DCIT, Jaipur V. PRATEEK KOTHARI, Jaipur

ITA 159/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4843 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 23-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA SINGH CIT DHK
• Keywords: Unexplained cash credit; Search and seizure; Principle of natural justice; Accommodation entries; Assessment record; Onus to prove; Bogus loan
• Section: 143(3); 133(6); 131

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.159/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 THE DCIT, CENTRAL CIRCLE-2, JAIPUR CUKE VS. SHRI PRATEEK KOTHARI, H-12 SUKHI JEEWAN COMPLEX, JACOB ROAD, AJMER ROAD, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABIPK 8090R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJENDRA SINGH (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14.10.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 16/12/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-4, JAIPUR DATED 23.12.2015 WHEREIN THE SOLE GROUND OF APPEAL IS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS. 1,00,27,500/ - MADE BY THE AO U/S 143(3) OF THE IT ACT, 1961 ON ACCOUNT OF BOGUS UNSECURED LOAN TAKEN BY THE ASSESSEE FROM M/S MEHUL GEMS (P) LTD. WHICH IS A BENAMI CON CERN OF SHRI BHANWARLAL JAIN IGNORING THE FACT THAT THE PIECE OF INFORMATIO N THAT THE SAID COMPANY IS INVOLVED IN PROVIDING BOGUS ACCOMMODATION UNSECURED LOANS AND ADVANCES, WAS ADMITTED BY SHRI BHANWARLAL JAIN IN STATEMENT R ECORDED U/S 132(4) OF THE IT ACT, 1961. 2. THE FACTS FOR THE ISSUE UNDER CONSIDERATION ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE TOOK UNSECURED LO AN FROM M/S MEHUL GEMS (P) LTD AMOUNTING TO RS. 1 CRORE. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE AO WAS IN RECEIPT OF INFORMATION THAT M/S MEHUL GEMS (P) ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 2 LTD. IS A BENAMI COMPANY OF SHRI BHANWAR LAL JAIN G ROUP WHO IS THE LEADING ENTRY PROVIDER IN MUMBAI. THE GROUP PROVIDES ACCOM MODATION ENTRIES OF BOGUS UNSECURED LOANS AND ADVANCES FROM VARIOUS BEN AMI CONCERNS BEING OPERATED AND MANAGED BY SHRI BHANWAR LAL JAIN AND H IS SONS. THE SAID INFORMATION WAS RECEIVED BY THE AO PURSUANT TO SEAR CH AND SEIZURE ACTION BY THE INVESTIGATION WING, MUMBAI ON 03.10.2013 WHERE VARIOUS INCRIMINATING DOCUMENTARY EVIDENCES WERE SEIZED AND STATEMENT O F VARIOUS PERSONS WHO ASSISTED SHRI BHANWAR LAL JAIN IN PROVIDING BOGUS L OANS AND ADVANCES THROUGH BENAMI CONCERNS WERE RECORDED. IT WAS NOTED BY THE AO THAT IN THE SAID SEARCH AND SEIZURE OPERATIONS CARRIED OUT BY THE IN VESTIGATION WING, ACCOMMODATION ENTRIES PERTAINING TO BOGUS LOANS AN D ADVANCES OF RS. 2,000/- CRORES WERE DETECTED. IT WAS FURTHER NOTED BY THE AO THAT THE ENTIRE BOGUS NATURE OF THE TRANSACTIONS HAS ALSO BEEN ADMITTED B Y SHRI BHANWAR LAL JAIN IN HIS STATEMENT RECORDED U/S 132(4) OF THE IT ACT. AS PER THIS INFORMATION, THE AO NOTED IN THE ASSESSMENT ORDER THAT NAME OF THE A SSESSEE IS APPEARING IN THE LIST OF BENEFICIARY WHO HAVE TAKEN THE ACCOMMOD ATION ENTRIES IN THE FORM OF UNSECURED LOANS. BASIS SUCH INFORMATION RECEI VED BY THE AO, A SHOW CAUSE LETTER DATED 05.11.2014 WAS ISSUED BY THE AO AND I N RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE VIDE ITS LETTER DATED 27 .11.2014 THAT HE DOES NOT KNOW WHO IS BHANWAR LAL JAIN AND HE WAS NEVER IN CO NTACT WITH HIM. SHRI BHANWARLAL JAIN GROUP IS NOT KNOWN TO THE ASSESSEE, THEREFORE, THE MODUS OPERANDI OF THIS GROUP IS NOT KNOWN TO THE ASSESSEE AND THE ASSESSEE HAS NOT CARRIED OUT ANY TRANSACTION THROUGH THESE PERSONS. THE ASSESSEE ACTUALLY TAKEN THE UNSECURED LOANS FROM M/S MEHUL GEMS (P) LTD. AN D THE SAME WAS REPAID IN JULY, 2014 WHERE THE RECEIPT AND REPAYMENT OF LOANS ARE THROUGH ACCOUNT PAYEE CHEQUE. IT WAS FURTHER SUBMITTED THAT BASED ON THE ROC RECORDS OF M/S MEHUL GEMS (P) LTD., SHRI MOHIT PUKHRAJ KAWADIA AN D SHRI RAJESH CHOPRA WERE THE DIRECTORS AND SHAREHOLDERS OF THE COMPANY AND S HRI BHANWARLAL JAIN WAS NEITHER THE DIRECTOR NOR SHAREHOLDER OF THE COMPANY . THEREFORE, WITHOUT BEING A SHAREHOLDER WOULD ANYONE CAN BECOME A DIRE CTOR OF THE COMPANY OR HOW ANYONE CAN CONTROL THE AFFAIRS OF THE COMPANY. REGARDING VARIOUS INCRIMINATING DOCUMENTARY EVIDENCES SEIZED DURING T HE COURSE OF SEARCH AND STATEMENTS OF SHRI BHANWARLAL JAIN AND OTHER PERSON S WERE RECORDED, THE ASSESSEE SUBMITTED THAT COPIES OF SUCH INCRIMINATI NG DOCUMENTS OR STATEMENT ON THE BASIS OF WHICH THE AO IS FORMING THIS OPIN ION HAS NOT BEEN PROVIDED TO ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 3 THE ASSESSEE. THEREFORE THE CONTENTS OF SUCH DOCU MENTS AND STATEMENT IS NOT KNOWN TO THE ASSESSEE. THEREFORE, THE ASSESSEE RE QUESTED THE AO TO KINDLY TO PROVIDE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENT OF ALL VARIOUS PERSONS RECORDED IN THIS REGARD AND PROVIDE AN OPPO RTUNITY TO THE ASSESSEE TO CROSS EXAMINE SUCH PERSONS. IT WAS FURTHER SUBMITT ED THAT IF THE ENTRIES AND MATERIAL GATHERED BEHIND THE BACK OF THE ASSESSEE A ND IF THE AO PROPOSES TO ACT ON SUCH MATERIAL AS HE MIGHT HAVE GATHERED AS A RESULT OF HIS PRIVATE ENQUIRIES HE MUST DISCLOSE THE SUBSTANCE OF ALL SUC H MATERIAL THOUGH NOT SOURCES THEREOF TO THE ASSESSEE AND IF THIS IS NOT DONE, THE PRINCIPLES OF NATURAL JUSTICE STAND VIOLATED. 2.1 IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS TAKEN ACTUAL LOAN FROM M/S MEHUL GEMS (P) LTD THROUGH A/C PAYEE CHEQUE AND NO ACCOMMODATION ENTRY WAS TAKEN FROM SHRI BHANWAR LAL JAIN OR HIS G ROUP. IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, NO IRREGULARITY HAS BEEN POINTED OUT BY THE AO. THEREFORE, THE ENTRIES RECORDED IN THE BOOKS OF ACC OUNT OF THE ASSESSEE IS EVIDENCE UNDER THE EVIDENCE ACT AND SHOULD BE ACCEP TED. IT WAS FINALLY SUBMITTED THAT IF THE DEPARTMENT WANTS TO ACCEPT WHAT HAS BEEN FOUND FROM THE POSSESSION OF SHRI BHANWAR LAL JAIN AND ITS GRO UP, THE BURDEN TO PROVE THAT THE AMOUNT ATTRIBUTABLE TO THE ASSESSEE REPRESENTS ITS CONCEALED INCOME WOULD BE ON THE DEPARTMENT. THIS BURDEN CANNOT BE DISCHARGED MERELY ON SUSPICION, SURMISES AND CONJECTURES. THE JUDICIAL VIEW HAS BEEN THAT THERE CANNOT BE A PRESUMPTION AGAINST A THIRD PARTY IN WH AT A PERSON WRITES IN HIS ACCOUNT BOOKS ABOUT HIM OR IT. THEREFORE, THE AO WAS REQUESTED TO PROVIDE THE COPIES OF INCRIMINATING DOCUMENTS AND STATEMENT S OF VARIOUS PERSONS ON THE BASIS OF WHICH THE BELIEF WAS DRAWN AND PROVIDE AN OPPORTUNITY TO CONFRONT THE MATERIAL AND CROSS EXAMINE THE PERSONS . THE ASSESSEE FURTHER SUBMITTED THE FOLLOWING DOCUMENTS IN SUPPORT OF GEN UINENESS OF LOAN TRANSACTION: (I) CONFIRMED COPY OF A/C OF ABOVE NAMED PARTY IN T HE BOOKS OF ACCOUNTS OF THE ASSESSEE. (II) CONFIRMED COPY OF A/C OF ASSESSEE IN THE BOOKS OF ACCOUNTS OF ABOVE NAMED COMPANY. ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 4 (III) COPY OF ACKNOWLEDGEMENT OF RETURN OF A.Y.2012 -13, BALANCE SHEET, PROFIT AND LOSS ACCOUNT OF 31.03.2012 OF ABOVE NAME D COMPANY. (IV) COPY OF RELEVANT PAGE OF BANK STATEMENT OF ABO VE NAMED COMPANY SHOWING THE ENTRY OF CHEQUE GIVEN TO THE ASSESSEE. (V) COPY OF PAN CARD OF PARTY. FROM EXAMINING THE BANK STATEMENT AND BALANCE SHEET OF THIS COMPANY, IT WAS SUBMITTED THAT THIS COMPANY WAS HAVING SUFFICIENT S OURCE TO ADVANCE THE MONEY TO THE ASSESSEE. THE ASSESSEE IS TRYING TO GE T THE AFFIDAVITS FROM THE DIRECTORS OF THIS COMPANY REGARDING GENUINENESS OF THE LOAN AND THE SAME WILL BE SUBMITTED AS SOON AS THE SAME WILL BE RECEIVED B Y THE ASSESEE FOR WHICH THE FURTHER TIME MAY KINDLY BE PROVIDED TO THE ASSESSEE . 2.2 IN VIEW OF ABOVE, IT WAS FINALLY SUBMITTED BY T HE ASSESSEE THAT HE HAS ACTUALLY TAKEN THE LOAN FROM ABOVE NAMED PARTY AND IF THE AO TREATS THE ENTRY AS ACCOMMODATION ENTRY THAN THE OPPORTUNITY TO CONF RONT THE INCREMENTING DOCUMENTS AND CROSS EXAMINING THE WITNESSES MAY KIN DLY BE PROVIDED TO ASSESSEE. 2.3 THE ABOVE SUBMISSIONS OF THE ASSESSEE WAS CONSI DERED BY THE AO BUT HE DID NOT FIND THE SAME ACCEPTABLE FOR THE REASONS ST ATED AS UNDER: (A) THE UNSECURED LOANS WAS RECEIVED BY CHEQUE DOE S NOT MAKE THE TRANSACTION GENUINE. THE HONBLE ITAT JAIPUR N THE CASE OF M/S KANCHWALA GEMS VS. JCIT, ITA NO. 134/JP/02 DATED 10.12.2003, AND AFFIRMED BY THE HONBLE SUPREME COURT IN 288 ITR 10 (SC) HAS HELD T HAT EVEN PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SUFFICIENT TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. (B) THE CONTENTIONS OF THE ASSESSEE THAT NEITHER BH ANWARLAL JAIN NOR HIS SONS ARE DIRECTORS OF THE COMPANY, IS ALSO NOT RELE VANT TO THE MATERIAL FACT THAT IN THE STATEMENTS, BHANWARLAL JAIN HAD DESCRIBED TH AT THEY ARE INDULGED IN PROVIDING ACCOMMODATION ENTRIES OF BOGUS UNSECURED LOANS AND ADVANCES THROUGH VARIOUS BENAMI CONCERNS (70) OPERATED AND M ANAGED BY THEM. THIS ADMISSION AUTOMATICALLY MAKES ALL THE TRANSACTIONS DONE BY THEM AS MERE PAPER TRANSACTIONS AND IN THESE CIRCUMSTANCES, FURT HER AS PER THE INFORMATION NAME AND ADDRESS OF ASSESSEE AND THE BENAMI CONCERN THROUGH WHICH ACCOMMODATION ENTRY OF UNSECURED LOANS WAS PROVIDED IS APPEARING IN THE LIST ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 5 OF BENEFICIARIES TO WHOM THE SAID GROUP HAS PROVIDE D. THIS ADMISSION IS SUFFICIENT TO REJECT THE CONTENTIONS OF THE ASSEESS E. (C) THE ASSESSEE HAD REQUESTED FOR CROSS EXAMINATIO N OF SUCH PERSONS. IN THIS REGARD, IT IS POINTED OUT THAT THE HONBLE SU PREME COURT IN THE CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206(SC) (3 JUDGE BEN CH) HAD OBSERVED THAT THE ITO IS NOT BOUND BY ANY TECHNICAL RULES OF THE LAW OF EVIDENCE. IT IS OPEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EV EN BY PRIVATE ENQUIRY. BUT, IF HE DESIRES TO USE THE MATERIAL SO COLLECTED, THE AS SESSEE MUST BE INFORMED ABOUT THE MATERIAL AND GIVEN ADEQUATE OPPORTUNITY T O EXPLAIN IT. THE STATEMENTS MADE BY PRAVEEN JAIN AND GROUP WERE MATE RIAL ON WHICH THE IT AUTHORITIES COULD ACT PROVIDED THE MATERIAL WAS DIS CLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RENDER THEIR EXPLANATION IN THAT REGARD. (D) THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLU TE RIGHT. (NATH INTERNATIONAL SALES VS. UOI, AIR 1992 (DEL) 295). THE HONBLE SUPREME COURT HAS ALSO HELD THAT THE RIGHT OF HEARING DOES NOT NE CESSARILY INCLUDE RIGHT OF CROSS EXAMINATION. THE RIGHT OF CROSS EXAMINATION M UST DEPEND UPON THE CIRCUMSTANCES OF EACH CASE AND ALSO ON THE STATUTE CONCERNED (STATE OF J&K VS. BAKSHI GULAM MOHAMMAD AIR 1967 SC 122). THE QUESTI ON WHETHER THE ASSESSEE IS ENTITLED TO CROSS EXAMINATION IS A QUES TION WHICH MAY LARGELY DEPENDS ON THE FACTS AND CIRCUMSTANCES OF THE CASE (EF. SHYAMLAL BIRI MERCHANT VS. UOI (1993) 68 ELT 548, 551(ALL.) IN THE PRESENT CASE NO SUCH CIRCUMSTANCES ARE WARRANTED AS IN THE LIST OF BENEFICIARIES TO WH OM ACCOMMODATION ENTRIES WERE PROVIDED BY THE SAID GROUP CATEGORICALLY CONTA INS THE NAME AND ADDRESS OF THE ASSESSEE, FURTHER THE GROUP HAS CATEGORICALL Y ADMITTED TO PROVIDING OF ACCOMMODATION ENTRIES OF UNSECURED LOANS THROUGH VA RIOUS BENAMI CONCERNS. (E) THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAMESHWARLAL MALI VS. CIT 256 ITR 536(RAJ.) HAS HELD THAT THERE IS NO PR OVISION FOR PERMITTING THE CROSS EXAMINATION OF THE PERSONS WHOSE STATEMENTS W ERE RECORDED DURING SURVEY. THEREAFTER, THE AO NOTED THAT AS PER THE ROC RECORD S THERE EXIST A NEXUS AMONG THE VARIOUS COMPANIES RIGHT FROM M/S MEHUL GE MS TO M/S ROSHAN GEMS (P) LTD. TO M/S MANISH FLOOR MILLS (P) LTD. TH ROUGH COMMON DIRECTORS AND ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 6 IN THE LAST MENTIONED COMPANY, SHRI BHANWARLAL JAIN AND SHRI MANAK CHAND JAIN WERE DIRECTORS. 2.4 FINALLY, THE AO HELD THAT BASED ON THE INFORMAT ION WITH THE INVESTIGATION DEPARTMENT, STATEMENT RECORDED U/S 132(4) OF SHRI B HANWARLAL JAIN AND VARIOUS INCRIMINATING DOCUMENTARY EVIDENCE FOUND FROM THE SEARCH AND SEIZURE CARRIED OUT BY INVESTIGATION WING, MUMBAI ON THE SA ID GROUP ON 03.10.2013, AND THE EXISTENCE OF NEXUS AS BRIEFED ABOVE CANNOT BE CONSIDERED AS A COINCIDENCE SPECIALLY WHEN SHRI BHANWARLAL JAIN HA S CATEGORICALLY ADMITTED THAT HIS GROUP WAS INDULGED IN PROVIDING ACCOMMODAT ION ENTRIES OF BOGUS UNSECURED LOANS AND ADVANCES THROUGH BENAMI CONCERN S (70) OPERATED AND MANAGED BY HIM AND HIS SONS. THUS, UNDER SUCH FACT S AND CIRCUMSTANCES M/S MEHUL GEMS (P) LTD. IS NOTHING BUT A BENAMI CONCER N OF SHRI BHANWARLAL JAIN GROUP. BASED ON CASE LAWS AND DISCUSSIONS, IT WAS FURTHER STATED BY THE AO THAT: (A) THE PRIMARY ONUS IS ON THE ASSESSEE TO ESTABLIS H THE GENUINENESS OF THE TRANSACTION CLAIMED BY IT. (B) IF THE INVESTIGATION DONE BY THE DEPARTMENT LEA DS TO DOUBT REGARDING THE GENUINENESS OF THE TRANSACTIONS, IT IS INCUMBENT ON THE ASSESSEE TO PRODUCE THE PARTIES ALONGWITH NECESSARY DOCUMENTS T O ESTABLISH THE GENUINENESS OF THE TRANSACTION. (C) PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSAN CT. IN LIGHT OF THE VARIOUS JUDICIAL PRONOUNCEMENTS AND THE ABOVE DISCUSSIONS IT IS TO BE SEEN WHETHER THE ASSESSEE WAS ABLE TO ESTABLI SH THE GENUINENESS OF THE TRANSACTIONS CLAIMED BY IT OR IT HAS FAILED IN DISC HARGING THIS ONUS. THE INFORMATION RECEIVED FROM INVESTIGATION WING AND ST ATEMENT OF SHRI BHANWARLAL JAIN AND GROUP CLEARLY EXPLAINS THE MODUS OPERANDI OF THIS BOGUS TRANSACTIONS. IN THE PRESENT CASE, ASSESSEE HAS SHOWN UNSECURED L OANS OF RS. 1,00,00,000/- FROM M/S MEHUL GEMS (P) LTD. A BENAMI CONCERN OF SH RI BHANWARLAL JAIN GROUP, AND THIS PARTY IS ONLY PROVIDING BOGUS ACCOM MODATION UNSECURED LOANS AND ADVANCES FOR THE REASONS GIVEN IN DETAIL IN THE ABOVE PARA. THEREFORE, THE UNSECURED LOANS FROM M/S MEHUL GEMS (P) LTD. WAS TR EATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT, 1961 AND AN ADDIT ION OF RS. 1,00,00,000/- TO THE DECLARED INCOME OF THE ASESSEE WAS MADE U/S 68 OF THE IT ACT, 1961. ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 7 2.5 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD CIT(A). THE LD. CIT(A) AFTER CONSIDERING THE ASSES SEES SUBMISSIONS DELETED THE ENTIRE ADDITION AND HIS FINDINGS ARE AS UNDER: 3.1.3 I HAVE DULY CONSIDERED THE ASSESSEES SUBMI SSION AND ALSO TAKEN A NOTE OF JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE AO AND APPELLANT. I HAVE ALSO CAREFULLY GONE THROUGH THE A SSESSMENT ORDER AND ALSO PERUSED THE ASSESSMENT RECORD. THE AO MADE T HE ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 OF IT ACT AND THE ACTION OF AO IS BASED ON INFORMATION RECEIVED FROM INVESTIGATION WI NG MUMBAI. DURING THE ASSESSMENT PROCEEDINGS IN COMPLIANCE TO THE SHO W CAUSE NOTICE ISSUED, ASSESSEE FILED FOLLOWING DOCUMENTS: (I) COPY OF CONFIRMATION LETTER OF THE ABOVE NAMED CASH CREDITOR (II) COPY OF ACKNOWLEDGEMENT OF RETURN (III) COPY OF BALANCE SHEET AND PROFIT AND LOSS ACC OUNT OF THE CASH CREDITOR (IV) COPY OF BANK STATEMENT OF THE CASH CREDITOR (V) COPY F PAN CARD OF THE CASH CREDITOR AND (VI) SWORN AFFIDAVIT OF THE DIRECTOR OF THE COMPANY FURTHER, ON EXAMINATION OF THE PROFIT AND LOSS ACCO UNT OF THE CASH CREDITOR M/S MEHUL GEMS PVT. LTD. IT IS SEEN THAT T HE TURNOVER OF THE COMPANY AS PER THE P&L IS MORE THAN 58 CRORES AND O N CAREFUL PERUSAL OF BANK STATEMENT OF THE CASH CREDITOR, THE SAID ENTRY OF WITHDRAWAL OF MONEY IS APPEARING IN THE NAME OF ASSESSEE IN THE B ANK STATEMENT. IT IS ALSO PERTINENT TO MENTION THAT THE SOURCE OF PAYMENT AS PER THE BANK STATEMENT IS ALSO DEPOSITS OF CHEQUE BY CLEARING. ON CAREFUL PERUSAL OF BANK STATEMENT OF M/S MEHUL GEMS PVT. LTD. NO INSTA NCES OF CASH DEPOSIT PRIOR TO ISSUE OF CHEQUE TO THE ASSESSEE BY THE CASH CREDITOR HAVE BEEN FOUND. FURTHER, THE ASSESSEE HAS ALSO FILED SWORN AFFIDAVIT OF THE DIRECTOR OF THE CASH CREDITOR COMPANY. ON RECEIPT OF THESE DOCUMENTARY EVIDENCES, IT IS AL SO SEEN THAT AO HAS NOT BROUGHT ON RECORD ANY POSITIVE MATERIAL TO CONT ROVERT THE EVIDENCE AND DOCUMENTS FURNISHED BY THE ASSESSEE. INSTEAD A O INSISTED ON PHYSICAL PRESENCE/ATTENDANCE OF THE DIRECTORS OF TH E CASH CREDITOR COMPANY PARTICULARLY WHEN THEY ARE NOT BASED IN JAI PUR. IT IS TRUE THAT ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 8 CHEQUE DOES NOT MAKE THE TRANSACTION GENUINE BUT IN THIS CASE THE ASSESSEE HAS SUBMITTED SEVERAL DOCUMENTS INCLUDING THE BANK STATEMENT AND SWORN AFFIDAVIT OF CASH CREDITORS, WHICH HAVE N OT BEEN CONTROVERTED BY AO ON THE BASIS OF POSITIVE EVIDENCE. MERELY ON THE BASIS OF STATEMENT OF SHRI BHANWARLAL JAIN BEFORE INVESTIGATION WING, MUMBAI, THE ADDITION CANNOT BE CONFIRMED PARTICULARLY WHEN THE COPY OF T HE SWORN STATEMENT OF SHRI BHANWARLAL JAIN WAS NOT PROVIDED TO THE AS SESSEE AND THE AO HAS NOT BROUGHT ANY POSITIVE MATERIAL TO SHOW NEXUS O F THE CASH CREDITOR COMPANY WITH SHRI BHANWARLAL JAIN. AS PER FINDING GIVEN BY THE AO IN ASSESSMENT ORDER EVEN SHRI BHANWARLAL JAIN AND THE DIRECTORS OF THE CASH CREDITOR COMPANY IS NOT THE COMMON DIRECTOR IN THE SAID COMPANY. THE AO ALLEGED THAT THE CASH CREDITOR COMPANY IS A BEN AMI COMPANY OF SHRI BHANWARLAL JAIN. IT IS WELL SETTLED LAW THAT THE ONUS TO PROVE BENAMI IS ON THE PERSON WHO ALLEGES. THE AO HAS NOT BROUGHT ANY POSITIVE MATERIAL TO SHOW THAT CASH CREDITOR COMPANY IS BENA MI COMPANY OF SHRI BHANWARLAL JAIN. FURTHER, ON CAREFULLY EXAMINATION OF ASSESSMENT RECORDS, IT IS SEEN THAT THE AO HAS ISSUED A LETTER DATED 06.01.2015 U/S 133(6) OF ACT (BY SPEED POST) FOR DIRECT ENQUIRY TO THE CASH CREDITOR COMPANY. FROM THE PERUSAL OF ASSESSMENT RECORDS, I T IS ALSO SEEN THAT THE AFOREMENTIONED CASH CREDITOR COMPANY HAS COMPLI ED WITH ITS LETTER DATED 19.01.2015 TO THE NOTICE ISSUED BY THE AO AND THE SAME WAS RECEIVED IN THE OFFICE OF AO ON 21.01.2015. FROM THE ABOVE IT IS SEEN THAT AO HAS NOT CONTROVER TED THE DOCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE NOR CONDUCTED A NY FRUITFUL ENQUIRY ON THAT. EVEN COMPLIANCE FROM M/S MEHUL GEMS PVT. L TD. WAS NOT TAKEN INTO COGNIZANCE WHEN THE SAME WAS RECEIVED IN THE A OS OFFICE IN THE MONTH OF JAN 2015 AND FINALLY ASSESSMENT ORDER WAS PASSED ON 23.03.2015 I.E. AFTER A LAPSE OF ALMOST 55 WORKING DAYS. MERE ON THE BASIS OF SURMISES AND SUSPICION, ADDITION MADE BY T HE AO CANNOT BE SUSTAINED IN VIEW OF JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION CANNOT BE SUSTAINED IN THE HANDS OF THE ASSESSEE AN D THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 1,00,00,000/- AND RS. 27,500/-(TOWARDS INTEREST PAID) MADE BY THE AO BY APPLYING THE PROVI SIONS OF SECTION 68 OF IT ACT, 1961. ASSESSEES APPEAL STANDS ALLOWED. 2.6 THE LD. AR OF THE APPELLANT SUBMITTED THAT THE APPEAL RELATE TO THE ISSUE OF ALLEGED UNEXPLAINED CASH CREDIT OF RS. 1,0 0,00,000/- FROM M/S MEHUL ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 9 GEMS PVT LTD AND DISALLOWANCE OF INTEREST OF RS. 27 500/- PAID BY ASSESSEE TO ABOVE NAMED CASH CREDITORS. IN THIS REGARD, THE SU BMISSIONS MADE BEFORE THE LD CIT(A) WERE REITERATED AND IT WAS SUBMITTED AS U NDER: A) THE ASSESSEE RELIES ON FINDINGS OF LD CIT(A) GIV EN AT PG 14-21 OF APPEAL ORDER. B) DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS TAKEN UNSECURED LOAN OF RS. 1,00,00,000/- FROM M/S MEHUL GEMS PVT. LTD, 228-229, MAJESTIC SHOPPING CENTRE, GIRGOAN ROAD, MUMBAI. PAN:- AAGCM9 256M ON 20.03.2012 THROUGH A/C PAYEE CHEQUE AND PAID INTEREST OF RS. 2 7,500/- THEREON AFTER DEDUCTING TDS OF RS. 2,750/-. C) THE ASSESSEE HAS SUBMITTED BEFORE THE LD AO THAT THE ASSESSEE DOES NOT KNOW WHO IS SHRI BHANWAR LAL JAIN AND NEVER BE IN C ONTACT OF SHRI BHANWAR LAL JAIN. THE BHANWAR LAL JAIN GROUP NOT KNOWN TO THE A SSESSEE, THEREFORE THE MODUS OPERANDI OF THIS GROUP IS NOT KNOWN TO THE AS SESSEE AND ASSESSEE NOT CARRIED OUT ANY TRANSACTION THROUGH THIS PERSON. TH E ASSESSEE HAS ACTUALLY TAKEN THE UNSECURED LOAN FROM M/S MEHUL GEMS PVT. L TD AND THE SAME REPAID IN JULY-14. THE RECEIPT AND REPAYMENT OF LOAN BOTH ARE THROUGH ACCOUNT PAYEE CHEQUES. D) THE ASSESSEE EXPLAINED TO LD AO THAT HE HAS TAKE N LOAN FROM M/S MEHUL GEMS PVT. LTD AND DURING THE FY 2011-12 SHRI MOHIT PUKHRAJ KAWADIYA, 702, SATYAM APARTMENTS, OPP. NAVYUG COLLEGE, SURAT AND S HRI RAJESH CHOPRA, 204, NILPA APT., KALPESHI STREET, TIMLIYAWAS, NANPURA, S URAT WERE DIRECTOR AND SHAREHOLDERS OF THIS COMPANY. THIS INFORMATION IS T AKEN AS PER ROC RECORD OF THIS COMPANY. THUS SHRI BHANWAR LAL SHARMA WAS NEIT HER DIRECTOR NOR SHAREHOLDER OF THIS COMPANY, THEREFORE WITHOUT BEIN G SHAREHOLDER/DIRECTOR OF A COMPANY HOW ANYONE CAN CONTROL THE AFFAIRS OF THE COMPANY. THE NAME OF ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 10 THE SON OF SHRI BHANWAR LAL SHARMA IS NOT KNOWN TO THE ASSESSEE, THEREFORE NO COMMENTS CAN BE MADE ON THE CONTROLLING OF SON OF S HRI BHANWAR LAL SHARMA IN THIS COMPANY. FURTHER THE AO HAS NOT BROUGHT ANY P OSITIVE MATERIAL TO PROVE THAT M/S MEHUL GEMS PVT LTD IS BENAMI COMPANY OF SH RI BHANWAR LAL JAIN GROUP. THE LD AO HAS LISTED NAME OF VARIOUS COMPANI ES IN PARA 4.5, AND YOUR HONOR WOULD FIND THAT THE DIRECTORS OF M/S MEHUL GE MS PVT LTD AND SHRI BHANWAR LAL JAIN ARE NOT COMMON PARTNER IN ANY COMP ANY. E) AS REGARD TO CONTENTION OF LD AO THAT VARIOUS IN CRIMINATING DOCUMENTARY EVIDENCES WERE SEIZED DURING THE COURSE OF SEARCH O N BHANWAR LAL JAIN AND STATEMENT OF SEVERAL PERSONS WERE RECORDED WHICH PR OVES THAT THE ENTRY OF THE ASSESSEE IS ACCOMMODATION ENTRY THIS IS TO SUBMIT T HAT THE LD AO HAS NOT PROVIDED THE COPY OF SO CALLED INCRIMINATING DOCUME NT OR STATEMENT THE ASSESSEE AND OPPORTUNITY OF CONFRONTATION WAS NOT G IVEN TO ASSESSEE. THE ASSESSEE HAS SPECIFICALLY DEMANDED TO LD AO TO PROV IDE THE COPY OF SO CALLED INCRIMINATING DOCUMENTS AND STATEMENTS BUT THE SAME WAS NOT GIVEN TO ASSESSEE. F) THE ASSESSEE HAS SUBMITTED FOLLOWING DOCUMENTS B EFORE LD AO IN SUPPORT OF GENUINENESS OF LOAN TAKEN FROM THIS PART Y: - I) CONFIRMED COPY OF A/C OF ABOVE NAMED PARTY IN TH E BOOKS OF ACCOUNTS OF THE ASSESSEE. II) CONFIRMED COPY OF A/C OF ASSESSEE IN THE BOOKS OF A CCOUNTS OF ABOVE NAMED COMPANY. III) COPY OF ACKNOWLEDGEMENT OF RETURN OF AY 2012-13, BA LANCE SHEET, PROFIT & LOSS A/C OF 31.03.2012 OF ABOVE NAMED COMP ANY. IV) COPY OF RELEVANT PAGE OF BANK STATEMENT OF ABOVE NA MED COMPANY SHOWING THE ENTRY OF CHEQUE GIVEN TO THE AS SESSEE. V) COPY OF PAN CARD OF PARTY. VI) AFFIDAVIT OF DIRECTOR OF THE COMPANY ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 11 FROM EXAMINING THE BANK STATEMENT AND BALANCE SHEET OF THIS COMPANY LD CIT(A) HAS FOUND THAT THIS COMPANY WAS HAVING SUFFI CIENT SOURCE TO ADVANCE THE MONEY TO THE ASSESSEE. THE ASSESSEE COMPANY IS TURN OVER IS 58.31 CRORES. G) THE LD CIT(A) HAS EXAMINED THE ASSESSMENT RECORD S OF THE ASSESSEE AND FOUND THAT THE AO HAS MADE DIRECT INQUIRY FROM THE CASH CREDITOR AND THE CASH CREDITOR HAS CONFIRMED THE GIVING OF LOAN TO THE AS SESSEE IN RESPONSE TO DIRECT INQUIRY OF THE AO. THE LD CIT(A) HAS REPRODUCED THE COPY OF INQUIRY LETTER OF AO AND REPLY OF CASH CREDITOR TO THE AO IN THE APPEAL ORDER, WHICH PROVES THAT THE LD AO HAS NO MATERIAL TO HOLD THAT THE CASH CREDIT WAS UNEXPLAINED. H) THE ASSESSEE HAS DISCHARGED HIS INITIAL ONUS. THE ASSESSEE HAS DISCHARGED HIS INITIAL ONUS LAID D OWN U/S 68 OF INCOME TAX ACT. THE ASSESSEE HAS FILED CONFIRMATION LETTERS AN D AFFIDAVIT OF CASH CREDITORS BEFORE THE AO WHO HAS ADMITTED GIVING OF MONEY TO T HE ASSESSEE AS A LOAN. THE LD AO HAS ERRED IN MAKING ADDITION OF RS.1,00,00,00 0/- EVEN IN THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE AND THE LEARNED AO HA S NO MATERIAL TO REJECT THE EVIDENCES FILED BEFORE HIM. (I) IDENTITY:- THE IDENTITY OF CASH CREDITOR STOOD PROVED IN AS MU CH AS COPY OF PAN CARD AND COPY OF INCOME TAX RETURN WERE FILED. HONBLE RAJAS THAN HIGH COURT IN THE CASE OF ARAVALI TRADING CO VS INCOME TAX OFFICER (2008) 8 DTR (RAJ) 199 HAS HELD THAT ONCE THE EXISTENCE OF THE CREDITORS IS PROVED AND SUCH PERSONS OWN THE CREDITS, THE ASSESSEES ONUS STANDS DISCHARGED AND THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE FROM WHICH THE CREDITORS COULD HAVE ACQUIRED THE MONEY DEPOSITED WITH HIM. HONBLE JURISDICTIONAL HIGH COU RT HAS HELD THAT MERELY BECAUSE THE DEPOSITORS EXPLANATION ABOUT THE SOURC ES OF MONEY WAS NOT ACCEPTABLE TO THE AO, IT CANNOT BE PRESUMED THAT TH E DEPOSIT MADE BY THE CREDITORS IS MONEY BELONGING TO THE ASSESSEE ITSELF . (II) GENUINENESS OF TRANSACTION:- THE ASSESSEE HAS FILED CONFIRMATION LETTER AND AFFI DAVIT OF DIRECTOR OF THE COMPANY WHO ADMIT THE GIVING OF LOAN. THE ASSESSEE FILED COPY OF BANK STATEMENT OF CASH CREDITORS WHERE THE AMOUNT OF PAY MENT IS REFLECTED IN BANK STATEMENT. THE ASSESSEE HAS FILED SWORN AFFIDAVIT O F SHRI MOHIT PUKHRAJ KAWADIYA DIRECTOR OF CASH CREDITOR COMPANY WHEREIN HE HAS ADMITTED THE ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 12 GIVING OF MONEY TO THE ASSESSEE AS LOAN. FURTHER, T HE ASSESSEE HAS PAID INTEREST AND DEDUCTED TDS. FURTHERMORE, THE ASSESSEE HAS REP AID THE LOAN BY ACCOUNT PAYEE CHEQUE. THE AO HAS NOT REBUTTED THE CONTENTS OF THE AFFIDAVITS. THE CONTENTS OF AFFIDAVITS, WHICH ARE NOT VAGUE SHOULD BE ACCEPTED CORRECT. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS:- (I) MEHTA PARIKH & CO V CIT [1958] 30 ITR 181 (SC) (II) DILIP KUMAR RAO VS CIT (1974) 94 ITR 1 (BOM); (III) MALWA KNITTING WORKS VS CIT (1977) 107 ITR 379, 381 MP AND (IV) SRI KRISHNA VS CIT (1983) 142 ITR 618 (ALL). (III) CAPACITY PROVED:- THE ASSESSEE HAS FILED COPY OF BALANCE SHEET AND PR OFIT AND LOSS ACCOUNT OF THE COMPANY. THE TURNOVER OF THE COMPANY IS 58.13 CRORE S. THE ASSESSEE HAS ALSO FILED COPY OF BANK STATEMENT OF THE COMPANY WHICH S HOWS HUGE NUMBER OF TRANSACTION OF HIGH VALUE. THERE IS NO ONUS OF THE ASSESSEE TO PROVE SOURCE OF SOURCE. ONCE THE ASSESSEE ABLE TO ESTABLISH THAT H E HAS IN FACT RECEIVED MONEY FROM THIRD PARTY, IT CANT BE BURDENED WITH A FURTH ER ONUS OF ESTABLISHING THE SOURCE FROM WHICH SUCH THIRD PARTY HAD BEEN ABLE TO OBTAIN THE MONEY. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: - (I) SIDEWAYS INVESTMENT PVT. LTD. VS DCIT 24 TAX WO RLD 146 (JP ITAT) (II) CIT VS. DAULAT RAM RAWATMAL 87 ITR 349 (SC) (III) SARAOGI CREDIT CORP. VS. CIT 103 ITR 344 (PA T) (I) THE ASSESSEE RELIES ON THE FOLLOWING DECISIONS: - (I) CIT VS ORISSA CORPORATION (P) LTD (1986) 159 ITR 79 (SC) THE ASSESSEE HAD GIVEN NAMED AND ADDRESSES OF THE C ASH CREDITORS, WHO WERE INCOME TAX ASSESSEES. REVENUE A PART FROM ISSUING SUMMON U/S 131 NOTICES TO CREDITORS, DID NO T PURSUE THE MATTER FURTHER- IT DID NOT EXAMINE CREDITWORTHINES S OF THE CREDITORS- ASSESSEE COULD NOT, UNDER THE CIRCUMSTAN CES DO ANYTHING FURTHER. HELD THAT THE ADDITIONS WERE RIGH TLY DELETED. (II) CIT VS HEERA LAL CHAGAN LAL TANK (2002) 157 ITR 281 (RAJ) BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE I DENTITY OF THE CREDITORS IS ESTABLISHED AND HE CONFIRMS THE LOANS. ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 13 J) THE LD AO MENTIONED THAT CHEQUE TRANSACTION IS N OT SUFFICIENT TO PROVE THE GENUINENESS OF TRANSACTION. BUT IN THE CASE OF ASSE SSEE, THE ASSESSEE IS CLAIMING THE GENUINENESS OF THE TRANSACTION NOT MER ELY ON THE STRENGTH OF CHEQUE BUT HE HAS SUBMITTED SEVERAL OTHER EVIDENCES SUCH AS SWORN AFFIDAVIT, INCOME TAX RETURN AND BANK STATEMENT OF CASH CREDIT OR AND PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF CASH CREDITOR, WHICH P ROVE THAT THE TRANSACTION OF ASSESSEE IS GENUINE. K) THE LD AO HELD THAT M/S MEHUL GEMS PRIVATE LTD I S BENAMI COMPANY OF SHRI BHANWAR LAL JAIN BUT THE LD AO HAS NOT BROUGHT ANY POSITIVE MATERIAL TO SHOW THAT M/S MEHUL GEMS PVT LTD IS BENAMI OF SHRI BHANW AR LAL JAIN. TO HOLD A PERSON AS BENAMI OF ANOTHER, ONE OUGHT TO HAVE CONC RETE EVIDENCES IN CONTRAST TO SHEER PRESUMPTIONS AND SUSPICION AND IN SUCH CASES INITIAL BURDEN LIES ON REVENUE. THE LD AO FAILED TO APPRECIATE THE FACTS, EVIDENCE AND THE TESTS LAID DOWN BY APEX COURT AND HIGH COURT. THE ASSESS EE RELIES ON THE FOLLOWING DECISIONS: A) CIT VS DAULAT RAM RAWATMULL 87 ITR 349 (SC) B) JAYDAYAL PODDAR VS. BIBI HAZRA, AIR 1974 SC 171 HONBLE SUPREME COURT HAS HELD THAT IT IS WELL SETT LED THAT THE BURDEN OF PROVING THAT A PARTICULAR SALE IS BENAMI AND THE AP PARENT PURCHASER IS NOT THE REAL OWNER, ALWAYS RESTS ON THE PERSON ASSE RTING IT TO BE SO. C) PRAKASH NARAIN VS CIT 134 ITR 364 (ALL) D) LAL CHAND AGARWAL VS. ACIT 21 TAX WORLD 213 HONBLE ITAT JAIPUR BENCH HAS HELD THAT TO HOLD A PERSON AS BENAMI OF ANOTHE R, ONE OUGHT TO HAVE CONCRETE EVIDENCES IN CONTRAST TO SHEER PRESUMPTION S AND SUSPICION AND IN SUCH CASES INITIAL BURDEN LIES ON REVENUE ; E) ITO VS. SHREE LADANI FAMILY TRUST 21 TAX WORLD 351 HONBLE ITAT JAIPUR BENCH HAS HELD THAT BURDEN TO PROVE BENAMI NATURE H EAVILY LIES ON THE DEPARTMENT. F) DCIT VS. PSM FAMILY TRUST 21 TAX WORLD 553 TO HOLD BENAMI CHARACTER OF A BUSINESS, IT IS ESSEN TIAL TO PROVE INTERLOCKING, INTERLACING AND INTER CONTROLLING BET WEEN THE TWO BUSINESS. ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 14 G) RAVI MATHUR & OTHERS VS. ACIT 22 TAX WORLD 245 H ELD THAT BURDEN TO PROVE BENAMI NATURE OF TRANSACTION HEAVILY LIES ON THE DEPARTMENT. H) RAMJAS NAWAL VS. ACIT 22 TAX WORLD 126 HELD THAT A PERSON CANNOT BE HELD TO BE BENAMI OF ASSESSEE SIMPLY BECAUSE THE VE HICLE ALONG WITH ITS REGISTRATION PAPERS WERE RECOVERED FROM THE POSSESS ION OF ASSESSEE IN ABSENCE OF SOME POSITIVE EVIDENCE. I) S.S. GUPTA VS. ACIT 22 TAX WORLD 337 HELD THAT TO H OLD BENAMI CHARACTER OF A BUSINESS, IT IS ESSENTIAL TO PROVE INTERLOCKIN G, INTERLACING AND INTER LINKING BETWEEN THE TWO OR MORE BUSINESSES. J) SANDEEP LOOMBA VS. ACIT 26 TAX WORLD 288 HELD T HAT BURDEN TO PROVE BENAMI NATURE HEAVILY LIES ON THE DEPARTMENT. K) ITO VS. SURESH CHAND GUPTA 26 TAX WORLD 224 HELD THAT BURDEN TO BRING MATERIAL EVIDENCE ON RECORDS TO PROVE A PERSON TO B E BENAMI OF ANOTHER HEAVILY LIES ON THE REVENUE. L) MANJU DEVI KOGTA VS. ITO 27 TAX WORLD 385 HELD T HAT BURDEN TO PROVE BENAMI NATURE HEAVILY LIES ON THE DEPARTMENT. M) SMT KESAR DEVI VS. ITO 28 TAX WORLD 157 HELD THA T BURDEN TO PROVE BENAMI NATURE HEAVILY LIES ON THE DEPARTMENT AND WH AT IS APPARENT HAS TO BE TREATED AS REAL IN ABSENCE OF ANY CONTRARY MA TERIAL N) UTTAM CHAND NAHAR VS. ITO 28 TAX WORLD 435 HELD THAT BURDEN TO PROVE BENAMI NATURE HEAVILY LIES ON THE DEPARTMENT. O) VIJENDRA KUMAR MAMODIA VS. DCIT 29 TAX WORLD 51 HELD THAT BURDEN TO PROVE BENAMI NATURE HEAVILY LIES ON THE DEPARTMENT AND BURDEN TO PROVE AN INVESTMENT AS BENAMI IS ON THE PERSON WHO ALLEGES AS SUCH. P) RAJESH JAIN VS. ITO 32 TAX WORLD 72 HELD THAT BU RDEN TO PROVE BENAMI TRANSACTION LIES ON THE PERSON WHO ASSERTS ITS AND SHARING OF SAME BUSINESS PLACE AND EMPLOYEES IS NOT SUFFICIENT TO H OLD ONE PERSON AS BENAMIDAR OF ANOTHER. Q) RADHEY SHYAM OJHA VS. ACIT 32 TAX WORLD 81 HELD THAT IT IS THE DUTY OF AO TO BRING ON RECORD SUFFICIENT MATERIAL TO PROVE BENAMI NATURE. (L) THE AO APPEARED TO BE BENT UPON MAKING THE ADDI TION UNDER THE INFLUENCE OF SOME REPORT WITHOUT APPLICATION OF MIN D. THE AO CANNOT BE GUIDED FOR HIS DECISIONS BY WHAT T HE OFFICER PREPARING THE REPORT SAYS. AS PER SECTION 119 (1) (A) EVEN THE C BDT CANNOT ISSUE DIRECTIONS OR ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 15 INSTRUCTIONS TO AN AO SO AS TO REQUIRE ANY INCOME T AX AUTHORITY TO MAKE A PARTICULAR ASSESSMENT OR TO DISPOSE OF A PARTICULAR CASE IN A PARTICULAR MANNER. THE SC IN THE CASE OF RAJESH KUMAR VS DCIT (2006) 1 57 TAXMAN 168 (SC) HAS SAID THAT AN ASSESSMENT ORDER IS THE RESULT OF A JU DICIAL PROCEEDINGS. ACCORDING TO THE APEX COURT AN ASSESSMENT PROCEEDING A JUDICI AL PROCEEDING. OBVIOUSLY, NO ONE CAN HAVE INFLUENCE OR SAY IN THE COURSE OF J UDICIAL PROCEEDINGS THAT A PARTICULAR DECISION SHOULD BE TAKEN IN A PARTICULAR WAY OR MANNER AFFECTING THE INDEPENDENCE OF THE DECISION-MAKING AUTHORITY. THE AO MUST DECIDE THE ISSUE BEFORE HIM ON A PROPER APPRECIATION OF EVIDENCE ADD UCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NOT TO BE SWAYED AND CARRIED AWAY UNDER SOME REPORT. HONBLE APEX COURT HAS HELD IN THE CASE OF DAKESHW ARI COTTON MILLS LTD VS CIT 26 ITR 775- THAT ONE WHO HEARS MUST DECIDE THE CASE. 2.7 THE LD DR IS HEARD WHO HAS VEHEMENTLY ARGUED TH E MATTER AND SUPPORTED THE ORDER OF THE AO. 2.8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE TRANSACTION UNDER QUESTION RELATES TO UNSECURED LOANS TAKEN BY THE ASSESSEE AMOUNTING TO RS 1 CRORES FROM M/S MEHU L GEMS PVT LTD DURING THE IMPUNGED ASSESSMENT YEAR AND NOT ACCEPTING THE SAID LOAN TRANSACTION AS A GENUINE TRANSACTION BY THE ASSESSING OFFICER AND TH E RESULTANT ADDITION MADE UNDER SECTION 68 OF THE ACT. UNDISPUTEDLY, THE PRIM ARY ONUS TO ESTABLISH GENUINENESS OF THE LOAN TRANSACTION IS ON THE ASSES SEE. IN THE INSTANT CASE, THE ASSESSEE HAS PROVIDED THE NECESSARY EXPLANATION, FU RNISHED DOCUMENTARY EVIDENCE IN TERMS OF TAX FILINGS, AFFIDAVITS AND CO NFIRMATION OF THE DIRECTORS, BANK STATEMENTS OF THE LENDER, BALANCE SHEET OF THE LENDER COMPANY, AND AN INDEPENDENT CONFIRMATION HAS ALSO BEEN OBTAINED BY THE ASSESSING OFFICER TO SATISFY THE CARDINAL TEST OF IDENTITY, CREDITWORTHI NESS AND GENUINENESS OF THE LOAN TRANSACTION. HOWEVER, THE ASSESSING OFFICER H AS NOT GIVEN ANY FINDING IN RESPECT OF SUCH EXPLANATION, DOCUMENTARY EVIDENCE A S WELL AS INDEPENDENT CONFIRMATION. APPARENTLY, THE REASON FOR NOT ACCEP TING THE SAME IS THAT THE ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 16 ASSESSING OFFICER WAS IN RECEIPT OF CERTAIN INFORMA TION FROM THE INVESTIGATION WING OF THE TAX DEPARTMENT AS PER WHICH THE TRANSAC TION UNDER CONSIDERATION IS A BOGUS LOAN TRANSACTION. THE SAID INFORMATION REC EIVED FROM THE INVESTIGATION WING THUS OVERWEIGHED THE MIND OF THE ASSESSING OFF ICER. THE ASSESSING OFFICER STATED THAT THE PRIMARY ONUS IS ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSACTION CLAIMED BY IT AND IF THE INVESTIGAT ION DONE BY THE DEPARTMENT LEADS TO DOUBT REGARDING THE GENUINENESS OF THE TRA NSACTIONS, IT IS INCUMBENT ON THE ASSESSEE TO PRODUCE THE PARTIES ALONGWITH NE CESSARY DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN R ESPONSE, THE ASSESSEE SUBMITTED THAT SHRI BHANWARLAL JAIN IS NOT KNOWN TO HIM AND REGARDING VARIOUS INCRIMINATING DOCUMENTARY EVIDENCES SEIZED DURING T HE COURSE OF SEARCH AND STATEMENTS RECORDED OF SHRI BHANWARLAL JAIN AND OTH ER PERSONS, HE SPECIFICALLY REQUESTED THE AO TO PROVIDE COPIES OF SUCH INCRIMI NATING DOCUMENTS AND STATEMENT OF ALL VARIOUS PERSONS RECORDED IN THIS R EGARD AND PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SUCH P ERSONS. HOWEVER, THE AO DIDNT PROVIDE TO THE ASSESSEE COPIES OF SUCH INCRI MINATING DOCUMENTS AND STATEMENTS OF VARIOUS PERSONS RECORDED AND ALLOW TH E CROSS-EXAMINATION OF ANY OF THESE PERSONS. WHILE DOING SO, THE AO STATE D THAT IN HIS STATEMENTS, BHANWARLAL JAIN HAD DESCRIBED THAT THEY ARE INDULGE D IN PROVIDING ACCOMMODATION ENTRIES OF BOGUS UNSECURED LOANS AND ADVANCES THROUGH VARIOUS BENAMI CONCERNS (70) OPERATED AND MANAGED B Y THEM. THIS ADMISSION AUTOMATICALLY MAKES ALL THE TRANSACTIONS DONE BY TH EM AS MERE PAPER TRANSACTIONS AND IN THESE CIRCUMSTANCES, FURTHER AS PER THE INFORMATION NAME AND ADDRESS OF ASSESSEE AND THE BENAMI CONCERN THRO UGH WHICH ACCOMMODATION ENTRY OF UNSECURED LOANS WAS PROVIDED IS APPEARING IN THE LIST OF BENEFICIARIES TO WHOM THE SAID GROUP HAS PROVIDE D. THIS ADMISSION IS SUFFICIENT TO REJECT THE CONTENTIONS OF THE ASSEESS E. FURTHER, REGARDING CROSS- ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 17 EXAMINATION, THE AO STATED THAT THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AND IT DEPENDS UPON THE CIRCUMSTANCE S OF EACH CASE AND ALSO ON THE STATUTE CONCERNED. IN THE PRESENT CASE, NO SUC H CIRCUMSTANCES ARE WARRANTED AS IN THE LIST OF BENEFICIARIES TO WHOM A CCOMMODATION ENTRIES WERE PROVIDED BY THE SAID GROUP CATEGORICALLY CONTAINS T HE NAME AND ADDRESS OF THE ASSESSEE. FURTHER THE GROUP HAS CATEGORICALLY ADMIT TED TO PROVIDING OF ACCOMMODATION ENTRIES OF UNSECURED LOANS THROUGH VA RIOUS BENAMI CONCERNS. THE AO FURTHER RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206(SC) AND H ONBLE RAJASTHAN HIGH COURT IN CASE OF RAMESHWARLAL MALI VS. CIT 256 ITR 536(RA J.) AMONG OTHERS. IN THIS REGARD, IT WAS SUBMITTED BY THE ASSESSEE THAT IF TH E ENTRIES AND MATERIAL ARE GATHERED BEHIND THE BACK OF THE ASSESSEE AND IF THE AO PROPOSES TO ACT ON SUCH MATERIAL AS HE MIGHT HAVE GATHERED AS A RESULT OF HIS PRIVATE ENQUIRIES, HE MUST DISCLOSE ALL SUCH MATERIAL TO THE ASSESSEE AND ALSO ALLOW THE CROSS- EXAMINATION AND IF THIS IS NOT DONE, THE PRINCIPLES OF NATURAL JUSTICE STAND VIOLATED. 2.9 IN LIGHT OF ABOVE DISCUSSIONS, IN OUR VIEW, THE CRUX OF THE ISSUE AT HAND IS THAT WHETHER THE PRINCIPLE OF NATURAL JUSTICE STAND VIOLATED IN THE INSTANT CASE. IN OTHER WORDS, WHERE THE AO DOESNT WANT TO ACCEP T THE EXPLANATION OF THE ASSESSEE AND THE DOCUMENTATION FURNISHED REGARDING THE GENUINENESS OF THE LOAN TRANSACTION AND INSTEAD WANTS TO RELY UPON THE INFORMATION INDEPENDENTLY RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT IN RESPECT OF INVESTIGATION CARRIED OUT AT A THIRD PARTY, CAN THE SAID INFORMATION BE USED AGAINST THE ASSESSEE WITHOUT SHARING SUCH INFORMATI ON WITH THE ASSESSEE AND ALLOWING AN OPPORTUNITY TO THE ASSESSEE TO EXAMINE SUCH INFORMATION AND ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 18 EXPLAIN ITS POSITION ESPECIALLY WHEN THE ASSESSEE H AS REQUESTED THE SAME TO THE ASSESSING OFFICER. 2.10 IN THIS REGARD, THE HONBLE SUPREME COURT IN T HE CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT (1954) 26 ITR 775 (SC) HAS HELD THAT THE RULE OF LAW ON THIS SUBJECT HAS BEEN FAIRLY AND RIGHTLY STATED BY THE LAHORE HIGH COURT IN THE CASE OF SETH GURMUKH SINQH WHERE IT WAS STATED THAT WHILE PROCEEDING UNDER SUB-SECTION (3) OF SECTION 23, THE INCOME-TAX OFFIC ER, THOUGH NOT BOUND TO RELY ON EVIDENCE PRODUCED BY THE ASSESSEE AS HE CONSIDER S TO BE FALSE, YET IF HE PROPOSES TO MAKE AN ESTIMATE IN DISREGARD OF THAT E VIDENCE, HE SHOULD IN FAIRNESS DISCLOSE TO THE ASSESSEE THE MATERIAL ON W HICH HE IS GOING TO FIND THAT ESTIMATE; AND THAT IN CASE HE PROPOSES TO USE AGAIN ST THE ASSESSEE THE RESULT OF ANY PRIVATE INQUIRIES MADE BY HIM, HE MUST COMMUNIC ATE TO THE ASSESSEE THE SUBSTANCE OF THE INFORMATION SO PROPOSED TO BE UTIL IZED TO SUCH AN EXTENT AS TO PUT THE ASSESSEE IN POSSESSION OF FULL PARTICULARS OF THE CASE HE IS EXPECTED TO MEET AND THAT HE SHOULD FURTHER GIVE HIM AMPLE OPPO RTUNITY TO MEET IT. IT WAS HELD IN THAT CASE THAT IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNAL VIOLATED CERTAIN FUNDAMENTAL RULES OF JUSTICE IN RE ACHING ITS CONCLUSIONS. FIRSTLY, IT DID NOT DISCLOSE TO THE ASSESSEE WHAT INFORMATIO N HAD BEEN SUPPLIED TO IT BY THE DEPARTMENTAL REPRESENTATIVE. NEXT, IT DID NOT G IVE ANY OPPORTUNITY TO THE COMPANY TO REBUT THE MATERIAL FURNISHED TO IT BY HI M, AND LASTLY, IT DECLINED TO TAKE ALL THE MATERIAL THAT THE ASSESSEE WANTED TO P RODUCE IN SUPPORT OF ITS CASE. THE RESULT IS THAT THE ASSESSEE HAD NOT HAD A FAIR HEARING. ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 19 THE HONBLE SUPREME COURT IN CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206 (SC) HAS HELD THAT THE ITO IS NOT BOUND BY ANY TECHNIC AL RULES OF THE LAW OF EVIDENCE. IT IS OPEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY PRIVATE ENQUIRY. BUT, IF HE DESIRES TO USE THE MATE RIAL SO COLLECTED, THE ASSESSEE MUST BE INFORMED ABOUT THE MATERIAL AND GIVEN ADEQU ATE OPPORTUNITY TO EXPLAIN IT. THE STATEMENTS MADE BY PRAVEEN JAIN AN D GROUP WERE MATERIAL ON WHICH THE IT AUTHORITIES COULD ACT PROVIDED THE MAT ERIAL WAS DISCLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RENDER THEIR EXPLANA TION IN THAT REGARD. THE HONBLE SUPREME COURT IN CASE OF KISHINCHAND CHELLARAM V. CIT (1980) 125 ITR 713 (SC) HAS HELD THAT WHETHER THERE WAS ANY MATERIAL EVID ENCE TO JUSTIFY THE FINDINGS OF THE TRIBUNAL THAT THE AMOUNT OF RS. 1,07,350 SAID TO HAVE BEEN REMITTED BY TILOKCHAND FROM MADRAS REPRESENTED THE UNDISCLOSED INCOME OF THE ASSESSEE. THE ONLY EVIDENCE ON WHICH THE TRIBUN AL COULD RELY FOR THE PURPOSE OF ARRIVING AT THIS FINDING WAS THE LETTER, DATED 18-2-1955 SAID TO HAVE BEEN ADDRESSED BY THE MANAGER OF THE BANK TO THE IT O. NOW IT IS DIFFICULT TO SEE HOW THIS LETTER COULD AT ALL BE RELIED UPON BY THE TRIBUNAL AS A MATERIAL PIECE OF EVIDENCE SUPPORTIVE OF ITS FINDING. IN THE FIRST PLACE, THIS LETTER WAS NOT DISCLOSED TO THE ASSESSEE BY THE ITO AND EVEN THOUG H THE AAC REPRODUCED AN EXTRACT FROM IT IN HIS ORDER, HE DID NOT CARE TO PR ODUCE IT BEFORE THE ASSESSEE OR GIVE A COPY OF IT TO THE ASSESSEE. THE SAME POSITIO N OBTAINED ALSO BEFORE THE TRIBUNAL AND THE HIGH COURT AND IT WAS ONLY WHEN A SUPPLEMENTAL STATEMENT OF THE CASE WAS CALLED FOR BY THIS COURT BY ITS ORDER, DATED 16-8-1979 THAT, ACCORDING TO THE ITO, THIS LETTER WAS TRACED BY HIM AND EVEN THEN IT WAS NOT SHOWN BY HIM TO THE ASSESSEE BUT IT WAS FORWARDED T O THE TRIBUNAL AND IT WAS FOR THE FIRST TIME AT THE HEARING BEFORE THE TRIBUN AL IN REGARD TO THE PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CA SE THAT THIS LETTER WAS ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 20 SHOWN TO THE ASSESSEE. IT WILL, THEREFORE, BE SEEN THAT, EVEN IF WE ASSUME THAT THIS LETTER WAS IN FACT ADDRESSED BY THE MANAGER OF THE BANK TO THE ITO, NO RELIANCE COULD BE PLACED UPON IT, SINCE IT WAS NOT SHOWN TO THE ASSESSEE UNTIL AT THE STAGE OF PREPARATION OF THE SUPPLEMENTAL STATEM ENT OF THE CASE AND NO OPPORTUNITY TO CROSS EXAMINE THE MANAGER OF THE BAN K COULD IN THE CIRCUMSTANCES BE SOUGHT OR AVAILED OF BY THE ASSESS EE. IT IS TRUE THAT THE PROCEEDINGS UNDER THE INCOME-TAX LAW ARE NOT GOVERN ED BY THE STRICT RULES OF EVIDENCE AND, THEREFORE, IT MIGHT BE SAID THAT EVEN WITHOUT CALLING THE MANAGER OF THE BANK IN EVIDENCE TO PROVE THIS LETTER, IT CO ULD BE TAKEN INTO ACCOUNT AS EVIDENCE. BUT BEFORE THE INCOME-TAX AUTHORITIES COU LD RELY UPON IT, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPP ORTUNITY TO CROSS EXAMINE THE MANAGER OF THE BANK WITH REFERENCE TO THE STATE MENTS MADE BY HIM. 2.10 IN LIGHT OF ABOVE PROPOSITION IN LAW AND ESPEC IALLY TAKING INTO CONSIDERATION THE DECISION OF THE HONBLE SUPREME C OURT IN CASE OF C. VASANTLAL & CO. (SUPRA) RELIED UPON BY THE REVENUE AND WHICH ACTUALLY SUPPORTS THE CASE OF THE ASSESSEE, IN THE INSTANT C ASE, THE ASSESSMENT WAS COMPLETED BY THE AO RELYING SOLELY ON THE INFORMATI ON RECEIVED FROM THE INVESTIGATION WING, STATEMENT RECORDED U/S 132(4) O F SHRI BHANWARLAL JAIN AND OTHERS, AND VARIOUS INCRIMINATING DOCUMENTARY EVIDE NCE FOUND FROM THE SEARCH AND SEIZURE CARRIED OUT BY INVESTIGATION WIN G, MUMBAI ON THE SHRI BHANWARLAL JAIN GROUP ON 03.10.2013. IT REMAINS UN DISPUTED THAT THE ASSESSEE WAS NEVER PROVIDED COPIES OF SUCH INCRIMINATING DOC UMENTS AND STATEMENTS OF SHRI BHANWARLAL JAIN AND VARIOUS PERSONS AND AN OPP ORTUNITY TO CROSS EXAMINE SUCH PERSONS THOUGH HE SPECIFICALLY ASKED FOR SUCH DOCUMENTS AND CROSS EXAMINATION. ON THE OTHER HAND, THE BURDEN WAS SOUG HT TO BE SHIFTED ON THE ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 21 ASSESSEE BY THE A.O. IT IS CLEAR CASE WHERE THE PRI NCIPLE OF NATURAL JUSTICE STAND VIOLATED AND THE ADDITIONS MADE UNDER SECTION 68 TH EREFORE ARE UNSUSTAINABLE IN THE EYE OF LAW AND WE HEREBY DELETE THE SAME. TH E ORDER OF THE LD CIT(A) IS ACCORDINGLY CONFIRMED AND THE GROUND OF THE REVENUE IS DISMISSED. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/12 /2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 16/ 12/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CENTRAL CIRCLE-2, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- SHRI PRATEEK KOTHARI, JAIPUR 3. VK;DJ VK;QDR@ CIT (CENTRAL), JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-4, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.159/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR ITA NO. 159/JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHAR I, JAIPUR 22