Sh. Narinder Kumar, Hoshiarpur V. The Income-tax Officer, Hoshiarpur

ITA 14/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0572 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 06-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKER
• Assessee Lawyers: SANDEEP VIJHCA
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Principle of natural justice; Source of fund; Accommodation entries; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.14 (ASR)/2015 ASSESSMENT YEAR:2006-07 PAN: ABCPK-0859N SH. NARINDER KUMAR VS. INCOME TAX OFFICER, S/O SH. BRIJ MOHAN, WARD-2, HOSHIARPUR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SANDEEP VIJH,CA RESPONDENT BY: SH. BHAWANI SHANKER, DR DATE OF HEARING: 28/06/2016 DATE OF PRONOUNCEMENT: 11/07/2016 ORDER PER A.D. JAIN, JM: THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2006-07, AGAINST THE ORDER DATED 19.12.2014, PASSED BY THE L D. CIT(A)-I, JALANDHAR. THE SOLE GROUND OF APPEAL RAISED BY THE ASSESSEE IS AS FOLLOWS: 1. THAT THE LD. CIT(APPEALS) HAS ERRED IN SUSTAINI NG THE ADDITION OF RS.20,00,000/- TOWARDS ALLEGED UNEXPLAI NED CREDITS IN BANK ACCOUNT. THE SUBMISSIONS MADE HAVE NOT BEEN APPRECIATED. THE LD. CIT(A) HAS MADE PRESUMPTI ONS WHILE SUSTAINING THE ADDITION. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, HAD SHOWN HIS INCOME BY WAY OF SALARY AND INTEREST INCO ME APART FROM COMMISSION INCOME FROM THE SALE AND PURCHASE OF IMM OVABLE PROPERTIES AND HAD FILED HIS RETURN OF INCOME FOR THE YEAR UND ER CONSIDERATION ON ITA NO.14(ASR)/2015 A.Y. 2006-07 2 30.03.2007 DECLARING THEREIN AN INCOME OF RS.4,48,7 55/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S JANTA OIL MILLS (IN WHICH THE ASSESSEE IS A PARTNER), IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD INTRODUCED FUNDS IN THE SAID CONCERN AND THE SOURCE OF THESE FUNDS WERE STATED TO BE WITHDRAWALS FROM BANK ACCOUNT NO. 14380 MAINTAINED BY THE HIM WITH OBC, HOSHIARPU R. A PERUSAL OF THE BANK ACCOUNT REVEALED THAT THERE WERE HUGE DEPO SITS IN THE BANK ACCOUNT OF THE ASSESSEE DURING THE YEAR UNDER CONSI DERATION. WHEN ASKED TO EXPLAIN THE SOURCE OF DEPOSITS IN THE BANK ACCOUNT, THE ASSESSEE EXPLAINED THE SOURCE AS LOAN FROM THE FOLLOWING PER SONS:- DATE NAME OF LENDER RELATION AMOUNT (IN RS.) 30.06.2005 SMT. SUMITI MITTAL WIFE 2,00,000/- 11.08.2005 SH. RAKESH AGGARWAL, LDH. BORTHER-IN-LAW 5,00,000/- 05.09.2005 SH. RAKESH AGGARWAL, LDH. BORTHER-IN-LAW 5,00,000/- 19.08.2005 SMT. SHRADDHA BAJORIA, 14/110, GOLF CLUB ROAD, CALCUTTA DISTANT RELATIVE 2,00,000/- 30.08.2005 SM T. SHRADDHA BAJORIA, 14/110, GOLF CLUB ROAD, CALCUTTA DISTANT RELATIVE 1,00,000/- 04.10.2005 SMT. SHRADDHA BAJORIA, 14/110, GOLF CLUB ROAD, CALCUTTA DISTANT RELATIVE 2,70,000/- 04.10.2005 SMT. SUSHILA AGGARWAL, 125, MUKHERJEE ROAD, 29/3, CALCUTTA DISTANT RELATIVE 1,30,000/-, 27.09.2005 SMT. URMILA BAJORIA, 14/110, GOLF CLUB ROAD, CALCUTTA DISTANT RELATIVE 4,00,000/- 30.08.2005 SMT. URMILA BAJORIA, 14/110, GOLF CLUB ROAD, CALCUTTA DISTANT RELATIVE 4,00,000/- 19.08.2005 SMT. GEETA, CALCUTTA DISTANT RELATIVE 5,00,000/- ITA NO.14(ASR)/2015 A.Y. 2006-07 3 THE SOURCE OF LOAN FROM THE WIFE OF THE ASSESSEE AN D SH. RAKESH AGGARWAL WAS TREATED BY THE ASSESSING OFFICER AS EX PLAINED AND NO ADVERSE INFERENCE WAS DRAWN IN RESPECT OF THESE LOA NS. HOWEVER, THE OTHER LOANS AMOUNTING TO RS.20,00,000/- WERE TREATE D BY THE ASSESSING OFFICER AS ACCOMMODATION ENTRIES AND UNEXPLAINED IN COME OF THE ASSESSEE HIMSELF IN VIEW OF DETAILED DISCUSSION MAD E IN THE ASSESSMENT ORDER. THE ASSESSMENT IN THIS CASE WAS ULTIMATELY C OMPLETED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT V IDE ORDER DATED 30.12.2008, AT AN ASSESSED INCOME OF RS.24,48,760/- , WHICH INCLUDED AN ADDITION OF RS.20,00,000/- ON ACCOUNT OF UNEXPLAINE D LOAN FROM FOUR LADIES, NAMELY, SMT. SHRADDHA BAJORIA, SMT. URMILA BAJORIA, SMT. SUSHILA AGGARWAL AND SMT. GEETA BAJORIA OF CALCUTTA . 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DISMISSED THE ASSESSEES APPEAL, HOLDING AS FOLLOWS: 6.13 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASS ESSING OFFICER AS MADE BY HIM IN THE ASSESSMENT ORDER AS WELL AS IN VARIOUS REMAND REPORTS. I HAVE ALSO CONSIDERED WRIT TEN SUBMISSIONS FILED BY THE ASSESSEE INCLUDING ADDITIO NAL EVIDENCES PRODUCED BY THE ASSESSEE AS WELL AS HIS C OUNTER COMMENTS ON THE REMAND REPORTS OF THE ASSESSING OFF ICER. I HAVE ALSO CONSIDERED ENQUIRY REPORTS OF THE ADIT/DD LT(INV.), KOLKATA AS WELL AS ASSESSMENT RECORDS. I HAVE AGAIN CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS RELIED U PON BY THE ASSESSEE AS WELL AS OTHER MATERIAL BROUGHT ON RECOR D. THE ONLY ADDITION MADE IN THE ASSESSMENT ORDER WHICH IS BEING CONTESTED IN APPEAL IS THE ADDITION OF RS.20,00,000 /- MADE BY THE ASSESSING OFFICER IN RESPECT OF UNEXPLAINED DEP OSITS RECEIVED FROM FOUR LADIES OF KOLKATA. ON CAREFUL CO NSIDERATION OF THE RIVAL CONTENTIONS, I AM ALSO OF THE OPINION THAT THE LENDERS DO NOT HAVE ANY CAPACITY TO ADVANCE ANY LOA N TO THE ITA NO.14(ASR)/2015 A.Y. 2006-07 4 ASSESSEE. THE INTEREST IN THE BOOKS OF TERPENE & AL LIED PRODUCTS WAS PROVIDED @15% WHEREAS THE INTEREST PAI D BY THE ASSESSEE IS ONLY @12%. THIS CREATES A DOUBT THAT AS TO WHY A PERSON WILL LEND HER HARD EARNED MONEY AT LESSER IN TEREST WHEN SHE IS ALREADY GETTING HIGHER RETURN FROM OTHE R CONCERN. SMT. SHRADDHA BAJORIA & SMT. SUSHILA AGGARWAL HAVE NOT EVEN APPEARED BEFORE THE DDIT(INV.), KOLKATA TO EXP LAIN THE SOURCES OF THEIR INCOME. VARIOUS CASH DEPOSITS HAVE ALSO BEEN MADE BY SOME OF THE LENDERS BEFORE ADVANCING LOAN T O THE ASSESSEE AND THE SOURCES HAVE BEEN EXPLAINED TO BE FROM SAVING. THIS FACT IS HARDLY DIGESTIBLE. IN MY OPINI ON, THE SOURCE OF CASH DEPOSITS REMAINED UNEXPLAINED AS THE FOUR L ADIES DO NOT HAVE CAPACITY TO ADVANCE. EVEN IN THE AFFIDAVIT S FILED BY FOUR LADIES, NONE OF THEM HAS DISCLOSED HER SOURCES OF INCOME. EVEN THE INTEREST IS BEING CREDITED IN THE ACCOUNT AND NO ACTUAL PAYMENT HAS BEEN MADE DURING THE YEAR UNDER CONSIDERATION OR IN SUBSEQUENT ASSESSMENT YEARS. TH E BALANCE SHEETS OF THE LENDERS SHOW THAT THEY HAVE A CCEPTED DEPOSITS WITHOUT PAYING ANY INTEREST. SIMILARLY, TH E ADVANCES WERE SHOWN WITHOUT CHARGING ANY INTEREST. THIS CLEA RLY CREATES A DOUBT IN THE AUTHENTICITY OF THE DOCUMENT S PRODUCED DURING ASSESSMENT/INVESTIGATION PROCEEDINGS. NONE O F THE CASE LAWS RELIED UPON BY THE ASSESSEE SUPPORT HIS C ASE AS EACH CASE HAS DISTINGUISHABLE FACTS. 4. BEFORE US, ON BEHALF OF THE ASSESSEE, IT HAS BEE N CONTENDED, BY WAY OF WRITTEN SUBMISSIONS, AS REITERATED BY THE LD. C OUNSEL, AS UNDER: THE FIRST GROUND OF APPEAL IS THAT THE LEARNED CIT (A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 20,00,000 TOWARDS AL LEGED UNEXPLAINED CREDITS IN BANK ACCOUNT. THE SUBMISSION S MADE HAVE NOT BEEN APPRECIATED AND THE ID. CIT(A) HAS MADE PR ESUMPTIONS WHILE SUSTAINING THE ADDITION. THE BRIEF FACT OF TH E CASE ARE THAT CERTAIN CREDITS WERE APPEARING IN THE PASS BOOK OF THE ASSESSEE I AND DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THESE CREDITS WERE EXPLAINED BY THE ASSESSEE. SOME CREDITS WERE A CCEPTED BUT FOUR CREDITORS LISTED AT THE BOTTOM OF PAGE NO. 9 O F THE ASSESSMENT ORDER WERE DISBELIEVED DESPITE THE FACT THAT ACKNOW LEDGMENT OF INCOME TAX RETURN, BANK ACCOUNTS AND OTHER CONNECTE D DOCUMENTS WERE FILED. THE GENERAL REASON GIVEN BY THE ASSESSI NG OFFICER [FIRST SEVEN LINES OF THE LAST PARA AT PAGE NO. 2 OF THE A SSESSMENT ORDER] WAS THAT THE ASSESSEE HAS OBTAINED LOANS FROM FAR O F PLACE LIKE KOLKATA WHEREAS LOANS ARE BEING OFFERED BY ALL THE BANKS AT EVERY STATION AT A REASONABLE RATE OF INTEREST. THE ASSES SING OFFICE HAD ITA NO.14(ASR)/2015 A.Y. 2006-07 5 FAILED TO APPRECIATE THAT THAT BANKS LEND MONEY AFT ER PROPER FINANCIAL EVALUATION AND OBTAINING PRIMARY AS WELL AS COLLATERAL SECURITY. IT IS NOT A SITUATION THAT ANY PERSON CAN GO TO ANY BANK AND BORROW ANY AMOUNT OF MONEY. AN ASSESSEE CAN BORROW FROM FRIENDS, RELATIVES ETC WHO DO NOT LIVE IN THE SAME TOWN AND IT CANNOT BE PRESUMED THAT ALL SUCH DEPOSITS ARE NOT GENUINE. TH E ASSESSING OFFICER HAS IN THE BORROWING RATE OF 12 % AND OBSER VED THAT THIS WAS 'NOT DIGESTIBLE AND NOT FREE FROM DOUBT'. WHY THE R ATE OF INTEREST OF 12 % IS NOT DIGESTIBLE AND WHY HE HAS RAISED DOUBTS HAS NOT BEEN MENTIONED IN THE ASSESSMENT ORDER. (A) THE ASSESSING OFFICER GOT A COMMISSION ISSUED U/S 1 31(L)(D) OF THE INCOME TAX ACT FROM THE ADDITIONAL COMMISSIONER OF INCOME TAX, HOSHIARPUR RANGE, HOSHIARPUR THROUGH LETTER DATED 1 6/10/2008 TO THE ADDITIONAL DIRECTOR OF INCOME TAX (INVESTIGATIO N) (HQ), KOLKATA FOR CONDUCTING INQUIRIES REGARDING THE GENUINENESS OF DEPOSITS AND ALSO TO VERIFY THE SOURCE OF THE SOURCE [LAST FIVE LINES AT PAGE NO. 2 OF THE ASSESSMENT ORDER]. THE REPORT OF THE ASSESSING OFFICER AT CALCUTTA DATED 26/12/2008 WHICH IS STATED TO HAVE BEEN RECEI VED ON FAX WAS USED AGAINST THE ASSESSEE WITHOUT EVEN CONFRONT ING THE REPORT TO THE ASSESSEE [FIRST PARA AT PAGE NO. 3 OF THE AS SESSMENT ORDER]. IF THE ASSESSING OFFICER WANTED TO USE THE FAXED DOCUM ENT AGAINST THE ASSESSEE, IN ORDER TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE, A COPY OF THE FAX RECEIVED SHOULD HAVE BEEN FORWARD T O THE ASSESSEE ON 26/12/2008 ITSELF WHEN THE HEARING TOOK PLACE BE FORE HIM. IT IS SUBMITTED THAT 27 TH AND 28 TH DECEMBER WERE HOLIDAYS BEING SATURDAY AND SUNDAY. ON 29 TH WHEN THE HEARING TOOK PLACE THE FOCUS OF THE ASSESSING OFFICER WAS ON THE VERIFICAT ION OF BOOKS OF ACCOUNTS OF M/S TRIN ENTERPRISES AND INTEREST PAID TO ONLY ONE DEPOSITOR - SMT. URMILA BAJORIA. WHEN THE PROCEEDIN GS WERE CONCLUDED HE INFORMED THAT THE FAX COPY OF THE REPO RT OF THE ADI KOLKATA HAD BEEN RECEIVED AND WAS IN THE ASSESSMENT FILE. UNDER THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE REP ORT WAS CONFRONTED TO THE ASSESSEE. MERELY INFORMING THAT T HE REPORT WAS AVAILABLE IN THE ASSESSMENT RECORD AND WITHOUT GIVI NG A COPY OF THE SAME ALONG WITH THE QUERY AS TO WHAT INFERENCE WAS PROPOSED TO DRAWN, THE PRINCIPLES OF NATURAL JUSTICE HAVE NOT B EEN COMPLIED WITH [ABOVE CONTENTION BEFORE THE CIT(A) IS IN THE SECON D PARA AT PAGE NO. 2], IN FACT THE CIT(A) HAD IN THE CASE OF MAYOR & C OMPANY CONSIDERED THIS LEGAL POSITION IN DETAIL AND HELD T HAT OPPORTUNITY TO REBUT A CHARGE MUST BE ADEQUATE AND MERELY SHOWING A DOCUMENT TO THE CHARGED PERSON WITHOUT INFORMING THE INFERENCE PROPOSED TO BE DRAWN FROM THE DOCUMENT AND WITHOUT GIVING ADEQUATE TIME TO REBUT THE ALLEGATION IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. THE ADDITION MADE WAS ACCORDINGLY DELETED. COPY OF THE RELEVANT PORTION OF THE ORDER IS ENCLOSED AT PAGE NO. 108 TO 116 [PL EASE SEE FIRST PARA ITA NO.14(ASR)/2015 A.Y. 2006-07 6 AT PAGE NO. 115]. IN FACT APPEAL AGAINST THIS ORDER FILED BY THE REVENUE HAD ALSO BEEN DISMISSED. COPY OF THE ORDER OF IT AT, AMRITSAR BENCH IS AT PAGE NO. 76 TO 78 [PLEASE SEE PARA NO. 19 & 20 AT PAGE NO. 77 & 78]. IT IS NOT CLEAR AS TO WHY THE CIT(A) CHOSE TO IGNORE THIS ORDER WHICH HAD BEEN UPHELD BY THE JURI SDICTIONAL IT AT AND WAS BINDING UPON HIM. IT IS AN ACCEPTED LEGAL PRINCIPAL THAT ANY MATERIAL WHICH IS TO BE USED AGAINST THE A SSESSEE HAS TO BE CONFRONTED TO HIM. THIS IS SUPPORTED BY T HE DECISION OF THE SUPREME COURT IN THE CASE OF KISHINCHAND CHE LLARAM VS. CIT REPORTED AT 125 ITR 713. THE ADDITION THUS MADE IS IN VIOLATION TO THE PRINCIPLES OF NATURAL JUSTICE AND DESERVES TO BE QUASHED ON THIS SCORE ITSELF. WE WOULD LIKE TO DRAW YOUR ATTENTION TO THE DECISION OF THE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. RAM KUMAR REPORTED AT 163 TAXMA N 253 WHEREIN IT WAS HELD THAT THE ORDER PASSED IN VIOLAT ION OF THE PRINCIPLES OF NATURAL JUSTICE WAS BAD IN LAW. COPY OF THE ORDER IS ENCLOSED AT PAGE NO. 90 TO 92 [PLEASE SEE PAGE N O. 90]. SIMILAR VIEW HAS BEEN EXPRESSED BY THE DELHI HIGH COURT IN THE CASE OF CIT VS. GULATI INDUSTRIAL FABRICATION PVT. LTD R EPORTED AT 217 CTR 494. COPY OF THE ORDER IS ENCLOSED AT PAGE NO. 93 TO 95 [PLEASE SEE PAGE NO. 93]. SLP AGAINST THIS ORDER HAS BEEN DISMISSED BY THE SUPREME COURT. COPY OF THE ORDER OF THE SUPREME COURT DISMISSING THE SLP IN THE CASE OF GUL ATI INDUSTRIAL FABRICATION PVT. LTD ON MERITS IS ENCLOSED AT PAGE NO. 1. [SETTING ASIDE WITHOUT SPECIFIC DIRECTIONS AMOUNTS TO ANNULM ENT AS HAS BEEN HELD BY THE CALCUTTA HIGH COURT IN THE CAS E OF FU SHEEN TANNERY VS. ITO REPORTED AT 262 ITR 456]. THIS VIEW HAS ALSO BEEN (B) DORSED BY THE ITAT, DELHI BENCH IN THE CASE OF SANJAY KUMAR BANSAL VS. ITO. COPY OF THE DECISION IS AT PAGE NO. 68 TO 75 [PLEAS E SEE PAGE NO. 75] AND IN THE CASE OF THE ITAT, DELHI 'A' BENCH IN THE CASE OF ITO VS. SMT. KANTI DEVI GUPTA REPORTED AT 3 SOT 893. COPY OF THE DECISION IS ENCLOSED AT PAGE NO. 96 TO 99 [PLEASE SEE PAGE NO. 96]. SIMILAR VIEW HAS ALSO BEEN EXPRES SED BY THE ITAT, MUMBAI BENCH IN THE CASE OF ACIT VS. TRISTAR JEWELL ERY. COPY OF THE DECISION IS ENCLOSED AT PAGE NO. 100 TO 105 [PLEASE SEE PAGE NO. 104]. THE PUNJAB & HARYANA HIGH COURT HAS RECENTLY IN THE CASE OF SURJIT SINGH VS. CIT DELETED THE ADDITION WHERE PRINCIPLES OF NATURAL JUSTICE HAD NOT BEEN COMPLIED WITH. COPY OF THE DECISION IS ENCLOSED AT PAGE NO. 106 & 107 [PLEASE SEE PAGE NO. 107 AND REVERSE OF PAGE NO. 107], ARGUMENTS ON THE ABOVE AS PECT MADE BEFORE THE CIT(A) ARE AT SECOND PARA AT PAGE NO. 2, AT PAGE NO. 54 AND FIRST PARA AT PAGE NO. 55. THE ADDITION OF RS. 20,00,000 THUS DESERVES TO BE DELETED ON THIS SCORE ITSELF. ITA NO.14(ASR)/2015 A.Y. 2006-07 7 5. THE LD. DR, ON THE OTHER HAND, STRONGLY RELIED ON THE IMPUGNED ORDER. 6. ON HAVING HEARD THE RIVAL CONTENTIONS IN THE LIG HT OF THE MATERIAL AVAILABLE ON RECORD, IT IS SEEN THAT IT REMAINS UND ISPUTED THAT A COMMISSION WAS ISSUED UNDER SECTION 131(1)(D) OF TH E INCOME TAX ACT, VIDE LETTER DATED 16.10.2008, BY THE ADDL. CIT, HOS HIARPUR RANGE, HOSHIARPUR TO THE ADDITIONAL DIRECTOR OF INCOME TAX (INVESTIGATION) (HQ), KOLKATA. THE REPORT OF THE ADDITIONAL DIRECTOR OF I NCOME TAX (INV.) (HQ), KOLKATA, DATED 26.12.2008 IS STATED TO HAVE BEEN RE CEIVED BY FAX. IN THIS REGARD, THE RELEVANT PORTION OF THE ASSESSMENT ORDE R AT PAGE 2, READS AS FOLLOWS: THE ASSESSEE DID NOT PRODUCE THE LENDERS AND THE E NTRIES IN THE BANK ACCOUNTS APPEAR TO BE ACCOMMODATING ENTRIES A ND AS THE COMPLETE PARTICULARS OF INCOME ENJOYED BY THE SO C ALLED LENDERS WERE NOT PROVIDED IT WAS NOT POSSIBLE TO ASCERTAIN THE CREDIT WORTHINESS OF THESE LADIES, A REFERENCE WAS MADE B Y WAY OF ISSUE OF COMMISSION U/S 131(1)(D) OF THE I.T. ACT, 1961 T O THE ADDL. DIRECTOR OF INCOME-TAX (INV.) (HQ), KOLKATA, BY THE ADDL. CI T, HOSHIARPUR RANGE, HOSHIARPUR UNDER LETTER NO. 4840 DATED 16.10 .2008 FOR CONDUCTING ENQUIRIES REGARDING THE GENUINENESS OF T HE AFORESAID LOANS. HE WAS ALSO REQUESTED TO VERIFY THE SOURCE O F SOURCE IN RESPECT OF THE SO CALLED LENDERS. THE ADI (INV.), U NIT IV, KOLKATA ISSUED SUMMONS TO THE SO CALLED LENDERS. THESE LEND ERS DID NOT APPEAR BEFORE HIM IN COMPLIANCE TO THE SAID SUMMONS . ONLY PHOTO COPIES OF THE RETURNS FILED AND BANK STATEMENTS OF THE LENDERS WERE FILED BEFORE HIM. THE ADI (INV.), KOLKATA, SUBMITTE D A DETAILED REPORT THROUGH FAX ON 26.12.2008 IN WHICH HE CAME TO THE C ONCLUSION AFTER EXAMINING THE DOCUMENTS FILED THAT THE LENDERS WERE NOT IN A POSITION TO ADVANCE SUCH HUGE AMOUNT AND THAT TOO W ITHOUT ANY SECURITY TO SH. NARINDER MITTAL. THE REPORT OF THE ADI (INV.) IS REPRODUCED BELOW FOR READY REFERENCE IN WHICH HE EL ABORATELY DEALT WITH THE GENUINENESS OF LOAN ADVANCED BY EACH SO CA LLED LADY LENDER SEPARATELY. ITA NO.14(ASR)/2015 A.Y. 2006-07 8 7. THE ASSESSEE CONTENDS THAT THE ABOVE REPORT OF T HE ADDL. DIT (INV.) WAS USED AGAINST THE ASSESSEE AT THE BACK OF THE ASSESSEE WITHOUT CONFRONTING THE SAME TO THE ASSESSEE. THIS CONTENTI ON OF THE ASSESSEE APPEARS TO BE CORRECT, IN AS MUCH AS THE ASSESSMENT ORDER EVINCES THAT AFTER THE ABOVE REPRODUCED PORTION OF THE ASSESSMEN T ORDER AT PAGES 2-3, FROM PAGES 3 TO 8, THE AO HAS REPRODUCED THE ADDL. DIT (INVESTIGATION)S REPORT DATED 26.12.2008. IMMEDIATELY THEREAFTER, AT PAGES 9 & 10, THE FINDINGS OF THE AO ARE CONTAINED, WHICH, FOR READY REFERENCE, ARE REPRODUCED HEREUNDER: FROM THE ABOVE FACTS IT IS CLEAR THAT THE ASSESSEE PROCURED ACCOMMODATING ENTRIES FROM THE ABOVE MENTIONED KOL KATA LADIES . THE CREDIT WORTHINESS OF THESE LENDERS IS NOT PROVE D. THE LENDER LADIES HAVE FILED THEIR RETURNS OF INCOME BELOW THE TAXABLE LIMIT. THIS ITSELF PROVES THAT THEY ARE ENGAGED IN FORMATION OF CAPITAL WITHOUT PAYMENT OF ANY INCOME-TAX. SUCH DEVICE CAN BE DESCR IBED AS TAX AVOIDANCE BUT WHEN THESE PERSONS ABET TO GIVE SUCH ACCOMMODATION ENTRIES TO OTHER ASSESSES IT AMOUNTS TO TAX EVASION BECAUSE FROM THE CAPITAL SO BUILT UP THE NON TAX PAYERS ADVANCES LOANS OR MAKING GIFTS TO OTHER TAX PAYER ASSESSES IN ORDER TO GIVE COLOUR OF GENUINENESS AND CONVERT THEIR UNDECLARED INCOME IN THE SHAPE OF SUCH GIFTS/LOANS. WHEN PUT TO SCRUTINY IT REQUIRES TO BE GIVEN A DIFFERENT AND DETERRENT TREATMENT AND SUCH TRANSACT IONS ARE MADE TO EVADE THE TRUE TRANSACTION OR SUBVERT WELFARE LEGIS LATION. WHERE A SMOKE SCREEN IS CREATED , THE COURT SHOULD NOT OVER RIDE THE SUBSTANCE OF THE TRANSACTION . IT IS THE DUTY OF TH E JUDICIARY TO PROBE INTO THE DARK RECESSES OF THE TRANSACTION , HOWEVER , LEGAL IT MAY BE (WORKMAN ASSOCIATED RUBBER INDUSTRIES LTD. 48CTR (S C) 355. IT IS THE DUTY OF THE COURT TO EXPOSE A TAX EVASION DEVIC E AND REFUSE APPROVAL TO IT. (ME. DEWELL & CO. (SC) 154 ITR 148. BY MAKING PAYMENT THROUGH BANKING CHANNEL IT CANNOT BE TAKEN THAT THE TRANSACTION HAVE BECOME PIOUS AND THERE DOES NOT EX IST ANY MALA FIDE. THE ASSESSEE HAS NOT YET PAID INTEREST ON THE SO CALLED LOANS EXCEPT RS.42,000/- CLAIMED TO HAVE BEEN PAID ON 08- 08-2006 AND RS.85,000/- ON 07-08-2008 THROUGH CHEQUES TO SMT. U RMILA BAJORIA. THE OTHER LADY LENDERS HAVE NOT YET BEEN PAID ANYTH ING UP TILL NOW ITA NO.14(ASR)/2015 A.Y. 2006-07 9 I.E. FOR THE LAST TWO YEARS OR MORE. THIS VERY FACT GOES TO PROVE WITHOUT ANY SHADOW OF DOUBT THAT THESE ARE ACCOMMOD ATION ENTRIES PROCURED BY THE ASSESSEE TO GIVE COLOUR OF GENUINEN ESS TO UNDECLARED INCOME EARNED BY HIM FROM HIS BUSINESS O F REAL ESTATE DEALING AS THE ASSESSEE HAS NOT DISCLOSED THE NAMES AND ADDRESSES OF THE PERSONS FROM WHOM HE RECEIVED COMMISSION AND SHOWN UNDER THE HEAD OTHER COMMISSION. ACCORDINGLY, THE FOLLO WING AMOUNTS INTRODUCED BY THE ASSESSEEE IN THE GARB OF SO CALLE D LOANS ARE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE AS INCOME FROM UNDISCLOSED SOURCES. WHERE EXPLANATION OFFERED BY THE ASSESSEE IN REGARD TO ALLEGED DEPOSITS WERE NOT SAT ISFACTORY AND THERE WAS NO SUFFICIENT EVIDENCE TO INDICATE DEPOSI TORS CAPACITY TO DEPOSIT THE ALLEGED AMOUNT, IT COULD BE SAID THAT T RANSACTION AS STATED BY THE ASSESSEE, HAD NEVER TAKEN PLACE IN TH E FORM CLAIMED BY THE ASSESSEE AND, THEREFORE, ADDITION OF ALLEGED DEPOSITS WAS JUSTIFIED VIDE GOVINDRAM M. OBEROI VS. ITO (1996) 5 8 ITD, 73 (PUNE TRIBUNAL). S.N. NAME OF THE PARTY AMOUNT 1 . SMT. SHRADHA BAJORIA: 5,70,000/ - 2. SMT. URIMILA BAJORIA: 8,00,000/ - 3. SMT. GEETA BAJORIA: 5,00,000/ - 4. SMT. SUSHILA AGGARWAL: 1,30,000/ - ACCORDINGLY, AN ADDITION OF RS.20,00,000/- IS MADE TO THE TOTAL INCOME OF THE ASSESSEE, THE SOURCE OF WHICH HAS NOT BEEN EXPLAINED BY THE ASSESSEE. PENALTY PROCEEDINGS U/S 271(L)(C ) HAVE BEEN INITIATED IN THIS BEHALF. 8. FROM THE ABOVE, IT IS EVIDENT THAT THE AFORESAID REPORT DATED 26.12.2008, OF THE ADIT (INV.) (HQ), KOLKATA, WHICH , ACCORDING TO THE ASSESSMENT ORDER, WAS RECEIVED THROUGH FAX ON 26.12 .2008 WAS NEVER CONFRONTED TO THE ASSESSEE THOUGH IT WAS USED AGAIN ST THE ASSESSEE BY THE AO TO PASS THE ASSESSMENT ORDER, MAKING THE ADD ITION OF RS. 20,00,000/-. NOW THIS, EVIDENTLY, IS WHOLLY UNSUSTA INABLE IN LAW. IT IS AGAINST THE VERY FIRST PRINCIPLES OF NATURAL JUSTIC E. THE PRINCIPLE OF AUDI ALTEREM PARTEM REQUIRES THE PARTY BEING CONDEMNED T O BE HEARD BEFORE SUCH CONDEMNATION. NOW, ON AN ISSUE, A PARTY CAN ON LY BE HEARD IF THE ITA NO.14(ASR)/2015 A.Y. 2006-07 10 MATERIAL PROPOSED TO BE EMPLOYED AGAINST THE PARTY ON SUCH ISSUE IS FIRST CONFRONTED TO THEM. IF THIS IS NOT DONE, WHAT WILL THE PARTY HEARD OF. OBVIOUSLY, A PARTY IS REQUIRED TO SUBMIT THEIR EXPL ANATION WITH REGARD TO THE MATERIAL WHICH, IN THE VIEW OF THE INVESTIGAT ING OFFICER/AO IS GOING AGAINST THE ASSESSEE. JUDGMENT CANNOT BE PASSED AGA INST THE PARTY ON THE BASIS OF SUCH MATERIAL/REPORT, ETC., AGAINST T HE ASSESSEE, WITHOUT CONFRONTING THE PARTY THAT SUCH MATERIAL/REPORT, ET C., AND WITHOUT PROVIDING THEM ADEQUATE OPPORTUNITY TO REBUT THE SA ME. 9. IN THE PRESENT CASE, THIS HAS EVIDENTLY NOT BEEN DONE AND THE ADDITION HAS BEEN MADE ON THE BASIS OF THE ADIT (IN V.)S REPORT, WHICH WAS NOT CONFRONTED TO THE ASSESSEE. MERELY INFORMIN G THE ASSESSEE AT THE TIME OF CONCLUSION OF THE PROCEEDINGS THAT THE ADIT (INV.)S REPORT WAS AVAILABLE AND PASSING THE ASSESSMENT ORDER WITHOUT SUPPLYING A COPY THEREOF TO THE ASSESSEE, MUCH LESS RAISING ANY QUE RY AS TO WHAT INFERENCE AGAINST THE ASSESSEE WAS PROPOSED TO BE DRAWN AGAINST SUCH REPORT, CANNOT BE SAID TO BE COMPLYING WITH THE NAT URAL JUSTICE PRINCIPLE ON AFFORDING DUE AND ADEQUATE OPPORTUNITY OF HEARIN G TO THE ASSESSEE. 10. IN VIEW OF THE ABOVE, WE DEEM IT APPROPRIATE TO REMIT THIS MATTER TO THE AO, TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW , ON AFFORDING DUE AND ADEQUATE OPPORTUNITY TO THE ASSESSEE, INCLUDING CONFRONTING THE ADIT (INV.)S AFORESAID REPORT DATED 26.12.2008 TO THE ASSESSEE ALONGWITH THE QUERY OF THE AO AS TO WHAT ACTION, IF ANY, IS P ROPOSED TO BE TAKEN AGAINST THE ASSESSEE. THE ASSESSEE SHALL BE AFFORDE D DUE AND ADEQUATE ITA NO.14(ASR)/2015 A.Y. 2006-07 11 OPPORTUNITY TO REBUT THE REPORT AND TO REPLY TO TH E QUERY OF THE AO, IF ANY. THE ASSESSEE, NO DOUBT, SHALL COOPERATE IN THE FRESH ASSESSMENT PROCEEDINGS. ORDERED ACCORDINGLY. 11. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11/07/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 11/07/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.NARINDER KUMAR, HOSHIARPUR. 2. THE ITO WARD-2, HOSHIARPUR. 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.