DCIT, Jaipur V. SHRI PRATEEK KOTHARI, Jaipur

ITA 552/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1898 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 30-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITHVI RAJ MEENA
• Assessee Lawyers: VIJAY GOYAL C A DHK
• Keywords: Unexplained cash credit; Search and seizure; Principle of natural justice; Accommodation entries; Assessment record; Onus to prove; Bogus loan
• Section: 133(6); 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 552/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 DY. COMMISSIONER OF INCOME-TAX, CIRCLE-2, JAIPUR CUKE VS. SHRI PRATEEK KOTHARI H-12, SUKH JEEVAN, JACOB ROAD, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: ABIPK8090R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : PRITHVIRAJ MEENA (ADDL. CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 18/10/2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 10/11/2017. VKNS'K@ ORDER PER:SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)- 04, JAIPUR DATED 28.04.2017 WHEREIN THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE TRADIN G ADDITION OF RS. 1,00,00,000/- ON ACCOUNT OF UNEXPLAINED LOANS TAKEN BY THE ASSESSEE FROM M/S ANKITA EXPORTS WHICH IS A BENAMI/PAPER COM PANY OF SHRI BHANWAR LAL JAIN IGNORING THE ADMISSION OF SH. BHAN WAR LAL JAIN RECORDED U/S 132(4) OF THE I.T.ACT, 1961 THAT THE S AID ADVANCES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS. 9,14,301/- ON ACCOUNT OF INTEREST PAID ON UNEXPLAINED LOANS. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 2 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ONS WHILE PLACING RELIANCE UPON THE HONBLE ITAT ORDER DATED 16.12.20 16 IN ITA NO. 159/JP/2016 FOR AY 2012-13 WHICH IS SUBJUDICE BEFOR E THE HONBLE HIGH COURT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT BASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, MUMBAI, THE AO ISSUED A SHOW CAUSE TO THE ASSESSEE AS TO WHY UNSECURED LOAN OF RS. 1.00 CRORE FROM M/S MEHUL GEMS (P) LTD. AND RS. 2.01 CRORE FROM M/S ANKITA EXPORT SHOULD NOT BE BROUGHT TO TAX U/S 68 OF THE ACT. IN RESPONSE, THE ASSESSEE SU BMITTED THAT NO FRESH LOAN HAS BEEN TAKEN FROM M/S MEHUL GEMS (P) LTD DURING T HE YEAR UNDER CONSIDERATION AND ONLY AN AMOUNT OF RS. 9,00,000/- HAS BEEN CREDITED IN THE ACCOUNT OF M/S MEHUL GEMS(P) LTD. TOWARDS INTEREST PAYABLE ON UNSECURED LOAN OF RS. 1.00 CRORE TAKEN DURING PREVIOUS YEAR R ELEVANT TO ASSESSMENT YEAR 2012-13. IT WAS FURTHER SUBMITTED THAT THE CONFIRMA TION OF THE PARTY HAS ALREADY BEEN SUBMITTED BY THE ASSESSEE. FURTHER, IN COMPLIANCE TO THE NOTICE ISSUED BY THE DEPARTMENT, THE PARTY HAS DIRECTLY CO NFIRMED THE LOAN TRANSACTION ALONG WITH SUPPORTING DOCUMENTATION TO THE DEPARTMENT. REGARDING LOAN FROM M/S ANKITA EXPORTS, IT WAS SUBM ITTED THAT ASSESSEE HAS TAKEN UNSECURED LOAN OF RS. 1.00 CRORE ON 13.03.201 3 DURING THE YEAR AND NOT RS. 2.01 CRORE AS MENTIONED IN THE SHOW CAUSE NOTIC E. IT WAS FURTHER SUBMITTED THAT INTEREST OF RS. 1,15,890/- HAS BEEN PAID ON THE SAID LOAN AFTER DEDUCTING TDS THEREON. IT WAS FURTHER SUBMITTED THA T THE ORIGINAL CONFIRMATION OF THE PARTY HAS ALREADY BEEN SUBMITTED BY THE ASSE SSEE AS PART OF THE EARLIER SUBMISSIONS. FURTHER, IN RESPONSE TO NOTICE ISSUED BY THE DEPARTMENT, THE PARTY HAS ALSO DIRECTLY CONFIRMED THE LOAN TRANSACT ION ALONG WITH SUPPORTING DOCUMENTATION TO THE DEPARTMENT. IN SUPPORT, THE F OLLOWING DOCUMENTS WERE AGAIN SUBMITTED DURING THE COURSE OF ASSESSMENT PRO CEEDINGS. I) COPY OF A/C OF ASSESSEE IN THE BOOKS OF ACCOUNTS OF ABOVE NAMED FIRM. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 3 III) COPY OF ACKNOWLEDGMENT OF RETURN OF AY 2013-14 , AUDITED BALANCE SHEET, PROFIT & LOSS A/C AND SUPPORTING ANN EXURE OF 31.03.2013 OF ABOVE NAMED FIRM. IV) COPY OF RELEVANT PAGE OF BANK STATEMENT OF ABOV E NAMED FIRM SHOWING THE ENTRY OF LOAN GIVEN TO THE ASSESSEE. V) COPY OF PAN CARD OF PARTY. 2.1 IT WAS SUBMITTED THAT FROM EXAMINATION OF THE B ANK STATEMENT AND THE BALANCE SHEET OF THE FIRM, IT CAN BE NOTED THAT THE FIRM WAS HAVING SUFFICIENT SOURCE TO ADVANCE MONEY TO THE ASSESSEE. IT WAS FUR THER SUBMITTED THAT THE ASSESSEE WAS TRYING TO GET AFFIDAVITS FROM PARTNERS OF THE FIRM REGARDING GENUINENESS OF THE LOAN TRANSACTION AND THE SAME WI LL BE SUBMITTED AS SOON AS THE SAME IS RECEIVED BY THE ASSESSEE. 2.2 IT WAS FURTHER SUBMITTED THAT THE ASSESSEE DOES NOT KNOW AND AWARE OF SHRI BHANWAR LAL JAIN AND BHANWAR LAL JAIN GROUP AN D NOT IN CONTACT WITH HIM OR HAVING TRANSACTION WITH HIM. THE ASSESSEE HAS AC TUALLY TAKEN UNSECURED LOAN FROM M/S MEHUL GEMS PVT. LTD AND M/S ANKITA EX PORTS AND THE SAME WAS REPAID IN JULY, 2014 AND BOTH THE RECEIPT AND REPAY MENT HAVE HAPPENED THROUGH THE BANKING CHANNEL. 2.3 IT WAS FURTHER SUBMITTED THAT REGARDING VARIOUS INCRIMINATING DOCUMENTARY EVIDENCE WHICH WAS SEIZED DURING THE CO URSE OF SEARCH ON BHANWAR LAL JAIN GROUP AND STATEMENT OF VARIOUS PER SONS WHICH WERE RECORDED, THE ASSESSEE MAY BE PROVIDED THE COPIES O F SUCH INCRIMINATING DOCUMENTS AND STATEMENTS OF VARIOUS PERSONS AND ALS O PROVIDED AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SUCH P ERSONS. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 4 2.4 THE SUBMISSION OF THE ASSESSEE WAS HOWEVER NOT FULLY ACCEPTABLE TO THE ASSESSING OFFICER FOR THE REASONS STATED IN THE ASS ESSMENT ORDER AS UNDER:- (A) THE UNSECURED LOANS WAS RECEIVED BY CHEQUE DO ES NOT MAKE THE TRANSACTION GENUINE. THE HONBLE ITAT JAIPUR N THE CASE OF M/S KANCHWALA GEMS VS. JCIT, ITA NO. 134/JP/02 DATED 10 .12.2003, AND AFFIRMED BY THE HONBLE SUPREME COURT IN 288 ITR 10 (SC) HAS HELD THAT EVEN PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SU FFICIENT TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. (B) THE CONTENTIONS OF THE ASSESSEE THAT NEITHER BH ANWARLAL JAIN NOR HIS SONS ARE DIRECTORS OF THE COMPANY, IS ALSO NOT RELEVANT TO THE MATERIAL FACT THAT IN THE STATEMENTS, BHANWARLAL JA IN HAD DESCRIBED THAT THEY ARE INDULGED IN PROVIDING ACCOMMODATION ENTRIE S OF BOGUS UNSECURED LOANS AND ADVANCES THROUGH VARIOUS BENAMI CONCERNS (70) OPERATED AND MANAGED BY THEM. THIS ADMISSION AUTOM ATICALLY MAKES ALL THE TRANSACTIONS DONE BY THEM AS MERE PAPER TRA NSACTIONS AND IN THESE CIRCUMSTANCES, FURTHER AS PER THE INFORMATION NAME AND ADDRESS OF ASSESSEE AND THE BENAMI CONCERN THROUGH WHICH AC COMMODATION ENTRY OF UNSECURED LOANS WAS PROVIDED IS APPEARING IN THE LIST OF BENEFICIARIES TO WHOM THE SAID GROUP HAS PROVIDED. THIS ADMISSION IS SUFFICIENT TO REJECT THE CONTENTIONS OF THE ASSEESS E. (C) THE ASSESSEE HAD REQUESTED FOR CROSS EXAMINATIO N OF SUCH PERSONS. IN THIS REGARD, IT IS POINTED OUT THAT T HE HONBLE SUPREME COURT IN THE CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206(SC) (3 JUDGE BENCH) HAD OBSERVED THAT THE ITO IS NOT BO UND BY ANY TECHNICAL RULES OF THE LAW OF EVIDENCE. IT IS OPEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY PRIVATE E NQUIRY. BUT, IF HE DESIRES TO USE THE MATERIAL SO COLLECTED, THE ASSES SEE MUST BE INFORMED ABOUT THE MATERIAL AND GIVEN ADEQUATE OPPORTUNITY T O EXPLAIN IT. THE ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 5 STATEMENTS MADE BY PRAVEEN JAIN AND GROUP WERE MATE RIAL ON WHICH THE IT AUTHORITIES COULD ACT PROVIDED THE MATERIAL WAS DISCLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RENDER THEIR EXPLANA TION IN THAT REGARD. (D) THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLU TE RIGHT. (NATH INTERNATIONAL SALES VS. UOI, AIR 1992 (DEL) 295). THE HONBLE SUPREME COURT HAS ALSO HELD THAT THE RIGHT OF HEARING DOES NOT NECESSARILY INCLUDE RIGHT OF CROSS EXAMINATION. THE RIGHT OF CR OSS EXAMINATION MUST DEPEND UPON THE CIRCUMSTANCES OF EACH CASE AND ALSO ON THE STATUTE CONCERNED (STATE OF J&K VS. BAKSHI GULAM MOHAMMAD A IR 1967 SC 122). THE QUESTION WHETHER THE ASSESSEE IS ENTITLE D TO CROSS EXAMINATION IS A QUESTION WHICH MAY LARGELY DEPENDS ON THE FACTS AND CIRCUMSTANCES OF THE CASE (EF. SHYAMLAL BIRI MERCHA NT VS. UOI (1993) 68 ELT 548, 551(ALL.) IN THE PRESENT CASE NO SUCH CIRC UMSTANCES ARE WARRANTED AS IN THE LIST OF BENEFICIARIES TO WHOM A CCOMMODATION ENTRIES WERE PROVIDED BY THE SAID GROUP CATEGORICALLY CONTA INS THE NAME AND ADDRESS OF THE ASSESSEE, FURTHER THE GROUP HAS CATE GORICALLY ADMITTED TO PROVIDING OF ACCOMMODATION ENTRIES OF UNSECURED LOA NS THROUGH VARIOUS BENAMI CONCERNS. (E) THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAMESHWARLAL MALI VS. CIT 256 ITR 536(RAJ.) HAS HELD THAT THERE IS NO PROVISION FOR PERMITTING THE CROSS EXAMINATION OF THE PERSONS WHO SE STATEMENTS WERE RECORDED DURING SURVEY. 2.5 THEREAFTER, THE AO NOTED THAT AS PER THE ROC R ECORDS THERE EXIST A NEXUS AMONG THE VARIOUS COMPANIES RIGHT FROM M/S M EHUL GEMS TO M/S ROSHAN GEMS (P) LTD. TO M/S MANISH FLOOR MILLS (P) LTD. THROUGH COMMON DIRECTORS AND IN THE LAST MENTIONED COMPANY, SHRI B HANWARLAL JAIN AND SHRI MANAK CHAND JAIN WERE DIRECTORS. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 6 2.6 FINALLY, THE AO HELD THAT BASED ON THE INFORMA TION WITH THE INVESTIGATION DEPARTMENT, STATEMENT RECORDED U/S 132(4) OF SHRI B HANWARLAL JAIN AND VARIOUS INCRIMINATING DOCUMENTARY EVIDENCE FOUND F ROM THE SEARCH AND SEIZURE CARRIED OUT BY INVESTIGATION WING, MUMBAI O N THE SAID GROUP ON 03.10.2013, AND THE EXISTENCE OF NEXUS AS BRIEFED A BOVE CANNOT BE CONSIDERED AS A COINCIDENCE SPECIALLY WHEN SHRI BHA NWARLAL JAIN HAS CATEGORICALLY ADMITTED THAT HIS GROUP WAS INDULGED IN PROVIDING ACCOMMODATION ENTRIES OF BOGUS UNSECURED LOANS AND ADVANCES THROUGH BENAMI CONCERNS (70) OPERATED AND MANAGED BY HIM AN D HIS SONS. THUS, UNDER SUCH FACTS AND CIRCUMSTANCES M/S MEHUL GEMS ( P) LTD. IS NOTHING BUT A BENAMI CONCERN OF SHRI BHANWARLAL JAIN GROUP. 2.7 BASED ON CASE LAWS AND DISCUSSIONS, IT WAS FURT HER STATED BY THE AO THAT: (A) THE PRIMARY ONUS IS ON THE ASSESSEE TO ESTABLIS H THE GENUINENESS OF THE TRANSACTION CLAIMED BY IT. (B) IF THE INVESTIGATION DONE BY THE DEPARTMENT LEA DS TO DOUBT REGARDING THE GENUINENESS OF THE TRANSACTIONS, IT I S INCUMBENT ON THE ASSESSEE TO PRODUCE THE PARTIES ALONGWITH NECESSARY DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. (C) PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSAN CT. IN LIGHT OF THE VARIOUS JUDICIAL PRONOUNCEMENTS AND THE ABOVE DISCUSSIONS IT IS TO BE SEEN WHETHER THE ASSESSEE WAS ABLE TO ESTABLI SH THE GENUINENESS OF THE TRANSACTIONS CLAIMED BY IT OR IT HAS FAILED IN DISC HARGING THIS ONUS. THE INFORMATION RECEIVED FROM INVESTIGATION WING AND ST ATEMENT OF SHRI BHANWARLAL JAIN AND GROUP CLEARLY EXPLAINS THE MODUS OPERANDI OF THIS BOGUS TRANSACTIONS. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 7 2.8 FINALLY, THE AO CONCLUDED THE ASSESSMENT PROCEE DINGS WITH THE FOLLOWING FINDINGS: 4.7 IN CONTINUATION OF THE ABOVE DISCUSSION AND CO NSIDERING THE ASSESSEES REPLY IT IS EVIDENT THAT THE ASSESSEE HA S NOT TAKEN FRESH UNSECURED LOANS FROM M/S MEHUL GEMS PVT. LTD. DURIN G THE YEAR UNDER CONSIDERATION WHEREAS UNSECURED LOAN OF RS. 1,00,00 ,000/- OF PREVIOUS YEAR WAS BROUGHT FORWARDED. FURTHER, IN THE CASE OF M/S ANKITA EXPORTS IT IS MENTIONED THAT ASSESSEE HAS TAKEN UNSECURED L OANS OF RS. 1,00,00,000/- ONLY INSTEAD OF RS. 2,01,04,301/- AS REPORTED IN THE INFORMATION RECEIVED IN THIS OFFICE AS MENTIONED IN PARA ABOVE. 4.8 IN THE PRESENT CASE, ASSESSEE HAS SHOWN UNSECUR ED LOANS OF RS. 1,00,00,000/- FROM M/S ANKITA EXPORTS, A BENAMI CON CERN OF SHRI BHANWAR LAL JAIN GROUP, AND THIS PARTY IS ONLY PROV IDING BOGUS ACCOMMODATION UNSECURED LOANS AND ADVANCES FOR THE REASONS GIVEN IN DETAIL IN THE ABOVE PARA. THEREFORE, THE UNSECURED LOANS FROM M/S ANKITA EXPORTS MAY BE TREATED AS UNEXPLAINED CASH C REDIT U/S 68 OF THE I.T. ACT, 1961. I HEREBY MAKE AN ADDITION OF RS. 1, 00,00,000/- TO THE DECLARED INCOME OF THE ASSESSEE U/S 68 OF THE I.T.A CT, 1961. THEREFORE, AS PER SECTION 115BBE (1)(A) THE INCOME OF RS. 1,00 ,00,000/- LIABLE FOR TAX @ 30%. AS PER SUB-SECTION 2 OF SECTION 115BBE O F THE I.T.ACT, 1961 NO DEDUCTION IN RESPECT OF ANY EXPENDITURE OR ALLOW ANCE SHALL BE ALLOWED TO THE ASSESSEE UNDER ANY PROVISION OF THIS ACT. 4.10 FURTHER, IT HAS BEEN CLAIMED BY THE ASSESSEE T HAT HE HAS PAID INTEREST OF RS. 8,10,000/- AND RS. 104,301/- TO M/S MEHUL GEMS PRIVATE LIMITED AND M/S ANKITA EXPORTS RESPECTIVELY. IN THI S REGARD IT RELEVANT TO MENTION HERE THAT, SINCE, AS PER THE DISCUSSION IN ABOVE PARA(S) IT IS ABUNDANTLY CLEAR THAT THE UNSECURED LOANS TAKEN FRO M ABOVE PARTIES IS ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 8 NOTHING BUT AN ACCOMMODATION ENTRY, UNDER SUCH FACT S AND CIRCUMSTANCES THE CLAIM OF INTEREST BY THE ASSESSEE CANNOT BE ALLOWED AS EXPENDITURE. THEREFORE, A SUM OF RS. 914301/- CL AIMED AS EXPENDITURE IS DISALLOWED AND IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 5. FURTHER, ON PERUSAL OF PROFIT AND LOSS ACCOUNT I T HAS BEEN NOTICED THAT ASSESSEE HAS CLAIMED INTEREST ON TDS OF RS. 51 520/-. IN THIS REGARD THE A/R OF THE ASSESSEE WAS ASKED TO STATE HIS CASE TO WHICH HE HAS AGREED THAT THIS AMOUNT HAS LEFT FROM ADDING BACK T O THE TOTAL INCOME. THEREFORE, INTEREST EXPENSE OF RS. 51520/- IS DISAL LOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO AFTER EXAMINING THE SUBMISSIONS AND OTHE R DOCUMENTATION FILED BY THE AO DELETED THE DISALLOWANCE MADE BY THE AO. NO W, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD DR VEHEMENTLY ARGUED THE MATTER AND TOOK US THROUGH THE FINDINGS OF THE AO AND SUBMITTED THAT THE LD CIT(A) HAS ERRED IN FOLLOWING THE ORDER OF THE TRIBUNAL FOR AY 2012-13 WHICH HAS BEEN CONTESTED BY THE REVENUE AND THE MATTER IS CURRENTLY SUB-JUDICE THE HONBLE RAJASTHAN HIGH COURT. 5. PER CONTRA, THE LD AR SUBMITTED THAT THE ISSUE IS COVERED BY FINDINGS OF HONBLE ITAT IN THE CASE OF ASSESSEE IN ITA NO 159/ JP/16 ORDER DATED 16/12/2016 FOR AY 2012-13 WHEREIN THE ADDITION UNDE R THE SAME SET OF FACTS AND CIRCUMSTANCES WAS DELETED BY LD CIT(A) AND ORDE R OF LD CIT(A) WAS CONFIRMED BY HONBLE ITAT. FURTHER, IN RESPECT OF C ONTENTION OF THE LD DR AND THE GROUND TAKEN BY THE REVENUE, IT WAS SUBMITTED T HAT THE MATTER HAS COME ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 9 UP FOR HEARING BEFORE THE HONBLE HIGH COURT IN DB APPEAL NO. 156/2017 WHEREIN THE HONBLE HIGH COURT VIDE ITS ORDER DATED 8.08.2017 HAS DISMISSED THE APPEAL OF THE REVENUE ON ACCOUNT OF NON-REMOVAL OF DEFECTS. IT WAS ACCORDINGLY SUBMITTED THAT AS ON THE DATE OF HEARIN G, THE MATTER IS NOT SUB- JUDICE BEFORE THE HONBLE HIGH COURT AND HENCE, THE RE IS NO INFIRMITY IN THE ORDER OF THE LD CIT(A) IN RELYING ON THE ORDER OF T RIBUNAL WHERE THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL. 6. THE LD AR FURTHER REITERATED THE SUBMISSIONS MAD E BEFORE THE LD CIT(A) AND AS CONTAINED IN THE WRITTEN SUBMISSIONS AS UNDER: A) DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS TAKEN UNSECURED LOAN OF RS. 1,00,00,000/- FROM M/S ANKITA EXPORTS 316, PANCHRATNA, OPERA HOUSE, MUMBAI-400004 ON 13.02.201 3 THROUGH A/C PAYEE CHEQUE AND PAID INTEREST OF RS. 1 ,15,890/- THEREON AFTER DEDUCTING TDS OF RS. 11,589/-. THE CO NFIRMATION OF LOAN WAS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. B) THE ASSESSEE HAS SUBMITTED BEFORE THE LD. AO THA T THE ASSESSEE DOES NOT KNOW WHO IS SHRI BHANWAR LAL JAIN AND NEVE R BE IN CONTACT OF SHRI BHANWAR LAL JAIN. THE BHANWAR LAL J AIN GROUP NOT KNOWN TO THE ASSESSEE, THEREFORE THE MODUS OPERANDI OF THIS GROUP IS NOT KNOWN TO THE ASSESSEE AND ASSESSEE HAS NOT CARRIED OUT ANY TRANSACTION THROUGH THIS PERSON. THE ASSESS EE HAS ACTUALLY TAKEN THE UNSECURED LOAN FROM M/S ANKITA E XPORTS THROUGH ACCOUNT PAYEE CHEQUES. C) IN M/S ANKITA EXPORTS, SHRI GAUTAM N. KUMAT AND SHRI VIVEK N. KUMAT WERE PARTNERS. THE SAME FACT IS VERIFIABLE FR OM BALANCE SHEET OF THIS FIRM. THUS SHRI BHANWAR LAL SHARMA WA S NOT PARTNER ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 10 OF THIS FIRM, THEREFORE WITHOUT BEING PARTNER OF A FIRM HOW ANYONE CAN CONTROL THE AFFAIRS OF THE FIRM. THE NAME OF TH E SON OF SHRI BHANWAR LAL SHARMA IS NOT KNOWN TO THE ASSESSEE, TH EREFORE NO COMMENTS CAN BE MADE ON THE CONTROLLING OF SON OF S HRI BHANWAR LAL SHARMA IN THIS CONCERN. FURTHER THE AO HAS NOT BROUGHT ANY POSITIVE MATERIAL TO PROVE THAT M/S ANKITA EXPORTS IS BENAMI CONCERN OF SHRI BHANWAR LAL JAIN GROUP. THE LD AO H AS LISTED NAME OF VARIOUS COMPANIES IN PARA 4.5, AND YOUR HON OR WOULD FIND THAT THE PARTNERS OF M/S ANKITA EXPORTS AND SH RI BHANWAR LAL JAIN ARE NOT COMMON PARTNER IN ANY CONCERN. D) AS REGARD TO CONTENTION OF LD AO THAT VARIOUS IN CRIMINATING DOCUMENTARY EVIDENCES WERE SEIZED DURING THE COURSE OF SEARCH ON BHANWAR LAL JAIN AND STATEMENT OF SEVERAL PERSON S WERE RECORDED WHICH PROVES THAT THE ENTRY OF THE ASSESSE E IS ACCOMMODATION ENTRY THIS IS TO SUBMIT THAT THE LD A O HAS NOT PROVIDED THE COPY OF SO CALLED INCRIMINATING DOCUME NT OR STATEMENT TO THE ASSESSEE AND OPPORTUNITY OF CONFRO NTATION WAS NOT GIVEN TO ASSESSEE. THE ASSESSEE HAS SPECIFICALL Y DEMANDED TO LD AO TO PROVIDE THE COPY OF SO CALLED INCRIMINATIN G DOCUMENTS AND STATEMENTS BUT THE SAME WAS NOT GIVEN TO ASSESS EE. IT IS NECESSARY THAT A COPY OF THE INCRIMINATING STATEMEN T OF THE WITNESS MUST BE GIVEN TO THE ASSESSEE IN ORDER TO E NABLE HIM TO HAVE AN EFFECTIVE AND USEFUL CROSS EXAMINATION AS H ELD IN STATE OF PUNJAB VS BHAGAT RAM AIR 1974 SC 2335; VAASANJI GHE LA & CO VS CST (1977) STC 544,553 (BOM), GARGI DIN JWALA PR ASAD VS CIT (1974) 96 ITR 97 (ALL). THE LEARNED AO VIOLATED THE RULE OF AUDI ALTERAM PARTEM, WHICH MEANS THAT NO ONE SHALL BE CONDEMNED UNHEARD, COROLLARY OF WHICH IS THAT HE SH OULD BE ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 11 GIVEN REASONABLE NOTICE OF THE NATURE OF THE CASE T O BE MET, THERE ARE OTHER RULES OF COMMON LAW TO THE SAME EFF ECT. RELIANCE IS PLACED ON PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD VS DCIT (1999) 236 ITR 671, 682. (CAL) IN VIEW OF THE ABOVE SUBMISSION, WE SUBMIT THAT THE LD AO ASSESSED THE INCOME OF THE ASSESSEE WITHOUT PROVIDI NG THE REASONABLE OPPORTUNITY. THE ASSESSING OFFICER IS NO T ABSOLVED OF THE OBLIGATION TO COMPLY WITH THE FUNDAMENTAL RULES OF JUSTICE, WHICH HAVE COME TO BE KNOWN IN ADMINISTRATIVE LAW A S THE PRINCIPLES OF JURISPRUDENCE. COMPLIANCE WITH THE AUDI ALTERAM PARTEM RULE OF NATURAL JUSTICE IS AN INDISPENSABLE REQUIR EMENT OF A VALID ASSESSMENT ORDER. KINDLY SEE, JAGADAMBIKA PRATAP NARAIN SINGH (RAJA) V. CBDT (1975) 100 ITR 698 (SC), GOVER NMENT OF INDIA V. MAXIM A LOBO (1990) 83 CTR (MAD) 103; CIT V. VIMLADEN BHAGWANDAS PATEL (SMT.) (1979) 118 ITR 134 (GUJ); GANGADHARAN PILLAI (P) V. ACED (1980) 126 ITR 356 ( KER); A SOCIEDADE DE FOMENTO INDUSTRIAL PVT. LTD. V. LAHIRI (KC) (1983) TAX LR 2664 (GOA); MALLAPPA KALLAPPA UGARE V. AG IT O (1973) 91 ITR 529 (MYS); STATE BANK OF PATIALA V UNION OF IND IA (1973) 91 ITR 630 (P&H); CIT V SHAM LAL (1981) 127 ITR 816 (P &H); JAI PRAKASH SINGH V CIT (1978) 111 ITR 507 (GAU); THOMA KUTTY (MO) V CIT (1958) 34 ITR 501 (KER); KOYAMMANKUTTY V ITO (1965) 58 ITR 871 (KER); MENON (TCN) V ITO (1974) 9 6 ITR 148 (KER.). E) APART FROM THE CONFIRMATION OF THE PARTY THE ASS ESSEE HAS SUBMITTED FOLLOWING DOCUMENTS IN SUPPORT OF GENUINE NESS OF LOAN TAKEN FROM THIS PARTY: - I) CONFIRMATION OF THE PARTY. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 12 II) COPY OF A/C OF ASSESSEE IN THE BOOKS OF ACCOUNT S OF ABOVE NAMED FIRM. III) COPY OF ACKNOWLEDGEMENT OF RETURN OF AY 2013-1 4, AUDITED BALANCE SHEET, PROFIT & LOSS A/C AND SUPPORTING ANN EXURE OF 31.03.2013 OF ABOVE NAMED FIRM. IV) COPY OF RELEVANT PAGE OF BANK STATEMENT OF ABOV E NAMED FIRM SHOWING THE ENTRY OF LOAN GIVEN TO THE ASSESSE E. V) COPY OF PAN CARD OF PARTY. THE COPIES OF ABOVE DOCUMENTS WERE ALSO FILED BEFOR E LD CIT(A). FROM EXAMINING THE BANK STATEMENT AND BALANCE SHEET OF THIS FIRM LD CIT(A) FOUND THAT THIS FIRM WAS HAVING SUFF ICIENT SOURCE TO ADVANCE THE MONEY TO THE ASSESSEE. THE TURNOVER OF CASH CREDITOR FIRM WAS 219.58 CRORES . FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. AO MADE DIRECT INQUIRIES FROM THIS FIRM REGARDING LOAN TAKEN BY THE ASSESSEE AND THIS FIRM CONFIRMED ABOUT GIVING THE LOAN TO THE ASSESSEE. F) THE ASSESSEE HAS DISCHARGED HIS INITIAL ONUS: THE ASSESSEE HAS DISCHARGED HIS INITIAL ONUS LAID D OWN U/S 68 OF INCOME TAX ACT. THE ASSESSEE HAS FILED CONFIRMATION LETTERS AND AFFIDAVIT OF CASH CREDITORS BEFORE THE AO WHO HAS A DMITTED GIVING OF MONEY TO THE ASSESSEE AS A LOAN. THE LD AO HAS E RRED IN MAKING ADDITION OF RS.1,00,00,000/- EVEN IN THE FAC TS AND CIRCUMSTANCES OF THE ASSESSEE AND THE LEARNED AO HA S NO MATERIAL TO REJECT THE EVIDENCES FILED BEFORE HIM. (I) IDENTITY:- THE IDENTITY OF CASH CREDITOR STOOD PROVED IN AS MU CH AS COPY OF PAN CARD AND COPY OF INCOME TAX RETURN WERE FILED. HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ARAVALI TRADING CO VS INCOME TAX OFFICER (2008) 8 DTR (RAJ) 199 ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 13 HAS HELD THAT ONCE THE EXISTENCE OF THE CREDITORS IS PROVED AND SUCH PERSONS OWN THE CREDITS, THE ASSESSEES ON US STANDS DISCHARGED AND THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE FROM WHICH THE CREDITORS COULD HAV E ACQUIRED THE MONEY DEPOSITED WITH HIM. HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT MERELY BECA USE THE DEPOSITORS EXPLANATION ABOUT THE SOURCES OF MONEY WAS NOT ACCEPTABLE TO THE AO, IT CANNOT BE PRESUMED THA T THE DEPOSIT MADE BY THE CREDITORS IS MONEY BELONGING TO THE ASSESSEE ITSELF. (II) GENUINENESS OF TRANSACTION:- THE ASSESSEE HAS FILED CONFIRMATION LETTER, ITR AND BALANCE SHEET OF THE FIRM WHEREIN THE AMOUNT GIVEN TO ASSES SEE SHOWN AS LOAN. THE ASSESSEE FILED COPY OF BANK STAT EMENT OF CASH CREDITORS WHERE THE AMOUNT OF PAYMENT IS RE FLECTED IN BANK STATEMENT. FURTHER, THE ASSESSEE HAS PAID I NTEREST AND DEDUCTED TDS. (III) CAPACITY PROVED:- THE ASSESSEE HAS FILED COPY OF BALANCE SHEET AND PR OFIT AND LOSS ACCOUNT OF THE FIRM. THE TURNOVER OF THE FIRM IS RS 219.58 CRORES. THE ASSESSEE HAS ALSO FILED COPY OF BANK STATEMENT OF THE FIRM WHICH SHOWS HUGE NUMBER OF TRANSACTION OF HIGH VALUE. THERE IS NO ONUS ON THE ASSESSEE TO PROVE SOURCE OF SOURCE. ONCE THE ASSESSEE ABLE T O ESTABLISH THAT HE HAS IN FACT RECEIVED MONEY FROM T HIRD PARTY, IT CANT BE BURDENED WITH A FURTHER ONUS OF ESTABLISHING THE SOURCE FROM WHICH SUCH THIRD PARTY HAD BEEN ABLE TO OBTAIN THE MONEY. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: - ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 14 (I) SIDEWAYS INVESTMENT PVT. LTD. VS DCIT 24 TAX WO RLD 146 (JP ITAT) (II) CIT VS. DAULAT RAM RAWATMAL 87 ITR 349 (SC) (III) SARAOGI CREDIT CORP. VS. CIT 103 ITR 344 ( PAT) (G) THE ASSESSEE RELIES ON THE FOLLOWING DECISIONS: - (I) CIT VS ORISSA CORPORATION (P) LTD (1986) 159 ITR 79 (SC) THE ASSESSEE HAD GIVEN NAMED AND ADDRESSES OF THE C ASH CREDITORS, WHO WERE INCOME TAX ASSESSEES. REVENUE A PART FROM ISSUING SUMMON U/S 131 NOTICES TO CREDITORS, D ID NOT PURSUE THE MATTER FURTHER- IT DID NOT EXAMINE CREDITWORTHINESS OF THE CREDITORS- ASSESSEE COULD N OT, UNDER THE CIRCUMSTANCES DO ANYTHING FURTHER. HELD THAT TH E ADDITIONS WERE RIGHTLY DELETED. (II) CIT VS HEERA LAL CHAGAN LAL TANK (2002) 157 ITR 281 (RAJ) BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE IDENTITY OF THE CREDITORS IS ESTABLISHED AND HE CON FIRMS THE LOANS. H) THE LD AO MENTIONED THAT CHEQUE TRANSACTION IS N OT SUFFICIENT TO PROVE THE GENUINENESS OF TRANSACTION. BUT IN THE CA SE OF ASSESSEE, THE ASSESSEE IS CLAIMING THE GENUINENESS OF THE TRANSACTION NOT MERELY ON THE STRENGTH OF CHEQUE BU T HE HAS SUBMITTED SEVERAL OTHER EVIDENCES SUCH AS INCOME TA X RETURN AND BANK STATEMENT OF CASH CREDITOR AND PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF CASH CREDITOR, WHICH PROVE THAT TH E TRANSACTION OF ASSESSEE IS GENUINE. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 15 I) THE LD AO HELD THAT M/S ANKITA EXPORTS IS BENAMI FIRM OF SHRI BHANWAR LAL JAIN BUT THE LD AO HAS NOT BROUGHT ANY POSITIVE MATERIAL TO SHOW THAT M/S ANKITA EXPORTS IS BENAMI OF SHRI BHANWAR LAL JAIN. TO HOLD A PERSON AS BENAMI OF ANO THER, ONE OUGHT TO HAVE CONCRETE EVIDENCES IN CONTRAST TO SHE ER PRESUMPTIONS AND SUSPICION AND IN SUCH CASES INITIA L BURDEN LIES ON REVENUE. THE LD AO FAILED TO APPRECIATE THE FACT S, EVIDENCE AND THE TESTS LAID DOWN BY APEX COURT AND HIGH COU RT. THE ASSESSEE RELIES ON THE FOLLOWING DECISIONS A) CIT VS DAULAT RAM RAWATMULL 87 ITR 349 (SC) B) JAYDAYAL PODDAR VS. BIBI HAZRA, AIR 1974 SC 171 HONBLE SUPREME COURT HAS HELD THAT IT IS WELL SETT LED THAT THE BURDEN OF PROVING THAT A PARTICULAR SALE I S BENAMI AND THE APPARENT PURCHASER IS NOT THE REAL OWNER, ALWAYS RESTS ON THE PERSON ASSERTING IT TO B E SO. C) PRAKASH NARAIN VS CIT 134 ITR 364 (ALL) D) LAL CHAND AGARWAL VS. ACIT 21 TAX WORLD 213 HONBLE ITAT JAIPUR BENCH HAS HELD THAT TO HOLD A PERSON AS BENAMI OF ANOTHER, ONE OUGHT TO HAVE CONCRETE EVIDENCES IN CONTRAST TO SHEER PRESUMPTION S AND SUSPICION AND IN SUCH CASES INITIAL BURDEN LIES ON REVENUE ; E) ITO VS. SHREE LADANI FAMILY TRUST 21 TAX WORLD 351 HONBLE ITAT JAIPUR BENCH HAS HELD THAT BURDEN TO PROVE BENAMI NATURE HEAVILY LIES ON THE DEPARTMENT. F) DCIT VS. PSM FAMILY TRUST 21 TAX WORLD 553 ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 16 TO HOLD BENAMI CHARACTER OF A BUSINESS, IT IS ESSENTIAL TO PROVE INTERLOCKING, INTERLACING AND IN TER CONTROLLING BETWEEN THE TWO BUSINESS. G) RAVI MATHUR & OTHERS VS. ACIT 22 TAX WORLD 245 HELD THAT BURDEN TO PROVE BENAMI NATURE OF TRANSACTION HEAVILY LIES ON THE DEPARTMENT. H) RAMJAS NAWAL VS. ACIT 22 TAX WORLD 126 HELD THAT A PERSON CANNOT BE HELD TO BE BENAMI OF ASSESSEE SIMPLY BECAUSE THE VEHICLE ALONG WITH ITS REGISTRAT ION PAPERS WERE RECOVERED FROM THE POSSESSION OF ASSESSEE IN ABSENCE OF SOME POSITIVE EVIDENCE. I) S.S. GUPTA VS. ACIT 22 TAX WORLD 337 HELD THAT TO HOLD BENAMI CHARACTER OF A BUSINESS, IT IS ESSENTIA L TO PROVE INTERLOCKING, INTERLACING AND INTER LINKING BETWEEN THE TWO OR MORE BUSINESSES. J) SANDEEP LOOMBA VS. ACIT 26 TAX WORLD 288 HELD THAT BURDEN TO PROVE BENAMI NATURE HEAVILY LIES ON THE DEPARTMENT. K) ITO VS. SURESH CHAND GUPTA 26 TAX WORLD 224 HELD THAT BURDEN TO BRING MATERIAL EVIDENCE ON RECORDS T O PROVE A PERSON TO BE BENAMI OF ANOTHER HEAVILY LIES ON THE REVENUE. L) MANJU DEVI KOGTA VS. ITO 27 TAX WORLD 385 HELD THAT BURDEN TO PROVE BENAMI NATURE HEAVILY LIES ON THE DEPARTMENT. M) SMT KESAR DEVI VS. ITO 28 TAX WORLD 157 HELD THA T BURDEN TO PROVE BENAMI NATURE HEAVILY LIES ON THE DEPARTMENT AND WHAT IS APPARENT HAS TO BE TREATED AS REAL IN ABSENCE OF ANY CONTRARY MATERIAL ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 17 N) UTTAM CHAND NAHAR VS. ITO 28 TAX WORLD 435 HELD THAT BURDEN TO PROVE BENAMI NATURE HEAVILY LIES ON THE DEPARTMENT. O) VIJENDRA KUMAR MAMODIA VS. DCIT 29 TAX WORLD 51 HELD THAT BURDEN TO PROVE BENAMI NATURE HEAVILY LIE S ON THE DEPARTMENT AND BURDEN TO PROVE AN INVESTMENT AS BENAMI IS ON THE PERSON WHO ALLEGES AS SUCH. P) RAJESH JAIN VS. ITO 32 TAX WORLD 72 HELD THAT BURDEN TO PROVE BENAMI TRANSACTION LIES ON THE PERSON WHO ASSERTS ITS AND SHARING OF SAME BUSINESS PLACE AND EMPLOYEES IS NOT SUFFICIENT TO HOLD ONE PERSON AS BENAMIDAR OF ANOTHER. Q) RADHEY SHYAM OJHA VS. ACIT 32 TAX WORLD 81 HELD THAT IT IS THE DUTY OF AO TO BRING ON RECORD SUFFIC IENT MATERIAL TO PROVE BENAMI NATURE. J) THE AO APPEARED TO BE BENT UPON MAKING THE ADDIT ION UNDER THE INFLUENCE OF SOME REPORT WITHOUT APPLICATION OF MIN D. AO CANNOT BE GUIDED FOR HIS DECISIONS BY WHAT THE O FFICER PREPARING THE REPORT SAYS. AS PER SECTION 119 (1) (A) EVEN THE CBDT CANNOT ISSUE DIRECTIONS OR INSTRUCTIONS TO AN AO SO AS TO REQUIRE ANY INCOME TAX AUTHORITY TO MAKE A PARTICUL AR ASSESSMENT OR TO DISPOSE OF A PARTICULAR CASE IN A PARTICULAR MANNER. RECENTLY, THE SC IN THE CASE OF RAJESH KUMAR VS DCIT (2006) 1 57 TAXMAN 168 (SC) HAS SAID THAT AN ASSESSMENT ORDER IS THE R ESULT OF A JUDICIAL PROCEEDINGS. ACCORDING TO THE APEX COURT A N ASSESSMENT PROCEEDING A JUDICIAL PROCEEDING. OBVIOUSLY, NO ON E CAN HAVE INFLUENCE OR SAY IN THE COURSE OF JUDICIAL PROCEEDI NGS THAT A PARTICULAR DECISION SHOULD BE TAKEN IN A PARTICULAR WAY OR MANNER ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 18 AFFECTING THE INDEPENDENCE OF THE DECISION-MAKING A UTHORITY. THE AO MUST DECIDE THE ISSUE BEFORE HIM ON A PROPER APP RECIATION OF EVIDENCE ADDUCED DURING THE COURSE OF ASSESSMENT PR OCEEDINGS AND NOT TO BE SWAYED AND CARRIED AWAY UNDER SOME RE PORT. HONBLE APEX COURT HAS HELD IN THE CASE OF DAKESHWA RI COTTON MILLS LTD VS CIT 26 ITR 775- THAT ONE WHO HEARS MUST DECIDE THE CASE. K) AS REGARDING TO DISALLOWANCE OF INTEREST PAID TO M/S MEHUL GEMS PVT. LTD RS. 8,10,000/- AND M/S ANKITA EXPORTS RS. 1,04,301/- THIS IS TO SUBMIT THAT THE LOAN FROM M/S MEHUL GEMS PVT. LTD WAS TAKEN IN AY 2012-13 AND IN APPEALS THE SAME HAS BEE N ACCEPTED AS GENUINE, THEREFORE NO INTEREST ON SUCH LOAN CAN BE DISALLOWED. IN VIEW OF ABOVE SUBMISSION THE LOAN TAKEN FROM M/S ANKITA EXPORTS IS ALSO GENUINE AND THEREFORE THE INTEREST PAID ON SUCH LOAN SHOULD ALSO BE ALLOWED TO ASSESSEE. 7. WE HAVE GONE THROUGH THE ORDER OF THE HONBLE H IGH COURT IN DB APPEAL NO. 156/2017 DATED 8.08.2017 WHICH IS PLACED ON RECORD AND AGREE WITH THE CONTENTIONS OF THE LD AR THAT THE APPEAL O F THE DEPARTMENT AGAINST THE ORDER OF THE TRIBUNAL FOR AY 2012-13 HAS BEEN D ISMISSED IN DEFAULT BY THE HONBLE HIGH COURT AND THE MATTER IS THEREFORE NOT SUB-JUDICE BEFORE THE HONBLE HIGH COURT. IN ANY CASE, EVEN WHERE THE MA TTER WAS SUB-JUDICE BEFORE THE HONBLE HIGH COURT, SO LONG AS THE HONB LE HIGH COURT HAS NOT STAYED THE OPERATION OF THE TRIBUNAL ORDER, THE JUD ICIAL DISCIPLINE WILL REQUIRE THE LD CIT(A) TO FOLLOW THE JURISDICTIONAL TRIBUNAL S ORDER UNLESS THE REVENUE IS ABLE TO BUILT UP ITS CASE ON DISTINGUISHABLE FACTS AND CIRCUMSTANCES OF THE CASE OR DUE TO CHANGE IN LAW. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 19 8. NOW COMING TO THE TWO TRANSACTIONS WHICH ARE SU BJECT MATTER OF DISPUTE BEFORE US. FIRST TRANSACTION RELATES TO UNSECURED LOAN OF RS 1.00 CRORE TAKEN BY ASSESSEE FROM M/S MEHUL GEMS PVT LTD DURING THE FINANCIAL YEAR RELEVANT TO AY 2012-13 AND INTEREST PAYABLE ON SUCH LOAN AMO UNTING TO RS 810,000 DURING THE YEAR UNDER CONSIDERATION. THE SECOND TR ANSACTION RELATES TO UNSECURED LOAN OF RS 1.00 CRORE TAKEN BY ASSESSEE F ROM M/S ANKITA EXPORTS DURING THE FINANCIAL YEAR RELEVANT TO IMPUNGED ASSE SSMENT YEAR AND INTEREST PAYABLE ON SUCH LOAN AMOUNTING TO RS 104,301 DURING THE YEAR UNDER CONSIDERATION. 9. FIRSTLY, IN THE CONTEXT OF UNSECURED LOAN TRANS ACTION RELATING TO MEHUL GEMS PVT LTD, IN ITA NO 159/JP/16 VIDE OUR ORDER DA TED 16/12/2016 FOR AY 2012-13, WE HAVE ALREADY EXAMINED THE MATTER AT LEN GTH AND DELETED THE ADDITION MADE BY THE AO UNDER SECTION 68 OF THE ACT . AS NOTED ABOVE, THOUGH THE DEPARTMENT HAS FILED AN APPEAL AGAINST THE SAID ORDER BEFORE THE HONBLE RAJASTHAN HIGH COURT, THE APPEAL OF THE DEPARTMENT HAS BEEN DISMISSED IN DEFAULT. AS SUCH, THE SAID ORDER IS STILL EFFECTIV E AND OPERATIVE. FOLLOWING THE SAME, DISALLOWANCE OF INTEREST AMOUNTING TO RS 8,10 ,000 ON SUCH LOAN TRANSACTION WHICH IS SOLELY BASED ON FINDINGS OF TH E AO IN PREVIOUS ASSESSMENT YEAR 2012-13 IS HEREBY DELETED. 10. IN RESPECT OF UNSECURED LOAN OF RS 1.00 CRORE TAKEN BY ASSESSEE FROM M/S ANKITA EXPORTS DURING THE FINANCIAL YEAR RELEVA NT TO IMPUNGED ASSESSMENT YEAR, THE LD CIT(A) HAS GIVEN THE FOLLOWING FINDING S WHICH ARE REPRODUCED AS UNDER:- 3.1.3 ....THE AO HAS MADE THE ADDITIONS OF RS. 1,0 0,00,000/- & RS. 9,14,301/- BY APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT WHICH IS BASED ON INFORMATION RECEIVED FROM INVESTIGATION WI NG, MUMBAI. IT IS ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 20 SUBMITTED THAT IN COMPLIANCE TO THE SHOW CAUSE NOTI CE ISSUED, ASSESSEE FILED FOLLOWING DOCUMENTS: (I) COPY OF CONFIRMATION LETTER OF THE ABOVE NAMED CASH CREDITOR, (II) COPY OF ACKNOWLEDGMENT OF RETURN (III) COPY OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT O F THE CASH CREDITOR (IV) COPY OF BANK STATEMENT OF THE CASH CREDITOR (V) COPY OF PAN CARD OF THE CASH CREDITOR AND FURTHER, ON EXAMINATION OF THE PROFIT AND LOSS ACCO UNT OF THE CASH CREDITORS NAMELY M/S ANKITA EXPORTS & M/S MEHUL GEM S PVT. LTD., IT IS SEEN THAT THEIR TURNOVER FOR THE YEAR RELEVANT TO A Y 2013-14 AS PER THE P & L ARE RS. 2,19,58,73,416/- AND RS. 1,49,93,46,2 44/-. FURTHER ON CAREFUL PERUSAL OF THE BANK STATEMENTS OF THE CASH CREDITORS, THE SAID ENTRY OF WITHDRAWAL OF MONEY ARE DULY APPEARING IN THE NAME OF ASSESSEE IN THE BANK STATEMENT. IT IS ALSO PERTINEN T TO MENTIONED THAT THE SOURCE OF PAYMENT AS PER THE BANK STATEMENT IS ALSO DEPOSITS OF CHEQUE BY CLEARING. ON CAREFUL PERUSAL OF BANK STAT EMENT OF M/S ANKITA EXPORTS & M/S MEHUL GEMS PVT. LTD., NO INSTANCE OF CASH DEPOSIT PRIOR TO ISSUE OF CHEQUE TO THE ASSESSEE BY THE CASH CRED ITOR HAVE BEEN FOUND. ON RECEIPT OF THESE DOCUMENTARY EVIDENCES, IT IS AL SO SEEN THAT AO HAS NOT BROUGHT ON RECORD ANY POSITIVE MATERIAL TO CONT ROVERT THE EVIDENCES AND DOCUMENTS FURNISHED BY THE ASSESSEE. INSTEAD, A O INSISTED ON PHYSICAL PRESENCE/ATTENDANCE OF THE DIRECTORS OF TH E CASH CREDITORS PARTICULARLY WHEN THEY THERE ARE NOT BASED IN JAIPU R. IT IS TRUE THAT CHEQUE DOES NOT MAKE THE TRANSACTION GENUINE BUT IN THIS CASE, THE ASSESSEE HAS SUBMITTED SEVERAL DOCUMENTS INCLUDING THE BANK ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 21 STATEMENTS AND SWORN AFFIDAVIT OF CASH CREDITORS, W HICH HAVE NOT BEEN CONTROVERTED BY AO ON THE BASIS OF POSITIVE EVIDENC E. MERELY ON THE BASIS OF STATEMENT OF SHRI BHANWAL LAL JAIN BEFORE INVESTIGATION WING, MUMBAI, THE ADDITION CANNOT BE CONFIRMED PARTICULAR LY WHEN THE COPY OF THE SWORN STATEMENT OF SHRI BHANWAR LAL JAIN. AS PE R FINDINGS GIVEN BY THE AO IN ASSESSMENT ORDER, EVEN SHRI BHANWAR LAL J AIN AND THE DIRECTORS OF THE CASH CREDITOR COMPANY IS NOT THE C OMMON DIRECTOR IN THE SAID COMPANY. THE AO ALLEGED THAT THE CASH CRED ITOR COMPANY IS A BENAMI COMPANY OF SHRI BHANWAR LAL JAIN. IT IS WELL SETTLED LAW THAT THE ONUS TO PROVE BENAMI IS ON THE PERSON WHO ALLEGES. THE AO HAS NOT BROUGHT ANY POSITIVE MATERIAL TO SHOW THAT CASH CRE DITORS ARE BENAMI COMPANY OF SHRI BHANWAR LAL JAIN. FURTHER, ON CAREF ULLY EXAMINATION OF ASSESSMENT RECORDS, IT IS SEEN THAT THE AO HAS ISSU ED A LETTER DATED 28.09.2015 U/S 133(6) OF ACT (BY SPEED POST) FOR DI RECT INQUIRY TO THE CASH CREDITORS, RELEVANT PARTICULARS OF WHICH IS RE PRODUCED AS UNDER:- SUBJECT:- INFORMATION REQUIRED U/S 133(6) OF THE I T ACT, 1961, IN THE CASE OF SH. PRATEEK KOTHARI FOR AY 2012-13 (PAN: AB IPK8090R)-REG. 1. PLEASE FURNISH BRIEF OF YOUR BUSINESS ACTIVITIES. 2. PLEASE FURNISH THE DETAILS OF THE TRANSACTIONS UNDE RGONE WITH THE ABOVE MENTIONED ASSESSEE. 3. PLEASE FURNISH COPY OF ITR, COMPUTATION AND BALANCE SHEET, P & L WITH AUDIT REPORT FOR THE FY 2012-13. 4. PLEASE FURNISH COPY OF BANK STATEMENT THROUGH WHICH THE TRANSACTIONS WERE UNDERGONE FOR THE RELEVANT PERIOD I.E. FY 2012- 13. THE ABOVE INFORMATION MAY BE FURNISHED ON OR BEFORE 09.10.2015 IN THE OFFICE OF THE UNDERSIGNED. THIS INFORMATION IS BEING CALLED FROM YOU UNDER THE PROVISIONS OF SEC. 133(6) OF THE INCO ME-TAX ACT, 1961. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 22 ANY FAILURE TO FURNISH THE SAME WOULD ATTRACT PENAL TY U/S 272A(2)(C) OF THE INCOME-TAX ACT, 1961....... FROM THE PERUSAL OF ASSESSMENT RECORDS, IT IS ALSO SEEN THAT M/S MEHUL GEMS PVT LTD HAS COMPLIED WITH ITS LETTER DT 05.10. 2015 TO THE NOTICE ISSUED BY THE AO AND THE SAME WAS RECEIVED IN THE O FFICE OF AO ON 08.10.2015. SIMILARLY, M/S ANKITA EXPORTS HAS ALSO COMPLIED WITH THE NOTICE VIDE LETTER DT 02.10.2015 (TO BE READ AS 07. 03.2016). HOWEVER, AO DID NOT TAKE ANY COGNIZANCE OF THE AFOREMENTIONE D COMPLIANCE LETTER AND FINALLY ADDED THE SAME U/S 68 OF THE ACT . FROM THE ABOVE, IT IS SEEN THAT AO HAS NOT CONTROVE RTED THE DOCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE NOR CONDUCTED ANY FRUITFUL ENQUIRY ON THAT. EVEN COMPLIANCE FROM M/S ANKITA EXPORTS & M/S MEHUL GEMS PVT LTD WERE NOT TAKEN INTO COGNIZANCE W HEN THEIR WRITTEN COMPLIANCES WERE RECEIVED IN THE AOS OFFICE IN THE MONTH OF OCTOBER 2015 AND FINALLY ASSESSMENT ORDER WAS PASSED ON 28. 03.2016 I.E., AFTER A LAPSE OF ALMOST 5 MONTHS. MERE ON THE BASIS OF SU RMISES AND SUSPICION, ADDITIONS MADE BY THE AO CANNOT BE SUSTA INED IN VIEW OF JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE . IT IS PERTINENT TO MENTION HERE THAT ON SIMILAR FA CTS IN AY 2012-13 (ITA NO. 718/14-15) ADDITION MADE OF RS. 1,00,00,00 0/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT HAS BEEN DELETED VIDE ORDER DT 23.12.2015 WHICH HAS ALSO BEEN DULY CONFIRMED BY HONBLE ITAT BENCH JAIPUR VIDE ORDER DT. 16.12.2016 (ITA NO. 159/JP/16). IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF TH E CASE, THE ADDITION CANNOT BE SUSTAINED IN THE HANDS OF THE AS SESSEE AND THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 1,00,00,000/ - AND RS. 9,14,301/- MADE BY THE AO BY APPLYING THE PROVISIONS OF SECTIO N 68 OF INCOME TAX ACT. ASSESSEES APPEAL IN GROUND NO. 1,2 & 3 STANDS ALLOWED. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 23 9. THE ABOVE FINDINGS OF THE LD CIT(A) REMAIN UNCO NTROVERTED BEFORE US. THE ASSESSEE HAS SUBMITTED THE NECESSARY DOCUMENTAT ION TO SATISFY THE INITIAL ONUS PLACED ON HIM IN TERMS OF SECTION 68 OF THE AC T AND THERE IS NO POSITIVE EVIDENCE BROUGHT ON RECORD BY THE AO TO CONTROVERT THE EVIDENCES AND DOCUMENTS FURNISHED BY THE ASSESSEE OR THE FACT THA T THERE ARE CERTAIN INADEQUACIES IN SUCH DOCUMENTATION. THE AO HAS INF ACT TOTALLY IGNORED THE DOCUMENTATION SO SUBMITTED BY THE ASSESSEE HOWEVER THE LD CIT(A) HAS GONE THROUGH THE SAME AND THERE IS NOTHING WHICH HAS BEE N BROUGHT TO OUR NOTICE BY THE LD DR WHICH SUGGEST THAT HIS FINDINGS ARE PE RVERSE. 10. FURTHER, WE NOTE THAT UNDER IDENTICAL FACT PAT TERN, THE ADDITIONS HAVE BEEN MADE BY THE AO IN AY 2012-13 IN RESPECT OF TRA NSACTION WITH M/S MEHUL GEMS PVT LTD WHICH CAME UP FOR CONSIDERATION BEFORE US IN ITA NO. 159/JP/16 AND AFTER DETAIL EXAMINATION, THE ADDITIO NS SO MADE UNDER SECTION 68 WERE DELETED VIDE OUR ORDER DATED 16/12/2016. THE RELEVANT FINDINGS ARE REPRODUCED AS UNDER: 2.8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE TRANSACTION UNDER QUESTION RELATES TO UNSECURED LOANS TAKEN BY THE ASSESSEE AM OUNTING TO RS 1 CRORES FROM M/S MEHUL GEMS PVT LTD DURING THE IMPUNGED ASSESSMENT YEAR AND NOT ACCEPTING THE SAID LOAN TRA NSACTION AS A GENUINE TRANSACTION BY THE ASSESSING OFFICER AND TH E RESULTANT ADDITION MADE UNDER SECTION 68 OF THE ACT. UNDISPUT EDLY, THE PRIMARY ONUS TO ESTABLISH GENUINENESS OF THE LOAN T RANSACTION IS ON THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE HAS PROVIDED THE NECESSARY EXPLANATION, FURNISHED DOCUMENTARY EV IDENCE IN TERMS OF TAX FILINGS, AFFIDAVITS AND CONFIRMATION O F THE DIRECTORS, BANK STATEMENTS OF THE LENDER, BALANCE SHEET OF THE LENDER ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 24 COMPANY, AND AN INDEPENDENT CONFIRMATION HAS ALSO B EEN OBTAINED BY THE ASSESSING OFFICER TO SATISFY THE CA RDINAL TEST OF IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE L OAN TRANSACTION. HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING IN RESPECT OF SUCH EXPLANATION, DOCUMENTARY EVIDENCE AS WELL AS INDEPENDENT CONFIRMATION. APPARENTLY, THE R EASON FOR NOT ACCEPTING THE SAME IS THAT THE ASSESSING OFFICER WA S IN RECEIPT OF CERTAIN INFORMATION FROM THE INVESTIGATION WING OF THE TAX DEPARTMENT AS PER WHICH THE TRANSACTION UNDER CONSI DERATION IS A BOGUS LOAN TRANSACTION. THE SAID INFORMATION RECEIV ED FROM THE INVESTIGATION WING THUS OVERWEIGHED THE MIND OF THE ASSESSING OFFICER. THE ASSESSING OFFICER STATED THAT THE PRIM ARY ONUS IS ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TR ANSACTION CLAIMED BY IT AND IF THE INVESTIGATION DONE BY THE DEPARTMENT LEADS TO DOUBT REGARDING THE GENUINENESS OF THE TRA NSACTIONS, IT IS INCUMBENT ON THE ASSESSEE TO PRODUCE THE PARTIES AL ONGWITH NECESSARY DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN RESPONSE, THE ASSESSEE SUBMITTED TH AT SHRI BHANWARLAL JAIN IS NOT KNOWN TO HIM AND REGARDING V ARIOUS INCRIMINATING DOCUMENTARY EVIDENCES SEIZED DURING T HE COURSE OF SEARCH AND STATEMENTS RECORDED OF SHRI BHANWARLAL J AIN AND OTHER PERSONS, HE SPECIFICALLY REQUESTED THE AO TO PROVID E COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENT OF ALL V ARIOUS PERSONS RECORDED IN THIS REGARD AND PROVIDE AN OPPO RTUNITY TO THE ASSESSEE TO CROSS EXAMINE SUCH PERSONS. HOWEVER, TH E AO DIDNT PROVIDE TO THE ASSESSEE COPIES OF SUCH INCRIMINATIN G DOCUMENTS AND STATEMENTS OF VARIOUS PERSONS RECORDED AND ALLO W THE CROSS- EXAMINATION OF ANY OF THESE PERSONS. WHILE DOING SO , THE AO STATED THAT IN HIS STATEMENTS, BHANWARLAL JAIN HAD DESCRIBED THAT ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 25 THEY ARE INDULGED IN PROVIDING ACCOMMODATION ENTRIE S OF BOGUS UNSECURED LOANS AND ADVANCES THROUGH VARIOUS BENAMI CONCERNS (70) OPERATED AND MANAGED BY THEM. THIS ADMISSION AUTOMATICALLY MAKES ALL THE TRANSACTIONS DONE BY TH EM AS MERE PAPER TRANSACTIONS AND IN THESE CIRCUMSTANCES, FURT HER AS PER THE INFORMATION NAME AND ADDRESS OF ASSESSEE AND THE BE NAMI CONCERN THROUGH WHICH ACCOMMODATION ENTRY OF UNSECU RED LOANS WAS PROVIDED IS APPEARING IN THE LIST OF BENEFICIAR IES TO WHOM THE SAID GROUP HAS PROVIDED. THIS ADMISSION IS SUFFICIE NT TO REJECT THE CONTENTIONS OF THE ASSEESSE. FURTHER, REGARDING CR OSS EXAMINATION, THE AO STATED THAT THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AND IT DEPENDS UPON THE CIRCU MSTANCES OF EACH CASE AND ALSO ON THE STATUTE CONCERNED. IN THE PRESENT CASE, NO SUCH CIRCUMSTANCES ARE WARRANTED AS IN THE LIST OF BENEFICIARIES TO WHOM ACCOMMODATION ENTRIES WERE PR OVIDED BY THE SAID GROUP CATEGORICALLY CONTAINS THE NAME AND ADDRESS OF THE ASSESSEE. FURTHER THE GROUP HAS CATEGORICALLY A DMITTED TO PROVIDING OF ACCOMMODATION ENTRIES OF UNSECURED LOA NS THROUGH VARIOUS BENAMI CONCERNS. THE AO FURTHER RELIED UPO N THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206(SC) AND HONBLE RAJASTHAN HI GH COURT IN CASE OF RAMESHWARLAL MALI VS. CIT 256 ITR 536(RAJ.) AMONG OTHERS. IN THIS REGARD, IT WAS SUBMITTED BY THE ASS ESSEE THAT IF THE ENTRIES AND MATERIAL ARE GATHERED BEHIND THE BA CK OF THE ASSESSEE AND IF THE AO PROPOSES TO ACT ON SUCH MATE RIAL AS HE MIGHT HAVE GATHERED AS A RESULT OF HIS PRIVATE ENQU IRIES, HE MUST DISCLOSE ALL SUCH MATERIAL TO THE ASSESSEE AND ALSO ALLOW THE CROSS EXAMINATION AND IF THIS IS NOT DONE, THE PRINCIPLES OF NATURAL JUSTICE STAND VIOLATED. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 26 2.9 IN LIGHT OF ABOVE DISCUSSIONS, IN OUR VIEW, THE CRUX OF THE ISSUE AT HAND IS THAT WHETHER THE PRINCIPLE OF NATU RAL JUSTICE STAND VIOLATED IN THE INSTANT CASE. IN OTHER WORDS, WHERE THE AO DOESNT WANT TO ACCEPT THE EXPLANATION OF THE ASSESSEE AND THE DOCUMENTATION FURNISHED REGARDING THE GENUINENESS O F THE LOAN TRANSACTION AND INSTEAD WANTS TO RELY UPON THE INFO RMATION INDEPENDENTLY RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT IN RESPECT OF INVESTIGATION CARRIED OUT AT A THIRD PARTY, CAN THE SAID INFORMATION BE USED AGAINST THE ASSESS EE WITHOUT SHARING SUCH INFORMATION WITH THE ASSESSEE AND ALLO WING AN OPPORTUNITY TO THE ASSESSEE TO EXAMINE SUCH INFORMA TION AND EXPLAIN ITS POSITION ESPECIALLY WHEN THE ASSESSEE H AS REQUESTED THE SAME TO THE ASSESSING OFFICER. 2.10 IN THIS REGARD, THE HONBLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT (1954) 26 ITR 7 75 (SC) HAS HELD THAT THE RULE OF LAW ON THIS SUBJECT HAS BEEN FAIRLY AND RIGHTLY STATED BY THE LAHORE HIGH COURT IN THE CASE OF SETH GURMUKH SINQH WHERE IT WAS STATED THAT WHILE PROCEE DING UNDER SUB-SECTION (3) OF SECTION 23, THE INCOME-TAX OFFIC ER, THOUGH NOT BOUND TO RELY ON EVIDENCE PRODUCED BY THE ASSESSEE AS HE CONSIDERS TO BE FALSE, YET IF HE PROPOSES TO MAKE A N ESTIMATE IN DISREGARD OF THAT EVIDENCE, HE SHOULD IN FAIRNESS D ISCLOSE TO THE ASSESSEE THE MATERIAL ON WHICH HE IS GOING TO FIND THAT ESTIMATE; AND THAT IN CASE HE PROPOSES TO USE AGAINST THE ASS ESSEE THE RESULT OF ANY PRIVATE INQUIRIES MADE BY HIM, HE MUS T COMMUNICATE TO THE ASSESSEE THE SUBSTANCE OF THE IN FORMATION SO PROPOSED TO BE UTILIZED TO SUCH AN EXTENT AS TO PUT THE ASSESSEE ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 27 IN POSSESSION OF FULL PARTICULARS OF THE CASE HE IS EXPECTED TO MEET AND THAT HE SHOULD FURTHER GIVE HIM AMPLE OPPORTUNI TY TO MEET IT. IT WAS HELD IN THAT CASE THAT IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNAL VIOLATED CERTAIN FUNDAMEN TAL RULES OF JUSTICE IN REACHING ITS CONCLUSIONS. FIRSTLY, IT DI D NOT DISCLOSE TO THE ASSESSEE WHAT INFORMATION HAD BEEN SUPPLIED TO IT B Y THE DEPARTMENTAL REPRESENTATIVE. NEXT, IT DID NOT GIVE ANY OPPORTUNITY TO THE COMPANY TO REBUT THE MATERIAL FURNISHED TO I T BY HIM, AND LASTLY, IT DECLINED TO TAKE ALL THE MATERIAL THAT T HE ASSESSEE WANTED TO PRODUCE IN SUPPORT OF ITS CASE. THE RESUL T IS THAT THE ASSESSEE HAD NOT HAD A FAIR HEARING. THE HONBLE S UPREME COURT IN CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206 (S C) HAS HELD THAT THE ITO IS NOT BOUND BY ANY TECHNICAL RULES O F THE LAW OF EVIDENCE. IT IS OPEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY PRIVATE ENQUIRY. BUT, IF HE DESI RES TO USE THE MATERIAL SO COLLECTED, THE ASSESSEE MUST BE INFORME D ABOUT THE MATERIAL AND GIVEN ADEQUATE OPPORTUNITY TO EXPLAIN IT. THE STATEMENTS MADE BY PRAVEEN JAIN AND GROUP WERE MATE RIAL ON WHICH THE IT AUTHORITIES COULD ACT PROVIDED THE MAT ERIAL WAS DISCLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RE NDER THEIR EXPLANATION IN THAT REGARD. THE HONBLE SUPREME CO URT IN CASE OF KISHINCHAND CHELLARAM V. CIT (1980) 125 ITR 713 (SC) HAS HELD THAT WHETHER THERE WAS ANY MATERIAL EVIDENCE TO JUSTIFY THE FINDINGS OF THE TRIBUNAL THAT THE AMOUNT OF RS. 1,0 7,350 SAID TO HAVE BEEN REMITTED BY TILOKCHAND FROM MADRAS REPRES ENTED THE UNDISCLOSED INCOME OF THE ASSESSEE. THE ONLY EVIDEN CE ON WHICH THE TRIBUNAL COULD RELY FOR THE PURPOSE OF ARRIVING AT THIS FINDING WAS THE LETTER, DATED 18-2-1955 SAID TO HAVE BEEN A DDRESSED BY THE MANAGER OF THE BANK TO THE ITO. NOW IT IS DIFFI CULT TO SEE HOW ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 28 THIS LETTER COULD AT ALL BE RELIED UPON BY THE TRIB UNAL AS A MATERIAL PIECE OF EVIDENCE SUPPORTIVE OF ITS FINDING. IN THE FIRST PLACE, THIS LETTER WAS NOT DISCLOSED TO THE ASSESSEE BY THE ITO AND EVEN THOUGH THE AAC REPRODUCED AN EXTRACT FROM IT IN HIS ORDER, HE DID NOT CARE TO PRODUCE IT BEFORE THE ASSESSEE OR GIVE A COPY OF IT TO THE ASSESSEE. THE SAME POSITION OBTAINED ALSO BEFOR E THE TRIBUNAL AND THE HIGH COURT AND IT WAS ONLY WHEN A SUPPLEMENTAL STATEMENT OF THE CASE WAS CALLED FOR BY THIS COURT BY ITS ORDER, DATED 16-8-1979 THAT, ACCORDING TO THE ITO, THIS LE TTER WAS TRACED BY HIM AND EVEN THEN IT WAS NOT SHOWN BY HIM TO THE ASSESSEE BUT IT WAS FORWARDED TO THE TRIBUNAL AND IT WAS FOR THE FIRST TIME AT THE HEARING BEFORE THE TRIBUNAL IN REGARD TO THE PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CASE THAT THIS LE TTER WAS SHOWN TO THE ASSESSEE. IT WILL, THEREFORE, BE SEEN THAT, EVEN IF WE ASSUME THAT THIS LETTER WAS IN FACT ADDRESSED BY TH E MANAGER OF THE BANK TO THE ITO, NO RELIANCE COULD BE PLACED UP ON IT, SINCE IT WAS NOT SHOWN TO THE ASSESSEE UNTIL AT THE STAGE OF PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CASE AND NO OP PORTUNITY TO CROSS EXAMINE THE MANAGER OF THE BANK COULD IN THE CIRCUMSTANCES BE SOUGHT OR AVAILED OF BY THE ASSESS EE. IT IS TRUE THAT THE PROCEEDINGS UNDER THE INCOME-TAX LAW ARE N OT GOVERNED BY THE STRICT RULES OF EVIDENCE AND, THEREFORE, IT MIGHT BE SAID THAT EVEN WITHOUT CALLING THE MANAGER OF THE BANK I N EVIDENCE TO PROVE THIS LETTER, IT COULD BE TAKEN INTO ACCOUNT A S EVIDENCE. BUT BEFORE THE INCOME-TAX AUTHORITIES COULD RELY UPON I T, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTUNITY TO CROSS EXAMINE THE MANAGER OF THE BAN K WITH REFERENCE TO THE STATEMENTS MADE BY HIM. ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 29 2.10 IN LIGHT OF ABOVE PROPOSITION IN LAW AND ESP ECIALLY TAKING INTO CONSIDERATION THE DECISION OF THE HONB LE SUPREME COURT IN CASE OF C. VASANTLAL & CO. (SUPRA) RELIED UPON BY THE REVENUE AND WHICH ACTUALLY SUPPORTS THE CASE OF THE ASSESSEE, IN THE INSTANT CASE, THE ASSESSMENT WAS COMPLETED BY T HE AO RELYING SOLELY ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, STATEMENT RECORDED U/S 132(4) OF SHRI BHANWAR LAL JAIN AND OTHERS, AND VARIOUS INCRIMINATING DOCUMENTARY EVIDE NCE FOUND FROM THE SEARCH AND SEIZURE CARRIED OUT BY INVESTIG ATION WING, MUMBAI ON THE SHRI BHANWARLAL JAIN GROUP ON 03.10.2 013. IT REMAINS UNDISPUTED THAT THE ASSESSEE WAS NEVER PROV IDED COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENTS OF S HRI BHANWARLAL JAIN AND VARIOUS PERSONS AND AN OPPORTUN ITY TO CROSS EXAMINE SUCH PERSONS THOUGH HE SPECIFICALLY ASKED F OR SUCH DOCUMENTS AND CROSS EXAMINATION. ON THE OTHER HAND, THE BURDEN WAS SOUGHT TO BE SHIFTED ON THE ASSESSEE BY THE A.O. IT IS CLEAR CASE WHERE THE PRINCIPLE OF NATURAL JUSTICE S TAND VIOLATED AND THE ADDITIONS MADE UNDER SECTION 68 THEREFORE A RE UNSUSTAINABLE IN THE EYE OF LAW AND WE HEREBY DELET E THE SAME. THE ORDER OF THE LD CIT(A) IS ACCORDINGLY CONFIRMED AND THE GROUND OF THE REVENUE IS DISMISSED. 11. IN THE INSTANT CASE, WE FIND THAT THE ASSESSME NT WAS AGAIN COMPLETED BY THE AO FOLLOWING THE SAME METHODOLOGY AS IN HIS EARLIER ORDER FOR AY 2012- 13 RELYING SOLELY ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, STATEMENT RECORDED U/S 132(4) OF SHRI BHANWARLAL JA IN AND OTHERS, AND VARIOUS INCRIMINATING DOCUMENTARY EVIDENCE FOUND FROM THE S EARCH AND SEIZURE CARRIED OUT BY INVESTIGATION WING, MUMBAI ON THE SH RI BHANWARLAL JAIN GROUP ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 30 ON 03.10.2013. IT REMAINS UNDISPUTED THAT THE ASSES SEE WAS NEVER PROVIDED COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMEN TS OF SHRI BHANWARLAL JAIN AND VARIOUS PERSONS AND AN OPPORTUNITY TO CROS S EXAMINE SUCH PERSONS THOUGH HE SPECIFICALLY ASKED FOR SUCH DOCUMENTS AND CROSS EXAMINATION. 12. IN LIGHT OF ABOVE, FOLLOWING OUR DETAIL REASON ING GIVEN IN ITA NO. 159/JP/16, IT IS CLEAR CASE WHERE THE PRINCIPLE OF NATURAL JUSTICE STAND VIOLATED AND THE ADDITIONS MADE UNDER SECTION 68 ARE NOT SUS TAINABLE IN THE EYE OF LAW. WE DONOT SEE ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN DELETING THE ADDITION OF RS. 1,00,00,000/- ON ACCOUNT OF UNSECUR ED LOANS TAKEN BY THE ASSESSEE FROM M/S ANKITA EXPORTS UNDER SECTION 68 O F THE ACT. FURTHER, WE ALSO CONFIRM THE DELETION OF THE ADDITION OF RS. 10 4,301/- ON ACCOUNT OF INTEREST PAID ON UNSECURED LOAN FROM ANKITA EXPORTS . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/11/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- /11/2017 *GANESH KR. VKNS'K DH IZFRFYFI VXZSF'KR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - DY. COMMISSIONER OF INCOME-TAX, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT - SHRI PRATEEK KOTHARI, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR ITA NO. 552/JP/2017 DY. COMMISSIONER OF INCOME-TAX, JAIPUR VS SHRI PRATEEK KOTHARI, JAIPUR 31 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 552/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.