M/S. APS Containers Pvt. Ltd., Kolkata V. DCIT, CC-XVIII, KOLKATA, Kolkata

ITA 2154/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1806 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 28-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURAV KUMAR
• Assessee Lawyers: S K TULSIYAN
• Keywords: Bogus Share capital; Principle of natural justice; Tangible material; Accommodation entries; Retraction
• Section: 143(3); 133A; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.2154-2155/KOL/2014 ASSESSMENT YEARS:2009-10 & 2010-11 M/S APS CONTAINERS PVT. LTD., BLOCK F-101, 4, D.L KHAN ROAD, KOLKATA-025 [ PAN NO.AACCA 1020 D ] / V/S . DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XVIII, AAYAKAR BHAWAN, POORVA, 110, SHANTI PALLY, KOLKATA- 107 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI S.K. TULSIYAN, ADVOCATE /BY RESPONDENT SHRI SAURAV KUMAR, ADDL. CIT-DR /DATE OF HEARING 20-03-2017 /DATE OF PRONOUNCEMENT 03-05-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- BOTH APPEAL BY THE ASSESSEE ARE DIRECTED AGAINST TH E DIFFERENT ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-II, KOLKATA OF EVEN DATED I.E. ON 25.09.2014. ASSESSMENTS WERE FRAMED BY DCIT, CENTRA L CIRCLE-XVIII, KOLKATA U/S 147/143(3) OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED TO AS THE ACT) VIDE HIS ORDERS DATED 26.03.2014 FOR ASSESSME NT YEARS 2009-10 & 2010- 11 RESPECTIVELY. SHRI S.K. TULSIYAN, LD. ADVOCATE APPEARED ON BEHALF OF ASSESSEE AND SHRI SAURAV KUMAR, LD. DEPARTMENTAL REPRESENTATIVE REPRE SENTED ON BEHALF OF REVENUE. ITA NO.2154-2155/KOL/2014 A.YS 0 9-10 & 10-11 M/S APS CONTAINERS PVT. LTD. VS. DCIT,CC-XVIII, KOL. PAGE 2 2. BOTH THE APPEALS ARE HEARD TOGETHER AND ARE BEIN G DISPOSED OF BY WAY OF CONSOLIDATE ORDER FOR THE SAKE OF BREVITY. WE FIRST TAKE UP THE APPEAL OF ASSESSEE IN ITA NO.2 154/KOL/2014 RELATING TO A.Y. 09-10 . 3. THE ISSUE RAISED IN GROUND NUMBER 2 BY THE ASSES SEE IN THIS APPEAL IS THAT LEARNED CIT-A ERRED IN UPHOLDING THE ORDER OF AO BY SUSTAINING THE DISALLOWANCE OF RS. 18 LAKH ON ACCOUNT OF SHARE AND APPLICATION MONEY. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PR IVATE LIMITED COMPANY WHERE A SURVEY OPERATION U/S 133A OF THE ACT WAS CO NDUCTED IN THE BUSINESS PREMISES OF M/S BUBNA PROPERTIES PRIVATE LIMITED (F OR SHORT BPPL) AND M/S GOKUL LEASING & FINANCE PRIVATE LIMITED (FOR SHORT GLFPL) DATED 03.80.2011. DURING THE COURSE OF SURVEY OPERATION STATEMENT U/S 131 DATED 04.08.2011 OF SHRI RAJENDRA BUBNA, MANAGING DIRECTOR OF THE BPPL WAS RECORDED WHEREIN IT WAS ADMITTED THAT ACCOMMODATION ENTRIES OF RS. 18 L ACS HAS BEEN PROVIDED TO THE ASSESSEE. THE RELEVANT EXTRACT OF THE STATEMENT IS REPRODUCED BELOW:- Q.5 DO YOU KNOW THE COMPANIES NAMED APS CONTAINERS PVT LTD. AND VKD TRADERS PVT. LTD.? ANS. YES, I KNOW THESE COMPANIES, THEY ARE RUN BY A LOK AGARWAL. Q.6. DURING THE COURSE OF SURVEY U/S 133A OF THE IT ACT IN YOUR OFFICE YOU ARE STATED THAT YOU HAVE GIVEN ACCOMMODATION ENTRIES OF RS.18,00,000/- TO APS CONTAINERS PVT. LTD IN THE FY 2008-09 AND RS.10,00, 000/- IN THE FY 2009-10 THROUGH M/S BUBNA PROPERTIES PVT LTD AND GOKUL LEAS ING PVT. LTD. AND RS.20,00,000/- TO M/S VKD TRADERS PVT. LTD. IN THE FY 2009-10 AT A COMMISSION OF 2%. DO YOU CONFIRM THIS STATEMENT NOW ? ANS: YES, I HAVE GIVEN ACCOMMODATION ENTRIES OF RS. 28,00,000/- APS CONTAINERS PVT LTD RS.110,000/- DURING THE FY 2009- 10 THROUGH GUKUL LEASING & FINANCE PVT. LTD., AND RS.18,00,000/- DUR ING FY 2008-09 THROUGH BUBNA PROPERTIES PVT. LTD., MOREOVER, I HAVE GIVEN ACCOMMODATION ENT5RIES FOR RS.20,00,000/- TO VKD TRADER PVT.LTD., THROUGH MY COMPANY. GUKUL LEASING & FINANCE PVT. LTD. Q.7. DURING THE COURSE OF SURVEY YOU HAVE ADMITTED THAT YOU HAVE GIVEN CHEQUES TO THESE COMPANIES AFTER RECEIVING AN EQUAL AMOUNT OF CASH ALONG WITH COMMISSION OF RS.96,000/- DO YOU ABIDE BY TO T HIS STATEMENT? ANS. YES, I AGREE THAT I HAVE DONE THIS. ITA NO.2154-2155/KOL/2014 A.YS 0 9-10 & 10-11 M/S APS CONTAINERS PVT. LTD. VS. DCIT,CC-XVIII, KOL. PAGE 3 Q.8 PLEASE STATE WHO PAID YOU THE CASH AGAINST WHIC H YOU HAVE ISSUED CHEQUES AMOUNTING TO RS.48,00,000/- ANS: SHRI ALOK AGARWAL, DIRECTOR OF THE ABOVE TWO C OMPANIES GAVE ME THIS MONEY THROUGH HIS AGENT TO WHOM I HANDED OVER THE C HEQUES. Q. 9. SHRI ALOK AGARWAL, DIRECTOR OF M/ VKD TRADERS LTD. AND APS CONTAINERS PVT LTD., IS SITTING BESIDE YOU. PLEASE CONFIRM THE STATEMENT YOU HAVE GIVEN REGARDING YOU ACCOMMODATING ENTRIES PROVIDED TO THE SE COMPANIES? ANS. YES, I REITERATED THAT I HAVE GIVEN ENTRIES TO THE ABOVE COMPANIES AFTER TAKING EQUAL AMOUNT OF CASH AND COMMISSION @ 2% OF THE AMOUNT. Q. 10. MR. ALOK AGRAWAL IS HEREBY GIVEN OPPORTUNITY TO CROSS EXAMINE SRI RAJENDRA BUBNA IF HE SO LIKES. ANS: I DO NOT WANT TO ASK HIM ANY QUESTION. THE AO ALSO CALLED UPON THE ASSESSEE TO EXPLAIN THE ABOVE FACTS OF THE CASE WHO HAS REFUTED TO HAVE TAKEN SUCH ACCOMMODATION EN TRIES OF RS. 18 LACS AND SUBMITTED VARIOUS DOCUMENTS IN SUPPORT OF GENUI NENESS OF THE TRANSACTIONS. IT IS ALSO IMPORTANT TO NOTE THAT SHRI RAJENDRA BUB NA MANAGING DIRECTOR OF BPPL RETRACTED FROM THE STATEMENT GIVEN AT THE TIME OF SURVEY VIDE LETTER DATED 18 TH MARCH 2014 ALONG WITH THE AFFIDAVIT DULY NOTARIZED . HOWEVER THE AO DISREGARDED THE CONTENTION OF THE ASSESSEE BY OBSER VING THAT SHRI RAJENDRA BUBNA RETRACTED FROM THE STATEMENT AFTER SUCH A LON G TIME. MOREOVER THE RETRACTED STATEMENT WAS GIVEN AFTER THE COMPLETION OF ASSESSMENT OF BPPL. THE AO FINALLY TREATED THE SUM OF RS.18 LACS AS UND ISCLOSED INCOME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE ADDIT ION MADE BY ASSESSING OFFICER WAS SOLELY ON THE BASIS OF THE STATEMENT GI VEN BY MR. RAJENDRA BUBNA, DIRECTOR OF M/S BUBNA PROPERTIES PVT. LTD. (BPPL FO R SHORT) WHICH WAS RETRACTED BY HIM IN THE COURSE OF ASSESSMENT PROCEE DINGS. BESIDES THIS THERE WAS NO DOCUMENT FOUND IN THE COURSE OF SURVEY SUGGE STING THAT THE ASSESSEE ITA NO.2154-2155/KOL/2014 A.YS 0 9-10 & 10-11 M/S APS CONTAINERS PVT. LTD. VS. DCIT,CC-XVIII, KOL. PAGE 4 HAS TAKEN ACCOMMODATION ENTRY FROM BPPL. THE ASSESS EE ALSO SUBMITTED THAT THE COPY OF THE STATEMENT USED AGAINST IT WAS NOT MADE AVAILABLE FOR THE PURPOSE OF CONFRONTATION. THE ASSESSEE ALSO SUBMITT ED THAT BPPL HAS SUBSCRIBED SHARES OF ASSESSEE-COMPANY FOR 18 LAKH IN THE YEAR ENDING AS ON 31.03.2009 AND THE NET WORTH OF THE BPPL I.E. ON 31 .03.2009 STOOD FOR 1017 LAKH. THEREFORE, IT CAN BE INFERRED THAT THERE WAS SUFFICIENT FUND AVAILABLE WITH THE BPPL FOR MAKING SUCH INVESTMENT IN THE COURT. T HE ASSESSEE ALSO SUBMITTED THAT SHRI ALOK AGARWAL, DIRECTOR OF THE A SSESSEE-COMPANY REMAINED SILENT AT THE TIME OF RECORDING THE STATEMENT OF SH RI RAJENDRA BUBNA U/S 131 OF THE ACT EVEN THE ALLEGATION WAS FRAMED BY SHRI RAJE NDRA ARORA AGAINST THE ASSESSEE. IT IS BECAUSE HE FACED SUCH PROCEEDINGS F IRST TIME IN HIS LIFE AND THEREFORE HE COULD NOT RESPOND AT THAT RELEVANT TIM E. THE ASSESSEE ALSO SUBMITTED THAT NO STATEMENT OF ALOK AGARWAL, DIRECT OR OF ASSESSEE-COMPANY WAS RECORDED DURING THE COURSE OF ASSESSMENT PROCEE DINGS. THE AO HAS NEVER RECORDED THE STATEMENT OF SHRI ALOK AGRAWAL D URING THE COURSE OF ASSESSMENT PROCEEDINGS THOUGH HE HAD EVERY OPPORTUN ITY TO RECORD HIS STATEMENT. HOWEVER, THE LD. CIT(A) AFTER HEARING TH E ASSESSEE AND CONSIDERING THE REMAND REPORT HAS MADE THE FOLLOWIN G OBSERVATION:- I) THERE WAS A VERY DIRECT AND SPECIFIC STATEMENT G IVEN BY SHRI RAJENDRA BUBNA STATING THAT HE HAS GIVEN ACCOMMODATION ENTRI ES TO THE ASSESSEE. II) AT THE TIME OF STATEMENT RECORDING U/S 131 OF T HE ACT SHRI ALOK AGARWAL, DIRECTOR OF ASSESSEE-COMPANY WAS ALSO PRES ENT AND A SPECIFIC OPPORTUNITY TO CROSS-EXAMINE, SHRI RAJENDRA BUBNA I N CONNECTION WITH THE ALLEGED SHARE TRANSACTIONS WAS GIVEN BUT HE FAI LED TO AVAIL THE SAME. III) TWO LETTERS FILED BY SHRI RAJENDRA BUBNA, DIRE CTOR OF BPPL RETRACTING FROM ITS EARLIER STATEMENT HAS NO MEANING BECAUSE I T WAS FILED ON 18.03.2014 I.E. AFTER MORE THAN 2 AND HALF YEARS. M OREOVER, SUCH RETRACTING STATEMENT WAS FILED AFTER THE COMPLETION OF ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT IN THE CASE OF B PPL. THE LD. CIT(A) ALSO OBSERVED THAT THE PROVISION OF SEC. 68 OF THE ACT DO NOT CAST ANY ITA NO.2154-2155/KOL/2014 A.YS 0 9-10 & 10-11 M/S APS CONTAINERS PVT. LTD. VS. DCIT,CC-XVIII, KOL. PAGE 5 OBLIGATION ON THE AO TO PROVE WITH THE HELP OF MATE RIALS THAT SHARE APPLICATION MONEY WAS BOGUS TRANSACTIONS. IN VIEW OF THE ABOVE, LD. CIT(A) DISREGARDED THE CO NTENTION OF ASSESSEE BY OBSERVING AS UNDER:- 7.7 IN VIEW OF THE ABOVE FACTS, I AM OF THE OPINIO N THAT THE AO WAS JUSTIFIED IN MAKING THE ADDITION OF RS.18,00,000 U/ S 68 OF THE ACT AS UNDISCLOSED INCOME OF THE APPELLANT FOR THE YEAR UN DER CONSIDERATION. THE SHAREHOLDER/SHARE SUBSCRIBER THROUGH ITS MANAGI NG DIRECTOR HAD GIVEN VERY SPECIFIC STATEMENT THAT DURING THE FINAN CIAL YEAR 2008-09 RELEVANT TO THE ASSESSMENT YEAR 2009-10 THE COMPANY M/S BUBNA PROPERTIES PVT. LTD HAD GIVEN AN ACCOMMODATION ENTR Y OF RS.18 LAKH TO THE APPELLANT COMPANY BY RECEIVING THE EQUIVALENT A MOUNT OF CASH AND THE COMMISSION OF RS.36,000/- FROM THE DIRECTOR OF THE APPELLANT COMPANY SHRI ALOK AGARWAL. THE DIRECTOR SHRI ALOK A GARWAL KEPT HIS SILENCE WHEN THE OPPORTUNITY TO CROSS EXAMINATION W AS ALLOWED TO HIM. HE COULD NOT REBUT THE STATEMENT GIVEN BY SHRI RAJE NDRA BUBNA AGAINST THE APPELLANT COMPANY. HENCE, THE ADDITION OF RS.18 LAKHS MADE BY THE AO IS CONFIRMED. IN SUPPORT THE RELIANCE IS PLACED ON THE DECISION IN THE CASE OF CIT VS. NEVA PROMOTERS & FINLEASE PVT. LTD ., 342 ITR 169 (DELHI) AND CIT VS. OASIS HOSPITALITIES PVT. LTD., 333 ITR 119 (DELHI). THE GROUND NO. 2, 3, AND 4 ARE DISMISSED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US ON THE FOLLOWING GROUND:- 2A) THAT THE LD. CIT(APPEALS) ERRED IN HAVING UPHE LD THE ADDITION OF RS.18,00,000/- 8U/S 68 OF ACT BEING THE EQUITY SHAR E APPLICATION MONEY RECEIVED BY THE ASSESSEE IN SPITE OF THE FACT THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ABLE TO PROVE THE IDEN TITY OF THE SHARE APPLICANT AND THE SOURCE OF THE SUBSCRIPTION AS WEL L AS GENUINENESS OF THE TRANSACTIONS BY FILING COPIES OF BANK STATEMENT OF THE INVESTOR REFLECTING ITS INVESTMENT IN THE SHARES, DECLARATION AFFIRMING THE INVESTMENT AND SOURCE, INCOME-TAX DETAILS, STATEMENT OF AUDITED ACCOUNTS O F THE INVESTOR REFLECTING THE INVESTMENT MADE BY IT IN THE INVESTEE COMPANY. (B) THAT THE LD. CIT(APPEALS) FAILED TO APPRECIATE THAT DURING SEARCH AND SURVEY OPERATION AT THE PREMISES OF THE ASSESSEE A ND ITS GROUP, NOTHING INCRIMINATING WAS FOUND SUGGESTING INVESTMENT MADE BY THE SUBSCRIBER M/S BUBNA PROPERTIES PVT. LTD. WAS ACTUALLY EMANATING F ROM THE COFFERS OF THE ASSESSEE AND HENCE TOTAL RELIANCE N THE ALLEGED STA TEMENT OBTAINED FROM SRI RJENDRA BUBNA, WHO TURNED HOSTILE, IS MISCONCEIVED, UNCALLED FOR AND BAD IN LAW. (C) THAT THE LD. CIT(APPEALS) ERRED IN NOT HAVING C ONSIDERED THAT THE SAID INVESTOR, SRI RAJENDRA BUBNA, DURING ASSESSMENT PRO CEEDINGS VIDE LETTER DATED 18.3.2014 RETRACTED FROM HIS EARLIER STATEMEN T ALLEGEDLY OBTAINED FROM HIM DURING SURVEY OPERATION AND ACTED UPON FOR DISB ELIEVING THE GENUINE TRANSACTIONS WITHOUT VERIFYING THE GENUINENESS OF T HE EVIDENCES PRODUCED ITA NO.2154-2155/KOL/2014 A.YS 0 9-10 & 10-11 M/S APS CONTAINERS PVT. LTD. VS. DCIT,CC-XVIII, KOL. PAGE 6 BEFORE THE AO WHEREAS THE IMPUGNED ASSESSMENT WAS C OMPLETED ON 26.3.2014. (D) THAT THE LD. CIT(APPEALS)FAILED TO APPRECIATE T HE SITUATION UNDER WHICH SRI ALOK AGARWALA FOR THE FIRST TIME HAD TO FACE SUCH U NCALLED FOR INCIDENCE OF ANSWERING QUESTIONS THROWN BY THE AO IN PRESENCE OF THE INVESTOR WHEN THE TRANSACTIONS WAS GENUINE AND DULY SUPPORTED BY THE AUDITED BOOKS OF ACCOUNT OF THE INVESTOR AND THE INVESTEE AND OTHER RELATED DOCUMENTS . 6. LD. AR FOR THE ASSESSEE BEFORE US FILED PAPER BO OK WHICH IS RUNNING PAGES FROM 1 TO 163 AND SUBMITTED THAT NO DEFECT IN THE DOCUMENTS IN SUPPORT OF SHARE CAPITALS WAS POINTED OUT BY THE AUTHORITIE S BELOW. THE AO HAS JUST RELIED ON THE STATEMENT GIVEN BY RAJENDRA ARORA WHI CH WAS TAKEN UNDER THE COERCION. THEREFORE, SAME CANNOT BE RELIED UPON. LD . AR ALSO SUBMITTED THAT THE RETRACTION STATEMENT WAS FIELD IN THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, NO ADDITION ON ACCOUNT OF SHARE APPLICATION M ONEY IS WARRANTED. ON THE OTHER HAND, LD. DR SUBMITTED THAT AN OPPORTU NITY WAS GIVEN TO ASSESSEE FOR CROSS-EXAMINATION WHEREIN THE ASSESSEE REMAINED SILENT WHICH PROVES BEYOND DOUBT THAT THE IMPUGNED ENTRY WAS ACC OMMODATION ENTRY AND THEREFORE LIABLE FOR ADDITION. HE HEAVILY RELIED ON THE ORDER OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE GRIEVANCE OF THE ASSESSEE IS THAT THE AO HAS MADE THE ADDITION OF RS. 18 LACS ON ACCOUNT OF BOGUS SHARE CAPITAL MERELY ON THE BASIS OF STATEMENT FURNISHED BY THE 3 RD PARTY WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LEARNED CIT(A). ADMITTEDLY THE SURVEY OPERATIONS WERE CONDUCTED ON THE ASSESSEE AS WELL AS ON THE BPPL AND GLFPL DATED 01.08-2011 AND 03.08.20 11 RESPECTIVELY. AT THE TIME OF SURVEY OPERATION, A STATEMENT U/S 131 O F SHRI RAJENDRA BUBNA MANAGING DIRECTOR OF THE BPPL WAS RECORDED WHEREIN IT WAS ADMITTED THE ASSESSEE WAS PROVIDED ACCOMMODATION ENTRY OF RS. 18 LACS IN FORM OF SHARE CAPITAL. AT THAT RELEVANT TIME, SHRI ALOK AGARWAL, DIRECTOR OF THE ASSESSEE COMPANY WAS ALSO PRESENT AND AN OPPORTUNITY FOR CRO SS EXAMINATION WAS ALSO ITA NO.2154-2155/KOL/2014 A.YS 0 9-10 & 10-11 M/S APS CONTAINERS PVT. LTD. VS. DCIT,CC-XVIII, KOL. PAGE 7 PROVIDED TO HIM FOR HIS REBUTTAL BUT HE REMAINED SI LENT. THUS THE ADDITION WAS CONFIRMED. 7.1 FROM THE FOREGOING DISCUSSION, IT APPEARS THAT THE OPPORTUNITY FOR CROSS EXAMINATION WAS PROVIDED TO THE ASSESSEE IN THE INS TANT CASE. BUT THE DUE PROCEDURE AS REQUIRED UNDER THE LAW HAS NOT BEEN AD HERED. AS PER THE PROVISIONS OF SECTION 131 OF THE ACT THE AO AFTER R ECORDING THE STATEMENT OF SHRI RAJENDRA BUBNA SHOULD HAVE ISSUED THE SUMMON U /S 131 OF THE ACT TO THE ASSESSEE FOR ITS CONFRONTATION. NEITHER SUCH NO TICE HAS BEEN ISSUED NOR ANY STATEMENT OF SHRI RAJENDRA BUBNA WAS PROVIDED T O THE ASSESSEE FOR HIS REBUTTAL. THE DIRECTOR OF THE ASSESSEE COMPANY WAS UNDER NO LEGAL OBLIGATION TO REPLY AT THE TIME OF RECORDING THE STATEMENT OF SHRI RAJENDRA BUBNA U/S 131 OF THE ACT. AS SUCH, THERE WAS NO ROLE OF THE DIREC TOR OF THE ASSESSEE COMPANY TO BE PRESENT AT THE TIME OF RECORDING OF STATEMENT OF SHRI RAJENDRA BUBNA. NO SUCH NOTICE WAS ISSUED BY THE REVENUE TO THE ASSESS EE FOR THE APPEARANCE AT THE TIME OF RECORDING OF STATEMENT OF SHRI RAJENDRA BUBNA. THE ALLEGATION OF THE LD. DR THAT THE DUE OPPORTUNITY WAS PROVIDED TO THE ASSESSEE AT THE TIME OF RECORDING OF STATEMENT OF SHRI RAJENDRA BUBNA IS NOT BASED ON THE PRINCIPLES OF NATURAL JUSTICE. IT IS WELL SETTLED L AW THAT NO STATEMENT CAN BE USED AGAINST THE ASSESSEE WITHOUT GIVING THE OPPORTUNITY AS PER THE PROCEDURE OF LAW. IN THIS CONNECTION WE RELY IN THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. CCE, CA NO. 4228 OF 2006 (SC) (2015)127 DTR (SC) 241. IN THE SAID CASE, THE HON'B LE SUPREME COURT HELD AS UNDER :- NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITN ESS BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES TH E ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURA L JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVE N BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORR ECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E AWE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT ITA NO.2154-2155/KOL/2014 A.YS 0 9-10 & 10-11 M/S APS CONTAINERS PVT. LTD. VS. DCIT,CC-XVIII, KOL. PAGE 8 REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAV E BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT T HEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS N OT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WA NTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WAN TED FROM THEM. WE FURTHER RELY IN THE JUDGMENT OF HON'BLE DELHI HI GH COURT IN THE CASE OF CIT VS. SMC. SHARE BROKERS LT. (2007) 288 ITR 345 (DEL) IN THIS CASE THE HON'BLE HIGH COURT HELD AS FOLLOWS:- WE ARE OF THE OPINION THAT THE TRIBUNAL WAS RIGHT I N ITS VIEW THAT IN THE ABSENCE OF MANOJ AGGARWAL BEING MADE AVAILABLE FOR CROSS-EXAMINATION, DESPITE REPEATED REQUESTS BY THE ASSESSEE, HIS STAT EMENT COULD NOT BE RELIED UPON TO HIS DETRIMENT. WE RELY IN THE JUDGMENT OF HON'BLE JURISDICTIONAL H IGH COURT IN THE CASE OF BANGODAYA COTTON MILLS LTD. VS. CIT (2009) 21 DTR 200 (CAL). IN THE SAID CASE THE HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- AO HAVING MADE THE IMPUGNED ADDITION SIMPLY ON THE BASIS OF SOME LETTERS SEIZED FROM A THIRD PARTY IN THE ABSENCE OF ANY COR ROBORATIVE EVIDENCE AND WITHOUT ISSUING SUMMONS TO THE CONCERNED PERSON OR MAKING HIM AVAILABLE FOR CROSS-EXAMINATION, THE ORDER PASSED BY THE TRIBUNAL UPHOLDING THE ADDITION IS SET ASIDE AND THE MATTER IS REMANDED BACK TO THE AO TO CONSIDER THE MATTER AFRESH. AGAIN THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF EASTERN COMMERCIAL ENTERPRISE (1994) 210 ITR 103 (CAL) AT PAGE 111:- CROSS-EXAMINATION IS THE SINE QUA NON OF DUE PROCES S OF TAKING EVIDENCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAINST A PARTY U NLESS THE PARTY IS PUT ON NOTICE OF THE CASE MADE OUT AGAINST HIM. HE MUST BE SUPPLIED THE CONTENTS OF ALL SUCH EVIDENCE, BOTH ORAL AND DOCUMENTARY, SO TH AT HE CAN PREPARE TO MEET THE CASE AGAINST HIM. THIS NECESSARILY ALSO POSTULA TES THAT HE SHOULD CROSS- EXAMINE THE WITNESS HOSTILE TO HIM. WE AGAIN RELY ON THE JUDGMENT OF HON'BLE KERALA HIG H COURT IN THE CASE OF P.S. ABDUL MAJEED (1994) 209 ITR 82(KEL) IN THE SAID CASE THE HON'B LE HIGH COURT HELD AS UNDER:- . HE HAD ALSO PRAYED FOR AN OPPORTUNITY TO CROSS-EXAM INE THE AUCTIONEERS. WHEN SUCH A REQUEST WAS MADE IT WAS INCUMBENT ON TH E OFFICER TO AFFORD OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE THE AU THORS OF THOSE BOOKS. THE PETITIONER HAD BEEN DENIED THE REASONABLE OPPORTUNI TY WHICH WAS DUE IN LAW, ITA NO.2154-2155/KOL/2014 A.YS 0 9-10 & 10-11 M/S APS CONTAINERS PVT. LTD. VS. DCIT,CC-XVIII, KOL. PAGE 9 IN RESPECT TO THE ASSESSMENT, AND THAT WAS SUFFICIE NT TO VITIATE THE ORDER. THE ORDER OF REASSESSMENT WAS NOT VALID AND WAS LIABLE TO BE QUASHED. IT IS ALSO UNDISPUTED FACT THAT THE LOWER AUTHORITI ES HAVE NOT BROUGHT ANY DEFECT ON RECORD IN THE DOCUMENTS SUBMITTED BY THE ASSESSE E TO DIPROVE THE GENUINENESS OF THE TRANSACTIONS. HERE IT IS PERTINE NT TO NOTE THAT THE CBDT HAS DISCOURAGED TO ITS OFFICERS TO MAKE THE ADDITION ON THE BASIS OF THE STATEMENTS AND WITHOUT BRINGING ANY TANGIBLE MATERIALS IN SUPP ORT OF HOLDING THE TRANSACTIONS AS BOGUS. THE RELEVANT EXTRACT OF CBDT INSTRUCTIONS ISSUED VIDE F. NO. 286/98/2013-IT(INV.II) DATED 18 TH OF DECEMBER 2014 READS AS UNDER:- INSTANCES/COMPLAINTS OF UNDUE INFLUENCE/COERCION HA VE COME TO NOTICE OF THE CBDT THAT SOME ASSESSEES WERE COERCED TO ADMIT UNDI SCLOSED INCOME DURING SEARCHES/SURVEYS CONDUCTED BY THE DEPARTMENT . IT IS ALSO SEEN THAT MANY SUCH ADMISSIONS ARE RETRACTED IN THE SUBSEQUEN T PROCEEDINGS SINCE THE SAME ARE NOT BACKED BY CREDIBLE EVIDENCE. SUCH ACTI ONS DEFEAT THE VERY PURPOSE OF SEARCH/SURVEY OPERATIONS AS THEY FAIL TO BRING THE UNDISCLOSED INCOME TO TAX IN A SUSTAINABLE MANNER LEAVE ALONE L EVY OF PENALTY OR LAUNCHING OF PROSECUTION. FURTHER, SUCH ACTIONS SHO W THE DEPARTMENT AS A WHOLE AND OFFICERS CONCERNED IN POOR LIGHT. 2. I AM FURTHER DIRECTED TO INVITE YOUR ATTENTION T O THE INSTRUCTIONS/GUIDELINES ISSUED BY CBDT FROM TIME TO TIME, AS REFERRED ABOVE , THROUGH WHICH THE BOARDS HAS EMPHASIZED UPON THE NEED TO FOCUS ON GAT HERING EVIDENCES DURING SEARCH/SURVEY AND TO STRICTLY AVOID OBTAININ G ADMISSION OF UNDISCLOSED INCOME UNDER COERCION/UNDUE INFLUENCE. 3. IN VIEW OF THE ABOVE, WHILE REITERATING THE AFOR ESAID GUIDELINES OF THE BOARD, I AM DIRECTED TO CONVEY THAT ANY INSTANCE OF UNDUE INFLUENCE/COERCION IN THE RECORDING OF THE STATEMENT DURING SEARCH/SURVEY/OTH ER PROCEEDING UNDER THE IT ACT, 1961 AND/OR RECORDING A DISCLOSURE OF UNDIS CLOSED INCOME UNDER UNDUE PRESSURE/COERCION SHALL BE VIEWED BY THE BOAR D ADVERSELY. FROM THE ABOVE CIRCULAR IT IS AMPLY CLEAR THAT THE CBDT HAS EMPHASIZED TO ITS OFFICERS TO FOCUS ON GATHERING EVIDENCES DURING SEA RCH/SURVEY OPERATIONS AND STRICTLY DIRECTED TO AVOID OBTAINING ADMISSION OF U NDISCLOSED INCOME UNDER COERCION/ UNDUE INFLUENCE. KEEPING IN VIEW THE GUID ELINES ISSUED BY THE CBDT FROM TIME TO TIME REGARDING THE STATEMENTS OBTAINED DURING SEARCH AND SURVEY OPERATION, IT IS UNDISPUTEDLY CLEAR THAT THE LOWER AUTHORITIES HAVE NOT COLLECTED ANY OTHER EVIDENCE TO PROVE THE IMPUGNED TRANSACTIO N AS BOGUS OTHER THAN THE STATEMENT. THEREFORE UNDER SUCH FACTS & CIRCUMSTANC ES WE ARE INCLINED TO REVERSE THE ORDER OF AUTHORITIES BELOW IN THIS REGA RD DIRECT THE AO TO DELETE THE ITA NO.2154-2155/KOL/2014 A.YS 0 9-10 & 10-11 M/S APS CONTAINERS PVT. LTD. VS. DCIT,CC-XVIII, KOL. PAGE 10 ADDITION. GROUND NO.3 IS NOT REQUIRED TO BE ADJUDI CATED AS THE MAIN ADDITION HAS BEEN DELETED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. COMING TO ASSESSEES APPEAL IN ITA NO.2155/KOL/2015 RELATING TO A.Y 10.11 . 8. AS STATED EARLIER, THE ISSUES IN THIS YEAR IS SA ME AS THAT OF THE LAST YEAR. THE ONLY DIFFERENCE IS THE AMOUNT INVOLVED. SINCE T HE FACTS ARE EXACTLY IDENTICAL, BOTH PARTIES ARE AGREED WHATEVER VIEW TA KEN IN ABOVE APPEAL OF THE ASSESSEE MAY TAKEN IN THIS PRESENT APPEAL OF ASSESS EE ALSO, WE HOLD ACCORDINGLY. 9. IN COMBINE RESULT, BOTH THE APPEAL OF ASSESSEE STAN D ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 03/05/2017 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S '#$ - 03/05/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S APS CONTAINERS PVT. LTD. BLOCK F-101, 4,D.L. KHAN R D.KOL-25 2. /REVENUE-DCIT, CENTRAL CIRCLE-XVIII, AAYAKAR BHAWAN , POORVA, 110 SHANTI PALLY, KO LKATA107 3. ##%& ' / CONCERNED CIT 4. ' - / CIT (A) 5. ()* ++%& , %& / DR, ITAT, KOLKATA 6. *,- / GUARD FILE. BY ORD ER/ , /TRUE COPY/ / # %& ,