ARUN KUMAR MUCHHALA, MUMBAI V. DCIT 8(2), MUMBAI

ITA 1341/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79514 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 23-07-2014
• Assessment Year: 1996-1997
• Appeal Filed On: 14-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Search and seizure; Principle of natural justice; Question of law; Accommodation entries; Onus to prove
• Section: 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.1341/MUM/2011 ' ' ' ' # # # # / ASSESSMENT YEAR 1996-97 ( $% / APPELLANT) ( &'$% / RESPONDENT) '() '() '() '() * * * * / ASSESSEE BY : SHRI VIJAY MEHTA + * / REVENUE BY : SHRI SUNIL AGRAWAL ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING : 23/07/2014 -.# + ), / DATE OF PRONOUNCEMENT : 30/07/2014 PER RAJENDRA,AM ' ' ' ' : CHALLENGING THE ORDER DT.29.11.2010 OF THE CIT(A)-1 7,MUMBAI,ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: GROUND NO.1: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE HON'BLE CITY(A) ERRED IN CONFIRMING THE ADDITION MADE U/S 68 IN THE CASE OF M/S. POOJA CORPORATION AMOUNTING TO RS. 9,00,000/- WITHOUT APPRECIATING THE FACTS OF THE CA SE. THE APPELLANT PRAYS THAT THE ADDITIONS MAY KINDLY BE ORDERED TO BE DELETED. GROUND NO.2: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE HON'BLE CITY(A) ERRED IN CONFIRMING THE ADDITION MADE U/S 68 IN THE CASE OF M/S. POOJA CORPORATION AMOUNTING TO RS. 7,00,000/- WITHOUT APPRECIATING THE FACTS OF THE CA SE. THE APPELLANT PRAYS THAT THE ADDITIONS MAY KINDLY BE ORDERED TO BE DELETED. GROUND NO.3: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE HON'BLE CITY(A) ERRED IN CONFIRMING THE ADDITION MADE U/S 68 IN THE CASE OF MR. ASHOK MEHTA AMOUNTING TO RS. 24,00,000/- WITHOUT APPRECIATING THE FACTS OF THE CASE. THE APP ELLANT PRAYS THAT THE ADDITIONS MAY KINDLY BE ORDERED TO BE DELETED. GROUND NO.4: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE HON'BLE CITY(A) ERRED IN CONFIRMING THE ADDITION MADE U/S 68 IN THE CASE OF MR. AJAY SHAH AMOUNTING TO RS. 18,00,000/- ARUN KUMAR MUCHHALA, AMAL MAHAL, NEAR CHANDAN CINEMA, JUHU, MUMBAI-400049 PAN: AAHPM5369F VS DCIT 8(2 ) MUMBAI-400020 ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 2 WITHOUT APPRECIATING THE FACTS OF THE CASE. THE APP ELLANT PRAYS THAT THE ADDITIONS MAY KINDLY BE ORDERED TO BE DELETED. THE APPELLANT CRAVES TO ADD, ALTER, AMEND OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING. THE APPEAL,BEFORE US,IS ARISING FROM THE ORDER OF T HE TRIBUNAL(ITA NO./4212/MUM/2004-DATED 18.11.2008).IN PURSUANCE OF THE SAID ORDER THE ASSE SSING OFFICER(AO)HAD PASSED AN ORDER ON 24. 12.2009,U/S.143(3) ACT R.W.S.254 OF THE ACT.WE WILL LIKE TO REPRODUCE THE ORDER OF THE TRIBUANL: HAVING REGARD TO THE DETAILS AND EVIDENCES FILED I N RESPECT OF SHRI CHANDULAL PATEL, THE FINDINGS OF THE LD.CIT(A),CANNOT BE SUSTAINED AND HENCE, THE SA ME ARE REVERSED. HOWEVER, IN RESPECT OF OTHER CASH CREDITORS INDICATED IN THIS GROUND OF APPEAL, THE ISSUE IS RESTORED TO THE FILE OF AO, FOR FRESH EXAMINATION OF THE SAME, IN THE LIGHT OF THE STATEM ENT ETC. TO BE RECORDED, ON PRODUCTION OF SUCH CASH CREDITORS AND ANY OTHER RELEVANT EVIDENCE FILE D BY THE ASSESSEE.HAVING REGARD TO THE FACT SITUATION OF THE CASE, AND THE MEET THE ENDS OF NAT URAL JUSTICE, IT BECOMES IMPERATIVE TO OFFER THE ASSESSEE OPPORTUNITY TO PRODUCE THE PARTIES.THE ASS ESSEE IS DIRECTED TO PRODUCE THE PARTIES AS CONTENDED.ACCORDINGLY, THE ORDER OF THE LD.CIT(A)IN RESPECT OF SUCH CASH CREDITORS, IS SET-ASIDE AND RESTORED TO THE FILE OF A.O. THE A.O. IS DIRECT ED TO ADJUDICATE THE ISSUE IN QUESTION,IN ACCORDANCE WITH LAW,AFTER AFFORDING REASONABLE AND PROPER OPPORTUNITY TO THE ASSESSEE. 2. BEFORE PROCEEDING FURTHER,IT WILL BE USEFUL TO UNDE RSTAND THE BACKGROUND OF THE MATTER.RETURN FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 27.12 .1996.ASSESSMENT WAS COMPLETED ON 12.03. 1999,U/S.144 OF THE ACT,DETERMINING THE INCOME OF T HE ASSESSEE AT RS.1.26 CRORES.WHILE PASSING THE BEST JUDGMENT ASSESSMENT THE AO HAD MADE CERTAI N ADDITIONS IN RESPECT OF NRI GIFTS, LOANS OR DEPOSITS TAKEN FROM VARIOUS PARTIES AND GIFTS RECEI VED IN MINOR CHILDRENS ACCOUNTS BY TREATING THE SAME AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY,WHO PARTLY ALLOWED THE APPEAL FILED BY HIM.BUT,HE CONFIRMED THE ADDITIONS MADE BY THE AO IN THE CASES OF POOJA CORPORATION (PC)-RS.9LAKHS,POOJA ENTERPRISES(PE)-RS.7LAKHS,ASHO K MEHTA-RS.24 LAKHS,AJAY SHAH-18 LAKHS, CHANDULAL PATEL(CP)-3 LAKHS.TRIBUNAL DELETED THE AD DITION CONFIRMED BY THE FAA IN THE CASE OF CP,BUT RESTORED BACK THE MATTER TO THE FILE OF THE AO IN RESPECT OF THE FOUR PARTIES I.E.PC,PE, ASHOK MEHAT,AJAY MEHTA. 2.1.IN PURSUANCE OF THE ORDER OF THE TRIBUNAL THE A O HELD THAT THE CASH CREDIT PARTIES HAD TO BE EXAMINED IN PERSON.HE ISSUED A NOTICE U/S.142(1)OF THE ACT IN RESPONSE TO SAME THE ASSESSEE SUBMITTED CERTAIN DETAILS VIDE ITS LETTER DTD.26.11 .2009.AFTER CONSIDERING HIS SUBMISSION THE AO ISSUED FOLLOWING SHOW CAUSE: ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 3 PLEASE REFER TO THE ORDER OF HONBLE ITAT A BENCH, MUMBAI IN ITA NO. 4212/MUM/2004 & ITA NO 6875/ MUM/2005 DT, 18.11.2008, IN YOUR CASE FOR THE A. Y: 1996-1 997 AS PER THE DIRECTION GIVEN BY HONBLE ITAT, YOU ARE REQUESTED TO PRODUCE FOLLOWING PARTIES IN PERSON 1)M/S POOJA CORPORATION FROM WHOM A LOAN OF RS.9 LACS HAS BEEN RECEIVED. 2)M/S POOJA ENTERPRISESFROM WHOM LOAN OF RS.7 LACS HAS BEE N RECEIVED, 3)SHRJ ASHOK MEHTA FROM WHOM A DEPOSIT OF RS.24 LACS HAS BE EN RECEIVED. 4)SHRI AJAY SHAH FROM WHOM A DEPOSIT OF RS.18 LEES HAS BEEN RECEIVED. 5)SHRI CHANDULA1 C. PATEL FROM WHOM A LOAN OF RS.3 LACS HAS BEE N RECEIVED. LOOKING TO THE FACTS AND PAST HISTORY OF YOUR CASE, IT IS OBSERVED THAT YOU HAVE AVOI DED THE PRODUCTION OF ABOVE PARTIES IN PERSON BEFORE THE ASSESSING OFFICER & COMMISSIONER OF INCOME TAX (A). HOWEVER, BEFORE HONBLE ITAT YOU HAVE TAKEN THE ARGUMENT THAT THE ABOVE PAR TIES CAN BE PRODUCED IN PERSON. IN VIEW OF ABOVE, FINAL OPPORTUNITY IS HEREBY ACCORDED TO YOU TO PRODUCE THE ABOVE PARTIES IN PERSON ON ANY WORKING DAY BETWEEN 01.12.2009 TO 16.12.2009 ALONG WITH PROOF OF TH EIR IDENTITY (ORIGINAL DOCUMENTS), COPY OF THEIR BANK STATEMENTS FOR THE RESPECTIVE PERIOD AND THEIR I. T. RETURN,COMPUTATION, CAPITAL A/C AND BALANCE SHEET FOR THE RELEVANT PERIOD. PLEASE NOTE THAT THIS BEING THE FINAL OPPORTUNITY PROVIDED TO YOU, IF YOU FAIL TO UTILIZE THE SAME, ADDITION OF RS.61 LACS SHALL BE MADE IN YOUR HANDS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT, 1961. 2.2. AS NO PARTIES WERE PRODUCED BEFORE THE AO DURING TH E PERIOD 01.12.2009-24.12.2009,SO,HE HELD THAT DISALLOWANCE COULD BE MADE ONLY ON THE FA CT THAT THE ASSESSEE HAD PRODUCED THE PARTIES . BUT,TO BE UTMOST FAIR TO THE ASSESSEE,HE DECIDED TO CONSIDER THE DOCUMENTS SUBMITTED BEFORE HIM.IN THE CASES OF PC AND PE HE HELD THAT IN THE O RIGINAL PROCEEDINGS THE ASSESSEE HAD NOT FILED THE CONFIRMATION OF THOSE PARTIES NOR HAD SUPPLIED THEIR ADDRESSES,THAT THIRD PARTY VERIFICATION COULD NOT BE CARRIED OUT, THAT IN THE SET-ASIDE PRO CEEDINGS THE ASSESSEE HAD FURNISHED THE CONFIRMATION LETTERS OF BOTH THE ENTITIES, THAT IT WAS NOT CLARIFIED AS TO WHO HAD SIGNED THE SAID CONFIRMATIONS,THAT NO PAN/GIR WERE MENTIONED,THAT D OCUMENTARY EVIDENCES LIKE BANK STATEMEN - TS/IDENTITY PROOF/ PROVING THE GENUINENESS AND CRED ITWORTHINESS OF THE PARTIES WERE NOT PRODUCED, THAT IDENTITY OF THE PARTIES WAS ALSO NOT PROVED,TH AT THE ASSESSEE HAD PRODUCED AFFIDAVIT OF NITIN RESHAMWALA WHO CLAIMED TO BE A REAL ESTATE AGENT,TH AT SAME WAS OF NO USE AS THE ASSESSEE HAD NOT PRODUCED THE COPIES OF BANK STATEMENTS AND THE COPI ES OF RETURNS OF INCOMES OF PC AND PE,THAT EVEN AT THE TIME OF ORIGINAL ASSESSMENT THE ASSESSE E HAD NOT PROVIDED ADDRESSES OF THE PARTY IN SPITE OF THE FACT THAT SEVERAL OPPORTUNITIES WERE G IVEN TO HIM.HE REFERRED TO THE ORDER OF THE FAA DATED 01.03.2004 AND HELD THAT THE ORDER OF THE FAA SHOWED THAT IN SPITE OF SPECIFIC OPPORTUNITIES PROVIDED TO THE ASSESSEE AND EVEN AFTER CALLING FOR TWO REMAND REPORTS THE ASSESSEE HAD FAILED TO SUBSTANTIATE HIS CLAIM,THAT HE WAS ALLOWED TIME OF MORE THAN 15 DAYS TO PRODUCE THOSE PARTIES,THAT HE FAILED TO PRODUCE THEM,THAT TO DEFRAUD THE REVEN UE THE ASSESSEE WAS NOT PRODUCING THE PARTIES OR ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 4 THE DOCUMENTS THOUGH HE HAD AGREED BEFORE THE TRIBU NAL THAT THE PARTIES WOULD BE PRODUCED,THAT THE ASSESSEE HAD FAILED TO PROVE THE IDENTITY,CREDI TWORTHINESS OF THE PARTIES AND GENUINENESS OF THE TRANSACTIONS. 2.3. ABOUT THE DEPOSITS OF RS.24 LAKHS AND RS.18 LAKHS F ROM ASHOK MEHTA AND AJAY SHAH RESPECTIVELY THE AO MENTIONED THAT AT THE TIME OF O RIGINAL ASSESSMENT PROCEEDINGS THE AO HAD SPECIFICALLY MENTIONED THAT THE ASSESSEE HAD INSPIT E OF OPPORTUNITIES GIVEN THE ASSESSEE HAD NEITHER SUBMITTED ANY CONFIRMATION NOR HAD GIVEN ADDRESSES. HE REFERRED TO THE ORDER OF THE FAA DATED 01.03.2004 WHEREIN IT WAS HELD THAT THE BANK ACCOU NT WAS OPENED IN THE BANK WHERE NRI STATUS HAD NOT BEEN SHOWN,THAT SIGNATURE IN THE PASSPORT W ERE DIFFERENT FROM THAT OF CONFIRMATION, THAT THE FUNDS IN THE BANK ACCOUNTS DID NOT BELONG TO TH E LENDERS.HE FURTHER MENTIONED THAT HE HAD NOT PRODUCED THE PARTIES DURING REMAND PROCEEDINGS OR S ET ASIDE PROCEEDINGS,THAT HE DID NOT SUBMIT CONFIRMATION AND ADDRESSES OF BOTH THE PERSONS,THAT HE HAD FAILED TO ESTABLISH IDENTITY AND CREDIT WORTHINESS OF THE PARTIES AND THE GENUINENESS OF TH E TRANSACTION.HE MADE AN ADDITION OF RS.42 LAKHS(RS.24 LAKHS + RS.18 LAKHS)TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FAA.BEFORE HIM,IT WAS SUBMITTED THAT THE ASSESSEE HAD RECEIVED AN ADVANCE OF RS.9,00,000/- FROM PC TOWARDS THE SALE OF PREMISES IN ONE OF THE PROJECTS,THAT TH E DEAL COULD NOT MATERIALISE AND HE REFUNDED THE MONEY THROUGH CHEQUE,THAT THE AMOUNT WAS REFLECTED IN THE BANK STATEMENT OF THE ASSESSEE,THAT HE HAD REPAID THE SUMS WITHIN THE SAME FY. AND NO ADDI TION COULD BE MADE U/S.68 OF THE ACT,THAT IT WAS NOT A LOAN BUT AN WAS AN ADVANCE RECEIVED IN RE LATION TO THE SALE OF THE PROPERTY IN THE NORMAL COURSE OF ITS BUSINESS,THAT THE ASSESSEE HAD PRODUC ED THE AFFIDAVIT OF NITIN RESHAMWALA,WHO WAS A REAL ESTATE AGENT AND WAS THE LINK BETWEEN THE ASSE SSEE AND PC,THAT THE AFFIDAVIT GAVE COMPLETE DETAILS OF THE AGENT, HIS PAN NUMBER, ADDRESS AND T HE DETAIL OF THE TRANSACTION AND ADDRESS OF PC.IN THE AFFIDAVIT THE AGENT HAD ALSO STATED THAT HE HANDED OVER TWO CHEQUES AMOUNTING TO RS.6,00,000/- AND RS.3,00,000/ IN THE MONTH OF JUNE , 1995 AND JULY1995 RESPECTIVELY AND THOSE WERE REFUNDED BY THE ASSESSEE TO PC VIDE TWO CHEQUE S AMOUNTING TO RS.7,00,000/- AND RS.2,00,000/- IN THE MONTH OF FEBRUARY 1996 AND MAR CH, 1996 RESPECTIVELY.IT WAS ARGUED THAT THE CREDENTIALS AND THE GENUINENESS OF THE TRANSACTION WERE ENTIRELY PROVED BY THE ASSESSEE,THAT THE PARTY COULD NOT BE PRODUCED BEFORE THE AO AS THAT W AS THE ONLY TRANSACTION WITH PC WHICH COULD NOT EVEN BE COMPLETED,THAT THE TRANSACTION OCCURRED DURING THE FINANCIAL YEAR 1995-96 WHICH WAS ABOUT 16 YEARS AGO.IN THE CASE OF PE IT WAS STATED THAT THE ASSESSEE HAD RECEIVED SIMILAR ADVANCE OF RS.7,00,000/- FROM IT TOWARDS THE SALE OF RESIDE NTIAL PREMISES,THAT THE DEAL COULD NOT MATERIALISE ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 5 AND,THAT THE THE ASSESSEE REFUNDED THE MONEY BY CHE UQE AND SAME WAS REFLECTED IN THE BANK- STATEMENT,THAT THE AGENT,NITIN RESHAMWALA IN HIS AF FIDAVIT HAD CONFIRMED THE TRANSACTIONS,THAT THE REASONS FOR NON PRODUCTION OF THE PARTY WERE THE SA ME AS THAT HAVE BEEN DISCUSSED IN THE CASE OF PC. 3.1. ABOUT ASHOK MEHTA IT WAS STATED THAT THE ASSESSEE H AD RECEIVED AN ADVANCE OF RS.24,00,000/- FROM HIM TOWARDS RESIDENTIAL PREMISES,THAT ASHOK ME HTA WAS A RESIDENT OF UNITED KINGDOM,THAT THE AMOUNT IN QUESTION WAS REFLECTED IN THE BANK ST ATEMENT OF THE ASSESSEE,THAT A CONFIRMATION LETTER, CONTAINING COMPLETE ADDRESS, PHONE NUMBER O F ASHOK MEHTA,WAS PRODUCED TO PROVE THE IDENTITY AND THE CREDITWORTHINESS OF ASHOK MEHTA,TH AT AN AFFIDAVIT AFFIRMING THE ADVANCE OF MONEY TO THE ASSESSEE WAS ALSO FILED,THAT A CERTIF ICATE FROM K AND P ACCOUNTANTS OF U.K.STATING THAT ASHOK MEHTA WAS OF SOUND FINANCIAL FOOTING AND WAS IN A POSITION TO MAKE AN INVESTMENT OF RS,24,00,000/- TOWARDS RESIDENTIAL FLAT WAS FILED A LONG WITH THE COPY OF THE PASSPORT OF MR. ASHOK MEHTA,THAT A COPY OF CERTIFICATE FROM INDIAN OVERSE AS BANK STATING DETAILS AS TO HOW MONEY CAME INTO ACCOUNT OF THE ASSESSEE WAS ALSO PRODUCED,THAT THE COPY OF SAVING BANK ACCOUNT OPENING FORM OF ASHOK SHAH WAS SUPPLIED,THAT THE COPY OF TH E ASSESSEES BANK STATEMENT REFLECTING THE RECEIPT OF MONEY WAS AVAILABLE ON RECORD,THAT THE A SSESSEE HAD RECEIVED THE MONIES THROUGH THE BANKING CHANNEL WHICH WAS SUBSTANTIATED BY THE BANK STATEMENT,THAT THE ASSESSEE HAD PRODUCED SUFFICIENT EVIDENCE TO PROVE THE GENUINENESS AND TH E CREDITWORTHINESS OF ASHOK MEHTA.IT WAS FURTHER STATED THAT THE THE ASSESSEE HAD RECEIVED A N ADVANCE OF RS.18, 00,000/- FROM AJAY SHAH,A RESIDENT OF UNITED KINGDOM TOWARDS INVESTMENT IN TH E LOCAL STOCK MARKET.IN THIS CASE ALSO ALMOST IDENTICAL ARGUMENTS WERE ADVANCED BY THE ASSESSEE T HAT WERE ADVANCED IN THE CASE OF ASHOK MEHTA.IT WAS ALSO CONTENDED THAT THE AO HAD MADE TH E ADDITION ON THE GROUND THAT THE ASSESSEE HAD FAILED TO PRODUCE THE PARTIES IN THE TIME PROVI DED IN THE SET-ASIDE PROCEEDINGS,THAT ASHOK MEHTA AND AJAY SHAH WERE NON-RESIDENTS,THAT THEY CO ULD NOT TRAVEL TO INDIA. 3.2. AFTER CONSIDERING HIS SUBMISSIONS AND THE ORDER OF THE AO,THE FAA HELD THAT THE ASSESSEE HAD CLAIMED THAT HE HAD RECEIVED LOAN FROM PC OF RS,9 ,00,000/- AND FROM PE OF RS.7,00,000/-, THAT BEFORE THE AO CONFIRMATIONS OF PC AND PE WERE FILED ALONG WITH AN AFFIDAVIT OF BROKER,NITIN RESHANWALA,THAT COPIES OF THE BANK STATEMENTS AS WE LL AS THE COPIES OF INCOME-TAX RETURNS OF BOTH THE PARTIES WERE NOT FILED,THAT THE GENUINENESS OF THE CREDITS OF RS.9 LAKHS AND RS.7 LAKHS FROM PC AND PE RESPECTIVELY WERE NOT PROVED,THAT THE CERTIF ICATES FURNISHED BY THE SAID PARTIES WERE ON PRINTED LETTER HEADS AND SIGNED BY THE PROPRIETOR O F EACH CONCERN,THAT THE LETTER HEADS USED IN BOTH CASES WERE VERY UNUSUAL,THAT THE ADDRESSES GIVEN ON THE LETTER HEADS WERE INCOMPLETE AND DETAILS ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 6 OF EXCISE OR SALES TAX REGISTRATION WERE NOT GIVEN, THAT THE LETTER HEADS DID NOT SPECIFY THE TIME OF BUSINESS OF THOSE TWO PARTIES,THAT THE IDENTITY OF THE CREDITORS AND THEIR CREDITWORTHINESS HAD NOT BEEN ESTABLISHED BY THE ASSESSEE,THAT FOR ESTABLISH ING THE GENUINENESS OF THE CASH CREDIT HAD NOT PROVED BY HIM,THAT THE AO COULD NOT BE FAULTED FOR TREATING THOSE CREDITS AND BRINGING THEM TO TAX U/S.68 OF THE ACT.ACCORDINGLY,ADDITIONS MADE BY THE AO OF RS. 9 LAKHS AND RS.7 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE WAS CONFIRMED BY THE FAA.REG ARDING DEPOSIT OF RS.24 LAKHS TAKEN FROM ASHOK MEHTA AND OF RS.18 LAKHS FROM AJAY SHAH, FAA HELD THAT THE ASSESSEE HAD NOT PRODUCED THE PARTIES BEFORE THE AO,BUT HAD ONLY FURNISHED DO CUMENTS. IN THE APPELLATE PROCEEDINGS,THE FAA HELD THAT ASHO K MEHTA AND AJAY SHAH WERE NOT ASSESSED TO TAX IN INDIA,THAT CONFIRMATIONS FURNISHED BY THEM D ID NOT DISCHARGE THE INITIAL ONUS RELATING TO THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE CREDIT S,THAT THE PURPOSE FOR GIVING THE FUNDS AS STATED IN THE CONFIRMATIONS WERE APPARENTLY CONTRADICTORY AND TOTALLY UNSUPPORTED WITH ANY EVIDENCE, THAT THERE WAS NOT A WORD ON WHETHER THE PURPOSE FO R WHICH THE AMOUNTS HAD BEEN GIVEN TO THE ASSESSEE WAS EVEN ATTEMPTED TO BE REVERSED OVER A P ERIOD OF MORE THAN 8 YEARS, THAT NO PART OF THE SO CALLED INTEREST FREE LOANS HAD BEEN RETURNED TO THE SO-CALLED LENDERS,THAT THE SAID FACT ITSELF, WA S HIGHLY SUSPICIOUS,THAT THE SAVINGS BANK ACCOUNTS OF THE TWO LENDERS WERE OPENED ON THE SAME DAY,THAT MEANT THAT BOTH THE NRI LENDERS WERE IN IN DIA AND IN MUMBAI AT THE SAME TIME,THAT THE ADDRESSES OF THE BOTH LENDERS WAS THE SAME,THAT IT WAS AN INEXPLICABLY STRANGE COINCIDENCE,THAT THE ADDRESS WAS INCOMPLETE,THAT BOTH THE NRIS HAD NOT D ISCLOSED THEIR STATUS OR ADDRESS TO THE BANK,THAT THE NAME OF THE ACCOUNT HOLDER OF SB NC. NO.9261 WAS AHSOK J. SHAH WHEREAS THE PASSPORT AND AFFIDAVIT FURNISHED WAS OF ASHOK MANSU KHLAL MEHTA,THAT THE SIGNATURE OF THE TWO LENDERS IN THE BANK WERE TOTALLY DIFFERENT FROM THO SE IN THEIR PASSPORTS AND CONFIRMATION LETTERS, THAT BOTH THE ACCOUNT OPENING FORMS HAD BEEN SIGNED IN THE SAME HAND WRITING,THAT THE BANK ACCOUNTS FROM WHICH AMOUNT OF RS.18 LAKHS AND RS.24 LAKHS WERE TRANSFERRED TO THE ASSESSEES ACCOUNT DID NOT BELONG TO THE PERSONS WHO HAD CONFI RMED THE LOANS,THAT THE IDENTITY AND CREDITWORTHINESS OF THE PARTIES AND THE GENUINENESS OF THE CASH CREDITS OF RS.18,00,000/- IN THE NAME OF AJAY SHAH AND RS.24,00,000/-IN THE NAME OF ASHOK MEHTA WERE NOT ESTABLISHED,THAT THE ASSESSEE COULD NOT PRODUCE THESE TWO PERSONS EITHER BEFORE THE AO OR BEFORE HIM I.E.FAA,THOUGH IT IS AVERRED THAT THEY WOULD BE VISITING INDIA ACC ORDINGLY, THE ACTION OF THE AO IN ADDING BACK THOSE AMOUNTS WAS CONFIRMED BY THE FAA,HOLDING THAT THE ASSESSEE HAD FAILED TO ESTABLISH IDENTITY,CREDITWORTHINESS OF THE PARTIES AND GENUIN ITY OF THE TRANSACTION, THAT THE ENTIRE LOANS/ ADVANCES TAKEN FROM THOSE PARTIES HAD TO BE TREATE D AS UNEXPLAINED CASH CREDITS.HE ALSO HELD THAT THE ASSESSEE HAD COMMITTED BEFORE THE ITAT THAT HE WOULD BE ABLE TO PRODUCE THE CREDITORS, THAT IN ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 7 THE CASE OF PC AND PE IT WAS CLAIMED THAT THESE WER E PROSPECTIVE CLIENTS,THAT IT IS IMPOSSIBLE TO PRODUCE THOSE PARTIES AT SHORT NOTICE WHEN ASSESSEE HAD INTERACTED WITH THEM FIFTEEN YEARS AGO.IN THIS REGARD THE FAA HELD THAT FOR THE EXPLANATION T O BE PLAUSIBLE AND BE ACCEPTED OTHER FACTORS HAD TO BE CONSIDERED,THAT THE TWO LETTERS PURPORTED TO HAVE BEEN WRITTEN BY THESE PARTIES DO NOT CONTAIN THEIR FULL ADDRESSES,THAT EVIDENCES LIKE THEIR PAN, ASSESSMENT DETAILS OR BANK DETAILS FROM WHERE THEY HAD GIVEN THE CHEQUES WERE FILED,THAT THE ONUS WAS ON THE ASSESSEE TO PROVE GENUINENESS OF THE CLAIM. 3.3. IN THE CASE OF MR. ASHOK MEHTA AND MR. AJAY SHAH TH E ASSESSEE HAD FILED LETTERS FROM THEM STATING THAT THEY HAVE ADVANCED FUNDS TO THE ASSESS EE,THAT LETTERS OF THEIR ACCOUNTANTS IN U.K. STATING THAT THEY ARE CAPABLE OF ADVANCING THESE AM OUNTS WAS ALSO FILED,THAT IT WAS NOT EXPLAINED AS HOW AND WHEN THESE ADVANCES WERE MADE OR WHETHER TH E MONEY WAS SENT THROUGH BANK CHANNELS OR BY BANK DRAFTS OR ANY SIMILAR MODE,THAT THERE WA S NO CORROBORATING EVIDENCE TO INDICATE THAT THESE AMOUNTS WHICH HAD CAME TO THOSE PARTIES ACCO UNT HAD BEEN REMITTED BY THEM FROM U.K.,THAT THE STATEMENT OF INDIAN OVERSEAS BANK SIM PLY STATES THAT TWO OF THE ACCOUNTS FROM WHICH THE AMOUNTS WERE TRANSFERRED TO THE ASSESSEE S ACCOUNT WERE THE SAVING BANK ACCOUNT IN THEIR NAMES,THAT THE BANK HAD NOT INDICATED THAT T HOSE WERE NRI ACCOUNTS,THAT THE FACT HAD TO BE SEEN IN THE CONTEXT OF OBSERVATIONS OF THE FAA,THAT THE OWNING UP OF THE ADVANCES BY THOSE TWO PARTIES WAS NOT SUFFICIENT,THAT THERE SHOULD BE PRO XIMATE CONNECTION TO SHOW THAT THE AMOUNTS HAD FROM THESE TWO PARTIES,THAT THE ASSESSEE HAD FAILED TO ESTABLISH THE SAID FACT, THAT THE ASSESSEES EXPLANATIONS WITH REGARD TO THOSE CREDITS COULD NOT BE ACCEPTED IN SHORT HE HELD THAT THE IDENTITY, CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF THE TRANSACTION WAS NOT PROVED. 4. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR) OF THE ASSESSEE FAIRLY CONCEDED THAT THE ASSESSEE HAD NOT PRODUCED THE PARTIES BEFORE THE AO IN THE S ET ASIDE PROCEEDINGS,THAT BECAUSE OF TIME LEG HE HAD NO RELATION WITH PC AND PE AND THE OTHER TWO PARTIES WERE RESIDENT OF UK,THAT MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO,THAT THE ASSESSEE FURNISHED VARIOUS DOCUMENTS BEFORE THE AO, THAT AO AND THE FAA HAD RELIED UPON THE EAR LIER ORDERS. DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA AND ARGUED THAT THE ASSESSEE HAD NOT PROVED THE CREDITWORTHINESS OF THE CREDITOR S AS WELL AS THE GENUINENESS OF THE TRANSACTION. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.FROM THE ORDER OF THE TRIBUNAL,DATED 18.11.2008,IT IS CLEAR THAT IN THE F IRST ROUND OF APPEAL THE FAA HAD CONFIRMED CERTAIN ADDITIONS MADE BY THE AO AND THE TRIBUNAL D ELETED ADDITION IN RESPECT OF ONE OF THE CREDITORS.FOR THE REMAINING CASH CREDITORS ISSUE WA S RESTORED BACK TO THE FILE OF THE AO TO RECORD ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 8 THEIR STATEMENT.WE FIND THAT IN THE INTEREST OF JU STICE THE ASSESSEE WAS OFFERED AN OPPORTUNITY TO PRODUCE PARTIES AND TO PRODUCE RELEVANT DOCUMENTARY EVIDENCES BEFORE THE AO. OVER THE YEARS LAW REGARDING CASH CREDITS HAVE EVOL VED AND HAS TAKEN A DEFINITE SHAPE.SO,BEFORE PROCEEDING FURTHER,WE WOULD LIKE TO MENTION A FEW I MPORTANT ASPECTS OF THE LAW;CULLED OUT FROM THE DECISIONS OF THE HONBLE COURT;WITH REGARD TO S EC.68 AND SAME CAN BE ENUMERATED AS UNDER : I). PROVISIONS OF THE SECTION 68 CAN BE INVOKED WHEN FO LLOWING THREE CONDITIONS ARE SATISFIED- FIRST WHEN TH E RE IS CREDIT OF AMOUNTS IN THE BOOKS MAINTAINED BY THE ASSESSEE AND SECONDLY SUCH CREDIT HAS TO BE A SUM OF MONEY DURING THE PREVIOUS YEAR I II) EITHER THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDITS FOUND I N THE BOOKS OR THE EXPLANATION OFFERED BY THE ASSESSEE,IN THE OPINION OF THE AO,IS NOT SATISFACTO RY.IT IS ONLY THEN THAT THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE . II). ASSESSEE HAS TO ESTABLISH IDENTITY AND CREDITWORTHI NESS OF THE CREDITOR AS WELL AS THE GENUINENESS OF THE TRANSACTION.ALL THE THREE INGRED IENTS ARE CUMULATIVE AND NOT EXCLUSIVE. III). IN MATTERS REGARDING CASH CREDIT THE ONUS OF PROOF IS NOT A STATIC ONE.AS PER THE PROVISIONS OF THE SECTION THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE.AMOUNT APPEARING IN THE BOOKS OF A/CS. OF THE ASSESSEE IS CONSIDERED A PROOF AGAINST HIM. HE CAN PROVE THE IDENTITY OF THE CREDITORS BY EITHER FURNISHING THEIR PANS OR ASSESSMENT ORDERS.S IMILARLY, GENUINENESS OF THE TRANSACTION CAN BE PROVED BY SHOWING THAT THE MONEY WAS RECEIVED BY AN ACCOUNT PAYEE CHEQUE OR BY DRAFT. CREDIT WORTHINESS OF THE LENDER CAN BE ESTABLISHED BY ATTE NDING CIRCUMSTANCES. ONCE THE ASSESSEE PRODUCES EVIDENCES ABOUT IDENTITY,GENUINENESS AND C REDIT WORTHINESS OF THE LENDER ONUS OF PROOF SHIFTS TO THE REVENUE. IV). UNDER SECTION 68 OF THE ACT,THE AO HAS JURISDICTION TO MAKE ENQUIRIES WITH REGARD TO THE NATURE AND SOURCE OF A SUM AND IT IS IMMATERIAL AS TO WHETHER THE AMOUNT CREDITED IS GIVEN THE COLOUR OF A LOAN OR A SUM REPRESENTS SALE PROCEEDS OR IT IS SHARE APPLICATION MONEY. V). THE EXPRESSION THE ASSESSEE OFFERS NO EXPLANATION M EANS THE IT OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CR EDITED IN THE BOOKS MAINTAINED BY THE ASSESSEE.THE OPINION OF THE AO FOR NOT ACCEPTING TH E EXPLANATION OF THE ASSESSEE AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPR ECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON THE RECORD. THE OPINION OF THE AO IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON RECORD FILE. VI). PHRASE NATURE AND SOURCES OF SUCH CREDITS HAS TO BE UNDERSTOOD IN RIGHT PRESPECTIVE, SO THAT GENUINENESS OF THE TRANSACTION CAN BE DECIDED ON ME RITS AND NOT ON PREJUDICES.COURTS ARE OF THE ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 9 FIRM VIEW THAT THE EVIDENCE PRODUCED BY THE ASSESSE E CANNOT BE BRUSHED ASIDE IN A CAUSAL MANNER. VII). ONCE THE EXPLANATION OF THE ASSESSEE IS FOUND UNBEL IEVABLE OR FALSE,THE AO IS NOT REQUIRED TO BRING POSITIVE EVIDENCE ON RECORD TO TREAT AMOUNT I N QUESTION AS INCOME OF THE ASSESSEE.WHILE CONSIDERING THE EXPLANATION OF THE ASSESSEE,THE AO HAS TO ACT REASONABLY-APPLICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION. VIII). MATTERS RELATED TO SECTION 68 SHOULD BE DECIDED ON THE PARTICULAR FACTS OF THE CASE AS WELL AS ON THE BASIS OF PREPONDERANCE OF PROBABILITIES.CRED IBILITY OF THE EXPLANATION, NOT THE MATERIALITY OF EVIDENCES,IS THE BASIS FOR DECIDING THE CASES FALLI NG UNDER THE SECTION. IX). CONFIRMATORY LETTERS OR A/C. PAYEE CHEQUES DO NOT P ROVE THAT THE AMOUNT IN QUESTION IS PROPERLY EXPLAINED FOR THE PURPOSE OF SECTION 68 OF THE ACT.IN OTHER WORDS MONEY COMING BY WAY OF BANK CHEQUES AND BEING PAID THROUGH THE PROCESS OF BANKING TRANSACTION ARE NOT BY ITSELF OF ANY CONSEQUENCE FOR DECIDING THE CASH CREDIT ISSUE. X). CONTENTS OF SECTION 68,MAY BE DIVIDED INTO TWO PAR TS-(A) IT REQUIRES THE ASSESSEE TO EXPLAIN THE SUM FOUND CREDITED IN THE BOOKS OF THE ASSESSEE ABO UT THE NATURE AND SOURCE THEREOF.THIS PART ONLY REQUIRES THE ASSESSEE TO DISCLOSE THE SOURCE FROM W HICH THE MONEY HAS BEEN RECEIVED BY HIM.THIS DOES NOT REQUIRE THE ASSESSEE TO DISCLOSE THE SOURC E 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 EXPLANATION WHICH IS SATISFACTORY IN THE OPINION OF THE AO.WHAT EXPLANATION WOULD BE CONSIDERED SATISFACTORY AND HOW MUCH OF DETAILS SHOULD BE FURN ISHED TO MAKE THE EXPLANATION SATISFACTORY NORMALLY DEPEND UPON THE FACTS. XI). BUT,THE DOCTRINE OF SOURCE OF SOURCE OR ORIGIN OF ORIGIN CANNOT BE APPLIED UNIVERSALLY,WITHOUT REFERENCE TO THE FACTUAL MATRIX AND FACTS OF EACH C ASE.THE SAID TEST IN CASE OF NORMAL BUSINESS TRANSACTIONS MAY BE LIGHT AND NOT VIGOROUS.THE SAID DOCTRINE IS APPLIED WHEN THERE IS EVIDENCE TO SHOW THAT ASSESSEE MAY NOT BE AWARE, COULD NOT HA VE KNOWLEDGE OR WAS UNCONCERNED AS TO THE SOURCE OF MONEY PAID OR BELONGING TO THE THIRD PART Y.THIS MAY BE DUE TO THE NATURE AND CHARACTER OF THE COMMERCIAL/BUSINESS TRANSACTION RELATIONSHIP BETWEEN THE PARTIES, STATUTORY POSTULATES, ETC. BUT,WHEN THERE IS SURROUNDING EVIDENCE AND MATERIAL MANIFESTING AND REVEALING INVOLVEMENT OF THE ASSESSEE IN THE TRANSACTION AND THAT IT IS NOT ENTIRELY AN ARM'S LENGTH TRANSACTION,RESORT OR RELIANCE TO THE SAID DOCTRINE MAY BE COUNTER-PRODUC TIVE AND CONTRARY TO EQUITY AND JUSTICE.THE DOCTRINE IS NOT AN ELDRITCH OR A CAMOUFLAGE TO CIRC ULATE ILL-GOTTEN AND UNRECORDED MONEY. XII). THE BURDEN IS ON THE ASSESSEE TO TAKE THE PLEA THAT ,EVEN IF THE EXPLANATION IS NOT ACCEPTABLE, THE MATERIAL AND ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD DO NOT JUSTIFY THE SUM FOUND CREDITED IN THE BOOKS BEING TREATED AS A RECEIPT OF INCOME N ATURE. ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 10 XIII). IN THE CONTEXT OF UNEXPLAINED CASH CREDITS,WHEN AN ASSESSEE DOES NOT PRODUCE EVIDENCE OR TRIES TO AVOID APPEARANCE BEFORE THE AO,IT NECESSAR ILY CREATES DIFFICULTIES AND PREVENTS ASCERTAINMENT OF THE TRUE AND CORRECT FACTS AS THE AO IS DENIED THE ADVANTAGE OF THE CONTENTION OR FACTUAL ASSERTION BY THE ASSESSEE BEFORE HIM. IF AN ASSESSEE DELIBERATELY AND INTENTIONALLY FAILS TO PRODUCE EVIDENCE BEFORE THE AO WITH THE DESIRE TO P REVENT INQUIRY OR INVESTIGATION, AN ADVERSE INFERENCE SHOULD BE DRAWN.MERE PRODUCTION OF PERMAN ENT ACCOUNT NUMBER(PAN)OR ASSESSMENT PARTICULARS DOES NOT ESTABLISH THE IDENTITY OF A PE RSON.THE IDENTIFICATION OF A PERSON INCLUDES THE PLACE OF WORK, THE STAFF AND THE FACT THAT THAT PER SON WAS ACTUALLY CARRYING ON BUSINESS AND FURTHER RECOGNITION OF THE COMPANY OR INDIVIDUAL IN THE EYE S OF PUBLIC.PANS ARE ALLOTTED ON THE BASIS OF APPLICATIONS WITHOUT ACTUAL DE FACTO VERIFICATION O F THE IDENTITY OR ASCERTAINMENT OF THE ACTIVE NATURE OF BUSINESS ACTIVITY. PANS ARE ALLOTTED AS A FACILITY TO THE REVENUE TO KEEP TRACK OF TRANSAC - TIONS.THEY CANNOT,BLINDLY AND WITHOUT CONSIDERATION OF SURROUNDING CIRCUMSTANCES,BE TREATED AS SUFFICIENTLY DISCLOSING THE IDENTITY OF THE PERSON. IN A CASE OF ACCOMMODATION ENTRIES, IN VIEW OF THE LINK BETWEEN THE ENTRY PROVIDERS AND INCRIMINAT ING EVIDENCE,THE MERE FILING OF PERMANENT ACCOUNT NUMBERS,ACKNOWLEDGMENT OF INCOME-TAX RETURN S OF THE ENTRY PROVIDERS AND BANK ACCOUNT STATEMENTS,IS NOT SUFFICIENT TO DISCHARGE THE ONUS ON THE ASSESSEE.(361ITR258) XIV). A CONCLUSION REGARDING CREDITWORTHINESS OR OTHERWIS E OF A PERSON IS ESSENTIALLY ONE OF FACT. 5.1.HERE,WE WOULD LIKE TO REFER TO THE CASE OF PUSH P TRADING CO.,DELIVERED BY THE HONBLE DELHI HIGH COURT(190ITR618).IN THAT MATTER CERTAIN CASH CREDITS WERE ASSESSED AS THE ASSESSEE'S INCOME FOR A PARTICULAR YEAR.THE ORIGINAL ASSESSMENT WAS S ET ASIDE ON THE GROUND THAT THE ASSESSEE HAD NOT BEEN GRANTED FULL OPPORTUNITY AND WANTED FURTHER OP PORTUNITY TO SUBSTANTIATE ITS CLAIM THAT THE CASH CREDITS WERE GENUINE. A FRESH ASSESSMENT WAS PASSED AFTER 14 YEARS TREATING THE CASH CREDITS AS THE ASSESSEE'S INCOME.TRIBUNAL HELD THAT THE ASSESSEE W AS NOT ABLE TO PRODUCE ANY EVIDENCE TO ESTABLISH THE GENUINENESS OF THE CASH CREDITS AND A LSO REJECTED THE ASSESSEE'S REFERENCE APPLICATION.ON AN APPLICATION FOR CALLING FOR A REF ERENCE BEFORE THE HIGH COURT, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT, AFTER A LAPSE OF 14 YEARS, IT WAS NOT POSSIBLE TO HAVE THE CREDITORS PRODUCED FOR CROSS-EXAMINATION.DISMISSING THE PETIT ION,HONBLE COURT HELD AS UNDER: THE ASSESSEE WAS NOT UNAWARE OF THE EVIDENCE TO BE PRODUCED TO SUBSTANTIATE ITS CLAIM WITH REGARD TO THE GENUINENESS OF THE CASH CREDITS. HAVI NG SUCCEEDED IN ITS CLAIM THAT FULL OPPORTUNITY HAD NOT BEEN GRANTED TO SUBSTANTIATE THE CLAIM, IT WAS NOT OPEN TO THE ASSESSEE THEREAFTER TO TURN ROUND AND SAY THAT, AFTER THE LAPSE OF MANY YEARS, IT WAS NOT POSSIBLE FOR IT TO LEAD ANY EVIDENCE. THE TRIBUNAL WAS RIGHT IN HOLDING THAT NO QUESTION OF LAW AROSE OUT OF ITS ORDER. ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 11 5.2.NOW,WE WOULD LIKE TO DISCUSS THE MATTER BEFORE US TESTING IT ON THE TOUCHSTONE OF ABOVE REFERRED DISCUSSION AND FACTS AVAILABLE OF RECORD.F OLLOWING THE DIRECTION OF THE TRIBUNAL,THE AO HAD ISSUED NOTICE.AS PER THE AO,THE ASSESSEE DID NO T PRODUCE ANY OF THE PARTIES BEFORE HIM TILL PASSING ASSESSMENT ORDER.WE FIND THAT THE ASSESSEE CHOOSE NOT TO PRODUCE THE PARTIES BEFORE THE AO DURING ORIGINAL ASSESSMENT PROCEEDINGS,REMAND PR OCEEDINGS,APPELLATE PROCEEDINGS BEFORE THE FAA AS WELL AS DURING SET-ASIDE PROCEEDINGS.SO,NOW GIVING HIM ONE MORE CHANCE WILL AMOUNT TO ALLOWING PREMIUM TO AN ASSESSEE WHO DOES NOT FOLLOW THE DIRECTIONS OF THE TRIBUANL.MATTER WAS REMANDED BY TO THE AO TO PRODUCE PARTIES AND EVIDEN CES AND EVEN IN THE SECOND ROUND HE CHOSE NOT TO PRODUCE PARTIES.IN OUR OPINION, PRINCIPLES O F NATURAL JUSTICE CANNOT BE STRETCHED TO AN EXTENT THAT THEY BECOME UNWORKABLE AND ASSESSEES START TAK ING UNDUE ADVANTAGE OF THOSE PRINCIPLES.A PERSON APPROACHING JUDICIAL FORUMS SHOULD COME WITH CLEAN HANDS.WE ARE AFRAID THAT THE BEHAVIOR OF THE ASSESSEE;FROM THE FIRST HEARING BEFORE THE A O IN THE ORIGINAL ASSESSMENT TILL HEARING BEFORE US;CLEARLY PROVE THAT HE HAD NOT COOPERATED WITH TH E AO AND HAD NOT PRODUCED EVIDENCES TO PROVE THE CLAIM MADE BY HIM ABOUT THE CREDITORS.AS FAR AS PC AND PE ARE CONCERNED IT IS FOUND THAT BOTH ARE MUMBAI BASED ENTITIES.IT IS STRANGE THAT INSTEA D OF PRODUCING THE DETAILS OF BOTH THE CONCERNS THE ASSESSEE OPTED TO FURNISH AN AFFIDAVIT OF AN ST RANGER WHO IS CLAIMED TO HAVE WORKED AS A CONDUIT BETWEEN THE HIM AND PC AND PE.FROM THE DAY, HE RECEIVED THE ORDER OF THE TRIBUNAL HE KNEW THAT HE HAS TO PRODUCE BOTH THE PARTIES FOR RE CORDING STATEMENTS,BUT HE DID NOT PRODUCE THEM.THE AO HAD DIRECTED HIM TO PRODUCE THE PROOF O F THEIR IDENTITY,COPY OF THEIR BANK STATEMENTS FOR THE RESPECTIVE PERIOD,THEIR I.T.RETURNS,COMPUTA TIONS OF INCOME,CAPITAL A/CS AND BALANCE SHEETS.AS STATED EARLIER HE FURNISHED A CERTIFICATE OF A REAL ESTATE BROKER,WHAT WAS THE LOCUS STANDI OF THE BROKER VIS A VIS THE CREDITORS IS NOT KNOWN. AT THE TIME OF THE ORIGINAL ASSESSMENT QUESTION ABOUT THE CREDITWORTHINESS OF PC AND PE HAD ARISEN AND THE FAA HAD POINTED ABOUT THE GLARING DISCREPANCIES OF THE LETTER HEADS OF BOTH THE PARTI ES.IN THESE CIRCUMSTANCES HE HAD AMPLE TIME FROM THE DATE OF RECEIVING THE ORDER OF THE FAA TO THE D ATE OF NOTICE OF THE AO ISSUED DURING SET ASIDE PROCEEDINGS TO COLLECT THE EVIDENCE THAT COULD PROV E HIS CLAIM. BUT,HE DID NOT AVAIL THAT OPPORTUNITY.IN OUR OPINION,IF A PERSON WHO HAS BEEN FOREWARNED ABOUT CONSEQUENCES OF TRAVELLING WITHOUT A TICKET,BOARDS THE TRAIN THEN HE CANNOT AV OID THE ENSUING RESULTS OF HIS ACT.IN THE CASES OF CASH CREDITS PRIMARY ONUS IS ON THE ASSESSEE TO PRO VE THE THREE BASIC INGREDIENTS-IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. IN THE CASE BEFORE US,THE ASSESSEE HAS NOT PROVED ANY OF THE THREE THING.EXCE PT GIVING THE NAME OF THE ALLEGED CREDITORS HE HAS NOT PROVED ANY OF THE THREE IMPERATIVE FACTORS. DOCUMENTS CALLED FOR BY THE AO WERE THE EVIDENCES THAT COULD HAVE TILTED THE SCALES OF THE WEIGHING MACHINE,IF FURNISHED, IN FAVOUR OF THE ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 12 ASSESSEE.WE FIND THAT ALL THE EVIDENCES AND CIRCUMS TANCES ARE TOTALLY AGAINST THE ASSESSEE AND HE HAS PUT HIMSELF IN AN INDEFENSIBLE POSITION BY NOT PROVIDING THE EVIDENCES TO THE AO. NOW,WE WILL TAKE THE FACTS RELATED WITH TWO NRI CRE DITORS.THEY WERE RELATIVE OF THE ASSESSEE. FAA HAS RIGHTLY POINTED OUT THAT IN SUCH CASES, TO PROVE THE CREDITWORTHINESS/GENUINENESS OF THE CREDITORS/TRANSACTION INCREASES MANIFOLDS.AS PER TH E ASSESSEE ONE OF THEM HAD ADVANCED MONEY FOR MAKING INVESTMENT IN STOCK MARKET.IF A PERSON HAS S O MUCH OF FAITH IN THE ASSESSEE TO MAKE INVESTMENT ON HIS BEHALF IN INDIAN STOCK MARKET,THE N FROM SUCH A CREDITOR TO GET THE BASIC INFORMATION LIKE HIS INCOME TAX RETURNS FILED IN U K AND COPY OF HIS BALANCE SHEET SHOWING MONEY ADVANCED TO THE ASSESSEE COULD HAVE SETTLED THE ISS UE FOR ONCE AND ALL.FROM THE DATE OF RECEIPT OF LOAN TILL DATE OF HEARING BEFORE US,THE ASSESSEE HA S NOT PRODUCED THESE BASIC DOCUMENTS.WE FIND THAT IT IS NOT CLEAR AS TO WHETHER THE BANK ACCOUNT S OF THE CREDITORS WERE THE NRI ACCOUNTS OR NOT.FAA HAS MENTIONED THAT IT WAS NOT EXPLAINED TO HIM AS HOW AND WHEN THESE ADVANCES WERE MADE OR WHETHER THE MONEY WAS SENT THROUGH BANK CHA NNELS.THE FINDING OF FACT GIVEN BY THE FAA HAS NOT BEEN CHALLENGED BY THE ASSESSEE BY FILING A N APPLICATION U/S.154 OF THE ACT BEFORE HIM.THUS,IT BECOMES A FINAL FINDING.IT IS ALSO A FA CT THAT FOR A PERIOD OF EIGHT YEARS THE ADVANCES RECEIVED BY THE ASSESSEE FROM BOTH THE CREDITORS WE RE NOT RETURNED,AS OBSERVED BY THE FAA.THE ASSESSEE HAS NOT DISCLOSED AS TO WHAT HAPPENED TO T HE LOANS/DEPOSITS RECEIVED BY HIM AFTER THAT PERIOD. CONSIDERING THE ABOVE PECULIAR FACTS AND CIRCUMSTAN CES OF THE CASE,WE ARE OF THE OPINION THAT THE DOCUMENTS FURNISHED BY THE ASSESSEE DO NOT PROVE TH E CREDITWORTHINESS OF THE CREDITORS AS WELL AS THE GENUINENESS OF THE TRANSACTION AND THE ASSESSEE HAS DISCHARGED THE INITIAL BURDEN OF PROOF. THEREFORE,WE ARE OF THE OPINION THAT THE ORDER OF T HE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY.UPHOLDING HIS ORDER,WE DECIDE EFFECTIVE G ROUND OF APPEAL AGAINST THE ASSESSEE. AS A RESU LT,APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. 0)1 '() 2 3 + 4 5) + ) 67. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH ,JULY, 2014 . 9 + -.# : ;' 30 ,2014 . + 4 B SD/- SD/- ( / VIJAY PAL RAO ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, ;' / DATE: 30TH JULY, 2014 ITA NO. 1341/MUM/2011 ARUN KUMAR MUCHHALA 13 S.K. 9 9 9 9 + ++ + &) &) &) &) C#) C#) C#) C#) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ D E , 4. THE CONCERNED CIT / D E 5. DR I BENCH, ITAT, MUMBAI / F4 &)' , . . . 6. GUARD FILE/ 4 0 ') ') ') ') &) &)&) &) //TRUE COPY// 9' / BY ORDER, G / 6 DY./ASST. REGISTRAR , /ITAT, MUMBAI