M/s. Kasturi Rashi Developers, Pune V. Income-tax Officer, Ward - 5(3), , Pune

ITA 1961/PUN/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7436 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 17-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Accommodation entries; Bogus loan; Reason to believe; Reassessment proceedings; TDS
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT आयकर अपील सं. / ITA No.1961/PUN/2017 नधा रण वष / Assessment Year : 2007-08 M/s. Kasturi Rashi Developers, 1, Adam’s Court, 2 nd Floor, Opp. Mahabaleshwar Hotel, Baner, Pune 411 045 PAN : AAHFK7276K Vs. ITO, Ward-5(3), Pune (Appellant) (Respondent) आदेश / ORDER PER R.S.SYAL, VP : This appeal by the assessee is directed against the order passed by the CIT(A) on 30-05-2017 in relation to the assessment year 2007-08. 2. Tersely stated, the facts of the case are that the assessee filed his return declaring Nil income. The Assessing Officer (AO) received information from DGIT(Investigation), Pune vide letter dated 11-03-2014 regarding the assesses, being, one of the beneficiaries of accommodation entries racket operated by one Mr. Praveen K. Jain. Notice was issued u/s.148. Appellant by Shri V.L. Jain Respondent by Shri Piyush Kumar Singh Yadav Date of hearing 02-03-2022 Date of pronouncement 07-03-2022 ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 2 During the course of the re-assessment proceedings, the AO observed that the report of DGIT (Investigation), Pune divulged the assessee to have received an alleged loan of Rs.25.00 lakh from M/s. Mohit International through accommodation entry. Vide letter dated 19-03-2015, an opportunity was given to the assessee to explain its stand. In its reply dated 21-03-2015, the assessee submitted in para 3 thereof that all the relevant information was already filed as per Annexure 1 to 5 of its letter dated 27-06-2014 and as such, the case was fully explained. The AO noticed that Mr. Nilesh Parmar, who was looking after the accounts of 33 concerns managed and controlled by Mr. Praveen K. Jain, in his statement recorded u/s.131 of the Act on 02-01-2013 admitted that Mr. Praveen K. Jain was engaged in providing accommodation entries of sale, purchase and bogus loans and advances to various parties through his fictitious concerns and further one of the concerns was M/s. Mohit International. In response to question nos. 31 and 32, Mr. Nilesh Parmar stated that he was the Accountant of all the 33 concerns which were merely engaged in providing accommodation entries. Mr. ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 3 Praveen K. Jain himself, in his statement recorded during the course of search, explained the modus operandi of providing accommodation entries. The relevant extracts of his statement recorded u/s.132(4) have been reproduced in the assessment order, through which he explained the entire mechanism of giving accommodation entries of unsecured loans/advances etc. through companies/partnership firms etc. controlled by him. He further admitted of getting commission between 0.15% to 0.25% on such accommodation entries. In view of this factual scenario, the AO made the addition of Rs.25.00 lakh. The assessee unsuccessfully challenged initiation of re- assessment proceedings before the ld. CIT(A) and also the addition on merits. In the instant appeal, the assessee has challenged the impugned order on the question of jurisdiction u/s.148 of the Income-tax Act, 1961 (hereinafter also called `the Act’); on merits; and on the violation of principles of natural justice. 3. I have heard the rival submissions and gone through the relevant material on record. I espouse the three issues raised by the assessee in seriatim. ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 4 I. INITIATION OF REASSESSMENT 4. The first issue is against the assumption of jurisdiction u/s.148 of the tax Act. The Reasons recorded for issuing notice u/s.148 read as under: “REASONS RECORDED FOR ISSUING NOTICE U/s.148 OF THE I.T. ACT, 1961 In this case information received from the DGIT (Inv.) Pune vide letter dated 11.3.14, regarding the assessee who are beneficiaries of accommodation entries (loans, advances entries, sales entries, share capital entries etc.). On going through the table following details are available in r/o. above named assessee : Bogus Loans & Advances F.Y. Name of concern- controlled & managed by Praveen Kumar Jain Name & address of the beneficiary Date of transaction Amount involved (Rs.) 2006-07 Mohit International M/s. Kasturi Rashi Developers, 842, Budhwar Peth, Rashi Developers, Laxmi Road, Pune 26/02/2007 25,00,000/- Total 25,00,000/- On going through the AST data, the assessee filed return on 19.10.2007 for AY. 2007-08 showing total loss of Rs.Nil. Thus, the bogus loans & advances shown from above named concerns managed by Mr. Praveen Kumar Jain, totaling to Rs.25 lac needs to be disallowed. I have, therefore, reason to believe that income to the extent of ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 5 Rs.25 lac has escaped assessment within the meaning of section 147 of the I.T. Act, 1961.” 5. It can be seen from the above reasons that the AO received information from DGIT (Inv.), Pune giving a list of beneficiaries of accommodation entries provided by Mr. Praveen Kumar Jain group of concerns. In the list so received, the name of the assessee appeared along with its address as beneficiary and the name of the alleged lender, M/s Mohit International, a concern controlled and managed by Mr. Praveen Kumar Jain also figured with the date of transaction on 26-02-2007 and the amount of alleged loan of Rs.25.00 lakh. The ld. AR contended that the AO did not record proper satisfaction before issuing notice u/s 148 of the Act. He submitted that the AO acted on a borrowed satisfaction from the letter of DGIT(Inv.), Pune and did not conduct any further enquiry to demonstrate that the assessee had escaped income before issuing the notice. The AO’s action, in the words of the ld. AR, was based on `reason to suspect’ and not ‘reason to believe’ as is statutorily mandated. In support of his contention, he relied on the judgment of the Hon’ble Delhi High Court in Pr. CIT Vs. RMG Polyvinyl (I) Ltd. (2017) 396 ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 6 ITR 5 (Delhi). He further buttressed the argument by relying on the judgment of Hon’ble jurisdictional High Court in CIT Vs. Shodiman Investments Pvt. Ltd. (2018) 167 DTR 290 (Bom.). 6. In my considered opinion, the contention of the ld. AR does not hold water because the AO got tangible material in the shape of information from DGIT (Inv.), Pune giving list of the beneficiaries of accommodation entries, which unmistakably included the assessee’s name with its address and also that of M/s. Mohit International, a concern controlled by Praveen Kumar Jain which was admitted to be engaged in providing accommodation entries. It is equally undisputed that such loan appeared in the accounts of the assessee. The condition precedent for issuing notice u/s.148 is that the AO should have reason to believe that any income chargeable to tax has escaped assessment in any assessment year. The reasons to believe do not contemplate making out a fool-proof case at the stage of initiation of re-assessment only. When the search on Mr. Praveen Kumar Jain transpired that he was engaged in the business of providing accommodation entries ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 7 and the list of beneficiaries submitted by him included the name of the assessee, there remains no doubt about the AO genuinely and lawfully entertaining reason to believe about the escapement of income in the hands of the assessee, who had, in fact, religiously shown such loan in its accounts. 7. It is trite that the AO should have prima facie grounds for forming a belief that there is some escapement of income, which is a condition precedent for initiating reassessment. The Hon’ble Supreme Court in Raymond Woollen Mills vs. ITO (1999) 236 ITR 34 (SC) has held to this extent by laying down that if prima facie some material exists on the basis of which the Department can reopen the case, it is sufficient to initiate reassessment. “The sufficiency or correctness of the material is not a thing to be considered at this stage.” The same view has been reiterated again by the Hon’ble Summit court in ACIT vs. Rajesh Jhaveri Stock Broker (P) Ltd. (2007) 291 ITR 500 (SC). The Hon’ble Apex Court held in the latter case that: “If the AO has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that income had escaped assessment. ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 8 The expression cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion.........at that stage the final outcome of the proceedings is not relevant.” It further went on to hold that: “At the initiation stage, what is required is ‘reason to believe’, but, not the establishment of fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage.” The Hon’ble Delhi High Court has also laid down similar proposition in several judgments including Areva T & D, SA vs. Asstt. DIT (2012) 349 ITR 127. In that case also, no return of income was filed by the petitioner. Upholding the initiation of reassessment proceedings, the Hon’ble High Court held that: “in any case, it is well settled that at this stage only prima facie view is to be taken to determine and decide whether there are reasons to believe that income has escaped assessment. Whether or not any income of the petitioner is chargeable to tax in India, whether the petitioner has a ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 9 permanent establishment in India, etc., are matters of merits which are to be decided in the assessment proceedings.” Similar view has been taken by the Hon’ble Delhi High Court in Rolls Royce PLC vs. DIT (International Taxation) (2011) 339 ITR 147 (Del) upholding the view of the Tribunal in Rolls Royce PLC vs. DIT 2007-TII-32-ITAT-DL-INTL, in which case, the assessee had not filed its return of income prior to issue of notice and the Tribunal rejected the assessee’s challenge to the initiation of reassessment proceedings by holding that the AO at that stage was required only to form a prima facie opinion about the escapement of income, which condition stood satisfied. In an earlier decision, the Hon’ble Delhi High Court in Reach Cable Networks Ltd. vs. DDIT (2008) 299 ITR 316 (Del) dismissed the writ petition challenging the initiation of reassessment proceedings in which the assessee had not originally filed the return of income. In the words of the Hon’ble Delhi High Court in Convergys Customer Management vs. Asstt. DIT (2013) 357 ITR 177 (Delhi) : `at the time of issuance of notices under section 148, the Assessing Officer is not expected to form any ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 10 definite or conclusive opinion about the taxability of the disputed amounts and that he is only expected to form a tentative or prima facie belief regarding the escapement of income chargeable to tax’. 8. A cursory glance at the proposition laid down in the above judgments fairly brings out that the initiation of reassessment proceedings requires the AO to form a prima facie view about the escapement of income. There is no need to conclusively establish at that stage itself that such and such income escaped assessment. If it emerges from the reasons recorded, which, in turn, are based on some cogent material, that the AO had prima facie reason to believe about income escaping assessment, the matter ends there insofar as the initiation of reassessment proceedings is concerned. No fault can be found with the jurisdiction of the AO to initiate reassessment. 9. Now, I advert to the judgment in the case of RMG Polyvinyl (I) Ltd. (Supra) relied on by the ld. AR. In that case, the re-assessment was held to be invalidly initiated on two counts viz., first, non-filing of return of income and the second, that there was discrepancy in the amount of ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 11 accommodation entry set out in the notice and the order. The case of the Department fell through because the assessee in that case had already filed the return and secondly, the actual amount of accommodation entry was Rs.78.00 lakh which was recorded in the reasons as Rs.1.56 crore. Au contraire, the facts of the instant case do not suffer from any such infirmity. Here is a case in which the reasons clearly indicated the assessee to have received bogus loan of Rs.25.00 loan from M/s. Mohit International on 26-02-2007. It is the exact amount of the alleged loan which was recorded by the assessee in its books of account as having been received from M/s. Mohit International on that date itself. There is hardly any need to emphasize that the decision of a case primarily depends upon the facts obtaining in that case. A slight change in the factual panorama in another case possibly dents the applicability of its conclusion in the later case. It can be seen that there is a significant difference in the facts of the extant case and that which were obtaining in the case before the Hon’ble Delhi High Court. The second decision in the case of Shodiman Investments Pvt. Ltd. (supra) is again ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 12 distinguishable. The Hon’ble Bombay High Court discussed the reasons recorded by the AO before issuing notice u/s.148 in para 4 of its judgment. Such reasons did not indicate the amount, which according to the AO, had escaped assessment. It was on the basis of this uncertainty that the Hon’ble High Court held the re-assessment to be invalidly initiated. Such facts are absent in the instant case. 10. Per contra, the ld. CIT(A) in the impugned order has referred to the judgment of Hon’ble Bombay High Court in the case of Om Vinyls Pvt. Ltd. Vs. ITO wherein the same Mr. Praveen Kumar Jain group of cases was involved for providing accommodation entries and on the basis of which the AO initiated re-assessment proceedings. The Hon’ble High Court dismissed the assessee’s writ petition challenging the initiation of re-assessment. The ld. CIT(A) has also referred to another judgment of the Hon’ble Gujarat High Court in Pushpak Bullion Pvt. Ltd. Vs. DCIT, in which case again, that assessee was one of the beneficiaries of Mr. Praveen Kumar Jain group of cases, who had allegedly received accommodation entries from M/s. Mohit International, being the same concern and ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 13 the same A.Y., from whom the assessee under consideration received the alleged loan. The writ petition filed by that assessee also came to be dismissed. There is a reference in the impugned order to still another judgment of the Hon’ble High Court in Ankit Financial Services Ltd. Vs. DCIT. That case also involved one of the beneficiaries of Mr. Praveen Kumar Jain group of cases, who approached the Hon’ble High Court challenging the issuance of notice u/s.148 but without success. 11. In view of the above overwhelming legal position settled in favour of the Revenue, I am of the considered opinion that no interference is warranted in the impugned order upholding initiation of re-assessment proceedings. This ground fails. II. ADDITION ON MERITS 12. Now I take up the issue on merits. It can be seen that the assessee was found to be a beneficiary of an accommodation entry of loan of Rs.25.00 lakhs received from M/s. Mohit International, a proprietorship concern of Mr. Nilesh Parmar, a part of Mr.Praveen Kumar Jain group of assesses. Statement of Mr. Nilesh Parmar was recorded u/s.131 of the Act by the Investigation wing, wherein he admitted to be looking after the ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 14 accounts of Mr.Praveen Kumar Jain group of cases including M/s. Mohit International. He admitted that M/s. Mohit International was one of the concerns which were apparently engaged in the business of Diamond trading, but actually there was no diamond activity. In answer to question no.31, he submitted that: “In my capacity as accountant of all the 33 concerns, having access to the books of accounts of these concerns and as the person who makes entries of sale, purchase and banking transaction, I would like to state that all the 33 concerns mentioned above are merely engaged in providing accommodation entries of sale, purchase and bogus loans and advances to various parties”. He further stated in answer to question no.32 that one: “Sandeep Maloo supervises the work of giving accommodation entries of bogus sale, purchase and bogus loans and advances. He advises Praveen Jain as to how the accommodation entries are to be given”. Then the statement of Mr. Praveen Kumar Jain was recorded during the course of search, who, in answer to question No.65, as reproduced in the assessment order, gave the list of his employees, which included Mr. Nilesh Parmar who was ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 15 looking after the accounts. In answer to question no.66, which has been reproduced at para 7 of the assessment order, he admitted of being engaged: “basically in the business of giving accommodation entries which are routed through the companies under my control”. All the companies were admitted to be either owned by him or directly/indirectly under his control and were only paper companies with no real business transactions except providing accommodation entries of bogus unsecured loan, bogus LTCG etc. In answer to question no.67, he admitted that: “I have earned in this entire transaction is the commission on the accommodation entry given to the beneficiary company/builder <0.15% to 0.20% per month”. It was on the basis of such statements, that the AO recorded the above reasons for reassessment and dealt with the objections raised by the assessee through a separate order, which was not challenged by the assessee before the Hon’ble High Court. In support of the genuineness of the transaction, the assessee furnished before the AO - Ledger extracts of M/s. Mohit International from its books of account; Bank statement; Confirmation from lender; Audited Statement ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 16 of accounts of lender; his PAN card; his Income-tax return etc., which did not convince the AO as well as the ld. first appellate authority. 13. In order to appreciate the genuineness or otherwise of the transaction, I, firstly, deal with the above referred material supplied by the assessee to the authorities below. The first and the foremost thing to be noted is that M/s. Mohit International is a proprietorship concern of Mr. Nilesh Parmar, whose PAN and Income-tax return have been placed on record by the ld. AR. At this stage, it is relevant to mention that the statement of Mr. Nilesh Parmar was recorded on oath u/s.131 of the Act, which has been referred to in para 6 of the assessment order. In that statement, he admitted to be looking after the accounts of all the 33 concerns which were managed and controlled by Mr. Praveen Kumar Jain. Then Mr. Praveen Kumar Jain also in his statement recorded u/s.132(4), as referred to in para 7 of the assessment order, admitted that Mr. Nilesh Parmar was looking after the accounts of his concerns. Thus, it becomes evident that Mr. Nilesh Parmar who was working as an Accountant with Mr. Praveen Kumar Jain was the alleged ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 17 owner of M/s. Mohit International, which provided accommodation entry of unsecured loan of Rs.25.00 lakh to the assessee. 14. The assessee has placed on record the Annual accounts of M/s. Mohit International for the year ending 31-03-2007 at pages 56 and 57 of the paper book. Page 57 is a copy of the Profit and loss account, which shows turnover of Rs.127.87 crore and purchase of Rs.127.75 crore, with the net profit at Rs.9,37,568/-. The `Other income’ shown in the Profit and loss account as per Schedule 7 is Rs.32,52,241/-. If the amount of `Other income’ is excluded, M/s. Mohit International suffered a loss of more than Rs.23.00 lakh on sale of Rs.127.87 crore. What is the nature of the transactions of purchase and sale is not borne out from any material provided by the assessee. An interesting fact to be noted is that there is no Opening stock or Closing stock of M/s. Mohit International, despite such a huge turnover. It is further important to note that the value of Fixed assets in the balance sheet of M/s. Mohit International is Rs.3,17,856/-, which shows that M/s. Mohit International carried out business of ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 18 Rs.127.00 crore with the fixed assets of Rs.3.17 lakh only. This concern has shown Loans/advances on the asset side of its Balance sheet at Rs.13.95 crore with Sundry Debtors at Rs.37.30 crore. Though there is reference to Schedule No.4 giving details of Current assets, loans and advances, but such Schedule is unfortunately again missing from the details filed by the assessee. As against that, balance in the Proprietor’s capital is only Rs.14,91,014/-. In fact, none of the Schedules referred to either in the Profit and loss account or the Balance sheet have been made available. On an examination of the Profit and loss account and Balance sheet of this concern de hors the other relevant details, I have no doubt that the Annual accounts not only lack credence but also prove non- genuineness of the transaction thereby destroying the assessee’s façade of authenticity. Though the assessee placed on record a copy of ledger extract, bank statements, income- tax returns, PAN of Mr. Nilesh Parmar and TDS certificates etc., but Schedules to the Profit and loss account and the Balance sheet, which could have illuminated the issue further, have not been made available. On a specific query, the ld. AR ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 19 denied to have possession of the Tax Audit Report which could have thrown further light on the nature of activities carried out by M/s. Mohit International. When the assessee had such an easy access to the Annual accounts, Income tax return and PAN along with the bank statements of M/s Mohit International etc., I fail to comprehend as to what prevented it from getting Schedules to the Annual accounts and its Tax audit report, which could have indicated the nature of business carried on by M/s. Mohit International and other crucial details having bearing on the transaction with the assessee. 15. There is another significant aspect of the matter. A copy of income-tax return of Mr. Nilesh Parmar, proprietor of M/s. Mohit International, has been placed at page 54 of the paper book. The address of Sh. Nilesh Parmar in such a return of income has been shown as that of Surat, Gujarat. Assuming arguendo the contention of the ld. AR that M/s. Mohit International was engaged in the business of Diamonds, a question arises as to how the assessee, engaged in construction activity based in Pune, came in touch with M/s. Mohit International for obtaining a loan of Rs.25.00 lakh. No answer ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 20 could be given even by the ld. AR during the course of hearing before the Tribunal. It is further interesting to note that the amount of alleged loan was provided by M/s. Mohit International from an account maintained with Axis Bank Ltd. with branch ID of 00233. The said branch ID reveals that it was located at New Marine Lines, Mumbai. This fact has been pointed out by the ld. CIT(A), which could not be controverted on behalf of the assessee. Thus, the situation which turns out in this way is that the assessee, a builder based in Pune, obtained a loan from Mr. Nilesh Parwar, doing business of Diamonds in Surat through a bank account maintained by him in Mumbai and on top of it, Mr. Nilesh Parmar was working as an Accountant with Mr. Praveen Kumar Jain as admitted by himself and Mr. Praveen Kumar Jain. 16. It is not the end of the matter. In order to prove the genuineness of the alleged loan transaction, the assessee furnished a copy of bank account of M/s. Mohit International from 25-11-2006 to 13.12.2006 at page 58 and from 27.2.2007 to 16-03-2007 at pages 59 of the paper book. The alleged loan entry of Rs.25.00 lakh dated 28.2.2007 has been debited to the ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 21 Axis Bank account and in the Description column mentions “KASTURI RASHI”, i.e. the name of the assessee. On a perusal of these two pages of the bank account provided by the assessee itself, it can be seen that there are transactions running into lakhs and crores in such a bank account. The transaction with the assessee is dated 28-02-2007. On that date itself, there are 14 transactions. First six transactions are Cancellation of DDs worth Rs.2.50 lakh approximately. Then there is a transaction with the assessee amounting to Rs.25.00 lakh. On that date itself, there are six credit transactions worth more than Rs.56.00 lakh and one debit transaction of Rs.12.70 lakh. Opening balance on 28.2.2007 as per the bank statement is Rs.37.54 lakh and closing balance is Rs.59.18 lakh. Similar is the position about several debit and credit entries on all the dates and the balance in the bank account running into crores. For example, on 16.3.2017, being the last date on two pages given, there is a closing balance of Rs.1.87 crore. It is not understandable as to how Mr. Nilesh Parmar, who was working just as an Accountant with Mr. Praveen Kumar Jain, could have managed to have bank transactions running into ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 22 crores of rupees. No answer could be given by the ld. AR to this during the course of hearing before the Tribunal. 17. When the above factual scenario is examined in the light of the statement given by Mr. Nilesh Parmar himself that M/s. Mohit International was one of the concerns which was apparently engaged in the business of Diamonds trading but actually providing accommodation entries, there remains no doubt that the transaction of loan of Rs.25.00 lakh received by the assessee is nothing but a bogus loan received from M/s. Mohit International, through a proprietorship concern of Mr. Nilesh Parmar, which was actually controlled by Mr. Praveen Kumar Jain, with whom Mr. Nilesh Parmar was working as an Accountant. Not only that, even Mr. Praveen Kumar Jain also admitted before the authorities that he was engaged in giving accommodation entries through companies under his control and all of such companies were paper concerns with no real business transactions. He also admitted to have provided accommodation entries, inter alia, of unsecured loans/advances, sale and purchase in various commodities including Diamonds etc. He further admitted that his ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 23 beneficiaries included, inter alia, builders. During the course of search, he provided a list of concerns controlled and managed by him along with name and address of the beneficiaries of accommodation entries. Such a list included the name of the assessee as a beneficiary of a loan of Rs.25.00 lakh received on 26-02-2007 from the concern controlled and managed by him by the name of M/s. Mohit International. On a specific question, the ld. AR fairly admitted that loan of Rs.25.00 lakh was received and recorded by the assessee from M/s. Mohit International on 26-02-2007, though he insisted on the genuineness of the transaction. 18. At this juncture, it will not be out of place to refer to the judgment of the Hon'ble Supreme Court in CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC), in which the assessee claimed before the ITO that income of certain property should not be taxed in his hands as it was a trust property. The ITO rejected the claim and included the income in the hands of the assessee. The Tribunal affirmed the decision of the ITO, which was reversed by the Hon'ble High Court. Reversing the verdict of the Hon’ble High Court, their Lordships noticed that ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 24 though the assessee made a claim that income of the property was not his and produced conveyance executed in his favour and the deed of settlement executed by his wife, nearly about a year after the conveyance, however, when the ITO asked the assessee about the source from which his wife got the amount, apart from saying that it was ‘sthridhan’ property, he failed to disclose any source from which his wife could have got the amount for purchasing the premises. In this backdrop of facts, the Hon'ble Supreme Court held that although the apparent must be considered as real, but, if there are reasons to believe that the apparent is not real, as is the case under consideration as well, then the apparent should be ignored to unearth the harsh reality. 19. Similar view has been canvassed in Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC). The question for consideration in that case was whether the assessee purchased winning tickets after the event. It was observed that in all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 25 of proving that it is not taxable because it falls within exemption provided by the Act, lies upon the assessee. But, in view of section 68, where any sum is found credited in the books of the assessee for any previous year the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In deciding the issue against the assessee, their Lordships held that : `Apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities’. This shows that a decision based on the attending circumstances and human probabilities does not get vitiated if there are compelling reasons to reject the frontage of a transaction based on the so-called evidence, which is nothing more than a mere paper work. ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 26 20. The ld. AR relied on a decision of the Mumbai Bench of the Tribunal in ITO Vs. M/s. Shreedham Construction Pvt. Ltd., copy placed at page 165 of the paper book, for contending that the Tribunal accepted the genuineness of transaction in respect of Mr. Parveen Kumar Jain group of cases. On the other hand, the ld. DR relied on the decision of the Ahmedabad Bench of the Tribunal in Pavankumar M. Sanghvi Vs. ITO, Vadodara in ITA No.2447/Ahd/2016 which has been discussed at page 30 of the impugned order. In view of the fact that the decision in M/s. Shreedham Construction Pvt. Ltd. (supra) pertains to years other than the assessment year 2007-08 under consideration and the decision of Ahmedabad Bench of the Tribunal in Pavankumar M. Sanghvi (supra) relates to the assessment year under consideration and also the loan transaction is from the same party, namely, M/s. Mohit International, I am convinced to go with the decision of the Ahmedabad Bench of the Tribunal. 21. To sum up, in the given facts as discussed supra, I have no hesitation in countenancing the view of the ld. CIT(A) that ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 27 the assessee received accommodation entry of loan of Rs.25.00 loan from M/s. Mohit International. III. PRINCIPLES OF NATURAL JUSTICE 22. The assessee has raised an additional ground contending that adequate opportunity of hearing was not provided by the authorities below. It was submitted that the AO wrongly mentioned in para 6 of his order that the copy of the statement was shown to the assessee. The ld. AR contended that in the absence of furnishing of the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain to the assessee, the assessment was vitiated. 23. I have examined the relevant material on record. The entire focus of the assessee in this ground has been on the fact that the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain were not supplied to him. It is a matter of record that the reasons recorded by the AO clearly indicated that the assessee received alleged loan of Rs.25.00 lakh from M/s. Mohit International. The assessee raised objections against such reasons which were disposed off by the AO, vide his order dated 21-01-2015, whose copy is available at pages 14 ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 28 and 15 of the assessment order. In para 3 of such order, the AO has clearly referred to the transactions of the alleged loan accepted by the assessee from M/s. Mohit International, who was a mere accommodation entry provider to various beneficiaries and the assessee was one of such beneficiaries. This shows that the assessee was well aware about the transaction under challenge allegedly entered into with M/s. Mohit International, whose proprietor admitted to be an accommodation entry provider. In support of the genuineness of the transaction, it was the assessee, who placed on record Ledger extracts, Bank statement, Confirmation from lender, PAN card, Income-tax return and Annual accounts of the lender etc. Submission of such documents in support of the genuineness of the transaction pre-empts the argument of ignorance of the case made against him by the AO. It is further relevant to note that the AO has reproduced all the relevant parts of the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain in the body of the assessment order itself, which form the basis of the addition. Except for harping on the argument of non-provision of such statements before the ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 29 CIT(A), the assessee did not add any further evidence to prove the genuineness of the transaction except for refurnishing the documents pertaining to M/s Mohit International as were placed before the AO. The material supposedly proving the genuineness of the transaction furnished by the assessee, speaks volumes of its unreliability and non-genuineness of the transaction. 24. The ld. AR contended that in the absence of the AO having provided statements on which reliance was placed, the addition deserves to be deleted. For this proposition, he relied on the judgment of Hon’ble Bombay High Court in Pr. CIT Vs. Paradise Inland Shipping (P) Ltd. (2017) 84 taxmann.com 58 (Bom.) and CIT Vs. Ashish International (ITP No.4299/2009). There can be no doubt about the proposition that if the Department is relying on any statement etc. for deciding the issue against the assessee, such statement must be confronted to the assessee, so as to enable him to put across his point of view. This general proposition holds good where the assessee is unaware of the contents of the statements sought to be used against him. If, however, the contents of the ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 30 statements are very well known to the assessee and the entire factual panorama is very well in the knowledge of the assessee, then he cannot be allowed to argue that he was unaware of the material used against him. Here is a case in which the assessee allegedly received loan of Rs.25.00 lakh from M/s. Mohit International. This fact was conveyed to the assessee by supplying the reasons for re-assessment against which the assessee filed objections which were disposed off by the AO. Thereafter, during the course of assessment proceedings, the assessee was again informed about the statement of Mr. Nilesh Parmar and shown the relevant excerpts from the statement. The assessee, in support of his submission and genuinely knowing that what was going on against him, did furnish necessary evidence in the shape of Ledger extracts of M/s. Mohit International, Bank statement of M/s. Mohit International, PAN card, Income-tax returns and Audited financials of M/s. Mohit International. In such circumstances, it will be too much to contend that the assessee was oblivious of the statements which were used against him. ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 31 25. Be that as it may, it is a settled legal position that the first appeal is a continuation of assessment proceedings. When the assessment order containing all the relevant questions from the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain was challenged before the ld. CIT(A), the assessee did nothing more than re-furnishing of the earlier documents viz., income- tax returns and PAN card etc. of Mr. Nilesh Parmar, which it had already filed with the AO. The assessee has failed to make its case any better before the Tribunal as well. In view of the above factual matrix, it is apparent that the assessee was in full knowledge of the state of affairs and the transaction of accommodation entry received from M/s. Mohit International, on the basis of which the addition came to be made. 26. The Hon’ble Supreme Court in State of U.P. Vs. Sudhir Kumar Singh and others in Civil Appeal No.3498/2020 (arising out of SLP (C) No.5136/2020 vide its judgment dated 16-10-2020 has extensively dealt with the question of principles of natural justice and laid down the following principles in para 39 of its judgment : ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 32 (1) Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused. (2) Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest. (3) No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission of facts, in cases in which the Court finds on facts that no real prejudice can therefore be said to have been caused to the person complaining of the breach of natural justice. (4) In cases where facts can be stated to be admitted or indisputable, and only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person. (5) The “prejudice” exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the non- observance of natural justice. 27. On going through the above principles laid down by the Hon’ble Apex Court, it is clear that when the facts are clear from which only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 33 no prejudice caused. When I examine the facts of the instant case on the touchstone of the above principle enunciated by the Hon’ble Apex Court, it gets manifested that the assessee was very well aware of the entire case against him. The fact that Mr. Praveen Kumar Jain was engaged in the business of providing accommodation entries was established twice, firstly, in the statement of Mr. Nilesh Parmar recorded u/s.131 and, secondly, in the statement of Mr. Praveen Kumar Jain recorded u/s.132(4) of the Act. All the attending facts and circumstances flowing from the documents of M/s. Mohit International, furnished by the assessee itself, as discussed hereinabove, abundantly corroborate the version stated by Mr. Nilesh Parmar and Mr. Praveen Kumar Jain in their respective statements about the racket of accommodation entries. In such circumstances, the assessee cannot claim any violation of principles of natural justice. 28. I am reminded of the judgment of the Hon’ble Supreme Court delivered by a five Hon’ble judges-bench in Managing Director, ECIL and others Vs. B. Karnakumar and others (1993) 4 SCC 727 holding that if after hearing parties, the ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 34 Court/Tribunal comes to the conclusion that the non-supply of the report would have made no difference to the ultimate findings and the punishment given, the Court/Tribunal should not interfere with the order of punishment by mechanically setting-aside the order of punishment on the ground that the report was not furnished. 29. The Hon’ble Delhi High Court in Roger Enterprises P. Ltd. & Anr VS. CIT & Anr (2016) 382 ITR 639 (Del) has held that where uncontroverted statement of witness was sufficient to substantiate the case of the Revenue, the assessee cannot take the plea of violation of principles of nature justice. This judgment was rendered after considering the decision of Hon’ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise, Kolkata-II (2015) 62 taxmann.com 3 (SC), on which the ld. AR has placed strong reliance. 30. The ld. AR also harped on not allowing cross examination of either Mr. Nilesh Parmar or Mr. Praveen Kumar Jain as a ground for quashing the instant assessment order. On a perusal of the facts, it is seen that the assessee did not make such ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 35 claim before the AO for allowing their cross examination. The reliance of the ld. AR on the judgment of Hon’ble Delhi High Court in Ashish International (supra) is misplaced. In that case, the appellate authority had sought remand report and even at that stage the genuineness of statement was not established by allowing cross examination of the person whose statement was relied upon by the Revenue. The facts in the instant case are far away from the factual situation prevailing in that case. The second judgment in the case of Paradise Inland Shipping Ltd. (supra) again does not support the assessee’s case because the AO in that case initiated re- assessment proceedings on the ground that the shares of the assessee company were purchased by fictitious companies, which were not in existence. When I turn to the facts of the instant case, it is discernible that the assessee allegedly received bogus loan of Rs.25.00 lakhs, which position got specifically established by the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain. 31. At this stage, it would be relevant to take note of the judgment of the Hon’ble jurisdictional High Court in Cenzer ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 36 Industries Ltd. VS. ITO (2016) 385 ITR 58 (Bom). In that case, the assessee, placing reliance on Andaman Timbers (supra), contended that in case the Revenue was relying upon statement of an adverse witness, then the appellant should have been given opportunity and having not done so, rendered the order not sustainable. The Hon’ble High Court rejected the contention of the assessee on finding that the assessee did not seek any cross examination. Turning to the facts of the case under consideration, my attention has not been drawn towards any specific material indicating that the assessee requested for cross examination of either or both of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain, which was not allowed by the AO. 32. The above discussion boils down that the assessee was very well aware of the contents of the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain from the stage of the initiation of the reassessment proceedings and the argument of it being unaware to the statements, is nothing but a shield to defend an undefendable case. It is pertinent to mention that the assessee in its last reply dated 21-03-2015 submitted personally to the AO on 24.3.2015, stated all that it was to ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 37 state by mentioning in para 3 that: “we have already filed with you all the relevant papers as Annexure 1 to 5 of our letter dated 27-06-2014. You have also acknowledged the same in Para 3 of your aforesaid letter. Under the circumstances, we fully explained the said loan”. There is no reference to any so- called violation of principles of natural justice by the AO not supplying the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain. In view of the foregoing discussion, I am satisfied that the authorities below were justified in deciding the issue against the assessee. 33. In the result, the appeal is dismissed. Order pronounced in the Open Court on 07 th March, 2022. Sd/- (R.S.SYAL) उपा य / VICE PRESIDENT प ु णे Pune; दनांक Dated : 07 th March, 2022 Satish ITA No. 1961/PUN/2017 M/s. Kasturi Rashi Developers 38 आदेश क त ल प अ े षत / Copy of the Order is forwarded to : 1. अपीलाथ / The Appellant; 2. यथ / The Respondent; 3. आयकर आयु (अपील) / The CIT (Appeals)-8, Pune 4. The Pr. CIT-3, Pune 5. वभागीय त न ध, आयकर अपील!य अ धकरण, प ु णे “SMC” / DR ‘SMC’, ITAT, Pune; 6. गाड फाईल / Guard file. आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 02-03-2022 Sr.PS 2. Draft placed before author 07-03-2022 Sr.PS 3. Draft proposed & placed before the second member -- JM 4. Draft discussed/approved by Second Member. -- JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *