Deputy Commissioner of Income-tax, V. M/s. Mahatma Jyotiba Phule Steel Corporation, Solapur

ITA 1952/PUN/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9116 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1952 /P U N/201 3 / ASSESSMENT YEAR : 20 07 - 08 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1, SOLAPUR . / APPELLANT VS. M/S. MAHATMA JYOTIBA PHULE STEEL CORPORATION, SHANKAR NAGAR, AKLUJ, DIST. SOLAPUR . / RESPONDENT PAN: A AEFM3672N . / ITA NO. 1956 /P U N/201 3 / ASSESSMENT YEAR : 20 07 - 08 M/S. MAHATMA JYOTIBA PHULE STEEL CORPORATION, C/O LINGE UDYOG SAMUH, 8, BAVI PLAZA, OPP. S.T. BUS STAND, MURARJI PETH, SOLAPUR 413002 . / APPELLANT PAN: AAEFM3672N VS. THE INCOME TAX OFFICER, WARD 1(4), PANDHARPUR . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI MUKESH JHA, JCIT / DATE OF HEARING : 15 .0 6 . 2017 / DATE OF PRONOUNCEMENT: 31 . 0 7 .201 7 ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 2 / ORDER PER SUSHMA CHOWLA, J M : TH E CROSS APPEAL S FILED BY THE REVENUE AND THE ASSESSEE ARE AGAINST THE ORDER OF CIT (A) - II I, PUNE , DATED 22 .0 8 .201 3 RELATING TO ASSESSMENT YEAR 20 07 - 08 AG AINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IN ITA NO. 1952 /PUN/201 3 HAS RAISED THE FOLLOWING GROUND OF APPEAL : - 01] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW AS WELL THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - III, PUNE ERRED IN DELETING IN PART OF RS.17,21,369/ - AND RS.37,82,191/ - , AGGREGATING TO RS.55,03,560/ - , THE ADDITIONS MADE OF RS.1,18,20,010/ - ON ACCOUNT OF UN - EXPLAINED CASH CREDITS U/S.68 OF THE INCOME TAX ACT, 1961, MADE BY THE ASSESSING OFFICER. 02] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW AS WELL THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - III, PUNE ERRED IN NOT APPRECIATING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH CREDITS U/S.68 OF THE INCOME TAX ACT, 1961, AS THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS AND CR EDITWORTHINESS OF SUNDRY CREDITORS. 03] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW AS WELL THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - III, PUNE ERRED IN NOT APPRECIATING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI D AYAL VS. CIT (214 ITR 801) FOR MAKING THE ADDITION ON ACCOUNT OF CASH CREDITS OF RS.1,18,20,010/ - . 04] THE ORDER OF THE CIT(A) - III, PUNE, BE VACATED AND THAT OF THE ASSESSMENT ORDER MADE BY THE ASSESSING OFFICER BE RESTORED. ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 3 4. THE ASSESSEE IN ITA NO. 19 56 /PUN/201 3 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ON FACTS AND IN LAW, 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.56,09,824 / - MADE U/S 68 ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO PROVE THE GENUINENESS OF THE VARIOUS CREDITO RS WITHOUT APPRECIATING THAT THE SAID ADDITION WAS NOT JUSTIFIED ON FACTS OF THE CASE. 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS NOT ABLE TO PROVE THE GENUINENESS OF 12 CREDITORS WHOSE STATEMENTS WERE RECORDED IN THE COURSE OF ASST. PROC EEDINGS AND THEREBY, SUSTAINING THE ADDITION U/S 68 MADE IN RESPECT OF THESE PERSONS. 2.1] THE LEARNED CIT(A) ERRED IN HOLDING THAT 8 OF THE ABOVE 12 CREDITORS HAD STATED THAT THEY HAD NOT ENTERED INTO ANY TRANSACTIONS WITH THE ASSESSEE WHEREAS 4 OF THEM HAD EITHER STATED THAT THERE WAS NO OUTSTANDING BALANCE AS ON 31.03.2007 OR THAT THE AMOUNT OF PURCHASES MADE BY THE ASSESSEE WERE AT A LESSER AMOUNT THAN SHOWN BY THE ASSESSEE AND HENCE, THE SAID CREDITORS WERE TO BE CONSIDERED AS NON - GENUINE. 2.2] THE L EARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HAD NOT MADE ANY SPECIFIC REQUEST FOR CROSS EXAMINATION OF THESE 12 PARTIES IN THE COURSE OF REMAND PROCEEDINGS AND THEREFORE, THE ASSESSEE HAD NOT DISCHARGED THE BURDEN LYING UPON HIM TO PROVE THE GENUINENE SS OF THE SAID PARTIES. 2.3] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT ALL THE 12 CREDITORS WERE GENUINE AND HENCE, THERE WAS NO REASON TO MAKE ANY ADDITION IN RESPECT OF THE SAME MERELY ON THE BASIS OF THE STATEMENTS RECORDED IN THE ASST PROCEEDINGS. 2.4] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSESSEE HAD MAINTAINED THE VOUCHERS IN RESPECT OF THE PURCHASES MADE FROM THESE CREDITORS AND ALL THE SAID CREDITORS WERE DULY PAID IN THE SUBSEQUENT YEAR AND THEREFORE, NO ADDITION SHOULD HAVE B EEN MERELY BECAUSE THE ASSESSEE WAS NOT ABLE TO GIVE THE CORRECT RECENT ADDRESSES IN RESPECT OF THESE PERSONS. 2.5] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THESE CREDITORS HAD SMALL BUSINESSES AND HENCE, THEY WERE NOT MAINTAINING THE BOOKS OF AC COUNTS AND ACCORDINGLY, THEY MAY NOT BE HAVING ANY RECORD IN RESPECT OF THE TRANSACTIONS ENTERED WITH THE ASSESSEE AFTER PASSAGE OF A CONSIDERABLE TIME. 2.6] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT 4 OUT OF THE 12 CREDITORS EXAMINED ON OATH HAD ADMIT TED TO HAVE TRANSACTIONS WITH THE ASSESSEE AND HENCE, THE LEARNED CIT(A) WAS NOT JUSTIFIED IN REJECTING THE GENUINENESS OF THESE CREDITORS ON AN OUTRIGHT BASIS. 2.7] THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT OUT OF 25 CREDITORS PRODUCED BY THE ASS ESSEE IN THE REMAND PROCEEDINGS, 3 CREDITORS WERE THOSE WHOSE STATEMENTS WERE RECORDED IN THE ORIGINAL ASST. PROCEEDINGS, HOWEVER, THE STATEMENTS OF THESE PERSONS WERE NOT RECORDED BY THE LEARNED A.O. IN THE REMAND PROCEEDINGS AND THEREFORE, THE ADDITION S USTAINED IN RESPECT OF THESE CREDITORS WAS NOT JUSTIFIED. ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 4 3] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE IN RESPECT OF 44 CREDITORS ON THE GROUND THAT THE SUMMONS ISSUED TO THESE PARTIES COULD NOT BE SERVED ON THE ADDRESSES GIVEN BY THE ASS ESSEE AND HENCE, THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS LYING UPON HIM TO PROVE THE GENUINENESS OF THE SAID PARTIES. 3.1] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT MOST OF THESE CREDITORS WERE SMALL TRADERS AND THEY DID NOT HAVE A PERMANENT PLAC E OF BUSINESS AND HENCE, THE ASSESSEE WAS NOT ABLE TO LOCATE THESE PERSONS IN THE LIMITED TIME PERIOD GIVEN BY THE LEARNED A.O. IN THE COURSE OF ASST. PROCEEDINGS AND THUS, NO ADDITION WAS JUSTIFIED IN RESPECT OF THESE CREDITORS. 3.2] THE LEARNED CIT(A) E RRED IN NOT APPRECIATING THAT THE ASSESSEE HAD MAINTAINED THE VOUCHERS IN RESPECT OF THE PURCHASES MADE FROM THESE CREDITORS AND ALL THE SAID CREDITORS WERE DULY PAID IN THE SUBSEQUENT YEAR AND THEREFORE, NO ADDITION SHOULD HAVE BEEN MERELY BECAUSE THE ASS ESSEE WAS NOT ABLE TO GIVE THE CORRECT RECENT ADDRESSES IN RESPECT OF THESE PERSONS. 3.3] THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT OUT OF THE 25 CREDITORS ASKED TO BE PRODUCED IN THE REMAND PROCEEDINGS, 9 CREDITORS WERE THOSE ON WHOM SUMMONS COUL D NOT BE SERVED DUE TO CHANGE IN THEIR BUSINESS ADDRESS AND THESE CREDITORS WERE DULY PRODUCED BEFORE THE LEARNED A O BY THE ASSESSES AND THEREFORE, THE FACT THAT ALL THE 44 CREDITORS STATED ABOVE WERE EXISTING COULD NOT BE DENIED AND HENCE, THE ADDITION MA DE IN RESPECT OF THESE CREDITORS WAS NOT JUSTIFIED. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGAGED IN THE SALE OF SCRAP AND THE TOTAL TURNOVER DURING THE YEAR UNDER CONSIDERATION WAS RS.3.07 CRORES. THE ASSESSEE HAD FURNISHED THE RETURN O F INCOME DECLARING TOTAL INCOME OF RS.4,07,110/ - . THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD SHOWN SUNDRY CREDITORS OF RS.1,18,02,017/ - . THE ASSESSING OFFICER WAS OF THE VIEW THAT CONSIDERING THE TOTAL P URCHASES OF THE YEAR AT RS.2.74 CRORES, THE BALANCES OF SUNDRY CREDITORS WERE QUIT E HIGH. THE ASSESSEE WAS ASKED TO FURNISH CONFIRMATION LETTERS IN RESPECT OF SUNDRY CREDITORS HAVING BALANCE ABO VE RS.50,000/ - . IN RESPONSE THERETO, THE ASSESSEE FURNISHED THE LIST OF SUNDRY CREDITORS BEARING NAMES OF 143 PERSONS, THEIR ADDRESSES AND THE AMOUNT OUTSTANDING. THE SAID LIST OF SUNDRY CREDITORS IS ANNEXED TO THE ASSESSMENT ORDER AS ANNEXURE - I. THE ASSESSEE FAILED TO FURNISH THE CONFIRMATION LETTERS OF THE SAID CREDITORS IN THE FIRST INSTANCE. THE ASSESSING OFFICER AGAIN ASKED THE ASSESSEE TO FURNISH ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 5 DETAILED ADDRESSES OF SUNDRY CREDITORS AND CONFIRMATION LETTERS ALONG WITH PAN NUMBERS AND ALSO TO PRODUCE BOOKS OF ACCOUNT FOR VERIFICATION. IN REPLY, THE ASSESS EE FURNISHED THE CONFIRMATION OF ACCOUNTS OF 130 SUNDRY CREDITORS. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ADDRESSES GIVEN IN THE STATEMENT OF CONFIRMATION OF ACCOUNTS WERE INCOMPLETE AND HENCE, THE ASSESSEE WAS ASKED TO SUBMIT DETAILED ADDRESSES A LONG WITH THEIR CONTACT NUMBERS, COPIES OF PURCHASE BILLS / VOUCHERS, THEIR PAN NUMBERS, ETC. THE ASSESSING OFFICER MEANWHILE ISSUED SUMMONS UNDER SECTION 131 OF THE ACT TO THE SAID SUNDRY CREDITORS ON THE ADDRESSES PROVIDED BY THE ASSESSEE. THE ASSESSIN G OFFICER HAS TABULATED THE DETAILS OF SUMMONS ISSUED AND WHETHER THE SAME WERE SERVED OR NOT AND WHETHER THE STATEMENTS WERE RECORDED IN THE TABULATED DETAILS AT PAGES 4 TO 14 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER OBSERVED THAT MOST OF THE SUMMO NS WERE RECEIVED BACK UNSERVED DUE TO INCOMPLETE ADDRESSES OR DUE TO NON - EXISTENCE OF PERSONS AT GIVEN ADDRESSES. THE WARD INSPECTOR WAS DEPUTED TO SERVE THE SUMMONS RETURNED BACK BY THE NOTICE SERVER AND HE ALSO COULD NOT SERVE THE SUMMONS DUE TO NON - AVA ILABILITY OF PERSONS AT GIVEN ADDRESSES. FURTHER, ACKNOWLEDGEMENTS OF SERVICE FOR FEW SUMMONS WERE ALSO AWAITED. THE ASSESSING OFFICER NOTED THAT OUT OF 130 SUMMONS ISSUED, ONLY 15 SUMMONS COULD BE SERVED ON THE PERSONS. THE ASSESSEE IN THE MEANWHILE FU RNISHED THE LATEST ADDRESSES OF SUNDRY CREDITORS AND HE ALSO ACKNOWLEDGED THAT EARLIER ADDRESSES OF SUNDRY CREDITORS WERE THOSE ADDRESSES WHICH WERE AVAILABLE IN THE ASSESSEES RECORD AT THAT TIME. FRESH AND DETAILED ADDRESSES COLLECTED BY THE ASSESSEE WE RE FURNISHED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER ON VERIFICATION NOTED THAT THE ADDRESSES IN RESPECT OF 119 PARTIES WERE SAME AND THERE WAS NO CHANGE IN THE ADDRESSES. THE ASSESSEE HAD FAILED TO PRODUCE THE PURCHASE / SALE BILLS AND HENCE , THE PLEA OF ASSESSEE ON THIS COUNT WAS ALSO REJECTED. CONSEQUENT TO ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 6 SUMMONS ISSUED UNDER SECTION 131 OF THE ACT, 12 PERSONS APPEARED BEFORE THE ASSESSING OFFICER WHOSE STATEMENTS ON OATH WERE RECORDED. THE ASSESSING OFFICER AT PAGES 17 TO 20 HAS SUMMAR IZED THE REPLIES GIVEN BY THE RESPECTIVE PARTIES AND OBSERVED AS UNDER: - AS SEEN FROM THE STATEMENTS RECORDED ON OATH, NO ONE PERSON ATTENDED IN RESPONSE TO SUMMONS U/S 131 HAS ACCEPTED THE BALANCE AS SHOWN BY THE ASSESSEE IN ITS BOOKS. ON THE CONTRARY, THEY HAVE DENIED OF HAVING ANY BALANCE AS ON 31.03.2007 AT ALL. THEY HAVE ALSO FURNISHED THE TELEPHONE NUMBERS, WHEREVER AVAILABLE. THE MOST SERIOUS PART OF THE STATEMENT RECORDED IS, DENIAL BY THESE PERSONS OF HAVING SIGNED THE CONFIRMATION LETTERS PROD UCED BY THE ASSESSEE. THEREFORE, ALL THE CONFIRMATION LETTERS PRODUCED BY THE ASSESSEE ARE MADE PART OF THIS ORDER (ANNEXURE II, PAGES 1 TO 169). SO ALSO, THE STATEMENTS RECORDED ON OATH ARE ANNEXED AS PART OF THE ASSESSMENT ORDER (ANNEXURE IV, PAGES 1 T O 23) 6. THE ASSESSING OFFICER IN THE INTEREST OF NATURAL JUSTICE, ACQUAINTED THE ASSESSEE WITH THE ABOVE SITUATION AND ALSO G AVE AN OPPORTUNITY TO SUBMIT THE NECESSARY INFORMATION ALONG WITH DOCUMENTS AND ALSO TO CROSS VERIFY THE STATEMENTS RECORDED. I N REPLY, THE ASSESSEE FURNISHED ACCOUNT EXTRACTS OF THE SUNDRY CREDITORS, WHOSE BALANCES WERE OUTSTANDING AS ON 31.03.2007 FOR THE FINANCIAL YEAR 2007 - 08 AND POINTED OUT THAT ALL THOSE CREDITORS WERE PAID IN THE NEXT YEAR. HE ALSO FURNISHED THE AUDITED BA LANCE SHEET AS ON 31.03.2008, WHEREIN THE TOTAL CREDITORS OUTSTANDING AS ON 31.03.2008 WAS RS. 20,43,128/ - ONLY. HE ALSO PRODUCED THE BOOKS OF ACCOUNT AND PAYMENT VOUCHERS OF THE CREDITORS FOR THE FINANCIAL YEAR 2007 - 08. THE ASSESSEE ALSO POINTED OUT THAT IN CASE THE ASSESSING OFFICER HAD ASKED THE ASSESSEE TO PRODUCE THE SUNDRY CREDITORS, THEY WOULD PRODUCE THEM. HOWEVER, NOTICE UNDER SECTION 131 OF THE ACT WAS DIRECTLY SENT BY THE ASSESSING OFFICER TO THE SUNDRY CREDITORS. HE FURTHER POINTED OUT THAT C OMPLETE DETAILS OF RECORDING OF STATEMENT OF 10 PERSONS AND THE LIST OF 45 PERSONS WHOSE SUMMONS HAVE BEEN RETURNED AND OTHER INFORMATION BE PROVIDED TO THE ASSESSEE AND IN THE ABSENCE OF THE SAME, THE ASSESSEE WAS UNABLE TO OFFER ITS COMMENTS. THE ASSESS EE ALSO ASKED CROSS - ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 7 EXAMINATION OF THE SAID WITNESSES. HE FURNISHED THE BALANCE CONFIRMATION S OF TWO SUNDRY CREDITORS I.E. RAJ POLYMERS AND JAI BHAVANI STEEL CENTER . THE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE THE ASSESSEE HAS FAILED TO DISCHARGE TH E BURDEN OF PROVING THE CORRECTNESS OF ITS CLAIM THOUGH SUFFICIENT TIME AND OPPORTUNITY WAS GIVEN TO THE ASSESSEE AND BECAUSE OF VARIOUS REASONS SUMMARIZED UNDER PARA 5.13 AT PAGES 25 TO 27 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HELD THAT THE ASSES SEE HAD FAILED TO EXPLAIN THE NATURE AND SOURCES OF SUM CREDITED IN THE BOOKS OF ACCOUNT ON ACCOUNT OF SUNDRY CREDITORS AT RS.1,18,20,010/ - AND THE SAME WAS TREATED AS UNEXPLAINED CASH CREDITS AND ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. 7. THE CIT(A) NOTED THE CONTENTIONS OF ASSESSEE THAT HE COULD NOT REBUT THE EVIDENCE AS NO OPPORTUNITY WAS GIVEN BY THE ASSESSING OFFICER TO THE ASSESSEE. THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS IN THIS REGARD ALONG WITH DETAILS. THE CIT(A) FOR WARDED THE SAID WRITTEN SUBMISSIONS FOR FURTHER VERIFICATION TO THE ASSESSING OFFICER. DURING THE REMAND PROCEEDINGS, THE ASSESSING OFFICER ISSUED LETTER DATED 05.12.2012 REQUESTING THE ASSESSEE TO PRODUCE 25 SUNDRY CREDITORS SELECTED ON RANDOM BASIS ALON G WITH THEIR CREDITWORTHINESS, IDENTITY, PAN NUMBER, ETC. THE ASSESSEE PRODUCED THE SAME. HOWEVER, THE ASSESSING OFFICER ACCEPTED THE GENUINENESS AND CREDITWORTHINESS OF TWO SUNDRY CREDITORS I.E. RAJ POLYMERS PROP. SOU SUNANDA SHANKAR SHINDE AND M/S. JAI BHAVANI STEEL CENTRE, PROP. SHANKAR DATTU LINGE AMOUNTING TO RS.2,69,080/ - AND RS.3,27,598/ - , RESPECTIVELY. THE REMAND REPORT IS REPRODUCED AT PAGES 18 TO 21 OF THE APPELLATE ORDER. THE ASSESSEE HAD PRODUCED 17 SUNDRY CREDITORS ON 20.12.2012 AND REMAINI NG SIX SUNDRY CREDITORS ON 31.12.2012 AND ALSO PRODUCED THEIR IDENTITY / ADDRESS PROOFS. THE CIT(A) IN ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 8 PARA 4.5 AT PAGE 21 NOTES THAT THE CONTENTION OF ASSESSEE WAS SEEN TO BE CORRECT SINCE THE ASSESSING OFFICER CLEARLY MENTIONED AT PAGE 9 OF HIS REMAND R EPORT THAT HE HAD PERSONALLY MET ALL THE 17 SUNDRY CREDITORS AND ASKED THEM SEVERAL QUESTIONS. HE REFERS TO THE CONTENTION OF ASSESSING OFFICER THAT THE ECONOMIC CONDITION OF SAID SUNDRY CREDITORS DOES NOT ALLOW THEM TO SELL THE SCRAP TO THE ASSESSEE ON C REDIT. IN ORDER TO CLARIFY THE MATTER AS TO WHETHER THE STATEMENTS OF 17 CREDITORS HAVE BEEN RECORDED ON OATH AND WHETHER THE IDENTITY PROOF, ADDRESS PROOF OF ALL THE 25 CREDITORS HAD BEEN PRODUCED BY THE ASSESSEE, THE CIT(A) ISSUED OFFICE LETTER DATED 18 .07.2013 TO THE ASSESSING OFFICER SEEKING NECESSARY CLARIFICATIONS. IN REPLY THERETO, THE ASSESSING OFFICER SENT HIS REPORT DATED 22.07.2013, WHEREIN HE ENLISTED THE LIST OF 25 CREDITORS AND THE IDENTITY PROOFS SUBMITTED BY THE ASSESSEE. HE FURTHER MENTI ONS THAT NO STATEMENT ON OATH UNDER SECTION 131 OF THE ACT WAS RECORDED IN RESPECT OF 17 SUNDRY CREDITORS AS MENTIONED IN PARA 9 OF REMAND REPORT DATED 22.01.2013. T HE ASSESSING OFFICER ACKNOWLEDGED THAT THE STATEMENTS RECORDED ON OATH DURING ORIGINAL ASS ESSMENT PROCEEDINGS WERE NOT MADE AVAILABLE TO THE ASSESSEE AS PERUSED FROM THE ASSESSMENT ORDER IN QUESTION AND EVEN CROSS EXAMINATION OF THE CREDITORS WAS NOT ALLOWED. THE CIT(A) VIDE PARA 4.7 AT PAGE 23 OF THE APPELLATE ORDER OBSERVED AS UNDER: - 4.7 BE THAT AS IT MAY, IT IS NOW CLEAR THAT NOT ONLY ALL THE 25 SUNDRY CREDITORS AS DIRECTED BY THE ASSESSING OFFICER DURING REMAND PROCEEDINGS WERE PRODUCED BEFORE HIM, BUT THE APPELLANT ALSO SUBMITTED THE NECESSARY EVIDENCES IN SUPPORT OF THE IDENTITY OF TH E CREDITORS AS WAS AVAILABLE, SUCH AS ELECTRICITY BILL, RATION CARD, ETC. (EMPHASIS PROVIDED) 8. THE CIT(A) VIDE PARA 4.8 ONWARDS DECIDED THE ISSUE OF ADDITION MADE ON ACCOUNT OF BALANCE OUTSTANDING IN RESPECT OF SUNDRY CREDITORS TOTALING RS. 1,18,46,264/ - . THE FINDINGS OF CIT(A) ARE TABULATED AS UNDER: - ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 9 A) DURING THE YEAR, THE TOTAL TURNOVER WAS RS.3.07 CRORES, AGAINST WHICH THE ASSESSEE HAD DECLARED GP OF RS.37,83,097/ - AND NP OF RS.3,28,672/ - . THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF RE - SALE OF SCR AP. B) AS AGAINST THE TOTAL PURCHASES OF RS.2.74 CRORES, PURCHASES FROM UNREGISTERED DEALERS WERE TO THE TUNE OF RS.2.36 CRORES. THE SAID UNREGISTERED DEALERS DO NOT SUPPLY BILLS AND THE PURCHASES WERE ON SELF MADE VOUCHERS AND THE MODE OF PAYMENT WAS CA SH. C) THE ASSESSING OFFICER HAD EXAMINED 12 PARTIES ON OATH UNDER SECTION 131 OF THE ACT, OUT OF WHICH 8 PARTIES DENIED THAT THEY HAD ANY TRANSACTIONS WITH THE ASSESSEE OR THAT ANY AMOUNT WAS DUE TO BE PAID BY THE ASSESSEE. THE 4 PARTIES CONFIRMED THAT THEY HAD TRANSACTIONS AND KN E W THE ASSESSEE BUT EITHER THE TRANSACTIONS WITH THE ASSESSEE WAS FOR LESSER AMOUNT OR THAT ALL THE CONSIDERATION TOWARDS PURCHASES MADE BY THE ASSESSEE HAD BEEN RECEIVED. D) THE ASSESSING OFFICER HAD ALLOWED THE ASSESSEE TO C ROSS EXAMINE THE SUNDRY CREDITORS ON 21.12.2009 AND ALSO SECOND OPPORTUNITY WAS GIVEN ON 29.12.2009. IN REPLY, THE ASSESSEE ONLY POINTED OUT THAT THE SUNDRY CREDITORS OUTSTANDING AS ON 31.03.2007 WERE PAID DURING THE FINANCIAL YEAR 2007 - 08. THE CREDITS S HOWN AS OUTSTANDING AGAINST THE SAID 12 PARTIES WAS HELD TO BE NOT GENUINE. ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 10 E) REGARDING CONTENTION OF ASSESSEE THAT IT WAS NEVER AFFORDED AN OPPORTUNITY TO REBUT THE ADVERSE EVIDENCE IN THE FORM OF STATEMENT RECORDED ON OATH WAS FOUND ACCEPTABLE AND THE MATTER WAS REMANDED TO THE ASSESSING OFFICER FOR FRESH VERIFICATION BY AN ORDER UNDER SECTION 250(4) OF THE ACT, DATED 11.07.2012. WHERE THE STATEMENTS RECORDED BY THE ASSESSING OFFICER WERE MADE AVAILABLE TO THE ASSESSEE BEING PART AND PARCEL OF ASSESSME NT ORDER BUT WHERE THE ASSESSEE HAD NOT MADE ANY SPECIFIC REQUEST TO THE ASSESSING OFFICER FOR CROSS EXAMINATION OF 12 WITNESSES EXAMINED ON OATH DURING ORIGINAL ASSESSMENT PROCEEDINGS, PRESUMPTION WAS DRAWN AGAINST THE ASSESSEE AND AS THE ASSESSEE FAILED TO AVAIL AN OPPORTUNITY, THE BALANCE OUTSTANDING IN THE BOOKS OF ASSESSEE IN THE CASE OF 12 SUNDRY CREDITORS AS ON 31.03.2007 WERE CONFIRMED. F) IN RESPECT OF BALANCE 25 SUNDRY CREDITORS WHO WERE DIRECTED TO BE PRODUCED BY THE ASSESSING OFFICER DURING R EMAND PROCEEDINGS, WHERE THE ASSESSING OFFICER HAD ACCEPTED THE GENUINENESS OF TRANSACTIONS WITH M/S. JAI BHAVANI STEEL CENTER AND RAJ POLYMERS, THE SAME WERE ACCEPTED TO BE GENUINE. G) IN RESPECT OF OTHER THREE SUNDRY CREDITORS DASTAGIR GAFOOR SHAIKH, AB HIMAN DIGAMBAR SHINDE AND SURESH RAKHMAJI SABALE , WHO WERE SUMMONED IN INITIAL ASSESSMENT PROCEEDINGS AND HAD DEPOSED BEFORE THE ASSESSING OFFICER AND HAD DENIED THE TRANSACTIONS OR HAD NOT ACCEPTED THE AMOUNT DUE. THE CASH ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 11 CREDITS WERE ASSESSED IN THE HA NDS OF ASSESSEE AS BEING PART OF 12 SUNDRY CREDITORS AND THE SAME WERE CONFIRMED. H) NOW, IN RESPECT OF BALANCE 20 CASH CREDITORS WHO WERE ACTUALLY PRODUCED BEFORE THE ASSESSING OFFICER AND APART FROM STATING THAT PROPER IDENTIFICATION OF THE PERSONS WAS NOT PRODUCED, THE ASSESSING OFFICER WAS FOUND TO HAVE FAILED TO SUBSTANTIATE THAT THEY WERE NOT GENUINE. THE IDENTITY / ADDRESS PROOFS PRODUCED BY THE ASSESSEE SUCH AS RATION CARD, ELECTRICITY BILL AND THEY WERE PERSONALLY PRESENT BEFORE THE ASSESSING OFF ICER BUT DID NOT POSSESS PAN NUMBER, DRIVING LICENCE BEING PERSONS OF SMALL MEANS. THE ASSESSING OFFICER HAD NOT CONSIDERED IT PROPER TO RECORD THEIR STATEMENTS ON OATH. I) OUT OF 20 CASH CREDITORS, SOME OF THE PARTIES WERE THOSE TO WHOM THE SUMMONS WERE ISSUED IN 2009 AND EITHER WERE RETURNED BACK OR TILL THE DATE OF PASSING OF ASSESSMENT ORDER, ACKNOWLEDGMENT O F SERVICE OF NOTICE WAS NOT RECEIVED. SINCE NO SUCH PARTIES WERE NOT EXAM INED ON OATH, NO ADDITION COULD BE MADE IN RESPECT OF 20 CASH CREDITORS AS TABULATED UNDER PARA 4.11 AT PAGES 26 AND 27 OF THE APPELLATE ORDER. J) REGARDING BALANCE 95 CREDITORS TO WHOM SUMMONS WERE ISSUED, 47 PERSONS HAD NOT ACKNOWLEDGED THE RECEIPT OF SUMMONS TILL THE DATE OF PASSING ASSESSMENT ORDER. IN THE REMAND PROCEE DINGS, THERE WAS NO MENTION ABOUT THE SUBSEQUENT EVENTS I.E. WHETHER THE SUMMONS WERE COMPLIED WITH OR NOT. SINCE OUT OF 25 PERSONS ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 12 PRODUCED BEFORE THE ASSESSING OFFICER DURING REMAND PROCEEDINGS, 19 PARTIES WERE THOSE TO WHOM SUMMONS WERE SENT BUT HAD NOT ACKNOWLEDGED THE RECEIPT OF SUMMONS, AND SINCE IN THE CASE OF 47 PERSONS, THE SUMMONS HAD NOT BEEN RETURNED BACK, THE PRESUMPTION WAS DRAWN THAT THE PERSONS DID EXIST. NO ADVERSE INFERENCE COULD BE DRAWN AGAINST OTHER PERSONS IN RESPECT OF CREDIT BALANCE OUTSTANDING AGAINST SUCH PERSONS. THE ADDITION MADE AGAINST THE PERSONS MENTIONED AT SL. NO.3, 4, 8, 10, 13, 15, 17 TO 20, 23, 25 TO 29, 32, 34, 38, 39, 42, 43, 45 TO 48, 51, 56, 57, 59 TO 61, 63, 65, 66, 68, 69, 71, 74, 76, 79, 86, 87, 90, 100, 101 & 10 4 AS APPEARING AT PAGES 4 TO 12 OF THE ASSESSMENT ORDER W ERE NOT SUSTAINED AND WERE DELETED. K) IN RESPECT OF BALANCE PERSONS TO WHOM SUMMONS WERE ISSUED BUT THE NOTICES WERE RETURNED BACK DUE TO INCOMPLETE ADDRESSES OR NOT RESIDENT AT THE GIVEN ADDRESSES WERE TOTALING 29. THE ASSESSEE PRODUCED THREE SUCH PERSONS BEFORE THE ASSESSING OFFICER DURING REMAND PROCEEDINGS AND THE BALANCE WERE 26. L) SIMILARLY, THERE WERE 24 SUCH CASES OF NON - SERVICE THROUGH NOTICE SERVE R BUT SINCE 6 OF THEM WERE PRODUCED DURI NG REMAND PROCEEDINGS, THE BALANCE REMAINING WAS THE AMOUNT PERTAINING TO 18 SUCH PERSONS. SINCE THE PERSONS WERE NOT IDENTIFIABLE AND PRESENT AT THE GIVEN ADDRESSES DURING ASSESSMENT PROCEEDINGS AND AS THE PAYMENTS TO THE PARTIES WERE MADE IN CASH, THE O NUS OF PROVING THE GENUINENESS AND CREDITWORTHINESS OF 44 I.E. 26 PLUS ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 13 18 WAS NOT DISCHARGED AND THE ADDITION WAS MADE AND THE SAME WAS UPHELD. M) THE PLEA OF THE ASSESSEE THAT THE PAYMENT TO ALL THESE CREDITORS WERE MADE DURING SUBSEQUENT FINANCIAL YEAR 2007 - 08 WAS NOT ACCEPTED SINCE TH E PROVISIONS OF SECTION 68 OF THE ACT WERE NOT FULFILLED IN THE INSTANT YEAR . 9. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE ADDITIONS IN RESPECT OF 12 PARTIES WHOSE STATEMENTS WERE RECORDED DUR ING ASSESSMENT PROCEEDINGS AND THEY DENIED THE TRANSACTIONS. THE ASSESSEE IS ALSO IN APPEAL AGAINST 44 CASH CREDITORS I.E. 26 PLUS 18 AGAINST WHOM THE INVESTIGATION, IF ANY, WAS DURING ASSESSMENT PROCEEDINGS BUT NO FURTHER EVIDENCE WAS FILED DURING APPELL ATE PROCEEDINGS / REMAND PROCEEDINGS. THE ASSESSEE IS AGGRIEVED THAT DURING THE REMAND PROCEEDINGS, HE WAS ASKED TO ESTABLISH THE GENUINENESS OF ONLY 25 CASH CREDITORS OUT OF TOTAL CASH CREDITORS AND HE HAS DISCHARGED HIS ONUS IN RESPECT OF 25 CREDITORS A ND HENCE, THE BALANCE CREDITORS SHOULD HAVE BEEN ACCEPTED IN ENTIRETY AS THE DIRECTIONS OF CIT(A) TO THE ASSESSING OFFICER WERE ONLY TO PROVE THE GENUINENESS OF 25 CREDITORS IN THE REMAND PROCEEDINGS. 10. THE REVENUE IS IN APPEAL AGAINST RELIEF GIVEN BY T HE CIT(A) IN DELETING THE ADDITION ON ACCOUNT OF CERTAIN CASH CREDITORS. 11. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT WHERE THE ASSESSEE HAS DISCHARGED ONUS OF PRODUCING 25 CASH CREDITORS AS SELECTED BY THE ASSESSING OFFIC ER DURING REMAND PROCEEDINGS OUT OF TOTAL CASH ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 14 CREDITORS OUTSTANDING AS ON CLOSE OF THE YEAR. UNDOUBTEDLY, THE ASSESSING OFFICER DID NOT VERIFY THE SAID CASH CREDITORS WHO WERE PRODUCED BEFORE HIM, BUT THE CIT(A) DELETED THE ADDITION IN RESPECT OF 22 CA SH CREDITORS SINCE THREE CASH CREDITORS WERE THOSE WHO WERE PRODUCED IN THE ASSESSMENT PROCEEDINGS. HE POINTED OUT THAT IN RESPECT OF ORIGINAL 12 CASH CREDITORS PRODUCED DURING ASSESSMENT PROCEEDINGS, THE DISALLOWANCE HAS BEEN CONFIRMED IN THE HANDS OF ASSE SSEE BUT IN RESPECT OF 22 CASH CREDITORS, THE ADDITION HAS BEEN DELETED. HERE, HE STRESSED THAT OUT OF BALANCE 100 CASH CREDITORS, NO ADDITION HAS BEEN MADE, WHEREIN THE NOTICES WERE SERVED AND EXISTENCE WAS PROVED ROUGHLY, ABOUT 47 CASH CREDITORS. THE B ALANCE OF ABOUT 44 CASH CREDITORS, SIX PERSONS WERE PRESENT BEFORE THE ASSESSING OFFICER AND THE CIT(A) DELETED THE ADDITION ON ACCOUNT OF AMOUNT OUTSTANDING IN RESPECT OF SAID SIX PERSONS. HOWEVER, IN RESPECT OF BALANCE PERSONS FOR WHOM NO FURTHER VERIFI CATION WAS CALLED FOR BY THE CIT(A) OR THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS, THE ADDITION WAS MADE WHICH IS NOT MERITED. HE FURTHER BROUGHT TO OUR NOTICE THAT THE ASSESSEE IS RE - SELLER OF SCRAP AND GP RATE AFTER THE ADDITIONS OF RS.1.18 CRORES WORKS OUT TO 39.78% AND AFTER RELIEF GIVEN BY THE CIT(A), THE NP RATE IS 19.32% WHICH IS VERY HIGH AND HENCE, NO MERIT IN THE AFORESAID ADDITION IN THE HANDS OF ASSESSEE. 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, RELIE D ON THE ORDERS OF CIT(A) AND THE ASSESSING OFFICER. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE IS AGAINST THE AMOUNT OUTSTANDING IN RESPECT OF SUND RY CREDITORS AS ON THE CLOSE OF YEAR. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF SALE OF SCRAP AND WAS ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 15 MAKING PURCHASES FROM UNREGISTERED DEALERS. THE AUTHORITIES BELOW NOTES THAT THE PURCHASES ARE MADE IN CASH FROM UNREGISTERED DEALERS BUT THE ISSUE BE FORE US IS NOT IN RESPECT OF PURCHASES AGAINST WHICH CASH HAS BEEN PAID BUT IN RESPECT OF PURCHASES MADE FROM PARTIES AGAINST WHOM THE AMOUNT IS STILL OUTSTANDING. THE TOTAL OUTSTANDING AMOUNT IS ABOUT RS.1.18 CRORES, WHEREIN THE NUMBER OF SUNDRY CREDITOR S IS ROUGHLY 140. THE ASSESSING OFFICER AT PAGE 4 ONWARDS OF THE ASSESSMENT ORDER HAS TABULATED THE LIST OF SUCH SUNDRY CREDITORS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE CERTAIN ENQUIRIES IN RESPECT OF SAID SUNDRY CREDITO RS. THE ASSESSEE WAS ASKED TO FILE THE DETAILS OF SAID PARTIES ALONG WITH ADDRESSES, THEIR IDENTITY PROOFS AND CONFIRMATION FROM THE SAID PARTIES. THE ASSESSEE DID FILE THE LIST AND ADDRESSES OF THE SAID PARTIES AND THE ASSESSING OFFICER ISSUED SUMMONS U NDER SECTION 131 OF THE ACT TO THE SAID PARTIES. IN RESPONSE THERETO, CERTAIN NOTICES WERE RETURNED BACK UNDELIVERED AND IN RESPONSE TO CERTAIN NOTICES, NOBODY APPEARED. THE ASSESSING OFFICER ALSO DEPUTED HIS INSPECTOR AND MADE TO SERVE THE SAID NOTICES BUT COMPLETE SERVICE OF NOTICES COULD NOT BE CARRIED OUT. IN RESPONSE TO THE SUMMONS ISSUED, 12 PERSONS APPEARED BEFORE THE ASSESSING OFFICER AND 8 SUCH PERSONS DENIED ANY TRANSACTION WITH THE ASSESSEE AND THE REMAINING 4 PERSONS STATED THAT THE TRANSACTI ONS WERE NOT TO THE EXTENT CLAIMED BY THE ASSESSEE OR NO AMOUNT IS OUTSTANDING . THE STATEMENTS OF SAID PERSONS WERE NOT CONFRONTED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHO ASKED FOR CROSS EXAMINATION ALSO. THE SAID STATEMENTS WERE ANNEXED TO THE ASSESSMENT ORDER. THE ASSESSEE BEFORE THE CIT(A) FURNISHED DETAILS IN RESPECT OF SUNDRY CREDITORS AND ALSO POINTED OUT THAT THE SAID PARTIES WERE PAID IN FINANCIAL YEAR 2007 - 08 AND HENCE, THE EXISTENCE OF PARTIES COULD NOT BE DOUBTED. THE CIT(A) FORWARDED THE INFORMATION FILED BY THE ASSESSEE TO THE ASSESSING OFFICER AND ASKED FOR ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 16 REMAND REPORT. THE CIT(A) ALSO DIRECTED THE ASSESSEE TO PRODUCE 25 CASH CREDITORS OF CHOICE OF THE ASSESSING OFFICER FOR THEIR VERIFICATION. IN THE REMAND PROC EEDINGS, THE ASSESSING OFFICER SELECTED 25 PARTIES OUT OF WHICH THREE HAD ORIGINALLY APPEARED BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. ADMITTEDLY, THE ASSESSEE PRODUCED ALL THE SAID 25 PERSONS BEFORE THE ASSESSING OFFICER AND FURNISHED THEIR PROOF OF IDENTITY ALSO. THE ASSESSING OFFICER DID NOT RECORD THEIR STATEMENTS BUT ADMITTED THAT THE SAID PERSONS WERE PRODUCED . THE CIT(A) WHILE PASSING THE ORDER CONFIRMED THE ADDITION ON ACCOUNT OF 12 PERSONS, WHO WERE PRODUCED IN THE ASSESSMENT PROCEEDINGS SINCE THEY HAD DENIED TO HAVE ENTERED INTO ANY TRANSACTIONS WITH THE ASSESSEE OR HAD NOT ENTERED INTO TRANSACTIONS TO THE EXTENT CLAIMED BY THE ASSESSEE. IN RESPECT OF 25 PERSONS PRODUCED BEFORE THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS, THREE PERSONS WERE OVERLAPPING WHOSE ADDITION WAS ALREADY CONFIRMED BY THE CIT(A). HOWEVER, IN RESPECT OF BALANCE 22 PERSONS THOUGH THE ASSESSING OFFICER HAD NOT CARRIED OUT ANY VERIFICATION EXERCISE BUT THE CIT(A) HELD THAT NO ADDITION ON ACCOUNT OF SUC H PERSONS COULD BE MADE. IN RESPECT OF ABOUT ROUGHLY 47 PERSONS, WHERE THE NOTICES WERE SERVED, THE CIT(A) HELD THAT THE EXISTENCE OF SAID PERSONS WAS PROVED AND THERE WAS NO MERIT IN MAKING ANY ADDITION ON ACCOUNT OF AMOUNTS OUTSTANDING AGAINST SUCH PERS ONS , THOUGH THOSE PERSONS HAD NOT APPEARED . IN RESPECT OF BALANCE 44 PERSONS, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ADDRESSES WERE NOT PROPER AND THE NOTICES COULD NOT BE SERVED. THE CIT(A) CONFIRMED THE ADDITION IN RESPECT OF SAID PERSONS IN THE ABSENCE OF ANY REPLIES OF NOTICES. HE ALLOWED THE CLAIM OF ASSESSEE IN RESPECT OF SIX SUCH PERSONS WHO WERE PRESENT BEFORE THE ASSESSING OFFICER. ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 17 14. THE FIRST ASPECT OF THE ISSUE WHICH ARISES IN THE PRESENT APPEALS IS IN RESPECT OF 12 PERSONS WHO WE RE PRODUCED DURING ASSESSMENT PROCEEDINGS, WHEREIN 8 PERSONS HAVE DENIED TO HAVE ENTERED INTO ANY TRANSACTIONS WITH THE ASSESSEE AND THE BALANCE 4 PERSONS HAVE ALSO DENIED TO THE EXTENT OF AMOUNT SHOWN BY THE ASSESSEE. IN SUCH CIRCUMSTANCES, WHERE THE ASS ESSING OFFICER HAS CARRIED OUT VERIFICATION EXERCISE AND RECORDED THEIR STATEMENTS, THE FIRST ASPECT IS THE DENIAL OF CROSS EXAMINATION TO THE ASSESSEE. THE CIT(A) IN THIS REGARD NOTES THAT THE ASSESSEE NEVER ASKED FOR CROSS EXAMINATION OF THE SAID 12 PER SONS AND HENCE, THE PRINCIPLES OF NATURAL JUSTICE ARE NOT VIOLATED. WE FIND MERIT IN THE OBSERVATIONS OF CIT(A) IN THIS REGARD AND ACCORDINGLY, CONFIRM THE ADDITION ON ACCOUNT OF BALANCE OUTSTANDING AGAINST THE SAID 12 PERSONS. 15. NOW, COMING TO THE BAL ANCE PERSONS, WHO ARE OUTSTANDING IN THE LIST OF SUNDRY CREDITORS. THE FIRST ASPECT TO BE CONSIDERED IN THIS REGARD IS THAT THE ASSESSING OFFICER HAD MADE THE ADDITION IN RESPECT OF TOTAL OUTSTANDING ON ACCOUNT OF SUNDRY CREDITORS. HOWEVER, BEFORE THE CI T(A), THE PLEA OF ASSESSEE WAS THAT IT WAS NOT GRANTED PROPER OPPORTUNITY IN FURNISHING THE DETAILS AND / OR PRODUCING THE SAID PARTIES. THE CIT(A) DURING APPELLATE PROCEEDINGS DIRECTED THE ASSESSEE TO PRODUCE 25 PERSONS OUT OF TOTAL LOT OF SUNDRY CREDITO RS BUT AS PER THE CHOICE OF THE ASSESSING OFFICER. HENCE, VERIFICATION EXERCISE OF ABOUT BALANCE 100 SUNDRY CREDITORS WAS TO BE TALLIED WITH THE RESULT OF VERIFICATION EXERCISE OF 25 PERSONS. THE ASSESSING OFFICER MADE A LIST OF 25 PERSONS OUT OF WHICH T HREE PERSONS WERE OVERLAPPING I.E. THEY HAD APPEARED IN THE ORIGINAL ASSESSMENT PROCEEDINGS AGAINST WHOM ADDITION WAS CONFIRMED. IN RESPECT OF BALANCE 22 PERSONS, THE ASSESSEE PRODUCED THE COMPLETE DETAILS I.E. TO ESTABLISH THEIR IDENTITIES. HOWEVER, THE ASSESSING OFFICER DID NOT RECORD ANY STATEMENTS OF THE SAID PERSONS AND ACCEPTED THE PLEA OF ASSESSEE IN THE ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 18 REMAND REPORT. THE ASSESSING OFFICER CONFIRMED THAT THE BALANCE OUTSTANDING AGAINST 22 SUCH PERSONS MERITS TO BE ACCEPTED. IN VIEW OF EXERCISE C ARRIED OUT BY THE ASSESSING OFFICER AS PER DIRECTIONS OF THE CIT(A), WHERE THE ASSESSEE WAS REQUIRED TO PRODUCE ONLY 25 PERSONS OUT OF BALANCE ABOUT 100 PERSONS AND ONCE THE ASSESSEE HAS PRODUCED THE SAID 25 PERSONS, THEN THE QUESTION WHICH ARISES IS WHETH ER IN RESPECT OF BALANCE PERSONS WHO WERE NOT PRODUCED, CAN THE ADDITION BE CONFIRMED IN THE HANDS OF ASSESSEE? HERE, IT MAY BE POINTED OUT THAT THE CIT(A) DELETED THE ADDITION IN RESPECT OF 25 PERSONS THOUGH NO VERIFICATION EXERCISE WAS CARRIED OUT BY THE ASSESSING OFFICER AND ROUGHLY IN RESPECT OF 47 PER SONS, WHERE NOTICES WERE SERVED , BUT NO SUCH PERSONS APPEARED . THE CIT(A) HELD THAT NO ADDITION IS WARRANTED AS THE EXISTENCE OF SAID PERSONS IS PROVED. FOLLOWING THE SAME LINE OF REASONING, THE EXISTENC E OF BALANCE PERSONS ALSO STANDS ESTABLISHED SINCE THE LIMITED SCOPE OF VERIFICATION EXERCISE IN THE REMAND PROCEEDINGS WAS ONLY IN RESPECT OF 25 PERSONS. ONCE THE ASSESSEE HAS PRODUCED THE SAID 25 PERSONS, THEN THE ONUS CAST UPON THE ASSESSEE STANDS DISC HARGED AND NON - PRODUCTION OF BALANCE PERSONS COULD NOT BE HELD AGAINST THE ASSESSEE I.E. NON - DISCHARGE OF ONUS BY THE ASSESSEE OF ESTABLISHING THE IDENTITY OF THE SAID PERSONS. AS MENTIONED ABOVE, THE ASSESSING OFFICER HAD OPPORTUNITY TO CH O OSE 25 PERSONS AND THE ASSESSEE DURING REMAND PROCEEDINGS HAS DISCHARGED THE ONUS CAST UP ON HIM . ACCORDINGLY, WE FIND NO MERIT IN THE ORDER OF CIT(A) IN PARTIALLY CONFIRMING THE ADDITION IN THE HANDS OF ASSESSEE ON ACCOUNT OF PERSONS WHOSE ADDRESSES WERE NOT PROPER IN THE ORIGINAL ASSESSMENT PROCEEDINGS, BUT WERE CORRECTED DURING ASSESSMENT PROCEEDINGS ITSELF AND FURTHER NO VERIFICATION EXERCISE WAS MADE IN THE APPELLATE / REMAND PROCEEDINGS. THE CIT(A) WHILE CONFIRMING THE ADDITION ON ACCOUNT OF SUCH PERSONS HAD DELET ED THE ADDITION IN RESPECT OF SIX PERSONS ON WHOM THE NOTICES COULD NOT BE SERVED. ACCORDINGLY, WE HOLD THAT ITA NO. 1952 /P U N/20 1 3 ITA NO. 1956 /PUN/201 3 19 THE ADDITION IN THE CASE OF ASSESSEE IS TO BE RESTRICTED TO 12 PERSONS, WHO APPEARED BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. IN RESPECT OF BALANCE CASH CREDITORS, NO ADDITION IS WARRANTED IN THE HANDS OF ASSESSEE. ACCORDINGLY, W E HOLD SO. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED AND THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 1 6 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUN CED ON THIS 31 ST DAY OF JU LY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 31 ST J U LY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - II I, PUNE ; 4. / THE CIT - III , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE