RINKU INDRAKUMAR PATODIA, MUMBAI V. ACIT CEN CIR 3(2), MUMBAI

ITA 1912/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3901 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 17-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIYA; S ABI RAMA KARTHIKEYAN
• Keywords: Bogus purchase; Unexplained cash credit; Bogus Share capital; Search and seizure; Principle of natural justice; Opportunity of cross examination; Source of fund; Third party statement; Accommodation entries; Bogus loan
• Section: 143(3); 142(1); 133(6); 68; 148

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE SH. R. C. SHARMA , AM & HONBLE SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 1912/MUM/2017 ( / ASSESSMENT YEAR: 2007 - 08 ) RINKU INDRAKUMAR PATODIA, 605, BUSINESS CLASSIC, CHNCHOLI BUNDER RD, MALAD (W), MUMBAI - 400064 / VS. ACIT CEN CIR 3(2), MUMBAI, PIN - ./ ./ PAN NO. A A JPP6974D ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENTBY : SHRI CHAITANYA ANJARIYA & S. ABI RAMA KARTHIKEYAN , D R / DATE OF HEARING : 14.12 .2018 / DATE OF PRONOUNCEMENT : 31.01.2019 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 51 , MUMBAI DATED 15.12.16 F OR AY 200 7 - 08 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN REOPENING THE CASE OF THE APPELLANT U/S 148 SOLELY ON THE BASIS OF THE THIRD PARTY STATEMENT WHICH IS NOT PERMISSIBLE AS PER LAW. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN NEITHER GRANTING THE APPELLANT THE OPPORTUNITY OF CROSS EXAMINATION OF MR. PRAVIN JAIN NOR IN PROVIDING THE COPY OF STATEMENT OF MR. PRAVIN JAIN, WHICH IS PURELY IN VIOLATION OF PRINCIPAL OF NATURAL JUSTICE. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN REOPENING THE CASE OF THE APPELLANT, COMPLETELY IGNORING THE FACT THAT MR. PRAVIN JAIN, BASED ON THE ST ATEMENT OF WHICH THE CASE OF THE APPELLANT GETS REOPENED, HAD RETRACTED FROM HIS STATEMENT IN DETAIL AND AFTER THAT THE DEPARTMENT IS HAVING NO CASE AT ALL FOR REOPENING. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) H AS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN MA KING 3 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, ADDITION OF RS.1,76,50,000/ - ON ACCOUNT OF UNSECURED LOAN BY APPLYING SECTION 68 OF THE INCOME TAX, 1961, COMPLETELY DISREGARDING THE DOCUMENTS FILED AT THE TIME OF ASSESSMENT PROCEED ING AS WELL AS THE FACT THAT ALL THE PARTIES, IN REPLY TO NOTICE U/S 133(6) HAD CONFIRMED THAT THEY HAD MADE THE TRANSACTION WITH THE APPELLANT. 5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS FAILED TO UNDERSTAND THE BASIC PRINCIPLE THAT HOW CAN A LOAN TRANSACTION BE TREATED AS BOGUS, WHEN THE LOAN GETS REPAID IN SUBSEQUENT YEARS, BOTH THE PARTIES HAS ACCEPTED THE SAME AND THERE IS NO DISCREPANCY NOTICED IN THE DETAILS FILED BY THE APPELLANT. 6) ON THE FACTS AND CI RCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN COMPLETELY IGNORING THE JUDGMENTS TAKEN IN THE VARIOUS CASE LAWS. 7) THE APPELLANT CRAVES, TO LEAVE, TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 2. AT THE VERY OU TSET, IT IS NOTICED THAT INITIALLY THE CASE WAS HEARD EX - PARTE ON 02.08.18, BUT DURING THE COURSE OF PREPARING THE ORDERS, IT WAS FELT THAT CERTAIN CLARIFICATIONS ARE REQUIRED FROM THE PARTIES, THEREFORE AGAIN MATTER WAS FIXED FOR 05.10.18 AND 4 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, NOTICE WAS O RDERED TO BE SERVED ON THE PARTIES. THEREFORE THE MATTER WAS ADJOURNED TO 26.10.18, 02.11.18, 09.11.18, 16.11.18 AND 14.12.18. BUT EVEN INSPITE OF SEVERAL NOTICES, NONE HAS APPEARED ON BEHALF OF ASSESSEE AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED. ON THE OTHER HAND L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PA RTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 07.02.08 D ECLARING TOTAL INCOME AT RS.1,67,040 / - . THE RETURN WAS PROCESSED U/S 1 43(1) OF THE I.T. ACT. SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM THE SAL ES TAX DEP ARTMENT THROUGH THE AD IT( INV.), MUMBAI THAT THE ASSESSEE IS ONE OF THE BENEFICIARY OF OBTAINING ACCOMMODATION ENTRIES BY WAY OF OBTAINING BOGUS LOANS AND ADVANCES. THEREAFTER A SEARCH AND SEIZURE ACTION WAS CONDUCTED U/S 132(2) OF THE ACT. SUBSEQUENTLY, NO TICES U/S. 143(2) AND 142(1) WERE ISSUED ALONGWITH QUESTIONNAIRE AND AFTER PROVIDING SUFFICIENT OPPORTUNITY, ASSESSMENT ORDER U/S 143(3) 5 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, R.W.S. 147 OF THE I.T. ACT WAS PASSED THEREBY MAKING ADDITIONS ON ACCOUNT OF BOGUS PURCHASES. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES, DISMISSED THE APPEAL OF THE ASSESS EE . NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BY RAISING THE ABOVE GROUNDS. GROUND NO. 1 TO 3 4 . THESE GROUND S RAISED BY THE ASSESSEE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHA LLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ACTION OF AO IN REOPENING THE CASE OF THE ASSESSEE U/S 148 OF THE ACT, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 5 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. 6 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, 5.1 BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUND RAISED BY THE ASSESSEE IN PARA NO. 5 TO 8 OF ITS ORDER . THE OPERATIVE PORTION OF THE ORDER IS CONTAINED IN PARA NO. 7 TO 8 AND THE SAME IS REPRODUCED BEL OW: - 7 . I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSIONS AND CONTENTIONS OF THE APPELLANT, AS ALSO THE O RDER OF THE AO. IT IS GATHERED THAT A NOTICE U/S 148 OF THE ACT WAS ISSUED IN THIS CASE ON 19.03 . 2014 ON THE BASIS OF SPECIFIC INFORMATION RECEIVED BY THE AO FROM THE OFFICE OF DGIT(INV), MUMBAI THAT ASSESSEE SHRI RINKU IND ARKUMAR PATODIA IS ON OF THE BENEFICIARY OF O BTAINING ACCOMMODATION EN TRIES IN NATURE OF BOGUS LOANS, ETC. FROM GROUP CONCERNS OF PRAVEEN KUMAR JA IN, A KNOWN HAWAL A OPERATOR. IT IS RELEVANT TO MENTION HERE THAT A SEARCH AND SEIZURE ACTION U/S 132(1) OF THE ACT WAS U NDERTAKEN IN THE CASE OF SHRI PRAVIN KUMAR JAIN AND HIS GROUP C ONCERNS ON 01.10.2013. DURING TH E COUR SE OF SEARCH IT - WAS GATHERED THAT PRAVIN KUMAR JAIN AND HIS GROUP CONCERNS WERE ENGAGED AND PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS, IN NATURE OF BOGUS UNSECURED LOANS, BOGUS SHARE APPLIC ATION MONEY, BOGUS PURCHASES, ETC. IT WAS FURTHER GATHERED 7 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, THAT THE PRESENT ASSESSEE IS ONE OF THE BENEFICIARY OF SUCH ENTRIES AND OBTAINED BOGU S UNSECURED LOANS OF RS 1,76,5 0,000/ - FROM THE FOLLOWING CONCERNS OF PRAVIN KUMAR JAIN GROUP: - 1. M/S MOHIT INTERNATION. RS. 90,50,000/ - 2. M/S NATASHA ENTERPRISES RS. 20,00, 000/ - 3. M/S NEW PLANET TRDING CO. LTD. RS. 16,00,000/ - 4. M/S KUNAL GEMS RS. 50,00,000/ - RS. 1,76,50,000/ - IN MY CONSIDERED VIEW, SUCH INFORMATION R ECEIVED BY THE AO THROU GH DEPARTMENTAL CHANNELS WAS CREDIBLE AND ACTIONABLE AND WAS SUFFICIENT TO INVOKE THE PROVISIONS OF SEC 147 OF THE ACT AND TO ISSUE A NOTICE U/S 148. I WOULD LIKE TO FURTHER CLARIFY HERE THAT AT THE TIME OF ISSUE OF NOTICE U/S 148, THE AO IS JUST FORMING A BROAD OPINION ABOUT CERTAIN INCOME ESCAPING FROM TAX IN THE HANDS OF THE ASSESSE. HE IS NOT MAKING ANY ASSESSMENT AS SUCH AT THAT POINT OF TIME. HE, OF COURSE HAS TO RECORD HIS REASONS FOR ISSUE OF NOTICE U/S 148 AND CAN SHARE SUCH RESONS WITH THE ASSESSEE AT HIS REQUEST. IN VIEW OF THE FINDING OF SEARCH IN CASE OF PRAVIN KUMAR JAIN AND HIS GROUP CONCERNS, IN MY ONSIDERED VIEW THERE WAS SUFFICIENT MATERIAL AT TH E END OF THE AO TO PROCEED AGAINST THE ASSESSEE. THEREFORE, VARIOUS CONTENTIONS MADE BY THE ASSESSEE IN THIS REGARD ARE LIABLE TO BE REJECTED. NO DOUBT THAT SHRI P RAVIN JAIN HAD RETRACTED HIS STATEMENT LATER AND FILED A LETTER 8 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, BEFORE THE INCOME TAX AUTHORITIES BUT SUCH LETTER HAS BEEN FILED AFTER A LONG GAP OF 9 MONTHS AFTER THE FIRST STATEEMTN AND IS THEREFORE ONLY AN AFTER - THOUGHT AND DOES NOT MATERIALLY CHANGE TH E POSITION THAT BOGUS LOAN WAS GIVE N TO THE ASSESSEE GROUP. IN FACT DURING THE COURSE OF ASSESSMENT PROCEEDING THE AO ASKED THE ASSESSEE TO PROVE THE LOAN TRANSACTION AND ALSO T O PRODUCE THESE PARTIES FOR EXAMINATION BUT THE ASSESSEE FAILED TO DO THE SA ME. THE AO HAS ALSO SENT QUERY LETTER U/S 133(6) WITH A VIEW TO CONFIRM THE LOAN TRANSACTIONS FROM SHARE PARTIES BUT THE SAME WERE ALSO RETURNED TO HIM UNSERVED BY THE POSTAL AUTHORITIES. IN THE CIRCUMSTANCES, THE GENUINENESS OF THE LOAN TRANSACTIONS OF TH E ASSESSEE WAS DOUBTFUL. 8. THE ASSESSEE IN THIS REGARD HAS ALSO RELIED UPON VARIOUS CASE LAWS, IN THIS REGARD WITH DUE RESPEC T TO ALL JUDGEMENTS, I WOULD LIKE TO SAY THAT THE FACT OF THE PRESENT CASE ARE DISTINGUISHABLE IN AS MUCH AS A SPECIFIC IN FORMATION WAS RECEIVED BY THE AO IN THIS CASE FROM DGIT ( INV), MUMBAI. FURTHER SUCH INFORMATION WAS ARISEN ON ACCOUNT OF A SEARCH AND SEIZURE ACTION ON ANOTHER GROUP NAMELY PRAVIN KUMA J AIN & HIS GROUP CONCERNS. IN VIEW OF THESE FACTS, THE RE WAS SUFFICIENT REASONS AND MATERIAL AT THE END OF THE AO TO PROCEED AGAI ST THE ASSESSEE U/S 48. THEREFORE, 9 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, THE RATIO OF HONBLE MUMBAI HIGH COURT DECISION IN THE CASE OF ANIL RADHAKRISHAN VA NI 323 ITR 564 OTHER CASE L4|VSJIS ALSO NOT APPLICABLE. THE ASSE SSEE IN THIS REGARD ALSO ARG UED THAT HE; WAS NOT PROVIDED C ROSS - EXAMINATION OF PRAVIN KUMAR JAIN OR THE GROUP CONCERNS. IN THIS REGARD , I WOULD LIKE TO CLARIFY THAT THE AO HAD ISSUED NOTICES U/ 'S 133(6) TO ALL OTHER CONCERNS BUT THEY FAILED TO C OMPLY TO TH E SAME. FURTHER SUCH CROSS EXAMINATION CANNOT BE PROVIDED TO THE ASSESSEE BEFORE THE ISSUE OF NOTICE U/S 148. THE AO CANNOT PROVIDE SUCH AN OPPORTUNITY WHEN PROCEEDINGS ARE UNDERWAY. THEREFORE THE ASSESSEE CANNOT RAISED QUESTION ABOUT THE ISSUE OF NOTICE U /S 148 ON THIS PRETEXT. NO DOUBT LATER ON THE AO TRIED TO LOCATE THESE PARTIES AND TRIED TO CONFIRM THE T RANSACTIONS OF THE ASSESSEE BUT THESE PARTIES NEV ER RESPONDED TO THE NOTICE ISSUED BY THE AO. IN FACT IT APPEARS THAT THE ASSESSEE ALSO DID NOT CO - OPER ATE WITH THE AO IN THIS REGARD. IF HE HAD TAKEN LOAN TO THE TUNE OF RS 1,76,50,000/ - FROM PRAVIN JAIN AND HIS GROUP CONCERNS , HE SHOULD BE IN A POSITION TO PERSUADE HIM TO [APPEAR BEFORE THE TAX AUTHORITIES AND CLEAR HIS POSITION IN THIS REGAR D. IN FACT THIS CANNOT BE A BURDEN OF THE AO ALONE AND THE ASSESSEE CANNOT SIMPLY SIT BACK AND RELAX. SINCE THE ASSESSEE HAD TRANSACTED WITH THE PARTIES OF DUBIOUS NATURE, IT WAS INCUMBENT UPON 10 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, HIM TO PURSUADE SUCH PARTIES TO COME BEFORE THE I T AUTHORITIE S AND CLARIFY THEIR POSITION, WHICH HAS NOT BEEN DONE. ACCORDINGLY, IN VIEW OF THE ABOVE FACTS, THE NOTICE ISSUED BY THE AO U/S 148 OF THE ACT IS UPHELD. THE GROUNDS TAKEN UP BY THE ASSESSEE IN THIS REGARD ARE THEREFORE DISMISSED. 5.2 AFTER HAVING GONE THROUGH THE ORDERS PASSED BY REVENUE AUTHORITIES AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES AND CONSIDERING THE FACTS AS DISCUSSED ABOVE, WE FIND THAT LD. CIT(A) AFTER APPREC IATING THE FACTS OF THE CASE HAD RIGHTLY CONCLUDED THAT PRAVIN KUMAR JAIN AND HIS GROUP CONCERNS WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN THE NATURE OF UNSECURED LOANS, BOGUS SHARE APPLICATION, ETC AND THE ASSESSEE WAS ONE OF THE BENEFICIARY. THE ASSESSEE HAD NOT DISCHARGED ITS ONUS, THEREFORE THE NOTICE ISSUED BY THE AO U/S 148 WAS RIGHTLY UPHELD. 5.3 N O NEW FACTS O R CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS SO RECORDED BY THE 11 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THESE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 4 & 5 6 . THESE GROUND S RAISED BY THE ASSESSEE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ACTION OF AO IN MAKING ADDITION ON ACCOUNT OF UNSECURED LOAN BY APPLYING SECTION 68 OF THE ACT, THEREFORE WE THO UGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 7 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. 7.1 BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVA LUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUND RAISE D BY THE ASSESSEE IN PARA NO. 9 12 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, TO 12 OF ITS ORDER . THE OPERATIVE PORTION IS CONTAINED IN PARA NO. 11 & 12 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 11. I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSIONS AND CONTENTIONS OF THE APPELLANT, AS ALSO THE ORDER OF THE AO. IT IS SEEN THAT THE LD. AO HAS DIS CUSSED THE ISSUE OF BOGUS LOANS OF RS.1,76,50,000/ - FROM FOUR DIFFERENT PARTIES AT GREAT LENGTH IN THE BODY OF O RDER AND HAS PASSED A VERY DETAILED AND SPEAKING ORDER. THE RELEVANT DISCUSSION IS APPEARING ON PAGE 3 TO 15 OF THE ASSESSMENT ORDER. IN THE SAID ORDER THE AO HAS ALSO REPRODUCED THE BALANCE SHEET AND P & L ACCOUNT OF THESE THREE CONCERNS NAMELY, M/S MOHIT INTERNATIONAL, M/S NATASHA ENTERPRISES , M/S NEW PLANET TRADING CO LTD (NOW KNOWN AS ANSH MERCHANDISE P LTD) AND M/S KUNAL GEMS AND VARIOUS INCONSISTENCIES THEREIN. FROM THE PERUSAL OF THESE BALANCE SHEETS, IT IS CLEAR THAT THERE ARE HARDLY ANY FIXED ASSE TS WITH THESE COMPANIES EVEN THOUGH THERE IS SIGNIFICANT TURNOVER. FURTHER THERE ARE HARDLY ANY EXPENSES IN THE P 8S L ACCOUNT IN THESE COMPANIES AND IT IS NOT CLEAR AS TO HOW COULD THEY RUN THEIR AFFAIRS WITH SUCH MEAGER EXPENSES. BESIDES THERE ARE OTHER INCONSISTENCIES LIKE THERE WAS NO CLOSING STOCK, AUDIT FEES PAID WAS VERY LOW WHICH RAISES DOUBTS ABOUT THE VERY EXISTENCE OF THESE COMPANIES AND THE GENUINENESS OF TRANSACTIONS. MOST OF ALL SHRI PRAVIN 13 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, JAIN MAIN PERSON OF GROUP HAD ADMITTED THAT HE WAS PR OVIDING ONLY ACCOMMODATION THROUGH HIS GROUP CONCERNS INCLUDING THESE FOUR COMPANIES. THE ASSESSEE IN THIS REGARD HAS ARGUED THAT THEIR TRANSACTIONS WERE MADE THROUGH CHEQUES THROUGH PROPER BANKING CHANNELS. HOWEVER PAYMENT THROUGH CHEQUE ALONE DOES NOT DE CIDE THE GENUINENESS OF TRANSITIONS. RELIANCE IN THIS REGARD IS PLACED ON THE CASE KACHWAL GEMS V/S CIT (2007) 288 ITR 10(SC), WHEREIN IT WAS HELD THAT MERE PAYMENTS BY ACCOUNT PAYEE CHEQUES IS NOT SACROSANCT AND IS NOT SUFFICIENT TO ESTABLISH THE GENUINEN ESS OF THE TRANSACTION. FURTHER, RELIANCE IS PLACED ON C VASANTILAL CO V/S CIT (1962) 45 ITR 206(SC), CHATURBHUJ PANAUJ AIR 1969 (SC) AND SURNATI DAYAL - VS CIT (1995) 214 ITR 801(SC) WHEREIN IT HAS BEEN HELD THAT EVEN STRICT RULES OF EVIDENCE DO NOT APPLY T O THE PROCEEDINGS UNDER THE INCOME TAX ACT AND THE REAL TEST WITH REGARD TO GENUINENESS OF THE TRANSACTION IS 'PREPONDERANCE OF PROBABILITIES' AND NOT 'BEYOND REASONABLE DOUBT'. IT IS AN UNDISPUTED FACT THAT THE ACCOMMODATION ENTRIES TAKEN FROM THESE FOUR PARTIES REMAINED UNVERIFIED. AS STATED ABOVE, DURING THE ASSESSMENT PROCEEDINGS THE AO HAD ISSUED QUERY LETTERS UNDER SECTION 133(6) OF THE ACT TO THE ABOVE MENTIONED LOAN CREDITORS BUT THE SAME WERE RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS THAT 'THE 14 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, PARTY IS NOT AVAILABLE'. THEREAFTER THE AO ASKED THE ASSESSEE TO PRODUCE THESE PARTIES BUT THE ASSESSEE EXPRESSED HIS INABILITY IN DOING SO. FURTHER THE BALANCE SHEETS OF THESE LOAN CREDITORS WERE NOT SHOWING ANY FIXED ASSETS RAISING DOUBTS ABOUT THE IR EXISTENCE AND DOING BUSINESS. THEIR SOURCES OF INCOME WERE MEAGER AND THEREFORE THESE CONCERNS COULD NOT HAVE GIVEN HUGE LOAN OF RS. 1,76,50,000/ - TO THE ASSESSEE. IN FACT THE TRANSACTIONS ITSELF APPEAR TO BE CIRCULAR IN NATURE AND A COLORA BLE IN DEVICE AS HELD BY SUPREME COURT IN CASE OF MCDOWELL'S CO LTD. 154 ITR. THE ASSESSEE HAS ALSO ARGUED THAT THE LOANS HAVE ALREADY BEEN RETURNED/REPAID BY T HE ASSESSEE TO RESPECTIVE CONCERNS IN THE YEAR 20 10. HOWEVER EVEN IF THE ASSESSEE HAS RETURNED, IT WILL NOT MATERIALLY CHANGE THE POSITION AS THE ISSUE IS SOURCE OF LOAN AN D WHETHER THE SAME WAS EXPLAINED AND NOT REPAYMENT AS SUCH. 12. IN VIEW OF THE ABOVE FACTS; AND LEGAL POSITION , THE STAND TAKEN BY THE AO TO TREAT THE LOANS AND ADVANCES OF RS. 1,76,50,0 00/ - AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ASSESSEE FOR THE RELEVANT YEAR UNDER CONSIDERATION APPEARS TO BE CORRECT AND JUSTIFIED. CONSEQUENTLY THESE GROUNDS TAKEN UP BY THE ASSESSEE ARE HEREBY DISMISSED. 15 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, 7.2 . AFTER HAVING GONE THROUGH THE ORDERS PASSED BY REVENUE AUTHORITIES AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES AND CONSIDERING THE FACTS AS DISCUSSED ABOVE, WE FIND THAT LD. CIT(A) AFTER APPRECIATING THE FACTS OF THE CASE HAS RIGHTLY CONCLUDED THAT THE TRANSACTIONS OF THE ASSESSEE WERE CI RUCULAR IN NATURE AND A COLORABLE DEVISE WAS ADOPTED. THE LD. CIT(A) RIGHTLY UPHELD THE ADDITIONS U/S 68 OF THE I.T. ACT WHILE RELYING UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MAC DOWELLS CO. LTD. 154 ITR. 7.3 NO NEW FACTS O R CONTRA RY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS SO RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . 16 I.T.A. NO. 1912 /MUM/201 7 RINKU INDRAKUMAR PATODIA, GROUND NO. 6 & 7 8 . THESE GROUND RAISED BY THE ASSESSEE ARE GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 9 . IN THE NET RESULT , THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JAN, 2019. SD/ - SD/ - ( R. C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 31 . 01 .201 9 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI