M/S RAMESHWARRAM TOOLS, Jaipur V. ITO, Sawai Madhopur

ITA 280/JPR/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5421 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 23-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH JCIT DHK
• Assessee Lawyers: O P AGARWAL; TARUN MITTAL
• Keywords: Unexplained cash credit; Share purchase agreement; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Question of law; Corroborative evidences; Third party statement; Onus to prove
• Section: 143(3); 147; 68; 69; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 280/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2004-05. M/S RAMESHWARRAM TOLLS, STATION ROAD, HINDAUN CITY, KAROLI. CUKE VS. INCOME TAX OFFICER, WARD 3, SAWAI MADHOPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABFR 8174 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI O.P. AGARWAL & SHRI TARUN MITTAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/02/2016 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 08/04/2016 VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 25/01/2012 OF THE LEARNED CIT(A), KOTA FOR A.Y. 200 4-05. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ACTION OF LD. AO IN INITIATING THE ACTION U/S 147 OF THE INCO ME TAX ACT, 1961, WITHOUT MAKING ANY ENQUIRIES/ 2 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO INVESTIGATION UPON ALLEGED FACTS/MATERIAL RECEIVED FROM OTHER PARTY BASED ON ASSUMPTION AND PRESUMPTION AND FURTHER NOT PROVIDING THE PROPER OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE OF THE PERSONS / AUTHORITY FROM WHOM SUCH MATERIAL WAS COLLECTED BEHIND THE BACK OF THE ASSESSEE, THUS THE CONSEQUENT ORDER PASSED U/S 143(3)/147 OF THE INCOME TAX ACT, 1961 BEING GROSSLY IN VIOLATION OF PRINCIPAL OF NATURAL JUSTICE, WHICH DESERVES TO BE H OLD VOID-AB-INITIO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDIT ION OF RS.76,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INCOME U/S 69 IN ARBITRARY MANNER WITHOUT PROPERLY CONSIDERING THE SUBMISSION MADE AND EVIDENCE ADDUCED AND HAS FURTHER IGNORED THE EFFECTIVE COMPLIANCE MADE BY THE ASSESSEE BY SUBMITTING THE ALL POSSIBLE DETAILS, THUS THE ADDITION OF RS.76,00 ,000/- UPHOLD BY THE LD. CIT(A) DESERVES TO BE DELETED. 2.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN NOT APPRECIATING THE FACT THAT LD. AO HAS NOT ALLOWED TH E OPPORTUNITY TO CROSS EXAMINE SHRI GAJENDRA PORWAL AND FURTHER HOLD THAT THE ASSESSEE HAS NOT DISCHARG ED HIS INITIAL ONUS WHEN THE ASSESSEE HAS FURNISHED ALL THE NECESSARY DETAILS TO PROVE THE GENUINENESS OF CASH CREDIT, THUS THE ADDITION UPHOLD BY THE LD. CIT(A) DESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITI ON OF RS. 76,000/- MADE BY ALLEGING THE SAME AS COMMISSION PAID FOR OBTAINING THE ALLEGED ENTRY OF RS.76.00 LACS ARBITRARILY. 3 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO 2. GROUND NOS. 1 AND 3 OF THE APPEAL ARE NOT PRESSE D BY THE LD AR, THEREFORE, WE DISMISS THE SAME AS NOT PRESSED. ACCOR DINGLY, GROUND NOS. 1 AND 3 OF THE APPEAL ARE DISMISSED. 3. THE 2 ND GROUND OF APPEAL IS AGAINST CONFIRMING THE ADDITIO N OF RS. 76.00 LACS MADE ON ACCOUNT OF UNDISCLOSED INCOME U/ S 69 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSEE IS IN TOLL COLLECTION BUSINESS. THE FIRM HAS FILED ITS RETURN ON 31/03/200 5 FOR A.Y. 2003-04 AT RS. 16,500/-. THERE WAS A SEARCH SEIZURE OPERATION AT THE RESIDENCE OF SHRI GAJENDRA PORWAL, R/O- UDAIPUR ON 11/3/2006. IT WAS FOUND DURING THE COURSE OF SEARCH THAT M/S ABHAYA INVESTMENT PVT . LTD. WAS MAINTAINING BANK ACCOUNT IN KARNATAKA BANK, IN WHICH RS. 76.00 LACS WERE DEPOSITED. SHRI GAJENDRA PORWAL FILED AN AFFIDA VIT BEFORE THE ADDL.DIT (INV) THAT THESE DEPOSITS WERE MADE ON BEHAL F OF THE DEBTORS, WHICH HAS NOT BEEN DISCLOSED BY THE ASSESSEE. THEREF ORE, REASONS U/S 147 WAS RECORDED AND NOTICE U/S 148 OF THE ACT WAS IS SUED ON 02/4/2008. THE ASSESSEE RAISED OBJECTION, WHICH HAS BEEN ADDRESSED BY THE ASSESSING OFFICER AS PER HON'BLE SUPREME COURT DIRECTION IN THE CASE OF G.N.K. DRIVESHAFTS (INDIA). THEREAFTER THE CASE WA S SCRUTINIZED U/S 143(3) OF THE ACT BY THE ASSESSING OFFICER. THE LD A SSESSING OFFICER 4 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO OBSERVED THAT ON VERIFICATION OF THIS BANK ACCOUNT, IT IS FOUND THAT THE ASSESSEE HAD DEPOSITED RS. 50 LACS ON 28/6/2003 AND ON 01/7/2003 RS. 26.00 LACS. THEREAFTER THE SAME AMOUNT HAS BEEN WITHD RAWN ON 01/7/2003 VIDE CHEQUE NO. 30901, WHICH WAS USED BY TH E ASSESSEE IN BUSINESS. THEREAFTER THIS AMOUNT HAS BEEN REDEPOSITE D ON 11/09/2003 IN THE BANK. HE HAS FURTHER HELD THAT AFTER ONE DAY I. E. ON 12/09/2003 VIDE CHEQUE NO. 30983 FOR RS. 26.00 LACS AND VIDE CHEQUE NO. 30984 FOR RS. 50.00 LACS ON 30/09/2003 HAVE BEEN WITHDRAWN BY SELF MADE CHEQUES. THE LD ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE. THE ASSESSEE ASKED TO PROVIDE THE COPY O F SEIZED MATERIAL. HE WAS DIRECTED TO COMPLETE THE FORMALITY FOR GRANTING OF THE COPY OF THE SEIZED MATERIAL. THE LD ASSESSING OFFICER PROVIDED C OPY OF SEIZED MATERIAL ON 24/12/2009. IT WAS SUBMITTED BY THE ASSESSEE BEF ORE THE LD ASSESSING OFFICER THAT THE ASSESSEE TOOK THE LOAN FROM M/S AB HAYA INVESTMENT PVT. LTD. AT RS. 76.00 LACS, WHICH WAS REPAID ON 09/09/200 3 THROUGH 8 DEMAND DRAFTS OF 9.5 LACS EACH, WHICH WAS PREPARED FR OM THE PNB, HINDAUN CITY. AFTER MATURING THE FDR, WHICH WAS IN TH E NAME OF RESIDENT ENGINEER RAJASTHAN STATE ROAD DEVELOPMENT CORP.. HE ALSO FILED AFFIDAVIT BEFORE THE ASSESSING OFFICER AND CL AIMED THAT THE COPY OF THE SEIZED MATERIAL WAS PROVIDED LATE AND WHATEVER CO PY OF DEPOSIT SLIP 5 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO AND WITHDRAWAL CHEQUES FOUND DURING THE COURSE OF SEA RCH WERE NOT PERTAINED TO HIS FIRM AND NO PARTNER/EMPLOYEE HAS S IGNED ON IT. WHATEVER ADMISSION MADE BY SHRI GAJENDRA PORWAL HAD BEEN USED AGAINST THE ASSESSEE ON SURMISES AND CONJECTURE. CO PY OF THE SEARCH MATERIAL HAD BEEN PROVIDED BY THE ASSESSING OFFICER AFTER REPEATED REQUESTS AND COPY PROVIDED OF THE STATEMENT OF SHRI GAJENDRA PORWAL WAS ALSO NOT LEGIBLE. THERE ALSO COPY OF ACCOUNT OF S HRI GAJENDRA PORWAL HAS NOT BEEN PROVIDED AND NO INSPECTION WAS ALLOWED T O THE ASSESSEE. HE WAS ALSO NOT ALLOWED CROSS EXAMINATION OF SHRI GAJ ENDRA PORWAL INCLUDING BANK MANAGER OF KARNATAKA BANK, WHICH IS N OT AS PER LAW. AFTER CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER HELD THAT WHATEVER OBJECTION RAISED BY THE ASSESSEE ARE NOT CO RRECT. THERE WAS A DELAY FROM THE SIDE OF THE ASSESSEE TO GET THE COPY OF SEIZED MATERIAL IN COMPLETING THE FORMALITY. WHEN FORMALITY HAS BEEN C OMPLETED, THE COPY OF SEARCH MATERIAL WAS PROVIDED BY THE DEPARTMENT. SHRI GAJENDRA PORWAL ADMITTED THAT IN M/S ABHAYA INVESTMENT PVT. LTD., C ASH OF RS. 76.00 LACS WAS DEPOSITED AND SHRI GAJENDRA PORWAL FILED AFFIDAVI T THAT THIS CASH WAS FOR PROVIDING BOGUS ENTRIES TO THE ASSESSEE. HE HAS FURTHER ADMITTED THAT HE HAS PROVIDED ACCOMMODATION ENTRY TO VARIOUS PART IES. HE COLLECTED THE CASH FROM THESE PARTIES AND DEPOSITED IN THE BA NK ACCOUNT, CHARGED 6 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO COMMISSION ON IT AND ISSUE CHEQUE TO DESIRE PARTIES . THE LD ASSESSING OFFICER FURTHER REFERRED HOW THIS OPERATION IS CARRI ED OUT BETWEEN THE ENTRY PROVIDER AND ENTRY SEEKER. IT IS FURTHER OBSE RVED THAT THE ASSESSEE DID NOT WANT TO COMPLETE THE ASSESSMENT BY THE ITO WA RD 3, SAWAI MADHOPUR, THEREFORE, HE MADE REQUEST U/S 127 TO THE LD CIT(A), KOTA TO TRANSFER THE FILE TO JAIPUR, WHICH WAS NOT ABLE TO SU CCEED DUE TO NO PARTNER HAS BEEN RESIDING IN ANY WARD OF THE JAIPUR. THE ASSESSEE REQUESTED FOR CROSS EXAMINATION OF SHRI GAJENDRA PO RWAL ON 07/12/2009 WHEREAS CASE WAS GETTING TIME BARRED ON 31/12/2009, W HICH WAS NOT FOUND LOGICAL TO THE ASSESSING OFFICER. THEREAFTER HE HELD THAT WHATEVER DEPOSIT MADE IN THE BANK ACCOUNT OF M/S ABHAYA INVE STMENT PVT. LTD. HAS TO BE LEVIABLE TO THE ASSESSEE TO PAY TAX ON IT . ACCORDINGLY, HE MADE ADDITION OF RS. 76.00 LACS U/S 69 OF THE ACT. 4. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD CONFIRMED THE ADDITION BY OBSERVING THAT THERE WAS A SEARCH SEIZUR E OPERATION IN THE CASE OF SHRI GAJENDRA PORWAL AND OTHERS. I WAS NOTIC ED THAT THIS WAS AN ENTRY PROVIDED BY M/S ABHAYA INVESTMENT PVT. LTD. A FTER RECEIVING EQUAL AMOUNT OF CASH FROM ASSESSEE. AN AFFIDAVIT, OF SHRI GAJENDRA PORWAL 7 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO STATING THE ABOVE FACTS, WAS OBTAINED BY ADIT(INVEST IGATION), WHICH WAS FORWARDED TO THE ASSESSING OFFICER. THE ASSESSING OFF ICER TREATED THIS CASH CREDIT OF RS. 76.00 LACS AS UNDISCLOSED INVEST MENT U/S 69 OF THE ACT AND ADDED IT IN THE TOTAL INCOME OF THE ASSESSEE. TH E LD CIT(A) FURTHER ANALYSED THE SITUATION-1 AND SITUATION-2 FOR EXAMPL E AND CONSIDERED THIS CASE IN SITUATION-2 WHERE THE ASSESSING OFFICER HAS NOT ALLOWED CROSS EXAMINATION OF SHRI GAJENDRA PORWAL. HOWEVER, THE ASS ESSEE HAD ALSO NOT DISCHARGED HIS INITIAL ONUS AS IN THE CASE OF C ASH CREDIT, THE BURDEN TO PROVE THE GENUINENESS OF THE CASH CREDITOR WAS ON TH E ASSESSEE AND AS IT FAILED TO DISCHARGE EVEN ITS INITIAL ONUS. THUS, HE CONFIRMED THE ADDITION. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THIRD PARTY STATEMENT AND MATERI AL GATHERED DURING THE SEARCH HAD BEEN USED IN MAKING ADDITION BY THE ASSESSING OFFICER AND CONFIRMING ADDITION BY THE LD CIT(A). THE ASSESS EE HAD TAKEN LOAN OF RS. 76.00 LACS FROM M/S ABHAYA INVESTMENT PVT. LTD. ON 01/07/2003 THROUGH PAYEES ACCOUNT CHEQUE DULY DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE, WHICH EVIDENCE HAD BEEN ADMITTED BY TH E LD ASSESSING OFFICER IN THE ASSESSMENT ORDER ITSELF. THIS AMOUNT WAS UTILIZED BY THE ASSESSEE IN ITS BUSINESS ACTIVITY AND THEREAFTER ON 09/09/2003, THE LOAN 8 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO SO TAKEN BY THE ASSESSEE WAS REPAID BY IT VIDE 8 DEM AND DRAFTS TOTALING TO RS. 76.00 LACS. THIS AMOUNT WAS REPAID BACK BY TH E ASSESSEE OUT OF THE MATURITY RECEIPTS OF FDRS OF ASSESSEE MAINTAINE D WITH PNB BANK OF RS. 80.25 LACS IN THE NAME OF RESIDENT ENGINEER RAJ ASTHAN STATE ROAD DEVELOPMENT CORPORATION MATURED IN THE MONTH OF JUL Y, 2003. THUS, ONCE THE ASSESSEE HAD REPAID THE LOAN, THE ACCOUNT OF THE AFOREMENTIONED COMPANY I.E. M/S ABHAYA INVESTMENT P VT. LTD. GOT SQUARED UP IN THE BOOKS OF ACCOUNT OF ASSESSEE. IT HAS BEEN ALLEGED BY THE ASSESSING OFFICER THAT AN AMOUNT OF RS. 26.00 L ACS HAS BEEN WITHDRAWN ON 12/09/2003 THROUGH CHEQUE AND ON 13/09/2 003, AN AMOUNT OF RS. 50.00 LACS BY THE LOANER WAS WITHDRAWN THROUGH CHEQUE. THERE IS NO RELATION WITH THESE WITHDRAWALS OF THE ASS ESSEE. THE LOANER IS FREE TO USE HIS MONEY WHATSOEVER MANNER. THERE WAS A S EARCH CONDUCTED ON SHRI GAJENDRA PORWAL ON THAT BASIS NUMB ER OF CASES WERE REOPENED SOLELY ON THE BASIS OF STATEMENT AND AFFID AVIT OF SHRI GAJENDRA PORWAL JUST LIKE IN THE CASE OF PRESENT ASSESSEE AND CROSS EXAMINATION OF SHRI GAJENDRA PORWAL WAS NOT ALLOWED TO THEM ALSO. THE LD CIT(A) HAD DELETED THE ADDITION BY FOLLOWING THE HONBLE ITAT J AIPUR BENCH DECISION IN VARIOUS CASES I.E. ITA NOS. 1351 TO 1356/JP/2008 ORDER DATED 31/03/2010 AND ITA NO. 885 AND 1013/JP/2008 ORDER D ATED 28/11/2008. 9 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO THE APPEALS FILED BEFORE THE HONBLE RAJASTHAN HIGH COURT AGAINST THE ORDER OF THE HONBLE ITAT HAS BEEN HELD THAT NO SUBS TANTIAL QUESTION OF LAW ARISES IN CASE OF APPEAL FILED IN THE CASE OF CI T VS A. LALPURIA CONSTRUCTIONS PVT. LTD., JAIPUR (TOTAL THREE APPEAL S) VIDE ORDER DATED 25/2/2013. HE HAS FURTHER DRAWN OUR ATTENTION ON FIN DINGS GIVEN BY THE HONBLE ITAT AND ARGUED THAT THE ASSESSEES CASE IS ALSO COVERED BY THESE FINDINGS AS FACTS ARE IDENTICAL. THEREFORE, HE PRAYED TO DELETE THE ADDITION. 6. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE LD CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS UNDISPUTED FACT THAT THE LD ASSESSING OFFICER HAS MADE ADDITION IN THE P REMISE OF CASH RECEIPTS FROM THE ASSESSEE DEPOSITED IN M/S ABHAYA INVESTMENT PVT. LTD.. THEREAFTER, HE GOT ACCOMMODATION ENTRY. THE LD CIT(A) HAD DISCUSSED SITUATION-1 IN HIS ORDER AND HELD THIS ADDITION IS NOT JUSTIFIED BUT HE HAVING COTERMINOUS POWER AND CONFIRMED THE ADDITION BY TREATING THIS LOAN AS CASH CREDITOR, WHICH HAS NOT BEEN PROVED BY THE ASSESSEE AS ONUS CAST ON HIM. IT IS ALSO NOT AS PER LAW AS THE L D CIT(A) HAS NOT 10 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO PROVIDED ANY OPPORTUNITY TO THE ASSESSEE BEFORE USI NG COTERMINOUS POWER GIVEN UNDER THE LAW TO HIM. THE IDENTICAL CASE HAS ALREADY BEEN CONSIDERED BY THE COORDINATE BENCH IN ITA NOS. 1351 TO 1356/JP/2008 ORDER DATED 31/03/2010 WHERE ADDITIONS WERE MADE WITHO UT PROVIDING CROSS EXAMINATION OF SHRI GAJENDRA PORWAL, WHICH HAS BEEN EITHER CONFIRMED OR DELETED BY THE LD CIT(A), HAS BEEN DECI DED IN FAVOUR OF THE ASSESSEE BY THE ITAT. THE OPERATIVE PORTION OF THE C OORDINATE BENCH IS AS UNDER:- UNDER THE FACTS AND CIRCUMSTANCES IN TOTALITY, WE C OME TO THE CONCLUSION THAT THE ADMISSION MADE BY SHRI PORWA L ADMITTING THAT THE TRANSACTION IN QUESTION WAS MANAG ED BY HIM FOR BENEFICIARIES ON CHARGING OF COMMISSION ARE NOT WORTH RELYING IN ABSENCE OF HIS BEING CROSS EXAMINED BY THE ASSESSES AND IN ABSENCE OF ANY SUPPORTING EVIDENCE ESPECIALLY WHEN THOSE ADMISSIONS BY SHRI PORWAL WERE SUITABLE TO HIS OWN INTEREST. IT IS ALSO SURPRISIN G THAT NO INCRIMINATING DOCUMENT WAS FOUND DURING THE COURSE O F SEARCH AT THE PREMISES OF SHRI GAJENDRA PORWAL TO CORROBORATE HIS STATEMENTS ABOUT INDULGING IN ARRAN GING ACCOMMODATING ENTRIES WHICH ARE BEING DONE AT LARGE SCALE IN A SYSTEMATIC MANNER, AS CLAIMED. WE THUS HOLD TH AT IN THE PRESENT CASE THERE WAS NO SUFFICIENT MATERIAL/EV IDENCE ON RECORD TO COME TO THE CONCLUSION THAT TRANSACTIO NS IN 11 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO QUESTION ARE BOGUS. UNDER THIS BACKGROUND, WE ARE O F THE VIEW THAT THE LD. CIT (A) HAS RIGHTLY DELETED THE ADD ITION. FOR A READY REFERENCE THE RELEVANT PARA AT PAGES 6 TO 8 IN THE CASE OF SHRI MEGH RAJ SINGH SHEKHAWAT WHICH IS AL SO COMMON IN THE OTHER APPEALS IS BEING REPRODUCED HEREUNDER :- THE CONTENTION OF THE A/R IS CONSIDERED. IT APPEAR S THAT THE SOLE BASIS FOR THE ADDITION IS STATEMENT OF SH. GAJENMDRA PORWAL RECORDED U/S 132(4) DURING THE COU RSE OF SEARCH IN HIS OWN CASE AND HIS AFFIDAVIT DATED 1.11.2006. BASED ON THE STATEMENT OF SH. GAJENDRA P ORWAL THE AO INFERRED THAT AS SH. GAJENDRA PORWAL WAS A E NTRY PROVIDER AND THE COMPANY M/S. JTFSPL WAS ALSO FLOAT ED BY HIM HAD NOT WORTH AT ALL, TRANSFER OF SHARE OF M/S. GORBANDH MARBLES PVT. LTD. AND M/S. KAMOD COMMERCIA L SERVICES PVT. LTD., BY THE APPELLANT TO M/S. JTFSPL WAS NOT GENUINE BUT A SHAM TRANSACTION. THAT M/S. JTFSPL WA S USED AS A CONDUIT TO BRING UNACCOUNTED MONEY IN THE BOOKS OF ACCOUNTS BY THE APPELLANT. THAT STATEMENT OF SH. GAJENDRA PORWAL WAS SUPPORTED WITH CIRCUMSTANTIAL EVIDENCES. AO ALSO EMPHASIS THAT SH. PORWAL DID NOT RETRACT HIS STATEMENT WHICH IS PROVED BY THE AFFIDA VIT FILED BY HIM ON 1.11.2006. THE CREDIT WORTHINESS OF PURCH ASER COMPANY I.E. JTFSPL WAS DOUBTED AS BEFORE ISSUING CHEQUES EQUIVALENT CASH WAS DEPOSITED IN ITS BANK ACCOUNT. THAT CREDIT WORTHINESS OF M/S. JTFSPL AND GENUINENESS OF THE TRANSACTION COULD NOT BE PROVED. THE RECEIPTS OF RS. 41,50,000/- WAS THEREFORE ADDED AS UNEXPLAINED CREDIT U/S 68 OF IT ACT. FROM THE OBSE RVATION OF THE AO IT IS CLEAR THAT HE HAD NO OTHER MATERIAL OR EVIDENCE EXCEPT THE STATEMENT OF SH. GAJENDRA PORWA L. FOR CONSIDERING THE CREDIT ENTRIES AS UNEXPLAINED, THE AO WAS SUPPOSED TO PROVE THAT THE AMOUNT CREDITED IS T HE APPELLANTS OWN MONEY. ALSO THAT M/S. JTFSPL WAS N OT 12 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO CREDIT WORTHY OF PAYING THIS MUCH AMOUNT AND THE TRANSACTION ENTERED INTO BETWEEN THE APPELLANT AND M/S. JTFSPL WAS NOT GENUINE. THE AO HAS TAKEN SUPPORT OF THE GENERAL STATEMENT GIVEN BY SH. PORWAL, THAT THE SHA RES WERE SUBSEQUENTLY BEEN TRANSFERRED TO CONFIDENT OF THE BENEFICIARIES. HOWEVER, THE AO FAILED TO GIVE ANY S PECIFIC FINDING ABOUT A PARTICULAR TRANSACTION UNDER CONSID ERATION THAT THE SHARES PURCHASED BY M/S. JTFSPL WERE SUBSEQUENTLY TRANSFERRED TO THE APPELLANT OR ITS BENEFICIARIES. IN FACT THE AO HAS NOT QUOTED ANY SP ECIFIC QUESTION AND ITS ANSWER GIVEN BY SH. PORWAL WITH RE FERENCE TO THE TRANSACTION UNDER REFERENCE. SH. PORWAL IN H IS STATEMENT ALSO ADMITTED THAT HE PROVIDED ENTRY FOR A COMMISSION RECEIVED IN CASH BUT IN THE PRESENT CASE THE AO HAS NOT GIVEN ANY FINDING, HOW MUCH COMMISSION W AS RECEIVED BY SH. PORWAL FROM THE APPELLANT FOR THIS TRANSACTION. NO SUCH ENTRY FOR RECEIPT OF COMMISSIO N WAS FOUND IN THE CASE OF SH. GAJENDRA PORWAL NOR ANY AD DITION OR AN ACCOUNTED PAYMENT OF COMMISSION WAS MADE BY T HE AO IN THE CASE OF THE APPELLANT. THE APPELLANT COMPANY ASKED FOR CROSS EXAMINATION O F SH. PORWAL WHICH WAS THOUGH ADMITTED BY THE AO BUT AS S H. PORWAL DID NOT REMAIN PRESENT BEFORE HIS OWN AO, TH E OPPORTUNITY OF CROSS EXAMINATION COULD NOT BE AVAIL ED BY THE APPELLANT. ABSENCE OF SH. PORWAL FOR CROSS EXAM INATION WAS JUSTIFIED BY THE AO ON SOME ASSUMPTIONS. THE AO HAS GIVEN WEIGHTAGE TO THE FACT THAT SH. PORWAL IN HIS AFFIDAVIT FILED MUCH AFTER THE SEARCH ACTION HAS CONFIRMED HI S EARLIER STATEMENT RECORDED U/S 132(4). THUS THE ENTIRE ADDI TION IS BASED ON THE STATEMENT OF SH. PORWAL RECORDED U/S 1 32(4). NOT PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION OF SH. PORWAL IS NOT JUSTIFIED. NO MATERIAL WAS BORNE OUT FROM THE STATEMENT OF SH. GAJENDRA PORWAL WHICH JUSTIFIES TH E ADDITIONS. /EXCEPT STATEMENT THERE IS NO OTHER MATER IAL TO SUPPORT THAT THE TRANSACTION WAS AN ACCOMMODATION E NTRY. THE POSSESSION OF SHARES IN THE HANDS OF THE APPELL ANT HAS 13 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO NOT BEEN DOUBTED. TO COME OUT OF CLUTCHES OF SECTIO N 68 AN ASSESSEE IS TO PROVE IDENTITY AND CREDIT WORTHIN ESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. ID ENTITY OF THE CREDITOR IS ESTABLISHED WHICH IS M/S. JTFSPL, A COMPANY INCORPORATED. REGARDING HIS CREDIT WORTHINE SS THE AO HIMSELF HAS MENTIONED THAT THE CASH WAS DEPOSITE D BEFORE ISSUING THE CHEQUES IN FAVOUR OF THE APPELLA NT AND THUS THE CREDIT WORTHINESS IS ALSO PROVED. SO FAR A S GENUINENESS OF THE TRANSACTION IS CONCERNED THE AO HAS NOT ESTABLISHED THAT THE MONEY PAID BY JTFSPL TO TH E APPELLANT WAS THE APPELLANTS MONEY. COPIES OF THE SHARE CERTIFICATES WERE ALSO FILED ALONG WITH THE WRITTEN SUBMISSION WHICH PROVES THAT THE APPELLANT HAD 4150 00 SHARES OF M/S. GORBANDH MARBLES PVT. LTD. AND M/S. KAMOD COMMERCIAL SERVICES PVT. LTD. AND ON SALE THE ASSES SES WERE ALSO TRANSFERRED IN THE NAME OF JTFSPL AND THE AMOUNT WAS RECEIVED BY ACCOUNT PAYEE CHEQUE. THUS T HE GENUINENESS OF THE TRANSACTION IS ALSO PROVED. THE A/R MADE DISTINCTION OF THE FACTS OF THE PRESENT CASE W ITH THE FACTS OF THE CASES RELIED UPON BY THE AO. CERTAINL Y CIRCUMSTANTIAL EVIDENCES CAN ALSO BE USED AGAINST T HE APPELLANT BUT IN THE PRESENT CASE EXCEPT THE STATEM ENT OF 3 RD PARTY WHICH WAS PARTIALLY RETRACTED, NO OTHER EVID ENCE WAS USED BY THE AO. UNDER THE FACTS AND CIRCUMSTAN CES OF THE CASE THE ADDITION MADE BY THE AO BEING NOT BASE D ON ANY EVIDENCE IS DIRECTED TO BE DELETED. THE ADDITIO N OF RS. 41,50,000/- MADE BY THE AO IS THEREFORE DELETED. TH E 2 ND GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE APPELL ANT. WE FULLY CONCUR WITH THE ABOVE FINDING OF THE LD. CI T (A) UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CA SE AS DISCUSSED ABOVE. THE FIRST APPELLATE ORDER IN THIS R EGARD IS THUS UPHELD. THE GROUND IS ACCORDINGLY REJECTED. 14 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO RECENTLY, THE HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRY VS. COMMISSIONER OF CENTRAL EXCISE IN CIVI L APPEAL NO. 4228/2006 VIDE ORDER DATED 2 ND SEPTEMBER, 2015 HAS HELD THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESSES BY ADJUDICATING THE AUTHORITY, THOUGH THE STATEMENT OF THOSE WITNESSES WE RE MADE THE BASIS OF IMPUGNED ORDER IS A SERIOUS FLAW, WHICH MAKES THE ORDER NULLITY, INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED . THIS TO BE BORNE IN MIND THAT THE ORDER OF THE CCE WAS BASED UPON THE STATEMENT GIVEN BY TWO WITNESSES. BY RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH AND PROPOSITION OF HON'BLE SUPREME COURT, WE A LLOW THE ASSESSEES APPEAL. 8. IN THE RESULT, THE ASSESSEES APPEAL PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/04/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08 TH APRIL, 2016 RANJAN* 15 ITA NO. 280/JP/2012 M/S RAMESHWARRAM TOLLS VS ITO VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S RAMESHWARRAM TOLLS, KAROLI. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-3, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 280/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR