Smt. SITU SHASTRI, MUMBAI V. CIT CITY-XX, MUMBAI

ITA 3387/MUM/2006

• Counselvise Citation: 338719914 RSA 2006
• Duration Of Justice: 5 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 23-06-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 30-05-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Keywords: Unexplained cash credit; Gift; Business expenditure; Opportunity of being heard; Additional evidence
• Section: 43B; 143(3); 14A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E,MUMBAI BEFORE SHRI D.K. AGARWSAL (JM) & SHRI J. SUDHAKAR REDDY (AM) I.T.A.NO.3387/MUM/2006 (A.Y. 2001-02) SHRI SITU SHASTRI, SILVER LINE, 1 ST FLOOR, J.B NAGAR, S.B. MARG, ANDHERI (E), MUMBAI-400 059. PAN: AAEPS6130M VS. ASST. COMMR. OF INCOME-TAX, CIRCLE 20(3), PIRAMAL CHAMBERS, PAREL, MUMBAI-400 012. APPELLANT RESPONDENT APPELLANT BY SHRI MADHUR AGARWAL. RESPONDENT BY SHRI G .P. TRIVEDI. O R D E R PER D.K. AGARWAL, JM : THIS APPEAL ARISES AS A RESULT OF ORDER PASSED IN M.A. NO.462/MUM/10 DATED 17-09- 2010 WHEREIN THE TRIBUNAL HAS RECALLED ITS EX PARTE ORDER DATED 04-06-2010 WHICH WAS PASSED DISMISSING THE ASSESSEES APPEAL IN LIMINE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE, AN INDIVIDUAL, IS CARRYING ON BUSINESS OF INDENTING AGENT OF WASTE PAPER FROM FO REIGN COUNTRIES. THE RETURN WAS FILED DECLARING TOTAL INCOME OF RS.12,11,248/-. HOWEVER, THE ASSESSMENT WAS COMPLETED, AFTER MAKING VARIOUS DISALLOWANCES/ADDITIONS, AT AN INCOM E OF RS.3,24,62,340/- VIDE ORDER DATED 29-03-2004 PASSED UNDER SEC. 143(3) OF THE I.T. ACT , 1961 (THE ACT). ON APPEAL, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. REVISED GROUND NO. 1 IS AGAINST THE SUSTENANCE OF DISALLOWANCE OF EMPLOYER CONTRIBUTION TO PF RS.46,853/-.. ITA NO.3387/M/06 SITU SHASTRI 2 5. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO N OTED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.46,853/- AS CONTRIBUTION TO PF. ON BEI NG ASKED, IT WAS SUBMITTED BY THE ASSESSEE THAT PF & ESIC ARE NOT APPLICABLE TO THE A SSESSEE. THE AO, AFTER CONSIDERING THE ASSESSEES REPLY, OBSERVED THAT THE CONTRIBUTION TO PPF IS ELIGIBLE FOR REBATE U/S.88 AND ACCORDINGLY HE DISALLOWED THE AMOUNT OF RS.46,853/- AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A), OBSERVED THAT THE CONTRIBUTION TO PPF CAN BE ALLOWED AS DEDUCTION ONLY IF THE PAYMENT OF THE SAME IS MAD E ON BEFORE THE DUE DATE. IN THE ABSENCE OF ANY SUCH EVIDENCE, HE CONFIRMED THE DISALLOWANCE MADE BY THE AO. 6. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT CONTRIBUTION TO PPF IS A CONTRACTUAL OBLIGATION BETWEEN THE EMPLOY ER AND EMPLOYEE AT THE TIME OF APPOINTMENT OF EMPLOYEE. EMPLOYER, I.E. THE ASSESSE E, HAS COMMITTED TO CONTRIBUTE EQUAL AMOUNT OF CONTRIBUTION TO THE PPF ACCOUNT OF THE RE SPECTIVE EMPLOYEE RESTRICTED TO 12% OF BASIC SALARY. AS THE PROVISIONS OF PF ACT ARE NOT A PPLICABLE TO THE ASSESSEE AND THE CONTRIBUTION IS NOT TO PF BUT TO PPF TO WHICH THE PROVISION OF SEC. 43B DOES NOT APPLY, THEREFORE, THE DISALLOWANCE MADE BY THE AO AND SUST AINED BY THE LD. CIT(A) BE DELETED. 7. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE ORD ERS OF THE AO AND LD.CIT(A). 8 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF T HE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT BEFORE T HE AO THE ASSESSEE, EXCEPT SUBMITTING THAT PF AND ESIC ARE NOT APPLICABLE TO THE ASSESSEE, DID NOT FILE ANY OTHER EXPLANATION. HOWEVER, BEFORE THE LD. CIT(A), THE ASSESSEE HAS STATED THAT IT WAS A CONTRACTUAL OBLIGATION BETWEEN THE EMPLOYER AND EMPLOYEE AT THE TIME OF APPOINTMEN T OF THE EMPLOYEE. THEREFORE, IT IS AN ALLOWABLE DEDUCTION. SINCE, IN THE ABSENCE OF ANY M ATERIAL, THIS ISSUE HAS NOT BEEN PROPERLY EXAMINED BY THE AO, THEREFORE, IN THE INTEREST OF J USTICE, WE CONSIDER IT FAIR AND REASONABLE THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE A O AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT A ND SEND BACK THE MATTER TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH AND ACCORDING TO LAW A FTER PROVIDING REASONABLE OPPORTUNITY OF ITA NO.3387/M/06 SITU SHASTRI 3 BEING HEARD TO THE ASSESSEE. THE GROUND TAKEN BY TH E ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO. 2 IS AGAINST THE SUSTENANCE OF DISALL OWANCE OF TELEPHONE EXPENSES. 10. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT ON PERU SAL OF THE DETAILS OF TELEPHONE EXPENSES, THE AO NOTED THAT OUT OF TELEPHONE & FAX CHARGES OF RS.6,19,569/-, AN AMOUNT OF RS.34,937/- PERTAINS TO THE ASSESSEES RESIDENTIAL TELEPHONE. T HE AO, AFTER CONSIDERING THE ASSESSEES EXPLANATION, OBSERVED THAT THE RESIDENTIAL TELEPHON E USED FOR PERSONAL PURPOSES CANNOT BE DENIED AND HENCE HE DISALLOWED RS.15,378/, BEIN G 50% OF RS.34,937/-. BESIDES THIS, THE AO FURTHER NOTED THAT OUT OF REMAINING TELEPHONE EX PENSES OF RS.5,31,079/-, WHICH PERTAIN TO THE OFFICE AS WELL AS MOBILE PHONE OF THE PROPRIETO R AND OTHER STAFF, PERSONAL USE CANNOT BE RULED OUT AND HENCE HE MADE A FURTHER DISALLOWANCE OF RS,.53,107/-, BEING 10% OF TELEPHONE EXPENSES OF RS.5,31,079/-. ON APPEAL, THE LD. CIT(A ), WHILE OBSERVING THAT THE DISALLOWANCE MADE BY THE AO IS QUITE REASONABLE, UPHELD THE DISA LLOWANCE MADE BY THE AO. 11. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE DISALLOWANCE MADE BY THE AO AND SUSTAINED BY THE CIT(A) IS EXCES SIVE AND, THEREFORE, DUE RELIEF BE ALLOWED TO THE ASSESSEE. 12. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF THE AO AND THE LD. CIT(A). 13. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND KEEPING IN VIEW TH AT PERSONAL USE OF THE TELEPHONE HAS NOT BEEN RULED OUT EVEN AT THIS STAGE, WE ARE OF THE VI EW THAT A REASONABLE DISALLOWANCE FOR PERSONAL USE OF TELEPHONE IS CALLED FOR. HOWEVER, K EEPING IN VIEW THE VOLUME AND THE NATURE OF THE BUSINESS OF THE ASSESSEE, THE DISALLOWANCE I S REDUCED TO 50% OF THE AMOUNT OF DISALLOWANCE MADE BY THE AO AND SUSTAINED BY THE LD . CIT(A). IN OTHER WORDS, THE ASSESSEE GETS A RELIEF OF RS.7,689/- + RS.26,553/- = RS.34,2 42/-. THE AO IS DIRECTED TO ALLOW THE SAME. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PAR TLY ALLOWED. ITA NO.3387/M/06 SITU SHASTRI 4 14. GROUND NO. 3 IS AGAINST THE SUSTENANCE OF AD HO C DISALLOWANCE OF STAFF WELFARE EXPENSES OF RS.13,383/-. 15. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO NOTED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.1,33,838/- UNDER THE HEAD STAFF WELFA RE. THE AO, AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE, OBSERVED THAT THE EXPENSES H AVE BEEN INCURRED FOR TEA & COFFEE ETC. ON STAFF OF LIMITED COMPANIES AND ALSO ON THE MEMBERS WHO ARE NOT THE STAFF MEMBERS OF THE ASSESSEE AND ALSO THE PAYMENTS HAVE BEEN INCURRED I N CASH, VERIFICATION OF WHICH IS NOT POSSIBLE, AND HENCE HE DISALLOWED RS.33,459/-, BEIN G 25% OF THE STAFF WELFARE EXPENSES. ON APPEAL, THE LD. CIT(A), WHILE OBSERVING THAT IT CAN NOT BE DENIED THAT ALL THE EXPENSES HAVE BEEN INCURRED FOR BUSINESS PURPOSES AND THERE IS NO PERSONAL ELEMENT, REDUCED THE DISALLOWANCE TO 25% AND THEREBY CONFIRMED DISALLOW ANCE OF RS.13,383/- AND DELETED THE BALANCE DISALLOWANCE OF RS.20,078/-. 16. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE AO AND THE LD. CIT(A), FURTHER SUBMITS THAT THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) IS EXCESSI VE AND, THEREFORE, DUE RELIEF BE ALLOWED TO THE ASSESSEE. 17. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF THE AO AND THE LD.CIT(A). 18. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND ALSO IN THE ABSENCE OF ANY CONTRARY MATERIAL PLACED ON RECORD BY THE ASSESSEE AGAINST THE FINDING OF THE LD. CIT(A), WE ARE OF THE VIEW THAT DISALLOWANCE OF RS.13,383/- SUSTAINED BY THE LD. CIT(A) IS MORE THA N REASONABLE AND HENCE DOES NOT CALL FOR ANY INTERFERENCE. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, REJECTED. 19. GROUND NO. 4 IS AGAINST THE SUSTENANCE OF DISAL LOWANCE OF FOREIGN TRAVEL EXPENSES SOF RS.2,76,994/-. ITA NO.3387/M/06 SITU SHASTRI 5 20. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO NOTED THAT AN AMOUNT OF RS.6,07,388/- HAS BEEN DEBITED UNDER THE HEAD FOREIGN TRAVEL. O N PERUSAL OF THE DETAILS OF FOREIGN TRAVEL FILED, THE AO OBSERVED THAT THE ASSESSEE AND HIS EX ECUTIVE, SHRI SOMA SHETTY, HAVE TRAVELLED TO USA, SINGAPORE AND SRI LANKA, ETC. THE AO ASKED THE ASSESSEE TO PRODUCE TICKETS AND PASSPORT OF THE ASSESSEE AND HIS FAMILY MEMBERS. TH E ASSESSEE FAILED TO PRODUCE THE SAME. ON SCRUTINY OF THE EXPENSES, THE AO NOTED THAT THE ASSESSEE HAS PAID CHARGES OF RS.35,702/- TOWARDS FLEXI PASSES AND SHUTTLE SERVIC ES FOR 4 PERSONS AND RS.1,600/- TOWARDS INTERNATIONAL AIR, NON-COMMISSION CHARGES FOR 4 PER SONS THEREBY INDICATING THAT THE ASSESSEE HAS NOT TRAVELLED ALONE BUT IS ACCOMPANIED BY THREE PERSONS WHO COULD BE THE FAMILY MEMBERS OF THE ASSESSEE. THE AO FURTHER NOTED THAT ALL THE TRIPS ARE UNDERTAKEN IN THE SUMMER VACATIONS AND ON FESTIVALS. THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF BOARDING & LODGING EXPENSES. THUS, THE AO HAS HELD THAT ALL TH E FOREIGN TRAVEL EXPENSES ARE NOT FOR THE PURPOSES OF BUSINESS AND HENCE HE DISALLOWED RS.2,7 6,994/-, BEING 50% OF THE FOREIGN TRAVEL EXPENSES OF RS.6,07,388/- LESS RS.53,400/- SEPARATE LY DISALLOWED. ON APPEAL, THE LD. CIT(A), WHILE OBSERVING THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF THE FOREIGN EXPENSES, CONFIRMED 50% DISALLOWANCE MADE BY THE AO. 21. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE HAS SEPARATELY DEBITED THE FOREIGN TRAVEL EXPENSES OF H IS FAMILY MEMBERS AMOUNTING TO RS.5,52,521/- UNDER THE DRAWINGS ACCOUNT OF RS.8,80 ,871/- AND HAS NOT CLAIMED THE SAME IN THE P & L ACCOUNT. HE FURTHER SUBMITS THAT SINCE TH E AO HAS OBSERVED THAT THE ASSESSEE HAS TRAVELLED ABROAD AND MUST HAVE DEFINITELY VISIT ED HIS CLIENTS FOR BUSINESS PURPOSES IS NOT BEING DENIED, THEREFORE, THE FOREIGN TRAVEL EXPEN SES DEBITED BY THE ASSESSEE IN THE P & L ACCOUNT ARE FOR BUSINESS PURPOSES AND THE SAME BE A LLOWED IN FULL. 22. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF THE AO AND THE LD. CIT(A). 23. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THERE IS NO DOUBT THAT THE ASSESSEE HAS DEBITED THE PAYMENT OF AIR TICKET AND VISA CHARGES AND PURCHASE OF US DOLLARS AMOUNTING TO ITA NO.3387/M/06 SITU SHASTRI 6 RS.5,52,521/- UNDER THE HEAD DRAWINGS IN HIS CAPI TAL ACCOUNT BUT THE FACT REMAINS THAT THE ASSESSEE HAS NOT DEBITED THE OTHER EXPENSES AS POIN TED OUT BY THE AO AS ABOVE. THIS BEING SO, WE ARE OF THE VIEW THAT SOME DISALLOWANCE ON AC COUNT OF PERSONAL EXPENSES IS CALLED FOR AND ACCORDINGLY WE SUSTAIN A DISALLOWANCE OF RS.50, 000/- INCLUDING THE ITEM OF EXPENSES AS POINTED OUT BY THE AO AND DELETE THE BALANCE DISALL OWANCE OF RS.2,26,994/-. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED . 24. GROUND NO. 5 IS AGAINST THE SUSTENANCE OF DISAL LOWANCE OF TRAVEL EXPENSES OF RS.2,09,354/-. 25. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT HE DOES NOT WANT TO PRESS THE ABOVE GROUND, WHICH WAS NOT OBJECTED T O BY THE LD. D.R. 26. THAT BEING SO, AND IN THE ABSENCE OF ANY SUPPOR TING MATERIAL PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE, THE GROUND TAKEN BY T HE ASSESSEE IS, THEREFORE, REJECTED BEING NOT PRESSED. 27. GROUND NO. 6 IS AGAINST THE SUSTENANCE OF DISAL LOWANCE OF GIFTS AND STAFF WELFARE EXPENSES OF RS.1,61,665/-. 28. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT HE DOES NOT WANT TO PRESS THE ABOVE GROUND, WHICH WAS NOT OBJECTED TO BY THE LD. D.R. 29. THAT BEING SO, AND IN THE ABSENCE OF ANY SUPPOR TING MATERIAL PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE, THE GROUND TAKEN BY T HE ASSESSEE IS, THEREFORE, REJECTED BEING NOT PRESSED. 30. GROUND NO. 7 IS AGAINST THE SUSTENANCE OF DISAL LOWANCE OF INTEREST PAID OF RS.43,77,778/-. 31. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO OBSERVED THAT THE ASSESSEE DEBITED AN AMOUNT OF RS.34,56,407/- TOWARDS INTEREST ON LOAN, RS.3,03,598/- TOWARDS INTEREST ON TERM LOAN AND RS.6,17,773/- TOWARDS BANK INTEREST AND CO MMISSION AGGREGATING TO RS.43,77,778/-. ITA NO.3387/M/06 SITU SHASTRI 7 THE AO, ON EXAMINATION OF ASSESSEES BALANCE-SHEET, FURTHER OBSERVED THAT AGAINST UNSECURED LOANS OF RS.4,50,08,791/- AS ON 31-03-200 1, THE ASSESSEE IS HAVING INVESTMENTS IN SHARES OF RS.1,96,23,020/- AND HAS GIVEN LOANS & ADVANCES AND DEPOSITS OF RS.1,46,65,007/- TO HIS SISTER CONCERNS, FRIENDS AN D RELATIVES/PERSONS WITH WHOM THE ASSESSEE IS HAVING NO BUSINESS CONNECTIONS. ACCORDI NG TO THE AO, THE DIVIDEND INCOME ON THE INVESTMENTS IN SHARES IS NOT TAXABLE AND HENCE INTEREST PAID BY THE ASSESSEE RELATING TO INVESTMENTS IN SHARES CANNOT BE ALLOWED AS DEDUCTI ON. THE ASSESSEES OWN OPENING CAPITAL AS ON 01-04-2000 IS ONLY RS.10,39,799/- AND, THEREF ORE, THE ASSESSEE CANNOT CLAIM THAT HE HAS INVESTED HIS OWN FUNDS IN SHARES AND IN GIVING LOANS TO OTHERS. THEREFORE, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE INTEREST PAID ON THE BORROWED FUNDS SHOULD NOT BE DISALLOWED. IN RESPONSE, THE ASSESSEE FILED A LETTE R ON 11-02-2004 SUBMITTING THAT IN THIS REGARD, WE HAVE TO STATE THAT, THE AMOUNT SO INVEST ED OF WHICH EARNINGS ARE EXEMPT ARE BEING INVESTED IN PREVIOUS YEAR THEN THE SAME HAS BEEN TA XABLE. HENCE WE REQUEST YOU TO ALLOW THE INTEREST PAID AS BUSINESS EXPENDITURE. HOWEV ER, THE AO DID NOT ACCEPT THE ASSESSEES CONTENTION. THE AO, AFTER INVOKING THE PROVISIONS O F SEC. 14A OF THE ACT AND RELYING ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE O F K. SOMASUNDARAM & BROS. (238 ITR 939) AND THE APPELLATE ORDER PASSED BY THE CIT(A) IN TH E ASSESSEES OWN CASE FOR THE ASSTT. YEAR 2000-01, DISALLOWED THE TOTAL AMOUNT OF INTERE ST OF RS.43,77,778/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 32. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE S UBMITTED AS UNDER (VIDE PARA 10.2 OR ORDER OF CIT(A) : 10.2 DURING THE COURSE OF APPELLATE PROCEEDING, TH E APPELLANT SUBMITTED THAT THE LOANS TAKEN WERE FOR THE BUSINES S PURPOSES ONLY AND HAD NOT BEEN UTILIZED FOR EARNING TAX-FREE INCO ME. IT WAS FURTHER SUBMITTED THAT THE AMOUNT OF RS.2,23,98,020/- HAS B EEN INVESTED IN THE EARLIER YEARS AND OUT OF SURPLUS AVAILABLE. THE APPELLANT ALSO CLAIMED THAT WHEN THE INVESTMENT WAS MADE IN THE SH ARES OF COMPANIES THE DIVIDEND INCOME WAS TAXABLE AND THE C OMPANY HAD PAID TAX ON SUCH INCOME. THE COMPANY SHOULD NOT BE PENALIZED FOR THE CHANGE IN THE PROVISIONS OF THE ACT IN THE SUBS EQUENT YEAR. FURTHER, THE AO FAILED TO APPRECIATE THAT THE LOANS AND ADVANCES MADE OF RS.1,46,65,007/- ARE TO THE PARTIES WITH WH OM THE COMPANY HAS BUSINESS TRANSACTION AND HAS BEEN GIVEN TO THEM AS SECURITY DEPOSITS AND FURTHER DURING THE YEAR THE C OMPANY HAS RECEIVED RS.21,98,840/- AS INTEREST ON THE SAID LOA NS AND ITA NO.3387/M/06 SITU SHASTRI 8 ADVANCES. FURTHER, THERE IS PAYMENTS TOWARDS TELEPH ONE DEPOSITS, PREPAID EXPENSES AND SECURITY DEPOSITS ON WHICH NO INTEREST IS RECEIVABLE. RS.3,03,598/- HAS BEEN INCURRED ON HIRE PURCHASE AVAILED FOR PURCHASING MOTOR CAR. FURTHER RS.6,17,7 73/- HAVE BEEN DEBITED TOWARDS BANK CHARGES AND COMMISSION WHICH H AS BEEN DEBITED BY THE BANK TOWARDS MINIMUM BALANCE CHARGES , INWARD REMITTANCES, FOLIO CHARGES ETC. THEREFORE, IT IS RE SPECTFULLY SUBMITTED THAT THE DISALLOWANCE OF RS.3,34,56,407/- TOWARDS I NTEREST ON LOANS, RS.3,30,598/- TOWARDS INTEREST ON TERM LOAN, RS.6,1 7,773/- TOWARDS BANK CHARGES AND COMMISSION BE ALLOWED. THE LD. CIT(A), AFTER CONSIDERING THE ASSESSEES SU BMISSIONS, WHILE OBSERVING THAT HUGE INVESTMENTS IN SHARES AND INTEREST-FREE LOANS HAVE COME OUT OF BORROWED CAPITAL AND THUS THERE IS A DIRECT NEXUS BETWEEN THE BORROWED FUND A ND ITS USE FOR EARNING OF AN INCOME, WHICH IS NOT TAXABLE, AND ALSO FOR ADVANCING LOAN, ON WHICH NO INCOME IS EARNED, FOLLOWED THE APPELLATE ORDER FOR THE ASSTT. YEAR 2000-01 WHE REIN SIMILAR DISALLOWANCE HAS BEEN UPHELD, SUSTAINED THE DISALLOWANCE OF INTEREST MADE BY THE AO. 33. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE AO AND THE LD. CIT(A), FURTHER SUBMITS THAT THE LOANS AND ADVANCES WERE GIVEN TO THE SISTER CONCERNS WIT H WHOM THE ASSESSEE HAS BUSINESS TRANSACTIONS AND, THEREFORE, IN VIEW OF THE DECISIO N OF THE HONBLE SUPREME COURT IN S.A. BUILDERS LTD. VS. CIT(A) (2007) 288 ITR 1 (SC), NO SUCH DISALLOWANCE IS CALLED FOR. HE FURTHER SUBMITS THAT SINCE THE AO HAS INVOKED THE PROVISION S OF SEC. 14A, THEREFORE, FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN GO DREJ & BOYCE MFG. CO. LTD. VS. DCIT (2010) 328 ITR 81 (BOM), THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO. HE FURTHER SUBMITS THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE VIDE ORDER IN ITA NO.1686/MUM/04 FOR THE ASSTT. YEAR 2000-01 DATED 19-06-2007 HAS SET ASIDE THE SIM ILAR ISSUE TO THE FILE OF THE AO. HE, THEREFORE, SUBMITS THAT IN THE INTEREST OF JUSTICE THE ISSUE MAY BE SET ASIDE TO THE FILE OF AO. 34. ON THE OTHER HAND, THE LD. D.R., WHILE RELYING ON THE ORDERS OF THE AO AND CIT(A), FURTHER SUBMITS THAT UNSECURED LOANS OF RS.4,50,08, 719/- HAVE BEEN INVESTED BY THE ASSESSEE IN SUNDRY DEBTORS RS.1,27,98,580/-, INVEST MENTS IN SHARES RS.1,96,23,020/- AND LOANS AND DEPOSITS RS.1,46,65,007/- AND THE ASSESSE E HAS NOT EARNED ANY INTEREST ON THESE INVESTMENTS AND, THEREFORE, THE LD. CIT(A) WAS FUL LY JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF ITA NO.3387/M/06 SITU SHASTRI 9 INTEREST OF RS.43,77,7788/- AND THE SAME BE UPHELD. HE FURTHER SUBMITS THAT HE HAS NO OBJECTION IF THE ISSUE IS SET ASIDE TO THE FILE OF THE AO. 35. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT BEFORE THE AO, TH E ASSESSEE, EXCEPT STATING THAT THE AMOUNTS SO INVESTED OF WHICH THE EARNINGS ARE EXEMP T ARE BEING INVESTED IN THE PREVIOUS YEAR WHEN THE SAME HAS BEEN TAXABLE, HAS NOT DEMON STRATED AS TO HOW THE INVESTMENTS IN SHARES AND LOANS, ADVANCES AND DEPOSITS ARE FOR THE PURPOSES OF BUSINESS. THIS BEING SO AND KEEPING IN VIEW THE RATIO OF THE DECISIONS RELI ED ON BY THE LD. COUNSEL FOR THE ASSESSEE AND ALSO THE FACT THAT IN THE IMMEDIATELY PRECEDING YEAR I.E. ASSTT. YEAR 2000-01 THE TRIBUNAL HAS SET ASIDE THE SIMILAR ISSUE TO THE FILE OF THE AO, WE CONSIDER IT FAIR AND REASONABLE THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE AO AND ACC ORDINGLY WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT SEND BAC K THE MATTER TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVAT IONS HEREINABOVE AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. 36. GROUND NO. 8 IS AGAINST THE SUSTENANCE OF DISAL LOWANCE OF BROKERAGE AND FINANCE CHARGES AMOUNTING TO RS.2,73,419/-. 37. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT WAS DISALLOWED BY THE AO ON THE GROUND THAT BROKERAGE AND FINANCE CHARGES HAVE BEEN PAID ON LOA NS WHICH ARE NOT UTILIZED BY THE ASSESSEE FOR HIS BUSINESS. BEFORE THE LD. CIT(A), T HE ASSESSEE CONTENDED THAT THE BROKERAGE AND FINANCE CHARGES HAVE BEEN PAID TO THE BROKERS W HO HAVE ARRANGED FINANCE FOR THE COMPANY FOR BUSINESS PURPOSES AND FOR ITS SISTER CO NCERNS ON WHICH INTEREST HAS BEEN RECEIVED AND, THEREFORE, THE SAME BE ALLOWED. HOWEV ER, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE ON THE GROUND THAT THERE IS NO DIRECT NEXUS BETWEEN THE BORROWED FUNDS AND ITS USE FOR EARNING AN INCOME. 38. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT IN VIEW OF THE PLEA TAKEN IN RESPECT OF GROUND NO.7, THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO. 39. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF THE AO AND LD. CIT(A). ITA NO.3387/M/06 SITU SHASTRI 10 40. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THERE IS NO DISPU TE THAT THE IMPUGNED ISSUE IS INTER- CONNECTED WITH THE ISSUE OF DISALLOWANCE OF INTERES T (GROUND NO.7), THEREFORE, KEEPING IN VIEW OF OUR FINDING RECORDED IN PARA 35 OF THIS ORD ER, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO TO EXAMINE THE SAME AFRESH IN THE LIGHT OF OUR O BSERVATIONS MENTIONED THEREIN AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE, THEREFORE, PARTLY ALL OWED FOR STATISTICAL PURPOSES. 41. GROUND NO. 9 IS AGAINST THE SUSTENANCE OF DISAL LOWANCE OF PROFESSIONAL CHARGES OF RS.2,17,140/-. 42. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAS PAID PROFESSI ONAL FEES TO MRS. NEERA BUCHER, MR. M.B. AGARWASL AND M/S. YASH CONSULTANT FINANCIAL SE RVICES. THE AO ISSUED LETTER U/S.133(6) TO M.B. AGARWAL AND M/S. YASH CONSULTANT FINANCIAL SERVICES FOR VERIFICATION OF PROFESSIONAL FEES PAID. MR. AGARWAL HAS NOT RESPONDED AND M/S. Y ASH CONSUSLTANT FINANCIAL SERVICES CONFIRMED HAVING RECEIVED THE PAYMENT FOR FINANCIAL SERVICES. ACCORDING TO THE AO, THESE SERVICES ARE FOR OBTAINING THE LOANS WHICH HAVE NOT BEEN USED FOR EARNING TAXABLE INCOME AND HENCE HE DISALLOWED THE DEDUCTION CLAIMED BY TH E ASSESSEE. ON APPEAL, THE ASSESSEE SUBMITTED THAT SINCE THE COMPANY HAS NO FULL TIME A CCOUNTANT, THE BOOKS OF ACCOUNTS AND NECESSARY DOCUMENTATION REQUIRED TO BE MAINTAINED A S PER SEC. 44AB WERE MAINTAINED BY MR.M.B. AGARWAL AND THE PAYMENTS WERE MADE ON RETAI NERSHIP BASIS TO HIM OF RS.1,11,640/-. CONFIRMATION OF THE SAME WAS SUBMITTED TO THE AO. I T WAS FURTHER SUBMITTED THAT THE OTHER PAYMENT WAS MADE FOR ARRANGING FINANCE FOR THE COMP ANY FOR BUSINESS PURPOSES AND, THEREFORE, THE ENTIRE CLAIM BE ALLOWED. 43. HOWEVER, THE LD. CIT(A), IN VIEW OF HIS EARLIER FINDING THAT THE LOANS HAVE NOT BEEN USED FOR EARNING INCOME, WHICH IS TAXABLE, AND KEEP ING IN VIEW THE PROVISIONS OF SEC. 14A, CONFIRMED THE DISALLOWANCE MADE BY THE AO. 44. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT IN VIEW OF THE PLEA TAKEN IN RESPECT OF GROUND NO. 7, THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO. ITA NO.3387/M/06 SITU SHASTRI 11 45. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF THE AO AND LD. CIT(A). 46. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THERE IS NO DISPU TE THAT THE IMPUGNED ISSUE IS CONNECTED WITH THE ISSUE OF DISALLOWANCE OF INTEREST (GROUND NO.7) , THEREFORE, KEEPING IN VIEW OF OUR FINDING RECORDED IN PARA 35 OF THIS ORDER, WE SET A SIDE THE ISSUE TO THE FILE OF THE AO TO EXAMINE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVA TIONS MENTIONED THEREIN AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR S TATISTICAL PURPOSES. 47. GROUND NO.10 IS AGAINST THE SUSTENANCE OF ADDIT ION OF RS.94,10,000/- MADE BY THE AO AS UNEXPLAINED CREDIT U/S.68. 48. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT THE AO OBSERVED THAT IN THE BALANCE-SHEET OF THE ASSESSEE THERE ARE UNSECURED LOANS OF RS.4,50,08,791/-. IN THE TAX AUDIT REPORT, THE ASSE SSEE HAS SHOWN THE LIST OF PERSONS FROM WHOM HE HAS TAKEN THE LOANS OR TO WHOM THE ASSESSEE HAS REPAID THE LOANS. NO DETAILS OF THE ADDRESSES OF THE PARTIES HAVE BEEN FURNISHED IN THE TAX AUDIT REPORT IN SPITE OF THE FACT THAT THE SAME IS MANDATORY. ACCORDING TO THE AO, TH E ASSESSEE HAS NOT FURNISHED THE NAMES AND ADDRESSES AND PAN IN MOST OF THE CASES IN SPITE OF THE FACT THAT REPEATED OPPORTUNITIES WERE GIVEN TO THE ASSESSEE. THE AO FURTHER NOTED TH AT IN MOST OF THE CASES, FOR WHICH THE CONFIRMATIONS HAVE BEEN FILED BY THE ASSESSEE, THE AMOUNTS OUTSTANDING AGAINST THE PERSONS HAVE BEEN BROUGHT FORWARD FROM THE EARLIER YEARS. T HE ASSESSEE HAS CLAIMED THAT THESE LOANS WERE ARRANGED BY THE BROKERS. THEREFORE, THE AO ISSUED SUMMONS TO THE BROKERS AND, IN RESPONSE, THEY HAVE ATTENDED THE OFFICE OF THE A O AND HAVE CONFIRMED THAT THEY HAVE ARRANGED THE LOANS. HOWEVER, THE AO, IN THE ABSENCE OF ANY CONFIRMATIONS AND BANK STATEMENTS TO PROVE THE CREDIT WORTHINESS OF THE PE RSONS, ADDED RS.2,51,90,000/- AS UNEXPLAINED CREDITS U/S.68 OF THE ACT. ON APPEAL, T HE ASSESSEE STATED THAT IN MOST OF THE CASES CONFIRMATIONS OF THE PERSONS, FROM WHOM THE A SSESSEE HAS TAKEN LOANS, WERE FILED BEFORE THE AO AND WHEREVER THE CONFIRMATIONS COULD NOT BE FILED, THE SAME WERE DUE TO FINANCIAL PROBLEMS BEING FACED BY THE ASSESSEE. AS THE ASSESSEE COULD NOT PAY INTEREST TO ITA NO.3387/M/06 SITU SHASTRI 12 THESE PARTIES AND AS A RESULT, PERSONS FROM WHOM TH E LOANS WERE TAKEN WERE NOT CO-OPERATING WITH THE ASSESSEE, CONFIRMATIONS COULD NOT BE FILED WITH THE DEPARTMENT. HOWEVER, THE ASSESSEE HAS FILED FRESH CONFIRMATIONS BEFORE THE L D. CIT(A) FROM 87 PERSONS. THE LD. CIT(A) FORWARDED THE SAME TO THE AO FOR HIS COMMENTS ON TH E MERITS ON THE ADDITIONAL EVIDENCE AS WELL AS OBJECTIONS TO THE ADMISSION OF ADDITIONAL E VIDENCE. IN RESPONSE, THE AO REPORTED THAT EXCEPT IN THE CASE OF 17 PERSONS, THE LOANS IN OTHE R CASES ARE PROVED. ACCORDING TO THE AO, THE AMOUNTS OF LOANS FROM 17 PERSONS ARE NOT CONFIR MED AS IN 7 CASES THE NOTICES ISSUED BY THE DEPARTMENT COULD BE SERVED AT THE GIVEN ADDRESS ES AND IN 10 CASES IN SPITE OF THE SERVICE OF NOTICES U/S.131 OF THE ACT THERE WAS NO ATTENDAN CE BY THESE PERSONS. ACCORDINGLY, THE ASSESSEE WAS ASKED BY THE LD. CIT(A) TO SUBMIT HIS SUBMISSIONS ON THE REMAND REPORT OF THE AO. IN RESPONSE, THE ASSESSEE REQUESTED FOR ISSUE O F FRESH NOTICES TO THESE PERSONS U/S.131 OF THE ACT WITH A COPY TO THE ASSESSEE SO THAT HE M AY TAKE UP THE MATTER DIRECTLY WITH THE PARTIES ALSO. IT WAS FURTHER SUBMITTED THAT THE AS SESSEE HAS FILED CONFIRMATIONS IN RESPECT OF 88 PARTIES AND REQUESTED THAT IN BALANCE CASES THE MATTER SHOULD BE REMANDED BACK TO THE FILE OF AO TO VERIFY THE GENUINENESS OF THE BALANCE LOANS. THE LD. CIT(A) OBSERVED THAT IN THIS CASE SUFFICIENT OPPORTUNITY WAS PROVIDED TO THE ASS ESSEE. HE FURTHER OBSERVED THAT DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE HAS FI LED CONFIRMATIONS OF 88 PERSONS. THE AO CARRIED OUT INVESTIGATIONS AT HIS END AND CONFIRMED THE GENUINENESS IN ALL CASES EXCEPT IN 17 CASES. WHEN THE REPORT OF THE AO WAS CONFRONTED TO THE ASSESSEE, THE ASSESSEE REQUESTED THAT ONCE AGAIN THE MATTER SHOULD BE REFERRED TO TH E AO FOR HIS FRESH REPORT. THE LD. CIT(A) DID NOT ACCEPT THE ASSESSEES REQUEST ON THE GROUND THA T SUFFICIENT TIME WAS ALREADY ALLOWED TO THE ASSESSEE TO PROVE THE CREDIT-WORTHINESS OF THES E PERSONS. THE BURDEN OF PROVING THE CREDIT-WORTHINESS OF THE CREDITORS HAS NOT BEEN DIS CHARGED BY THE ASSESSEE. IN THIS VIEW OF THE MATTER AND IN THE ABSENCE OF ANY CONFIRMATION I N 46 AND 17 CASES, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.94,10,000/- AND ALLOWE D A RELIEF OF RS.1,57,80,000/-. 49. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE AO AND THE LD. CIT(A), FURTHER SUBMITS THAT THERE IS NO DISPUTE THAT THE LOANS WERE ARRANGED BY THE BROKERS . IT IS ALSO NOT IN DISPUTE THAT THE AO ITA NO.3387/M/06 SITU SHASTRI 13 ISSUED SUMMONS TO THE BROKERS AND IN RESPONSE THEY HAVE ATTENDED THE OFFICE OF THE AO AND HAVE CONFIRMED THAT THEY HAVE ARRANGED THE LOANS. H E FURTHER SUBMITS THAT THE LOANS WERE TAKEN BY ACCOUNT PAYEE CHEQUES AND INTEREST AND BRO KERAGE HAS BEEN ALLOWED. THEREFORE, THE ASSESSEE HAS DISCHARGED HIS INITIAL BURDEN AND THEREFORE NO SUCH ADDITION IS CALLED FOR AND FOR THIS PROPOSITION RELIANCE WAS ALSO PLACED O N THE DECISION IN ORIENT TRADING CO. LTD. VS. CIT (1963) 49 ITR 723 (BOM) WHEREIN IT HAS BEEN HEL D THAT WHEN THE ASSESSEE SATISFIES THE ITO AS TO THE IDENTITY OF THE THIRD PARTY AND ALSO SATISFIES SUCH OTHER EVIDENCE WHICH WILL SHOW, PRIMA FACIE, THAT THE ENTRY IS NOT FICTITIOUS, THE INITIAL BURDEN WHICH LIES ON HIM CAN BE SAID TO HAVE BEEN DISCHARGED BY HIM. IT WILL NOT, THEREAFTE R, BE FOR THE ASSESSEE TO EXPLAIN FURTHER HOW OR IN WHAT CIRCUMSTANCES THE THIRD PARTY OBTAIN ED MONEY AND HOW OR WHY HE CAME TO MAKE A DEPOSIT OF THE SAME WITH THE ASSESSEE. THE B URDEN WILL THEN SHIFT ON THE DEPARTMENT TO SHOW WHY THE ASSESSEES CASE CANNOT BE ACCEPTED AND WHY IT MUST BE HELD THAT THE ENTRY, THOUGH PURPORTING TO BE IN THE NAME OF THIRD PARTY, STILL REPRESENTS THE INCOME OF THE ASSESSEE FROM A SUPPRESSED SOURCE. RELIANCE WAS ALSO PLACED ON THE DECISION IN ASHOKPAL DAGA (HUF) V. CIT (1996) 220 ITR 452 (MP) WHEREIN SIMILA R VIEW HAS BEEN TAKEN. THE LD. COUNSEL FOR THE ASSESSEE, AFTER REFERRING THE TRIBUNAL DECI SIONS IN ITO VS. SANJAY KUMAR GOYAL (2007) 108 TTJ (DEL) 823, ANIL KUMAR MIDHA (HUF) V. ITO (2 006) 100 TTJ (JD) 644 AND A.P.S. ASSOCIATES (P) LTD. V. ACIT (2006) 101 ITD 215 (ASR ), FURTHER SUBMITS THAT SINCE THE ASSESSEE HAS REQUESTED TO ISSUE SUMMONS TO THE CRED ITORS U/S.131, WHICH WAS REJECTED BY THE REVENUE AUTHORITIES ON THE GROUND THAT SUFFICI ENT TIME WAS ALREADY ALLOWED TO THE ASSESSEE TO PROVE THE CREDIT-WORTHINESS OF THE PERS ONS, THEREFORE, IN VIEW OF THE RATIO OF THE ABOVE DECISIONS, THE ASSESSEE HAS DISCHARGED HIS B URDEN AND, THEREFORE, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS LIABL E TO BE DELETED. IN THE ALTERNATIVE, HE SUBMITS THAT HE HAS NO OBJECTION IF THE ISSUE IS SE T ASIDE TO THE FILE OF THE AO. 50. ON THE OTHER HAND, THE LD. D.R., WHILE RELYING ON THE ORDERS OF AO AND LD. CIT(A), FURTHER SUBMITS THAT MERELY PRODUCING THE BROKERS, WHO CONFIRMED THAT THEY HAVE ARRANGED THE LOANS, DOES NOT MEAN THAT THE ASSESSEE HAS DISCHARG ED HIS ONUS AS PER THE PROVISIONS OF SEC. 68 OF THE ACT. HE FURTHER SUBMITS THAT AS THE ASSESSEE HAS FAILED TO PRODUCE THE ITA NO.3387/M/06 SITU SHASTRI 14 CREDITORS AND HAS ALSO FAILED TO FILE THEIR CONFIRM ATIONS AND THEIR CREDIT-WORTHINESS, THEREFORE, THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD . CIT(A) BE UPHELD. 51. WE HAVE CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPU TE THAT THE ADDITION OF RS.94,10,000/- WAS CONFIRMED BY THE LD. CIT(A) ON THE GROUND THAT THE ASSESSEE HAS NEITHER FILED ANY CONFIRMATIONS NOR HAS PRODUCED THE LOAN CREDITORS D ESPITE SUFFICIENT OPPORTUNITY TO PRODUCE THEM WAS PROVIDED TO THE ASSESSEE. WE FURTHER FIND THAT UNDER THE PROVISIONS OF SEC. 68, THE INITIAL BURDEN IS ON THE ASSESSEE TO PROVE THE IDEN TITY, CREDIT-WORTHINESS AND GENUINENESS OF THE TRANSACTIONS. MERELY BECAUSE THE ASSESSEE HAS P RODUCED THE BROKERS WHO HAVE ARRANGED THE LOANS IS NOT SUFFICIENT TO HOLD THAT THE ASSESS EE HAS DISCHARGED HIS BURDEN. THIS BEING SO, WE ARE OF THE VIEW THAT THE BURDEN STILL LIES ON T HE ASSESSEE AND, THEREFORE, ALL THE DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE D ISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HOWEVER, KEEPING IN VIE W THAT THE ASSESSEE HAS MADE REQUEST TO THE REVENUE TO ISSUE SUMMONS U/S.131 TO THE PARTIES AND THE REQUEST OF THE ASSESSEE WAS DENIED ON THE GROUND THAT SUFFICIENT OPPORTUNITY WA S ALREADY PROVIDED TO THE ASSESSEE, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE ON E MORE OPPORTUNITY BE PROVIDED TO THE ASSESSEE AND ACCORDINGLY WE SET ASIDE THE ORDERS PA SSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTER TO THE FILE OF AO TO DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATIONS HEREINABOVE AND ACCORDING TO LAW A FTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND TAKEN BY TH E ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 52. IN THE RESULT, THE ASSESSEES APPEAL STANDS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 06TH DAY OF JULY, 20 11. SD/- SD/- (J. SUDHAKAR REDDY) (D.K. AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 06TH JULY , 2011. ITA NO.3387/M/06 SITU SHASTRI 15 NG: COPY TO : 1. ASSESSEE. 2. DEPARTMENT. 3 CIT(A)-XXXII,,MUMBAI. 4 CIT-20,MUMBAI. 5.DR,E BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO.3387/M/06 SITU SHASTRI 16 DETAILS DATE INITIALS DESIGN ATION 1. DRAFT DICTATED ON 24-06-11 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 28-06-11 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER