ACIT, Patiala V. M/s N.K. Sharma Enterprises (P) Ltd., Zirakpur

ITA 1134/CHANDI/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9968 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Opportunity of being heard; Additional evidence
• Section: 153A; 131; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 1134/CHD/2012 ASSESSMENT YEAR: 2006-07 THE ACIT, VS. M/S N.K. SHARMA ENTERPRISES (P) LTD ., CENTRAL CIRCLE, ZIRAKPUR PATIALA PAN NO. AABCN3333K (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANOJ MISHRA RESPONDENT BY : SH. SUDHIR SEHGAL DATE OF HEARING : 10.03.2016 DATE OF PRONOUNCEMENT : 10.05.2016 . ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A)-I, LUDHIANA DATED 23.8.2012 RELATING TO ASSESSMENT YE AR 2006-07. 2. GROUND NO. 1 OF THE APPEAL READS AS UNDER:- 1. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN DELETING THE ADDITION MADE BY THE AO AMOUNTING TO R S.1700/- ON ACCOUNT OF UNEXPLAINED PURCHASE OF DIAMOND PINS, RS. 1,34,000/- ON ACCOUNT OF UNEXPLAINED PURCHASE OF JE WELLERY AND RS.48,000/- ON ACCOUNT OF UNEXPLAINED PURCHASE OF JEWELLERY SETS, AS PER SPECIFIC FINDINGS GIVEN BY T HE AO IN THE 2 ASSESSMENT ORDER THAT THE EXPENSES WERE NOT FOUND R ECORDED IN THE BOOKS OF ACCOUNTS. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT AS SESSEE RELATES TO SHRI N.K. SHAMRA GROUP OF CASES, ZIRAKPUR. A SEARCH AND SEIZU RE OPERATION U/S 132 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') ACT WAS CONDUCTED ON 16.10.2007. NOTICE U/S 153A OF THE WAS ISSUED TO THE ASSESSEE O N 6.6.2008. SUBSEQUENTLY, STATUTORY NOTICES WERE ALSO ISSUED TO THE ASSESSEE WHICH WERE SERVED UPON THE ASSESSEE. DURING THE COURSE OF SEARCH AT THE RESIDE NTIAL PREMISES OF THE DIRECTORS OF THE ASSESSEE COMPANY, DOCUMENTS NUMBERING 96 & 9 7 OF ANNEXURE A-1 DATED 18.11.2005 CONTAINING DETAILS OF PURCHASES OF JEWE LLERY SET OF RS. 1,34,000/- (WEIGHT 158.880 GMS) WERE SIEZED. THE BILL NO. 3311 DATED 18.11.2005 WAS ISSUED BY THE TALWAR SONS, JEWELLER SCT 14-015, SEC TOR 22-D, CHANDIGARH IN THE NAME OF M/S N.K. ENTERPRISES (P) LTD VILLAGE LOHGAR H, ZIRAKPUR. SIMILARLY DOCUEMENTNO. 95 OF ANNEXURE A-1 DATED 18.11.2005 CO NTAINING DETAILS FOR PURCHASES OF FIVE DIAMOND RINGS OF RS. 1700/- WAS S EIZED. THE BILL NO. 823 DATED 18.11.2005 WAS ISSUED BY M/S TALWER SONS, JE WELLER IN THE NAME OF M/S N.K. SHARMA ENTERPRISES (P) LTD. DURING THE COURSE OF SEARCH, AT THE RESIDENTIAL PREMISES OF THE DIRECTORS, YET ANOTHER DOCUMENT NO. 99 OF ANNEXURE A-1 DATED 19.11.2005 CONTAINING DETAILS OF PURCHASES OF JEWEL LERY SET OF RS. 48,000/- (WEIGHT 56.80 GMS) WAS SEIZED. THE BILL NO. 3314 D ATED 19.11.2005 WAS ISSUED BY M/S TALWAR SONS, JEWELLERS IN THE NAME OF M/S N .K. SHARMA ENTERPRISES. THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE STATING AS TO WHY RS. 1,34,000/-, RS. 1700/- AND RS. 48,000/- SH OULD NOT BE ADDED TO THE INCOME TREATING THE SAME AS UNEXPLAINED. THE NOTICE WAS PROPERLY SERVED ON 4.9.2009 BUT THE ASSESSEE DID NOT FILE ANY REPLY. IN THAT VIEW OF THE MATTER, THE ASSESSING OFFICER OPINED THAT ASSESSEE HAD PURCHA SED THE ABOVE JEWELLERY TO MAKE GIFT TO SOMEONE AND MADE PAYMENT FROM UNDISCLO SED SOURCES; THEREFORE, 3 THE ABOVE SAID AMOUNT WAS TREATED AS UNEXPLAINED AN D WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT (A), THE ASSESSEE CONTENDED THAT THE DIAMOND PINS WERE PURCHASED BY SHRI NARIND ER KUMAR SHARMA, ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY ON HIS PERSON AL ACCOUNT. IT WAS ALSO EXPLAINED THAT SHRI N.K.SHARMA BEING AT A GOOD REPU TATIONAL POST AND BEING IN THE BUSINESS OF REAL ESTATE FOR A LONG TIME, HE IS A KNOWN PERSONALITY IN THE MARKET ALSO, THE NAME OF THE ASSESSEE COMPANY UNDER CONSIDERATION WAS ON HIS NAME I.E M/S N.K. ENTERPRISES, SO SOMETIMES THE SEL LERS MISTAKENLY ISSUED THE BILLS IN THE NAME OF THE ASSESSEE INSTEAD OF SHRI N .K. SHARMA IN HIS PERSONAL CAPACITY AND VICE VERSA. ACCORDINGLY, IT WAS CONTEN DED THAT SAME IS HAPPENED HERE TO AND THE BILLS WERE FOUND FROM THE RESIDENTI AL PREMISES OF THE DIRECTORS. IT WAS ALSO STATED THAT THE PURCHASE OF DIAMOND PINS I S RECORDED IN THE PERSONAL CASH BOOK OF SHRI N.K.SHARMA AT PAGE NO.30. THE CIT (A) FORWARDED THE SUBMISSIONS OF THE ASSESSEE TO THE ASSESSING OFFICE R FOR HIS COMMENTS. AFTER CONSIDERING THE REMAND REPORT DATED 9.8.2012 SUBMIT TED BY THE ASSESSING OFFICER, THE CIT(A) HELD AS UNDER:- 20. I HAVE CONSIDERED THE BASIS OF ADDITION MADE BY THE AO AND THE OF THE AR ON THE ISSUE. THE ASSESSING OF FICER HAS REJECTED THE EXPLANATION GIVEN BY THE APPELLANT DU RING APPELLATE PROCEEDINGS BY MAKING REFERENCE TO THE SU SPECT NATURE OF CASH FLOW STATEMENT. I HAVE ALREADY HELD IN THE CASE OF THE INDIVIDUAL IN THIS GROUP OF CASES THAT THE C ASH FLOW STATEMENT PREPARED BY THE APPELLANT IS BASED UPON T HE BANK DEPOSITS AND WITHDRAWALS AS WELL AS VARIOUS REA L ESTATE TRANSACTIONS OF PURCHASES/SALES/EXPENSES AND THEREF ORE COULD NOT BE REJECTED ON THE GROUND THAT THE SAME WAS AN AFTERTHOUGHT OR CREATED AFRESH. THE SAID CASH FLOW STATEMENT 4 IS REFLECTIVE OF THE EVENTS WHICH ARE CROSS VER IFIABLE IN TERMS OF BANK WITHDRAWALS/DEPOSITS AN PURCH ASES/SALES OF IMMOVABLE PROPERTIES IN THE FORM OF REGISTER DEE DS, THE STANCE OF THE ASSESSING OFFICER THAT THE SAME IS NO T VERIFIABLE AT THIS STAGE IS HOLLOW AND DEVOID OF ANY LOGIC. , THE PURCHASE OF JEWELLERY WHICH OBVIOUSLY SHOULD NORMALLY BE IN THE HANDS OF INDIVIDUAL STANDS RECORDED IN THE PERSONAL CASH BOOK OF SH. N.K. SHARMA AND THEREFORE NO SEPARATE ADDITI ON IN THE HANDS OF COMPANY WHICH HAS SIMILAR NAME COULD BE MA DE. THE ADDITION MADE IS THEREFORE DIRECTED TO BE DELETED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. FROM THE AB OVE FINDINGS OF THE CIT(A), IT IS CLEAR THAT JEWELLERY IN DISPUTE WAS FOUND RECORDED IN THE PEROSNAL CASH BOOK OF SHRI N.K. SHARMA AND THEREFORE, THE LD . CIT(A) HAS CATEGORICALLY HELD THAT NO SEPARATE ADDITION IN THE HANDS OF THE ASSESSEE COMPANY CAN BE MADE. THE LD. CIT(A) OBSERVED THAT IN THE CASE OF T HE INDIVIDUAL IN THIS GROUP OF CASES, HE HAD ACCEPTED CASH FLOW STATEMENT PREPA RED BY THE ASSESSEE WAS BASED UPON THE BANK ACCOUNT DEPOSITS AND WITHDRAWAL S AS WELL AS VARIOUS REAL ESTATE TRANSACTIONS OF PURCHASES / SALES. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, THE CASH FLOW STATEMENT CLEARLY REVEALED THE EVENTS WHICH WERE VERIFIABLE IN TERMS OF BANK WITHDRAWALS /DEPOSITS. THE LD. CIT(A) CONCLUDED THAT THE JEWELLERY WAS FOUND RECORDED IN THE PERSON AL CASH BOOK OF SHRI N.K. SHARMA, AND THEREFORE, NO SEPARATE ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY. CONSIDERING THE ABOVE FACTS, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF CIT(A) ON THIS ISSUE. WE MAY ALSO ADD HERE THAT THERE IS NOTHING ON RECORD TO TO CONTROVERT THE CATEGORICAL FINDINGS GIVEN BY THE CIT(A) ON THIS ISSUE. ACCORDINGLY, WE UPHOLD HIS ORDER AND REJECT GROUND NO.1 OF THE APPEAL. 6. GROUND NOS. 2 AND 3 OF THE APPEALS READ AS UNDER :- 2. THAT LD. CIT(A) HAS ERRED BOTH IN LAW ARID ON FACTS IN DELETING THE ADDITION OF RS. 1,00,00,000/- MADE BY THE AO ON 5 ACCOUNT OF PAYMENT MADE TO SH. JAGDEEP SINGH FROM UNDISCLOSED SOURCES AS PER SPECIFIC FINDS GIVEN BY THE AO IN THE ASSESSMENT ORDER AS UNDER: 'SHRI YADWINDER SHARMA ALSO ENCLOSED WITH THE AFFIDAVIT THE COPY OF CASH BOOK FOR 9-4-2005 SHOWIN G CASH IN HAND OF RS. 9295344/- TO PROVE THE AVAILABI LITY OF CASH. IF SH. YADWINDER SHARMA HAD GIVEN MONEY THROUGH CHEQUE THEN HE WOULD HAVE ENCLOSE COPY OF T HE BANK ACCOUNT SHOWING BANK BALANCE AND WITHDRAWAL DURING THAT PERIOD, THEREFORE, THE STORY OF TRANSAC TION BY CHEQUE COOKED BY THE ASSESSEE IS REJECTED AND IT IS TREATED THAT SH. YADWINDER SHARMA PAID RS. 1 CRORE ON BEHALF OF THE COMPANY IN CASH TO SH. JAGDEEP SINGH FROM UNDISCLOSED SOURCES, THEREFORE, ADDED TO THE INCOME. COPY OF AFFIDAVIT OF SH. YADWINDER SHARMA ENCLOSED AS PER ANNEXURE 'A'' 3. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FA CTS IN DELETING THE ADDITIONS BY ADMITTING THE ADDITIONAL EVIDENCE AT THE APPELLATE STAGE AS PER FOLLOWING REASONS: I. THE AO OBJECTED TO THE ADMISSION OF ADDITIONAL E VIDENCE AT APPELLATE STAGE U/S 46A OF THE INCOME TAX RULES. II. THE LD. CIT(A) HAS DELETED THE ADDITION WITHOUT ALLOWING THE AO TO EXAMINE THE CORRECTNESS AND GENUINENESS O F THE ADDITIONAL EVIDENCE ADMITTED BY THE LD. CIT(A) THOU GH 7. GROUND NO. 2 OF THE APPEAL RELATES TO DELETION OF ADDITION OF RS. 1 CRORE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PAYMENT MADE TO SHRI JAGDEEP SINGH FORM UNDISCLOSED SOURCES. VIDE GROUND NO.3 OF THE APPEAL THE REVENUE HAS ALSO CHALLENGED THE ACTION OF THE CIT(A) IN DEL ETING THE ADDITION BY ADMITTING ADDITIONAL EVIDENCE AT THE APPELLATE STAG E. WE WILL DISPOSE OFF BOTH THE GROUNDS OF APPEAL, TOGETHER IN SUCCEEDING PARAG RAPHS. 6 8. THE FACTS RELATING TO THIS ISSUE ARE THAT THE AS SESSING OFFICER MADE THE ADDITION OF RS. 1 CRORE ON ACCOUNT OF ALLEGED PAY MENT TO ONE SHRI JAGDEEP SINGH BY SHRI YADWINDER SHARMA ON BEHALF OF THE ASS ESSEE COMPANY. THE ASSESSING OFFICER RELIED ON THE AFFIDAVIT OF SHRI YADWINDER SHARMA FILED ON 27.3.2009 IN THE COURT OF ADDITIONAL CIVIL JUDGE (S ENIOR DIVISION) DERA BASSI IN THE CASE OF SH JAGDEEP SINGH S/O SH. NARINDAER SING H VS. SH. JAGDISH ARORA AND OTHERS. THE AFFIDAVIT SUBMITTED BY SHRI YADWIND ER SHARMA READS AS UNDER:- I, YADWINDER SHARMA, AGED ABOUT 35 YEARS S/O SH. VISHWANATH SHARMA R/O VILLAGE LOHGARH, N.A.C. ZIRAKPUR, TEHSIL DERA BASSI, DISTT. S.A.S. NAGAR (MOHALI) DO HEREBY SOLEMNLY AFF IRM AND DECLARE AS UNDER :- 1. THAT I AM PERMANENT RESIDENT OF VILLAGE LO HGARH, N.A.C ZIRAKPUR, TEHSIL DERA BASSI, DISTT. .A.S, NAG AR (MOHAJI) AND I AM ENGAGED IN THE BUSINESS OF REAL E STATE IN THE AREA OF ZIRAKPUR AND ITS ADJOINING AREAS. 2. THAT I AM FULL TIME DIRECTOR OF M/S N.K SHAR MA ENTERPRISES LTD. & OTHER COMPANIES OF N.K GROUP OF COMPANIES. 3.. THAT NARINDER KUMAR SHARMA (N.K SHARMA) IS M Y REAL BROTHER WHO IS ALSO FULL TIME DIRECTOR OF AFORESAID N.K GROUP OF COMPANIES WHO ARE ENGAGED IN THE BUSINESS OF CON STRUCTION OF GOVERNMENT APPROVED COLONIES AND FLATS. IT IS PE RTINENT TO MENTION HERE THAT WE HAVE ALREADY DEVELOPED MANY FU LL FLEDGED COLONIES AND GOVERNMENT APPROVED APARTMENTS AND FLATS IN THE AREA OF ZIRAKPUR AND DERABASSI. 4. THAT I KNOW THE PLAINTIFF PERSONALLY WHO IS V ERY GOOD FRIEND OF MINE AND THAT OF MY BROTHER N.K SHARMA. 5 THAT IN THE LAST WEEK OF APRIL 2005, PLAINTIF F AND APPROACHED ME TO GIVE HIM AMOUNT OF RS. 10000000/- AS THE SAME WAS REQUIRED BY THE PLAINTIFF FOR PURCHASING L AND AT VILLAGE BHABAT FROM JAGDISH ARORA AND OTHERS. 7 6. THAT KEEPING IN VIEW OUR LONG RELATIONS AND FRI ENDSHIP I HAD PAID RS. 10000000/- IN THE LAST WEEK OF APRIL, 2005 TO PLAINTIFF TO ENABLE HIM TO GET THE SALE DEED EXECUT ED-AND REGISTERED FROM JAGDISH ARORA & OTHERS REGARDING LA ND SITUATED AT VILLAGE BHABAT. 7. THAT AFORESAID MONEY OF RS. 10000000/- HAD B EEN RETURNED BY THE PLAINTIFF TO ME IN THE FIRST WEEK O F MAY, 2005 BY SAYING THAT THE SAME WILL BE REQUIRED BY HIM WIT HIN NEXT MONTH AND PLAINTIFF WILL TAKE THE SAME FROM ME WHEN JAGDISH ARORA AND OTHERS WILL BE READY TO EXECUTE AND REGIS TER THE SALE DEED IN DIE NAME OF PLAINTIFF. 8. THAT SAID MONEY WAS TAKEN BACK BY ME FROM PLA INTIFF WITH THE PROMISE THAT I WILL GIVE THE SAME TO PLAIN TIFF AS AND WHEN THE SAME WILL BE REQUIRED BY HIM FOR GETTING T HE SALE DEED EXECUTED AND REGISTERED IN HIS FAVOUR, BUT LAT ER ON I CAME TO KNOW THAT THE PERSON I.E., JAGDISH ARORA AN D OTHERS WITH WHOM THE PLAINTIFF HAD ENTERED INTO TWO AGREEM ENTS TO PURCHASE THE LAND, HAVE REFUSED TO EXECUTE AND REGI STER THE SALE DEED IN THE NAME OF PLAINTIFF. 9 THE DETAILED ACCOUNT STATEMENT AND BALANCE SHE ET OF M/S N.K. SHARMA ENTERPRISES LTD. WHERE I AM THE DIRECTO R, AS ON 31-3-2005 AND 31-3-2006 ARE EX.P-3 AND P4.1 IDENTIF Y MY SIGNATURES ON EX. P-3 AND 4 AND I ALSO IDENTIFY THE SIGNATURES OF MY BROTHER N.K SHARMA THE OTHER DIRECTOR IN THE COMPANY ON EX. P-3 AND P4 AND EX. P-3 AND P4 ARE CORRECT AS PER IHE ORIGINAL FILED BEFORE THE INCOME TAX DEPARTMENT EX. P-5 IS INCOME TAX RETURN AND EX. P-6 IS ALSO INCOME TAX RE TURN FILED ON LINE BY OUR AFORESAID COMPANY WHICH IS ALSO CORR ECT AS PER THE ORIGINAL. EX.P-7 IS THE ENTRY OF CASH BOOK FOR THE MONTH OF APRIL 2005 WHICH IS ALSO CORRECT AS PER THE ORIGINA L . ON THE BASIS OF ABOVE AFFIDAVIT OF SHRI YADWINDER S HARMA, THE ASSESSING OFFICER TOOK THE VIEW THAT NO TRANSACTION BY CHEQUE WAS MAD E BETWEEN SH. JAGDEEP SINGH AND YADWINDER SHARMA. HE FURTHER OBSERVED THA T FROM PARAS 6 & 7 OF THE AFFIDAVIT, IT IS CLEAR THAT RS. 1 CRORE WAS PAID TO SHRI JAGDEEP SINGH IN CASH IN 8 THE LAST WEEK OF APRIL 2005 AND RETURNED IN CASH IN FIRST WEEK OF MAY 2005. THE ASSESSING OFFICER FURTHER NOTED THAT SHRI YADWINDER SHARMA ALSO ENCLOSED WITH THE AFFIDAVIT A COPY OF CASH BOOK FOR 9.4.2005 SHOW ING CASH IN HAND OF RS. 92,95,344/- TO PROVE THE AVAILABILITY OF CASH. ACC ORDING TO THE ASSESSING OFFICER, IF SHRI YADWINDER SHARMA HAD GIVEN MONEY T HROUGH CHEQUE THEN HE WOULD HAVE ENCLOSED COPY OF THE BANK ACCOUNT SHOWIN G BANK BALANCE AND WITHDRAWALS DURING THAT PERIOD AND, THEREFORE, THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE REGARDING TRANSACTION BY CHEQUE. CONSEQUENTLY, THE ASSESSING OFFICER HELD THAT SHRI YADWINDEAR SHARMA PAID RS. 1 CRORE ON BEHALF OF THE COMPANY IN CASH TO SHRI JAGDEEP SINGH FROM U NDISCLOSED SOURCES, THEREFORE, THE ASSESSING OFFICER ADDED A SUM OF RS. 1 CRORE TO THE TOTAL INCOME OF THE ASSESSEE. 9. ON APPEAL, THE CIT(A) DELETED THE ADDITION, OBS ERVING AS UNDER:- 29. I HAVE CONSIDERED THE BASIS OF ADDITION MADE BY THE AO AND THE ARGUMENTS OF THE AR ON THE ISSUE AS WELL AS THE COMMENTS OF THE ASSESSING OFFICER IN THE REMAND REPORT AND OF THE A PPELLANT IN THE REJOINDER. THE ISSUE WHETHER ANY AMOUNT HAD BEEN PA ID ON BEHALF OF THE COMPANY TO SH. JAGDEEP SINGH HAS TO BE SEEN IN THE CONTEXT OF CIVIL DISPUTE BETWEEN SH. JAGDEEP SINGH AND SH. JAG DISH ARORA WHEREIN SH. JAGDISH ARORA HAD FILED A SUIT BEFORE T HE ADDITIONAL CIVIL JUDGE, DERA BASSI TO SEEK FORFEITURE OF THE A MOUNT HE HAD RECEIVED FROM SH. JAGDEEP SINGH TO THE TUNE OF RS. 50 LACS IN RESPECT OF A DEAL THEY HAD ENTERED INTO TO PURCHASE LAND WORTH RS. 3,75,00,000/-. SH. JAGDEEP SINGH IN HIS ATTEMPT TO SATISFY THE CIVIL COURT AS TO HIS CAPABILITY OF HAVING SUFFICIENT RES OURCES TO HONOUR HIS PART OF THE COMMITMENT IN THE DEAL TO PURCHASE THE IMPUGNED REAL ESTATE SOUGHT THE HELP OF HIS FAMILY FRIEND SH . YADWINDER SHARMA WHO AGREED AND ACTUALLY DID FILE AN AFFIDAVI T WHEREIN THE AVAILABILITY OF AMOUNT OF RS. 1 CRORE WAS AGREED TO BE AVAILABLE FOR SH. JAGDEEP SINGH. IT IS IN THIS CONTEXT THAT THE C OPY OF CASH BOOK OF THE APPELLANT COMPANY AS ON 19/4/2005 HAD BEEN FILE D AS ENCLOSURE 9 OF THE AFFIDAVIT BY SH. YADWINDER SHARMA BEFORE THE CIVIL COURT. IT MEANT THAT ON THE GIVEN DATE THE COMPANY HAD SUFFIC IENT CASH BALANCE AS PER THE CASH BOOK TO HONOUR THE CHEQUE I SSUED IN FAVOUR OF SH. JAGDEEP SINGH TO THE TUNE OF RS. 1 CRORE. IF THE ASSESSEE HAD ALREADY PAID CASH TO SH. JAGDEEP SINGH AS CONCLUDED BY THE ASSESSING OFFICER, THEN THEY WOULD NOT HAVE BEEN AN Y NEED TO PROVIDE THE COPY OF THE CASH BOOK TO THE CIVIL COUR T AND IN THAT CASE THE COPY OF THE CASH BOOK WOULD HAVE INCORPORATED T HE ENTRY OF WITHDRAWAL OF RS. 1 CRORE CASH. THE PERUSAL OF THE AFFIDAVIT OF SH. YADWINDER SHARMA IN ITS ENTIRETY MAKES IT AMPLY CLE AR THAT IT MEANT TO SUPPORT THE CASE OF SH. JAGDEEP SINGH AND NO ACT UAL EITHER IN CASH OR IN CHEQUE HAD BEEN MADE AT ALL. FURTHER IT IS PERTINENT TO APPRECIATE THAT THE ASSESSING OFFICER DURING THE CO URSE OF ASSESSMENT PROCEEDINGS HAD RECORDED THE STATEMENT O F SH. JAGDEEP SINGH WITH REFERENCE TO THIS ISSUE WHEREIN SH. JAGD EEP SINGH CLEARLY STATED THAT NO AMOUNT WAS ACTUALLY BORROWED FROM THE APPELLATE COMPANY AS THE ENTIRE DEAL FOR THE PURCHA SE OF LAND WHEN INTO CIVIL DISPUTE BEFORE THE COURT. THE SPECIFIC Q UESTION AND ANSWER ON THE ISSUE AS RECORDED BY THE ASSESSING OFFICER U /S 131 IS REPRODUCED AS UNDER:- Q.6. A COMPLAINT HAS BEEN RECEIVED AGAINST YOU FROM SH. JAGDISH ARORA IN WHICH HE HAS STATED THAT YOU HAVE RECEIVED A SUM OF RS. 1 CRORE CASH IN MONTH OF APRIL, 2005 FRO M SH. YADWINDER SHARMA, WHICH WAS RETURNED BY YOU IN THE MONTH OF MAY, 2005, WHAT DO YOU WANT TO SAY IN THIS REGAR D? ANS. YES I HAD RECEIVED A CHEQUE OF RS. 1 CRORE FRO M MR. YADWINDER SHARMA BEARING CHEQUE NO. 133950 DRAWN ON HDFC BANK, ZIRAKPUR DATED 25/4/2005 FROM M/S N.K. S HARMA ENTERPRISES (P) LTD. ACTUALLY SH. N.K. SHARMA IS MY VERY CLOSE FRIEND AND WE HAVE THE FAMILY RELATIONS WITH EACH OTHER. THE CHEQUE AS RECEIVED BY ME WAS RETURNED WITHIN 10 DAYS TO SH. YADWINDER SHARMA DUE TO SOME DISPUTE, REGISTRAT ION OF PLOT COULD NOT EXECUTED. THE PERUSAL OF PROCEEDINGS CONDUCTED BY THE ASSESSI NG OFFICER IN TERMS OF ENQUIRIES DONE FROM SH. JAGDISH SINGH MAKE IT CLEAR THAT NO CONSEQUENTIAL ACTION WAS TAKEN IN THE CASE OF SH . JAGDEEP SINGH AS THE ALLEGED RECEIPT AND REPAYMENT OF LOAN OF RS. 1 CRORE HAD NOT 10 ACTUALLY TAKEN PLACE. THIS FURTHER LENDS CREDENCE T O THE CLAIM OF THE APPELLANT THAT NO AMOUNT EITHER IN CASH OR IN CHEQU E HAD BEEN PAID TO SH. JAGDEEP SINGH. IN THE CIRCUMSTANCES, THE ADD ITION MADE BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED. 10. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH T HE PARTIES AT LENGTH AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD . IT IS OBSERVED THAT DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE A SSESSEE SUBMITTED COPY OF THE STATEMENT MADE BY SHRI JAGDEEP SINGH IN RESPON SE TO THE SUMMONS ISSUED TO HIM BY THE ASSESSING OFFICER U/S 131 OF THE ACT. IN THIS REGARD THE ASSESSEE CONTENDED THAT IT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE COPY OF STATEMTENT OF SHRI JAGDEEP SINGH DUE TO PAUCITY OF TIME SINCE THE ASSESSMENT PROCEEDINGS WERE TAKEN UP IN NOVEMBER 2009 AND THE RECORDS WERE NOT TRACEABLE AND ACCORDINGLY, THE ASSESSEE REQUESTED THE CIT(A) TO ADMIT THE STATEMENT OF SHRI JAGDEEP SINGH RECORDED U/S 131 OF THE ACT AS A N ADDITIONAL EVIDENCE UNDER RULE 46 OF THE I.T. RULES, 1962. THE LD. CIT(A) FOR WARDED THE ASSESSEES SUBMISSIONS AND THE STATEMENT OF SHRI JAGDEEP SINGH TO THE CONCERNED ASSESSING OFFICER FOR HIS COMMENTS. IN COMPLIANCE TO THE DIRE CTIONS OF THE CIT(A), THE ASSESSING OFFICER SUBMITTED A REMAND REPORT STATING THAT THE ADDITIONAL EVIDENCE MAY NOT BE ADMITTED. HE FURTHER STATED THAT THE A SSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF SUM OF RS. 1 CRORE. ACCORDINGLY, THE ASSESSING OFFICER ASKED THE CIT(A) TO UPHOLD THE ADDITION OF RS. ONE CRORE. I N OUR OPINION, GROUND NO.3 OF THE REVENUES APPEAL IS WITHOUT ANY MERIT AND DESER VES TO BE REJECTED. THERE WAS NO VIOLATION OF RULE 46A OF THE I.T RULES, BY THE CIT(A). ACCORDING TO LD. CIT(A), THE ASSESSEE WAS PREVENTED BY SUFFICIEN T CAUSE FROM PRODUCING THE STATEMENT OF SHRI JAGDEEP SINGH, RECORDED U/S 131 O F THE ACT BEFORE THE ASSESSING OFFICER. AT THE SAME TIME, THE CIT(A) HA S AFFORDED AN OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER. THE SUBMISSIO NS TOGETHER WITH THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE WERE SENT TO THE ASSESSING OFFICER 11 BY CIT(A) FOR COMMENTS AND AFTER RECEIVING THE COMM ENTS OF THE ASSESSING OFFICER, THE CITA HAS ADJUDICATED THE ISSUE IN ACCO RDANCE WITH LAW. ACCORDINGLY, GROUND NO.3 OF THE APPEAL IS REJECTED. 11. AS REGARDS GROUND NO.2 OF THE APPEAL, THE LD. CIT(A) HAS CORRECTLY OBSERVED THAT THE ISSUE WHETHER ANY AMOUNT WAS PAID ON BEHALF OF THE COMPANY TO SHRI JAGDEEP SINGH HAS TO BE CONSIDERED IN THE C ONTEXT OF THE PENDING CIVIL LITIGATION BETWEEN SHRI JAGDEEP SINGH AND SHRI JAG DISH ARORA. IT IS APPARENT FROM THE RECORDS THAT SHRI JAGADISH ARORA HAD FILED A SUIT BEFORE THE ADDITIONAL CIVIL JUDGE, DERABASSI TO SEEK FORFEITURE OF THE AM OUNT WHICH HE HAD RECEIVED FROM SHRI JAGDEEP SINGH TO THE TUNE OF RS. 50 LAKHS IN RESPECT OF A DEAL THEY HAD ENTERED INTO FOR PURCHASE OF LAND WORTH RS. 3.75 CR ORES. THE CONTENTION OF THE ASSESSEE WAS THAT SHRI JAGDEEP SINGH IN HIS ATTEMPT TO SATISFY THE COURT REGARDING HIS CAPABILITY OF HAVING SUFFICIENT RESOU RCES TO HONOUR HIS PART OF THE COMMITMENT IN THE DEAL TO PURCHASE THE PROPERTY SOU GHT THE HELP OF HIS FAMILY FRIEND SHRI YADWINDER SHARMA, ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY, WHO AGREED AND SUBMITTED AN AFFIDAVIT, WHEREIN THE AVAILABILITY OF AN AMOUNT OF RS. 1 CRORE WAS SHOWN FOR HIS FRIEND SHRI JAGDEEP S INGH. IT IS CLEAR FROM THE ABOVE NARRATED FACTS THAT SHRI YADWINDER SHARMA FIL ED THE AFFIDAVIT BEFORE THE CIVIL COURT, DERABASSI TO SUPPORT THE CASE OF SHRI JAGDEEP SINGH. WE FULLY AGREE WITH THIS OBSERVATION OF THE CIT(A) THAT IN FACT NO ACTUAL PAYMENT EITHER IN CASH OR IN CHEUQE HAD BEEN MADE AT ALL. IN THIS REGARD, THE STATEMENT OF SHRI JAGDEEP SINGH WAS RECORDED BY THE ASSESSING OFFICER IS RELEVANT; WHEREIN SHRI JAGDEEP SINGH HAD CATEGORICALLY STATED THAT NO AMOU NT WAS ACTUALLY BORROWED FROM THE ASSESSEE COMPANY AS THE ENTIRE DEAL FOR TH E PURCHASE OF LAND WENT INTO CIVIL DISPUTE BEFORE THE COURT. FROM THE ANSWER TO Q.NO.6 OF THE STATEMENT OF SHRI JAGDEEP SINGH, IT IS CLEAR THAT NO AMOUNT EIT HER IN CASH OR CHEQUE HAS BEEN PAID TO SHRI JAGDEEP SINGH. IN FACT, THE CHEQUE NO . 133950 DRAWN ON HDFC 12 BANK, ZIRAKPUR DATED 25.4.2005 FROM ASSESSEE COMPAN Y WAS RETURNED WITHIN 10 DAYS TO SHRI YADWINDER SHARMA. THUS, IN VIEW OF TH E ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION. WE DISMISS GROUND NOS. 2 & 3 OF THE APPEAL. 12. NO OTHER POINT WAS RAISED OR ARGUED BEFORE US. 13. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.05.2016 SD/- SD/- (RANO JAIN) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 10 TH MAY, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR