ACIT, UDAIPUR V. M/s. The Lake Shore Palace Hotels Pvt. Ltd., UDAIPUR

ITA 478/JODH/2009

• Counselvise Citation: 47823314 RSA 2009
• Duration Of Justice: 2 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-12-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 10-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SH SUBHASH CHANDRA
• Assessee Lawyers: N M RANKA
• Keywords: Gift; Search and seizure; Wrong claim; Corroborative evidences; Accommodation entries; Competent authority; Retraction
• Section: 131; 68; 69; 132; 69C; 15; 92; 153A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH : JODHPUR BEFORE SH. R.K. GUPTA, JUDICIAL MEMBER AND SH. N.L. KALRA, ACCOUNTANT MEMBER I.T.A. NO. 478/JU/2009 ASSESSMENT YEAR : 2004-05 PAN:AAACT8215H ASSTT. COMMISSIONER OF INCOMETAX, VS. THE LAKE SHO RE PALACE HOTEL P. LTD. CIRCLE 2, UDAIPUR. UDAIPUR. (APPELLANT) (RESPONDENT) C.O. NO.73(JU/2009 (ARISING OUT OF ITA NO.48/JU/2009) ASSESSMENT YEAR: 2004-05 THE LAKE SHORE PALACE HOTELS PVT. LTD. VS. ASSTT. C OMMR. OF INCOME-TAX, UDAIPUR. CIRCLE -2, UDAIAPUR. APPELLANT BY:SH. SH. SUBHASH CHANDRA, CIT(DR) RESPONDENT BY:SH. N.M. RANKA, AR DATE OF HEARING :14.12.2011 DATE OF PRONOUNCEMENT:20.01.2012 ORDER PER N.L. KALRA, AM THE APPEAL BY THE REVENUE AND C.O. BY THE ASSESSEE ARE FILED AGAINST THE ORDER OF THE LD. CIT(A), UDAIPUR, DATED 01.05.2009 , RELATING TO ASSESSMENT YEAR 2004-05. THE GROUNDS OF APPEAL RAISED BY THE REVENU E ARE AS UNDER: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE 1. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 50 LACS MADE BY THE AO U/S 68 OF THE I.T.ACT, 1961. 2 2. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.50,000/ MADE BY THE AO U/S 69 OF THE I.T. ACT, 1961. 3. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DEL ETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 2. THE ASSESSEE DERIVES INCOME FROM RUNNING OF HOTE LS AND OTHER ANCILIARY ACTIVITIES. THE ASSESSEE HAS SHOWN TO HAVE RECEIVED AN UNSECURED LOAN OF RS. 50 LAKH FROM M/S. JAI KANTA TECHNICAL AND FINANCIAL S ERVIOCES P. LTD. (HEREINAFTER REFERRED TO AS JTFSPL). THE ASSESSEE FURNISHED PHO TOSTAT COPY OF CONFIRMATION LETTER DATED 20.4.2005 IN RESPECT OF UNSECURED LOAN OF RS. 50 LAKH FROM M/S. JTFSPL AND SUCH CONFIRMATION IS SIGNED BY SH. GAJEN DRA PORWAL DIRECTOR OF THE COMPANY. THE ASSESSEE COMPANY SUBMITTED THAT IT CAN NOT PRODUCE THE ORIGINAL CONFIRMATION AND ALSO CAN NOT PRODUCE THE DIRECTOR, WHO HAS SIGNED THE CONFIRMATION. THE ASSESSEE COMPANY REQUESTED THE DE PARTMENT TO ISSUE SUMMONS UNDER SECTION 131 OF THE INCOME TAX ACT, 1961 ( IN SHORT, THE ACT) TO SH. GAJENDRA PORWAL. THE ASSESSEE COMPANY ALSO FILED AN AFFIDAVIT IN SUPPORT OF THEIR CONTENTION OF RECEIVING UNSECURED LOANS FROM SH. PA NKAJ NANDAWAT, OFFICIALTING COMPANY SECRETARY. 3. THE AO RECEIVED THE COPY OF THE AFFIDAVIT FILED BY SH. GAJENDRA PORWAL BEFORE ACIT, CENTRAL CIRCLE1, UDAIPUR. THE AFFIDAVI T IS DATED IST NOV., 2006 AND WAS RECEIVED ON 9 TH NOV., 2006 BY THE AO. IN THE AFFIDAVIT, SH. GAJEND RA PORWAL , THE DIRECTOR OF JTFSPL, ON PAGE 4 STATED, AS BELOW: 3 **F'KOFUOKL ISYSV GKSVY DS LACA/K ESAA ESA ;G DFKU DJRK GW FD ESJS }KJK DKSBZ HKH JDE UGHA NH XBZ GSA ESJS IKL :IK;S 20 YK[K O'KZ 1999&2000 O 50 YK[K DHKH HKH UGHA JGSA ESUS DHKH HKH FDLH DKS HKH BRUH CM+H JDE UGHA NH GSA VR% ;G ,UVH HKH VU; ,UVHL DH RJG ACCOMMODATION ENTIES GH GS O EQ>S DSOY DEH'KU DH VK; GQBZ GSA FTLS ESUS ESJS }KJK NH XBZ VK;DJ FOOJ. KH ESA N'KKZ FN;K GSA 4. THE AO ISSUED SUMMONS UNDER SECTION 131 TO SH. G AJENDRA PORWAL AND THE ASSESSEE WAS ALSO INFORMED TO ATTEND THE OFFICE ON 12 TH DEC., 2006 SO AS TO CROSS EXAMINE SH. GAJENDRA PORWAL ON 12 TH DEC., 2006. THE AO RECEIVED THE STATEMENT RECORDED ON 8 TH DEC., 2006 OF SH. GAJENDRA PORWAL AND THAT STATEME NT WAS RECORDED BY THE ACIT CENTRAL CIRCLE-I, UDAIPUR. THE AO IN HI S ORDER HAS REPRODUCED THE RELEVANT PORTION OF THE QUESTIONS AND ANSWERS FROM THE STATEMENT AT PAGES 2 TO 4 OF THE ASSESSMENT ORDER. FOR BETTER APPRECIATION OF TH E FACTS, IT WILL BE USEFUL TO REPRODUCE THE SAME AS UNDER: IZ- 2- ESA VKIDK /;KU VK;DJ VF/KFU;E DH /KKJK 131 D S V/KHU FNUKAD 23-03-2005 DKS FN;S X;S C;KU DH VKSJ VKD`'V DJRK GWA BU C;KUK SA ESA IZ- 3 DS MKJ ESA IST 17 IJ VKIUS CRK;K GS FD ESLLZ F'KOFUOKL ISYSL DKS VIUH IQJKUH DSIHVY ,OA VK; ESA LS #- 50 YK[K DK YKSU DKS GENUINE CRK;K GS] IJURQ FNUKAD 01-11-2006 DS 'KIFK IK= TKS ESJS LE{K VK;DJ FU/KKZJ.K IZF;K DS NKSJKU FNUKAD 09-11-2006 DKS IS'K FD;K] DS ISJK UA- 1 IST 5 ESA ESLLZ F'KO FUOKL GKSVY DS C KJS ESA VKIUS FUEU FVII.KH NH GSA **F'KOFUOKL ISYSV GKSVY DS LACA/K ESAA ESA ;G DFKU DJRK GW FD ESJS }KJK DKSBZ HKH JDE UGHA NH XBZ GSA ESJS IKL :IK;S 20 YK[K O'KZ 1999&20 00 O 50 YK[K DHKH HKH UGHA 4 JGSA ESUS DHKH HKH FDLH DKS HKH BRUH CM+H JDE UGHA NH GSA VR% ;G ,UVH HKH VU; ,UVHL DH RJG ACCOMMODATION ENTIES GH GS O EQ>S DSOY DEH'KU DH VK; GQBZ GSA FTLS ESUS ESJS }KJK NH XBZ VK;DJ FOOJ.KH ESA N' KKZ FN;K GSA TCFD ESLLZ TYDKURK VSDFUDY ,.M QKBZUFL;Y LFOZLST IZ K- FY- DS CSAD VKWQ CM+KSNK] MN;IQJ ESUS CZKUP DS CSAD [KKRAS ESA FNUKA D 29-03-2004 DKS :IK;S ,D YK[K UDN ,OA 49 YK[K VKULQJ LS TEK GQ, CRK;S GSA DQI;K CRK;S FD :IK;S 49 YK[K VKULQJ LS CSD DH TEK DH ,UVH DS CKJS EAS VKIDK D; K LI'VHDJ.K GS \ MKJ ESUS ESLLZ TYDKURK VSDFUDY ,.M QKBZUSFUL;Y LFO ZLST IZK- FY- DS CSAD VKWQ CM+KSNK] MN;IQJ ESU CZKUP DH 29-03-2004 DH TEK DH IZFO'B DK VOYKSDU DJ FY;K GS] BL IZFO'BH ESA VKULQJ 'KCN XYR FY[KK GQVK GSA OKLRO EAS :I;S 49 YK[K UDN EAS GH TEK DJK;K X;K GSA ;G JDE ESJH UGHA GS D ;KSAFD ESJS IKL BRUH CM+H JDE GS GH UGHAA ESJH BRUH GSFL;R UGHA GS A F'K OFUOKL ISYSL OKYKS DKS EQ>LS PSD }KJ YKSU DH ,UVH YSUH FKH BLFY;S MUGKSAUS EQ>L S :IK;S 1 YK[K DH JKSDM+ DH ,D ISLYHI O 49 YK[K :IK;S DH JKSDM+ DH NQLJH ISLYHI HKJOKDJ YS YH FKHA BLDS LKFK GH MUGKSAUS EQ>LS MLH RKJH[K ;KFU 29-03-2004 D S MLH [KKRS DS FUEU IZDKJ LS PSD LKBZU DJOKDJ YS FY;S FKS %& PSD UECJ 573038 #IK;S 15]00]000@& PSD UECJ 573039 #IK;S 15]00]000@& PSD UECJ 573040 #IK;S 20]00]000@& IZ- 4 D`I;K LI'V DJ FD ESLLZ F'KOFUOKL ISYSL LS IZK IRKSA PSDKSA DKS VKIUS DGK TEK DJK;K VKSJ ML [KKRS ESA TEK JDE DK D;K FD;K \ MKJ MDR IZ'U 3 DS MKJ ESA OF.KZR PSADKSA DKS ESAU S ESLLZ TYDKURK VSDFUDY ,.M QKBZUSUFL;Y LFOZLST IZK- FY- DS ;QUF;U CSAD VKWQ BF .M;K] MN;IQJ DS [KKRS ESA TEK DJK;S FKS RFKK MDR JDE DKS ESUS F'KOFUOKL ISYSL OKY KSA DKS FUEU IZDKJ LS [KKRKSA ESA VKGJ.K DJ YKSVKBZ %& 1- LSYQ PSD 680773 FNUKAD 21-05-2004 ;QFU;U CSAD VKWQ BF.M;K] MN;IJ MIJKSDR [KKRK UDN :IK;S 15-00 YK[K FUDKYSA 5 2- PSD 680774 FNUKAD 07-06-2004 ;QFU;U CSAD VKWQ BF.M; K] MN;IJ MIJKSDR [KKRK :IK;S 15-00 YK[K ESLLZ TYDKURK ESUSTES.V LFO ZLST IZK- FY- DS FGR ESS TKJH FD;KA 3- PSD 680775 FNUKAD 07-06-2004 ;QFU;U CSAD VKWQ BF.M; K] MN;IJ MIJKSDR [KKRK :IK;S 12-00 YK[K ESLLZ TYDKURK ESUTESUV LFOZ LST IZK- FY- DS FGR ESS TKJH FD;KA #IK;S 2 YK[K XKSJOKM+K DSFEDYL LS VK;K A 4- PSD 963201 FNUKAD 01-07-2004 ;QFU;U CSAD VKWQ BF.M; K] MN;IJ MIJKSDR [KKRK :IK;S 10-00 YK[K ESLLZ TYDKURK ESUTESUV LFOZ LST IZK- FY- DS FGR ESS TKJH FD;KA ESLLZ TYDKURK ESUSTESUV LFOZLST IZK- FY- DS ;QFU;U CSAD VKWQ BF.M;K] MN;IQJ DS CSAD [KKRS LS FUEUFYF[KR RJHDS LS O;OGKJ FD;K %& 1- PSD 680612 & FNUKAD 07-06-2004 & ESLLZ XKSJOKM+K DS FEDYL BF.MLVHT DKS #IK;S 15-00 YK[K DK PSD FN;KA 2- PSD 680613 & FNUKAD 08-06-2004 & ESLLZ XKSJOKM+K DS FEDYL BF.MLVHT DKS :IK;S 15-00 YK[K DK PSD FN;KA MIJKSDR #IK;S 15-00 & 15-00 YK[K DS PSADKSA DS FO:) EQ>S XKSJOKM+K DSFEDYL BF.MLVHT LS :IK;K 30-00 YK[K UDN IZKIR GQVK] MLESA LS FNUKAD 08-06-2004 #IK;K 25 YK[K ESLLZ F'KOFUOKL ISYSL OKYKS DKS UDN ESA HKQ XRKU DJ GKSVY LS PSD UECJ 776823 DS :IK ESA IZKIR GQBZ] ;G PSD ESUS ESLLZ TYD KURK ESUSTESUV LFOZLST IZK-FY- ESA ESLLZ XKSJOKM+ DSFEDYL B.MLVHT LS TKS 45 YK[K :IK;K FEYK MLESA LS 10-00 YK[K F'KOFUOKL ISYSL DKS UDN ESA OKIL DJ FN;KA 5 THE STATEMENT OF GAJENDRA PORWAL WAS ALSO RECORDE D BY THE AO IN WHICH SH. GAJENDRA PORWAL REAFFIRMED HIS DEPOSITION IN THE AF FIDAVIT AND THE STATEMENT RECORDED U/S 131 OF THE ACT BY THE ACIT, CC1, UDAIP UR ON 8 TH DEC., 2006. SH. GAJENDRA PORWAL ADMITTED IN THE STATEMENT THAT IN T HE FINANCIAL YEAR 2003-04, HE GAVE ACCOMMODATION ENTRY OF RS.50 LACS TO THE ASSES SEE FOR WHICH HE RECEIVED 1% 6 COMMISSION. THE REPRESENTATIVE OF THE ASSESSEE CROS S-EXAMINED SH. GAJENDRA PORWAL. ACCORDING TO THE AO, SH. GAJENDRA PORWAL RE PORTED AND RE-AFFIRMED THE SAME FACTS IN THE CROSS EXAMINATION. THE ASSESSEE W AS ASKED TO FILE REPLY IN VIEW OF THE ADMISSION OF SH. GAJENDRA PORWAL THAT HE HAS ON LY PROVIDED ACCOMMODATION ENTRY. BEFORE THE AO, THE ASSESSEE FILED A LETTER S TATING THEREIN THAT THE STATEMENT OF GAJENDRA PORWAL IS FALSE AND WITH MALAFIDE INTENTI ON. IT WAS SUBMITTED THAT IN THE ORIGINAL STATEMENT, SH. GAJENDRA PORWAL CONFIRMED TO HAVE PAID THE LOAN. THE ASSESSEE MADE A REQUEST FOR PROVIDING CERTAIN DOCUM ENTS. BUT IN THE MEANTIME, THE ASSESSEE FILED AN APPLICATION UNDER SECTION 144A OF THE ACT, BEFORE THE ADDL. CIT RANGE-II, UDAIPUR, FOR DIRECTIONS IN THE MATTER. 6. THE AO HAS REPRODUCED THE DIRECTIONS OF THE ADDL . CIT RANGE-II, UDAIPUR, ISSUED UNDER SECTION 144A OF THE ACT. THE ASSESSEE RECEIVED A LOAN OF RS. 50 LACS FROM JTFSPL BY CHEQUES DATED 24 TH MARCH, 2004, 25 TH MARCH, 2004 AND 29 TH MARCH, 2004. THE THREE CHEQUES WERE OF THE AMOUNTS OF RS.15 LACS, RS.15 LACS AND RS.20 LACS RESPECTIVELY. THE AMOUNTS SO RECEIVED H AVE BEEN REPAID BY THE ASSESSEE THROUGH FOUR CHEQUES OF DIFFERENT DATES. THE DETAIL S ARE AS UNDER: DATE CHEQUE DRAWN ON BANK AMOUNT 20/05/2004 751708 BANK OF BARODA, UDAIPUR 15,00,000/- 01/06/2004 776821 BANK OF BARODA, UDAIPUR 15,00,000/- 7 04/06/2004 776822 BANK OF BARODA, UDAIPUR. 10,00,000/- 29/06/2004 776823 BANK OF BARODA, UDAIPUR. 10,00,000/- TOTAL 50,00,000/- 7. BEFORE THE ADDL. CIT, RANGE-II, UDAIPUR, THE ASS ESSEE SUBMITTED THAT SH. GAJENDRA PORWAL ACCEPTED THE PAYMENT OF LOAN AS GEN UINE, IN HIS STATEMENT, TAKEN AT THE TIME OF SEARCH UNDER SECTION 132 OF THE ACT . SUBSEQUENTLY, SH. GAJENDRA PORWAL FILED AN AFFIDAVIT BEFORE THE AO IN THE ASSE SSMENT PROCEEDINGS OF THE COMPANY M/S. JTFSPL, IN WHICH HE DENIED ABOUT THE T RANSACTIONS WITH THE ASSESSEE COMPANY. REFERENCE WAS MADE TO THE CROSS-EXAMINATIO N CONDUCTED BY THE REPRESENTATIVE OF THE ASSESSEE-COMPANY AND IT WAS S UBMITTED THAT SH. GAJENDRA PORWAL HAS NOT GIVEN CORRECT ANSWER AND HAS NOT PRO VIDED THE REQUIRED INFORMATION. REPLIES OF SH. GAJENDRA PORWAL WERE VAGUE AND FALS E AND ARE NOT BASED ON THE FACTS. IT WAS SUBMITTED BEFORE THE ADDL. CIT, R-II , UDAIPUR THAT SH. GAJENDRA PORWAL WAS BLACK MAILING THE ASSESSEE-COMPANY. 8. THE ADDL. CIT, R-II, UDAIPUR PERUSED THE ASSESSM ENT RECORD AND NOTICED THAT THE ASSESSEE HAS FILED ONLY COPY OF CONFIRMATION SI GNED BY SH. GAJENDRA PORWAL, DIRECTOR OF M/S. JTFSPL. THE ADDL. CIT, R-II, UDAIP UR, GAVE AN OPPORTUNITY TO THE ASSESSEE TO FILE SUBMISSIONS IN SUPPORT OF THEI R APPLICATION UNDER SECTION 144A 8 OF THE ACT. BEFORE THE LD. ADDL. CIT,R-II, UDAIPUR, THE ASSESSEE FILED THE FOLLOWING SUBMISSIONS: 1. THAT ORIGINAL OF CONFIRMATION DATED 20.04.2005 APPEARS TO HAVE BEEN MISPLACED AND IS NOT ON THE RECORDS. HOWEVER, WE HA VE PHOTOCOPY FROM THE ORIGINAL OF THE SAID CONFIRMATION. IT IS ON PRINTED LETTER HEAD WITH COMPLETE ADDRESS AND COMPLETE DETAILS OF THE TRANSACTION. HE HAS ALSO GIVEN PERMANENT ACCOUNT NUMBER. SHRI GAJENDRA PORWAL HAS SIGNED AS AUTHORIZED SIGNATORY. THE SAID CONFIRMATION WAS SHO WN TO SHRI GAJENDRA PORWAL, MANAGING DIRECTOR CUM CHAIRMAN OF THE COMPA NY. HE ADMITTED IN REPLY TO QUESTION NO.17 OF HIS STATEMENT AT THE TIM E OF CROSS EXAINATION ON 12.12.06 HAI YAH SAHI HAI HOWEVER, HE HAS FURTHER MENTIONED THAT IT IS AN ACC OMMODATION ENTRY. WE SUBMIT THAT THE LATER PART IS FALSE AND HE HAS SO S TATED TO BLACK MAIL AND TO AVOID HIS TAX LIABILITY. 2. THAT WE HAVE NOT BEEN SUPPLIED COPY OF THE AFFID AVIT DATED 09/11/2006. HOWEVER, WE HAVE BEEN PROVIDED ONLY A S MALL EXTRACT WITH LETTER DATED 24.11.2006 OF THE LEARNED A.O. THE EXT RACT IS INCOMPLETE AND VAGUE. IN THE SAID EXTRACT HE HAS ADMITTED THAT IN HIS STATEMENT THE TRANSACTION WITH THE LAKE PALACE HOTELS & MOTELS PV T. LTD; AND SHIVNIWAS PALACE HOTEL HAVE BEEN RECORDED AS REAL, ACTUAL AND GENUINE. WE HAVE NOT BEEN PROVIDED WITH COPY OF THE STATEMENT IN THE SEA RCH WHERE HE HAS DULY ACCEPTED THE TRANSACTION TO BE GENUINE. WE REQUEST TO PLEASE GO THROUGH THE SAID FIRST STATEMENT AND PROVIDE ITS COPY TO US. 3. THAT AS SUBMITTED EARLIER THE AFFIDAVIT DATED 01 /11/06 IS A SELF SERVING STATEMENT SUBMITTED UNDER PRESSURE AND TO BLACK MAI L THE ASSESSEE COMPANY. WE FURTHER SUBMIT THAT THE AFFIDAVIT AND SUBSEQUENT DENIAL IS AN AFTERTHOUGHT AND WITH MALAFIDES. IT DSERVES TO BE EXCLUDED. 4. THAT THE AMOUNT OF RS.50.00 LACS WAS ADVANCED BY THE SAID COMPANY TO THE ASSESSEE COMPANY BY THREE CHEQUES AND IT STA NDS DULY DEBITED TO HIS ACCOUNT WITH BANK OF BARODA, MAIN BRANCH, UDAIPUR B Y WAY OF TRANSFER. THE ASSESSEE COMPANY RECEIVED THE THREE CHEQUES AND CLE ARED THE CHEQUES THROUGH ITS BANKERS BANK OF BARODA, MAIN BRANCH, UD AIPUR AND A COPY OF CERTIFICATE ISSUED BY OUR BANKERS IS ENCLOSED HEREW ITH. WE HAVE ALREADY SUBMITTED COPY OF THE BANK STATEMENT OF THE ASSESSE E COMPANY AS WELL AS 9 JALKANTA TECHNICAL AND FINANCIAL SERVICES PVT. LTD. IN THE ACCOUNT OF THE SAID COMPANY THERE IS A CREDIT OF RS.49.00 LACS BY TRANS FER AND THE SAID AMOUNT WAS TRANSFERRED BY SHRI GAJENDRA PORWAL FROM ANU CO NSTRUCTION TO JALKANTA TECHNICAL AND FINANCIAL SERVICES PVT. LTD. IN HIS S TATEMENTS IN REPLY TO QUESTION NO.24 HE HAS ADMITTED THE SAID CREDIT BUT HAS STATED THAT RS..49.00 LACS WERE DEPOSITED IN CASH. IT IS FALSE, WE HEREB Y REQUEST TO MAKE NECESSARY VERIRFICATION FROM THE BANK OF BARODA, MAIN BRANCH, UDAIPUR AND ON VERIFICATION WE ARE SURE IT WOULD BECAME APPARENT A S TO HIS FALSE CLAIM. THE SOURCE OF THE SAID AMOUNT OF RS.49.00 LACS IS THERE FORE FROM THE ACCOUNT OF ANU CONSTRUCTION. THAT THE TRANSACTION IS GENUINE, BY ACCOUNT PAYEE C HEQUES, FROM AN EXISTING ASSESSEE, HAS BEEN ADMITTED AS GENUINE IN THE FIRST STATEMENT ON OATH AND STANDS PROVED BY RELEVANT ENTRIES IN THE BANK ACCOU NTS. THE SUBSEQUENT AFFIDAVIT AND STATEMENTS ARE FALSE AND WITH BAD MOT IVES. THE ASSESSEE COMPANY HAS DULY DISCHARGED ITS ONUS UNDER SECTION 68 OF THE ACT. 9. THE LD. ADDL. CIT, R-II, UDAIPUR, WAS OF THE OPI NION THAT M/S. JTFSPL HAS PROVIDED AN ACCOMMODATION ENTRY OF RS.50 LACS TO TH E ASSESSEE-COMPANY IN LIEU OF COMMISSION, AS THE SAME IS EVIDENT FROM THE STATEME NT AND AFFIDAVIT OF SH. GAJENDRA PORWAL. IT WAS NOTICED BY THE ADDL. CIT TH AT SH. GAJENDRA PORWAL ISSUED A SELF CHEQUE OF RS.49 LACS FROM THE BANK ACCOUNT O F M/S. ANU CONSTRUCTION AND THE SAME WAS GIVEN TO M/S. THE LAKE PALACE HOTELS & MOTELS PVT. LTD. ACCORDING TO SH. GAJENDRA PORWAL, A SUM OF RS. 49 LACS WAS DE POSITED IN THE BANK ACCOUNT IN CASH AND THE WORD TRANSFER USED IN THE BANK ACCOU NT IS NOT CORRECT. THE TRANSFER ENTRIES AS REFLECTED IN THE BANK ACCOUNT OF M/S. ANU CONSTRUCTION AND M/S. JTFSPL ARE NOT THROUGH ACCOUNT PAYEE CHEQUES. IN CA SE M/S. ANU CONSTRUCTION WANTED TO TRANSFER A SUM OF RS. 49 LACS RECEIVED FR OM M/S. THE LAKE PALACE HOTELS & MOTELS PVT. LTD; TO THE ACCOUNT OF M/S. JT FSPL., IT WOULD HAVE 10 SIMPLY ISSUED AN ACCOUNT PAYEE CHEQUE TO THE EXTENT OF THE AMOUNT OF RS. 49 LACS AND THERE WAS NO NEED OF ISSUING SELF CHEQUE OF RS .49 LACS. SH. GAJENDRA PORWAL HAS ALSO STATED THAT FROM M/S. THE LAKE PALACE HOTE LS & MOTELS PVT. LTD; THE ASSESSEE-COMPANY OBTAINED THREE CHEQUES FROM THE BA NK ACCOUNT OF M/S. JTFSPL AFTER GETTING HIS SIGNATURES. SUBSEQUENTLY, IN THE MONTH OF MAY & JUNE, 2004, THE AMOUNT OF RS. 50 LACS WAS REPAID TO THE ASSESSEE-CO MPANY AND THE CHEQUES EARLIER ISSUED WERE ENCASHED. THE LD. ADDL. CIT, R-II, UDAI PUR, THEREFORE, HELD THAT THE ASSESSEE HAS RECEIVED AN ACCOMMODATION ENTRY OF RS. 50 LACS. 10. THE AO IN HIS ORDER HAS ALSO MENTIONED THAT SH. GAJENDRA PORWAL WAS A MAN OF MEANS AND HE WAS NOT CAPABLE OF ADVANCING LO AN OF RS.50 LACS. THE AO HAS ALSO RELIED ON THE FOLLOWING DECISIONS: I) CIT VS. DURGA PRASAD MORE ( 82 ITR 540 ) (SC) II) SUMATI DAYAL VS. CIT ( 214 ITR 801) (SC) THE AO HAS ALSO ADDED A SUM OF RS. 50 LACS WHICH RE PRESENTS THE COMMISSION PAID FOR OBTAINING THE ACCOMMODATION ENTRY. 11. THE LD. CIT(A), HAS REFERRED THE FACTS OBSERVED BY THE AO IN HIS ORDER FOR MAKING AN ADDITION. THE LD. CIT(A) HAS ALSO REFERRE D TO THE STATEMENT OF SH. GAJENDRA PORWAL TAKEN DURING SEARCH PROCEEDINGS IN HIS CASE ON 11 TH MARCH, 2005. THE RELEVANT PORTION OF THE STATEMENT IS REPRODUCED AS UNDER: 11 ESJS IKFJOKFJD LNL;KSA ,OA O;KIKFJD IZFR'BKU }KJK B L IZDKJ DH TKS ,DKSEKSMS'KU ,UVHT NH TKRH GS] MUDK USPJ EQ[;R% FUEU IZDKJ GS % & 1- IKVHZ;KSA DKS ,DKSEKSMS'KU ,UVHT LO:IK YKSU DS :IK ESA Q.ML NSUKA BLESA FTL IKVHZ DKS HKH YKSU DH VKO';DRK GKSRH GS] MULS MRUH GH JDE JKSDM+ ESA ESJH DE'KHU TKSM+DJ YS YSRK GW] BL JKSDM+ DKS VIUS CSAD KASA ESA [KKSYS G, [KKRKS FTUDK FOOJ.K ESA VIUS ?KJ IJ FN;S C;KUKSA ESA NS PQDK GW TEK DJK NSRK GW O LECFU/KR IKVHZ DKS MRUH JDE DK PSD B';Q DJ NSRK GWA ,SLS YK SUL TC ESJH FDLH DEIUH }KJK FN, TKUS N'KKZ;S TKRS GS RKS LKY DS VKF[KJ ESA C;KT LO:IK FEYUS OKYH JDE TKS IKVHZ }KJK PSD LS EQ>S VHMH,L DKV DJ NH TKR H GS] ML PSD DKS CSAD ESA TEK DJ MLDS CJKCJ DH JDE JKSDM+ ESA FUDKY DJ LE CFU/KR IKVHZ DKS OKFIL DJ NSRK GWA ,SLH FLFKFR EAS EQ>S IZKIR GKSUS OKYK VHMH,L DH DEH'KU GKSRK GSA VYX LS DKSBZ DEH'KU UGHA YSRK GWA FN;S TKUS OK YS YKSUL DBZ CKJ INTEREST BEARING GKSRK GS O DBZ CKJ INTEREST FREE HKH GKSRK GSA 2- ESJS }KJK CUKBZ XBZ CONCERNS ESA DBZ CKJ IKVHZ;KSA DS FY, MUDH T:JR VUQLKJ CKSXL FCFYAX DH ,UVHT HKH NH TKRH GSA ,SLS DSLST E SA IKVHZ;KSA DKS FTRUH JDE DK FCY PKFG;SA GKSRK GSA MRUH GH JDE OS GESA PSD }K JK NS NSRS GSAA BL PSD DKS CSAD ESA TEK DJOK DJ CJKCJ DH JDE DK JKSDM+ FUDKY D J IKVHZ DKS OKIL NS NSRS GSAA T;KNKRJ ,SLS DSLST ESA IKVHZ GESA [KPSZ L ECFU/KR CONTRACT GLRK{KJ FD;K GQVK N'KKZRH GS O GESA HKQXRKU LO:IK PSD ESA , SLS VHMH,L DK HKQXRKU DJRH GSA ;G VHMH,L GH GEKJH ,SLS DSLST ESA DEH'KU GKSRK GSA 12. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED A S UNDER: '..(1) THE APPELLANT HAD TAKEN A LOAN OF RS. 50 LA CS FROM M/S JALKANTA TECHNICAL & FINANCIAL SERVICES (P) LTD. , UDAIPUR ( HEREINAFTER REFERRED TO AS 'JTFSPL') BY ACCOUNT PAYEE CHEQUES BEARING NO. 5730 389, 573039 AND 573040 FOR RS. 15.00 LACS, RS. 15.00 LACS AND RS. 2 0.00 LACS RESPECTIVELY DRAWN ON BANK OF BARODA, UDAIPUR, MAIN BRANCH. THE SAID CHEQUES WERE CLEARED BY THE APPELLANT COMPANY THROUGH ITS BANK A ND ITS PROCEEDS WERE 12 CREDITED TO THE ACCOUNT OF THE APPELLANT COMPANY BY ITS BANKER ON 29.03.2004. THE APPELLANT COMPANY REPAID THE SAID LOAN BY 4 CHE QUES AS UNDER :- DATE CHEQUE DRAWN ON BANK AMOUNT 20.05.2004 751708 BANK OF BAORDA, UDAIPUR 15,00,000 /- 01.06.2004 776821 BANK OF BAORDA, UDAIPUR 15,00,000 /- 04.06.2004 776822 BANK OF BAORDA, UDAIPUR 10,00,000 /- 29.06.2004 776823 BANK OF BAORDA, UDAIPUR 10,00,000 /- 50,00,000/- THE SAID 4 CHEQUES WERE GOT CLEARED BY THE SAID COM PANY THROUGH ITS BANKER, UNION BANK OF INDIA AND STAND DULY CREDITED TO THE SAID BANK ACCOUNT. COPY OF THE SAID BANK ACCOUNT WAS ALSO SUBMITTED. THE A.O. ENQUIRED OF THE SAID LOAN. NAME WITH COMPL ETE ADDRESS WAS FURNISHED AND IT WAS SUBMITTED THAT THE SAID COMPAN Y IS AN EXISTING ASSESSEE. ITS PERMANENT ACCOUNT NUMBER WAS FURNISHED. THE ASS ESSEE COMPANY ALSO SUBMITTED A CONFIRMATION DATED 20.04.2005, WHICH IS ON PRINTED LETTERHEAD WITH COMPLETE ADDRESS AND COMPLETE DETAILS, PERMANE NT ACCOUNT NUMBER AND SIGNED BY SHRI GAJENDRA PORWAL, AS AUTHORIZED SI GNATORY, THE ORIGINAL OF THE SAID CONFIRMATION HAVING BEEN MISPLACED, ITS PH OTOCOPY FROM THE ORIGINAL OF THE SAID CONFIRMATION WAS SUBMITTED. THE SAID CO NFIRMATION WAS SHOWN TO SHRI GAJENDRA PORWAL CHAIRMAN, CHAIRMAN-CUM MANAGING DIRECTOR OF THE SAID COMPANY WHILE HIS STATEMENTS WERE RECORDED BY THE AO U/S. 131 OF THE 13 ACT. H ADMITTED IN REPLY TO QUESTION NO. 17 OF HIS STATEMENT AT THE TIME OF CROSS EXAMINATION ON 12.12.2006 'HAI YAH SAHI HAI'. HOWEVER, HE HAS FURTHER MENTIONED THAT IT IS AN ACCOMMODATION ENTRY . 6. M/S JALKANTA TECHNICAL AND FINANCIAL SERVICES PV T. LTD. IS AN OLD COMPANY, WHICH WAS INCORPORATED AT MUMBAI. THE SAID COMPANY HAVE REGULARLY ASSESSED TO INCOME TAX, HAVE PAN AAACT139 3C. IN THE SAID BOOKS ADVANCE OF RS. 50 LACS WAS DULY SHOWN. THE SAID COM PANY WAS BEING ASSESSED TO TAX REGULARLY AT MUMBAI AND ITS ACCOUNT S WERE AUDITED BY THE STATUTORY AND TAX AUDITORS. SUCH BOOKS OF ACCOUNT, DOCUMENTS INCLUDING HIS ASSESSMENT FILES AND RECORD WERE SEIZED IN THE COUR SE OF THE SEARCH BY THE INCOME-TAX DEPARTMENT; ARE IN THE POSSESSION, CUSTO DY AND CONTROL OF THE PRESENT ASSESSING OFFICER AND THAT JURISDICTION WAS TRANSFERRED TO THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E 1, UDAIPUR AFTER THE SEARCH. HE ALSO CATEGORICALLY ADMITTED THAT AFTER T HE SEARCH, RETURNS WERE FILED AT UDAIPUR IN PURSUANCE OF NOTICES AND DECLAR ED INCOME STANDS ACCEPTED BY THE ASSESSING OFFICER. WE REQUEST THAT THE RELEVANT RECORD WHICH IS UNDER SEIZURE BE CALLED FOR FROM HIS ASSES SING OFFICER TO VERIFY OUR CLAIM. THE ASSESSEE COMPANY IN ORDER TO DISCHARGE ITS ONU S U/S.68 ADDUCED FOLLOWING EVIDENCE ;- (I) AMOUNT RECEIVED BY ACCOUNT PAYEE CHEQUE; (II) AMOUNT WAS REPAID BY ACCOUNT PAYEE CHEQUES, WHICH S TOOD COLLECTED AND CREDITED TO THE BANK ACCOUNT OF 'M/S. JALKANTA TECHNICAL & FINANCIAL SERVICES (P) LTD.' (III) CONFIRMATION DATED 20.04.2005; (IV) AFFIDAVIT OF SHRI PANKAJ NANDAWAT FILED, WHICH REMAI NED UNCONTROVERTED; 14 (V) ADMITTED AS GENUINE TRANSACTION IN THE STATEMENTS R ECORD IN SEARCH ON 23-24.03.2005' (VI) NO EVIDENCE OF REPAYMENT OF RS. 50 LACS BY CASH. (VII) A SUM OF RS. 49 LACS WAS CREDITED TO THE BANK ACCOU NT OF M/S 'JTFSPL' BY THE BANK ON TRANSFER FROM THE ACCOUNT O F M/S ANU CONSTRUCTION (HUF). VERIFICATION MADE FROM THE BANK ; AND (VIII) NO EVIDENCE THAT RS. 49 LACS WAS DEPOSITED BY 'CASH ' IN THE BANK OF ACCOUNT OF 'JTFSPL' THE A.O. HAS DISCUSSED THE ISSUE IN PARA 3 ON PAGES 2 TO 26. THE ASSESSEE HAS DULY DISCHARGED THE ONUS AS REQUIRED U/S 68 OF THE ACT. 7. THAT A SEARCH WAS CONDUCTED BY THE INCOME-TAX DE PARTMENT AT THE OFFICE AND RESIDENTIAL PREMISES OF SHRI GAJENDRA PO RWAL, HIS BUSINESS CONCERN AND COMPANIES WHEREIN HE IS CLOSELY ASSOCIATED AND INTERESTED. IN THE COURSE OF THE SEARCH, HIS STATEMENTS WERE RECORDED ON OATH BY THE AUTHORIZED OFFICER. IN HIS STATEMENT U/S. 132(4) READ WITH 131 OF THE ACT RECORDED BY THE COMPETENT AUTHORITY ON 24.03.2005, HE VOLUNTARILY A ND CATEGORICALLY ADMITTED THE TRANSACTION AS GENUINE. FULL COPY OF T HE STATEMENT WAS NOT PROVIDED BY THE AO THOUGH DEMANDED. WE REQUEST TO CALL FOR THE COMPLETE STATEMENT FROM THE ASSESSING OFFICER OF THE ASSESS EE I.E. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL 1,, UDAIPUR. 8. THE AFTER THE SEARCH AND IN PURSUANCE TO THE NOT ICE U/S. 153A, THE ASSESSING OFFICER ENQUIRED AS TO THE ABOVE TRANSACT ION AND THE RECEIPT AND REPAYMENT. SHRI GAJENDRA PORWAL TO EVADE AND AVOIDED HIS TAX LIABILITY SENT AN AFFIDAVIT DATED 01.11.2006 TO HIS ASSESSING OFFI CER ON 09.11.2006. IN THE SAID AFFIDAVIT, HE ALLEGED THAT THE IMPUGNED TRANSA CTION IS AN ACCOMMODATION ENTRY. STATEMENT OF SHRI GAJENDRA PORW AL WAS RECORDED ON 08.12.2006 BY ACIT, CC-I, UDAIPUR U/S 131. 15 CONSEQUENT TO THE SAID INFORMATION, THE A.O. GAVE A N OPPORTUNITY TO CROSS EXAMINE SHRI GAJNDRA PORWAL BY ISSUING SUMMON U/S.13 1. HE WAS CROSS- EXAMINED. ON PERUSAL OF THE SAID STATEMENT, IT IS A PPARENT AND PATENT ON THE FAE OF THE RECORD THAT MR. PORWAL HAS BEEN EVASIVE, VAGUE, HIS STATEMENTS ARE FALSE, ARE MOTIVATED WITH ULTERIOR MOTIVES TO B LACKMAIL THE ASSESSEE COMPANY AND WITH MALAFIDE. IT IS EQUALLY APPARENT A ND PATENT ON RECORDS THAT THE SAID STATEMENTS DO NOT INSPIRE CONFIDENCE AND HAVE BEEN GIVEN TO EVADE OWN TAX LIABILITY AS ALSO TO CHEAT THE LAKE P ALACE HOTEL & MOTEL LTD. TO WHOM HE OWES RS. 50 LACS. 9. THEAT SHRI PORWAL HAS STATED THAT HE WITHDREW RS . 49 LACS BY CASH ON 29.03.2004 FROM THE ACCOUNT OF M/S. ANU CONSTRUCTIO N AND PAID TO THE LAKE PALACE HOTELS & MOTELS LTD., BUT ON PERUSAL OF THE BANK STATEMENT OF M/S. ANU CONSTRUCTION, THERE IS A 'TRANSFER OF RS. 49.00 LACS ON 29.03.2004 TO HIS ANOTHER CONCERN M/S JALKANTA TECHNICAL AND FINANCIA L SERVICES PVT. LTD., WHERE MR. PORWAL IS CHAIRMAN/M.D. THE PROCEEDS OF T HE SAID CHEQUE STAND DULY CREDITED TO THE ACCOUNT OF M/S . JALKANTA TECH NICAL AND FINANCIAL SERVICES PVT. LTD. BY BANK OF BARODA, UDAIPUR MAIN BRANH ON 29.03.2004. THE CLAIM OF MR. PORWAL TO THE CONTRARY IS FALSE AND AG AINST DOCUMENTS MAINTAINED BY THE INDEPENDENT AGENCY I.E. THE BANK OF BARODA. REQUEST WAS MADE TO THE AO TO MAKE VERIFICATION FROM THE BANK O F BARODA AND TO SATISFY THAT NO CASH WAS WITHDRAWN IN LIEU OF THE SAID CHEQ UE ON 29.03.2004 BUT PROCEEDS OF THE SAID CHEQUE WERE TRANSFERRED TO THE ACCOUNT OF M/S JALKANTA TECHNICAL & FINANCIAL SERVICES PVT. LTD. THERE IS N O EVIDENCE THAT THE WORK 'TRANSFER' IN THE ANK STATEMENT/BANK RECORD IS FALS E. AGAIN THERE IS NO EVIDENCE THAT RS. 49.00 LACS WERE PAID BY CASH BY T HE BANK FROM THE SAID ACCOUNT ON 29.03.2004. LASTLY THERE IS NO EVIDENCE OR ACKNOWLEDGMENT OR RECEIPT FOR THE ALLEGED REPAYMENT OF RS. 49.00 LACS BY CASH ON 29.03.2004 OR AY SUBSEQUENT DATE. ON THE CONTRARY IN THE STATEMEN T ON OATH RECORDED ON 24.03.2005 U/S.132, HE EMPHATICALLY AND CLEARLY ADM ITTED THE GENUINENESS. 16 SHRI PORWAL FURTHER FILED TO PRODUCE ANY DOCUMENTAR Y EVIDENCE OR TO NAME ANY PERSON TO WHOM HER REPAID BY CASH. SUCH CLAIM I S FULL OF FALSITY AND CONTRARY TO THE DOCUMENTARY EVIDENCE AND MATERIAL O N RECORD 10. THAT THE AFFIDAVIT DATED 01.11.2006 FILED ON 09 .11.2006 TO HIS ASSESSING OFFICER IS NOT ONLY BELATED BUT TAINTED W ITH FALSITY, MALAFIDE AND WITH ULTERIOR MOTIVE. RETRACTION STATEMENT RECORDED ON OATH U/S 131 BY THE COMPETENT AUTHORITY ON 24.03.2005 AFTER MORE THAT 2 0 MONTHS AND AFTER RECEIPT OF NOTICE U/S 153A IS ILLEGAL AND IMPERMISS IBLE. THE AFFIDAVIT DATED 01.11.2006 IS A SELF SERVING STATEMENT, A AFTER THO UGHT, MALAFIDE, WITHOUT MATERIAL AND CONTRARY TO THE MATERIAL ON RECORD.' 11. THE AR HAS ALSO CITED THE FOLLOWING DECISIONS : I) CIT VS. DAULAT RAM RAWATMULL (1973) 87 ITR 361 (SC) II) R.V.E. VENKATACHALA GOUNDER VS. A.V. & V.P. TEMPLE AIR 2003 (SC) 4548 AND 4554 III) GREEN VIEW RESTAURANT VS. ACIT(2003) 263 ITR 169 (G AUHARI) IV) JAGAT EXPLORERS VS. ACT (2007) 212 CTR 244 V) M/S. FABRIL GASOSA VS. LABOUR COMMISSIONER AIR 1997 VOL. 84 (SC) 12. THAT THE CLAIM OF THE APPELLANT COMPANY IS FULL Y SUPPORTED BY THE MARTIAKL DOCUMENTS COUPLED WITH REGULAR BOOKS OF AC COUNT AND DOCUMENTS. SECTION 92 OF THE EVIDENCE ACT, 1872 ALSO LAYS DOWN THAT WHEN THE TERMS OF ANY CONTRACT, GRANT OR SETTLEMENT, AS ARE REQUIRED BY LAW TO BE REDUCED TO B FORM OF A DOCUMENT, HAVE BEEN PROVED AS PER THE PRO VISIONS OF SEC. 91 OF THE EVIDENCE AT, NO EVIDENCE OF ANY ORAL AGREEMENT OR S ETTLEMENT SHALL BE ADMITTED AS BETWEEN THE PARTIES TO ANY SUCH INSTRUM ENT OR THEIR REPRESENTATIVES IN INTEREST OF THE PURPOSE OF CONTR ADICTING, VARYING ADDING TO OR SUBTRACTING FROM ITS TERMS. 13. THE AO HAS COMMITTED SERIOUS ERROR IN DRAWING A DVERSE INFERENCE ON ACCOUNT OF COPY OF ORIGINAL CHEQUE (I.E. SELF CHEQU E OF RS. 49 LACS) CLAIMED TO 17 HAVE BEEN ISSUED TO THE LAKE PALACE HOTELS & MOTELS . HOWEVER, THERE IS NO EVIDENCE IN SUPPORT OF THE SAID ALLEGATION. THE AO HAS MECHANICALLY BELIEVED THE CLAIM OF SHRI PORWAL THAT THE WORD 'TRANSFER' USED FOR THIS ENTRY BY THE BANK IS NOT CORRECT AND THAT CASH OF RS. 49 LACS WA S DEPOSITED B THE APPELLANT IN THE ACCOUNT OF M/S JALKANTA TEHNICAL AND FINANCI AL SERVICES PVT. LTD.. THE REVENUE HAS EITHER NOT MAD VERIFICATION FROM THE BA NK IS AGAINST THE CLAIM OF SHRI PORWAL. IN THE CASH OF THE APPELLANT, THE ADVA NCE WAS RECEIVED BY ACCOUNT PAYEE CHEQU AND ADMITTEDLY THERE IS REPAYME NT BY ACCOUNT PAYEE CHEQUS. THE AR SUBMITTED THAT THE AO HAS INDULGED I N SURMISE; CONJECTURES, DOUBTS, SUSPICIONS AND THE INFERENCES/CONCLUSIONS D RAWN ARE ARBITRARY, CAPRICIOUS, PERVERSE, WITHOUT MATERIAL AND CONTRARY TO THE MATERIAL ON RECORD. HENCE, THERE WAS NO EVIDENCE THAT IT WAS AN ARRANGEMENT FOR PROVIDING ACCOMMODATION ENTRIES. 12.1. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE DELETED THE ADDITION AFTER OBSERVING AS UNDER: 14. I HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSION OF THE LD. AR AND FOUND THAT A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT WAS CARRIED OUT IN THE RESIDENTIAL AND BUSINESS PREMISE S OF SHRI GAJENDRA PORWAL GROUP, UDAIPUR ON 11.03.2005. DURING SEARCH ACTIVIT Y, IT WAS FOUND THAT SHRI GANENDRA PORWAL GROUP WAS ENGAGED IN PROVIDING ACCO MMODATION ENTRIES UNDER VARIOUS HEADS I.E. UNSECURED LOAN, SHARE APPL ICATION MONEY, SHARE CAPITAL, BOGS BILLING AND GIFT ETC. FOR THIS PURPOS E, SHRI GAJENDRA PORWAL WAS RUNNING NUMBER OF CONCERNS THROUGH WHICH THSW ACCO MMODATION ENTRIES WEE PROVIDED TO VARIOUS PARTIES SITUATED AT UDAIPUR , JAIPUR PRATAPGARH, MIMBAHERA, RAIPUR AND MUMBAI. THE NAME F THE CONCER NS BELONGING TO SHRI 18 GAJENDRA PORWAL GROUP THROUGH WHICH ACCOMMODATION EN TRIES WERE GIVEN UNDER VARIOUS HEADS MENTIONED ABOVE AR AS UNDER:- 1) M/S JALKANTA TECHNICAL & FINANCE SERVICES PVT. LTD. 2) M/S ABHAVYA INVRSTMENT PVT. LTD. 3) M/S JAIN CONSTRUCTION & BUILDERS (PROP. CONCERN OF SHRI GAJENDRA PORWAL) 4) M/S SARJAN HOUSING FINANCE DEVELOPMENT LTD. 5) M/S ANU CONSTRUCTION, PROP. SHRI GAJENDRA PORWAL, HU F. THE BANK ACCOUNT OPENED AND UTILIZED BY SHRI GAJENDR A PORWAL GROUP FOR THE PURPOSE OF PROVIDING ACCOMMODATION ENTRIES BY ITS V ARIOUS CONCERNS OPERATING THROUGH DIFFERENT BANK ACCOUNTS ARE AS UN DER :- A M/S JALKANTA TECHNICAL & FINANCE SERVICES P. LTD . 1. SANGLI BANK, FORT BRANCH MUMABI 2. VIJAYA BANK, BULESHWAR BRANCH, MUMBAI 3. VIJAYA BANK, NEW EXCELCIAR BRANCH, MUMBAI 4. VIJAYA BANK, NEAR RAILWAY STATION, MUMBAI 5. CENTRAL BANK OF INDIA, CHITTOGARH, COLLEGE BRANCH, RAIPUR 6. SBBJ, PRATAPNAGAR, CHITTORGARH 7. VIJAYA BANK, AHINSA CIRCLE, C-SCHEME, JAIPUR 8. UNION BANK OF INDIA, BAPU BAZAR, UDAIPUR 9. VIJAYA BANK, BAPU BAZAR, UDAIPUR 10. BANK OF RAJASTHAN, BAPU BAZAR UDAIPUR 11. ICICI, MADHUVAN, UDAIPUR 12. UDAIPUR URBAN COOPERATIVE BANK, BADA BAZAR, UDAIPUR 13. VIJAYA BANK, OD A/C BAPU BAZAR, UDAIPUR 14. CANARA BANK, ST. GREGARIOUS SCHOOL BRANCH, UDAIPUR 15. BANK F BARODA, BAPU BAZAR, UDAIPUR 16. PUNJAB NATIONAL BANK, KALAJI GORAJI BRANCH, UDAIPUR 19 17. HDFC BANK, INDOR (MP) B. M/S JAIN CONSTRUCTION & BUILDINGS (PROP. CONCERN OF SHRI GAJENDRA PORWAL) 1. SBBJ SECRETARIAT BRANCH, JAIPUR 2. BANK OF INDIA, DELHI GATE, UDAIPUR C. M/S ABHAVYA INVESTMENT PVT. LTD. 1. UNION BANK OF INDIA, TOWN HALL, UDAIPUR 2. SBBJ, CHETAK CIRCLE, UDAIPUR 3. KARNATAKA BANK, GANPATI PLAZA, UDAIPUR D. M/S ANU CONSTRUCTION. PROP. SHRI GAJENDR PORWAL, HUF DURING POST SEARCH ACTIVITIES, THE DEPARTMENT RECOR DED THE STATEMENT OF SHRI GAJENDRA PORWAL U/S 131 OF THE ACT ON 24.03.2005 WHE REIN HE HAD STATED THAT: 15. THE LAKE PALACE HOTELS & MOTELS PVT. LTD. ISSUE D A CHEQUE OF RS. 48,90,000/- TO M/S ANU CONSTRUCTION, THE PROPRIETAR Y CONCERN OF M/S GAJENDRA PORWAL ON DATED 29.03.2004 M/S ANU CONSTRUC TION IN TRUN HAS ISSUED A CHEQUE OF RS. 49 LACS TO JTFSPL WHEREIN SH RI GAJENDRA PORWAL IS A DIRECTOR. SUBSEQUENTLY, JTFSPL ISSUED CHEQUES OF RS . 15 LACS, RS. 15 LACS, RS. 10 LACS AND RS. 10 LACS, THE DETAILS ARE AS UNDER : - DATE CHEQUE DRAWN ON BANK AMOUNT 20.05.2004 751708 BANK OF BAORDA, UDAIPUR 15,00,000 /- 01.06.2004 776821 BANK OF BAORDA, UDAIPUR 15,00,000 /- 04.06.2004 776822 BANK OF BAORDA, UDAIPUR 10,00,000 /- 29.06.2004 776823 BANK OF BAORDA, UDAIPUR 10,00,000 /- 20 50,00,000/- DURING SEARCH PROCEEDINGS IN THE RESIDENTIAL AND OF FICE PREMISES OF SHRI GAJENDRA PORWAL U/S. 132 OF THE ACT ON 23.03.2005, S HRI GAJEDRA PORWAL HAD ACCEPTED THE TRANSACTIONS BETWEEN JTFSPL AND THE AP PELLANT AS GENUINE. AFTER A GAP OF 20 MONTHS, SHRI GAJENDRA PORWAL FILED AN AFFIDAVIT DATED 01.11.2006 RETRACTING HIS STATEMENT OF TREATING THE LOAN OF RS. 50 LACS FROM JTFSPL TO THE APPELLANT AS GENUINE FILED TO ACIT, C IRCLE-2, UDAIPUR, THE AO AGAIN RECORDED THE STATEMENT OF SHRI GAJENDRA PORWAL U/S. 131 OF THE ACT ON 08.12.2006. THE AR OF THE APPELLANT HAS CROSS-EXAMI NED SHRI PORWAL ON 12.12.2006, THE QUESTIONS AND ANSWERS ARE AS UNDER :- IZ- 25- VIUS IZ- LA[;K 24 ESA #- 49]00]000@& I #- 1 ]00]000@& UDN TYDKURK TEHNICAL FINANCIAL SERVICES PVT. LTD. DS [KKRS ESA TEK DJOKUK CRK;K GS] D;K VKI ;S CSAD LYHI IZLRQR DJ LDRS GSAA MKJ UGHA] VHKH EKSTQN UGHA GSA IZ- 26 VKIUS ;G C;K FD;K GS FD MDR 50]00]000@& DH J DE UDN ESJH UGHA GS RKS ;G VKIDKS DGK LS IZKIR GQBZ FKH] D;WFDA ;G JD VKIDH DEIUH DS CSAD [KKRS ES TEK GSAA MKJ F'KOFUOKL ISYSL OKYKSA DKS PSD }KJK YKSU DH ,U VH YSUH FKH] BLFY;S MUGKSAUS EQ>LS #- 1]00]000@& DH JKSDM+ DH ,OA IS LYHI O 49]0 0]000@& DH JKSDM+ DH GKS] NQLJH IS LYHI HKJOKDJ YS YH FKHA IZ- 27 VKIDS CSAD [KKRS MDR 50]00]000@& #- DH JDE F DLUS TEK DJOKBZ FKHA MKJ F'KOFUOKL ISYSL OKYKSA DKS PSD }KJK YKSU DH ,U VH YSUH FKH] BLFY;S MUGKSAUS EQ>LS #- 1]00]000@& DH JKSDM+ DH ,OA IS LYHI O 49]0 0]000@& DH JKSDM+ DH GKS] NQLJH IS LYHI HKJOKDJ YS YH FKHA IZ 28 MDR NKSUKSA IS LYHI VKIS }KJK FDLUS YH FKH] M LDK UKE] DC YH FKH O DGKA YH FKHA MKJ EQ>S ;KN UGHA GSA 21 IZ- 29 VKIUS ;G CRK;K GS FD ;G JDE F'KO FUOKL ISYSL US GH TEK DJKBZ FKH] BLDK VKIDS DFKU DS VYKOK VKIDS IKL D;K LCWR GSA MKJ BLDS LKFK GH MUGKSAUS MLH RKJH[K ;KUH 29-03-20 04 DS MLH [KKRS DS FUEU IZDKJ DS PSD LKBZU DJOK DJ YS FY;S FKS FTLDK FOOJ.K IJ NS FN;K GSA IZ 30 VKIUS IZ- 29 ESA IQNS X;S IZ- ESA ;G UGHA CRK ;K GS FD VKIDH DEIUH ES 50 YK[K #IK;S CSAD [KKRS ESA F'KO FUOKL ISYSL US TEK D JK;S GS] D;K BLDK VKIDS IKL DKSBZ LCQR MIYC/K GSA MKJ F'KOFUOKL ISYSL OKYKSA DKS PSD }KJK YKSU DH ,U VH YSUH FKH] BLFY;S MUGKSAUS EQ>LS #- 1]00]000@& DH JKSDM+ DH ,OA IS LYHI O 49]0 0]000@& DH JKSDM+ DH GKS] NQLJH IS LYHI HKJOKDJ YS YH FKHA IZ- 31 VKI }KJK BRUH CM+H JDE DK UDN O;OGKJ GKSRK J GK GS] D;K VKIUS BL LECU/K ESA FDL HKH IZDKJ DK DKSBZ FJDKWMZ J[KK GS] ;FN GKA RKS MDR JDE DS FO'K; ESA GEKJS LS LECFU/KR TKS HKH FJDKWMZ GKS D;K VKI IZLR QR DJ LDRS GSAA MRRJ LPZ DS NKSJKU LHKH FJDKWMZ VK;DJ FOHKKX }KJK L HT DJ FY;S X;S GSAA IZ- 32 D;K VKI CRK LDRS GS FD DEIUH DH FU;FER CFG;K SA DS VYKOK VKI ,SLK D;K FJDKWMZ J[KRS FKS TKS FOHKKX DS IKL LHT GSA ,O FTLS YSD 'KKSJ ISYSL DS LKFK GQ, UDN YSUS NSUS DK FOOJ.K GKSA MRRJ EQ>S ;KN UGHA GSA 16. IN CROSS-EXAMINATION, HE ANSWERED THE QUESTION ASKED BY THE AR OF THE APPELLANT IN GENERAL MANNER AS ALREADY RECORDED IN HIS STATEMENT DATED 08.12.2006 AND HAS NOT GIVEN SPECIFIC REPLY OF ANY OF THE QUESTIONS ASKED BY THE AR. SHRI PORWAL DID NOT HAVE ANY DOCUMENTARY EV IDENCE TO PROVE THAT HE HAD RECEIVED RS. 50 LACS CASH OR PAID BACK THE SAME TO THE APPELLANT. THE FACT IS TOTALLY DIFFERENT THAT WHAT SHRI PORWAL HAS STA TED ON VARIOUS TIMES. THE APPELLANT HAS TAKEN LOAN OF RS. 50 LACS THROUGH CHE QUES AS MENTIONED ABOVE IN PARA NO. 15 FROM JTFSPL AND IT WAS ACCEPTED BY S HRI PORWAL AS GENUINE DURING SEARCH ACTIVITIES U/S. 132 OF THE ACT. THE A PPELLANT HAS ALSO REPAID THE AMOUNT AS UNDER DATE CHEQUE DRAWN ON BANK AMOUNT 22 20.05.2004 751708 BANK OF BAORDA, UDAIPUR 15,00,000 /- 01.06.2004 776821 BANK OF BAORDA, UDAIPUR 15,00,000 /- 04.06.2004 776822 BANK OF BAORDA, UDAIPUR 10,00,000 /- 29.06.2004 776823 BANK OF BAORDA, UDAIPUR 10,00,000 /- TOTAL: 50,00,000/- 17. THE AR HAS FURTHER REBUTTED CLAIM OF SHRI PORWA L THAT THE WORD 'TRANSFER' USED FOR RECEIPT OF RS. 49 LACS IS NOT A CTUALLY 'TRANSFER' BUT CASH RECEIPT. HOWEVER, THE FACT IS TOTALLY DIFFERENT. TH E AR HAS IN THIS REGARD SUBMITTED A CERTIFICATE DATED 22.12.2006 OF CHIEF M ANAGER, BANK OF BARODA, TOWN HALL ROAD, UDAIPUR WHICH IS REPRODUCED AS UNDE R :- TO WHOMSOEVER IT MAY CONCERN WE HEREBY CERTIFY THAT CHEQUE NO. 573038 DATED 24.0 3.2004, 573039 DATED 25.03.2004 AND CHEQ. NO. 573040 DT. 27.03.2004 DRAW N BY M/S JALKANTA TECHNICA AND FINANCE SERVICE P. LTD. WERE DEPOSITED FOR CREDIT TO IT'S A/C NO C-100124 M/S. SHIVNIVAS PALACE. A CREDIT SLIP FOR C REDIT OF THE SAID CHEQUE AGRECTING RS. 50,00,000/- (RS. FIFTY LACS ONLY) WAS PROVIDED FOR NECESSARY ENTRIES BY THE SAID PARTY. WE HAVE EFFECTED THE SAI D ENTRIES 29.03.2004. THIS CERTIFICATE IS ISSUED AT THE SPECIFIC REQUEST OF M/ S SHIVNIVAS PALACE. THE BANK OR ANY OF ITS OFFICIALS IS NOT IN ANY MANNER RELATE D TO SUCH TRANSITION & OWES NO RESPONSIBILITY THERETO. SD/- (P. K. SHARMA) CHIEF MANAGER 18. IN ABSENCE OF ANY DOCUMENTARY EVIDENCE, IT IS N OT PROVED TO HAVE HANDED OVER THE CASH AMOUNT TO THE APPELLANT BY WIT HDRAWING CASH FROM THE 23 ACCOUNT OF JTFSPL IN THE UNION BANK OF INDIA AND M/ S. GORWARA CHEMICAL INDUSTRIES. IT IS TO BE MENTIONED HERE THAT SHRI PO RWAL HAD CLAIMED THAT THE CHEQUES OF RS. 50 LACS RECEIVED BACK FROM THE APPEL LANT FOR REPAYMENT OF LOAN WERE DEPOSITED IN THE ACCOUNT OF JTFSPL AND IN TURN M/S JALKANTA MANAGEMENT SERVICES PVT. LTD. AND M/S GORWARA CHEM ICAL INDUSTRIES, THE DETAILS ARE AS UNDER :- IZ- 4 D`IK;K LI'V DJS FD ESLLZ F'KOFUOKL ISYSL LS I ZKIRKSA PSADKSA DKS VKIUS DGK TEK DJK;K VKSJ ML [KKRS ESA TEK JDE DK D;K FD;K \ MDR IZ'U 3 DS MKJ ESA OF.KZR PSADKSA DKS ESAUS ESL LZ TYDKURK VSDFUDY ,.M QKBZUSUFL;Y LFOZLST IZK- FY- DS ;QUF;U CSAD VKWQ BF .M;K] MN;IQJ DS [KKRS ESA TEK DJK;S FKS RFKK MDR JDE DKS ESUS F'KOFUOKL ISYSL OKY KSA DKS FUEU IZDKJ LS [KKRKSA ESA VKGJ.K DJ YKSVKBZ %& 1- LSYQ PSD 680773 FNUKAD 21-05-2004 ;QFU;U CSAD VK WQ BF.M;K] MN;IJ MIJKSDR [KKRK UDN :IK;S 15-00 YK[K FUDKYSA 2- PSD 680774 FNUKAD 07-06-2004 ;QFU;U CSAD VKWQ BF.M; K] MN;IJ MIJKSDR [KKRK :IK;S 15-00 YK[K ESLLZ TYDKURK ESUSTES.V LFO ZLST IZK- FY- DS FGR ESS TKJH FD;KA 3- PSD 680775 FNUKAD 07-06-2004 ;QFU;U CSAD VKWQ BF.M; K] MN;IJ MIJKSDR [KKRK :IK;S 12-00 YK[K ESLLZ TYDKURK ESUTESUV LFOZ LST IZK- FY- DS FGR ESS TKJH FD;KA #IK;S 2 YK[K XKSJOKM+K DSFEDYL LS VK;K A 4- PSD 963201 FNUKAD 01-07-2004 ;QFU;U CSAD VKWQ BF.M; K] MN;IJ MIJKSDR [KKRK :IK;S 10-00 YK[K ESLLZ TYDKURK ESUTESUV LFOZ LST IZK- FY- DS FGR ESS TKJH FD;KA ESLLZ TYDKURK ESUSTESUV LFOZLST IZK- FY- DS ;QFU;U CSAD VKWQ BF.M;K] MN;IQJ DS CSAD [KKRS LS FUEUFYF[KR RJHDS LS O;OGKJ FD;K %& 1- PSD 680612 & FNUKAD 07-06-2004 & ESLLZ XKSJOKM+K DSFEDYL BF.MLVHT DKS #IK;S 15-00 YK[K DK PSD FN;KA 24 2- PSD 680613 & FNUKAD 08-06-2004 & ESLLZ XKSJOKM+K DSFEDYL BF.MLVHT DKS :IK;S 15-00 YK[K DK PSD FN;KA MIJKSDR #IK;S 15-00 & 15-00 YK[K DS PSADKSA DS FO:) EQ>S XKSJOKM+K DSFEDYL BF.MLVHT LS :IK;K 30-00 YK[K UDN IZKIR GQVK] MLESA LS FNUKAD 08-06-2004 #IK;K 25 YK[K ESLLZ F'KOFUOKL ISYSL OKYKS DKS UDN ESA HKQ XRKU DJ GKSVY LS PSD UECJ 776823 DS :IK ESA IZKIR GQBZ] ;G PSD ESUS ESLLZ TYD KURK ESUSTESUV LFOZLST IZK-FY- ESA ESLLZ XKSJOKM+ DSFEDYL B.MLVHT LS TKS 45 YK[K :IK;K FEYK MLESA LS 10-00 YK[K F'KOFUOKL ISYSL DKS UDN ESA OKIL DJ FN;KA 19. ON GOING THROUGH THE BANK ACCOUNT OF JTFSPL, IT IS SEEN THAT NO CASH HAS BEEN DEPOSITED IN THIS BANK ACCOUNT BEFORE ISSU E OF CHEQUES OF RS. 50 LACS TO THE APPELLANT. THE AFFIDAVIT-DATED 01.11.2006 OF SHRI GAJEDRA PORWAL IS ALSO AFTERTHOUGHT AS THE SAME HAS BEEN FILED BEFORE THE DEPARTMENT AFTER GAP OF 20 MONTHS FROM THE DATE OF SEARCH. WHEN HE HAD ACCE PTED TRANSACTION WITH THE APPELLANT AS GENUINE. BUT IN HIS LATER STATEMENT RE CORDED U/S 131 OF THE ACT ON 08.12.2006, HE HAS REITERATED THE FACTS GIVEN IN TH E AFFIDAVIT AND NOT IN HIS ORIGINAL STATEMENT RECORDED AT THE TIME OF SEARCH A CTIVITY U/S 132 OF THE ACT. SUBSEQUENT RETRACTION OF THE ORIGINAL STATEMENT DOE S NOT HELP SHRI GAJENDRA PORWAL'S CLAIM. HE HAS ALSO NOT BEEN ABLE TO PROVE HIS RETRACTION WITH ANY DOCUMENTARY EVIDENCES. HE HAS RETRACTED HS ORIGINAL STATEMENT ORALLY THROUGH HIS AFFIDAVIT AND HIS STATEMENT U/S 131 OF THE ACT. THE APPELLANT, CONTRARY TO THE FACTS, HAS PROVED THAT THE LOAN TRANSACTION WAS DONE FROM JTSPL THROUGH CHEQUES. THE DEPARTMENT COULD NOT BRING ANY EVIDENC E FOR DEPOSITING RS. 50 LACS IN CASH OR GIVING BACK THE SAME AMOUNT TO THE APPELLANT AFTER WITHDRAWING THE SAME FROM THE ACCOUNT OF JTFSPL, M/ S. JALKANTA MANAGEMENT SERVICES PVT. LTD. AND M/S GORWARA CHEMI CAL INDUSTRIES. 20. MOREOVER, WITHDRAWAL OF CASH , IF ANY, FROM THE ABOVE MENTIONED CONCERN HAS TAKEN PLACE IN THE A.Y. 2005-06 BUT NOT IN THE CONCERNED A.Y. 2004-2005 OF THE APPEAL. 25 21. FINALLY, THE PHOTOCOPY OF THE CONFIRMATION OF L OAN IS CONCERNED THAT IS NOT MATERIAL AS THERE IS NO DISPUTE BOUT THE FACT T HAT THE COMPANY JTFSPL IS EXISTING COMPANY. IT HAS GIVEN LOAN OF RS. 50 LACS THROUGH CHEQUE AND RECEIVED BACK THE SAME AMOUNT ALSO. THEREFORE, THE ADDITION OF RS. 50,00,000/- MADE BY THE AO U/S. 68 OF THE ACT IS DE LETED AND APPEAL IS ALLOWED. 22. THE SECOND GROUND OF APPEAL RELATES TO ADDITION OF RS. 50,000/- ON ACCOUNT OF UNEXPLAINED CASH EXPENDITURE U/S 69C OF THE ACT. DECISION 23. THIS IS CONSEQUENTIAL TO GROUND NO. 1, THEREFOR E, THIS GROUND OF APPEAL IS ALLOWED. 13. DURING THE COURSE OF PROCEEDINGS BEFORE US, THE LD. DR DREW OUR ATTENTION TO THE FACTS NOTICED BY THE AO AS WELL AS BY THE ADDL. CIT, R-II, UDAIPUR. THE DIRECTOR OF THE CREDITOR COMPANY ADMITTED THAT HE H AS GIVEN ACCOMMODATION ENTRY THAT THERE IS NO CREDIT WORTHINESS OF THE CREDITOR COMPANY. IN OTHER CASES ALSO, THE ACCOMMODATION ENTRIES SO PROVIDED BY SH. GAJENDRA P ORWAL HAVE BEEN SURRENDERED. THERE IS SUFFICIENT MATERIAL ON RECORD TO SUGGEST THAT THE ASSESSEE COMPANY HAS UTILIZED ITS OWN FUNDS IN THE FORM OF CREDIT ENTRY IN THE NAME OF JTFSPL. THE ASSESSEE COMPANY HAS FAILED TO ESTABLIS H THE THREE INGREDIENTS OF THE CASH CREDIT I.E. IDENTITY OF THE CREDITOR, CREDIT W ORTHINESS OF THE CREDIT AND GENUINENESS OF THE TRANSACTION. EXCEPT THE IDENTITY OF THE CREDITOR, THE OTHER TWO 26 CONDITIONS ARE NOT SATISFIED. IT WAS, THEREFORE, SU BMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 14. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE, RE LIED ON THE ORDER OF THE ASSESSING OFFICER. THE ASSESSEE HAS RECEIVED THE AM OUNT THROUGH CHEQUE AND THERE IS NO EVIDENCE TO SUGGEST THAT THE ASSESSEE HAS PAI D SUM IN CASH OUTSIDE THE BOOKS OF ACCOUNT TO M/S. JTFSPL FOR OBTAINING THE CREDIT ENTRY. THE WRITTEN SUBMISSIONS GIVEN BEFORE US ARE REPRODUCED AS UNDER: 1. THE ASSESSEE RECEIVED A SUM OF RS.50 LACS BY CHEQUE NO.573038, 573039 AND 573040 FOR RS.15 LAC, 15 LAC AND 20LACS ISSUED BY J ALKANTA TECHNICAL & FINANCIAL SERVICES (P) LTD. DRAWN OF BANK OF BARODA, UDAIPUR COLLECTED THROUGH ITS BANKER AND ITS PROCEEDS WERE CREDITED BY THE BANK TO THE A CCOUNT OF THE APPELLANT ASSESSEE ON 29.03.2004. IN THE BANK ACCOUNT OF JALKANTA TECH NICAL & FINANCIAL SERVICES A SUM OF RS. 40 LACS WAS CREDITED TO ITS ACCOUNT BY T HE BANK ON TRANSFER FROM THE ACCOUNT OF M/S. ANU CONSTRUCTION (HUF). IT WAS NOT DEPOSITED BY CASH. COPY OF BANK STATEMENT OF JFSPL IS SUBMITTED ALONG WITH CON FIRMATION DATED 20.04.2005. M/S. ANU CONSTRUCTION (HUF) RECEIVED A SUM OF RS.48 ,90,000/- FROM CHEQUE OF THE LAKE PALACE HOTELS & MOTELS LTD. ON 29.03.2004. COPY OF BANK STATEMENT OF ANU CONSTRUCTION IS ENCLOSED. 2. SHRI PORWAL ADMITTED THE LOAN AS GENUINE ON 2 4.03.2005 RETRACTION IS MALAFIDE BELATED AND WITHOUT EVIDENCE. IT IS A SELF SERVING STATEMENT AND FALSE. 3. BANK RECORD SAYS IT IS TRANSFER. 4. IN CROSS EXAMINATION HE IS VAGUE AND FAILED TO NAME WHO DEPOSITED RS.49 LACS OR REPAID BY CAHS. 15. WE HAVE HEARD BOTH THE PARTIES. BEFORE WE PROCE ED FURTHER, IT WILL BE USEFUL TO UNDERSTAND THE MODUS-OPERANDIE USED BY A PERSON WHO PROVIDES ACCOMMODATION ENTRY. ONCE AN ACCOMODATION ENTRY IS CREATED THEN IT IS AGAIN 27 UTILIZED AFTER RECEIVING BACK ACCOMMODATION ENTRY F ROM ONE PARTY. FOR CREATING ACCOMMODATION ENTRY, THE ENTRY PROVIDER HAS TO FIRS T IDENTIFY A PERSON WHO IS WILLING TO LEND HIS NAME. SUCH PERSON SHOULD HAVE A BANK ACCOUNT AND IT IS USEFUL IF HE HAS ALSO A PAN. THE PERSON WHO WANTS TO RECEIVE THE ACCOMMODATION ENTRY, DEPOSITS THE CASH IN THE ACCOUNT OF THE PERSON WHO HAS BEEN IDENTIFIABLE BY THE ENTRY PROVIDER. THE PERSON IN WHOSE BANK ACCOUNT, T HE CASH IS DEPOSITED, WILL ISSUE A CHEQUE IN THE NAME OF AN ENTRY PROVIDER AND THE E NTRY PROVIDER WILL ISSUE A CHEQUE TO THE PERSON WHO WANTS A CREDIT ENTRY. SUCH ENTRY HAS BEEN GIVEN FOR A FIXED TIME. WHEN SUCH ENTRY IS GIVEN BACK TO THE EN TRY PROVIDER THEN HE RECEIVES CHEQUES FROM THE PERSON WHO HAS OBTAINED THE CREDIT ENTRY. THE CHEQUE IS DEPOSITED IN THE BANK ACCOUNT OF THE ENTRY PROVIDER AND HE ISSUES A SELF CHEQUE AND WITHDRAWS THE AMOUNT IN CASH. THE AMOUNT SO WITHDRA WN IN CASH IS REFLECTED IN THE BOOKS OF THE ENTRY PROVIDER AS CASH IN HAND THOUGH ACTUAL CASH IS GIVEN BACK TO THE PERSON WHO HAS RETURNED THE ENTRY, IN LIEU OF THE C ASH WHICH HE PAID AT THE TIME OF GETTING ENTRY. THUS, IN CASH BACK OF THE ENTRY PROV IDER, THERE IS CASH IN HAND THOUGH THERE IS NO CASH ACTUAL AVAILABLE WITH HIM. WHEN OT HER PARTY APPROACHES THE ENTRY PROVIDER THEN HE WILL RECEIVE THE CASH OUTSIDE THE BOOKS AND THEN HE WILL DEPOSIT THE AMOUNT IN HIS BANK ACCOUNT BECAUSE HIS CASH BAC K IS ALSO SHOWING CASH BALANCE. AFTER DEPOSITING CASH IN THE BANK ACCOUNT, THE ENTRY PROVIDER WILL GIVE ENTRY TO THE SECOND PERSON. THUS, ONCE AN ENTRY IS CREATED, THIS IS UTILIZED SUBSEQUENTLY WHEN SUCH ENTRY IS RETURNED BACK BY ON E PARTY. IN THE INSTANT CASE 28 ALSO, SH. GAJENDRA PORWAL IN HIS STATEMENT, HAS MEN TIONED THAT CHEQUES OF RS. 30 LACS WERE ISSUED TO M/S. GORWARA CHEMICAL INDUSTRIE S AFTER OBTAINING CASH OF RS.30 LACS. HOWEVER, THE REVENUE HAS NOT MADE ANY EFFORT TO ASCERTAIN AS TO WHETHER M/S. GORWARA CHEMICALS INDUSTRIES HAS ACCEPTED TO HAVE P AID CASH TO SH. GAJENDRA PORWAL IN LIEU OF ENTRY OBTAINED. SH. GAJENDRA PORW AL HAS GIVEN DIFFERENT STATEMENTS AND CORROBORATIVE EVIDENCES WERE REQUIRE D TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE. THE ASSESSEE IS A COMPANY AN D, THEREFORE, SH. GAJENDRA PORWAL SHOULD HAVE BEEN ASKED TO IDENTIFY THE PERS ON WITH WHOM THE TRANSACTION WAS CARRIED ON BEHALF OF THE COMPANY. AN ENTRY PROV IDER MAY UTILISE THE UNACCOUNTED FUNDS OF OTHER PERSONS AND IT MAY NOT B E NECESSARY THAT ASSESSEE RECEIVED THE ENTRY AS PAID IN CASH. IT IS A CASE OF EVALUATION OF EVIDENCES. IN THE BANK ACCOUNT OF THE ASSESSEE-COMPANY, A SUM HAS BEE N CREDITED THROUGH TRANSFER AND NOT BY CASH. THE REVENUE HAS NOT COLLECTED ANY EVIDENCE TO SUGGEST THAT A SUM OF RS. 49 LACS DEPOSOITED IN THE BANK ACCOUNT OF TH E ASSESSEE-COMPANY WAS IN CASH. WE HAVE SEEN THE PHOTOCOPY OF THE PAY-IN-SLIP AND T HE PHOTOCOPY OF THE CHEQUE ISSUED BY M/S. ANU CONSTRUCTION. THE CHEQUE ISSUED BY M/S. ANU CONSTRUCTION AS SELF-CHEQUE BUT THE STAMP ON THIS CHEQUE AS MADE BY THE BANK SHOWS DISPOSAL OF SUCH CHEQUE THROUGH TRANSFER. IT DOES NOT SHOW THAT THE CASH WAS WITHDRAWN. THE PAY-IN-SLIP ALSO SHOWS THAT IT IS A TRANSFER ENTRY . THE PAY-IN-SLIP COULD BE USED FOR CASH/LOCAL/OUTSTATION CHEQUES. IF THE AMOUNT IS DEP OSITED IN CASH IN NORMAL WAY ONE HAS TO REFER THE NUMBER OF NOTES AND THEIR DENOMINA TION AND SO FAR AS ASSESSEE IS 29 CONCERNED, HE HAS SHOWN THAT THE AMOUNT WAS RECEIVE D THROUGH CHEQUE. THE ONUS WAS ON THE ASSESSEE TO ESTABLISH THE SOURCE OF THE AMOUNT RECEIVED AND SUCH SOURCE STANDS ESTABLISHED. SH. GAJENDRA PORWAL IS SAYING THAT HE HAS ISSUED SELF-CHEQUE AND CASH WAS WITHDRAWN AND THE SAME WAS DEPOSITED AND FOR THIS NO EVIDENCE IS PLACED. 15.1. THE EVALUATION OF THIRD PARTY EVIDENCE HAS BE EN CONSIDERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ADDL. CIT VS. MISS LATA MANGESHKAR, REPORTED IN 97 ITR 696. IN THIS CASE, CERTAIN ENTRIES IN THE NAME OF LATA MANGESHKAR WERE FOUND IN THE LEDGER OF VASU FILMS (MADRAS). SUCH LE DGER WAS FOUND DURING THE COURSE OF SEARCH AND IN THIS LEDGER, THERE WERE ENT RIES OF 800W & 700B. IT WAS, THEREFORE, INFERRED BY THE AO THAT MISS LATA MANGES HKAR HAS RECEIVED THE AMOUNT OUTSIDE THE BOOKS OF ACCOUNT BECAUSE THE WORD B REFERS TO THE BLACK. BEFORE THE TRIBUNAL, IT WAS CONTENDED THAT THE ASSESSEE HA S RECEIVED THE PAYMENT OUTSIDE THE BOOKS OF ACCOUNT AND RELIANCE WAS ALSO PLACED UPON THE STATEMENTS OF TWO PERSONS. BEFORE THE TRIBUNAL, IT WAS STATED THAT SU CH ENTRIES AS APPEARING IN THE LEDGER OF VASU FILMS CAN CREATE SUSPICION BUT THESE CANNOT TAKE PLACE OF PROOF. THE HONBLE BOMBAY HIGH COURT STATED THAT THE ISSUE BEF ORE THEM IS A QUESTION OF FACT AND REFERENCE WAS NOT ADMITTED AT THE INSTANCE OF T HE REVENUE. THE HONBLE BOMBAY HIGH COURT, HELD THAT THERE SHOULD BE PROPER CORROBORATIVE EVIDENCE AND THE PRIMARY DIRECT EVIDENCE IS ALSO REQUIRED TO BE SCRUTINISED. IN THE INSTANT CASE 30 BEFORE US, SH. GAJENDRA PORWAL HAS NOT BEEN ABLE TO IDENTIFY THE PERSON WHO PAID THE CASH TO HIM ON BEHALF OF THE COMPANY AND THEREA FTER RECEIVED BACK THE CASH. THE COMPANY IS ARTIFICIAL JURISDICATURE PERSON AND THE TRANSACTION MUST HAVE BEEN DONE THROUGH SOME INDIVIDUAL. THE ITAT MUMBAI BENC H, IN THE CASE OF SAIF ALI KHAN MANSURALI VS. ACIT, (2012) 13 ITR (TRIB) 204 ( MUMBAI) VIDE ORDER DATED 23.09.2011 HAD AN OCCASION TO CONSIDER THE EVALUATI ON OF THIRD PARTY EVIDENCE. IN THE CASE BEFORE MUMBAI TRIBUNAL, A SEIZED PAPER CO NTAINING DETAILS OF PAYMENT WERE FOUND AT THE SEARCH OF THE THIRD PARTY. UNTIL AND UNLESS CORROBORATIVE EVIDENCES WERE PRODUCED, THE ADDITION CANNOT BE MAD E. IT WAS NOT ESTABLISHED BY THE REVENUE AS TO WHEN THE PAYMENT WAS MADE TO SAI ALI KHAN MANSURALI I.E. WHETHER AT THE TIME OF SIGNING OR AT THE TIME OF RE LASE OF THE FILM. MERE REASON TO SUSPECT CANNOT BE SUFFICIENT FOR MAKING THE ADDITIO N. TAKING AN OVER-ALL VIEW, WE HOLD THAT THE REVENUE HAS NOT BEEN ABLE TO ESTABLIS H WITH CORROBORATIVE EVIDENCE THAT THE ASSESSEE HAS PAID CASH FOR OBTAINING THE C REDIT ENTRY. THE REVENUE HAS NOT EVEN EXAMINED THE CASH BOOK OF M/S. JTFSPL TO ASCER TAIN AS TO WHETHER THE ENTRY WAS GIVEN AFTER RECEIVING BACK ENTRY FROM OTHER PAR TY OR THE ENTRY WAS CREDITED FOR THE FIRST TIME. IN THE ABSENCE OF CORROBORATIVE EVI DENCE, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 15.2. ONCE WE ARE HOLDING THAT THE AMOUNT RECEIVED IS NOT AN ACCOMMODATION ENTRY, THEREFORE, ADDITION ON ACCOUNT OF COMMISSION CANNOT BE UPHELD. 31 16. NOW WE TAKE UP C.O. NO.73/JU/2009 FOR THE ASSES SMENT YEAR 2004-05 FILED BY THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY TH E ASSESSEE ARE SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). SINCE WE HAVE DISMISSED TH E APPEAL OF THE REVENUE, THE C.O. FILED BY THE ASSESSEE IS ALSO DISMISSED AS INF RUCTUOUS. 16. IN THE RESULT, THE APPEAL OF THE REVENUE AND C. O. OF THE ASSESSEE ARE DISMISSED. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTNAT MEMBER DATED:20/01/2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE:M/S. THE LAKE SHORE PALACE HOTELS PVT. LTD. UDAIPUR. 2. THE ACIT, CIRCLE-2, UDAIPUR. 3. THE CIT(A), UDAIAPUR. 4. THE CIT, UDAIPUR 5. THE SR DR, ITAT, ASR 6. GUARD FILE ITA NO.478/JP/2009