE JUSTIFIED BY ANY OF THE ACT ON THE PART OF ASSESSEE . THESE FACTS ARE REVEALING MORE THAN THE APPARENT SHOWN ON THE PAPER. ALL THESE FAC TS PUT TOGETHER REVEAL THAT NEITHER THE IDENTITY OF THE SHARE APPLICANTS ARE PR OVED NOR JUSTIFICATION FOR SHARE PREMIUM HAS BEEN PROVED. IN SUCH CIRCUMSTANCES THE COURT CANNOT PUT BLINKER ON THE EYE AND LOOK ONLY AT THE PAPERS PRESENTED BEFOR E IT. THERE IS SOMETHING MORE THAN THAT MEETS THE EYE. AS RIGHTLY CONTENDED BY LD . DR IN SUCH SITUATION THE OBSERVATION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE 82 ITR 540 AND IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 801 ARE APT FOR APPLICATION. WE THEREFORE DO NOT FIND ANY REASON TO HOLD THAT THE SHARE CAPITAL RECEIPTS BY ASSESSEE WERE FROM PERSONS WHOSE IDENTI TY IS ESTABLISHED AND THE AMOUNT IS GENUINELY RECEIVED TOWARDS SHARE CAPITAL. 5.10 IN A RECENT DECISION IN CASE OF PRINCIPAL COMM ISSIONER OF INCOME VS BIKRAM SINGH IN ITA 55/2017, THE HONBLE HIGH COUR T OF DELHI HELD ON 25 AUGUST, 2017 AS UNDER:- 25. THE LAW APPLICABLE TO TRANSACTIONS OF THIS NATU RE IS WELL SETTLED BY THIS COURT IN DIVINE LEASING (SUPRA). BOTH PARTIES HAVE REFERR ED TO AND RELIED UPON THIS JUDGMENT. THIS COURT, AFTER ANALYZING THE ENTIRE LA W ON THE SUBJECT IN THE CONTEXT OF SECTION 68 OF THE ACT, HELD AS UNDER: ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 66 '...16. IN THIS ANALYSIS, A DISTILLATION OF THE PRE CEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68 OF THE IT ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CREDITOR/ SUBSCRIBER; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRA NSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDITWORTHINE SS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER. (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS REGISTER, SHARED APPLICATION FORMS, SH ARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXP LANATION BY THE ASSESSEE. (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS T O RESPOND TO ITS NOTICES; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUB SCRIBER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSEE NOR SHOULD T HE AO TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST T HE ASSESSEE. (7) THE ASSESSING OFFICER IS DUTY-BOUND TO INVESTIGATE THE CREDITWORT HINESS OF THE CREDITOR /SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION....' 26. IN DIVINE LEASING (SUPRA), ON THE QUESTION OF B URDEN OF PROOF, THE COURT RELIED UPON CIT V. MUSADDILAL RAM BHAROSE , (1987) 165 ITR 14, TO HOLD THAT THE INITIAL BURDEN IS UPON THE ASSESSEE TO SHOW THE ABSENCE OF FRAUD AND THIS IS NOT DISCHARGED BY THE ASSESSEE TENDERING AN INCREDIBLE AND FANTASTIC EXPLANATION. THE COURT ALSO HELD THAT EVERY EXPLANATION GIVEN BY THE ASSESSEE NEED NOT BE ACCEPTED. 27. IN KAMDHENU (SUPRA), THIS COURT CATEGORICALLY H ELD THAT THE INITIAL BURDEN LIES ON THE ASSESSEE TO ESTABLISH THE IDENTITY OF THE SH AREHOLDERS, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE SHA REHOLDERS. IT IS ONLY AFTER THE INITIAL BURDEN IS DISCHARGED THAT THE ONUS SHIFTS T O THE REVENUE. THIS COURT IN KAMDHENU (SUPRA) REFERRED TO CIT V. SOPHIA FINANCE , 205 ITR 98 WHICH HAD HELD TO THE SAME EFFECT. THE DIVINE LEASING (SUPRA) AND SOPHIA FINANCE (SUPRA) ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 67 JUDGMENTS WERE REITERATED BY THIS COURT IN DWARKADH ISH (SUPRA). THUS, THE LAW IN RELATION TO SECTION 68 IS WELL SETTLED. ................................................... ................................................... ......................... 43. THE TRANSACTIONS IN THE PRESENT APPEAL ARE YET ANOTHER EXAMPLE OF THE CONSTANT USE OF THE DECEPTION OF LOAN ENTRIES TO BRING UNACC OUNTED MONEY INTO BANKING CHANNELS. THIS DEVICE OF LOAN ENTRIES CONTINUES TO PLAGUE THE LEGITIMATE ECONOMY OF OUR COUNTRY. AS SEEN FROM THE FACTS NARRATED ABO VE, THE TRANSACTIONS HEREIN CLEARLY DO NOT INSPIRE CONFIDENCE AS BEING GENUINE AND ARE SHROUDED IN MYSTERY, AS TO WHY THE SO-CALLED CREDITORS WOULD LEND SUCH H UGE UNSECURED, INTEREST FREE LOANS - THAT TOO WITHOUT ANY AGREEMENT. IN THE ABSE NCE OF THE SAME, THE CREDITORS FAIL THE TEST OF CREDITWORTHINESS AND THE TRANSACTI ONS FAIL THE TEST OF GENUINENESS. 5.11 IN MY CONSIDERED VIEW, THE TECHNICAL OBJECTION S RAISED BY THE APPELLANT IN RESPECT OF LOAN FROM M/S JALSAGAR COMMERCE PVT. LTD . ARE OF NO AVAIL TO THE APPELLANT DUE TO FOLLOWING UNDISPUTED FACTS:- I. IT IS UNDISPUTED FACT THAT THE INCOME TAX DEPART MENT HAS MADE TREMENDOUS INVESTIGATIONS IN SUCH SHELL COMPANIES O F KOLKATA, MUMBAI AND DELHI PROVIDING ACCOMMODATION ENTRY AND STATEMENTS MADE B Y SEVERAL ACCOMMODATION ENTRY PROVIDERS HAVE BECOME VIRTUALLY IN PUBLIC DOM AIN. IT IS NO ARGUMENT THAT THE AO DID NOT PROVIDE SUCH STATEMENT BEFORE THE AS SESSEMENT OR IN ANY OF THE NOTICES. THESE FACTS WERE WELL KNOWN TO THE APPELLA NT GROUP AND IGNORANCE IS MERE PRETENCE. II. MOREOVER, SUCH STATEMENTS ARE SO VOCAL AND UNDE NIABLE THAT AS MENTIONED IN SOME OF THE CASE LAWS ABOVE, CROSS-EXAMINATION O F SUCH ACCOMMODATION ENTRY PROVIDES BY THOUSANDS OF BENEFICIARIES ACROSS INDIA IS NEITHER PRACTICABLE NOR VIABLE AND THEREFORE UNCALLED FOR. III. IT IS UNDISPUTED FACT THAT IN THE STATEMENT DA TED 06.02.2014 SHRI ANAND SHARMA HAD ADMITTED TO BE ONE OF SUCH ACCOMMODATION ENTRY PROVIDERS. THE SUM AND SUBSTANCE OF THE SAID STATEMENT IS THAT THE CON CERN M/S JALSAGAR COMMERCE PVT. LTD. WAS ENGAGED IN THE ACTIVITIES OF PROVIDI NG ACCOMMODATION ENTRIES AND ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 68 THE APPELLANT HAPPENED TO BE ONE OF SUCH BENEFICIAR Y OF SUCH CONCERN. IT IS ALSO ADMITTED FACT THAT SHRI ANAND SHARMA HAD BEEN RUNNI NG THE AFFAIR OF THE SAID COMPANY. V. THE STATEMENT OF SHRI ANAND SHARMA IN WHICH NAM E OF M/S JALSAGAR COMMERCE PVT. LTD. CANNOT BE COMPLETELY IGNORED SO LELY ON THE LEGAL GROUNDS RAISED BY THE APPELLANT. 5.12 IN VIEW OF ABOVE DISCUSSION, IT IS CLEAR THAT THE INCRIMINATING MATERIAL HAD BEEN FOUND DURING THE COURSE OF SEARCH OF ACCOMMODA TION ENTRY PROVIDER. FURTHER INCRIMINATING MATERIAL HAD BEEN GATHERED BY ISSUING COMMISSION TO DDIT (INV.) KOLKATA, DURING THE ASSESSMENT PROCEEDINGS AND ALL SUCH MATERIAL HAVE BEEN SHARED WITH THE APPELLANT AT LEAST DURING THE REMAN D REPORT PROCEEDING. IN VIEW OF NATION-WIDE KNOWN SCAM BY THE ACCOMMODATION ENTRY P ROVIDERS OF KOLKATA AND ELSEWHERE BURST BY THE INCOME TAX DEPARTMENT, THERE WAS NO NEED TO PROVIDE OPPORTUNITY FOR CROSS-EXAMINATION OF SAME ACCOMMODA TION ENTRY PROVIDERS. ANY WAY IN THE REJOINDER SUBMISSION TO REMAND REPORT TH E APPELLANT IS ABSOLUTELY SILENT ON CROSS-EXAMINATION AND BY SUCH CONDUCT HE HAS FOR GONE HIS RIGHT TO CROSS- EXAMINE. THEREFORE, THE PRINCIPLES OF NATURAL JUSTI CE HAVE BEEN FOLLOWED. AS DISCUSSED IN PRECEDING PARAS, UNDER THE FACTS AND C IRCUMSTANCE OF THE CASE, IT COULD NOT BE SAID THAT AO DID NOT FOLLOWED THE BIND ING DECISION OF THE HONBLE SUPREME COURT AND THE HONBLE JURISDICTION COURT. T HEREFORE, IN VIEW OF ABOVE FACTS DISCUSSED IN PARA 4.1 & 4.4.7, 5.1 TO 5.3 AND LEGAL POSITION APPRISED IN PARA 5.5 TO 5.11 ABOVE, IT IS HELD THAT THE ADDITION MAD E BY THE AO ON ACCOUNT OF UNSECURED LOANS AMOUNTING TO RS. 12,36,49,999/- FRO M M/S JALSAGAR COMMERCE PVT. LTD. SUSTAINABLE AND THE SAME IS CONFIRMED. THUS THE ADDITION WAS CONFIRMED BASED ON THE REPORT OF THE DDIT (INV.) KOLKATA. WE FIND THAT THE REPORT OF THE DDIT (INV. ) KOLKATA IS ALSO BASED ON THE STATEMENTS OF VARIOUS PERSONS RECORDED DURING T HEIR INVESTIGATION AND THE STATEMENT OF SHRI ANAND SHARMA WAS ALSO SENT AL ONG 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 MU CH IN THE POSSESSION OF ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 69 THE AO WHO HAS ADMITTED IN HIS STATEMENT THAT M/S. JALSAGAR COMMERCE PVT. LTD. WAS ENGAGED IN THE ACTIVITY OF PROVIDING ACCOM MODATION ENTRY. HOWEVER, WE FIND THAT M/S. JALSAGAR COMMERCE PVT. L TD IS NOT MANAGED OR CONTROLLED BY SHRI ANAND SHARMA, RATHER THE COMPANY M/S. ROYAL CRYSTAL DEALERS PVT. LTD. WAS STATED TO HAVE BEEN OWNED BY SHRI ANAND SHARMA AND IN HIS STATEMENT DATED 6 TH FEBRUARY, 2014 SHRI ANAND SHARMA HAS STATED TO HAVE BEEN PROVIDING ENTRIES FROM M/S. ROYAL CRYSTAL DEALERS PVT. LTD. TO M/S. JALSAGAR COMMERCE PVT. LTD. THEREFORE, THERE IS NO ALLEGATION OR ANY ADMISSION IN THE STATEMENT OF SHRI ANAND SHARMA THA T HE HAS PROVIDED BOGUS LOAN ENTRY TO THE ASSESSEE OR ANY GROUP CONCERNS OF THE ASSESSEE. SINCE THE NAME OF M/S. JALSAGAR COMMERCE WAS CREPTED IN HIS S TATEMENT, THE AO HAS PRESUMED THAT THE LOAN PROVIDED BY M/S. JALSAGAR CO MMERCE PVT. LTD IS NOTHING BUT THE BOGUS ACCOMMODATION ENTRY PROVIDED BY SHRI ANAND SHARMA THROUGH M/S. ROYAL CRYSTAL DEALERS PVT. LTD. THE A O HAS TRIED TO ESTABLISH THE NEXUS OF THE LOAN RECEIVED BY THE ASSESSEE THROUGH THE STATEMENT OF SHRI ANAND SHARMA WHERE HE HAS PURPORTED TO HAVE PROVIDE D THE ALLEGED ENTRY. SINCE THERE IS NO DIRECT ALLEGATION OR ADMISSION OF PROVIDING LOAN BY SHRI ANAND SHARMA TO THE ASSESSEE THROUGH M/S. ROYAL CRY STAL DEALERS PVT. LTD., THEN EVEN IF THERE IS A POSSIBILITY OF BOGUS ACCOMM ODATION ENTRY ROUTED THROUGH ANOTHER INTERMEDIARY COMPANY M/S. JALSAGAR COMMERCE PVT. LTD., IT REQUIRES A DEFINITE LINK OF THE TRANSACTIONS FROM M /S. ROYAL CRYSTAL DEALERS PVT. LTD. TO M/S. JALSAGAR COMMERCE PVT. LTD. AND T HEN 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 N OT BEEN ESTABLISHED, THEN THE ADDITION MADE MERELY ON SUSPICION, HOW SO STRON G IT MAY BE, IS NOT SUSTAINABLE. ON THE CONTRARY, WHEN THE ASSESSEE PR ODUCED ALL THE RELEVANT RECORD WHICH CONTAINS THEIR FINANCIAL STATEMENTS, B ANK ACCOUNTS STATEMENT OF LOAN CREDITOR, RETURN OF INCOME, ASSESSMENT ORDERS FRAMED UNDER SECTION 143(3), CONFIRMATION OF THE LOAN CREDITOR, THEN A P ROPER EXAMINATION COULD HAVE VERY WELL ESTABLISHED THE LINK, IF ANY, IN PRO VIDING THE ACCOMMODATION ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 70 ENTRY FROM ONE ENTITY TO ANOTHER AND FINALLY TO THE ASSESSEE. HOWEVER, NO SUCH LINK WAS FOUND IN THE DOCUMENTS AND FINANCIAL STATEMENTS OF THESE COMPANIES, RATHER IN THE BANK ACCOUNT STATEMENT OF LOAN CREDITOR M/S. JALSAGAR COMMERCE PVT. LTD. THERE WAS NO SUSPICIOUS TRANSACTION OF RECEIVING 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 MASTER DATA SHOWING THE STATUS OF LOAN CREDITOR COMPANY AS ACT IVE, CONFIRMATION OF LOAN GIVEN TO THE ASSESSEE. FURTHER, THE AO ISSUED SUMM ONS AND ALSO GOT THE SUMMONS SERVED THROUGH DDIT KOLKATA UNDER SECTION 1 31 OF THE IT ACT WHICH WERE DULY RESPONDED BY THE LOAN CREDITOR. EXCEPT TH E STATEMENT OF SHRI ANAND SHARMA AND THE REPORT OF THE INVESTIGATION WI NG KOLKATA, THE AO HAS NOT BROUGHT ON RECORD ANY OTHER MATERIAL TO CONTROV ERT 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 CO MPLETED 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 HAS NOT DISTURBED THE TRANSACTIONS OF LOAN GIVEN BY THIS CO MPANY TO THE ASSESSEE. 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 WER E NOT DISTURBED, THEN THE CREDITWORTHINESS OF THE LOAN CREDITOR CANNOT BE DOU BTED WHEN IT WAS ACCEPTED IN THE ASSESSMENT ORDER PASSED UNDER SECTI ON 143(3) OF THE IT ACT. WE FURTHER NOTE THAT THE AO INSISTED THE ASSESSEE T O PRODUCE THE DIRECTORS OF THE LOAN PROVIDER COMPANY. THE ASSESSEE PRODUCED TH E AFFIDAVIT, AND THE NOTICES ISSUED BY THE AO UNDER SECTION 131 AND 133( 6) OF THE ACT WERE DULY COMPLIED WITH BY THE CREDITOR. THE STATEMENT OF TH E DIRECTOR OF M/S. ROYAL CRYSTAL DEALERS PVT. LTD. WAS ALSO RECORDED BY THE AO WHEREIN THE DIRECTOR ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 71 HAS CONFIRMED THE TRANSACTION OF LOAN. THERE ARE V ARIOUS REPORTS OF THE DDIT KOLKATA WHICH ARE PLACED AT PAGES 406 TO 422 OF THE PAPER BOOK. WE FIND THAT ALL THESE REPORTS ARE BASED ON THE STATEMENTS RECORDED DURING THE INVESTIGATION BUT NO DOCUMENTARY EVIDENCE WAS EITHE R GATHERED OR HAS BEEN REFERRED IN THESE REPORTS. THEREFORE, EVEN IF THES E REPORTS ARE TO BE TAKEN INTO CONSIDERATION, THESE ARE NOTHING BUT NARRATION OF THE STATEMENTS OF VARIOUS PERSONS TAKEN DURING THE INVESTIGATION. IT IS WELL SETTLED PRINCIPLE AS WELL AS THE DIRECTIONS OF THE CBDT ISSUED UNDER THE CIRCULARS THAT DURING THE COURSE OF INVESTIGATION, THE DEPARTMENT SHOULD CONC ENTRATE AND FOCUS ON COLLECTING DOCUMENTARY EVIDENCE DISCLOSING UNDISCLO SED INCOME INSTEAD OF OBTAINING THE STATEMENT AND THEN SUPPORT OF THEIR C LAIM MERELY ON THE BASIS OF THE STATEMENT. THEREFORE, THE STATEMENTS RECORD ED BY THE DDIT KOLKATA ARE ALSO NOT BASED ON ANY DOCUMENTARY EVIDENCE SO A S TO HAVE AN EVIDENTIARY VALUE FOR SUSTAINING THE ADDITIONS MADE BY THE AO. THE ENTIRE REPORT OF THE INVESTIGATION WING IS BASED ON STATEMENTS RECORDED DURING SURVEY AND SEARCH. ONCE THE ASSESSEE HAS PRODUCED THE DOCUMENT ARY EVIDENCE AND PARTICULARLY THE FINANCIAL STATEMENTS OF THE LOAN C REDITORS, THEIR BANK ACCOUNT STATEMENT, THEN IN THE ABSENCE OF ANY DISCREPANCY O R FAULT IN THESE FINANCIAL STATEMENTS OR IN THE BANK ACCOUNT STATEMENT TO REFL ECT THAT THE TRANSACTIONS IN QUESTION ARE NOTHING BUT BOGUS ACCOMMODATION ENT RIES, THE ADDITION MADE BY THE AO IS NOT SUSTAINABLE AS IT IS MERELY O N THE BASIS OF SURMISES AND CONJECTURES AND NOT ON ANY TANGIBLE MATERIAL DISCLO SING THE NON-GENUINENESS OF THE TRANSACTIONS. THE AO HAS NOT DISPUTED THE TR ANSACTIONS ROUTED THROUGH BANKING CHANNEL HAVING SUFFICIENT FUNDS WHICH IS AL SO SUPPORTED BY THE FINANCIAL STATEMENTS AND FURTHER THE ASSESSMENTS OF THE LOAN CREDITOR WERE COMPLETED UNDER SECTION 143(3). THE DETAILS OF LOA NS TAKEN FROM M/S. JALSAGAR COMMERCE PVT. LTD., INTERESTS CREDITED/PAI D AND REPAYMENT OF LOAN AMOUNT AS WELL AS CLOSING BALANCE ARE AS UNDER :- ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 72 NAME OF COMPANY AY OPENING BALANCE LOAN TAKEN DURING THE YEAR INTEREST CREDITED IN LOAN A/C DURING THE YEAR INTEREST CREDITED IN INTEREST PAID /PAYABLE A/C LOAN REPAYMENT/ TDS/TRANSFER IN PARTNER CAPITAL DURING THE YEAR CLOSING BALANCE JALSAGAR COMMERCE PRIVATE LTD 10-11 41,298 34,70,40,000 13,96,176 12,56,558 34,21 ,15,916 51,05,000 JALSAGAR COMMERCE PRIVATE LTD 11-12 51,05,000 77,18,70,000 16,71,599 15,04,439 77 ,18,37,160 53,05,000 JALSAGAR COMMERCE PRIVATE LTD 12-13 53,05,000 78,95,00,000 1,07,08,434 96,37,591 31,72,80,655 47,85,95,188 JALSAGAR COMMERCE PRIVATE LTD 13-14 47,85,95,188 2,76,31,50,000 0 0 2,97,53,40,00 0 26,64,05,188 JALSAGAR COMMERCE PRIVATE LTD 14-15 26,64,05,188 97,34,50,000 0 0 1,24,03,55,188 (5,00,000) JALSAGAR COMMERCE PRIVATE LTD 15-16 0 1,34,89,00,000 49,00,600 44,10,540 1,34,93, 90,060 0 JALSAGAR COMMERCE PRIVATE LTD 16-17 0 87,11,00,000 1,67,23,178 1,50,50,860 87,27, 72,318 0 ALL THESE DETAILS WERE BEFORE THE AO AS ALL THESE A SSESSMENT YEARS WERE PASSED BY THE AO PURSUANT TO THE SEARCH AND SEIZURE ACTION 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 ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 73 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. THUS, THE TRIBUNAL HAS CONSIDERED THE FACT THAT THE ASSESSEE PRODUCED ALL THE RELEVANT DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLA IM TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF UNSECURED LOAN. WE FURTHER NOTE THAT IN SUPPORT OF ITS CLAIM, THE ASSESSEE PRODUCED FOLLOWI NG DOCUMENTS: S. NO. PARTICULARS OF DOCUMENTS 1 COPY OF ACK. OF ITR OF AY 2010 - 11 2 COPY OF BALANCE SHEET AND ANNEXURE OF LOANS & ADVAN CE OF AY 2010 - 11 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY O F PAYMENT MADE TO ASSESSEE. 4 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS O F ACCOUNTS OF PARTY. 5 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS O F ACCOUNTS OF ASSESSEE. 6 COPY OF AFFIDAVIT OF SANGEETA SOMANI DIRECTOR OF CO MPANY. 7 COPY OF BAL ANCE SHEET OF COMPANY OF 31.03.2010, 31 - 03 - 2011,31 - 03 - 2012, 31-03-2013, 31-03-2014,31-03-2015 AND 31-03-2 016 8 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOV E NAMED COMPANY FOR AY 2005-06, AY 2007-08, AY 2011-12, AY 2012-13 AND 2014-15. 9 COPY OF ROC MASTER DATA. 10 COPY OF PAN CARD. THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE CORRECTNESS OF THE EVIDENCE FILED BY THE ASSESSEE R ATHER ALL THESE RECORDS WAS SUBJECTED TO THE SCRUTINY ASSESSMENT IN THE CASE OF THE LOAN CREDITOR, THEREFORE, ONCE THE DEPARTMENT HAS ACCEPTED FINANCIAL STATEMEN T OF THE LOAN CREDITORS THEN THE SAME CANNOT BE DENIED WHILE EXAMINING GENUINENE SS OF THE TRANSACTION IN THE HAND OF THE ASSESSEE. HENCE, BY FOLLOWING THE EARLI ER ORDER OF THIS TRIBUNAL IN THE CASE OF KOTA DALL MILL (SUPRA) WHEREIN THE ISSUE OF LOAN TAKEN FROM M/S JALSAGAR COMMERCE PVT. LTD. WAS EXAMINED AND DECIDED IN FAVO UR OF THE ASSESSEE, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER I N THIS REGARD. WE FIND THAT IN THE CASE IN HAND, THE ASSESSEE HAS ALSO PRODUCED ALL THE RELEVANT DOCUMENTS AS REFERRED IN THE EARLIER ORDER OF THIS TRIBUNAL WHICH INCLUDES ITR, FINANCIAL STATEMENTS, BANK STATEMENTS , CONFIRMATION OF LOAN, ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 74 AFFIDAVIT OF THE DIRECTOR OF THE LOAN CREDITOR, BAL ANCE SHEET OF VARIOUS YEARS SHOWING THE AVAILABILITY OF THE FUNDS, STATUS OF TH E LOAN CREDITOR AS PER THE ROC MASTER DATA AND THE ASSESSMENT ORDERS FRAMED U/ S 143(3) OF THE ACT BY THE A.O.. THEREFORE, ONCE THE ASSESSEE HAS PRODU CED THE RELEVANT DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM AS WEL L AS REPAYMENT OF THE LOAN INCLUDING THE PAYMENT OF INTEREST, WHICH WERE NOT DISALLOWED OR DISTURBED BY THE A.O. IN ANY OF THE YEARS THEN IN A BSENCE OF ANY CONTRARY MATERIAL BROUGHT BY THE A.O. TO CONTROVERT OR DISPU TE THE CORRECTNESS OF THE EVIDENCE FILED BY THE ASSESSEE, THE ADDITION MADE B Y THE A.O. AND CONFIRMED BY THE LD. CIT(A) ARE NOT SUSTAINABLE. FU RTHER THE STATEMENT RELIED UPON BY THE A.O. OF SHRI ANAND SHARMA, NO WH ERE STATES THAT HE HAS PROVIDED ANY ACCOMMODATION ENTRY TO THE ASSESSEE BU T REFERENCE OF M/S JALSAGAR COMMERCE PVT. LTD. IN THE STATEMENT IS ONL Y TO THE EXTENT THAT HE HAS PROVIDED ACCOMMODATION ENTRIES TO M/S JALSAGAR COMMERCE PVT. LTD. THROUGH ANOTHER COMPANY NAMELY ROYAL CRYSTAL DEALER PVT. LTD. FURTHER THE A.O. HAS NOT POINTED OUT ANY DISCREPANCY IN THE REC ORD TO SHOW THAT THE ASSESSEES OWN MONEY HAS BEEN ROUTED BACK IN THE GA RB OF UNSECURED LOANS. ACCORDINGLY, IN VIEW OF THE EARLIER ORDERS O F THIS TRIBUNAL, WE DELETE THE ADDITION MADE BY THE A.O. IN RESPECT OF UNSECUR ED LOAN TAKEN FROM M/S JALSAGAR COMMERCE PVT. LTD. FOLLOWING THE EARLIER ORDERS OF THIS TRIBUNAL, THIS I SSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. GROUND NO. 6 OF THE ASSESSEES APPEAL IS REGARD ING DENIAL OF BENEFIT OF TELESCOPING, RECYCLING AND ROTATION OF FUNDS BY REJECTING THE PEAK CREDIT THEORY. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 75 11. WE HAVE CONSIDERED THE LD AR OF THE ASSESSEE AS WELL AS THE LD CIT- DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. SINCE THE ADDITIONS MADE BY THE ASSESSING OFFICER HAVE BEEN FINALLY DEL ETED BY US, THEREFORE, THIS GROUND OF THE ASSESSEES APPEAL IS BECOME INFR UCTUOUS. 12. IN THE CROSS APPEAL FOR THE A.Y. 2010-11, THE R EVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F RS. 77,00,000/- MADE BY THE AO U/S 68 OF THE IT ACT ON ACCOUNT OF U NEXPLAINED SHARE APPLICATION MONEY ALLEGEDLY OBTAINED BY THE A SSESSEE FROM M/S ISIS MERCANTILE P LTD., M/S TEAC CONSULTANTS PV T. LTD. AND M/S SANGAM DISTRIBUTORS 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 O F UNSECURED LOANS BY OBSERVING THAT THE ALLEGED LENDER COMPANY M/S IS IS MERCANTILE P LTD., M/S TEAC CONSULTANTS PVT. LTD. AND M/S SANG AM DISTRIBUTORS PVT. LTD. ARE NOT SHELL COMPANIES WITH OUT CONSIDERING THE FINANCIAL STATEMENTS OF THIS COMPANIES. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F UNSECURED LOANS ALLEGEDLY OBTAINED FROM M/S ISIS MERCANTILE P LTD., M/S TEAC CONSULTANTS PVT. LTD. AND M/S SANGAM DISTRIBUTORS P VT. LTD. MERELY FOR THE REASON THAT EVIDENCES IN THE FORM OF STATEM ENT ON OATH OF THE RELEVANT ENTRY OPERATORS WERE NOT AVAILABLE ON RECORD. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F UNSECURED LOANS ALLEGEDLY OBTAINED FROM M/S ISIS MERCANTILE P LTD., M/S TEAC CONSULTANTS PVT. LTD. AND M/S SANGAM DISTRIBUTORS P VT. LTD. DESPITE THE FACT THAT THE DIRECTORS OR PRINCIPAL OF FICERS OF THESE COMPANIES WERE NEVER PRODUCED BEFORE THE AO FOR EXA MINATION DESPITE NUMBER OF OPPORTUNITIES PROVIDED BY THE AO FOR PRODUCING ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 76 AND ALSO IGNORING THE FACT THAT THE ASSESSEE NEITHE R EXPRESSED ITS INABILITY IN PRODUCING THE LENDERS NOR PRODUCED THE M EITHER. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F UNSECURED LOANS ALLEGEDLY OBTAINED FROM M/S ISIS MERCANTILE P LTD., M/S TEAC CONSULTANTS PVT. LTD. AND M/S SANGAM DISTRIBUTORS P VT. LTD. MERELY BY OBSERVING THAT THE ASSESSEE HAS COOPERATED IN AS SESSMENT BY SHOWING HIS WILLINGNESS TO PRODUCE THE DIRECTORS OF LENDER COMPANIES AND SOME DIRECTORS/OFFICERS WERE ALSO PRO DUCED BEFORE THE AO DESPITE THE FACT THAT EVEN THE DIRECTORS WHI CH WERE PRODUCED BEFORE THE AO FAILED TO SUBSTANTIATE THE G ENUINENESS OF THE ALLEGED TRANSACTIONS. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F UNSECURED LOANS BY OBSERVING THAT THE APPELLANT CANNOT BE FASTENED UPON THE BURDEN TO PRODUCE THE LENDERS BEFORE THE AO AND IN NOT CONSIDERING THE DECISION OF THE HONBLE SUPREME COU RT IN NAVODAYA CASTLES (P) LTD VS CIT(2015) 56 TAXMANN.CO M 18(SC) WHEN THERE WERE GENUINE CONCERNS OF THE GENUINENESS OF THE TRANSACTIONS. 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE O F RS. 1,50,187/- MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTIO N 14A OF THE INCOME TAX ACT. 8. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE O F RS. 8,89,891/- MADE BY THE AO ON ACCOUNT OF DEPRECIATION CLAIM. THE APPELLANT CRAVE, LEAVE OR RESERVING THE RIGHT TO AMEND MODIFY, ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 13. GROUNDS NO. 1 TO 6 OF THE APPEAL ARE REGARDING THE ADDITIONS MADE BY THE A.O. IN RESPECT OF SHARE CAPITAL RECEIVED FR OM THREE COMPANIES NAMELY M/S ISIS MERCANTILE PVT. LTD. AND M/S SANGAM DISTRIBUTORS PVT. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 77 LTD., M/S TECH CONSULTANTS PVT. LTD., WHICH WAS DELETE D BY THE LD. CIT(A) FOR WANT OF ANY SUPPORTING MATERIAL AS WELL AS STATEM ENT OF ALLEGED ENTRY OPERATOR. 14. WE HAVE HEARD THE LD CIT-DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD AT T HE OUTSET WE NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THIS TRIBU NAL IN THE CASE OF M/S KOTA DALL MILL VS. DCIT (SUPRA) AS WELL AS IN THE CAS E OF DCIT VS. M/S BARAN ROLLER FLOUR MILLS PVT. LTD. (SUPRA) WHILE DEA LING THE APPEAL OF THE REVENUE. THE TRIBUNAL IN THE CASE OF DCIT VS. M/S BAR AN ROLLER FLOUR MILLS PVT. LTD. (SUPRA) VIDE ORDER DATED 11/01/2019 HAS C ONSIDERED AND DECIDED THE ISSUE OF ADDITION MADE IN RESPECT OF THESE COMP ANIES IN PARA 6 AND 7 AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. FOR THE ASSESSMENT YEAR 2010-11, THE AS SESSEE RECEIVED SHARE CAPITAL WITH PREMIUM FROM TWO COMPANIES DETAILS OF WHICH ARE AS UNDER :- (1) M/S. SANGAM DISTRIBUTORS PVT. LTD. RS. 90,00,000/- (2) M/S. TEAC CONSULTANTS PVT. LTD. RS. 15,00,000/- THERE IS NO DISPUTE THAT DURING THE COURSE OF SEARC H AND SEIZURE NO INCRIMINATING MATERIAL WAS EITHER FOUND OR SEIZED D ISCLOSING ANY UNDISCLOSED INCOME OR INDICATING ANY BOGUS TRANSACT ION OF RECEIPT OF SHARE CAPITAL AND PREMIUM BY THE ASSESSEE FROM THESE TWO COMPANIES. FURTHER, THE AO HAS ALSO NOT REFERRED OR RELIED UPON ANY SEI ZED DOCUMENT WHILE MAKING THE ADDITION OF THE AMOUNT OF RS. 1,05,00,00 0/- ON ACCOUNT OF ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 78 SHARE CAPITAL AND PREMIUM RECEIVED FROM THESE TWO C OMPANIES UNDER SECTION 68 OF THE IT ACT. THE SOLE BASIS OF THE AD DITION MADE BY THE AO IS THE INFORMATION RECEIVED FROM THE INVESTIGATION WIN G KOLKATA WHICH IS ALSO IN TURN IS NOTHING BUT THE NARRATION OF THE ST ATEMENTS OF VARIOUS PERSONS ALLEGEDLY OPERATORS OF BOGUS ENTRY PROVIDER . THE AO HAS REFERRED TO THE STATEMENT OF SHRI ANAND SHARMA AND OTHER THR EE PERSONS AS MENTIONED IN THE REPORT OF THE INVESTIGATION WING F OR TREATING THE SHARE CAPITAL AND PREMIUM RECEIVED FROM THESE TWO COMPANI ES AS UNDISCLOSED CASH CREDIT BEING THE ASSESSEES OWN UNACCOUNTED AN D UNDISCLOSED INCOME ROUTED IN THE SHAPE OF SHARE CAPITAL AND PRE MIUM. IT IS ALSO NOT DISPUTED THAT THE AO WAS NOT EVEN HAVING THE ALLEGE D STATEMENT OF SHRI AMIT KEDIA AND SHRI ALOK HARLALKA BUT ONLY A REFERE NCE WAS MADE IN THE REPORT OF THE INVESTIGATION WING. THEREFORE, EXCEP T THE REPORT OF THE INVESTIGATION WING KOLKATA, THE AO WAS NOT HAVING A NY OTHER MATERIAL IN HIS POSSESSION TO SUPPORT HIS DECISION OF TREATING THE SHARE CAPITAL AND PREMIUM RECEIVED FROM THESE TWO COMPANIES AS BOGUS TRANSACTION AND ADDITION UNDER SECTION 68 OF THE ACT. ON THE CONT RARY, THE ASSESSEE HAS PRODUCED THE FOLLOWING DOCUMENTARY EVIDENCE IN SUPP ORT OF THE CLAIM :- M/S TEAC CONSULTANTS PVT. LTD S. NO. PARTICULARS PAPER BOOK PAGE NO. 1 COPY OF ACK. OF ITR OF AY 2010-11 ALONG WITH COMPUTATION SHEET 426 - 427 2 COPY OF BALANCE SHEET OF AY 2010-11 ALONG WITH ENCLOSURES 428 - 433 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. 434 4 CONFIRMATION OF ACCOUNT SHOWING THE TRANSACTION WITH ASSESSEE COMPANY ALONG WITH LEDGERS FROM THE BOOKS OF SHARE APPLICANTS 435 - 436 5 COPY OF SHARE ALLOTMENT ADVICE 437 6 COPY OF SHARE APPLICATION FORM OF EQUITY SHARE 438 ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 79 7 COPY OF AFFIDAVIT OF MR JITENDRA SHARMA DIRECTOR OF COMPANY. 439 - 442 8 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 AND 31.03.2016. 443 - 449 9 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOVE NAMED COMPANY FOR AY 2005-06, AY 2006- 07, AY 2012-13 AND 2014-15. 450 - 469 10 COPY OF ROC MASTER DATA. 470 - 471 11 COPY OF PAN CARD. 472 12 CERTIFICATE OF INCORPORATION. 473 13 COPY OF CERTIFICATE OF NBFC REGISTRATION. 474 14 COPY OF SUMMON NO. 1433 DATED 13.10.2017 AND REMINDER SUMMON NO.-1592 DATED 31.10.2017 ISSUED BY DDIT (INVESTIGATION), UNIT-1(3), KOLKATA U/S 131 OF INCOME TAX ACT, 1961 TO M/S TEAC CONSULTANTS PRIVATE LIMITED. 475 - 478 15 COPY OF REPLY IN RESPONSE TO SUMMON ISSUED TO TH E COMPANY. 479 - 481 16 COPY OF LETTER FOR CONFIRMATION OF SOURCE OF FUN DS USED FOR APPLYING THE SHARES ALONG WITH SUPPORTING DOCUMENTS 482 - 485 M/S SANGAM DISTRIBUTORS PVT. LTD. S. NO. PARTICULARS PAPER BOOK PAGE NO. 1 COPY OF ACK. OF ITR OF AY 2010-11 ALONG WITH COMPUTATION SHEET 486 - 487 2 COPY OF BALANCE SHEET OF AY 2010-11 ALONG WITH ENCLOSURES 488 - 489 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. 490 4 CONFIRMATION OF ACCOUNT SHOWING THE TRANSACTION WITH ASSESSEE COMPANY. 491 5 COPY OF SHARE APPLICATION FORM OF EQUITY SHARE 492 - 493 6 COPY OF AFFIDAVIT OF MRS NEELAM GAUTAM DIRECTOR O F M/S BIRLA ARTS PVT LTD. ON BEHALF OF AMALGAMATED COMPANY M/S SANGAM DISTRIBUTORS PVT LTD. 494 - 497 ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 80 7 COPY OF ORDER DATED 19.07.2014 PASSED BY CALCUTTA HIGH COURT REGARDING AMALGAMATION OF OTHER COMPANIES IN THIS COMPANY 498 - 524 8 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31.03.2011, 31.03.2012, AND 31.03.2013. 525 - 528 9 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOVE NAMED COMPANY FOR AY 2006-07, AY 2007- 08 AND 2013-14. 529 - 540 10 COPY OF ROC MASTER DATA. 541 - 542 11 COPY OF PAN CARD. 543 12 CERTIFICATE OF INCORPORATION. 544 THUS IT IS MANIFEST FROM THE DETAILS OF THE DOCUMEN TARY EVIDENCE PRODUCED BY THE ASSESSEE THAT THE ASSESSEE ESTABLISHED ITS C LAIM OF GENUINENESS OF THE TRANSACTION AS WELL AS CREDITWORTHINESS OF THES E SHARE APPLICANTS BY SHOWING THE TRANSACTIONS IN THE BOOKS OF ACCOUNTS A ND FINANCIAL STATEMENTS OF THE SHARE APPLICANTS, THE AVAILABILIT Y OF THE FUNDS TO ESTABLISH THE CAPACITY OF THE SHARE APPLICANTS TO S UBSCRIBE TO THE SHARE CAPITAL OF THE ASSESSEE WITH PREMIUM. FURTHER, THE INCOME TAX RETURNS OF THE SHARE APPLICANTS WERE ALSO FILED WHICH SHOW THA T ALL THE TRANSACTIONS WERE DISCLOSED IN THE RETURN OF INCOME. APART FROM THE CAPACITY OF THE SHARE APPLICANTS, THE ASSESSEE HAS ALSO PRODUCED TH E BANK STATEMENTS OF THE SHARE APPLICANTS TO SHOW THAT THE PAYMENT OF TH E MONEY WAS MADE THROUGH BANKING CHANNEL AND THE AO HAS NOT POINTED OUT ANY DISCREPANCY EITHER IN THE BANK ACCOUNT STATEMENTS OF THE SHARE APPLICANTS OR IN THE FINANCIAL STATEMENTS TO SHOW THAT THERE WAS ANY COR RESPONDING DEPOSITS OF MONEY PRIOR TO THE PAYMENT TO THE ASSESSEE WHICH CO ULD INDICATE A SLIGHTEST SCOPE OF ASSESSEES OWN MONEY ROUTED THRO UGH SHARE APPLICANTS. THEREFORE, IN THE ABSENCE OF ANY SUCH FINDING OR AN Y SUCH DISCREPANCY IN THE BANK ACCOUNT STATEMENTS AND FINANCIAL STATEMENT S, THE AO HAS NOT PRODUCED ANY MATERIAL OR RECORD TO CONTRADICT THE D OCUMENTARY EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF THE CLAIM. FUR THER, THERE IS A DECISION OF HONBLE CALCUTTA HIGH COURT IN CASE OF M/S. SANGAM DISTRIBUTORS PVT. LTD. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 81 APPROVING THE AMALGAMATION OF THE COMPANY. THE ASS ESSEE ALSO PRODUCED THE CONFIRMATION AND AFFIDAVITS OF THE DIRECTORS OF THE SHARE APPLICANT COMPANIES APART FROM THE FINANCIAL STATEMENTS TO SH OW THE SUFFICIENCY OF FUND WITH THE SHARE APPLICANTS AND REGULAR BUSINESS ACTIVITIES AND FLOW OF FUNDS. FURTHER, THE ASSESSEE ALSO PRODUCED THE ROC MASTER DATA OF SHARE APPLICANTS TO SHOW THAT THE STATUS OF THESE COMPANI ES AS PER ROC RECORD IS ACTIVE/AMALGAMATED . THE SHARE APPLICANT COMPANIES ARE ALSO REGULARLY ASSESSED TO TAX AND SUBJECT TO SCRUTINY ASSESSMENT. THE ASSESSEE PRODUCED THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) I N RESPECT OF THE SHARE APPLICANT COMPANIES, DETAILS OF WHICH ARE AS UNDER :- ASSESSMENT U/S 143(3) : NAME OF COMPANY ASSESSMENT YEAR INCOME ASSESSED ASSESSMENT ORDER U/S 143(3) AT PB PG M/S TEAC CONSULTANTS PVT. LTD 2005-06 13,980 451-453 M/S TEAC CONSULTANTS PVT. LTD 2006-07 45,395 454-455 M/S TEAC CONSULTANTS PVT. LTD 2012-13 49,91,290 459-462 M/S TEAC CONSULTANTS PVT. LTD 2014-15 10,14,150 466/ M/S SANGAM DISTRIBUTORS PVT.LTD 2006-07 NIL 530-531 M/S SANGAM DISTRIBUTORS PVT.LTD 2007-08 9,600 534-535 M/S SANGAM DISTRIBUTORS PVT.LTD 2013-14 6,79,400 538 M/S ISIS MERCANTILE PVT. LTD. 2006-07 6,936/- 500-501 M/S ISIS MERCANTILE PVT. LTD 2013-14 21,81,459/- 502-505 M/S ISIS MERCANTILE PVT. LTD 2014-15 NIL (AMALGAMATED WITH M/S MAGNATE CAPITAL MARKET PVT. LTD.) 509-510 ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 82 THUS IT IS CLEAR THAT BOTH THE SHARE APPLICANT COMP ANIES ARE REGULARLY ASSESSED AND ASSESSMENT ORDERS UNDER SECTION 143(3) WERE PASSED WHEREIN THE TRANSACTIONS OF INVESTMENT MADE IN THE SHARES O F THE ASSESSEE WERE NOT DISTURBED BY THE AO. HENCE ALL THESE DOCUMENTAR Y EVIDENCES AS WELL AS THE ADMITTED FACTS CLEARLY ESTABLISHED THAT THE ASS ESSEE HAS DISCHARGED ITS ONUS OF PROVING THE IDENTITY AND CREDITWORTHINESS O F THE SHARE APPLICANTS AS WELL AS GENUINENESS OF THE TRANSACTIONS. THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO CONTRADICT THE DOCUMENTARY E VIDENCE FILED BY THE ASSESSEE. THE LD. CIT (APPEALS) HAS DELETED THE AD DITION IN PARA 5 TO 5.13 AS UNDER :- 5. ON BEING PERUSAL OF REPORTS DATED 28.11.2017 AND 06.12.2017 RECEIVED FROM INVESTIGATION DIRECTORATE, KOLKATA IT REVEALS NO ADVERSE FACTS, DETAILS AND EVIDENCES ARE NOT FOUND IN THE REPORTS IN RESPECT OF SHARE APPLICATION MONEY AND SHARE PREMIU M RECEIVED FROM M/S SANGAM DISTRIBUTORS PVT. LTD. AND M/S TEAC CONSULTANTS PVT. LTD. AS MENTIONED IN PARA 4.4.7 ABOVE MY FINDI NGS ARE AS FOLLOWS:- 5.1 AS DISCUSSED IN PARA 4.4.7 ABOVE, IN RESPECT OF THE INVESTORS NAMELY M/S SANGAM DISTRIBUTORS PVT. LTD. AND M/S TE AC CONSULTANTS PRIVATE LIMITED ADVERSE FINDINGS ALONG WITH ELOQUEN T EVIDENCES IN THE FORM OF STATEMENT ON OATH OF RELEVANT ENTRY OPE RATORS ARE NOT VISIBLE IN THE REPORTS DATED 28.11.2017 AND 06.12.2 017 FROM INVESTIGATION DIRECTORATE, KOLKATA AND THEREFORE IT COULD NOT BE TREATED AS SHELL COMPANY. 5.2 AS FAR AS THE LENDER COMPANIES NAMELY, M/S SANG AM DISTRIBUTORS PVT. LTD AND M/S TEAC CONSULTANTS PRIV ATE LIMITED IS CONCERNED, IT IS EVIDENT FROM THE DOCUMENTS PLACED ON RECORD THAT ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 83 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 REMAINE D UNSERVED OR THESE COMPANIES WERE NOT FOUND EXISTENT ON THE GIVE N ADDRESSES. FURTHERMORE, AFFIDAVIT OF THE DIRECTORS WERE ALSO S UBMITTED WHEREIN THE DIRECTORS CONFIRMED INVESTMENT IN SHARES OF THE APPELLANT AND SOURCE OF PROVIDING THE SAID. ALSO, IT IS EVIDENT F ROM THE ASSESSMENT ORDER THAT NO STATEMENT/EVIDENCE HAS BEEN RELIED UP ON OR PROVIDED BY THE AO FOR SUBSTANTIATING THAT THESE COMPANIES A RE CONTROLLED BY THE SO-CALLED ENTRY OPERATORS. 5.3 FOR THIS INVESTOR NAMELY, M/S SANGAM DISTRIBUT ORS PVT. LTD. AND M/S TEAC CONSULTANTS PRIVATE LIMITED, THE APPEL LANT IN DISCHARGE OF ITS ONUS U/S 68 OF THE ACT HAS FILED C ONFIRMATION OF ACCOUNTS AS WELL AS BANK STATEMENT REFLECTING THE T RANSACTIONS WITH OTHER SUBSTANTIATING DOCUMENTS ALONG WITH ASSESSMEN T ORDERS IN CASE OF INVESTOR COMPANIES, WHICH ARE AVAILABLE AT PAGE NO. 292 TO 389 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 APPELLANT TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENES S OF THE CASH CREDITS. IN THE CASE OF ADDL. CIT V. BAHRI BROS. (P ) LTD. [1985] 154 ITR 244 (PAT), THE HON'BLE PATNA HIGH COURT HAS HEL D ' IF THE LOANS ARE GIVEN BY AN ACCOUNT PAYING CHEQUE, IT AMOUNTS T O IDENTIFICATION OF THE PARTIES AND DISCHARGE OF BURDEN BY THE BORRO WER .' IN VIEW OF THE ABOVE, IT IS CLEAR THAT APPELLANT DISCHARGED IT S BURDEN U/S 68 OF THE ACT. EVEN OTHERWISE, THERE IS NO ADVERSE FINDIN G OF ANY INVESTIGATION CONDUCTED BY THE DEPARTMENT IN RELATI ON TO THESE COMPANIES. THEREFORE, IN THE ABSENCE OF ANY INDEPEN DENT INQUIRY AND ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 84 ANY ADVERSE FINDINGS TO REBUT THE EVIDENCES FILED B Y THE APPELLANT, I FIND THAT THE ADDITION IN RESPECT OF SHARE APPLICAT ION AND SHARE PREMIUM FROM M/S SANGAM DISTRIBUTORS PVT. LTD. AND M/S TEAC CONSULTANTS PRIVATE LIMITED AMOUNTING TO RS. 1,05,0 0,000/- IS UNJUSTIFIED; FIRSTLY, ON THE GROUND THAT NO INQUIRI ES WERE MADE TO REBUT THE EVIDENCES FILED BY THE APPELLANT AND SECO NDLY, ON THE GROUND THAT APPELLANT DULY DISCHARGED ITS BURDEN CA STED UPON U/S 68 OF THE ACT TO EXPLAIN NATURE AND SOURCE OF THE TRAN SACTIONS BY PROVING THE IDENTITY, CREDITWORTHINESS OF CREDITOR AND GENUINENESS OF THE TRANSACTION. IN PARTICULAR, NONE OF THE MATERIA L OR STATEMENTS HAVE BEEN PROVIDED IN THE ASSESSMENT ORDER WHEREIN NAMES OF THE SAID COMPANIES ARE MENTIONED. NOTABLY, THE TRANSACTIONS WITH THE COMPANY ARE DULY VERIFIABLE FROM CONFIRMATION OF AC COUNTS PLACED AT PAGE NO. 296 AND 351 OF PB WITH SUPPORTING BANK STATEMENTS PLACED AT PAGE NO. 295 AND 352 OF PB AND HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS ONLY AND THUS, APPELLANT HAS DULY PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS. 5.4 FURTHERMORE, FROM THE PERUSAL OF DOCUMENTARY EV IDENCES SUBMITTED BY THE APPELLANT, IT IS SEEN THAT TRANSAC TIONS HAVE BEEN DONE THROUGH BANKING CHANNELS AND ON THE DATE OF MA KING OF LOANS, THERE IS BALANCE AVAILABLE IN THE ACCOUNTS OF THE B ORROWERS, WHICH PROVES THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THERE IS NO CASE OF ANY CASH DEPOSITION IN THE ACCO UNT OF ANY OF THE INVESTOR AT THE TIME OF ISSUING CHEQUES/RTGS IN FAV OUR OF THE ASSESSEE. THEREFORE, IN VIEW OF THE SETTLED JUDICIA L PRECEDENT IN CASE OF CIT V. VARINDER RAWLLEY [2014] 366 ITR 232 (PUNJ AB & HARYANA), CIT V. VIJAY KUMAR JAIN [2014] 221 TAXMAN 180, CIT V. VICTOR ELECTRODES LTD. [2010] 32 9 ITR 271, ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 85 ADDL. CIT V. BAHRI BROS. (P) LTD. [1985] 154 ITR 24 4 (PAT) AND OTHERS AS REFERRED BY THE APPELLANT, I AM OF THE CO NSIDERED VIEW THAT APPELLANT DULY DISCHARGED ITS BURDEN CASTED UPON IT U/S 68 OF THE ACT. IT IS FURTHER SEEN THAT M/S SANGAM DISTRIBUTOR S PVT. LTD AND M/S TEAC CONSULTANTS PRIVATE LIMITED DULY REPLIED TO TH E NOTICES ISSUED BY DCIT/DDIT(INV.), KOLKATA IN RESPECT OF COMMISSIO N, THESE FACTS REMAIN UNCONTROVERTED BY THE AO. 5.5 THE AO DURING ASSESSMENT PROCEEDINGS TOOK NEGAT IVE INFERENCE FROM THE STATEMENT OF SHRI RAJENDRA AGARW AL RECORDED DURING SEARCH U/S 132(4) WHEREIN HE MADE DISCLOSURE IN RESPECT OF LONG TERM CAPITAL GAIN IN HIS INDIVIDUAL HANDS. I H AVE GONE THROUGH THE STATEMENT OF SHRI RAJENDRA AGARWAL AND HIS DISCLOSURE MADE IN HIS STATEMENT, NOTABLY, THE DISCLOSURE MADE WAS IN HIS PERSONAL CAPACITY ONLY AND WITH RESPECT TO LTCG ONL Y AND NOT IN RESPECT OF ANY OTHER TRANSACTIONS BE IT BE RECEIPT OF UNSECURED LOANS. FURTHER, RAJENDRA AGARWAL AND APPELLANT ARE SEPARAT E LEGAL ENTITY. THEREFORE, I FIND THAT IN THE ABSENCE OF ANY NEXUS OF THE STATEMENT OF SHRI RAJENDRA AGARWAL WITH THE APPELLANT OR ITS TOT AL INCOME, THIS BASIS OF ADDITION ADOPTED BY THE AO IS FARFETCHED & CANNOT BE CONCURRED. 5.6 IT IS FURTHER SEEN THAT AO HAS NOT BROUGHT ANY SPECIFIC DEFECT / DISCREPANCIES IN THE DIRECT EVIDENCE BROUGHT ON REC ORD BY THE APPELLANT. THE AO HAS OBSERVED THAT ON THE DATE OF DEBIT IN THE ACCOUNT STATEMENT OF INVESTOR, THERE IS CORRESPONDI NG CREDIT ENTRY OF EQUAL AMOUNT, HOWEVER, THIS OBSERVATION OF THE AO I S ITSELF NOT SUFFICIENT TO PROVE BEYOND DOUBT THAT APPELLANT ROU TED ITS UNACCOUNTED INCOME BY THESE COMPANIES RATHER IT PRO VES THE SOURCE IN THE HANDS OF THE APPELLANT. IT IS USUAL BUSINESS PRACTICE, WHILE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 86 MAKING INVESTMENT, FUNDS ARE REQUIRED TO BE ARRANGE D BY THE INVESTOR, THEREFORE REFLECTION OF SUCH ENTRIES IN B ANK STATEMENT DOESNT LEAD TO DRAW ANY ADVERSE INFERENCE AGAINST THE APPELLANT. NEEDLESS TO SAY THAT APPELLANT IS NOT REQUIRED TO P ROVE SOURCE OF THE SOURCE U/S 68 OF THE ACT IN VIEW OF THE SETTLED JUD ICIAL PRECEDENTS. 5.7 IN MY CONSIDERED VIEW, MERE NOT BELIEVING AN EX PLANATION CANNOT LEAD TO A CONCLUSION THAT THE INVESTED AMOUN T IS THE INCOME OF THE ASSESSEE FROM SOME UNDISCLOSED SOURCES WHILE IN THE PRESENT CASE, NO EVIDENCES OF ANY GENERATION OF UNDISCLOSED INCOME OR THEIR UTILIZATION IN THE FORM OF SHARE APPLICATION AND SH ARE PREMIUM HAS BEEN FOUND AND BROUGHT ON RECORD. 5.8 SIMILARLY, I FIND THAT VARIOUS OBSERVATIONS OF THE AO ON BALANCE SHEET / ITR OF THE LENDER COMPANIES ARE MIS CONSTRUED, MISCONCEIVED AND ARE FACTUALLY INCORRECT. I FURTHER FIND THAT THE VARIOUS OTHER ALLEGATIONS / OBSERVATIONS OF THE AO ARE MISCONCEIVED AND PREMATURE ONLY AND IN VIEW THE APPELLANTS SUBM ISSION MADE IN PARA 10 AS REPRODUCED IN PARA NO. 4.2 OF THIS ORDER , THE SAME DOES NOT LEAD ANY WHERE TO DRAW ANY ADVERSE INFERENCE AG AINST THE APPELLANT. FURTHER, THE VARIOUS CASE LAWS RELIED UP ON BY THE AO ARE DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE AS CATEGORICALLY COUNTERED BY THE APPELLANT IN HIS WRITTEN SUBMISSIO NS AS REPRODUCED IN PARA NO. 4.2 ABOVE. 5.9 IT IS SETTLED JUDICIAL PRECEDENTS THAT UNDER TH E INCOME TAX LAW PRIMARY BURDEN U/S 68 OF THE ACT IS ON THE APPELLAN T AND ONCE THIS BURDEN IS DISCHARGED U/S 68 OF THE ACT, NO ADDITION U/S 68 OF THE ACT IS JUSTIFIABLE IN THE HANDS OF THE ASSESSEE IN VIEW OF THE JUDGMENTS IN CASE OF SHREE BARKHA SYNTHETICS LTD. V/S ASSISTANT COMMISSIONER OF ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 87 INCOME-TAX (2006) 155 TAXMAN 289 (RAJ.), COMMISSION ER OF INCOME-TAX, JAIPUR -II V. MORANI AUTOMOTIVES (P.) LTD. [2014] 264 CTR 86 (RAJASTHAN-HC), CIT V. ORISSA CORPN. (P.) LTD. [1986) 159 ITR 78/25 TAXMAN 80F (S C), COMMISSIONER OF INCOME-TAX V/S MARK HOSPITALS (P.) LTD. [2015] 373 ITR 115 (MADRAS)(MAG.), COMMISSIONER OF INCOME- TAX, AJMER V. JAI KUMAR BAKLIWAL [2014] 366 ITR 217 (RAJASTHAN ), CIT V/S. CREATIVE WORLD TELEFILMS LTD (2011) 333 ITR 100 (BO M), COMMISSIONER OF INCOME-TAX-I V. PATEL RAMNIKLAL HIR JI [2014] 222 TAXMAN 15 (GUJARAT)(MAG.), PRINCIPAL COMMISSIONER O F INCOME- TAX-4 V. G & G PHARMA INDIA LTD. [2016] 384 ITR 147 (DELHI) REFERRED ABOVE WHICH HAVE BEEN ALSO BEEN FOLLOWED R ECENTLY BY HONBLE DELHI TRIBUNAL IN CASE OF ITO VS. SOFTLINE CREATIONS (P) LTD. IN ITA NO. 744/DEL/2012 VIDE ITS ORDER DATED 10.02. 2016. FURTHER, HONBLE APEX COURT AS WELL AS HIGH COURT HAS HELD T HAT ONCE THE IDENTITY OF CREDITOR IS ESTABLISHED, THE DEPARTMENT IS FREE TO REOPEN THE ASSESSMENT OF CREDITOR AND NO ADDITION CAN BE M ADE IN THE HAND OF BORROWER AS RIGHTLY HELD IN CASE OF CIT V/S LOVE LY EXPORTS PVT. LTD. [2008] 216 CTR 195 (SC), COMMISSIONER OF INCOM E-TAX V. ROCK FORT METAL & MINERALS LTD. [2011] 198 TAXMAN 4 97 (DELHI), DIVINE LEASING & FINANCE LIMITED [2008] 29 9 ITR 268 (DELHI) CIT V. ORISSA CORPORATION (P.) LTD. [1986) 159 ITR 78/25 TAXMAN 80F (SC) AND OTHERS ON THIS QUESTION OF LAW. 5.10 FURTHER, POWER TO CALL FOR INFORMATION/PRODUCT ION OF EVIDENCES OR ENFORCING ATTENDANCE UNDER THE LAW IS GIVEN TO THE INCOME TAX AUTHORITIES ONLY AND THEREFORE, IN VIEW OF THE JUDGMENT CIT V/S VICTOR ELECTRODES LTD. [2010] 329 ITR 271, THE APPELLANT CANNOT BE FASTENED UPON THE BURDEN TO PRODUCE THE I NVESTORS BEFORE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 88 THE ASSESSING AUTHORITIES THOUGH IN THE INSTANCE CA SE, APPELLANT HAS COOPERATED IN ASSESSMENT BY SHOWING HIS WILLINGNESS TO PRODUCE THE DIRECTORS OF INVESTOR COMPANIES AND SOME DIRECTORS/ OFFICER WERE ALSO PRODUCED BEFORE THE AO. THUS, IN VIEW OF THE JUDICI AL PRECEDENTS REFERRED ABOVE, UNDER THE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE IT IS UNTENABLE TO MAKE ANY ADDITION FOR ALLEGED NO N-APPEARANCE BY THE CONCERNED PERSON BEFORE THE AUTHORITIES THOUGH THEY COMPLIED WITH THE NOTICES/SUMMON ISSUED TO THEM. 5.11 IN THE PRESENT CASE IN HAND, I FIND THAT AO AS KED ASSESSEE TO PRODUCE INVESTOR COMPANIES WITHOUT VERIFYING THE FA CTS OF INVESTING MONEY FROM RESPECTIVE JURISDICTION ASSESSING OFFICE R AND WITHOUT VERIFYING THEIR RETURNS OF INCOME AND BALANCE SHEET WHEREIN THESE TRANSACTIONS ARE REPORTED, ACCORDINGLY THE AO HAS N OT FOLLOWED THE PRINCIPLES LAID DOWN UNDER SECTION 68 OF THE ACT. T HE HONBLE GUJRAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TA X V. RANCHHOD JIVABHAI NAKHAVA [2012] 21 TAXMANN.COM 159 (GUJ.) H AS HELD THAT:- ONCE THE ASSESSEE HAS ESTABLISHED THAT HE HAS TAKEN MONEY BY WAY OF ACCOUNT PAYEE CHEQUES FROM THE LENDERS WHO A RE ALL INCOME TAX ASSESSEES WHOSE PAN HAVE BEEN DISCLOSED, THE INITIAL BURDEN UNDER SECTION 68 WAS DISCHARGED. IT FURTHER APPEARS THAT THE ASSESSEE HAD ALSO PRODUCED CONFIRM ATION LETTERS GIVEN BY THOSE LENDERS. [PARA 15] ONCE THE ASSESSING OFFICER GETS HOLD OF THE PAN OF THE LENDERS, IT WAS HIS DUTY TO ASCERTAIN FROM THE ASSE SSING OFFICER OF THOSE LENDERS, WHETHER IN THEIR RESPECTI VE RETURNS THEY HAD SHOWN EXISTENCE OF SUCH AMOUNT OF MONEY AN D HAD FURTHER SHOWN THAT THOSE AMOUNT OF MONEY HAD BEEN L ENT 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 ASSESSEE TO FURTHER PROVE THE GENUINENESS AND CREDITWORTHINE SS OF THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 89 TRANSACTION, THE ASSESSING OFFICER DOES NOT FOLLOW THE PRINCIPLE LAID DOWN UNDER SECTION 68. [PARA 16] IN THE INSTANCE CASE BEFORE ME , THE AO HAS NOT FOL LOWED THE DUE PROCEDURE OF LAW U/S 68 OF THE ACT. THEREFORE, REQU IRING THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE LENDER COMPANY WAS NOT LEGALLY TENABLE IN VIEW OF THE JUDGMENT OF GUJRAT HIGH COUR T (SUPRA). 5.12 IT IS NOTED THAT NO CLINCHING EVIDENCES HAS BE EN BROUGHT ON RECORD THAT ANY UNACCOUNTED INCOME WAS ROUTED THROU GH SHARE APPLICATION AND SHARE PREMIUM BY THE APPELLANT AS N O EVIDENCES AS TO RECEIPT/PAYMENT OF CASH FOR RECEIPT OF SHARE APP LICATION AND SHARE PREMIUM WERE FOUND DURING SEARCH IN CASE OF THE APP ELLANT. MERE SUSPICION HOWSOEVER STRONG CANNOT TAKE PLACE OF EVI DENCE. THUS, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DUR ING SEARCH TO REBUT THE EVIDENCES FILED BY THE APPELLANT, THE IMP UGNED ADDITION MADE IN RESPECT OF SHARE APPLICATION & SHARE PREMIU M U/S 68 OF THE ACT IS LEGALLY UNTENABLE AND UNJUSTIFIED. 5.13 IN VIEW OF THE ABOVE DISCUSSION OF RELEVANT F ACTS AND FOLLOWING THE SEVERAL RATIOS ON THE SUBJECT FROM HO NBLE APEX COURT, HIGH COURTS INCLUDING JURISDICTIONAL HIGH COURTS, T RIBUNALS INCLUDING JURISDICTIONAL TRIBUNALS, THE IMPUGNED AD DITION IN RESPECT OF SHARE APPLICATION AND SHARE PREMIUM RECEIVED FRO M M/S SANGAM DISTRIBUTORS PVT. LTD. AND M/S TEAC CONSULTANTS PRI VATE LIMITED TOTALLING TO RS. 1,05,00,000/- IS NOT SUSTAINABLE A ND HENCE THE SAME STANDS DELETED. IN VIEW OF ABOVE THE GROUND NO. 2, 13 TO 18 AND 20 OF APPEAL IS ALLOWED TO THE EXTENT MENTIONED ABOVE. ACCORDINGLY, IN VIEW OF THE ABOVE DISCUSSION AS WEL L AS FACTS AND CIRCUMSTANCES OF THE CASE THE AO HAS MADE THE ADDIT ION BASED ON THE ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 90 REPORT OF THE INVESTIGATION WING KOLKATA WHEREAS TH E ASSESSEE HAS PRODUCED ALL THE RELEVANT DOCUMENTARY EVIDENCE TO E STABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. HENCE IN THE ABSENCE OF ANY DISCREPANCY OR OTHERWISE ANY MATERIA L OR RECORD TO SHOW THAT THE ASSESSEES OWN UNACCOUNTED/ UNDISCLOSED IN COME HAS ROUTED THROUGH THE SHARE APPLICANTS, THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. ACCORDINGLY, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT (APPEALS) IN DELETING THE ADDITION. 7. FOR THE ASSESSMENT YEAR 2011-12, THE ADDITION WA S MADE IN RESPECT OF THE SHARE CAPITAL AND PREMIUM OF RS. 90,00,000/- RECEIV ED FROM M/S. ISIS MERCANTILE PVT. LTD. THE OTHER FACTS REGARDING THI S ISSUE REMAIN IDENTICAL AS FOR THE ASSESSMENT YEAR 2010-11. THE AO HAS MAD E THE ADDITION BASED ON THE REPORT OF THE INVESTIGATION WING KOLKATA. H OWEVER, EXCEPT THE SAID INFORMATION RECEIVED FROM THE INVESTIGATION WING, T HE AO WAS NOT HAVING ANY OTHER EVIDENCE OR MATERIAL TO SHOW THAT THE TRA NSACTION IS A BOGUS ENTRY PROVIDED BY THE SHARE APPLICANT. THE ASSESSE E PRODUCED THE FOLLOWING DOCUMENTARY EVIDENCE IN SUPPORT OF THE CL AIM :- M/S ISIS MERCANTILE PVT. LTD. S. NO. PARTICULARS PB PAGE NO./ AY 2011-12 1 COPY OF ACK. OF ITR OF AY 2011-12 ALONG WITH COMPUTATION SHEET. 430-432 2 COPY OF BALANCE SHEET OF AY 2011-12 ALONG WITH ENCLOSURES. 433-450 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. 451-454 4 CONFIRMATION OF ACCOUNT SHOWING THE TRANSACTION WITH ASSESSEE COMPANY, ALONG WITH LEDGER ACCOUNT FROM THE BOOKS OF SHARE APPLICANTS 455-456 5 COPY OF SHARE ALLOTMENT ADVICE 457 ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 91 6 COPY OF SHARE APPLICATION FORM OF EQUITY SHARE ALONG WITH FORM 2 458-468 7 COPY OF AFFIDAVIT OF MRS BABITA KRIPLANI DIRECTOR OF COMPANY. 469-472 8 COPY OF ORDER PASSED BY CALCUTTA HIGH COURT REGARDING AMALGAMATION OF OTHER COMPANIES IN THIS COMPANY 473-495 9 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31.03.2011, 31.03.2012, AND 31.03.2013. 496-499 10 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOVE NAMED COMPANY FOR AY 2006-07, AY 2013-14 AND 2014-15. 500-513 11 COPY OF ROC MASTER DATA. 514-515 12 COPY OF PAN CARD. 516 13 CERTIFICATE OF INCORPORATION. 517 14 COPY OF SUMMON NO. 1444 DATED 13.10.2017 AND REMINDER SUMMON NO. 1584 DATED 31.10.2017 ISSUED BY DDIT (INVESTIGATION), UNIT-1(3), KOLKATA U/S 131 OF INCOME TAX ACT, 1961 TO M/S ISIS MERCANTILES PVT. LTD. 518-521 15 COPY OF REPLY IN RESPONSE TO SUCH SUMMON ALONG WITH DISPATCH PROOF. 522-524 FURTHER, THE ASSESSEE ALSO PRODUCED THE MASTER DATA OF ROC SHOWING THE STATUS OF THE SAID COMPANY AS AMALGAMATED . THE AMALGAMATION WAS DULY APPROVED BY THE HONBLE HIGH COURT. THE FINAN CIAL STATUS AND CAPACITY TO INVEST IN THE SHARES OF THE ASSESSEE WAS ALSO PR OVED BY SHOWING THE SHARE CAPITAL OF THE SAID COMPANY RAISED IN THE FIN ANCIAL YEAR 2005-06 OF RS. 15.42 CRORES, IN THE FINANCIAL YEAR 2010-11 OF RS. 2.5 CRORES AND IN THE FINANCIAL YEAR 2012-13 OF RS. 12.9 CRORES. THE ASS ESSMENT ORDERS FOR ALL THESE YEARS EXCEPT ASSESSMENT YEAR 2011-12 WERE ALS O PASSED UNDER SECTION 143(3) OF THE IT ACT AND, THEREFORE, THE AV AILABILITY OF THE FUNDS AS WELL AS THE INVESTMENT MADE BY THE SAID COMPANY IN THE SHARES OF THE ASSESSEE WERE NOT DISTURBED BY THE DEPARTMENT WHILE COMPLETING THE SCRUTINY ASSESSMENT. HENCE IN VIEW OF OUR FINDING ON THIS ISSUE FOR THE ASSESSMENT YEAR 2010-11 AND AN IDENTICAL FINDING OF THE LD. CIT (APPEALS) ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 92 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT (A) FOR THE ASSESSMENT YEAR 2011-12. IN THE CASE IN HAND, THE ASSESSEE HAS ALSO PRODUCED IDENTICAL DOCUMENTARY EVIDENCE AS CONSIDERED BY THE TRIBUNAL IN THE CASE O F DCIT VS. M/S BARAN ROLLER FLOUR MILLS PVT. LTD. (SUPRA). ACCORDINGLY, IN VIEW OF THE EARLIER ORDER OF THIS TRIBUNAL, WE DO NOT FIND ANY ERROR OR ILLEGAL ITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION IN RESPECT OF UNSECURED LOAN AND SHARE CAPITAL RECEIVED FROM THESE THREE COMPANI ES. 15. GROUND NO. 7 OF THE APPEAL IS REGARDING THE DIS ALLOWANCE MADE BY THE A.O. U/S 14A OF THE ACT, WHICH WAS DELETED BY THE LD. CIT(A). 16. WE HAVE HEARD THE LD CIT-DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE IS HAVING INVESTMENT IN SHARES AS ON 31/3/2010 OF RS. 53,08,0 00/-. THE A.O. HAS MADE DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8 D OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES) BEING 1% OF THE AVERAGE INVESTMENT WHICH COMES TO RS. 1,50,187/-. ON APPEAL, THE LD. CI T(A) DELETED THE ADDITION BY CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION B Y HOLDING AS UNDER: ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 93 '9.3 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. '9.4 IN MY CONSIDERED VIEW, THE AO HAS LEGALLY ERRE D IN DIRECTLY APPLYING THE PROVISION OF SECTION 14A OF THE ACT, WITHOUT RE CORDING ANY SATISFACTION AS TO THE CORRECTNESS OF THE CLAIM MAD E BY THE APPELLANT. IN THE ASSESSMENT ORDER, THERE IS NO SAT ISFACTION RECORDED BY THE AO AS REQUIRED BY SECTION 14A (1) OF THE ACT BEFORE PROCEEDING FURTHER TO MAKE ANY DISALLOWANCE U/S 14A OF THE ACT. FURTHER, IT IS SEEN THAT AO HAS MECHANICALLY APPLIE D THE RULE 8D AS AMENDED W.E.F. 02.06.2016, WHICH WAS NOT EVEN APPLI CABLE TO RELEVANT ASSESSMENT YEAR. IN MY CONSIDERED VIEW, TH E LAW CANNOT BE APPLIED MECHANICALLY AND THAT TOO RETROSPECTIVELY. IT IS SEEN THAT AO HAS NOT ESTABLISHED ANY NEXUS OF INVESTMENT WITH BO RROWED FUNDS, RATHER AVAILABILITY OF SUFFICIENT INTEREST FREE FUN DS JUSTIFIES THE CASE OF THE APPELLANT THAT DISALLOWANCE U/S 14A OF THE ACT IS UNWARRANTED. FURTHER, IT IS SEEN THAT AO HAS NEITHER POINTED OUT NOR GIVEN ANY SPECIFIC FINDINGS IN THE ASSESSMENT ORDER THAT ANY EXEMPT INCOME WAS EARNED DURING THE RELEVANT ASSESSMENT YEAR. THE REFORE, IN VIEW OF THE NON-FULFILLMENT OF SUCH STATUTORY REQUIREMEN T AS LAID DOWN IN VARIOUS JUDICIAL PRECEDENTS AND CIRCULARS AS RELIED UPON BY THE A/R IN HIS SUBMISSION, IN MY CONSIDERED VIEW, THE DISALLOW ANCE U/S 14A OF THE ACT OF RS. 1,50,187/- IS UNWARRANTED. ACCORDING LY, THE SAME IS DELETED AND GROUND NO. 17 TO 25 OF APPEAL IS ALLOWE D. ' THE FACT RECORDED BY THE LD. CIT(A) THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION H AS NOT BEEN DISPUTED BY THE DEPARTMENT AND THEREFORE, IN VIEW OF THE SET TLED PROPOSITION OF LAW ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 94 ON THIS POINT AND PARTICULARLY THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CHEMVEST LTD. VS CIT 378 ITR 33, WE DO NO T FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE LD. CIT(A) QUA THIS I SSUE. HENCE, WE UPHOLD THE SAME. 17. GROUND NO. 8 OF THE REVENUES APPEAL FOR THE A. Y. 2010-11 IS REGARDING DELETING THE DISALLOWANCE ON ACCOUNT OF DE PRECIATION. 18. THE A.O. HAS MADE A DISALLOWANCE OF CLAIM OF DEPR ECIATION ON THE ASSET AMOUNT TO RS. 8,89,891/- ON THE GROUND THAT T HE ASSESSEE COMPANY HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY DURING TH E YEAR. THE A.O. HAS NOT DISCUSSED THE REASONS FOR MAKING THE DISALLOWANCE OF DEPRECIATION CLAIMED BY THE ASSESSEE. ON APPEAL, THE LD. CIT(A) HAS DELET ED THE DISALLOWANCE BY HOLDING THAT THE SAME WERE BUSINESS ASSETS OF THE AS SESSEE. 19. WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL AS THE LD. CIT-DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. CIT(A) HAS CONSIDERED THIS ISSUE IN PARA 10.2 AND 10.3 OF HIS ORDER AS UNDER: 10.2 THE A/R OF THE APPELLANT ATTENDED PROCEEDINGS AND MADE SUBMISSIONS AS FOLLOWS:- 1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AUD ITED BOOKS OF ACCOUNTS WITH BILLS/EXPENSE VOUCHERS WERE PRODUCED FOR VERIFICATION. THE LD. A.O. DISALLOWED THE AMOUNT WI THOUT ANY BASIS OR POINTED OUT ANY SPECIFIC DEFECTS. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 95 2. THE DEPRECIATION IS A STATUTORY ALLOWANCE AND IT CANNOT BE DISALLOWED. AS PER PROVISION OF SECTION 38(2) READ WITH SECTION 32(1) OF I.T. ACT, 1961 AND ALSO HONBLE I.T.A.T. J AIPUR BENCH, JAIPUR IN CASE OF DCIT V/S. KAILASHCHAND GUPTA (IIIV) TAX WORLD 36, HAS HELD THAT SINCE DEPRECIATION IS STATUTORY PROVISION S AND EVEN IF THERE IS PART USE FOR NON BUSINESS PURPOSE, NO PART OF THE DEPRECIATION CAN BE DISALLOWED. RELIANCE IS ALSO PL ACED ON THE DECISION OF HONBLE MUMBAI TRIBUNAL IN THE CASE OF MUKESH K SHAH VS ITO 92 TTJ 1060. 3. THE COMPANY IS AN ARTIFICIAL JUDICIAL PERSON AND THERE CANNOT BE ANY PERSONAL USE EXPENSES BY THE COMPANY, THEREFORE NO DISALLOWANCE CAN BE MADE ON A/C OF PERSONAL USE OF EXPENSES. RELIANCE PLACED ON SAYAJI IRON & ENGG. CO. LTD. VS CIT (2002) 253 ITR 749 (GUJ) /121 TAXMAN 43. 10.3 I HAVE DULY CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER. IT IS SEEN THAT THE DEPRECIATION WAS DISALLOWED ON THE GROUND THAT THE ASSESSEE DID NOT CARRY ANY BUSINESS ACTIVITIES, HENCE THE DEPRECIATI ON IS NOT ALLOWABLE. IT REVEALS FROM THE FINANCIAL STATEMENTS THAT THE SAME WERE BUSINESS ASSETS OF THE APPLICANT. THERE IS NO FINDING THAT T HE ASSESSEE CLOSED ITS BUSINESS ACTIVITIES AND THE BUSINESS OPERATION HAS BEEN CEASED. MERELY THAT THE APPLICANT DID NOT CARRY OUT ANY BUSINESS IN THE YEAR UNDER CONSIDERATION DOES NOT MEAN THAT DEPRECIATION IS NO T ALLOWABLE TO APPLICANT MORE SO WHEN IT IS MAINTAINING BUSING EST ABLISHMENT. IN VIEW OF ABOVE THE ADDITION OF RS. 8,89,891/- MADE BY DIS ALLOWING THE DEPRECIATION IS DELETED. THE GROUND NO. 26 IS APPEA L IS ALLOWED. THUS, THE LD CIT(A) NOTED THE FACT THAT THE A.O. HAS MADE THE DISALLOWANCE OF CLAIM OF DEPRECIATION ON THE ASSET I N THE COMPUTATION OF INCOME AND NOT DISCUSSED THE ISSUE IN THE BODY. THOU GH, IT APPEARS THAT THE DISALLOWANCE WAS MADE ON THE GROUND OF NON-USE OF THE ASSET FOR ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 96 BUSINESS PURPOSE DURING THE YEAR UNDER CONSIDERATIO N. THE LD AR HAS POINTED OUT THAT THE ASSESSEE HAS THOUGH NOT SHOWN A NY BUSINESS INCOME FOR THE YEAR UNDER CONSIDERATION. HOWEVER, IN THE IM MEDIATE PRECEDING YEAR, THE ASSESSEE HAS DISCLOSED SUBSTANTIAL AMOUNT OF TURNOVER AND BUSINESS INCOME AND THE A.O. HAS ALLOWED THE DEPRECI ATION. THEREFORE, MERELY BECAUSE THERE IS NO TURNOVER DURING THE YEAR UNDER CONSIDERATION, CANNOT BE A REASON FOR DISALLOWANCE OF DEPRECATION O NCE THE ASSET WAS ALREADY PUT TO USE IN THE PRECEDING YEARS. WE FIND THAT THE DISALLOWANCE OF DEPRECIATION ON THE GROUND OF THE ASSET NOT TO PUT USE CAN BE CONSIDERED ONLY AT THE FIRST YEAR OF ACQUISITION OF ASSET BUT ONCE THE ASSET WAS DULY USED IN THE BUSINESS OF THE ASSESSEE THEN IN THE SU BSEQUENT YEAR IF THERE IS NO BUSINESS ACTIVITY DUE TO TEMPORARY SUSPENSION OF ACTIVITY OR LULL IN THE BUSINESS, THE CLAIM OF DEPRECIATION BEING A STATUTO RY ALLOWANCE CANNOT BE DISALLOWED. ACCORDINGLY, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE LD. CIT(A) QUA THIS ISSUE. 20. IN THE APPEAL FOR THE A.Y. 2011-12, THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F RS. 2,23,00,000/- MADE BY THE AO U/S 68 OF THE IT ACT O N ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY ALLEGEDLY OBTAI NED BY THE ASSESSEE FROM M/S ISIS MERCANTILE P LTD. AND M/S SA NGAM DISTRIBUTORS PVT. LTD. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 97 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F UNSECURED LOANS BY OBSERVING THAT THE ALLEGED LENDER COMPANY M/S IS IS MERCANTILE P LTD. AND M/S SANGAM DISTRIBUTORS PVT. LTD. ARE NO T SHELL COMPANIES WITHOUT CONSIDERING THE FINANCIAL STATEME NTS OF THESE COMPANIES. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F UNSECURED LOANS ALLEGEDLY OBTAINED FROM M/S ISIS MERCANTILE P LTD. AND M/S SANGAM DISTRIBUTORS PVT. LTD. MERELY FOR THE REASON THAT EVIDENCES IN THE FORM OF STATEMENT ON OATH OF THE RELEVANT EN TRY OPERATORS WERE NOT AVAILABLE ON RECORD. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F UNSECURED LOANS ALLEGEDLY OBTAINED FROM M/S ISIS MERCANTILE P LTD. AND M/S SANGAM DISTRIBUTORS PVT. LTD. DESPITE THE FACT THAT THE DIRECTORS OR PRINCIPAL OFFICERS OF THESE COMPANIES WERE NEVER PR ODUCED BEFORE THE AO FOR EXAMINATION DESPITE NUMBER OF OPPORTUNIT IES PROVIDED BY THE AO FOR PRODUCING AND ALSO IGNORING THE FACT THAT THE ASSESSEE NEITHER EXPRESSED ITS INABILITY IN PRODUCI NG 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 O F UNSECURED LOANS ALLEGEDLY OBTAINED FROM M/S ISIS MERCANTILE P LTD. AND M/S SANGAM DISTRIBUTORS PVT. LTD. MERELY BY OBSERVING T HAT THE ASSESSEE HAS COOPERATED IN ASSESSMENT BY SHOWING HI S WILLINGNESS TO PRODUCE THE DIRECTORS OF LENDER COMPANIES AND SO ME DIRECTORS/OFFICERS WERE ALSO PRODUCED BEFORE THE AO DESPITE THE FACT THAT EVEN THE DIRECTORS WHICH WERE PRODUCED BE FORE THE AO FAILED TO SUBSTANTIATE THE GENUINENESS OF THE ALLEG ED TRANSACTIONS. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F UNSECURED LOANS BY OBSERVING THAT THE APPELLANT CANNOT BE FASTENED UPON THE BURDEN TO PRODUCE THE LENDERS BEFORE THE AO AND IN NOT CONSIDERING THE DECISION OF THE HONBLE SUPREME COU RT IN NAVODAYA CASTLES (P) LTD VS CIT(2015) 56 TAXMANN.CO M 18(SC) ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 98 WHEN THERE WERE GENUINE CONCERNS OF THE GENUINENESS OF THE TRANSACTIONS. 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE O F RS. 2,73,868/- MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTIO N 14A OF THE INCOME TAX ACT. 8. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE O F RS. 1,55,785/- MADE BY THE AO ON ACCOUNT OF DEPRECIATION CLAIM. THE APPELLANT CRAVE, LEAVE OR RESERVING THE RIGHT TO AMEND MODIFY, ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 21. GROUNDS NO. 1 TO 6 OF THE APPEAL ARE REGARDING THE ADDITIONS MADE BY THE A.O. IN RESPECT OF UNSECURED LOAN AND UNEXPL AINED SHARE APPLICATION MONEY WAS DELETED BY THE LD. CIT(A) ON THE GROUND THA T THE A.O. WAS NOT HAVING ANY MATERIAL IN SUPPORT OF THE DECISION AS T HE STATEMENT OF THE ALLEGED ENTRY OPERATOR WAS NOT IN THE POSSESSION OF THE A.O. AT THE TIME OF ASSESSMENT. 22. WE HAVE HEARD THE LD CIT-DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ADDITION MADE BY THE A.O. IN RESPECT OF UNEXPLAINED SHARE APPLICATION MO NEY FROM M/S ISIS MERCANTILE PVT. LTD. WHICH WAS DELETED BY THE LD. CIT( A) IS COMMON AS IN THE A.Y. 2010-11. IN VIEW OF OUR FINDING FOR THE A.Y . 2010-11, WE UPHOLD THE ORDER OF THE LD. CIT(A) QUA THESE ISSUES. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 99 23. GROUND NO. 7 OF THE APPEAL IS REGARDING THE DIS ALLOWANCE OF RS. 2,73,868/- MADE BY THE A.O. U/S 14A OF THE ACT WHICH WAS DELETED BY THE LD. CIT(A). THIS ISSUE IS COMMON AS IN THE A.Y. 2010- 11. 24. WE HAVE HEARD THE LD CIT-DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. CIT(A) HAS DELETED THE ADDITION BY CONSIDERING THE FACT THAT THE ASSES SEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, IN VIEW OF OUR FINDING FOR THE A.Y. 2010-11, THIS ISSUE IS DECIDED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE AND THE ORDER OF THE LD. CIT(A) IS UPHELD. 25. GROUND NO. 8 OF THE APPEAL IS REGARDING DELETIN G THE DISALLOWANCE ON ACCOUNT OF DEPRECIATION, WHICH WAS DELETED BY THE LD. CIT(A). THIS ISSUE IS COMMON AS IN THE A.Y. 2010-11. 26. WE HAVE HEARD THE LD CIT-DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. CIT(A) HAS DELETED THE ADDITION, IS COMMON AS IN THE A.Y. 2010-11. AC CORDINGLY, IN VIEW OF OUR FINDING FOR THE A.Y. 2010-11, THIS ISSUE IS DEC IDED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE AND THE ORDER OF THE LD. CIT(A) IS UPHELD. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 100 27. IN THE CROSS OBJECTION FOR THE A.Y. 2011-12, TH E ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ORDER PASSED U/S 153A READ WITH SECTION 143(3) OF T HE INCOME TAX ACT, 1961 IS BAD IN LAW, VOID-AB-INITIO, AND DESERV ES TO BE ANNULLED AS THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS NOT ABATED AS ON THE DATE OF SEARCH AND CIT(A) ERRED IN HOLDIN G THAT THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED IN VI EW OF SLPS ADMITTED IN VARIOUS CASES. THE LD. CIT(A) FURTHER E RRED IN HOLDING THAT THE ADDITIONS ARE TO BE ADJUDICATED ON MERITS AS PER RELEVANT GROUND OF APPEAL HENCE THE ISSUE REMAINS FOR ACADEM IC DISCUSSION ONLY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN NOT DECLARING THE ASSESSMENT ORDER AS BAD IN LAW AND VOID AB INITIO. IT IS CONTENDED THAT THE A.O. P ASSED THE ASSESSMENT ORDER AGAINST THE DOCTRINE OF AUDI ALTE RM PARTEM, VIOLATING THE PRINCIPLE OF NATURAL JUSTICE AND NOT GIVING THE OPPORTUNITY OF CROSS EXAMINATION OF THE ALLEGED ACC OMMODATION ENTRY PROVIDERS, THEREFORE, THE ASSESSMENT ORDER OU GHT TO HOLD AS BAD IN LAW AND DESERVES TO BE ANNULLED. THE FINDING S OF THE LD. CIT(A) IN THIS REGARD ARE PERVERSE AND ERRONEOUS. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, ANY OF THE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING OF APPEA L. 28. GROUND NO. 1 OF THE C.O. IS REGARDING THE ADDIT ION MADE BY THE A.O. FOR WANT OF INCRIMINATING MATERIAL. THIS ISSUE IS COM MON AS RAISED BY THE ASSESSEE IN GROUND NO. 1 OF THE APPEAL FOR THE A.Y. 2010-11. IN VIEW OF OUR FINDING ON THIS ISSUE IN THE GROUND NO. 1 OF TH E ASSESSEES APPEAL FOR THE A.Y. 2010-11, GROUND NO. 1 OF THE ASSESSEES C. O. IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ITA NOS. 1055, 1208, 1191/JP/2018 & CO 49/JP/2018 M/S JAMMU METALLIC OXIDES PVT. LTD. VS DCIT 101 29. GROUND NO. 2 OF THE APPEAL IS REGARDING VIOLATI ON OF PRINCIPLES OF NATURAL JUSTICE FOR NOT ALLOWING THE CROSS EXAMINATI ON OF THE WITNESS. THIS ISSUE IS ALSO COMMON AS RAISED BY THE ASSESSEE IN G ROUND NO. 2 OF THE APPEAL FOR THE A.Y. 2010-11. THEREFORE, IN VIEW OF OU R FINDING ON THIS ISSUE IN THE GROUND NO. 2 OF THE ASSESSEES APPEAL FOR TH E A.Y. 2010-11, GROUND NO. 2 OF THE ASSESSEES C.O. IS DECIDED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. 30. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMI SSED AND APPEAL AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2019. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ YS[KK LNL;@ YS[KK LNL;@ YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ U;KF;D LNL;@ U;KF;D LNL;@ U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14 TH FEBRUARY, 2019. *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S JAMMU METALLIC OXIDES PVT. LTD., KOTA. 2. IZR;FKHZ @ THE RESPONDENT- THE D.C.I.T., 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 NOS. 1055, 1208 & 1191/JP/2018 & C. O. 49/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR
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