KATARIA INFRASTRUCTURE CORPORATION, MUMBAI V. ADDL CIT 18(1), MUMBAI

ITA 1286/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79432 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 22-07-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 11-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained cash credit; Additional evidence; Accommodation entries
• Section: 143(3); 147; 68

Judgement Text

, INCOME TAX APPELLATE TRIBUNALMUMBAI BENCH ES I MUMBAI , , ! BEFORE S.SH.VIJAY PAL RAO,JUDICIAL MEMBER AND RAJEN DRA,ACCOUNTANT MEMBER ./ ITA NO.1286/MUM/2011 ' ' ' ' # # # # / ASSESSMENT YEAR 2004-05 ./ ITA NO. 1211/MUM/2011 ' ' ' ' # # # # / ASSESSMENT YEAR 2004-05 ( $% / APPELLANT) ( &'$% / RESPONDENT) ( ) / REVENUE BY : SHRI SUNIL AGRAWAL '*+ '*+ '*+ '*+ ) ) ) ) / ASSESSEE BY : SHRI ANIL SATHE ' ' ' ' ( (( ( +, +, +, +, / DATE OF HEARING : 22/07/2014 -.# ( +, / DATE OF PRONOUNCEMENT : 25/07/2014 PER RAJENDRA,AM ' ' ' ' : CHALLENGING THE ORDER DT.15.11.2010 OF THE CIT(A)-2 9,MUMBAI,ASSESSEE-COMPANY AND THE ASSESSING OFFICER (AO) HAVE FILED CROSS APPEALS FOR THE YEAR UNDER CONSIDERATION.ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.REOPENING OF ASSESSMENT U/S 147 THE COMMISSIONER OF INCOME TAX (APPEALS) 29, MUMBAI , ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT. THE SAID CIT(A) ERRED IN NOT APPRECIATING THAT AT THE TIME OF ORIGINAL AS SESSMENT MADE U/S 143(3) ON 29/12/2006 ALL THE INFORMATION ABOUT THE VARIOUS LOANS TAKEN BY THE AP PELLANT WERE SUPPLIED AND THE CONFIRMATION LETTERS WERE ALSO FILED WITH THE AD AND THEREFORE T HE SAME COULD NOT BE MADE A GROUND FOR M/S. KATARIA INFRASTRUCTURE CORPORATION, 72, GANDHI NAGAR, DRAINAGE CHANNEL ROAD, MUNICIPAL INDUSTRIAL ESTATE, MUMBAI-400018 PAN:AAGFK0094A VS ADDL. CIT-18(1), MUMBAI. ADDL. CIT-18(1), MUMBAI. VS M/S. KATARIA INFRASTRUCTURE CORPORATION, 72, GANDHI NAGAR, DRAINAGE CHANNEL ROAD, MUNICIPAL INDUSTRIAL ESTATE, MUMBAI-400018 PAN:AAGFK0094A ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 2 REOPENING THE ASSESSMENT U/S 147. 2.ADDITION OF UNEXPLAINED CASH CREDIT U/S 68 RS.10 LACS 2.1.THE SAID CIT(A) ERRED IN CONFIRMING THE ADDITIO N OF RS.10 LACS BEING LOAN TAKEN FROM M/S LUNKAD MEDIA AND ENTERTAINMENT LTD., OF INDORE ON V ARIOUS DATES ON THE GROUND THAT THE LOAN TAKEN BY THE APPELLANT DURING THE YEAR UNDER ASSESS MENT WERE NOT PROPERLY EXPLAINED AND THEREFORE THE SAID AMOUNT CONSTITUTED INCOME OF THE APPELLANT U/S 68 OF THE INCOME TAX ACT. 2.2THE SAID CIT(A) ERRED IN ACCEPTING THE OBSERVATI ONS MADE BY THE AO IN THE ASSESSMENT ORDER THAT ONE ENTRY OF RS.2 LACS ON 29/12/2003 FOR THE L OAN TAKEN BY THE APPELLANT FROM M/S LUNKAD MEDIA AND ENTERTAINMENT LTD., RELATED TO ALLEGED CA SH DEPOSIT OF RS.2 LACS IN THE BANK ACCOUNT OF THE LENDER WITHOUT ANY EVIDENCE. THE APPELLANT SUBM ITS THAT LOAN OF RS.2 LACS WAS RECEIVED BY CHEQUE FROM THE ABOVE LENDER ON 27/12/2003 AND THER E WAS NO EVIDENCE THAT THE APPELLANT HAD PAID CASH TO THE LENDER ON 29/12/2003. 2.3THE SAID CIT(A) ERRED IN CONCLUDING THAT THE LOA N OF RS.3 IACS TAKEN FROM THE ABOVE LENDER ON 19/12/2003 AND THE LOAN OF RS.5 LACS TAKEN FROM THE ABOVE LENDER ON 22/12/2003 WAS ALSO NOT EXPLAINED MERELY ON THE GROUND THAT THERE WAS SOME ENTRY OF RS. 2 LACS IN THE BOOKS OF THE LENDER ON 19/12/2003 WHICH WAS CONSIDERED AS DOUBTFUL. THE APPELLANT SUBMITS THAT THERE WAS NO EVIDENCE TO DOUBT THAT THE OTHER LOANS AGGREGATING TO RS.8 LACS WHICH WERE TAKEN EARLIER FROM THE ABOVE LENDER WERE NOT GENUINE AND THEREFORE THE SAI D CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.10 LACS U/S 68. 2.4THE SAID CIT(A) ERRED IN NOT APPRECIATING THAT T HE ABOVE ADDITION WAS MADE BY THE AO MERELY ON THE BASIS OF CERTAIN ENQUIRIES MADE BY ACIT 3(1) , INDORE AND THAT NO ADEQUATE OPPORTUNITY WAS GIVEN TO THE APPELLANT TO EXAMINE THE STATEMENT S MADE BY THE LENDER BEFORE THE ACIT 3(1), INDORE. 2.5THE SAID CIT(A) ERRED IN NOT APPRECIATING THAT T HE AO HAD NOT GIVEN ANY OPPORTUNITY TO THE APPELLANT TO CROSS EXAMINE THESE PARTIES INSPITE OF REPEATED REQUESTS MADE TO THE SAID AO AS WELL ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 3 AS CIT(A) FOR THIS PURPOSE. 2.6THE SAID CIT(A) ERRED IN NOT APPRECIATING THAT T HE AO DID NOT SUPPLY TO THE APPELLANT COPIES OF THE EVIDENCE COLLECTED BY HIM, COPIES OF STATEMENT OF DIRECTORS OR REPRESENTATIVES OF THE LENDER COMPANY WHO ARE ALLEGED TO HAVE MADE CERTAIN ALLEGA TIONS AGAINST THE APPELLANT AND DETAILS OF CASH ALLEGED TO HAVE BEEN TAKEN BY THE VARIOUS COMP ANIES FROM THE APPELLANT WITH NAMES OF PERSONS WHO HAD GIVEN CASH AND NAMES OF PERSONS WHO HAD RECEIVED CASH AS ALLEGED IN THE ASSESSMENT ORDER. 2.7THE SAID CIT(A) ERRED IN NOT APPRECIATING THAT T HE ABOVE ADDITION OF RS.10 LACS WAS MADE BY THE AO MERELY ON THE BASIS OF CONJECTURES AND SURMI SES WITHOUT ANY EVIDENCE AVAILABLE ON RECORD AND WITHOUT ISSUING SUMMONS TO VARIOUS PARTIES WHO HAD GIVEN LOANS TO THE APPELLANT AND THEREFORE THE ADDITION MADE BY THE SAID AO WAS NOT AT ALL JUSTIFIED. 3.THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MODIFY, DELETE AND/OR CHANGE ALL OR ANY OF THE ABOVE GROUNDS ON OR BEFORE THE DATE OF HEARING. GROUNDS OF APPEAL,FILED BY THE AO READ AS UNDER: THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACT S OF THE CASE. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN TREATING THE UNSECURED LOANS OF RS. 40,00,000/- AS GENUINE WITHO UT APPRECIATING THE FACT THAT THE LOAN CONFIRMATION FILED BY THE ASSESSEE ON WHICH THE CIT (A) HAS RELIED UPON IN RESPECT OF (I) RAJVIR MARKETING & INVESTMENT LTD, (II) LUNKAD MEDIA SECUR ITIES LTD. (III) RAJIV BIOTECH P. LTD. (IV) PARKSONS SECURITIES LTD. (V) LUNKAD MEDIA ENTERTAIN MENT LTD. ARE SIGNED BY ONE DIRECTOR I.E. BY MR SANJIV LUNKAD AND ONLY (VI) WEST END MANAGEMENT TECHNOLOGIES P.LTD. SIGNED BY MR. VIJAY LUNKAD, AND ERRED IN IGNORING THE FACT MENTIONED BY THE AO IN THE ASSESSMENT ORDER ESTABLISHING ABSENCE OF GENUINENESS OF THE LOANS FROM THESE PART IES. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A)HAS ERRED IN DELETING THE ADDITION WITHOUT APPRECIATING THE FACT THAT SURVEY CONDUCTED BY THE DEPARTMENT HAS UNEARTHED THE ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 4 FACT THAT THE LUNKAD GROUP OF COMPANIES HAVE ONLY C OMMISSION INCOME IN THEIR COMPUTATION OF TOTAL INCOME AND THEY HAVE CASH DEPOSITS,MONEY TRAN SFERS,INTER-COMPANY-TRANSFERS,CASH WITHDRAWALS AND CHEQUES ISSUSED TO THE BENEFICIARY. 2)THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. DURING THE COURSE OF HEARING BEFORE US,AUTHORISED R EPRESENTATIVE(AR) OF THE ASSESSEE DID NOT PRESS GROUND NO.1,HENCE,SAME STANDS DISMISSED AS NO T PRESSED. 2. ASSESSEE-COMPANY,CARRYING ON BUSINESS OF GENERATION AND SUPPLY OF ELECTRIC ENERGY AND AGENCY COMMISSION,FILED ITS RETURN OF INCOME ON 31. 10.2004 DECLARING TOTAL INCOME OF RS.(-)1.11 CRORES.AO FINALISED THE ASSESSMENT U/S.143(3) R.W.S .147OF THE ACT,ON 29.12.2008,DETERMINING THE TOTAL INCOME AT RS. (-)61,19,950/-. EFFECTIVE GROUND OF APPEAL PERTAINS TO ADDITION OF RS.50 LAKHS U/S.68 OF THE ACT.THE AO HAD A RECEIVED A LETTER FROM THE ACIT 3(1),INDORE;REGARDI NG LUNKAD GROUP (LG) OF COMPANIES;WHEREIN IT WAS STATED THAT THAT LG OF COMPANIES AND THEIR S UBSIDIARY CONCERNS WERE ACCEPTING CASH FROM VARIOUS PARTIES AND WERE LENDING THEM AS UNSECURED LOANS,THAT THE ASSESSEE HAD ALSO TAKEN LOANS FROM LG.HE FOUND THAT THE ASSESSEE HAD TAKEN LOANS OF RS.5 LAKHS,RS.10LAKHS,RS.10LAKHS,RS.10 LAKHS,RS.5LAKHS AND RS.10LAKHS FROM WEST END MANAGE MENT TECHNOLOGY PVT.LTD.,PAKSONS SECURITIES LTD.,LUNKAD MEDIA & ENTERTAINMENT LTD.,R AVJIR MARKETING & INVESTMENT LTD.,RAJVIR BIOTECH (P) LTD. AND LUNKAD SECURITIES LTD.RESPECTI VELY. HE FOUND VIJAY LUNKAD,SANJEEV LUNKAD ANDRITESH LUNKAD OR THEIR FAMILY MEMBERS WER E THE DIRECTORS OF THE 18 COMPANIES OF THE GROUP,THAT ALL OF THEM WERE OPERATING FROM ONE ROOM AT 13,RACE COURSE ROAD, INDORE,THAT ALL THE SIX COMPANIES MENTIONED ABOVE HAD THEIR ADDRESS AT THE SAME PLACE I.E.,13 RACE COURSE ROAD, INDORE,THAT THE CONFIRMATION LETTERS FOR ALL OF THE M EXCEPT ONE WERE SIGNED BY SANJEEV LUNKAD ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 5 WITH RUBBER STAMPS OF THE SAME ADDRESS,THAT THE OTH ER CONFIRMATION HAS BEEN SIGNED BY VIJAY LUNKAD,THAT ALL THE LOANS LISTED ABOVE WERE RECEIVE D IN A PERIOD OF ONE WEEK I.E., BETWEEN 20.12.2003 TO 27.12.2003. THE AO CONCLUDED THAT LG WAS ENGAGED IN GIVING ACCO MMODATION ENTRIES FOR SHARE APPLICATIONS AND UNSECURED LOANS,THAT VARIOUS AMOUNTS OF CASH WE RE RECEIVED FROM MEDIATORS AND DEPOSITED INTO BANK ACCOUNTS OPENED IN THE NAME OF THE COMPAN IES,THAT AFTER ROUTING THROUGH ONE OR MORE BANK ACCOUNTS THOSE SUMS WERE ADVANCED AS LOANS BAC K TO THE BENEFICIARIES,THAT LUNKADS USED TO CHARGE COMMISSION RANGING FROM 2 TO 3 % IN CASH FRO M BENEFICIARIES.HE CITED THE INSTANCE OF BANK ENTRY FROM THE BANK ACCOUNT OF RAJVIR MARKETIN G RELATING TO AY.2004-05,THAT ON 27.12.2003 THERE WAS A CASH DEPOSIT OF RS.2,00,000/ - INTO THE BANK ACCOUNT OF RAJVIR MARKETING & INVESTMENT LTD.,THAT THE SAID AMOUNT WAS FINALLY TR ANSFERRED TO KATARIA INFRASTRUCTURE CORPORATION THROUGH INTERMEDIARIES.HE CONCLUDED THAT THE LOANS TAKEN BY THE ASSESSEE WAS ONLY ACCOMMODATION ENTRIES AND SAME WERE NOT GENUINE.INV OKING THE PROVISIONS OF SECTION 68 OF THE ACT,HE MADE AN ADDITION OF RS.50,00,000/-TO THE TOT AL INCOME OF THE ASSESSEE. THE AO RELIED UPON VARIOUS CASES OF 2.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND THE ASSESSMENT ORDER HE HELD THAT THERE WAS INCRIMINATING MATERIAL FOR DISALLOWANCE O F LOANS ONLY IN RESPECT OF ONE COMPANY I.E., M/S.RAJVIR MARKETING AND INVESTMENT LTD.,THAT THE A SSESSEE HAD STATED THAT THE INFORMATION AND MATERIAL RELIED UPON BY THE AO HAD NOT BEEN GIVEN T O IT FOR REBUTTAL,THAT THERE WAS NO MATERIAL TO HOLD THAT THE ALLEGED LOANS WERE NOT GENUINE IN RES PECT OF OTHER CONCERNS EXCEPT FOR RAJBEER MARKETING AND INVESTMENT LTD. DURING APPEAL PROCEEDINGS HE DIRECTED THE ASSESSEE TO PRODUCE ALL OTHER EVIDENCE WITH RELATION TO ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 6 THESE LOANS.THE ASSESSEE FURNISHED EXPLANATION ABOU T VARIOUS ENTRIES.HE HELD THAT WEST END MANAGEMENT TECHNOLOGY PVT.LTD. HAD ADVANCED A LOAN OF RS.5 LAKHS, ON 21.12.2003 BY CHEQUE,THAT THE CONFIRMATION AND PAN HAD BEEN GIVEN DURING ASSESSMENT PROCEEDINGS.BEFORE THE FAA,THE ASSESSEE ALSO FILED AFFIDAVIT CONFIRMING TH E TRANSACTION,BUT HE DID NOT ADMIT ADDITIONAL EVIDENCE.HE FURTHER HELD THAT THE CONFIRMATION FRO M THE CREDITOR WAS ALREADY ON RECORD,THAT THE COMPANY HAD A SHARE CAPITAL AND FREE RESERVE OF RS. 8,04,88,065/-,THAT THERE WAS NO FINDING THAT THE SHARE CAPITAL WAS NOT GENUINE,THAT THERE WAS NO INCRIMINATING ENTRY OF CASH DEPOSIT OR SUBSEQUENT TRANSFER TO THE ASSESSEE,THAT WITHOUT TH OSE FINDINGS THE AMOUNT COULD NOT BE ADDED AS UNEXPLAINED CREDIT U/S.68 OF THE ACT.WITH REGARD TO THE LOAN AMOUNT OF RS.10 LAKHS OF PARKSONS SECURITIES,HE HELD THAT SAME HAD BEEN TAKEN BY THE ASSESSEE ON 24.12.2003 BY CHEQUE,THAT THE CONFIRMATION AND PAN HAD BEEN GIVEN DURING ASSESSME NT PROCEEDINGS.CONSIDERING THE SHARE CAPITAL OF THE COMPANY AND THE FACTORS MENTIONED IN THE EARLIER PARAGRAPH,HE HELD THAT THE AO WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION. IN THE CASE OF RAJVIR MARKETING AND INVESTMENT LTD. ,FAA FOUND THAT RS.5,00,000/-,RS.2,00,000 /- AND RS.3,00,000/-HAD BEEN TAKEN BY THE ASSESSEE ON 23.12.2003, 24.12,2003 & 27.12.2003, RESPECTIVE -LY,THAT THE CONFIRMATION AND PAN HAD BE EN GIVEN DURING ASSESSMENT PROCEEDINGS,THAT THE COMPANY HAD A SHARE CAPITAL AND FREE RESERVE OF RS..8,23,60,903/-,THAT THERE WAS NO FINDING THAT THE SHARE CAPITAL WAS NOT GENUINE,THAT THERE W AS NO INCRIMINATING ENTRY OF CASH DEPOSIT OR SUBSEQUENT TRANSFER TO THE ASSESSEE,THAT WITHOUT SU CH FINDINGS THE AMOUNT WAS NOT TO BE ADDED AS UNEXPLAINED CASH CREDIT U/S.68. DISCUSSING THE FACTS OF RAJVIR BIOTECH (P) LTD.,HE HELD THAT AN AMOUNT OF RS.5 LAKHS HAD BEEN TAKEN BY THE ASSESSEE ON 24.12.2003 BY CHEQUE,THAT THE CONFIRMATION AND PAN HAD BEEN FILED DURING ASSESSMENT PROCEEDINGS.FOLLOWING HIS ORDER F OR ABOVE REFERRED THREE CREDITORS,HE HELD THAT ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 7 THE AO WAS NOT JUSTIFIED IN MAKING ADDITION.SIMILAR FINDING WAS GIVEN BY HIM WITH REGARD TO LUNKAD SECURITIES LTD.ALSO. HE FURTHER HELD THAT ALL THE COMPANIES WERE ASSESSE D TO TAX WITH HUGE SHARE CAPITAL AND FREE RESERVE,THAT LOANS HAD BEEN TAKEN BY CHEQUES AND HA D BEEN REPAID IN THE FINANCIAL YEAR 2004-05 AND 2005-06,THAT DUE INTEREST HAD BEEN PAID,THAT TH ERE WAS NO EVIDENCE OF CASH BEING TENDERED IN RESPECT OF THOSE CONCERNS,EXCEPT RAJVIR MARKETING A ND INVESTMENT LTD.,THAT THE LOANS RECEIVED FROM THOSE COMPANIES CANNOT BE HELD AS UNEXPLAINED LOANS.HE DELETED THE ADDITION AMOUNTING TO RS.40 LAKHS,IN RESPECT OF FIVE CONCERNS. HE FURTHER OBSERVED THAT THE AO HAD POINTED OUT ABO UT AN INCRIMINATING ENTRY AMOUNTING TO RS.2,00,000/-, IN RESPECT OF LUNKAD MEDIA & ENTERTA INMENT LTD.,THAT THE ENTRY PERTAINED TO THE TRANSACTION OF 29.12.2003 AND WAS ABOUT RS.2,00,000 /-,THAT LOAN HAD BEEN ADVANCED TO KATARIA INFRA CORPORATION,THAT THE AO HAD HELD THAT CASH WA S DEPOSITED INTO THE ACCOUNT OF RAJVIR MARKETING,THAT SAME WAS TRANSFERRED TO THE ACCOUNT OF LUNKAD MEDIA & ENTERTAINMENT LTD,IN TURN IT TRANSFERRED THE AMOUNT IN QUESTION TO THE A SSESSEE AS UNSECURED LOAN,THAT SAID ENTRY WAS AGAINST THE ASSESSEE WHICH APPEARED TO BE INCRIMINA TING,THAT LOAN GIVEN BY THE LUNKAD MEDIA & ENTERTAINMENT WAS A DOUBTFUL ENTRY. REFERRING TO TH E ORDER U/S.143(3) PASSED IN THE CASE OF RAJVEER MARKETING & INVESTMENT LTD. FOR AY.2004-05, FAA HELD THAT LUNKAD MEDIA HAD ADVANCED AN AMOUNT OF RS.2 LACS TO THE ASSESSEE AGA INST CASH RECEIVED,THERE WAS SPECIFIC MENTION OF THE ASSESSEES NAME,THAT THE LOAN GIVEN BY LUNKA D MEDIA AND ENTERTAINMENT COULD NOT BE HELD TO BE GENUINE,THAT THE ASSESSEE HAD NOT EXPLAINED T HE IMPORTANCE OR RELEVANCE OF THAT ENTRY,THATLY ENTIRE AMOUNT RECEIVED FROM LUNKAD MEDIA WAS RIGHTL Y TREATED AS UNEXPLAINED CASH CREDIT AS SAME ARE NOTHING BUT HAWALA ENTRIES IN LIEU OF ASSE SSEES OWN CASH.HE UPHELD THE ADDITION MADE BY THE AO TO THE TUNE OF RS.10 LAKHS. ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 8 2.2. BEFORE US,AR STATED THAT THE ASSESSEE HAD RECEIVED THE LOAN AMOUNTS BY CHEQUES,THAT LOANS WERE REPAID THROUGH BANKING CHANNELS,THAT IDENTITY OF THE CREDITORS WAS ESTABLISHED,THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE AND HAD DEPOSIT ED IT IN GOVERNMENT ACCOUNT,THAT INTEREST PAID BY IT ON LOANS WAS NOT DISALLOWED BY THE AO,BA NK STATEMENT AND CONFIRMATIONS OF THE CREDITORS WERE PRODUCED BEFORE THE AO,THAT THE ORDE R OF THE TRIBUNAL IN THE LUNKAD GROUP OF CASES WAS NOT ADVERSE TO THE ASSESSEE.HE RELIED UPO N THE DECISIONS OF HINGORA INDUSTRIES LTD.(ITA/2109/AHD/2008-AY.2004-05,DTD.12.10.2012),R OHINI BUILDERS.(76TTJ521-AHD), ANANT SHELTERS PVT.LTD (51 SOT 234).DEPARTMENTAL REPRESE NTATIVE (DR) ARGUED THAT THE ASSESSEE HAD TAKEN LOANS FROM THE GROUP THAT WAS INDULGED IN HAW ALA ENTRIES,THAT IT HAD PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE,THAT ALL THE SIX CREDITORS WERE FROM THE SAME GROUP,THAT CASH WAS DEPOSITED BY THE CREDITORS IN THEIR ACCOUN T AND MONEY WAS TRANSFERRED TO THE ASSESSEE. DR REFERRED TO THE JUDGMENT OF INDORE BENCH OF TRIB UNAL DELIVERED IN THE CASE OF M/S. RAJVIR MARKETING AND INVESTMENT LTD.& OTHERS.(ITA/124-127/ IND/2011-AY.2002-03, 2004-05TO2007- 08,DATED 31.01.2012) 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO HAD MADE AN ADDITION OF RS.50 LAKHS U/S.68 OF THE A CT,THAT HE WAS OF THE OPINION THAT LOAN TRANSACTIONS ENTERED IN TO WITH LG OF COMPANIES WER E NOT GENUINE,THAT SURVEY ACTION CARRIED OUT AT THE BUSINESS PREMISES IN THE CASE OF THAT GROUP HAD REVEALED THAT IT WAS GIVING HAWALA ENTRIES TO THE PERSONS IN LIEU OF CASH,THAT SIX GROUP CONCE RNS HAD ADVANCED LOANS,AMOUNTING TO RS.50 LAKHS,TO THE ASSESSEE-FIRM.IT IS FURTHER FOUND THAT THE FAA HAD PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE BY DELETING THE ADDITIONS OF RS.40 LAK HS,THAT HE UPHELD THE ADDITION OF RS.10 LAKHS.THE ASSESSEE AS WELL AS THE AO HAVE FILED APP EALS FOR THE SUSTAINED /DELETED ADDITIONS. WHILE GOING THROUGH THE PAPER BOOK FILED BY THE ASS ESSEE,WE NOTICED THAT PAGES WERE NOT ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 9 PRODUCED BEFORE THE AO AND WERE PRODUCED BEFORE THE FAA ONLY.NO DOUBT THE FAA HAS ALL THE POWERS OF THE FAA AND CAN DO THE THINGS THAT THE AO CAN DO,BUT,HE HAS TO FOLLOW A CERTAIN PROCEDURE AS ENVISAGED BY RULE 46 A OF THE INCOME T AX RULES,1962(RULES).SUB-SECTION 4 OF THE RULE 46A PROVIDES THAT IF THE FAA IS OF THE OPINION THAT PARTICULAR DOCUMENTS WOULD BE HELPFUL FOR DECIDING THE APPEAL,HE CAN ADMIT SUCH EVIDENCES ,AFTER RECORDING REASONS HE COULD.WE DO NOT FIND ANY MENTION OF THE REASONS ,RECORDED FOR ADMIT TING PAGES, IN THE ORDER OF THE FAA.AR OF THE ASSESSEE,FAIRLY CONCEDED THAT THERE WAS NO MENT ION OF THE CIRCUMSTANCES UNDER WHICH THE PAPERS WERE ACCEPTED BY THE FAA.BUT,HE ARGUED THAT THE ASSESSEE COULD NOT COMPEL THE FAA AS TO WHAT FACTS TO BE MENTIONED IN HIS ORDER.WE AGREE THAT THE ASSESSEE CANNOT DO ANYTHING BESIDES COMPLYING WITH THE ORDERS OF FAA.BUT,TRIBUNAL DEFIN ITELY CAN ASK HIM TO PASS A REASONED ORDER FOR ADMITTING PAPERS AND TO INCORPORATE THE SAID FA CT IN HIS ORDER.WE DO NOT KNOW WHAT PREVENTED THE ASSESSEE TO PRODUCE THE DOCUMENTS BEFORE THE AO THAT WERE CONSIDERED CRUCIAL BY THE FAA.IF HE DECIDED TO GIVE RELIEF TO THE ASSESSEE ON THE BA SIS OF SUCH PAPERS,HE SHOULD HAVE AFFORDED AN OPPORTUNITY TO THE AO TO EXAMINE THEM OR AT LEAST S HOULD HAVE RECORDED THE REASONS FOR ADOPTING A PARTICULAR COURSE OF ACTION.AS WE ARE NOT ABLE TO FIND THE REASONS RECORDED BY THE FAA,FOR ADMITTING DOCUMENTS,DURING THE APPELLATE PROCEEDI NGS FOR THE FIRST TIME,SO,IN THE INTEREST OF JUSTICE WE ARE REMITTING BACK THE MATTER TO THE FIL E OF THE FAA FOR FRESH ADJUDICATION.HE IS DIRECTED TO ADOPT THE PROCEDURE ENVISAGED BY THE RU LE 46A OF THE ACT OR TAKE ANY OTHER NECESSARY STEP DEEMED FIT IN THIS REGARD. THEREFORE,EFFEVTIVE GROUND OF APPEAL FILED BY THE AO IS ALLOWED IN HIS FAVOUR,IN PART. 2.3.A. NOW,WE WOULD LIKE TO DECIDE THE ISSUE RAISED BY THE ASSESSEE. IT IS WELL-SETTLED THAT UNDER SECTION 68 OF THE ACT, THE ASSESSEE HAS TO PROVE TH REE CONDITIONS (A) THE IDENTITY OF THE CREDITOR, (B) THE CAPACITY OF SUCH CREDITOR TO ADVANCE THE AMOUNT, AND (C) THE GENUINENESS OF THE ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 10 TRANSACTION. THE CONTENTS OF SECTION 68, MAY BE DI VIDED INTO TWO PARTS. (A) IT REQUIRES THE ASSESSEE TO EXPLAIN THE SUM FOUND CREDITED IN THE B OOKS OF THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF. THIS PART ONLY REQUIRES THE ASSESS EE TO DISCLOSE THE SOURCE FROM WHICH THE MONEY HAS BEEN RECEIVED BY THE ASSESSEE. THIS DOES NOT R EQUIRE THE ASSESSEE TO DISCLOSE THE SOURCE OF THAT SOURCE, I.E., THE SOURCE FROM WHICH THE DONOR OR INVESTOR HAS RECEIVED THE MONEY WHICH HAS BEEN INVESTED. (B) IT CONSISTS OF OFFERING AN EXP LANATION WHICH IS SATISFACTORY IN THE OPINION OF THE AO. WHAT EXPLANATION WOULD BE CONSIDERED SATISF ACTORY AND HOW MUCH OF DETAILS SHOULD BE FURNISHED TO MAKE THE EXPLANATION SATISFACTORY NOR MALLY DEPEND UPON THE FACTS OF A PARTICULAR MATTER.IN OUR OPINION THE LAW DOES NOT PRESCRIBE AN Y QUANTITATIVE TEST TO FIND OUT WHETHER THE ONUS ON A PARTICULAR CASE HAS BEEN DISCHARGED OR NO T. IT ALL DEPENDS ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IN SOME CASES, THE ONUS MAY BE HEAVY WHEREAS, IN OTHERS, IT MAY BE NOMINAL. THERE IS NOTHING RIGID ABOUT IT.THEREFORE, IN DECIDING SUCH CASES TEST OF HUMAN PROBABILITIES HAS TO BE APPLIED AND SURROUNDING CIR CUMSTANCES HAVE TO BE CONSIDERED.SECONDLY,THE CREDITWORTHINESS OF THE CRE DITOR HAS TO BE JUDGED VIS-A-VIS THE TRANSACT - TION WHICH HAD TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR. IN THE CASE UNDER CONSIDERATION,THE FAA HELD THAT C ASH DEPOSITED IN ONE OF THE GROUP CONCERN WAS RECEIVED BY THE ASSESSEE AS LOAN FROM LUNKAD ME DIA & ENTERTAINMENT LTD.THE ASSESSEE HAD NOT EXPLAINED THE GENUINENESS OF THE TRANSACTION BE FORE ANY OF THE AUTHORITIES.IF THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S.RAJVIR MARKETING AND IN VESTMENT LTD.& OTHERS(SUPRA)IS TAKEN IN TO CONSIDERATION,IT IS FOUND THAT THE TRIBUNAL HAD GIV EN A FINDING OF FACT THAT IN THE YEAR 2007-08 GROUP COULD NOT OFFER EXPLANATION OF CASH DEPOSITS OF RS.5 CRORES (APP.), THAT IN EARLIER YEARS THE LG OF COMPANIES HAD NOT OFFERED EXPLANATION ABOUT T HE SHARE CAPITAL RECEIVED BY THEM.THESE FACTS ABOUT THE LG GROUP OF CONCERNS ARE THE SURROU NDING CIRCUMSTANCES TO DECIDE THE ISSUE ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 11 BEFORE US.MERELY TAKING OR REPAYING THE LOAN AMOUNT S BY CHEQUES IN ITSELF DOES NOT PROVE ANYTHING EXCEPT THE FACT THAT THE TRANSACTION WAS T HROUGH BANKING CHANNEL.CREDITWORTHINESS OF A PERSON ADVANCING LOAN HAS TO BE DECIDED AFTER CONSI DERING THE TRANSACTION IN QUESTION.IN THE CASE BEFORE US,THE FAA HAD TAKEN NOTE OF THE CERTAIN FAC TS ABOUT CASH DEPOSIT IN BANK ACCOUNT OF ONE OF THE GROUP CONCERNS AND RESULTANT ADVANCING OF LO AN TO THE ASSESSEE.CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE MATTER BEFORE US,WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.THEREFORE, CONFIRMING HIS ORDER WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE.AS FAR AS THE CASES RELIED UPON BY THE AR ARE CONCERNED,WE ARE OF THE OPINION THAT FACTS OF THOSE CASES ARE SI MILAR TO THE FACTS OF THE PRESENT CASE.IN THOSE CASES NO SURVEY WAS CARRIED OUT AT THE BUSINESS PRE MISES OF THE CREDITORS BUSINESS PREMISES WHERE INCRIMINATING DOCUMENTS WERE FOUND.BESIDES,IN THOSE CASES,THE TRIBUNAL HAD NOT ARRIVED AT FINDING OF FACT THAT THE GROUP ADVANCING LOANS TO T HE ASSESSEE HAD NOT EXPLAINED THE CASH DEPOSITED IN BANK ACCOUNTS OR THE SHARE APPLICATION MONEY RECEIVED BY THE GROUP.SO,CONSIDERING THE TOTALITY PECULIARITY OF THE FACTS OF THE INSTAN T CASE APPEAL FILED BY THE ASSESSEE IS REJECTED. AS A RESULT, APPEAL FILED BY THE AO STANDS PARTLY A LLOWED AND THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. /+0 '*+ , 2 3 ( 4 5+0 6 ( + 78 9 '*+ 2 3 ( 4 :+ ( + 78. ORDER PRONOUNCED IN THE O PEN COURT ON 25TH JULY, 2014 . 5 ( -.# < =' 25 ,2014 . ( 4 D SD/- SD/- ( / VIJAY PAL RAO ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, ='/ DATE: 25TH JULY, 2014 S.K. 5 ( &+ F#+ 5 ( &+ F#+ 5 ( &+ F#+ 5 ( &+ F#+/ COPY OF THE ORDER FORWARDED TO : ITA NO.1286 & 1211/MUM/2011 M/S. KATARIA INFRASTRU CTURE CORPORATION 12 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ G H , 4. THE CONCERNED CIT / G H 5. DR I BENCH, ITAT, MUMBAI / I4 &+' , ... 6. GUARD FILE/ 4 / '+ &+ '+ &+ '+ &+ '+ &+ //TRUE COPY// 5' / BY ORDER, J/7 DY./ASST. REGISTRAR , /ITAT, MUMBAI