MEHTA FINANCIAL SERVICES LTD, MUMBAI V. DCIT 4(2), MUMBAI

ITA 3813/MUM/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3564 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G N MAKWANA
• Assessee Lawyers: NEELKANT KHANDELW AL
• Keywords: Bogus purchase; Unexplained cash credit; Search and seizure; Principle of natural justice; Onus to prove
• Section: 143(3); 147; 131; 68; 148; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 3812 AND 3813 /MUM/ 201 6 ( / ASSESSMENT YEAR : 2008 - 09 AND 2009 - 10 ) MEHTA FINANCIAL SERVICES LTD. 612, ARUN CHAMBERS, 6 TH FLOOR, TARDEO ROAD, MUMBAI - 400034 / VS. DY.COMMISSIONER OF I NCOME TAX 4(2), AAYAKAR BHAVAN , M K ROAD, MUMBAI - 400020 ./ PAN : AAACR4142D / ASSESSEE BY S HRI NEELKANT KHANDELWAL / REVENUE BY SHRI G N MAKWANA / DATE OF HEARING : 18 .8 . 2016 / DATE OF PRONOUNCEMENT : 25 . 8. 2016 / O R D E R PER RAJESH KUMAR, A. M: THE SE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 16 . 3.2016 PASSED BY THE LD.CIT(A) - 9 , MUMBAI FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 . SINCE THESE APPEALS PERTAIN TO THE SAME ASSESSEE, THESE AP PEALS ARE BEING DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 3812 AND 3813 / MUM/201 6 2. ITA NO. 3812 /MUM/201 6 . 3 . GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER : 1. THE COMMISSIONER OF INCOME - TAX (APPEALS) - 9, MUMBAI (HEREINAFTER REFERRED TO AS CIT(A) ERRED IN UPHOLDING THE ACTION OF DEPUTY COMMISSIONER OF INCOME - TAX - 4(2),MUMBAI (HEREINAFTER REFERRED TO AS THE ASSESSING OFFICER) IN ISSUING A NOTICE UNDER SECTION 148 DATED 28.3.2013 ON THE BASIS OF THE SEARCH AND SEIZURE OPERATIONS CARRIED OUT UNDER SECTION 132 ON KSL GROU P. THE APPELLANTS CONTEND THAT THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER FOR INCOME - TAX ASSESSMENT YEAR 2007 - 08 ON THE BASIS OF THE SEARCH AND SEIZURE OPERATIONS CARRIED OUT UNDER SECTION 132 ON KSL GROUP BY ORDER DATED 29.12.2009 AND HENCE, THE ASSESSING OFFICER HAD THE INFORMATION IN HIS POSSESSION WHEN HE COMPLETED THE ORIGINAL ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER REFERENCE BY HIS ORDER DATED 15.12.2011 AND AS SUCH, THE ISSUE OF IMPUGNED NOTICE UNDER SECTION 148 IS BAD IN L AW AND CONSEQUENTLY, TH E IMPUGNED REASSESSMENT ORDER IS ALSO BAD IN LAW. 2. THE CIT(A) ERRED IN UPHOLDING THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) R.W.S147 INASMUCH AS HE ASSESSMENT ORDER IS BAD IN LAW. T HE APPELLANTS CONTEND THAT THE ASSESSING O FFICER IN THE REASONS RECORDED FOR RE - OPENING THE ASSESSMENT HAS MENTIONED THAT' ..... IT HAS BEEN FOUND THAT THE ASSESSEE COMPANY HAS TAKEN BOGUS BILLS FOR PURCHASES FROM THE FOLLOWING PARTIES - ' (EMPHASIS OURS) AND HAS NOT. MADE ANY ADDITION IN THE IMPU GNED ASSESSMENT ORDER ON ACCOUNT OF SUCH BOGUS BILLS FOR PURCHASES BUT HAS MADE AN ADDITION OF RECEIPT OF UNSECURED LOAN FROM SEAVIEW TRADING CO. PVT LTD WHICH HAS BEEN SQUARED - UP DURING THE YEAR UNDER REFERENCE. THE APPELLANTS FURTHER, CONTEND THAT THE ASSESSMENT ORDER IS BAD IN LAW INASMUCH AS, PER EXPLANATION 3 TO SECTION 147 THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSMENT AND WHICH WAS BASIS OF FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING COURSE OF PROCEEDINGS. ACCORDINGLY, THE ASSESSING OFFICER HAVING NOT MADE ANY ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES WHICH IS 3 3812 AND 3813 / MUM/201 6 THE BASIS FOR RE - OPENING OF A SSESSMENT, HE COULD NOT HAVE MADE ANY OTHER ADDITION. 3. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS 1,05,00,000 BEING LOAN RECEIVED BY THE APPELLANTS FROM SEAVIEW TRADING CO. PVT. LTD. ON THE GROUND THAT THE APPELLANTS HAVE FAILED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTION AND THEREBY TREATED THE SAID LOAN RECEIVED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE APPELLANTS CONTEND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT NOT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER IN MAKING THE IMPUGNED ADDITION INASMUCH AS THE IDENTITY AND CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTION AR E PROVED BEYOND DOUBT AND THUS, THE SAID LOAN RECEIVED CANNOT BE TREATED AS UNEXPLAINED CASH CREDIT UNDER THE PROVISIONS OF SECTION 68 OF THE ACT. FURTHER, THE APPELLANTS CONTEND THAT THE MONIES DO NOT BELONG TO THEM AND HENCE, THE PROVISIONS OF SECTION 68 ARE NOT APPLICABLE TO THE FACTS OF THE CASE AND AS SUCH, THE IMPUGNED ADDITION OUGHT TO BE DELETED. THE APPELLANTS FURTHER, CONTEND THAT THE CIT(A) OUGHT NOT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER INASMUCH AS THE ASSESSING OFFICER HAS GROSS LY VIOLATED THE PRINCIPLES OF NATURAL JUSTICE IN NOT ALLOWING THE APPELLANTS AN OPPORTUNITY TO CROSS EXAMINE MR GIRISHCHAND YADAV, THE MAIN WITNESS ON WHOSE STATEMENT THE ASSESSING OFFICER HAS BASED THE IMPUGNED ADDITION, INSPITE OF THE APPELLANTS REQUESTI NG FOR THE SAME; IT IS THE OBLIGATION OF THE ASSESSING OFFICER TO PRODUCE MR GIRISHCHAND YADAV FOR CROSS EXAMINATION INASMUCH AS HE IS THE WITNESS OF THE DEPARTMENT. 4 . FACTS OF THE CASE ARE THAT THE ASSESSEE FILED IS RETURN OF INCOME ON 19.9.2008 DECLAR ING TOTAL INCOME OF RS.1,47,76,121/ - WHICH WAS PROCESS ED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) . THEREAFTER THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 14 3(3) AT THE RETURNED 4 3812 AND 3813 / MUM/201 6 INCOME. SUBSEQUENTLY THE CASE WAS REOPENED UNDER SECTION 147 OF THE ACT AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 28.3.2013 AFTER RECORDING THE REASONS WHICH WERE ALSO DULY SERVED THE ASSESSEE. THE REAS ONS RECORDED BY THE AO ARE READS AS UNDER : AS BELOW: - THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME OF INCOME OF RS.14776721/ - ON 19/09/2008. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961. DURING THE COURSE OF SEARCH & SEIZURE OP ERATION U/ S 132 OF THE INCOME TAX ACT, 1961 IN THE CASE OF KSL GROUP ON 23. 12.2008,IT HAS BEEN FOUND THAT THE ASSESSEE COMPANY HAS TAKEN BOGUS BILLS FOR PURCHASES FROM THE FOLLOWING PARTIES: I) REALSTAR TRADING CO. PVT. LTD. II) WATERGATE MERCANTILE CO. PVT. LTD. III) SEA VIEW TRADING CO. PVT. LTD. IV) SUPERHOUSE TRADING CO. PVT. LTD. V) MONTREAL TRADING CO. PVT. LTD. VI) STARVIEW MERCANTILE CO. PVT. LTD. MOREOVER, THE ABOVE PARTIES HAD CONFIRMED THE ISSUANCE OF ACCOMMODATION BILLS TO THE ASSESSEE COM PANY DURING THE COURSE OF COURSE OF SEARCH & SEIZURE OPERATION U/ S 132 OF THE INCOME TAX ACT, 1961 IN THE CASE OF KSL GROUP ON 23.12.2008. THEREFORE, I HAVE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT COPY OF THE REASONS WAS SUPPLIED TO THE ASSESSEE ON 16.3.2013. HOWEVER, THE ASSESSEE DID NOT FILE ANY OBJECTION TO THE PROCEEDINGS UNDER SECTION 148. STATUTORY NOTICES WERE ISSUED UNDER SECTION 143(1) AND 142(3) OF THE ACT AND SERVED UPON THE ASSESSEE ASKING VARIOUS DETAILS FRO M THE ASSESSEE AS MENTIONED IN THE SAID NOTICE. THE ASSESSEE ATTEND ED THE H EARING S FROM 5 3812 AND 3813 / MUM/201 6 TIME TO TIME BEFORE THE AO AND PARTICULARLY ON 21.3.2014, THE ASSESSEE FILED A LETTER ALONG WITH THE LEDGER ACCOUNT, BANKS STATEMENTS AND A COPY OF THE CHEQUES ISSUED TO M/S SEAVIEW TRADING CO. PVT LTD. THEREAFTER A SUMMONS DATED 24.3.2014 U/S 131 (1) W ERE ISSUED TO M/S SEAVIEW TRADING CO. PVT LTD. WHEREIN THE DETAILS OF TRANSACTIONS WERE CALLED FOR BUT THE SAID NOTICE COULD NOT BE SERVED AS THE COMPANY HAD L EFT THE OFFICE. THEREAFTER THE AO REQUIRED THE ASSESSEE TO PRODUCE PRINCIPAL OFFICER OF M/S SEAVIEW TRADING CO. PVT LTD. AND ACCORDINGLY MR.GIRISHCHAND R YADAV WAS PRODUCED BY THE ASSESSEE ON 26.3.2014 AND THE AO RECORDED HIS STATEMENT ASKING VAR IOUS QUERIES. T HE AO WAS NOT SATISFIED WITH THE TRANSACTIONS WITH M/S SEAVIEW TRADING CO. PVT LTD AND DOUBTED THE CREDITS AS APPEARING IN THE BOOKS OF THE ASSESSING AMOUNTING TO RS.1,05,00,000/ - IN THE CREDIT OF ABOVE COMPANY ON VARIOUS GROUNDS SU CH AS THE SAID COMPANY HAVING RS.65.95 CRORES TURNOVER, NET PROFIT OF RS.1,52,180/ - WITH PAID UP CAPITAL OF RS.1 LAKH , INVESTMENT S OF RS.9.5 CRORES AND ADVANCES OF RS.3.65 CRORES. THE AO OBSERVED THAT IT IS IMPOSSIBLE TO BELIEVE THAT A COMPANYS PAID UP CAPITAL OF RS.1 LAKHS HAS ADVANCED RS.3.65 CRORES WHOSE DIRECTOR EARNING RS.8000/ - PER MONTH FROM THIS COMPANY AND STAYING IN THE RENTED HOUSE AND THEREB Y HELD THAT THE CREDITS IN THE CREDIT OF M/S SEAVIEW TRADING CO. PVT LTD. IN THE BOOKS OF TH E ASSESSEE WAS NOT GENUINE AND FINALLY FRAMED THE ASSESSMENT U/S 6 3812 AND 3813 / MUM/201 6 143(3) OF THE ACT READ WITH SECTION 147 OF THE ACT BY MAKING AN ADDITION OF RS.1,05,00,000/ - U/S 68 OF THE ACT AT AN INCOME OF RS.2,26,95,490/ - BY DISBELIEVING THE IDENTITY AND CREDIT WORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THE ORDER OF THE AO WAS UPHELD BY THE L D. CIT(A) IN THE APPELLATE PROCEEDINGS . NOW THE ASSESSEE IS BEFORE US CHALLENGING THE ORDER OF CIT(A) 5 . WE SHALL FIRST TAKE UP THE ISSUE ON MERIT AS RA ISED IN GROUND NO.3 OF THE APPEAL THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS.1,05,00,000/ - AS MADE BY THE AO U/S 68 OF THE ACT FOR UNEXPLAINED CASH CREDIT. 6 . THE LD.AR VEHEMENTLY ARGUED BEFORE US THAT SIMILAR ISSUE OF ADDITION U/S 68 HAS BEEN DECIDED IN ASSESSEES OWN CASE BY T HE CO - ORDINA T E BENCH OF THE TRIBUNAL IN ITA NO . 6765/MUM/2012(AY - 2007 - 08) DATED 20.2.2015 IN FAVOUR OF THE ASSESSEE. THE LD. AR SUBMITTED THAT THE REASONS RECORDED BY T HE AO FOR REOPENING THE ASSESSMENT STAT ED THAT THE ASSESSEE COMPANY HAS TAKEN BOGUS BILLS FOR PURCHASE FROM SIX PARTIES AND IN THE YEAR 2007 - 08, THE ASSESSEE RECEIVED A SUM OF RS.94,95,000/ - FROM REALSTAR TRADING CO. PVT. LTD. WHEREAS IN THE CURRENT YE AR UNDER THE SAME FACTS RS.1.05 CRORES W ERE RECEIVED FROM M/S SEAVIEW TRADING CO. PVT LTD. THE LD. AR ARGUED THAT THE CO - ORDINATE BENCH OF THE TRIBUNAL AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES, CONCE RN ING THE SAID TRANSACTION HAS DECI D ED THE 7 3812 AND 3813 / MUM/201 6 ISSUE IN FAVOUR OF THE A S SES S EE BY HOLDIN G TH AT THE ADDITION CANNOT BE SUSTAINED U/S 68 OF THE AC T AS T HE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION S COULD NOT BE DOUBTED AS THE ASSESSEE FURNISHED ALL EVIDENCES WHICH SATISFIED ALL THREE CONDITIONS NAMELY I DENTITY , CREDITWORTHINESS AND GENUINITY AND PRAYED THAT IN VIEW OF THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CA S E THE ADDITION AS MADE OF RS.1.05 CRORES BE DELE T ED. 7 . ON THE CONTRARY , THE LD. DR OBJECTED TO THE ARGUMENT S OF THE LD.AR THAT IN THE YEAR 2007 - 08 THE ASSESSMENT WAS MA D E U/S 143(3) OF THE ACT WHEREAS IN THE PRESENT YEAR THE ASSESSMENT WAS MADE U/S 143(3) READ WITH SECTION 147 OF THE ACT . THE LD. DR SUBMITTED THAT THE ASSESSEE HAS TAKEN BOGUS ENTRIES FROM M/S SEAVIEW TRADING CO. P VT LTD AND THEREFORE, THE AO HAS RIGHTLY MADE ADDITION U/S 68 OF THE ACT AS THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION WAS NOT PROVE D AS THE COMPANY HAVING PAID UP CAPITAL OF RS.1 LAKH COULD NOT LOAN SUCH HUG E SUM TO THE ASSESSEE . THUS I T WAS CLEAR THAT THE ENTIRE TRANSACTION WAS SHAM AND BOGUS ONE AND HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND PRAYED THAT THE ADDITION BE CONFIRMED BY DISMISSING T HE APPEAL OF T HE ASSE SS EE. 8 . WE HAVE CONSIDER ED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE 8 3812 AND 3813 / MUM/201 6 ASSESSEE HAS RAISED A SUM OF RS.1.05 CRORES DURING THE YEAR FROM M/S SEAVIEW TRADING CO. PVT LTD. FROM THE PERUSAL OF REASON S RECORDED BY THE AO, THE PARTY M/S SEAVIEW TRADING CO. PVT LTD IS AT SERIAL NO.3 AND REALSTAR TRADING CO. WAS APPEARING AT SR.NO.1 IN THE REASONS RECORDED B Y THE AO U/S 148 OF THE ACT. IN THE ASSESSMENT YEAR 2007 - 08, THE AS S ES S EE HAS TAKEN SIMI LAR LOAN S FROM REALSTAR TRADING CO AMOUNTING TO RS.94,95,000/ - AND IN THE CURRENT YEAR THE A SS ES S EE TOOK THE AMOUNT OF RS.1.05 CRORES FROM M/S SEAVIEW TRADING CO. PVT. WE FIND THAT THE FACTS OF THE CURRENT YEAR ARE IDENTICAL TO THAT OF THE FACTS OF EARLIER YEAR I.E AY 2007 - 08 IN WHICH THE CO - ORDINATE BENCH OF T HE TRIBUNAL DELETED HE ADDITI ON BY UPHOLDING THAT THE TRANSACTION S AS MADE BY THE ASSESSEE FROM REALSTAR TRADISNG CO WAS GENUINE AND NO ADDITION U/S 68 COULD HAVE BEEN MADE . THE OPERATI VE PORTION OF THE JUDGMENT OF THE TRIBUNAL IS REPRODUCED AS UNDER : 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICE FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS PLACED FULL RELIANCE ON THE SWORN STATEMENTS GIVEN B Y THE FOUR PERSONS VIZ., SHRI MAHAVIR DUGGAR, SHRI DILIP S MEHTA, SMT. SANGEETHA J SAWANT AND SHRI GIRISHCHAND R YADAV FOR DOUBTING ABOUT THE GENUINENESS AND CREDIT WORTHINESS OF M/S REAL STAR TRADING COMPANY P LTD, FROM WHOM THE ASSESSEE HAD RECEIVED SHAR E APPLICATION MONEY OF RS.94.95 LAKHS. ADMITTEDLY, THESE STATEMENTS WERE TAKEN FROM THE ABOVE SAID PERSONS IN CONNECTION WITH THE SEARCH OPERATIONS CONDUCTED ON KSL GROUP OF COMPANIES. ADMITTEDLY, THE QUESTIONS POSED IN THE STATEMENTS SHOULD HAVE BEEN AI MED TO BRING OUT THE FACTS RELATING TO M/S KSL GROUP ONLY. ADMITTEDLY, AT THAT POINT OF TIME, THESE PERSONS SHOULD ALSO HAVE GIVEN THE STATEMENTS IN CONNECTION WITH M/S KSL GROUP ONLY. 9 3812 AND 3813 / MUM/201 6 10. IN THE ABOVE SAID STATEMENTS, AS SUBMITTED BY THE LD A.R, NO QU ESTION SEEMS TO HAVE ASKED ABOUT THE TRANSACTIONS WITH THE ASSESSEE HEREIN. THOUGH THE ASSESSING OFFICER CONFRONTED THE STATEMENT GIVEN BY SHRI MAHAVIR DUGGAR TO HIM, YET THE AO ONLY ASKED ABOUT THE CORRECTNESS OF THE STATEMENT GIVEN BY HIM EARLIER. SHRI MAHAVIR DUGGAR STATED THAT THE CONTENTS OF HIS EARLIER STATEMENT WERE CORRECT. HENCE, DURING THE COURSE OF PRESENT ASSESSMENT PROCEEDINGS ALSO, THE AO DID NOT QUESTION ABOUT THE TRANSACTIONS ENTERED BETWEEN THE ASSESSEE AND M/S REAL STAR TRADING CO. P LT D. THUS, IT IS SEEN THAT THE ASSESSING OFFICER HAS PROCEEDED ON THE PRESUMPTIONS THAT ALL THE TRANSACTIONS ENTERED BY M/S REAL STAR TRADING CO. P LTD SHALL BE BOGUS ONLY. THE LD CIT(A) HAS ALSO CONFIRMED THE ADDITION ONLY ON SUCH PRESUMPTIONS. THIS APPR OACH OF THE TAX AUTHORITIES, IN OUR VIEW, DOES NOT APPEAR TO BE CORRECT. 11. THE PROVISIONS OF SEC. 68 OF THE ACT PLACE THE INITIAL BURDEN OF PROOF UPON THE ASSESSEE. IT IS WELL SETTLED PROPOSITION THAT THE ASSESSEE HAS TO DISCHARGE THREE MAIN INGREDIE NTS IN ORDER TO DISCHARGE THE INITIAL BURDEN OF PROOF, I.E., HE HAS TO PROVE THE IDENTITY OF THE CREDITOR, THE GENUINENESS OF TRANSACTIONS AND THE CREDIT WORTHINESS OF THE CREDITOR. ONCE THE ASSESSEE DISCHARGES THE INITIAL BURDEN PLACED UPON HIM, THEN T HE BURDEN TO DISPROVE THE SAID CLAIM SHIFTS UPON THE ASSESSING OFFICER. IN THE INSTANT CASE, WE NOTICE THAT THE ASSESSEE HAS FILED CONFIRMATION LETTER OBTAINED FROM M/S REALSTAR TRADING CO. P LTD ALONG WITH ITS FINANCIAL STATEMENTS. THE ABOVE SAID COMPAN Y HAS ALSO FILED ITS INCOME TAX RETURNS. AS REQUESTED BY THE AO, THE ASSESSEE HAS ALSO PRODUCED THE DIRECTOR ALSO. THROUGH THE FINANCIAL STATEMENTS, THE ASSESSEE HAS PROVED THE CREDIT WORTHINESS OF THE ABOVE SAID COMPANY. THERE IS NO DOUBT ABOUT THE IDE NTITY OF THE COMPANY. HOWEVER, THE AO HAS, IN EFFECT, DOUBTED ABOUT THE GENUINENESS OF THE TRANSACTION, IN VIEW OF THE FINDINGS ARISING OUT OF THE SEARCH OPERATIONS CONDUCTED ON M/S KSL GROUP OF COMPANIES. 12. WE HAVE ALREADY NOTICED THAT THE ASSESSING OFFICER HAS CONSIDERED THE STATEMENTS TAKEN FROM THE PARTIES IN CONNECTION WITH SEARCH OPERATIONS CONDUCTED ON M/S KSL GROUP. WE HAVE ALSO NOTICED THAT THE AO DID NOT MAKE ANY ENQUIRIES ABOUT THE TRANSACTIONS ENTERED BETWEEN THE ASSESSEE AND M/S REALSTAR TRADING CO. P LTD. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE TAX 10 3812 AND 3813 / MUM/201 6 AUTHORITIES SHOULD NOT HAVE PLACED THEIR RELIANCE ON THE STATEMENTS GIVEN IN CONNECTION WITH M/S KSL GROUP FOR DRAWING ADVERSE INFERENCE IN THE INSTANT CASE. WE NOTICE THAT THE ASSESSEE HAS ASKED FOR AN OPPORTUNITY TO CROSS EXAMINE THE FOUR PERSONS CITED ABOVE, BUT THE SAID OPPORTUNITY SEEMS TO HAVE NOT BEEN PROVIDED WITH, EVEN THOUGH THE AO HAS REPORTED THAT THE ASSESSEE DID NOT AVAIL THE OPPORTUNITY. WE HAVE ALREADY NOTICED TH AT THE ASSESSEE HAS FURNISHED AFFIDAVITS OBTAINED FROM THE FOUR PERSONS AND THESE AFFIDAVITS WOULD SHOW THAT THEY HAVE NOT RECEIVED ANY COMMUNICATION FROM THE AO ASKING THEM TO APPEAR FOR CROSS EXAMINATION. THESE FACTS, IN OUR VIEW, FURTHER WEAKEN THE CAS E OF THE REVENUE. HENCE, WE ARE OF THE VIEW THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN DOUBTING ABOUT THE GENUINENESS OF THE TRANSACTIONS WITHOUT BRINGING ON RECORD ANY MATERIAL TO SHOW THAT THE IMPUGNED TRANSACTION ENTERED BETWEEN THE ASSESSEE AND M/S REALSTAR TRADING CO. P LTD WAS ALSO BOGUS. IN OUR VIEW, THE STATEMENTS GIVEN IN CONNECTION WITH M/S KSL GROUP CANNOT BE USED AGAINST THE ASSESSEE, SINCE THE TRADE DEALINGS BETWEEN EACH OF THE PARTY WOULD DIFFER IN COLOUR AND CHARACTER. HENCE, WE ARE OF THE VIEW THAT THE REVENUE CANNOT TAKE SUPPORT FROM THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF NOVA PROMOTERS & FINLEASE (P) LTD (SUPRA). 13. THE DOCUMENTS FURNISHED IN THE PAPER BOOK WOULD SHOW THAT THE SHARE APPLICATION MONEY HAS BEEN RECEIVED BY THE ASSESSEE BY FOLLOWING PROPER PROCEDURES THROUGH THE BANKING CHANNELS. THE FINANCIAL STATEMENTS OF M/S REALSTAR TRADING CO. P LTD ALSO SHOW THAT IT IS CARRYING ON BUSINESS ACTIVITIES AND THUS, THE CREDIT WORTHINESS TO GIVE THE SHARE AP PLICATION MONEY ALSO STANDS PROVED. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED THE INITIAL BURDEN PLACED UPON HIM. IN VIEW OF THE ABOVE, WE ARE UNABLE TO AGREE WITH THE VIEW TAKEN BY THE LD CIT(A). ACCORDINGLY WE SET ASIDE THE ORDE RS OF LD CIT(A) AND THE AO ON THIS ISSUE. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 9 . FROM THE ABOVE IT IS CLEAR THAT THE TRIBUNAL HAS REACHED THE FINDING S THAT THE ASSESSEE HAS DULY PROVE D THE GENUINENESS OF TRANSACTION., CRED ITWORTHINESS AND IDENTITY OF THE CREDITOR BY PRODUCING THE PRINCIPAL OFFICER OF THE COMPANY AND ALSO BY FILING THE DETAILS OF THE COMPANY LIKE 11 3812 AND 3813 / MUM/201 6 B ANKS STATEMENT, AUDITED ACCOUNT OF THE LENDER. SAME RECORD S WERE PRODUCED AND THE PRINCIPAL OFFICER WAS ALSO PRODUC ED AND HIS STATEMENT WAS ALSO RECORDED BY T HE AO. WE FIND THAT THE IDENTICAL ISSUE OF ADDITION U/S 68 WAS DECIDED IN THE ASSESSEE OWN CASE IN THE AY 2007 - 08. THEREFORE, R ESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH O F T HE TRIBUNAL WE SET ASIDE T HE OR D ER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 1,05,00,000/ - . 10. SINCE WE HAVE DECIDED THE APPEAL ON MERIT IN FAVOUR OF THE ASSESSEE, THE OTHER GROUNDS OF APPEAL ON LEGAL/TECHNICAL ISSUES ARE RENDERED ACADEMIC IN AND DISM ISSED AS INFRUCTUOUS. 1 1 . I.T.A. NO.3813/MUM/2016 AY 2009 - 10 12. WE HAVE ALREADY DECIDED IDENTICAL ISSUE AS INVOLVED IN THIS APPEAL IN ITA NO 3812/MUM/2016 WITH IDENTICAL FACTS (SUPRA) AND OUR DECISION IN ITA NO 3812/MUM/2016 WOULD MUTATIS MUTANDIS AP PLY TO THIS APPEAL AS WELL. THE APPEAL OF THE ASSESSEE IS ALLOWED AND AO IS DIRECTED ACCORDINGLY. 13. IN THE RESULT, THE APPEA L S OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25. 0 8 . 2016. S D SD ( SHAILEN DRA KUMAR YADAV ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 25 . 8 .2016 SR.PS: SRL: 12 3812 AND 3813 / MUM/201 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR , ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR ) , / ITAT, MUMBAI