DCIT, New Delhi V. M/s. Suncity Projects Pvt. Ltd., New Delhi

ITA 5740/DEL/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6782 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 06-06-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 25-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: ASHOK AGARWAL
• Keywords: Unexplained cash credit; Principle of natural justice; Opportunity of cross examination; Accommodation entries; Onus to prove; Retraction; Documents seized; reassessment proceedings
• Section: 143(3); 153A; 133(6); 147; 131; 68; 148; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SH. N. K. SAINI, AM AND MS. SUCHITRA KAMBLE , JM ITA NO. 5740/DEL/2013 : ASSTT. YEAR: 2003 - 04 DCIT, CENTRAL CIRCLE - 1, NEW DELHI VS M/S SUNCITY PROJECTS PVT. LTD., N - 49, 1 ST FLOOR, CONNAUGHT PLACE, NEW DELHI - 110001 (APPELLANT) (RESPONDENT) PAN NO. A A BC S8906K ASSESSEE BY : SH. VED JAIN , ADV. & SH. ASHOK AGARWAL, CA REVENUE BY : SH. S. S. RANA, CIT DR DATE OF HEARING : 23 . 04 .201 8 DATE OF PRONOUN CEMENT: 12 . 07 .201 8 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 02.08.2013 OF LD. CIT(A) - III, NEW DELHI. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.6,61,00,000/ - MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INCOME RECEIVED UNDER THE GARB OF ADVANCE FOR BOOKING FROM THE ENTRY OPERATOR COMPANIES UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. 2. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND AN Y/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 2 3 . FROM THE ABOVE GROUNDS, IT IS GATHERED THAT ONLY GRIEVANCE OF THE DEPARTMENT RELATES TO THE DELETION OF ADDITION OF RS.6.61 CRORES MADE BY THE AO U/S 68 OF THE IN COME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON ACCOUNT OF UNDISCLOSED INCOME RECEIVED UNDER THE GARB OF ADVANCE FOR BOOKING. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 02.12.2003 DECLARING AN INCOME OF RS .28,95,910/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM THE DIRECTOR OF INVESTIGATION WING, UNIT - 1, NEW DELHI THAT THE ASSESSEE COMPANY HAD RECEIVED ACCOMMODATION ENTRIES UNDER THE GUISE OF ADVANCE BOOKINGS. T HOSE INFORMATIONS WERE CONFRONTED TO THE ASSESSEE AND IN RESPONSE TO THIS, THE ASSESSEE AGREED TO DECLARE ADDITIONAL INCOME AND ALSO PAID THE TAX OF ABOUT RS.6 CRORES. HOWEVER, THE ASSESSEE RETRACTED FROM ITS STAND AND DID NOT OFFER THE ADDITIONAL INCOME I N THE RETURN OF INCOME AND CLAIMED REFUND OF THE ADDITIONAL TAXES PAID. THE AO INITIATED THE PROCEEDINGS U/S 147 OF THE ACT AND COMPLETED THE ASSESSMENT U/S 143(3)/147 OF THE ACT ON 28.12.2006 AFTER MAKING ADDITION OF RS.2,24,50,000/ - . THE ADDITIONS SO MAD E WERE DELETED BY THE LD. CIT(A) VIDE ORDER DATED 29.10.2007. AGAINST THE SAID ORDER, THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE ITAT WHEREIN VIDE ORDER DATED 06.01.2017 , THE VIEW TAKEN BY THE LD. CIT(A) WAS CONFIRMED AND THE APPEAL OF THE DEPARTMENT WA S DISMISSED IN ITA NO. 4997/DEL/2007. IN THE MEAN WHILE, A SEARCH U/S 132 OF THE ACT WAS CONDUCTED ON SUNCITY GROUP OF CASES ON 29.05.2008 AND AFTER THE SEARCH , PROCEEDINGS U/S 153A OF THE ACT WERE INITIATED VIDE NOTICE DATED 10.09.2009. IN RESPONSE, THE A SSESSEE FILED THE RETURN OF INCOME ON 09.03.2010 DECLARING AN INCOME OF RS.28,95,910/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO POINTED OUT THAT THE DOCUMENTS INVENTORIZED (AS PARTY SCE/ANNEXURE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 3 A - 1/PAGE 82) WERE FOUND WHICH REVEALED THAT THE A SSESSEE HAD RECEIVED AMOUNT FROM A GROUP OF COMPANIES WHICH WERE CONTROLLED AND REGULATED BY A COMMON DIRECTOR AND WERE HAVING COMMON ADDRESSES/COMMON BANK ACCOUNTS FROM THERE THEY OPERATED. THE AO POINTED OUT THAT THERE WERE AS MANY AS 73 SUCH COMPANIES F ROM WHOM THE ASSESSEE HAD RECEIVED AMOUNT IN DIFFERENT YEARS. THE NAME OF THOSE COMPANIES HAS BEEN REPRODUCED BY THE AO IN PARA 3 OF THE ASSESSMENT ORDER DATED 30.12.2010, FOR THE COST OF REPETITION, THE SAME IS NOT REPRODUCED HEREIN. THE AO ALSO POINTED O UT THAT THE DOCUMENT S SEIZED DURING THE COURSE OF SEARCH MADE ANOTHER REVELATION THAT THE ASSESSEE COMPANY HAD OBTAINED A SET OF DOCUMENTS FROM THOSE COMPANIES WHICH INCLUDED APPLICATION FROM, RECEIPT AGAINST MONEY RECEIVED, REQUEST FOR CANCELLATION LETTER AND ACKNOWLEDGEMENT OF THE RETURN OF INCOME. THE AO WAS OF THE VIEW THAT THE ASSESSEE HAD OBTAINED A SET OF DOCUMENT AT THE INITIAL STAGE WHICH INCLUDED APPLICATION FORM AS WELL AS REQUEST FOR CANCELLATION AND THAT THE ASSESSEE OBTAINED ACKNOWLEDGMENT OF RE TURN OF INCOME FROM THO SE COMPANIES WHICH HE NEVER PROCURED FROM ANY OF ITS REGULAR CUSTOMERS WHICH PROVED THAT THESE WERE NOTHING BUT PAPER COMPANIES INVOLVED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. THE AO MENTIONED THAT THE DETAILS OF THE C OMPANIES FROM WHOM THE ASSESSEE RECEIVED ADVANCE BOOKING AND THEIR BALANCE IN PARA 3.2 OF THE IMPUGNED ORDER, FOR THE COST OF REPETITION, THE SAME IS NOT REPRODUCED HEREIN. THE AO RECORDED THE STATEMENT OF DIRECTORS OF THE COMPANIES AND CAME TO THE CONCLUS ION THAT OWNER OF THOSE COMPANIES WERE ENTRY OPERATOR CONTROLLED BY SH. MAHESH GARG AND HIS ASSOCIATES WHOSE NAMES WERE AS FOLLOWS: (I) MAHESH GARG (II) RAJAN JASSAL (III) SURINDER PAL SINGH (IV) MUKESH GUPTA ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 4 5 . THE AO RECORDED THE STATEMENT OF THE AFOR ESAID FOUR PERSONS WHICH HAS BEEN MENTIONED AT PAGE NOS. 10 TO 14 OF THE ASSESSMENT ORDER. ON THE BASIS OF THE ABOVE, THE AO CAME TO THE CONCLUSION THAT THE INQUIRIES MADE BY THE DEPARTMENT REVEALED THE FOLLOWING: (I) THE 73 COMPANIES IN THE FIRST TABLE A RE CONTROLLED AND REGULATED BY SH . MAHESH GARG AND HIS ASSOCIATES'. THE COMPANIES HAVE BY AND LARGE COMMON ADDRESS AND ENQUIRIES MADE REVEAL THAT THE EXISTENCE OF THESE COMPANIES AT THE COMMON ADDRESS IS LIMITED TO USE THESE ADDRESSES AS POST BOX ONLY. (I I) THE ENQUIRES MADE BY THE INVESTIGATION WING REVEALED THAT THE PERSONS WHO WERE OPERATING THE SO CALLED SHARE APPLICANT COMPANIES WERE OF NO CREDITWORTHINESS AND THEY WERE ALSO NOT HAVING ANY WORTHWHILE SOURCE OF INCOME. THEY WERE CORPORATE ENTITIES F OR THE PURPOSE OF NAME SAKE ONLY AS THEY WERE NOT CARRYING OUT ANY ACTUAL BUSINESS ACTIVITY. THEY WERE BASICALLY THE PAPER ENTITIES FLOATED FOR THE PURPOSE OF ARRANGING ACCOMMODATION ENTRIES F OR OTHERS AND THE MODUS OPERANDI ADOPTED BY THEM HAS ALSO BEEN B ROUGHT TO THE NOTICE OF THE ASSESSEE. (III) SH . MAHESH GARG, SH . NARENDER JASSAL AND OTHERS WHO WERE MANAGING THESE ENTITIES HAD GIVEN A SWORN STATEMENT TO THE DEPARTMENT AND HAS CATEGORICALLY ADMITTED THAT THEY WERE ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES. MORE SO, THEY HAVE SPECIFICALLY NAMED THE SUNCITY GROUP TO WHOM ACCOMMODATION ENTRIES HAVE BEEN GIVEN. (IV) SH . MAHESH GARG & OTHERS HAVE ALSO EXPLAINED THE MODUS OPERANDI OF PROVIDING ACCOMMODATION ENTRIES TO SUNCITY GROUP. THEY HAVE ADMITTED THAT THEY HAVE A NUMBER OF ACCOUNTS IN THE SAME BANK/BRANCH OR IN DIFFERENT BRANCHES IN THE NAME OF COMPANIES, FIRMS & INDIVIDUALS. A PERSON INTERESTED IN INTRODUCING ITS UNDISCLOSED MONEY INTO HIS/HER/ITS BUSINESS APPROACHES THE ENTRY OPERA TOR AND HANDS OVER THE CASH, ALONG WITH COMMISSION AND TAKE CHEQUES/DD/PO. THE CASH IS DEPOSITED BY THE ENTRY OPERATOR IN A BANK ACCOUNT EITHER IN HIS OWN NAME OR IN THE NAME OF RELATIVE/FRIENDS OR OTHER PERSON ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 5 HIRED BY HIM FOR THE PURPOSE OF OPENING BANK ACCOUNT. THE OTHER PERSON, IN WHOSE NAME THE ACCOUNT IS OPENED, ONLY SIGNS THE BANK CHEQUE - BOOK AND HANDS OVER THE SAME TO THE MAIN ENTRY OPERATOR. THE ENTRY OPERATOR, IN TURN, ISSUES CHEQUES /DD/PO IN THE NAME OF THE BENEFICIARY EITHER FROM THE ACCOUNT IN WHICH THE CASH IS DEPOSITED OR AFTER MULTI - LAYERING AND FURTHER OBSCURING THE TRAIL BY ROTATING IT THROUGH OTHER ACCOUNT OR ACCOUNTS, WHICH ARE USED ONLY AS CONDUITS AND IN WHICH THE FUNDS ARE TRANSFERRED THROUGH CLEARING IN TWO OR MORE STAGES. 6 . THE AO OBSERVED THAT THERE WAS A POSITIVE EVIDENCE TO IMPEACH THE CREDITWORTHINESS OF THE ASSESSEE. HE ISSUED THE FOLLOWING SHOW - CAUSE DATED 26.08.2010 TO THE ASSESSEE: (I) PLEASE ALSO EXPLAIN AS TO HOW THESE COMPANIES CAME INTO YOUR CONTACT FOR BOOKING OF PL OTS/FLATS. (II) PLEASE CLEARLY SPECIFY AS TO WHETHER THESE BOOKING AMOUNTS WERE RECEIVED AFTER THE COMMENCEMENT OF THE PROJECT OR THESE WERE RECEIVED AT THE PRE - LAUNCH STAGE. (III) PLEASE FURNISH PHOTOCOPIES OF THE AGREEMENT AGAINST WHICH BOOKING AMOUNT HAS BEEN RECEIVED. (IV) YOU ARE REQUESTED TO PRODUCE THE PRINCIPAL OFFICER OF THESE COMPANIES ALONG WITH THEIR COPY OF LAST RETURN FILED, BOOKS OF ACCOUNTS AND THEIR BANK ACCOUNTS IN THE OFFICE SO AS TO EXAMINE THE GENUINENESS OF TRANSACTIONS AND CREDIT W ORTHINESS OF THE CREDITORS AS APPEARING IN YOUR BOOKS OF ACCOUNTS. 7. IN RESPONSE TO THE AFORESAID QUERIES, THE ASSESSEE FURNISHED THE LIST OF THE COMPANIES AND FILED THE REPLY DATED 15.12.2010 ALONGWITH THE DOCUMENTS. ON RECEIPT OF THE REPLY, THE AO CON DUCTED THE DETAILED ENQUIRY AND ISSUED SUMMONS U/S 131 OF THE ACT TO ALL THE COMPANIES. THE OUTCOME OF THE ENQUIRY HAS BEEN GIVEN BY THE AO IN PARA 3.6 OF THE IMPUGNED ORDER, FOR THE COST OF REPETITION, THE SAME IS NOT REPRODUCED HEREIN. THE AO ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 6 POINTED OUT THAT THE FOLLOWING FACTS CAME TO THE NOTICE AFTER THE DETAILED ENQUIRIES: (I) THE COMPANIES FROM WHOM THE ASSESSEE HAS SHOWN BOOKING AMOUNT ARE CONTROLLED BY ONE OR THE OTHER PERSON WHO ARE RENOWNED 'ENTRY OPERATORS'. THE COMPANIES OPERATED BY THEM ARE S IMPLY FOR NAME SAKE AS THEY ARE NOT CARRYING ON ANY BUSINESS ACTIVITY. THEY ARE PAPER ENTITIES FLOATED FOR THE PURPOSE OF ARRANGING ACCOMMODATION ENTRIES FOR OTHERS AND THE MODUS OPERANI ADOPTED BY THEM HAS BEEN DESCRIBED BY NONE OTHER THAN BY THE D IRECTOR S' OF THESE COMPANIES SH. MAHESH GARG AND OTHERS. (II) SH. MAHESH GARG, WHO IS MANAGING THESE ENTITIES HAD GIVEN A SWORN STATEMENT TO THE DEPARTMENT ON 25 - 09 - 2008 WHEREIN 'HE HAS CATEGORICALLY ADMITTED THAT HE IS ENGAGED IN THE ACTIVITY OF PROVIDING ACCOM MODATION ENTRIES AND NONE OF HIS COMPANIES IS CARRYING OUT ACTUAL BUSINESS. SH . MAHESH GARG HAS SPECIFICALLY CLARIFIED THAT THROUGH NUMBER OF COMPANIES CONTROLLED BY HIM HE HAS PROVIDED ACCOMMODATION ENTRIES TO M/S SUNCITY PROJECTS (P) LTD UNDER THE GARB O F ADVANCE FOR BOOKING OF PLOT . (III) AN EXTENSIVE EXERCISE HAS BEEN DONE TO TRACE OUT THESE COMPANIES ON THE ADDRESSES GIVEN BY THE ASSESSEE AND SUMMON HAS BEEN ISSUED. BUT IN RESPONSE TO THESE SUMMONS IT HAS BEEN SIMPLY FOUND THAT THESE ARE NON - EXISTENT COMPANIES AND THE ADDRESSES ARE NOTHING BUT A POSTAL FACILITY. (IV) THE FACTS OF THE PRESENT CASE HAS MUCH RELEVANCE BECAUSE THE CASE IS PECULIAR AS THE PERSON WHO IS MANAGING THE AFFAIRS OF THESE COMPANIES HAS ADMITTED BEFORE THE DEPARTMENT THAT HE WAS M ANAGING THESE COMPANIES ONLY FOR THE PURPOSE OF PROVIDING ACCOMM ODATION ENTRIES. STILL MORE THE SO CALLED MANAGING DIRECTORS OF THESE COMPANIES HAVE SPECIFICALLY VERIFIED THAT THE AMOUNT INTRODUCED BY M /S SUNCITY PROJECTS (P) LTD IN HIS BOOKS OF A/C IN THE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 7 NAME OF HIS COMPANIES AS ADVANCE FOR BOOKING OF PLOT IS IN LIEU OF CASH PROVIDED BY HIM AS ACCOMMODATION ENTRY. (V) FURTHER, ON ENQUIRIES IT HAS BEEN ESTABLISHED THAT THESE COMPANIES HAVE NO CREDITWORTHINESS NOR DO THEY HAVE ANY WORTHWHILE SOURCE OF INC OME. THEY ARE CORPORATE ENTITIES FOR THE PURPOSE OF NAME SAKE ONLY AND THEY ARE NOT ENGAGED IN ANY ACTUAL BUSINESS ACTIVITY. THESE ARE PAPER ENTITIES FLOATED FOR THE PURPOSE OF ARRANGING ACCOMMODATION ENTITIES TO OTHERS. THE BANK ACCOUNTS EXISTING IN THE N AME OF THESE COMPANIES ARE USED AS CONDUITS FOR THE PURPOSE OF A RRANGING ACCOMMODATION ENTRIES . THE CREDITWORTHINESS OF THESE COMPANIES HAVE BEEN EXAMINED AND THEY ARE FOUND COMPANIES WITHOUT ANY FINANCIAL STAND AND WITHOUT ARTY PROPER ACCOUNTS. THE COMPAN IES HAVE ADOPTED A UNIFIED MODUS OPERANDI. THEY HAVE OPENED A NUMBER OF BANK A/CS. THE CASH RECEIVED FROM THE BENEFICIARY IS DEPOSITED IN ONE BANK AND THEN IT IS ROTATED THROUGH NUMBER OF BANKS SO AS TO PROVIDE MULTI LAYERING WITH THE PURPOSE OF OBSCURING THE TRAIL OF ACTUAL CASH DEPOSIT. IT IS IN THIS PRECISE MANNER THAT THE BENEFICIARIES UNACCOUNTED MONEY SAILS THROUGH SEVERAL ACCOUNTS BEFORE TRIPPING BACK TO IT IN THE DISGUISE OF ADVANCE FOR BOOKING AMOUNT. (VI) THE ASSESSEE WAS MADE AWARE OF THE OUTCOM E OF THE INVESTIGATION OF THE DEPARTMENT AND HE WAS ASKED TO PRODUCE DIRECTOR OF THESE COMPANIES SO AS TO EXAMINE THEIR CREDITWORTHINESS BUT HE HAS FAILED TO DISCHARGE HIS ONUS. THE SUMMONS ISSUED TO THESE COMPANIES AT THE ADDRESSES GIVEN BY THE ASSESSEE H AVE BEEN RECEIVED BACK WITH THE POSTAL REMARKS THAT THE COMPANY DO NOT EXIST AT THE GIVEN ADDRESS. IN VIEW OF THESE FACTS, IT CANNOT BE SAID THAT THE IDENTITY AND THE CREDITWORTHINESS OF THE COMPANY HAS BEEN ESTABLISHED. (VII) IT IS A CASE WHERE ASSESSEE HAS ARRANGED ADVANCE AGAINST BOOKING THROUGH ENTRY OPERATORS. THE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 8 ASSESSEE COULD NOT ESTABLISH THE IDENTITY, CREDITWORTHINESS AS WELL AS GENUINENESS OF THE TRANSACTION. IN VIEW OF THESE FACTS, THE AMOUNT INTRODUCED BY THE ASSESSEE IS NOTHING BUT UNEXPLAINE D CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF INCOME TAX ACT, 1961. 8 . THE AO HELD THAT THE ONUS TO PROVE THE CREDIT ENTRY IN THE BOOKS OF ACCOUNTS WAS PRIMARILY ON THE ASSESSEE AND NOT ON THE DEPARTMENT AND THAT THE ASSESSEE HAD NOT FULLY DISCHARGED ITS ONUS TO PROVE THE CREDITWORTHINESS OF THE COMPANIES WHICH DID NOT HAVE ANY SOURCE OF PROFIT AND WERE NOT IN ANY ACTUAL BUSINESS. THEREFORE, MERELY ESTABLISHING THE IDENTITY OF THE CREDITOR WAS NOT ENOUGH. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: SHANKAR INDUSTRIES VS CIT (1978) 114 ITR 689 (CAL) C KANT & CO. VS CIT (1980) 126 ITR 63 (CAL) PRAKASH TEXTILE AGENCY VS CIT (1980) 121 ITR 890 (CAL) ORIENTAL WIRE INDUSTRIES P. LTD. VS CIT (1981) 131 ITR 688 (CAL) CIT VS UNITED COMMERCIAL & INDUSTRA L CO. (P) LTD. (1991) 187 ITR 596 (CAL) M.A. UNNEERI KUTTY VS CIT (1992) 198 ITR 147, 150 (KER) CIT VS PRECISION FINANCE PVT. LTD. (1994) 208 ITR 465, 470 (CAL) BHARATI P. LTD. VS CIT (1978) 111 ITR 951 (CAL) CIT VS W. J. WALKER & CO. (1979) 117 ITR 690, 6 94 (CAL) 9. THE AO FURTHER OBSERVED THAT THE ADDITION OF RS.2,24,50,000/ - EARLIER MADE IN THIS CASE ON THE SAME GROUND HAD BEEN DELETED BY THE LD. CIT(A) BECAUSE THE STATEMENT OF SH. M AHESH GARG WAS GENERAL AND NOW SH. MAHESH GARG HAD GIVEN A ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 9 SPECIFIC STA TEMENT WHEREIN HE HAD CONFIRMED THAT HE HAD GIVEN AN ACCOMMODATION ENTRY TO THE ASSESSEE. ACCORDINGLY, ADDITION OF RS.6,61,00,000/ - WAS MADE. 10. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: ...........Y OUR HO NOR IN THE PRESENT CASE THE SOLE BASIS OF ADDITION MADE BY THE AO IS THE INQUIRIES MADE BY THE INVESTIGATION WING WHEREIN STATEMENTS OF VARIOUS PERSONS WERE RECORDED AND WERE MADE AS A BASE FOR MAKING THE ADDITIONS. ALL THESE STATEMENTS HAVE NEVER BEEN PRO VIDED TO THE ASSESSEE NEITHER DURING THE COURSE OF INVESTIGATION PROCEEDINGS NOR DURING THE ASSESSMENT PROCEEDINGS. ALL INQUIRIES HAVE BEEN MADE AT THE BACK OF THE ASSESSEE AND HAVE BEEN COMMUNICATED TO THE ASSESSEE ONLY IN THE FORM OF ASSESSMENT ORDER. TH US THE ASSESSMENT PROCEEDINGS HAVE BEEN MADE IN SHEER VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE WITHOUT AFFORDING AN OPPORTUNITY TO THE APPELLANT TO EXPLAIN THE CLAIMS MADE BY VARIOUS PARTIES. THE ASSESSMENT HAS BEEN COMPLETED IN HASTE WITHOUT GIVING PROPER AND ADEQUATE OPPORTUNITY TO THE APPELLA NT COMPANY. IT IS A SETTLED LAW THAT ANY ASSESSMENT COMPLETED IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE IS BAD IN LAW AND LIABLE TO BE QUASHED ON THIS ACCOUNT. CROSS EXAMINATION - NOT PROVIDED TO THE ASSESS EE - ASSESSMENT BAD IN LAW YOUR HONOUR THE ID. AO HAS SOLELY RELIED ON THE REPORT OF THE INVESTIGATION WING ON THE BASIS OF WHICH HE HAS MADE VARIOUS ALLEGATION ON THE ASSESSEE. HE HAS ONLY AND ONLY CONSIDERED THE REPORT FOR MAKING THE DISALLOWANCE AND EX CEPT THAT HAS NOT BOTHERED TO CONDUCT ANY INQUIRY AGAINST THE APPELLANT IT SEEMS THAT SOME INQUIRIES WERE DONE BY THE INVESTIGATION WING ON THE BASIS OF STATEMENT OF SOME PARTY. IT IS CLEARLY EVIDENT THAT THESE WERE NOT RECORDED BY A.O, NOR THE SAID PEOPLE WERE PUT FOR CROSS EXAMINATION. ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 10 YOUR HONOUR THE STATEMENT OF ALL PERSONS (IF ANY) ON WHICH THE INVESTIGATION WING HAS PLACED RELIANCE, WAS RECORDED AT THE BACK OF THE ASSESSEE. NO CROSS EXAMINATION OF SAID PERSON WAS ALLOWED DURING THE REASSESSMENT PROCEE DINGS. THIS STATEMENT WAS A/SO NOT RECORDED BY THE A.O. THE A.O GOT A REPLY FROM THE ASSESSEE JUSTIFYING THE GENUINENESS OF THE TRANSACTION. DESPITE SPECIFIC ASSERTION BY THE ASSESSEE THAT ITS TRANSACTION ARE GENUINE, NO EFFORTS WERE MADE BY THE A.O TO GET THIS FACT CROSS VERIFIED FROM THESE THREE PERSONS ON WHOSE STATEMENTS THE ID. AO HAS RELIED. IT IS SURPRISING THAT THE A.O STRAIGHTAWAY RELIED UPON A STATEMENT RECORDED BY SOME ONE ELSE WITHOUT PUTTING TO TEST THIS STATEMENT FOR CROSS EXAMINATION BY ASSESS EE, NOR GETTING IT REASSERTED BEFORE HIMSELF. IT IS SURPRISING, A.O HAS ARBITRARY IGNORED THE DOCUMENTARY EVIDENCES IN SUPPORT OF CLAIMS MADE BY THE ASSESSEE BACKED BY EVERY PIECE OF INFORMATION RELEVANT TO PROVE THE GENUINENESS AND HAS MERELY RELIED UPON AN ORAL STATEMENT NOT BACKED OR CORROBORATED BY ANY MATERIAL. THE ISSUE HAS BEEN CONSIDERED BY VARIOUS AUTHORITIES AND THE RIGHT OF CROSS - EXAMINATION HAS BEEN CONSIDERED AN ESSENTIAL INGREDIENT OF REASONABLE OPPORTUNITY TO BE AFFORDED TO AN ASSESSEE. IN T HE CASE OF K.T. SHADULI VS STATE OF KERALA 29 STC 44, THE VIEW OF THE HON'BLE KERALA HIGH COURT WAS UPHELD BY THE HON'BTE SUPREME COURT. THIS DECISION IS REPORTED IN 39 STC 478. IN THE CASE OF VASANJI GHE L A & CO. VS COMMISSIONER OF SALES TAX 40 STC 544, T HE HON'BLE BOMBAY HIGH COURT HAS CONSIDERED VARIOUS AUTHORITIES AND HAS HELD AS UNDER: 'HELD, THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE DEPUTY COMMISSIONER WAS BAD ON THE GROUND OF NON - COMPLIANCE WITH THE PRINCIPLES OF NATURAL JUST ICE AND THE ORDER OF THE TRIBUNAL WHICH UPHELD THE ORDER OF THE DEPUTY COMMISSIONER WAS ALSO BAD ON THE SAME GROUND. ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 11 THE RULES OF NATURAL JUSTICE DO REQUIRE THAT NORMALLY SPEAKING, IF THE STATEMENT OF A PERSON IS INTENDED TO BE USED AS EVIDENCE AGAINST A P ARTY, IT MUST BE MADE AVAILABLE TO THE PARTY AGAINST WHOM IT IS INTENDED TO BE USED AND SUCH PARTY MUST BE GIVEN A FAIR OPPORTUNITY TO EXPLAIN THE SAME OR COMMENT ON IT. WHAT WOULD AMOUNT TO FAIR OPPORTUNITY WOULD DEPEND UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IF SUCH A PARTY MAKES A REQUEST TO BE ALLOWED TO CROSS - EXAMINE THE PERSON, WHO MADE THE STATEMENT, FOR THE PURPOSE OF MEETING THE STATEMENT OR WITH A VIEW TO COMMENTING THEREON, SUCH A REQUEST CANNOT, SAVE IN EXCEPTIONAL OR SPECIAL CASES, BE DE NIED WITHOUT VIOLATING THE PRINCIPLES OF NATURAL JUSTICE.' IN THAT CASE, THE ASSESSEE WAS CARRYING ON THE BUSINESS OF GROCERY. THEY HAD SHOWN SALES TO M/S KESHAVJI HIRJI. THESE SALES WERE DISALLOWED ON THE BASIS OF WRITTEN LETTER OF M/S KESHAVJI HIRJI AND HIS STATEMENT GIVEN TO COLLECTOR OF SALES - TAX. THE ASSESSEE REQUESTED THAT THE ORIGINAL LETTER SHOULD BE MADE AVAILABLE TO HIM. THE APPLICANTS WERE NOT PERMITTED TO READ THE ORIGINAL LETTER BUT THE GIST OF INFORMATION AVAILABLE WITH THE DEPARTMENT WAS COM MUNICATED TO THEM. THE STATEMENT OF KESHAVJI HIRJI WAS THAT THEY DID NOT AFFECT THE PURCHASES FROM THE ASSESSEE. HOWEVER, AFTER EXAMINING THE BOOKS OF ACCOUNT, THE DEPUTY COMMISSIONER UPHELD THE DISALLOWANCE. THE APPLICANTS PREFERRED REVISION AGAINST THE O RDER OF DEPUTY COMMISSIONER, WHICH WAS DISMISSED BY THE TRIBUNAL. IT WAS CONTENDED BEFORE THE TRIBUNAL THAT THE ORDER OF THE DEPUTY COMMISSIONER WAS BAD ON THE GROUND THAT THE RULES OF NATURAL JUSTICE HAD NOT BEEN COMPLIED WITH. THE TRIBUNAL OBSERVED THAT THE NECESSARY PORTION OF THE LETTER SENT BY KESHAVJI HAD BEEN MADE AVAILABLE TO THE APPLICANTS AND OPPORTUNITIES TO CROSS EXAMINATION WAS NOT NECESSARY. BEFORE THE HON'BLE HIGH COURT, IT WAS CONTENDED THAT IT WAS OBLIGATORY ON THE PART OF THE DEPUTY COMMIS SIONER TO OFFER KESHAVJI HIRJI FOR CROSS - EXAMINATION ALTHOUGH NO SPECIFIC REQUEST WAS MADE. THE HON'BLE COURT OBSERVED THAT THE DEMAND MADE BY THE APPLICANTS IN ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 12 REPLY TO THE QUESTIONNAIRE SUBMITTED TO THE ADDITIONAL COLLECTOR, REQUESTING FOR AN OPPORTUNITY TO READ THE LETTER OF KESHAVJI IN THE ORIGINAL, ALSO INDICATED THAT THE APPLICANTS MIGHT DESIRE TO CROSS - EXAMINE KESHAVJI HIRJI. IT WAS ALSO OBSERVED THAT THE DEMAND FOR CROSS - EXAMINATION OF KESHAVJI HIRJI WAS NOT GIVEN UP. UNDER THESE CIRCUMSTANCES, AFTE R PLACING RELIANCE ON THE DECISION OF DIVISION BENCH OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF PAHAR CHAND & SONS VS. STATE OF PUNJAB 30 STC 211 AND AFTER MAKING REFERENCE TO OTHER DECISIONS, THE HON'BLE COURT HELD THAT IT WAS THE DUTY OF THE DEPUTY CO MMISSIONER TO HAVE GIVEN AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE KESHAVJI HIRJI AND HIS FAILURE AMOUNTS TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. ON THIS BASIS, THE ORDER OF THE ID. COMMISSIONER WAS HELD BAD IN LAW AND THE ORDER OF THE TRIBUNA L WAS ALSO HELD BAD IN LAW FOR THE SAME REASON. RELIANCE IS ALSO PLACED ON THE DECISION OF DELHI BENCH OF ITAT IN THE CASE OF SATISH GUPTA VS. ITO RENDERED BY ITAT, DELHI BENCH SMC - IV IN ITA NO. 57 & 100/04 (ASSESSMENT YEAR 1995 - 96). IN THIS CASE ALSO, TH E ISSUE INVOLVED WAS AS TO WHETHER THE ASSESSING OFFICER WAS REQUIRED TO AFFORD AN OPPORTUNITY OF CROSS EXAMINATION OF SHRI ANAND PRAKASH. THIS STATEMENT WAS MADE BY THE ASSESSING OFFICER IN ADDITION TO OTHER EVIDENCE. THE ASSESSEE WAS NOT GIVEN OPPORTUNIT Y TO CROSS - EXAMINE DESPITE HAVING ASKED. THE ITAT, AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELARAM VS CIT, 125 ITR 713 DELETED THE ADDITION BY HOLDING THAT THE ASSESSING OFFICER'S FAILURE TO ALLOW CROSS - EXAMINATI ON VITIATES THE ENTIRE ADDITION. THE OBSERVATIONS OF THE BENCH IN THE ORDER DATED JULY 2, 2004 ARE AS UNDER: 'THE ASSESSEE FURTHER REQUESTED SPECIFICALLY TO THE ASSESSING OFFICER TO ALLOW HIM TO CROSS - EXAMINE ANAND PRAKASH. DESPITE THESE TWO REQUESTS, ANA ND PRAKASH WAS NOT ALLOWED TO BE CROSS - EXAMINED BY THE ASSESSEE, A POSITION WHICH IS NOT DISPUTED BEFORE ME BY THE DEPARTMENT. THE ENTIRE ADDITION IS BASED ON THE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 13 STATEMENT OF ANAND PRAKASH. AS RIGHTLY POINTED OUT ON BEHALF OF THE ASSESSEE, IF THIS STATEME NT IS IGNORED, THERE IS HARDLY ANY ANOTHER DIRECT EVIDENCE TO JUSTIFY THE ADDITION. THEREFORE, IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO AFFORD AN OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE ANAND PRAKASH. HE DID NOT DO SO. THE EFFECT OF THE ASSESSIN G OFFICER'S FAILURE TO DO SO IS THAT THE ENTIRE ADDITION IS BAD. IN THE CASE OF KISHAN CHAND CHELARAM VS. CIT 125 ITR 713, THE SUPREME COURT HELD THAT IF ANY EVIDENCE ITSELF USED AGAINST THE ASSESSEE NOT SHOWN TO HIM AND AN OPPORTUNITY TO CONTROVERT THE SA ME IS NOT GIVEN TO THE ASSESSEE THAT EVIDENCE SHALL NOT BE ADMISSIBLE IN SUPPORT OF THE ADDITION. IT WAS SPECIFICALLY HELD IN THAT CASE THAT THE INCOME - TAX AUTHORITIES ARE BOUND TO ACCEDE TO THE REQUEST FOR CROSS - EXAMINATION AND IF THEY DO NO DO SO, THE AD DITION CANNOT BE SUSTAINED IN THE ABSENCE OF ANY OTHER EVIDENCE IN SUPPORT OF THE SAME. THIS POSITION APPLIES SQUARELY TO THE PRESENT CASE. THE ADDITION SUFFERS FROM A BASIC INFIRMITY IN THE SENSE THAT IT HAS BEEN MADE WITHOUT ACCEPTING THE ASSESSEE'S REQU EST MADE AT LEAST TWICE BEFORE THE ASSESSING OFFICER, TO CROSS - EXAMINE ANAND PRAKASH. I, THEREFORE DELETE THE ADDITION.' IT HAS TO BE POINTED OUT THAT IT IS NOT THE CASE OF THE DEPARTMENT THAT THE PARTIES ON WHO'S STATEMENTS THE RELIANCE HAS BEEN PLACED W ERE NOT AVAILABLE OR IT WAS NOT WITHIN THE CONTROL OF THE ASSESSING OFFICER TO SUMMON THEM. THE POWERS OF THE ASSESSING OFFICER AS ARE AVAILABLE UNDER SECTION 131 OF INCOME - TAX ACT ARE VERY WIDE AND SUCH POWERS HAVE TO BE UTILIZED FOR MEETING OUT THE ENDS OF JUSTICE. IN FACT, THE ASSESSING OFFICER HAS EXERCISED THIS POWER FREQUENTLY AND ITS STATUTORY POWER CAN BE EXERCISED AGAINST THE ASSESSEE AND IT HAS TO BE EQUALLY EXAMINED FOR THE BENEFIT OF THE ASSESSEE MORE PARTICULARLY WHEN HE CRAVES THE CONCERNED AU THORITIES FOR DOING SO. THE DENIAL OF SUCH POWER FOR THE DISADVANTAGE OF THE ASSESSEE SHOWS GLARING CONDUCT OF BIAS AND UNFAIRNESS ON THE PART OF ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 14 THE AUTHORITY AND SUCH A CONDUCT IS AN ATTEMPT TO CAUSE INJUSTICE TO HIM........... 11. THE RELIANCE WAS PLA CED ON THE FOLLOWING CASE LAWS: M/S SMC SHARE BROKERS LIMITED VS DCI T CE NTRAL CIRCLE - 3 IN ITA NO. 250/DEL /2005 CIT VS. BIJU PATNAIK 190 I TR 396 (ORISSA) P.S ABDU L MAJEE VS. ACIT & STO 209 ITR 821 M.O. THOMAKUTTY VS. CIT 34 ITR 501 VASANTI LAL & CO. VS. CIT 45 ITR 206 (SC) STATE OF KERAL A VS. K.T. SHADULL AIR 19971627 (SC) KISHEN CHART CHELLARAM VS. CIT 125 ITR 713 S O NA ELECTRIC CO. VS. CIT 152 ITR 507(DEL) NARAYAN CHANDRA BAIDYA VS. CIT (1951) 20 ITR 207 VOI VS. T .R. VERMA (SC) (1959) 882 SETH GURUMUKH SINGH VS. CIT (1944) 12 ITR 393 CIT VS. EASTERN COMMERCIAL ENTERPRISES (1944) 210 ITR 104 (CAL) 12 . IT WAS FURTHER SUBMITTED AS UNDER: .. ADDITION OF RS.6,61,00,000/ - ON ACCOUNT OF ADVANCE AGAINST BOOKING . YOUR HONOR AT THE OUTSET IN THIS RESPECT IT IS IMPORTANT TO MENTION THAT THE ID. AO HAS WRONGLY TAKEN THE AMOUNTS RECEIVED FROM TWO PARTIES WHICH HAS LEAD TO AN EXCESS ADDITION OF RS. 28,00,000/ - . THE DETAIL IS AS UNDER: S.NO. NAME OF PARTY AMOUNT STATED BY AO AMOUNT ACTUALLY RECEIVED EXCESS ADDITION 1 D K ISPA T & TIMBER LIMITED 20,00,000 10,00,000 10,00,000 2 ASSOCIATED FINLEASE LIMITED 33,00,000 15,00,000 18,00,000 TOTAL 53,00,000 25,00,000 28,00,000 '.............THUS THE ABOVE STATED ADDITION OF R S.28,00,000/ - BEING A FACTUAL ERROR IS LIABLE TO BE DELETED AT THE OUTSET. AS REGARDS THE OTHER ADDITION DETAILED SUBMISSIONS ARE AS UNDER: ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 15 YOUR HONOR DURING THE YEAR UNDER CONSIDERATION THE APPELLANT RECEIVED AN AMOUNT OF RS.18,18,50,993/ - FROM 350 PARTIE S AS ADVANCE AGAINST SALE OF PLOTS. THERE WAS AN OPENING BALANCE OF RS.53,31,14,043/ - IN THE BOOKS OF THE ASSESSES UNDER THE SAME HEAD. DURING THE YEAR AN AMOUNT OF RS.4,89,0 2, 350/ - WAS REFUNDED BACK TO THE PARTIES WHO CANCELLED THEIR BOOKING DUE TO VARIOU S REASONS, AN AMOUNT OF RS.10,46,69,558/ - WAS BOOKED AS SALES AND THE REMAINING AMOUNT OF RS.55,93,93,128/ - WAS TAKEN TO THE BALANCE SHEET AS CLOSING BALANCE OF THE SAID ACCOUNT. THE AO ON THE BASIS OF INQUIRIES MADE BY THE INVESTIGATION WING AND THE STAT EMENTS RECORDED AT THE BACK OF THE ASSESSEE HAD DOUBTS WITH RESPECT TO THE GENUINENESS OF THE TRANSACTION WITH 32 PARTIES. THE AO ASKED THE APPELLANT TO FILE DETAILS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION EXECUTED WITH THE SAME. THE APPELLANT FILE D THE FOLLOWING DETAILS BEFORE THE AO: COPY OF CONFIRMATION OF ACCOUNT COPY OF BANK STATEMENT OF THE PARTIES COPY OF CONFIRMATION FROM THE SOURCES WHO GAVE MONEY TO PARTIES COPY OF ITR COPY OF APPLICATION FILED BY PARTIES COPY OF PROVISIONAL ALLOTMENT LET TER COPY OF REQUEST FOR CANCELLATION CIN DETAILS THE APPELLANT BY PRODUCING THE ABOVE STATED DOCUMENTS DULY DISCHARGED ITS ONUS OF PROVING THE GENUINENESS OF THE TRANSACTION EXECUTED BY IT. THE AO AFTER HAVING GOT THE ABOVE STATED DETAILS, IGNORING THE SA ME, MERELY RELYING ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND STATEMENTS RECORDED ON THE BACK OF THE ASSESSEE CONSID ERED AN AMOUNT OF RS.6,61,00,000 / - AS UNDISCLOSED INCOME OF THE ASSESSEE. THE SAID ACTION OF THE AO IS AGAINST THE FACTS OF THE CASE AND IN LAW. A DETAILED ANALYSIS OF ALLEGATIONS ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 16 MADE BY THE AO ALONG WITH THE FACTS OF THE CASE OF THE ASSESSEE IS BEING MADE HEREUNDER : YOUR HONOR AT PAGE 1 OF THE ORDER THE ID. AO HAS STATED THAT THE APPELLANT DURING AN INQUIRY BEFORE THE INVES TIGATION WING AGREED TO DECLARE AN ADDITIONAL INCOME OF RS.6 CRORES ON ACCOUNT OF ADVANCE AGAINST BOOKINGS AS THE PARTIES WHO HAD PAID THE SAID SUM TO THE ASSESSEE WERE NOT COMING FORWARD TO ADMIT THE SAME. THE SAID FINDING OF THE AO IS BAD ON THE FACTS OF THE CASE AS THE APPELLANT NEVER MADE ANY SUCH STATEMENT/DISCLOSURE BEFORE THE INVESTIGATION WING OF THE DEPARTMENT. IN THIS RESPECT IT IS PRAYED BEFORE YOU TO KINDLY CALL FOR THE RELEVANT RECORDS TO VERIFY THE FACTS OF THE CASE. THE AO HAS MADE AN ADDITI ON OF RS.6,61,00,000/ - ON ACCOUNT OF MONEY RECEIVED FROM 32 PARTIES DURING THE YEAR. AS REGARDS THE ADDITION OF RS.2,34,50,000/ - THE AO HAS HIMSELF STATED THAT A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED BY DCIT , CIRCLE 9(1), NEW DELHI WHO ADDED THE S AID AMOUNT TO THE INCOME OF THE APPELLANT AS UNEXPLAINED RECEIPTS. HE HAS THEN STATED THAT THE APPELLANT FILED AN APPEAL AGAINST THE SAID ORDER BEFORE THE HONORABLE CIT(A) WHO VIDE HIS ORDER DELETED THE ADDITION MADE BY THE THEN ID. AO. THUS YOUR HONOR THE ADDITION MADE BY THE PRESENT AO TO THE EXTENT OF RS.2,34,50,000/ - BEING ALREADY DELETED BY THE HONORABLE CIT(A) 12, NEW DELHI, AND THERE BEING NO NEW FINDING/EVIDENCE BEFORE THE ID. AO DURING THE ASSESSMENT PROCEEDINGS BEFORE HIM, IS LIABLE TO BE DELETED. IT IS JUST THAT THE AO IN THE PRESENT CASE HAS RELIED ON SOME STATEMENTS WHICH HAVE NEVER BEEN PROVIDED TO THE APPELLANT TO CONFRONT THE SAME. FAILING WHICH EVEN IF HE POSSESSED SOME VITAL INFORMATION SINCE THE SAME WAS NEVER PROVIDED TO THE APPELLANT THE ADDITIONS MADE ARE BAD ON THE FACTS OF THE CASE. THE ASSESSEE PRAYS BEFORE YOUR HONOR TO KINDLY PROVIDE AN OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT TO EXAMINE THE PERSONS WHO'S STATEMENTS HAVE BEEN ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 17 RECORDED, SO THAT THE TRUE FACTS OF THE CASE MAY KINDLY BE BROUGHT ON RECORD. YOUR HONOR IT IS MOST IMPORTANT TO STATE HERE THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF REAL ESTATE. THE AMOUNT RECEIVED FROM 32 PARTIES AS STATED BY THE AO WAS ON ACCOUNT OF ITS REGULAR BUSINESS TRANSACTIONS. IT IS NO T THE CASE THAT THE ASSESSEE HAS TAKEN SOME ACCOMMODATION ENTRY IN THE FORM OF SHARE CAPITAL/ UNSECURED LOANS WHICH WOULD MISS THE PROFIT AND LOSS ACCOUNT AND WOULD HELP THE ASSESSEE FORM ITS CAPITAL WITHOUT PAYING TAX. IN THE PRESENT CASE THE AMOUNT HAS B EEN RECEIVED ON ACCOUNT OF BOOKINGS AGAINST FLATS AND THE SAME WAS DUE TO BE TAKEN TO THE CREDIT SIDE OF THE PROFIT AND LOSS ACCOUNT, IT IS IMPORTANT TO MENTION HERE THAT OUT OF THE TOTAL ADVANCE RECEIVED A SUM OF RS.10,46,69,558/ - HAS BEEN BOOKED AS INCOM E BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THUS THE ALLEGATIONS OF THE AO THAT THE ASSESSEE WAS INTENDING TO ROUTE ITS UNACCOUNTED MONEY IS BAD ON THE FACTS OF THE CASE AS THE AMOUNT RECEIVED AGAINST SALES (HAD IT NOT BEEN CANCELLED) WAS TO BE TAKEN TO THE CREDIT SIDE OF THE PROFIT AND LOSS ACCOUNT AS INCOME. IT IS FURTHER IMPORTANT TO STATE THAT THE ASSESSEE HAS DEALT WITH AROUND 350 PARTIES. IF SOME PARTIES OUT OF THE SAME CANCEL THEIR BOOKINGS ( WHICH IS A NORMAL TRADE ACTIVITY) IT CANNOT BE S AID THAT AMOUNT RECEIVED FROM THEM WAS ACCOMMODATION ENTRY. WHATEVER AMOUNT HAS BEEN RECEIVED FROM THESE PARTIES HAS BEEN THROUGH A PROPER BANKING CHANNEL. ALSO THE AMOUNT REFUNDED TO THESE PARTIES IS THROUGH A PROPER BANKING CHANNEL. THEN FROM WHERE THE C ASH COMPONENT (FORMING UNDISCLOSED INCOME OF THE APPELLANT) HAS COME OUT IS A FACT BEST KNOWN TO THE ASSESSING OFFICER. YOUR HONOR OUT OF THE TOTAL AMOUNT OF RS.633 LAKHS FROM THESE PARTIES AN AMOUNT OF RS.15 LAKHS HAS ALREADY BEEN REFUNDED BACK BY THE AS SESSEE EITHER DURING THE PREVIOUS YEAR OR IN LATER YEARS. ALSO THE REMAINING AMOUNT HAS BEEN RETURNED IN LATER YEARS. THE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 18 SAID FACT IN ITSELF SUGGESTS THAT WHAT HAS NOT REMAINED WITH THE ASSESSEE CANNOT BE CONSTRUED AS ITS INCOME. A DETAILED CHART DEPICTIN G THE PARTY WISE RECEIPT AND REFUND IS PLACED IN THE PAPER BOOK. A PERUSAL OF THE SAME WILL REVEAL THAT BY NO STRETCH OF IMAGINATION THE AMOUNT RECEIVED FROM THE SAID PARTIES CAN BE CONSIDERED AS INCOME OF THE APPELLANT. THESE ARE REGULAR TRADE PARTIES AND YOUR HONOR WILL ENDORSE THAT PROVISIONS OF SECTION 68 CANNOT BE APPLIED ON REGULAR TRADE CREDITORS/DEBTORS. YOUR HONOR THE AO IN PARA 3.1 OF HIS ORDER HAS STATED THAT DURING THE COURSE OF SEARCH CERTAIN DOCUMENTS INVENTORIZED AS PARTY SC E ANNEXURE A - 24, A25, A - 26 & A27 WERE FOUND AND SEIZED. THESE DOCUMENTS INCLUDED APPLICATION FORMS, RECEIPTS AGAINST MONEY RECEIVED, REQUEST FOR CANCELLATION, CANCELLATION LETTER AND ACKNOWLEDGMENT OF RETURN OF INCOME OF SOME OF THE COMPANIES OUT OF THESE 32 COMPANIES. THE AO ON GOING THROUGH THESE DOCUMENTS HAS REACHED A CONCLUSION THAT, THESE DOCUMENTS ARE FAKE AS THEY BELONG TO PAPER COMPANIES (AS ADMITTED BY VARIOUS PERSONS IN THEIR STATEMENTS). THESE DOCUMENTS ARE PLACED FOR YOUR KIND PERUSAL IN THE PAPER NOOK. YOUR HO NOR THE L D . AO HAS FAILED TO APPRECIATE THAT THESE DOCUMENTS GO TO THE ROOT OF THE CASE AND ESTABLISH BEYOND THE DOUBT THE GENUINENESS OF THE TRANSACTION EXECUTED BY THE APPELLANT. THE PRESENCE OF THESE DOCUMENTS DEPICT THAT THE ACTION OF THE ASSESSEE IN R ECEIVING MONEY AND THEN REFUNDING THE SAME ON CANCELLATION IS NOT AN AFTERTHOUGHT RATHER THE SAME WAS AN ACTUAL TRANSACTION. IT IS THEREFORE THESE DOCUMENTS WERE LYING AT ITS PREMISES. HAD THERE BEEN NO REFUND OF MONEY THESE DOCUMENTS WOULD NOT HAVE EXISTE D. AS REGARD THE ALLEGATION OF THE AO THAT THE ITR'S OF ONLY THESE 32 PARTIES WERE FOUND IT IS SUBMITTED THAT THE ID. AO HAS FAILED TO APPRECIATE THAT PROCEEDINGS UNDER SECTION 1 47 OF THE ACT WERE EXECUTED ON THE APPELLANT AND ALL THESE DETAILS WERE GATHER ED AT THAT TIME TO PROVE THE GENUINENESS OF THE TRANSACTIONS. THE ORDER U/S 147 WAS PASSED ON 28.12.2006 AND THE SEARCH WAS CONDUCTED ON ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 19 THE APPELLANT WAS ON 25.09.2008. THUS THE PRESENCE OF THESE DOCUMENTS (SPECIFICALLY ITR'S) WAS NOT INCIDENTAL RATHER TH E SAME WAS DUE TO A DETAILED EXERCISE BEING CARRIED BY THE ASSESSEE DURING THE PROCEEDINGS U/S 147 OF THE ACT . YOUR HONOR IT IS IMPORTANT TO MENTION HERE THAT OUT OF TH E TOTAL AMOUNT OF RS.6,33,00,000 / - RECEIVED FROM THESE 32 PARTIES AN AMOUNT OF RS.15,00 ,000/ - WAS REFUNDED TO THEM DURING THE YEAR ITSELF AND THE REMAINING AMOUNT OF RS.6,18,00,000/ - WAS REFUNDED IN LATER YEARS. THUS BY NO MEANS THE AMOUNT WHICH HAS BEEN PAID BACK CAN BE ADDED TO THE INCOME OF THE APPELLANT. YOUR HONOR THE AO IN PARA 3.3 & 3.4 HAVE STATED THE STATEMENTS RECORDED OF MR. MAHESH GARG, MR. RAJAN JASSAL, MR. SURENDRA PAL SINGH & MR. MUKESH GUPTA AND THE FINDINGS OF INVESTIGATION WIN G WITH RESPECT TO MODUS OPERANDI OF THESE PARTIES. SINCE THESE INFORMATION HAVE BEEN COLLECTED AT T HE BACK OF THE ASSESSEE AND THE ASSESSEE HAS NEVER BEEN CONFRONTED WITH THE SAME THE ACTION OF THE AO IN RELYING UPON THE SAME IS BAD IN LAW. IT IS THEREFORE PRAYED BEFORE YOU TO KINDLY PROVIDE AN OPPORTUNITY TO CROSS EXAMINE THE SAID PARTIES SO THAT THE T RUE FACTS OF THE CASE MAY BE BROUGHT ON RECORD. YOUR HONOR THERE AFTER THE AO IN PARA 3.5 HAS STATED THAT THE APPELLANT WAS ASKED TO PROVIDE CERTAIN DETAILS WITH RESPECT TO TRANSACTIONS WITH THE SAID PARTIES. HE HAS THEN ADMITTED THAT THE APPELLANT FILED ALL DETAILS AS ASKED BY HIM. THIS FACT IN ITSELF PROVES THAT THE APPELLANT HAS DISCHARGED ITS ONUS OF PROVING THE GENUINENESS OF THE TRANSACTION. YOUR HONOR THE AO THEREAFTER IN HIS ORDER HAS STATED THAT CERTAIN INQUIRIES WERE MADE BY HIM BY ISSUING NOTIC E U/S 131/133(6) OF THE ACT. HE HAS GIVEN A PARTY WISE ANALYSIS. AN ANALYSIS OF THE ALLEGATIONS MADE BY ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 20 THE AO AND WHY THE CONCLUSION DRAWN ON THE BASIS OF SAME IS BAD IN LAW IS AS UNDER: IT IS IMPORTANT TO MENTION HERE THAT THE ID. AO HAS NOT COMMENTED O N PARTIES ON WHO'S ACCOUNT THE ADDITIONS WERE MADE U/S 147 OF THE ACT. SINCE THESE ADDITIONS STAND ALREADY DELETE BY THE HONORABLE CIT(A) 12, NEW DELHI IT IS PRAYED BEFORE YOUR HONOR TO KINDLY DELETE THE SAME AS WELL. AS REGARD THE REMAINING PARTIES SINCE NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD NO ADDITION CAN BE MADE. THE AO HAS GIVEN A LIST OF 32 PARTIES AND HAS MADE FOLLOWING OBSERVATION: A) SUMMONS ISSUED TO SOME PARTIES RETURNED BACK ANSERVED: IN THIS RESPECT IT IS SUBMITTED THAT THE ASSESSEE PROV IDED SPECIFIC DETAILS OF ALL THE PARTIES WITH WHOM IT HAS DONE TRANSACTION IN THE FY 2002 - 03 I.E. 8 YEARS BEFORE THE PERIOD IN WHICH ASSESSMENT PROCEEDINGS WERE GOING ON. HAD AO INFORMED THE APPELLANT THAT THESE SUMMONS SENT TO THESE PARTIES RETURNED BACK UNSERVED APPELLANT WOULD HAVE TRIED ITS BEST TO COLLECT THE LATEST ADDRESSES AND PROVIDE THE SAME TO THE ASSESSING OFFICER. THE ACTION OF THE AO IN NOT CONTROVERTING THE APPELLANT WITH THE FACT THAT THE NOTICES RETURNED BACK UNSERVED IS AGAINST THE PRINCIP AL OF NATURAL JUSTICE AND THE ADVERSE INFERENCE DRAWN BY HIM IS BAD IN LAW . B) MAHESH GARG, RAJAN JA SSAL OWNED UP CERTAIN COMPANIES : IN THIS RESPECT IT IS SUBMITTED THAT THE STATEMENTS ALL THESE PERSONS WERE NEVER PROVIDED TO THE APPELLANT BY THE AO. A/SO THE REPORT OF INVESTIGATION WING WAS NEVER MADE AVAILABLE. THUS THE ACTION OF THE AO IN RELYING ON THESE STATEMENTS WITHOUT PROVIDING AN OPPORTUNITY TO CONTROVERT THE SAME IS BAD IN LAW . C) SUMMONS WERE SERVED BUT THE PARTIES DID NOT RESPOND : IN THIS R ESPECT IT IS SUBMITTED - THAT THE ASSESSEE HAVING PROVIDED THE ADDRESS AND THE SUMMONS ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 21 SENT TO PARTIES BEING SERVED, THE ONUS ON THE ASSESSEE GETS DISCHARGES. WHY THE SAID PARTIES DID NOT APPEAR BEFORE THE AO IS A FACT BEST KNOWN TO THESE PARTIES AND AO. THE ASSESSEE IS NOT IN REGULAR TOUCH WITH THESE PARTIES. FURTHER HAD THE AO INFORMED THE SAID FACT TO THE APPELLANT HE WOULD HAVE ENSURED THEIR PRESENCE. YOUR HONOR THE AO HAS MADE CERTAIN INVESTIGATION BUT HAS FAILED TO TAKE THE SAME TO A LOGICAL END. HE SH OULD HAVE APPRAISED THE APPELLANT ABOUT HIS FINDINGS IN THE INQUIRIES SO THAT THE APPELLANT COULD HAVE PROVIDED REASONABLE HELP AND EXPLANATION TO THE ANOMALIES NOTICED BY THE AO. THUS SINCE THE AO HAS NOT DISCHARGED HIS DUTIES PROPERLY THE APPELLANT CANNO T BE SAID TO HAVE NOT EXPLAINED THE GENUINENESS OF THE TRANSACTIONS EXECUTED BY IT. YOUR HONOR THE AO HAS THEN STATED THAT THE BANK ACCOUNTS AND BALANCE SHEETS OF ALL PARTIES DO NOT DEPICT THEIR CREDITWORTHINESS. IN THIS RESPECT IT IS SUBMITTED THAT THE A PPELLANT HAS SOLD ITS STOCK TO ALL THESE PARTIES. THEY ARE PART OF ITS REGULAR CUSTOMERS. NO ASSESSEE WOULD ASK HIS CUSTOMER ABOUT HIS CREDITWORTHINESS UNTIL AND UNLESS THEY PAY FOR THE PRODUCT OFFERED BY THE ASSESSEE. ALSO ANYONE NEVER KEEPS FULL DETAILS OF ITS CUSTOMERS. AS A BUSINESS ENTITY THE ASSESSEE RECEIVES MONEY AND SELLS ITS PRODUCTS. IN CASE OF REAL ESTATE TRANSACTIONS PEOPLE ENTER INTO NEWLY LAUNCHED PRODUCTS TO GET GOOD PRICE AND THEN A GOOD MARGIN AT A LATER STAGE. AT TIMES WHEN THEY ARE UNABL E TO MEET THE COMMITMENTS THE TRANSACTIONS ARE CANCELLED. THE SAME HAPPENED IN THE PRESENT CASE WHEREIN SINCE SOME PARTIES WERE UNABLE TO TAKE THESE TRANSACTIONS FORWARD THEY TOOK REFUND OF MONEY GIVEN TO THE ASSESSEE. THE FACT STATED BY THE AO THAT THESE PARTIES ARE NOT CREDITWORTHY SUPPORTS THEIR ACTION OF CANCELLING THE TRANSACTION AS THUS GOES IN FAVOR OF THE ASSESSEE. IT SHALL BE VERY IMPORTANT TO UNDERSTAND AT THIS STAGE THAT ASSESSEE HAS MADE BOOKINGS AGAINST SALE OF PLOTS AND HAS RECEIVED MONEY FOR THE SAME. THE SAID AMOUNT ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 22 WAS LYING IN THE ACCOUNT 'ADVANCE FROM CUSTOMERS'. TO THE EXTENT THE SALE WAS BOOKED THE AMOUNT WAS TRANSFERRED TO THE PROFIT AND LOSS ACCOUNT AND THE REMAINING AMOUNT FOR WHICH THE DEALS WERE CANCELLED WAS RETURNED BACK TO PARTI ES. FROM WHERE THE ISSUE OF UNDISCLOSED INCOME/ RECEIPTS HAS COME IS A FACT NOT KNOWN TO THE ASSESSEE. YOUR HONOR THE AO HAS SUMMARIZED HIS ALLEGATIONS IN PARA 3.8 OF THIS ORDER. A PERUSAL OF THE SAID SUMMARY REVEALS THAT THERE IS A PERSON RUNNING A RACKE T OF PROVIDING ACCOMMODATION ENTRIES WHO HAS ADMITTED TO HAVE DONE CERTAIN TRANSACTIONS WITH THE ASSESSEE COMPANY AND SINCE HE HAS STATED THAT HE PROVIDED ACCOMMODATION ENTRY THE AO BELIEVES THAT THE ASSESSEE HAS SOME UNACCOUNTED MONEY WHICH HAS BEEN ROUTE D THROUGH THIS PERSON. ALL THESE ALLEGATIONS WOULD HAVE COME TO REST HAD THE AO PROVIDED AN OPPORTUNITY TO THE APPELLANT TO CROSS EXAMINE THE SAID PERSON(S) OR THE AO BROUGHT FORWARD THESE FINDING BEFORE THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEED INGS. AO HAVING FAILED TO DO SO HAS ERRED ON FACTS AND IN LAW IN MAKING THE ADDITION. YOUR HONOUR IN VARIOUS JUDGMENTS DELIVERED BY NUMBER OF HIGH COURTS IT HAS BEEN HELD THAT AFTER HAVING RECEIVED ALL DETAILS FROM THE ASSESSEE IF THE ASSESSING OFFICER HA S NOT GONE BEYOND ISSUING NOTICES U/S 131 OF THE ACT TO THE CONCERNED PARTIES (I.E. HE HAS NOT CONDUCTED ANY INQUIRY EXCEPT ISSUING THE NOTICES) HE CANNOT REACH A CONCLUSION THAT THE CREDITS APPEARING IN THE BOOKS OF THE ASSESSEE ARE FAKE............ 13 . THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS. DIVINE LEASING & FINANCE LTD. 299 ITR 268 (DEL) CIT, ORISSA VS. ORISSA CORPORATION PVT . LTD. [1986] 159 ITR 78 (SC) SUMATI DAYAL V S. CI T - BANGALORE [1995] 214 ITR 801 (SC) CIT VS . VALUE CAPITAL SE RVICES (P) LTD. 307 ITR 334 (DELHI) JALAN TIMBER VS . CIT 223 ITR 11 (GAU) ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 23 ADDL. CIT BIHAR VS . HANUMAN PRASAD AGGARWAL 151 ITR 151 (PAT) CIT VS . KANNAN KUNHI 87 ITR 395 CIT VS. VALUE CAPITAL SERVICES PVT . LTD. 307 ITR 334 CIT VS. DEVINE LEASING AND FINANCE LTD. 299 ITR 268 14 . IT WAS FURTHER SUBMITTED AS UNDER: ..............YOUR HONOUR IN THIS REGARD IT IS ALSO TO MENTION THAT THE APPELLANT HAS FULLY COOPERATED WITH THE DEPARTMENT. THE APPELLANT PROVIDED ALL DETAILS WITH REGARD TO PARTIES FROM WHOM IT HAD ACCEPTED SHARE APPLICATION/ CAPITAL MONEY. YOUR HONOUR ONLY ISSUE WHICH DISTURBS THE ASSESSEE IS THAT EVERY TIME THE ID. AO HAS MADE SOME FINDING THAT HAS BEEN DONE BY HIM ON SOME ESTIMATES BASED ON HIS OWN WHIMS AND FANCIES. THE ID. AO HAS NOT BEEN ABLE TO GIVE A SINGLE CONCRETE FINDING WHICH COULD BE HELD AGAINST THE ASSESSEE IS DISALLOWING VARIOUS CLAIMS MADE BY IT. YOUR HONOUR WILL ENDORSE THAT HERE IT IS NOT THE CASE THAT THE APPELLANT DID NOT COOPERATE WITH THE DEPARTMENT IN PROVIDING VARIOUS DETAILS TO PROVE THE GENUINENESS OF THE TRANSACTION. THE APPELLANT PRODUCED ALL POSSIBLE DOCUMENTS BEFORE HIM. HAVING FILED ALL THE DETAILS THE ASSESSEE DISCHARGED IT ONUS OF PROVING THE TRANSACTION BEING GENUINE. NOW IT WAS THE DUTY OF THE REVENUE TO PROVE WITH SOME EVIDENCE THAT THE GENUINENESS OF THE TRANSACTION WAS NOT ESTABLISHED BY THE ASSESSEE. BUT SURPRISINGLY THE ID. AO DID NOT DISCHARGE HIS ONUS PROPERLY AS THE SAME CAN BE MADE OUT BY READING THE RELEVANT PORTION OF THE ASSESSMENT ORDER HAND - IN - HAND WIT H THE RECENT DECISION GIVEN BY THE DELHI HIGH COURT WHICH CLEARLY SAYS THAT IT IS THE DUTY OF REVENUE TO PROVE THAT THE MONEY DEPOSITED IN THE ACCOUNT OF SOME OTHER PARTY EMANATED FROM THE COFFERS OF THE ASSESSEE. THUS IT IS VERY CLEAR THAT THE ID. AO HAS FAILED TO DISCHARGE HIS LIABILITY AND IN ORDER TO JUST MAKE AN ADDITION HE HAS IGNORED THE PROVISIONS OF LAW AND VARIOUS JUDICIAL PRONOUNCEMENTS IN THIS REGARD AND MADE THE ADDITION WITH CLOSED EYES WHICH IS UNTENABLE IN THE EYES OF LAW AND THUS LIABLE TO BE DELETED. ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 24 YOUR HONOUR IT IS INTERESTING TO SEE THAT THE ID. AO HAS VERY EASILY DRAWN A CONCLUSION THAT THE MONEY RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS AS BOOKING ADVANCE WAS ITS OWN MONEY. HE HAS GROSSLY NEGLECTED THE FACT THAT THE BOOKS OF THE AP PELLANT COMPANY WERE DULY AUDITED BY A CHARTERED ACCOUNTANT WHO DID NOT GIVE ANY ADVERSE FINDING WITH REGARD TO THE GENUINENESS OF ITS CLAIM. ALSO THERE IS NO PROOF WHICH COMES OUT FROM THE BOOKS OF THE ASSESSEE WHICH SHOWS THAT MONEY RECEIVED BY IT FROM I TS SHARE APPLICANTS EMANATED FROM ITS OWN COFFERS. THE MOST IMPORTANT THING TO BE SEEN HERE IS THAT THE TRANSACTION TOOK NOTHING OUT OF THE COMPANY'S COFFERS, AND PUT NOTHING INTO THE SHAREHOLDERS' POCKETS AND THUS ON WHAT BASIS THE ID. AO DOUBTED THE GENU INENESS OF THE TRANSACTION IS BEYOND THE IMAGINATION OF THE ASSESSEE. YOUR HONOR IT IS THUS PRAYED BEFORE YOU TO KINDLY DELETE THE ADDITION MADE BY THE LD. AO AS THE SAME IS BAD ON THE FACTS OF THE CASE AND IN LAW .. 1 5 . THE LD. CIT(A) AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD CHALLENGED THE ADDITION ON THE GROUND THAT THE PRINCIPLES OF NATURAL JUSTICE WERE NOT ADHERED TO, AS THE STATEMENTS OF CERTAIN PERSONS WHICH WERE USED WITHOUT GIVING AN OPPORTUNITY TO CROSS EXAMINE. HE ASKED THE COMMENTS OF THE AO VIDE LETTER DATED 19.03.2013 WHICH READ AS UNDER: 'THE DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 01, JHANDEWALAN EXT., NEW DELHI. SUB; - APPEAL NO. 509/2010 - 11 IN THE CASE OF SUNCITY PROJECTS PVT. LTD. FOR THE ASSESSMENT YEAR 2003 - 04 - OUTSTANDING DEMAND - RS. 4,57,61,559 - REG. - ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 25 1 DURING THE APPELLATE PROCEEDINGS IN THE ABOVE MENTIONED CASE, THE APPELLANT HAS STATED THAT THE STATEMENTS OF MR. MAHESH GARG, MR. RAJ AN JASSAL, MR. SURINDER PAL SINGH AND MR . MUKESH GUPTA WHICH HAVE BEEN USED AGAINST THEM WERE COLLECTED AT THEIR BACK AND THEY WERE NOT GIVEN ANY OPPORTUNI TY TO CROSS EXAMINE, THUS PRINCIPLE OF NATURAL JUSTICE HAVE BEEN VIOLATED BEFORE MAKING AN ADDITION OF RS.6,61,00,000 ON ACCOUNT OF UNEXPLAINED CREDIT. IN THIS REGARD, YOU ARE REQUESTED TO PLEASE LET ME KNOW WHETHER THE ABOVE CONTENTION OF THE APPELLANT IS CORRECT OR NOT. IF THE STATEMENT AND CROSS EXAMINATION HAVE NOT BEEN GIVEN THEN THE SAME MAY PLEASE BE PROVIDED TO THE APPELLANT NOW AND NECE SSARY REPORT MAY BE SUBMITTED IN THIS REGARD. IN PARA 1 OF YOUR ASSE SSMENT ORDER YOU HAVE GIVEN THE EXTRACT OF THE STATEMENT RECORDED BEFORE DIT (INV), UNIT - 1, NEW DELHI WHICH STATES THAT THE APPELLANT HAS SURRENDERED A SUM OF RS.6 CRORES IN RESPECT OF AM OUNT INTRODUCED FOR THEIR GURGAON PROJECT. IN THIS REGARD, PLEASE SEND ME THE PHOTOCOPY OF THE STATEMENT OF THE APPELLANT, WHEREIN THEY HAVE SURRENDERED A SUM OF RS. 6 CRORES. SINCE IT IS A HIGH DEMAND APPEAL, THEREFORE, I WOULD REQUEST YOU TO SUBMIT THE REPORT BY 10.04.2013. (RAJESH TUTEJA) COMMISSIONER OF INCOME TAX (APPEALS) - III, NEW DELHI 16 . IN RESPONSE, THE AO VIDE LETTER DATED 07.06.2013 STATED AS UNDER: 'A KIND REFERENCE IS MADE TO YOUR OFFICE LETTER F.NO. CIT (A) - III/MISC./2012 - 13/422 DATED 19. 03.2013 AND SUBSEQUENT REMINDERS FOR SUBMISSION OF REPORT ON THE CONTENTIONS RAISED DURING THE COURSE OF PENDING APPELLATE PROCEEDINGS BEFORE YOUR HONOUR FOR THE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 26 ASSESSMENT YEAR 2003 - 04. ACCORDINGLY, THE CONTENTION - WISE REPORT IS AS UNDER: 1. THE CONTENTI ON OF THE APPELLANT THAT THE STATEMENTS OF MR . MAHESH GAR G, MR. RAJAN JASSA L, MR. SURINDER PAL SINGH AND MR. MUKESH GUPTA WHICH HAVE BEEN USED AGAINST THEM WERE COLLECTED AT THEIR BACK AND THEY WERE NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE, THUS PRINCIPL E OF NATURAL JUSTICE HAVE BEEN VIOLATED BEFORE MAKING AN ADDITION OF RS.6,61,00,000 ON ACCOUNT OF UNEXPLAINED CREDIT, IS ABSOLUTELY NOT CORRECT FOR THE FOLLOWING REASONS: I ) DURING THE COURSE OF SEARCH A DOCUMENT INVENTOR/SERF AS (PARTY SCE/ANNE XURE A1 /PA GE 8 2 WAS FOUND WHICH REVEALED THAT THE A SSESSEE RECEIVED AMOUNT FROM A GROUP OF COMPANIES WHICH ARE CONTROLLED AND REGULATED BY A COMMON DIRECTOR. ALL THESE COMPANIES HAVE BY AND LARGE COMMON ADDRESSES AND COMMON BANK A/CS FROM WHERE THEY OPERATE. THERE A RE AS MANY AS 73 SUCH COMPANIES FROM WHOM THE ASSESSEE HAD RECEIVED AMOUNT IN DIFFERENT YEARS. APART FROM THE ABOVE DOCUMENT, ANOTHER DOCUMENT INVENTORIED AS PARTY SCE ANNEXURE A - 24, A - 25, A - 26, A - 27 WAS FOUND AND SEIZED FROM THE PREMISES OF THE ASSESSEE. THIS DOCUMENT MADE ANOTHER REVELATION THAT THE COMPANY HAD OBTAINED A SET OF DOCUMENTS FROM THESE PAPER COMPANIES WHICH INCLUDES APPLICATION FORM, RECEIPT AGAINST MONEY RECEIVED, REQUEST FOR CANCELLATION, CANCELLATION LETTER AND ACKNOWLEDGMENT OF THE RETUR N OF INCOME OF THE PAPER COMPANIES. THUS, THE COMPANY HAS OBTAINED A SET OF DOCUMENT AT THE INITIAL STAGE WHICH INCLUDE APPLICATION FORM AS WELL AS REQUEST FOR CANCELLATION. ANOTHER SIGNIFICANT DOCUMENT IN THE SET IS COPY OF RETURN OF INCOME WHICH THE ASSE SSEE NEVER PROCURED FROM ANY OF ITS REGULAR CUSTOMERS. THE DOCUMENT FUR THER CONFIRMED THAT THESE ARE N OTHING BUT PAPER COMPANIES IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. ON THE BASIS OF ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 27 DOCUMENTS SEIZED DURING SEARCH, DETAILED ENQUIRY WAS CONDUC TED AND STATEMENT OF DIRECTORS' OF THESE COMPANIES WAS RECORDED. THE ENQUIRIES MADE AFTER THE SEARCH REVEALED THAT OWNER OF THESE COMPANIES IS 'ENTRY OPERATOR' CONTROLLED BY SHRI MAHESH GARG AND HIS ASSOCIATE S WHOSE NAMES ARE AS UNDER: ( I ) MAHESH GARG (II) RAJAN JASSAL (III) SURINDER PAL SIN GH (IV) MUKE SH GUPTA THE STATEMENT OF DIRECTORS' OF THESE COMPANIES WERE RECORDED ON OATH AND THE EXTRACT FROM THESE STATEMENT OF DIRECTORS' HAS BEEN GIVEN IN THE ASSESSM ENT ORDER UNDER SECTION 153A READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 DATED 30.12.2010. II) IN PARA 3.5 IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 DATED 30.12.2010, THE ASSESSING OFFI CER HAD MENTIONED AS UNDER: 'IT IS IN THIS BACKGROUND IT WAS EXPLAINED TO HIM THAT QUANTUM OF ONUS LIES UPON HIM TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS AND THE TRUE IDENTITY AND CREDITWORTHINESS OF THE ALLEGED APPLICANT. THERE IS POSITIVE EVIDEN CE TO IMPEACH THE CREDITWORTHINESS OF THE APPLICANT. IN THESE CIRCUMSTANCES, THE FOLLOWING SHOW - CAUSE DATED 26.08.2010 WAS ISSUED TO THE ASSESSEE: (I) PLEASE ALSO EXPLAIN AS TO HOW THESE COMPANIES CAME INTO YOUR CONTACT FOR BOOKING OF PLOTS/FLATS. (II) PL EASE CLEARLY SPECIFY AS TO WHETHER THESE BOOKING AMOUNTS WERE RECEIVED AFTER THE COMMENCEMENT OF THE PROJECT OR THESE WERE RECEIVED AT THE PRE - L AUNCH STAGE. ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 28 (III) PLEASE FURNISH PHOTOCOPIES OF THE AGREEMENT AGAINST WHICH BOOKING HAS BEEN RECEIVED. (IV) YOU ARE REQUESTED TO PRODUCE THE PRINCI PAL OFFICER OF THESE COMPANIES A LONGWITH THEIR COPY OF LAST RETURN FILED, BOOKS OF ACCOUNTS AND THEIR BANK ACCOUNTS IN THE OFFICE SO AS TO EXAMINE THE GENUINENESS OF TRANSACTIONS AND CREDIT WORTHINESS OF THE CREDITORS AS APPEARING IN YOUR BOOKS OF ACCOUNTS. III) FURTHER, IN PARA 3.8 (VI) OF THE SAID ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MENTIONED AS UNDER: 'THE ASSESSEE WAS MADE AWARE OF THE OUTCOME OF THE INVESTIGATION OF THE DEPARTME NT AND HE WA S ASKED TO PRODUCE DIRECTOR OF THESE, COMPANIES SO A S TO EXAMINE THEIR CREDITWORTHINESS BUT HE HAS FAILED TO DISCHARGE HIS ONUS. THE SUMMONS ISSUED TO THESE COMPANIES AT THE ADDRE SSES GIVEN BY THE '' ASSESSEE HAVE BEEN RECEIVED BACK WIT H THE POSTAL REMARKS THAT THE COMPANY DO NOT 'EXIST AT THE GIVEN ADDRESS. IN VIEW OF THESE FACTS, IT CANNOT BE SAID THAT THE IDENTITY AND THE CREDITWORTHINESS OF THE COMPANY HAS BEEN ESTABLISHED.' IV) THE BRIEF FACTS OF THE CASE AS GIVEN HEREINABOVE CLEAR LY AND CONCLUSIVELY ESTABLISH THAT THE ASSESSEE WAS MADE AWARE OF THE OUTCOME OF THE INVESTIGATION OF THE DEPARTMENT AND THE STATEMENTS OF MR. MAHESH GARG, MR. RAJAN JA SSAL, MR. SURINDER PAL SINGH AND MR. MUKESH GUPTA WHICH HAVE BEEN USED IN THE ASSESSMENT OF THE ASSESSEE COMPANY WERE GIVEN TO IT AND THE ASSESSEE COMPANY WAS ALSO GIVEN AN OPPORTUNITY TO EXAMINE/CROSS EXAMINE THEM AS THE ASSESSING OFFICER HAD VIDE SHOW - CAUSE DATED 26.08.2010 REQUESTED THE ASSES SEE COMPANY TO PRODUCE THE PRINCIPAL OFFICERS OF SAID COMPANIES OWNER OF WHICH IS 'ENTRY OPERATOR' CONTROLLED BY SHRI MAHESH GARG AND HIS ASSOCIATES, NAMELY, MAHESH GARG, RAJAN JASSAL, SURINDER PAL SINGH AND MUKESH GUPTA BUT THE ASSESSEE COM PANY ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 29 FAILED TO PRODUCE THESE PERSONS AND, THUS PRINCIPLE OF NATURAL JUSTICE HAVE PROPERLY BEEN FOLLOWED/OBSERVED BEFORE MAKING AN ADDITION OF RS.6,61,00,000 ON ACCOUNT OF UNEXPLAINED CREDIT HERE, IT IS RELEVANT TO MENTION THAT THE ASSESSEE COMPANY DID NOT RAISE ITS CONTENTION OF HAVING NOT GIVEN THE COPY OF STATEME NT A ND CROSS EXAMINATION DURING THE COURSE OF ENTIRE ASSESSMENT PROCEEDINGS WHICH PROVES BEYOND DOUBT THAT THE ASSESSING OFFICER HAD PROVIDED COPY OF STATEMENTS AND CROSS EXAMINATION TO THE AS SESSEE COMPANY AND IT IS AN AFTERTHOUGHT BY THE ASSESSEE COM PANY TO CONTROVERT THE FINDINGS OF THE ASSESSING OFFICER TO DEFRAUD THE REVENUE THAT IT WAS NOT GIVEN COPY OF STATEMENTS AND ANY OPPORTUNITY TO CROSS EXAMINE. IN VIEW OF THE CLEAR - CUT FACTS AND FINDINGS RECORDED BY THE ASSESSING OFFICER I N THE ASSESSMENT ORDER , THE SO - CALLED CONTENTIONS OF THE ASSESSEE RAISED BEFORE YOUR HONOUR ARE TOTALLY INCORRECT AND THE SAME REQUIRES TO BE REJECTED WITHOUT TAKING ANY COGNIZANCE THEREOF. 2. WITH REGARD TO MATTER RELATING TO PROVIDING THE PHOTOCOPY OF THE STATEMENT AS REFERR ED TO IN PARA - 1 OF THE ASSESSMENT ORDER, IT IS SUBMITTED THE MATTER IS OLD ONE AND THEREFORE, THE EFFORTS ARE BEING MADE TO LOCATE THE SAME. HOWEVER, I COULD LIKE TO SUBMIT THAT IT IS NOT RELEVANT TO THE PRESENT ASSESSMENT UNDER SECTION 153A READ WITH 143 (3).' 17 . IN RESPONSE TO THE AFORESAID REPORT OF THE AO, THE ASSESSEE FILED ITS REJOINDER WHICH READ AS UNDER: '..................IN POINT (IV) OF THE REMAND REPORT HE ALLEGED THAT STATEMENTS OF MR. MAHESH GARG, MR. RAJAN JA SSAL , MR. SURINDER PAL SINGH AND MR. MUKESH GUPTA WERE GIVEN TO THE ASSESSEE COMPANY AND OPPORTUNITY TO CROSS EXAMINE WAS ALSO ' PROVIDED VIDE THE SHOW CAUSE DATED 26/08/2010. IN THIS REGARD YOUR HONOURS ATTENTION IS DRAWN TO THE PAPER BOOK PAGE NO. 126 - 127 ON WHICH THE SAID SHOW' CAUSE NOTICE IS PLACED. ON PERUSAL OF - THE SAME YOUR HONOUR WILL NOTICE THAT THERE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 30 IS NO REFERENCE OF ANY STATEMENT OR OTHER SEIZED MATERIAL IN IT, HENCE THERE IS NO QUESTION OF PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION ARISES: FURTHER IN POINT NO. (II) OF THE REMAND REPORT THE ID. AO HAS REFERRED TO THE CONTENTS OF THE SHOW CAUSE ISSUED BY HIM. ON PERUSAL OF THE SAME YOUR HONOUR WILL NOTICE THAT THE ID. AO HAS SIMPLY ASKED THE ASSESSEE COMPANY TO PRODUCE THE PRINCIPAL OFFICER OF THE COMPANIES ALONG WITH THE IR ITR , BOOKS AND BANK STATEMENT SO THAT HE COULD EXAMINE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. YOUR HONOUR THE SAID STATEMENT OF THE ID. AO DOES NOT TANTAMOUNT TO PROVIDING THE OPPORTUNITY FOR CROSS EXAMINATION. IN FACT THE SA ID STATEMENT OF THE AO CLEARLY SHOWS THAT HE NEEDED THE PERSONAL ATTENDANCE OF THE DIRECTORS AND VARIOUS DOCUMENTS IN ORDER TO BEING THE ENQUIRY AND INVESTIGATION. FURTHER HE HAS NOT REFERRED TO ANY STATEMENT RECORDED ON OATH IN HIS SHOW CAUSE ON WHICH HE WAS EXPECTING THE REPLY/COMMENTS OF THE ASSESSEE COMPANY. YOUR HONOUR THE ID. AO IN THE REMAND HAS ALLEGED THAT THE VARIOUS STATEMENTS RECORDED ON OATH WERE DULY GIVEN TO THE ASSESSEE B UT HE HAS NOT REFERRED TO ANY DOCUMENTARY EVIDENCE IN THIS REGARD. IF THE SAID STATEMENTS WOULD HAVE ACTUALLY BEEN GIVEN BY THE AO TO THE A SSESSEE COMPANY THE N HE WOULD HAVE REFERRED TO HIS ORDER SHEET ENTRY OR SPEED POST RECORDS ETC TO DEPICT THE SAME. IN ABSENCE OF ANY DOCUMENTARY EVID ENCE, IT CAN BE CONCLUDED THAT THE ST ATEMENTS OF THE ALLEGED ENTRY OPERATOR AND HIS ASSOCIATES WERE RECORDED AT THE BACK OF THE ASSESSEE AND THE SAME WERE NEVER FORWARDED TO THE ASSESSEE. YOUR HONOUR THE ID. AO IN POINT NO. IV) OF HIS REMAND REPORT HAS ALSO ALLEGED THAT THE ASSESSEE COMPANY DID NOT RAISE ANY CONTENTION OF HAVING NOT GIVEN THE COPY OF STATEMENT AND CROSS EXAMINATION DURING THE COURSE OF ASSESSMENT. IN THIS REGARD, WE ARE TO SUBMIT THAT THE VERY FACT THAT THE STATEMENTS ON OATH WERE RECORDED WAS ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 31 NOT KNOWN TO THE ASSESSEE UNTIL THE ASSESSMENT WAS COMPLETED AND THE SAID FACT WAS RECORDED IN THE ASSESSMENT ORDER. THEREFORE THERE IS NO QUESTION OF ASKING FOR CROSS EXAMINATION IN RESPECT OF THE SAME. IN PARA 2 OF THE REMAND REPORT, THE ID. AO HAS STATED THAT THE MATTER OF PROVIDING THE PHOTOCOPY OF STATEMENT IS OLD ONE AND THEREFORE EFFORTS ARE BEING MADE TO LOCATE THE SAME. HE HAS FURTHER STATED THAT THE SAME IS NOT RELEVANT TO THE PRESENT ASSESSMENT U/S 153A R. W. S. 143(3). YOUR HONOUR THE SAID COMMENTS OF THE ID. AO CLEARLY SPEAKS HIS MIND AND THE FACTUAL POSITION OF THE AVAILABILITY OF CASE RECORDS WITH THE ID. AO. FROM THE SAID COMMENTS OF THE AO A CONCLUSION CAN EASILY BE DRAWN THAT THE ID. AO IS NOT HAVING ANY STATEMENT RECORDED IN HIS RECORD AND THIS BEING THE REASON THE SAME W ERE NEVER FORWARDED TO THE ASSESSEE. FURTHER THE COMMENT OF THE AO THAT SAID STATEMEN T S ARE NOT RELEVANT FOR THE ASSESSMENT COMPLETED UNDER SECTION 153A SHOWS THAT THE FACTS OF THE CASE ARE NOT CLEAR TO HIM AND STATEMENTS ETC. WERE NOT RECORDED BY HIM AND WERE MERELY APPLIED WITHOUT GOING THROUGH THE SAME. YOUR HONOUR FORM THE ABOVE COMMENTS OF THE ID. AO IT IS QUITE CLEAR THAT HE HAS ONLY REINSTATED HIS COMMENTS IN THE ASSESSMENT ORDER AND NOTHING NEW HAS BEEN BROUGHT ON RECORD. IN OUR WRITTEN SUBMISSION WE HAVE DEALT WITH EACH OF THE ISSUE SEPARATELY AND HAS MADE DETAILED SUBMISSION. IN THE REMAND REPORT THE ASSESSING OFFICER HAS NOT REBUTTED ANY OF THE CONTENTION AND THE SUBMISSION MADE BY US EXCEPT MAKING A GENERAL STATEMENT THAT FOLLOWING ADDITIONS WER E MADE GIVING PROPER JUSTIFICATION AND REASONING. THE ASSESSING OFFICER IN THE REMAND REPORT HAS NOT CONSIDERED THE SUBMISSION MADE BY US AND AFTER SUCH SUBMISSION WHY THESE ADDITIONS ARE STILL SUSTAINABLE. THE ASSESSING OFFICER HAS MERELY REITERATED THE A LLEGATIONS WHICH HE HAS LEVIED IN THE ASSESSMENT ORDER. WE FURTHER WISH TO REITERATE HERE IN THIS REJOINDER THAT IN PARA 3.1 OF THE SAID ORDER, THE ASSESSING OFFICER HAS ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 32 STATED THAT DOCUMENTS INVEN TORIZED AS PARTY SCE ANNEXURE A - 24, A - 25, A - 26 & A - 27 WHIC H WERE FOUND & SEIZED FROM ASSESSEE'S PREMISE REVEALS THAT THE COMPANY HAS OBTAINED A SET OF DOCUMENTS FROM THESE PAPER COMPANIES WHICH INCLUDES APPLICATI ON FORM, RECEIPT AGAINST MONEY RECEIVED, REQUEST FOR CANCELLATION, CANCELLATION LETTER AND ACKNOWLEDGE MENT OF THE RETURN OF INCOME OF PAPER COMPANIES. THUS, THE COMPANY HAS OBTAINED A SET OF DOCUMENTS AT THE INITIAL STAGE WHICH INCLUDE APPLICATION FROM AS WELL AS REQUEST FOR CANCELLATION, ANOTHER SIGNIFICANT DOCUMENT IN THE SET IS COPY OF RETURNS OF INCOME WHICH THE ASSESSES NEVER PROCURED FROM ANY OF ITS REGULAR CUSTOMERS. THE DOCUMENT FURTHER CONFIRMED THAT THESE ARE NOTHING BUT PAPER COMPANIES INVOLVED IN THE BUSINESS OF PROVIDING ENTRIES. THIS OBSERVATION OF THE ASSESSING OFFICER IS COMPLETELY WRONG AND AGAINST THE FACTS OF THE CASE. THE ASSESSING OFFICER FAILED TO APPRECIATE THE FACT THAT THE SEARCH & SEIZURE OPERATION IN WHICH THESE DOCUMENTS WERE SEIZED WERE CARRIED OUT ON 25.09.2008. THE ASSESSEE COMPANY'S CASE FOR ASST. YEAR 2003 - 04 WAS RE - OPENED U/ S 148 OF THE IT ACT, 1961 AND RE - ASSESSMENT WAS COMPLETED VIDED ORDER DATED 28.12.2006. THE DOCUMENTS SEIZED WERE NOTHING BUT COPY OF THOSE DOCUMENTS WHICH WERE FILED DURING THE COURSE OF THE SAID ASSESSMENT PROCEEDINGS WHICH WAS COMPLETED ON 28.12.2006. T HEREFORE, THESE DOCUMENTS WERE RIGHTLY FOUND AT ONE PLACE AT THE TIME OF SEARCH & SEIZURE OPERATION ON 25.09.08 AND THERE IS NOTHING ILLEGAL IN IT. THE CONCLUSION DRAWN BY THE ASSESSING OFFICER IS COMPLETELY OUT OF CONTEXT AND AGAINST THE FACTS OF THE CASE . THE ASSESSING OFFICER HAS WITHOUT ANY BASES CONCLUDED THAT THESE ARE NOTHING BUT PAPER COMPANIES. FURTHER I N PARA 3.3 OF THE SAID ORDER, THE ASSESSING OFFICER HAS STATED THAT ON THE BASIS OF DOCUMENTS SEIZED DURING SEARCH, DETAILED ENQUIRY WAS CONDUCTED AND STATEMENT OF DIRECTOR OF THESE COMPANIES WAS RECORDED. IN THIS CONTEXT IT IS SUBMITTED AS UNDE R : - ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 33 (A) THE FACT OF ANY ENQUIRY HAVING BEING MADE AND OUTCOME THEREOF WAS NEVER BROUGHT TO THE NOTICE OF THE ASSESSEE COMPANY. (B) THE FACT OF RECORDING OF STATEMENT WAS NEVER BROUGHT TO THE NOTICE OF THE ASSESSEE COMPANY. THE ASSESSEE COMPANY WAS NEITHER PROVIDED WITH THE COPY OF THE ALLEGED RECORDED STATEMENT TILL THE COMPLETION OF ASSESSMENT PR OCEEDINGS U/S 153A R.W.S. 143(3) OF THE IT. ACT, 1961 ON 30.12 .2010 NOR RIGHT TO CONFRONT WITH THE PERSONS WHOSE STATEMENT WAS RECORDED, WAS AFFORDED TO THE ASS ESSEE COMPANY. (C) THE ALLEGED STATEMENTS WERE NEITHER RECORDED IN THE PRESENCE OF ANY REPRESENTATIVE OF THE ASSESSEE COMPANY NOR ANY OPPORTUNITY WAS GIVEN T HEREAFTER TO CROSS EXAMINE THESE PERSONS OR REBUT THE CONTENTION THERE IN. IN VIEW OF THESE CIRCUMSTANCES THESE STATEMENTS CANNOT BE RELIED UPON AND NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE COMPANY ON THE BASIS OF THESE ALLEGED STATEMENTS. R ELIANCE ON THE STATEMENTS OF THIRD PARTIES WHO WERE NEVER EXAMIN ED BY THE ASSESSING OFFICER HIM SELF AND THAT TOO WITHOUT PROVIDING ANY OPPORTUNITY TO T HE ASSESSEE TO CROSS EXAMINE CAN NOT THE SUSTAINED IN LAW. IN THIS CONTEXT RELIANCE SHOULD BE MADE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS WHEREIN IT HAS BEEN HELD THAT BEFORE DRAWING ANY ADVERSE INFERENCE ON THE MATERIAL COLLECTED BEHIND THE BACK OF THE ASSESSEE, IT IS NECESSARY TO CONFORM IT WITH THE ASSESSEE FOR REBUTTAL. IN PARA 3.4 OF THE SAID ORDER, T HE ASSESSING OFFICER HAS OBSERVED THAT 73 COMPANIES GIVEN IN THE TABLE ARE CONTROLLED AND REGULATED BY SH. MAHESH GARG AND HIS ASSOCIATED. THIS OBSERVATION OF THE ASSESSING OFFICER IS INCORRECT AS IS EVIDENT FROM THE LIST OF COMPANIES GIVEN BY THESE PERSON S IN THEIR ALLEGED STATEMENT REPRODUCED IN THE ASSESSMENT ORDER ITSELF. A PERUSAL OF THE SAID LIST SHOWS THAT OUT OF 32 COMPANIES FROM WHOM ASSESSEE COMPANY RECEIVED ADVANCE AGAINST BOOKING DURING THE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 34 YEAR UNDER CONSIDERATION AND WHICH WERE ADDED TO ITS IN COME, ONLY 8 COMPANIES WERE BEING CONTROLLED/ REGULATED BY SH . MAHESH GARG AND HIS ASSOCIATES. OTHER COMPANIED WERE NOT IN ANY WAY RELATED TO THESE PERSONS. FURTHER IT IS IMPORTANT TO MENTION HER THAT THE ID. AO HAS NOT STATED ANYTHING ON THE MERITS OF TH E CASE. THE FACT THAT THE APPELLANT RECEIVED MONEY FROM VARIOUS PARTIES AND PAID THE SAME BACK IN LATER YEARS IS UNDISPUTED. THE PARTIES AS LISTED IN THE ASSESSMENT ORDER HAVE BEEN MARKED AT 1 TO 73 PARTIES. THE FOLLOWING CHART WILL ANALYZE THE FACTS CORRE CTLY WITH RESPECT TO VARIOUS PARTIES. A ) NOT COVERED BY STATEMENT & NOT ADDED IN ORIGINAL ASSESSMENT U/S 147/143(3) DT. 28/12/06 PARTIES AT SI. NO. 1, 4, 7, 9, 10, 13, 15, 18, 22, 26, 28, 30 & 37 OF THE TABLE GIVEN IN ASSESSMENT ORDER. B ) NOT COVERED BY STAT EMENT & NOT ADDED IN ORIGINAL ASSESSMENT U/S 147/143(3) DT. 28/12/06 AND ALSO INVESTOR TREATED AS GENUINE IN RE ASSESSMENT ORDER U/S 263/143(3) OF ASS. YR. 2002 - 03 DT. 28/3/13 PARTIES AT SI. NO. 3, 6, 8, 19, 31, 33 & 36 OF THE TABLE GIVEN IN ASSESSMENT O RDER. C ) NOT COVERED BY STATEMENT AND ALLOWED AS GENUINE IN TERMS OF C.I. T. (A) ORDER DATED 29/10/07 PARTIES AT SI. NO. 42, 43, 54 & 56 OF THE TABLE GIVEN IN ASSESSMENT ORDER. D ) COVERED BY STATEMENT BUT ALLOWED AS GENUINE IN TERMS OF C.I.T. (A) ORDER DAT ED 29/10/07 PARTIES AT SI. NO. 40, 46, 58, 60, 61, 63, 65 & 66 OF THE TABLE GIVEN IN ASSESSMENT ORDER. YOUR HONOR A PERUSAL OF THE ABOVE STATED SCHEDULE WILL CLEARLY DEPICT THAT THE ALLEGATIONS MADE BY THE AO ARE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 35 BAD ON THE FACTS OF THE CASE. OUT OF THE 32 PARTIES ON ACCOUNT OF WHICH ADDITION HAS BEEN MADE DURING THE YEAR UNDER CONSIDERATION 13 PARTIES ARE NOT COVERED BY STATEMENT & NO ADDITION MADE FOR RECEIPTS MADE FROM THEM IN ASSESSMENT U/S 147/143(3) DT. 28/12/06, 7 PARTIES ARE SUCH WHICH ARE NOT CO VERED BY STATEMENT & NO ADDITION MADE FOR RECEIPTS MADE FROM THEM IN ASSESSMENT U/S 147/143(3) DT. 28/12/06 AND ALSO INVESTOR TREATED AS GENUINE IN RE - ASSESSMENT ORDER U/S 263/143(3) OF ASS. YR. 2002 - 03 DT. 28/3/13, 4 PARTIES ARE NOT COVERED BY STATEMENT A ND ALLOWED AS GENUINE IN TERMS OF C.I.T. (A) ORDER DATED 29/10/07 AND REMAINING 8 PARTIES THROUGH ARE COVERED BY STATEMENT BUT ALREADY ALLOWED AS GENUINE IN TERMS OF C.I.T. (A) ORDER DATED 29/10/07. THUS THE PARTIES ON ACCOUNT OF WHICH ADDITIONS HAVE BEEN MADE BY THE AO, HAVING BEING ALREADY CONSIDERED AS GENUINE AND THERE BEING NO FRESH CORROBORATIVE EVIDENCE BEFORE THE AO THE ADDITION MADE BY HIM IS BAD ON THE FACTS OF THE CASE. WE FURTHER RELY ON OUR SUBMISSION FILED EARLIER IN THIS RESPECT ON THE MERITS OF THE CASE. IN VIEW OF THE ABOVE FACTS IT IS PRAYED THAT THE ASSESSMENT ORDER FRAMED UNDER SECTION 153A BE QUASHED AND THE VARIOUS ADDITIONS AND DISALLOWANCES MADE BY THE AO BE DIRECTED TO BE DELETED............... 18 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE AO MADE THE ADDITION OF RS.6.61 CRORES (THOUGH AS PER APPELLANT RS.6.33 CRORES) AS ADVANCE AGAINST PROPERTIES FROM FOLLOWING 32 PARTIES: S.NO. NAME OF THE COMPANY AMOUNT 1. ABM OVERSEAS PVT. LTD. 19,50, 000 2. ASSOCIATED FINLEASE LTD. SEWAK HOUSE 33,00,000 3. BAY INLAND FINANCE PVT. LTD. 20,00,000 4. KIRTI ELECTRO SYSTEM PVT. LTD. 7, 00,000 5. SHRUTI FINSTOCK LTD. 15,00,000 6. SPARTON COMMERCE LTD. 5,00,000 ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 36 7. VISESH INFOSYSTEMS LTD, 27,00,000 8. A AP KI AGENCIES LTD. 25,00,000 9. ADMIRE CAPTRADE AND ORGANICS PVT. LTD. 10,00,000 10. AT ALL TIMES YOURS SECURITIES PVT. LTD. 25,00,000 11. BLOSSOM ADVERTISERS PVT. LTD. 25,00,000 12. DELTON EXIM PVT. LTD. 20,00,000 13. FOCUS INDUSTRIAL RESOURCES LTD. 25,00,000 14. GROMORE PORTFOLIO FUND LIMITED 10,00,000 15. JUNOON CAPITAL SERVICES PVT. LTD. 25,00,000 16. MICHEAL MERCHANDISE PVT. LTD. 35,00,000 17. PRAGATI FINSEC LTD. 25,00,000 18. RELIABLE SECURITIES LTD. 25,00,000 19. SAVERA COMMERCIAL ENTERPR ISES LTD. 35,00,000 20. VIVEK CYBERTECH PVT. LTD. 25,00,000 21. D.K. ISPAT AND TIMBER LTD. 20,00,000 22. ENPOL PVT. LTD. 7,00,000 23. NITI HOUSING DEVELOPMENT AND FINANCE CORP. LTD. 36,00,000 24. CHINTPURNI CREDITS AND LEASING PVT. LTD. 25,00,000 25 . PERFORMANCE TRADING AND INVESTMENT PVT. LTD. 15,00,000 26. RAHUL FINLEASE PVT. LTD. 25,00,000 27. SOBER ASSOCIATES PVT. LTD. 25,00,000 28. TECHNOCOM ASSOCIATES PVT. LTD. 24,00,000 29. FAIR 'N' SQUARE EXPORTS PVT. LTD. 5,00,000 30. SGC PUBLISH ING PVT. LTD. 15,00,000 31. SHATAARCHI FINANCE AND LEASING PVT. 17,50,000 32. TASHI CONTRACTORS PVT. LTD. 10,00,000 19 . HE FURTHER OBSERVED THAT THE ASSESSEE IN ORDER OF PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE ADVANCES FILED BEFORE THE AO VARIOUS DOCUMENTS VIZ. CONFIRMATION, INCOME TAX PARTICULARS, REQUEST APPLICATION, PROVISIONAL ALLOTMENT LETTER, CANCELLATION LETTER ETC. IN RESPECT OF ENTITIES AT S. NO. 1 TO 20 ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 37 DURING THE PROCEEDINGS U/S 153A OF THE ACT AND IN RESPECT OF ENTITIES A T S. NO. 21 TO 32 DURING THE EARLIER PROCEEDINGS U/S 147/148 OF THE ACT BUT THE AO DISREGARDED THE SAME AND HELD THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WERE DOUBTFUL AND THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES ON ACCOUN T OF FOLLOWING REASONS: (I) DURING THE POST SEARCH INVESTIGATION THE DEPARTMENT RECORDED THE STATEMENTS OF S/SH. MAHESH GARG, MUKESH GUPTA, RAJAN JASSAL AND SURINDER PAL SINGH AND THEY ADMITTED THAT THEY WERE GIVING ACCOMMODATION ENTRIES IN THE FORM 'ADVA NCE AGAINST PROPERTIES/PLOTS' THOUGH VARIOUS ENTITIES MANAGED/CONTROLLED BY THEM. (II) THE APPELLANT FAILED TO PRODUCE THE PRINCIPAL OFFICER/DIRECTORS OF THE 32 COMPANIES. (III) SUMMONS UNDER SECTION 131/NOTICES 133(6) WERE NOT SERVED AND WERE RECEIVED B ACK WITH THE REMARK 'NO SUCH COMPANY' OR 'LEFT' AND WHERE THE SUMMONS WERE SERVED, THOSE PARTIES DID NOT RESPONDED TO THE NOTICES ISSUED. (IV) DURING THE SEARCH ON APPELLANTS PREMISES ON 25.09.2008, (IN RESPECT OF CERTAIN ENTITIES) SET OF DOCUMENTS COMPRI SING OF APPLICATION FORM, RECEIPT AGAINST ADVANCE OF MONEY, REQUEST FOR CANCELLATION, CANCELLATION LETTER AND INCOME TAX RETURN PARTICULAR WERE FOUND. 20 . THE LD. CIT(A) OBSERVED THAT THE ASSESSEE FILED BEFORE HIM THE ORDER DATED 28.03.2013 PASSED U/S 14 3(3)/263 OF THE ACT PROCEEDINGS RELATING TO ASSESSMENT YEAR 2002 - 03 WHICH REVEALED THAT 22 ENTITIES HAD GIVEN ADVANCES IN ASSESSMENT YEAR 2002 - 03 ALSO AND THEY HAD RESPONDED U/S 133(6) OF THE ACT BEFORE THE AO AND FILED THE NECESSARY DOCUMENTS, AS A RESULT OF WHICH THE AO ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 38 HELD THAT THE ADVANCES FROM THOSE 22 ENTITIES TO BE GENUINE. THE LD. CIT(A) FURTHER OBSERVED THAT ENTITIES AT SL. NO. 1 TO 7 MENTIONED IN FORMER PART OF THIS ORDER HAD GIVEN ADVANCES IN ASSESSMENT YEAR 2002 - 03 AND IN THE YEAR UNDER CONSIDE RATION ALSO. THEREFORE, WHEN THE AO IN HIS SUBSEQUENT ORDER DATED 28.03.2013 HAD ACCEPTED THE GENUINENESS OF THE 7 ENTITIES IN ASSESSMENT YEAR 2002 - 03, THE AMOUNT RECEIVED FROM THOSE ENTITIES WERE GENUINE IN THE YEAR CONSIDERATION ALSO . W ITH REGARD TO THE ADVANCES RECEIVED FROM ENTITIES AT S L. NO. 21 TO 32 MENTIONED ABOVE, T HE LD. CIT(A) OBSERVED THAT THOSE ADVANCES WERE ALSO HELD TO BE NON - GENUINE IN THE EARLIER ASSESSMENT ORDER DATED 28.12.2006 PASSED U/S 143(3)/147 OF THE ACT BUT THE THEN CIT(A) - XII VIDE HIS ORDER DATED 24.10.2007 HELD THEM TO BE GENUINE. HOWEVER, THE AO AGAIN IN SECTION 153A OF THE ACT PROCEEDINGS HELD THE ADVANCES RECEIVED FROM THOSE PARTIES TO BE NON - GENUINE, PRIMARILY RELYING ON THE STATEMENT GIVEN BY FOUR PERSONS BUT THE OPPORTUNITY TO CROSS EXAMINE THOSE FOUR PERSONS HAD NOT BEEN PROVIDED TO THE ASSESSEE AND THAT THE AO THOUGH IN HIS REMAND REPORT DATED 07.06.2013 IN PARA (IV) STATED THAT THE AO DURING THE PROCEEDINGS U/S 153A OF THE ACT VIDE HIS SHOW - CAUSE DATED 26.08.2010 HAD PROVI DED THE COPY OF THE STATEMENTS OF ABOVE MENTIONED FOUR PERSONS AND HAD ALSO GIVEN AN OPPORTUNITY/CROSS EXAMINE THEM. BUT THE SHOW - CAUSE NOTICE DATED 26.08.2010 REVEALED THAT THERE WAS NO MENTION OF SUPPLY OF STATEMENTS ETC. IN THIS REGARD, THUS, APPARENTLY THE RULES OF NATURAL JUSTICE HAD NOT BEEN ADHERED TO. THE RELIANCE WAS PLACED ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF KISNICHAND CHELLARAM VS CIT (1980) 125 ITR 713 WHEREIN IT HAS ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 39 BEEN HELD THAT ANY ADDITION OR ASSESSMENT MADE BY THE A O ON THE BASIS OF ANY INFORMATION OR EVIDENCE FROM OTHER SOURCES WITHOUT GIVING AN OPPORTUNITY TO REBUT OR CROSS EXAMINE CANNOT BE SUSTAINED. A REFERENCE WAS ALSO MADE TO THE FOLLOWING CASE LAWS: MAHES GULABRAI JOSHI VS CIT (2005) 95 ITD 300 (MUM.) DHAKESW ARI COTTON MILLS LTD. VS CIT (1955) 27 ITR 126 (SC) C. VASANTLAL & CO. VS CIT (1962) 45 ITR 206 (SC) TIN BOX CO. VS CIT (2001) 116 TAXMAN 491 (SC) 21 . THE LD. CIT(A) HELD THAT IN THE PRESENT CASE STATEMENTS OF FOUR PERSONS WERE RECORDED AT THE BACK OF THE ASSESSEE AND HAD BEEN USED AGAINST IT WITHOUT GIVING AN OPPORTUNITY TO EXAMINE/CROSS EXAMINE. THEREFORE, THE RULES OF NATURAL JUSTICE HAD NOT BEEN ADHERED TO. HE ALSO OBSERVED THAT IF THE SUMMONS U/S 131 OF THE ACT AND NOTICES ISSUED U/S 133(6) OF THE ACT HAD NOT BEEN COMPLIED WITH, THIS BY ITSELF CANNOT BE THE GROUND TO COME TO THE CONCLUSION THAT THE MONEY RECEIVED FROM SUCH PARTIES WAS NOT A GENUINE ONE. PARTICULARLY WHEN, THE AO HAD NOT DONE ANYTHING TO IMPOSE THE PENALTY AND HAD NOT USED HIS POWER TO ENFORCE THEIR ATTENDANCE SO AS TO REACH TO THE TRUTH. THE LD . CIT(A) ALSO OBSERVED THAT NO DETAILS OF NON - SERVICE OF SUMMONS WERE PROVIDED TO THE ASSESSEE, SO THAT IT COULD HAVE GIVEN NEW ADDRESSES AND THAT THE SUMMONS WERE RECEIVED BACK FROM ENTITIES AT S L. NO. 1 TO 7 DURING THE PROCEEDINGS U/S 143(3)/153A OF THE ACT BUT LATER IN THE PROCEEDINGS U/S 263 OF THE ACT IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2002 - 03, THE SAME PARTIES HAVE DULY RESPONDED. THEREFORE, EVEN IF THE NOTICES/SUMMONS REMAINED UN SERVED OR RECEIVED BACK THIS BY ITSELF COULD NOT BE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 40 THE GROUND FOR DRAWING ADVERSE INFERENCE WITHOUT APPRECIATING THE OTHER DOCUMENTS VIZ. INCOME TAX DETAILS, CONFIRMATION ETC. FILED BY THE ASSESSEE BEFORE THE AO. A REFERENCE WAS MADE TO THE JUDGMENT OF TH E HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS DWARKADHISH INVESTMENT (P) LTD. IN ITA 911/2010 ORDER DATED 02.08.2010 WHEREIN IT HAS BEEN HELD THAT JUST BECAUSE THE CREDITOR/SHARE APPLICANT COULD NOT BE FOUND AT THE ADDRESS IF COULD NOT REVENUE ARRIVE TO INVOKE SECTION 68 OF THE ACT. THE LD. CIT(A) MENTIONED THAT THE AO IN HIS ORDER RELIED ON THE FACT THAT ON THE DATE OF SEARCH I.E. 25.09.2008, THE DEPARTMENT FOUND THE SET OF DOCUMENTS RELATING TO ENTITIES CONTROLLED MANAGED BY FOUR ALLEGED ENTRY OPERATORS, BUT THE SAME COULD NOT HAVE BEEN THE GROUND TO DRAW INFERENCE BECAUSE ALL THOSE DOCUMENTS WERE USED AND NEEDED BY THE ASSESSEE IN ITS PROCEEDINGS U/S 147/148 OF THE ACT WHICH CONCLUDED ON 28.12.2006 I.E. PRIOR TO THE DATE OF SEARCH. HE ALSO OBS ERVED THAT THE AO HAD JUST RELIED ON THE FINDINGS OF THE INVESTIGATION WING AND HAVE NOT MADE ANY EFFORTS TO VERIFY THE FACTS FURTHER AND TOOK STEPS TO ADHERE TO THE PRINCIPLES OF NATURAL JUSTICE. THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE SUPR EME COURT IN THE CASE OF CIT VS DIVINE LEASING AND FINANCE LTD. REPORTED AT 299 ITR 268. THE LD. CIT(A) ALSO MADE REFERENCE OF THE FOLLOWING CASE LAWS: CIT VS GOEL SONS GOLDEN ESTATE PVT. LTD. IN ITA 212/2012 ORDER DATED 11.04.2012 (DEL.) CIT VS FROSTAIR P VT. LTD. IN ITA 183/2002 ORDER DATED 24.08.2012 (DEL.) CHUHARMAL VS CIT (1988) 172 ITR 250 (SC) ACCORDINGLY, THE ADDITIONS MADE BY THE AO WERE DELETED. ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 41 22 . NOW THE DEPARTMENT IS IN APPEAL. THE LD. CIT DR STRONGLY SUPPORTED THE ORDER PASSED BY THE AO AND R EITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER DATED 30.12.2010. IT WAS FURTHER SUBMITTED THAT DIFFERENT DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH WHICH WERE INVENTORIZED AS PARTY SCE ANNEXURE A - 24, A - 25, A - 26 AND A - 27. THOSE DOCUMENTS REVE ALED THAT THE ASSESSEE COMPANY HAD OBTAINED A SET OF DOCUMENTS FROM THOSE PAPER COMPANIES WHICH INCLUDED APPLICATION FORM , RE CEIPT AGAINST MONEY RECEIVED, REQUEST FOR CANCELLATION, CANCELLATION LETTER AND ACKNOWLEDGMENT OF THE RETUR N OF INCOME OF THE PAPER COMPANIES . IT WAS FURTHER STATED THAT ANOTHER SET OF DOCUMENTS WAS, COPY OF RETURN OF INCOME WHICH THE ASSESSEE NEVER PROCURED FROM ANY OF ITS REGULAR CUSTOMER WHICH REVEALED THAT THE ASSESSEE HAD RECEIVED AMOUNT FROM A GROUP OF COMPANIES WHICH WERE CONTR OLLED AND REGULATED BY A COMMON DIRECTOR OF THOSE COMPANIES , HAD BY AND LARGE COMMON ADDRESS ES AND COMMON BANK ACCOUNT S FROM WHERE THEY OPERATED AND TH ERE WERE AS MANY AS 73 COMPANIES FROM WHOM THE ASSESSEE HAD RECEIVED THE AMOUNT IN DIFFERENT YEARS . IT WA S FURTHER STATED THAT THE REQUEST FOR CANCELLATION LETTERS SEIZED DURING THE COURSE OF SEARCH CONSTITUTED INCRIMINATING MATERIAL AGAINST THE ASSESSEE WHICH JUSTIFIED THE ADDITION MADE DURING THE COURSE OF ASSESSMENT U/S 153A OF THE ACT. IT WAS FURTHER STAT ED THAT THE STATEMENT ON OATH OF THE ASSESSEE WAS RECORDED U/S 131 OF THE ACT IN WHICH THE ASSESSEE ADMITTED THAT THE PERSONS WHO HAD BOOKED WERE NOT COMING FORWARD TO ADMIT THE SAME AND THAT THE COMPANY WAS WILLING TO OWN UP THE AMOUNTS BY BRINGING THE SA ME IN TO ITS BOOKS OF ACCOUNTS AND PAID TAXES TREATING IT AS ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 42 INCOME OF THE CURRENT YEAR AND ON THIS ACCOUNT, THE ASSESSEE COMPANY HAD PAID ABOUT RS.6 CRORES IN RESPECT OF AMOUNT INTRODUCED IN DELHI, GURGAON PROJECTS. THE LD. CIT DR ALSO SUBMITTED THAT NO RE TRACTION WAS FILED BY THE ASSESSEE TILL FILING OF RETURN OF INCOME WHICH PREVENTED THE DEPARTMENT FROM MAKING FURTHER INQUIRIES AND FOR RETRACTION TO BE VALID, THREAT OR COERCION HAS TO BE PROVED WHICH HAS NOT BEEN DONE IN THE PRESENT CASE. I T WAS STATED T HAT WHEN STATEMENT WAS MADE VOLUNTARY AND WAS NOT ALLEGED TO HAVE BEEN OBTAINED UNDER THREAT OR COERCION, ONUS WAS ON THE ASSESSEE TO PROVE THAT SAID DECLARATION WAS MADE UNDER ANY MISCONCEPTION OF FACTS AND SINCE THE ASSESSEE HAD NOT TAKEN ANY STEP TO REC TIFY ITS DECLARATION BEFORE AUTHORITIES IN FRONT OF WHOM SUCH DECLARATION WAS MADE, THERE WAS NO VALID REASON FOR RETRACTION OF THE SAME AFTER A GAP OF ABOUT TWO AND A HALF MONTHS. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CARPENTERS CLASSICS (EX IM) (P) LTD. VS DCIT 108 ITD 142 (ITAT BANG) E.N. GOPAKUMAR VS CIT (2016) 75 TAXMANN.COM 215 (KER.) CIT VS ST. FRANCIS CLAY DCOR TILES 385 ITR 624 (DEL. ) SMT. DAYAWANTI VS CIT 75 TAXMANN.COM 308 (DEL.) FILATEX INDIA LTD. VS CIT 49 TAXMANN.COM 465 (DEL.) C IT VS NIPUN BUILDERS & DEVELOPERS (P) LTD. 350 ITR 407 (DEL.) CIT VS NOVA PROMOTERS & FINLEASE (P) LTD. 342 ITR 169 (DEL.) CIT VS ULTRA MODERN EXPORTS (P.) LTD. 40 TAXMANN.COM 458 (DEL.) CIT VS FROSTAIR (P.) LTD. 26 TAXMANN.COM 11 (DEL.) CIT VS N R PORTFOL IO PVT. LTD. 29 TAXMANN.COM 291 (DEL.) CIT VS EMPIRE BUILTECH (P.) LTD. 366 ITR 110 (DEL.) CIT VS MAF ACADEMY (P.) LTD. 361 ITR 258 (DEL.) ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 43 CIT VS FOCUS EXPORTS (P.) LTD. (2015) 228 TAXMANN.COM 88 (DEL.) 23 . IT WAS ALSO STATED THAT THE LD. CIT(A) DELETE D THE ADDITION ON THE PRINCIPLES OF NATURAL JUSTICE BY IGNORING THE DOCUMENTS AND EVIDENCES AVAILABLE ON RECORD PARTICULARLY THE STATEMENTS OF THE DIRECTOR WHICH WERE CONTROVERTED TO THE ASSESSEE. THEREFORE, THE ADDITION MADE BY THE AO WAS FULLY JUSTIFIED AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE SAME. 24 . IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT IN THE PROCEEDINGS U/S 153A OF THE ACT , THE A O CON FRON TED THE ASSESSEE WITH THE DOCUMENT S FOUND DURING THE COURSE OF SEARCH AND THE ASSESSEE EXPLAINED THAT THOSE DOCUMENTS WERE NOT ANY INCRIMINATING MATERIAL BUT THE DETAILS OF THE ADVANCES RECEIVED AGAINST BOOKING AND THOSE DOCUMENTS WERE COLLECTED D URING THE REASSESSMENT PROCEEDINGS AND WERE THE BASIS OF THE REASSESSMENT PROCEEDINGS U/S 148 OF THE ACT FOR THE YEAR UNDER CONSIDERATION RELATING TO THE ASSESSEE. THE AO ARBITRARILY REJECTED THE EXPLANATION OF THE ASSESSEE AND MADE THE ADDITION OF RS.6.61 CRORES. HOWEVER, THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION, THE REMAND REPORT OF THE AO AND THE REPLY OF THE ASSESSEE , DELETED THE SAID ADDITION. IT WAS CONTENDED THAT THE ASSESSEE COMPANY HAD BEEN DEVELOPING PROJECT IN SECTOR - 54, GURGAON FOR WHICH I T HAD INCURRED A TOTAL COST OF RS.101.89 CRORES DURING THE PRECEDING YEAR AND HAD RECEIVED ADVANCES AGAINST BOOKING OF RS.78.20 CRORES. IT WAS FURTHER SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURTHER ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 44 INCURRED EXPENDITURE OF RS.1 32.83 CRORES ON THE PROJECT AND RECEIVED ADVANCES FROM CUSTOMERS AGAINST BOOKING OF FLATS OF RS.123.84 CRORES BUT THE AO HAD RAISED THE DOUBT IN RESPECT OF ADVANCES OF RS.6.61 CRORES ONLY. IT WAS STATED THAT IN THIS CASE, THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AND ALSO FOR THE PRECEDING ASSESSMENT YEAR 2002 - 03 WERE REOPENED ON THE BASIS OF THE ALLEGATION THAT THE ADVANCES AGAINST BOOKINGS WERE ACCOMMODATION ENTRIES AS WAS EVIDENT FROM THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT U/S 148 OF THE ACT AND WHICH ALSO STOOD CONFIRMED , THEREFORE, THE AO MADE THE ADDITIONS IN THE ORDER PASSED U/S 147 R.W.S. 143(3) OF THE ACT. HOWEVER, THE LD. CIT(A) DELETED THE ADDITIONS FOR BOTH THE ASSESSMENT YEARS VIDE COMMON ORDER DATED 29.10.2007 AGAINST WHICH THE DEPARTMENT CAME IN APPEAL BEFORE THE ITAT WHEREIN THE ISSUE WAS SET ASIDE VIDE INTERIM ORDER DATED 12.11.2009 TO THE AO WITH A DIRECTION TO CARRY OUT VERIFICATION OF THE ADVANCE S RECEIVED AGAINST BOOKINGS FROM RESPECTIVE AO, REGISTRAR OF COMPANIES AND BANK ACCOUNT S OF EACH OF THOSE COMPANIES WHO HAD GIVEN ADVANCES AND ALSO DIRECTED THAT THE DETAILS BE FURNISHED BEFORE THE ITAT. THEREAFTER, THE AO FURNISHED THE REMAND REPORT IN RESPECT OF VERIFICATION CARRIED OUT BY HIM VIDE LETTER DATED 12.11.2011, 12.0 7.2012 AND 20.07.2012. IT WAS ALSO POINTED OUT THAT WHEN THOSE VERIFICATIONS WERE CARRIED OUT BY THE AO AND ABOVE SAID REMAND REPORTS WERE FURNISHED BY THE AO, THE SEARCH ON 25.09.2008 HAD ALREADY TAKEN PLACE. IT WAS POINTED OUT THAT IN THE SAID REPORTS NO THING ADVERSE HAD COME AGAINST THE ASSESSEE. IT WAS CONTENDED THAT CONSEQUENT TO THE DIRECTIONS GIVEN BY THE ITAT IN ITS INTERIM ORDER DATED 12.11.2009 , T HE AO CARRIED OUT ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 45 THE VERIFICATIONS OF THE PAN/AVAILABILITY OF THE DATA/STATUS TO THE REGISTRAR OF THE COMPANIES AS WELL AS VERIFICATION FROM THE RESPECTIVE BANK ACCOUN T OF EACH OF THE COMPANIES. IN HIS REPORTS, THE AO EXCEPT POINTING OUT SOME ERRORS IN THE PAN AND NOT BEING ABLE TO OBTAIN IN SOME CASES FROM THE RESPECTIVE BANK ACCOUNT, NOTHING ADVERSE HAD BEEN BROUGHT ON RECORD. IT WAS CONTENDED THAT IN THE REPORT DATED 29.03.2012, THE AO HAD CONFIRMED THAT OUT OF THE 37 CASES PAN STANDS VERIFIED IN 28 CASES AND THAT IN RESPECT OF REMAINING CASES, THE ASSESSEE HAD CLARIFIED THE ERROR POINTING OUT BY THE AO ALONGWITH THE EVIDENCES. IT WAS EMPHASIZED THAT THE MISMATCH HAD OCCURRED BECAUSE IN SOME OF THE CASES, THE NAME OF THE COMPANY HAD CHANGED. IT WAS FURTHER CONTENDED THAT AFTER SUBMISSION OF THE CLARIFICATION BY THE ASSESSEE, NO FURTHER ERRORS WAS POINTED OUT BY THE AO WHO CARRIED OUT THE SIMILAR VERIFICATION FOR THE BANK ACCOUNT AND FURNISHED A DETAILED REPORT WHICH REVEALED THAT THE AMOUNTS WERE GOT VERIFIED EXCEPT IN A FEW CASES WHERE THE AO COULD NOT OBTAIN THE DETAILS FROM THE BANK. THUS, NOTHING ADVE RSE HAD COME OUT IN THE VERIFICATION CARRIED OUT BY THE AO. IT WAS STATED THAT THE ITAT AFTER CONSIDERING THE AFORESAID REPORTS UPHELD THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITIONS MADE IN THE ASSESSMENT PROCEEDINGS U/S 148 OF THE ACT FOR BOTH THE ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2002 - 03 AND 2003 - 04 , VIDE ORDER DATED 06.01.2017. IT WAS ALSO POINTED OUT THAT THE ASSESSMENT FOR THE PRECEDING ASSESSMENT YEAR 2002 - 03 WAS ALSO REOPENED ON 18.03.2009 , POST SEARCH ON THE SAME MATERIAL AND ALLEGATION U/S 148 OF THE ACT, SINCE THIS ASSESSMENT YEAR WAS BEYOND A PERIOD OF SIX ASSESSMENT YEARS AND HENCE OUTSIDE THE PURVIEW OF SECTION ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 46 153A OF THE ACT. IT WAS ALSO POINTED OUT THAT THE AO COMPLETED THE REASSESSMENT FOR THE ASSESSMENT YEAR 2002 - 03 VIDE ORDER D ATED 31.03.2009 WHEREBY NO ADVERSE VIEW WAS TAKEN REGARDING ADVANCES AGAINST BOOKING. HOWEVER, THE SAID ASSESSMENT ORDER WAS CANCELLED BY THE LD. CIT UNDER HIS POWER OF REVISION U/S 263 OF THE ACT VIDE ORDER DATED 29.03.2012, ON THE BASIS OF THAT THE AO HA D CARRIED OUT THE NECESSARY ENQUIRIES AND INVESTIGATION INTO THE GENUINENESS OF THE ADVANCES AGAINST BOOKINGS RECEIVED BY THE ASSESSEE. THEREAFTER, THE AO CARRIED OUT THE VERIFICATION AGAIN AND HAD REFRAMED THE ASSESSMENT AFTER MAKING DETAILED ENQUIRY AND HAD ACCEPTED THAT THE ADVANCES RECEIVED BY THE ASSESSEE WERE GENUINE VIDE ORDER DATED 28.03.2013. IT WAS ACCORDINGLY SUBMITTED THAT IT IS A CASE WHERE THE ASSESSEE HAD FURNISHED ALL THE DETAILS AND THE AO HAD CARRIED OUT EXTENSIVE VERIFICATION POST SEARCH AND NOTHING ADVERSE HAD COME AGAINST THE ASSESSEE. IT WAS REITERATED THAT THE ASSESSEE HAD FURNISHED ALL THE NECESSARY DETAILS WHICH INCLUDED CONFIRMATION, BANK STATEMENT, SOURCES FROM WHERE THE MONEY WAS PROVIDED, ITR, APPLICATION, ALLOTMENT LETTER ETC. B ASED ON WHICH THE AO HAD CARRIED OUT EXTENSIVE VERIFICATION AS IS EVIDENT FROM THE REPORT FURNISHED BY THE AO TO THE ITAT. AS REGARDS, THE ALLEGATION OF THE AO STATED IN THE ASSESSMENT ORDER IN PARAS 3.6 AND 3.7, IT WAS STATED THAT POST THESE ALLEGATIONS, THE AO HAD CARRIED OUT EXTENSIVE VERIFICATION AND SUBMITTED HIS REPORT S VIDE LETTER DATED 12.11.2011, 12.07.2012 AND 20.07.2012 ON VERIFICATION OF ITR DETAILS, PAN, ROC STATUS & BANK STATEMENTS AND AGAIN THE AO CARRIED OUT THE VERIFICATION ON THE DIRECTION OF THE LD. CIT IN THE ORDER DATED 29.03.2012 PASSED U/S 263 OF THE ACT WHILE PASSING THE REVISED ASSESSMENT ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 47 ORDER DATED 28.03.2013 WHICH REVEALED THAT AT LEAST 7 PARTIES WERE THE SAME AS WERE IN THE ASSESSMENT YEAR 2002 - 03 AND 12 PARTIES WERE THE SAME FOR WHICH THE ADDITIONS WERE MADE IN THE REASSESSMENT PROCEEDINGS U/S 148 OF THE ACT ON THE SAME ALLEGATION WHICH WERE DELETED BY THE ITAT AFTER VERI FICATION AND THE REMAINING PARTIES DID NOT PERTAIN TO ANY OF THE PERSON ON THE BASIS OF THE STATEMENT OF WHOM THE AO HAD RAISED DOUBT. THEREFORE, THE ASSESSEE DISCHARGED ITS ONUS . A S REGARDS TO IDENTITY, CREDITWORTHINESS AND THE GENUINENESS , I T WAS CONTENDED THAT THE LD. CIT(A) ALSO VIDE LETTER DATED 19.03.2013 HAD BROUGHT TO THE NOTICE OF THE AO, THE FACT THAT TH E STATEMENT OF CERTAIN PERSONS USED BY HIM WERE NOT PROVIDED AND NOR ANY CROSS EXAMINATION WERE GIVEN TO THE ASSESSEE. IN RESPONSE TO THE SAID LETTER, THE AO FURNISHED HIS REPLY VIDE LETTER DATED 07.06.2013, MAKING A REFERENCE TO THE SHOW - CAUSE NOTICE DATE D 26.08.2010 TO CONTEND THAT THE ASSESSEE WAS AWARE OF TH E OUTCOME OF THE INVESTIGATION D EPARTMENT AND THE STATEMENTS WERE GIVEN TO IT AND OPPORTUNITY TO CROSS EXAMINE WAS PROVIDED VIDE SHO W - CAUSE NOTICE DATED 26.08.2010. IT WAS FURTHER STATED THAT THE ASS ESSEE IN ITS REJOINDER INVITED ATTENTION OF THE LD. CIT(A) TO THE SHOW - CAUSE NOTICE DATED 26.08.2010 ON WHICH THE AO HAD RELIED, TO POINT OUT THAT IN THE SAID SHOW - CAUSE NOTICE, THERE WAS NO REFERENCE OF ANY STATEMENT OR ANY OTHER SEIZED MATERIAL AND HENCE , THERE WAS NO QUESTION OF PROVIDING OPPORTUNITY OF CROSS EXAMINATION AND THE LD. CIT(A) AFTER CONSIDERING THOSE FACTS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT IN THIS CASE, NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND HENCE THESE ADDITIONS WERE OTHERWISE UNSUSTAINABLE AS THE ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 48 ASSESSMENT FOR THIS YEAR HAD NOT BEEN ABATED. IT WAS ALSO STATED THAT THE MATERIAL REFERRED TO BE INCRIMINATING BY THE AO IN THE ASSESSMENT ORDER WAS NOT AN INCRIMINATING AS THE SE WERE THE DETAILS OF THE ADVANCE S AGAINST BOOKINGS AND THE SUPPORTING DOCUMENTS WERE THOSE WHICH WERE COLLECTED FOR THE PURPOSES OF THE REASSESSMENT PROCEEDINGS U/S 148 OF THE ACT. AS REGARDS TO THE STATEMENTS OF SH. MAHESH GARG AND OTHERS, IT WAS STATED THAT THOSE STATEMENTS WERE NOT OBTAINED DURING THE COURSE OF SEARCH ON THE ASSESSEE AND MOREOVER, THOSE STATEMENTS IN ANY CASE CANNOT BE CONSIDERED TO BE INCRIMINATING MATERIAL IN THE ABSENCE OF ANY INCRIMINATING DOCUMENT FOUND RELATING TO THE SEARCH. IT WAS SUBMITTED THAT THE PRESENT ASSESSMENT PROCEEDINGS WERE U/S 153A OF THE ACT AND IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, NO ADDITION COULD HAVE BEEN MADE. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS KABUL CHAWLA (2016) 380 ITR 573 (D EL.) PR. CIT VS BEST INFRASTRUCTURE (INDIA) PVT. LTD. (2017) 397 ITR 82 (DEL.) PR. CIT VS MEETA GUTGUTIA (2017) 395 ITR 526 25 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSMENT WAS FRAMED BY THE AO U/S 153A R.W.S. 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2003 - 04, WHICH WAS EARLIER ASSESSED BY THE AO IN REGULAR COURSE U/S 143(3) OF THE ACT AND REASSESSMENT WAS AGAIN FRAMED AFTER REOPENING THE ASSESSMENT U/S 148 OF THE ACT. THE SAID ASSESSMENT WAS ABATED. THE AO MADE THE ADDITION WHILE FRAMING THE ASSESSMENT U/S 153A OF THE ACT, HOWEVER, NO ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 49 INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. THE ADDITION WAS MADE ON THE BASIS OF THE ADVANCES RECEIVED BY THE ASSESSEE FROM CUSTOMERS AGAINST BOOKING OF FLATS. THOSE ADVANCES RECEIVED WERE ALREADY CONSIDERED WHILE FRAMING THE REGULAR ASSESSMENT OR REASSESSMENT BY THE AO, SO IT CANNOT BE SAID THAT ANY INCRIMINATING MATERIA L WAS FOUND DURING THE COURSE OF SEARCH. AS REGARDS TO THE STATEMENTS OF 4 PERSONS RECORDED BY THE AO POST SEARCH, IT CANNOT BE SAID THOSE WERE THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 26 . ON A SIMILAR ISSUE, THE HON BLE DELHI HIGH CO URT IN THE CASE OF CIT VS KABUL CHAWLA (2016) 380 ITR 573 (SUPRA) HELD AS UNDER: ''THE LEGAL POSITION THAT EMERGES ON A PERUSAL OF SECTION 153A AND SECTION 132 OF THE IN COME - TAX ACT, 1961, IS AS UNDER : (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON IN RESPECT OF WHOM SEARCH WAS CONDUCTED REQUIRING HIM TO FILE RETURNS FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE . (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS WILL HAVE TO BE COM PUTED BY THE ASSESSING OFFICERS AS AFRESH EXERCISE. (II I) THE ASSESSING OFFIC ER WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. THE ASSESSING OFFICER HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE SIX YEARS ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 50 IN SEPARATE ASSES SMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS, THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY, AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF THE SEIZED MATERIAL . (V) IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESS MENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATED PROCEEDINGS (I.E., THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS ' TO C OMPLETED ASSESSMENT PR OCEEDINGS. (VI) IN SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE R ECORD OF THE ASSESS ING OFFICER. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESS ING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS O F SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL AS SESSMENT. ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 51 IT HAS FURTHER BEEN HELD AS UNDER: ON THE DATE OF THE SEARCH THE ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED.' 27 . IN T HE PRESENT CASE ALSO, SINCE NO INCRIMINATING MATERIAL WAS FOUND AS THE ADV ANCE RECEIVED AGAINST BOOKING WERE ALREADY IN THE KNOWLEDGE OF THE DEPARTMENT IN REGULAR COURSE OF ASSESSMENT PROCEEDINGS AND THE STATEMENT OF MR. MAHESH GARG AND OTHERS WERE NOT OBT AINED DURING THE COURSE OF SEARCH, SO THOSE CAN ALSO NOT CONSIDERED AS INCRIMINATING MATERIAL. THEREFORE, THE ADDITION MADE BY THE AO U/S 153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL WAS NOT JUSTIFIED AND THE LD. CIT(A) RIGHTLY DELETED THE SAME. 28. ON MERIT ALSO, THE REGULAR RETURN WAS ACCEPTED BY THE AO U/S 143(1) OF THE ACT AND THEREAFTER THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT ON THE BASIS OF THE INFORMATION RECEIVED BY THE AO FROM THE INVESTIGATION WING OF THE DEPARTMENT THAT T HE ASSESSEE HAS RECEIVED ACCOMMODATION ENTRIES BYWAY OF ADVANCE BOOKING. THE AO MADE THE ADDITION S WHICH WERE DELETED BY THE LD. CIT(A) AND THE DEPARTMENT CARRIED THE MATTER TO THE ITAT WHEREIN THE DIRECTIONS WERE GIVEN TO THE LD. DR VIDE INTERIM ORDER AS MENTIONED IN PARA 9.3 OF THE ORDER DATED 06.01.2017 IN ITA NOS. 4996 & 4997/DEL/2007 FOR THE ASSESSMENT YEARS 2002 - 03 AND 2003 - 04 WHICH READ AS UNDER: 9.3 WHEN THE MATTER TRAVELLED TO THE ITAT, THE ITAT DIRECTED THE CIT(DR) TO CARRY OUT THE VERIFICATION A ND ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 52 IN THIS REGARD PASSED A DETAILED INTERIM ORDER AS UNDER: - THE LEARNED CIT (DR) IS DIRECTED TO FURNISH US THE FOLLOWING DETAILS FOR THE PURPOSE OF ASSISTING US IN LAYING DOWN THE FACTS IN ITS RIGHT PERSPECTIVE. 1) THE ASSESSEE HAS PROVIDED THE PAN OF THE PERSONS WHO HAVE GIVEN THE ADVANCES FOR PURCHASE OF PLOTS AT GURGAON SECTOR 54 PROJECTS. THE PAN IS TO BE VERIFIED WITH THE NAMES & ADDRESSES GIVEN. 2) THE LATEST INCOME TAX RETURN COPIES ALONGWITH THE BALANCE SHEETS AND SCHEDULES THERE TO IN RESP ECT OF ALL THE PERSONS WHOSE PAN HAVE BEEN GIVEN ARE TO BE PRODUCED. THE INCOME TAX RETURN COPIES FILED BY ALL THE SAID PAN HOLDERS FOR THE ASSESSMENT YEAR 2002 - 03 & 2003 - 04 ALONGWITH BALANCE SHEET AND SCHEDULE THERETO ARE TO BE PRODUCED. THE INCOME TAX RE TURNS OF ALL THE SAID PAN HOLDERS FOR THE ASSESSMENT YEAR 2005 - 06 & 2006 - 07 ARE ALSO TO BE PRODUCED. IN THE EVENT THAT INCOME TAX RETURNS ARE NOT AVAILABLE, COPIES OF THE RETURNS FILED FOR THOSE YEARS CALLED FOR MAY BE OBTAINED FROM THE REGISTRAR OF COMPAN IES AS ARE AVAILABLE WITH THE REGISTRAR OF COMPANIES. 3) IT IS NOTICED THAT THE ASSESSEE HAS RETURNED ADVANCES THROUGH ITS ACCOUNTS IN HDFC BANK LTD. AND HAS BEEN GIVEN IN THE CHART PROVIDED IN BRIEF IS ENCLOSED AS ANNEXURE A - I. THE RETURN OF THE DEPOSIT S IS TO BE VERIFIED IN CONNECTION WITH THE CHEQUE NUMBER WHICH HAVE ALSO BEEN PROVIDED AND YOU ARE DIRECTED TO INFORM US AS TO WHICH ACCOUNTS. THE NAMES OF ACCOUNTS HOLDERS AND THE BANK ACCOUNT AND PROVIDE COPIES OF THE BANK ACCOUNTS FOR THE PERIOD DURING WHICH THE CHEQUES HAVE BEEN ENCASHED AND THE STATEMENT OF THE FUNDS THERE FROM. THESE DETAILS ARE TO BE PRODUCED BEFORE US BEFORE THE NEXT DATE OF HEARING. COPIES OF ALL THE DETAILS ARE ALSO TO BE GIVEN TO THE ASSESSEE IMMEDIATELY ON BEING. ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 53 THE DETAILS ARE ALSO TO BE GIVEN BY 1 ST FEB. 2010 AND THE CASE IS ADJOURNED TO 15.2.2010. 2 9 . PURSUANT TO THE DIRECTIONS OF THE ITAT, THE AO CARRIED OUT THE VERIFICATION AND HAS SUBMITTED HIS REPORT WHICH IS MENTIONED IN PARAS 9.4 TO 9.7 OF THE SAID ORDER WHICH READ AS UNDER: 9.4 PURSUANT TO THE DIRECTIONS OF THE ITAT, THE AO HAS CARRIED OUT THE VERIFICATION AND HAS SUBMITTED HIS REPORT ON THE VERIFICATION OF PAN, AVAILABILITY OF THE DATA/ STATUS WITH THE REGISTRAR OF COMPANIES AS WELL AS ON VERIFICATION FROM T HE RESPECTIVE BANK ACCOUNT OF EACH OF THESE CREDITORS. ON GOING THROUGH THESE REPORTS, WE NOTE THAT EXCEPT POINTING OUT SOME ERRORS IN THE PAN, SOME COMPANIES INACTIVE WITH ROC AND AO NOT BEING ABLE TO OBTAIN DETAILS IN SOME CASES FROM THE RESPECTIVE BANK , NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD AGAINST THE ASSESSEE. IN THE REPORT DATED 29.03.2012, THE AO HAS CONFIRMED THAT PAN OF THE PARTIES HAVE BEEN VERIFIED EXCEPT IN SOME OF THE CASES. OUT OF 37 CASES, THE AO HAS POINTED OUT ERRORS IN RESPECT OF 9 CASES MEANING THEREBY THAT PAN STAND VERIFIED IN REST OF THE 28 CASES. THE ASSESSEE IN ITS REPLY HAS CLARIFIED EACH OF THE ERROR POINTED OUT BY THE AO IN THESE 9 CASES. THE ASSESSEE IN SUPPORT OF IT CLARIFICATION HAS SUBMITTED EVIDENCES IN THE FORM OF A SSESSMENT ORDER, COPY OF PAN AND THE PAYMENT OF CHALLAN, ETC. ON GOING THROUGH THIS REPORT OF AO AND THE REPLY OF THE ASSESSEE, WE NOTE THAT ERROR HAS OCCURRED IN BECAUSE IN SOME OF THE CASES THE NAME OF THE COMPANY HAS BEEN CHANGED AND THAT IS WHY THE AO HAS POINTED OUT ERROR. AFTER SUBMISSION OF THE CLARIFICATION WITH EVIDENCES BY THE ASSESSEE, NO FURTHER ERRORS HAVE BEEN POINTED OUT BY THE AO. THE LD. DR DURING THE COURSE OF HEARING ALSO COULD NOT REBUT THE REPLY OF THE ASSESSEE. 9.5 WE ALSO NOTE THA T ON THE ISSUE OF VERIFICATION FROM THE REGISTRAR OF COMPANIES, THE AO HAS ALSO SUBMITTED REPORT WHEREBY HE HAS POINTED OUT THAT SOME ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 54 OF THE COMPANIES ARE DORMANT AND SOME OF THE COMPANIES NAMES HAVE BEEN STRUCK OFF. THE ASSESSEE HAS FILED REPLY TO THIS REPORT OF THE AO. IT HAS BEEN CLARIFIED BY THE ASSESSEE THAT THESE COMPANIES WERE ACTIVE AT THE RELEVANT POINT OF TIME AND EVIDENCES IN SUPPORT THEREOF WERE ALSO FILED. LATER ON, AFTER 7 OR 8 YEARS SINCE THESE COMPANIES HAVE BECOME DORMANT OR INACTIVE AN D THE SAME CANNOT BE A GROUND TO DRAW ANY ADVERSE INFERENCE. 9.6 WE FURTHER FIND THAT THE AO HAS ALSO CARRIED OUT VERIFICATION FROM THE BANKERS OF THE CREDITORS AND A DETAILED REPORT HAS BEEN SUBMITTED ON THIS ASPECT ALSO. ON GOING THROUGH THIS REPORT WE NOTE THAT IN MANY CASES THE AO HAS GOT THE AMOUNT VERIFIED. IN MANY CASES AO HAS NOT GOT DETAILS FROM THE BANK. THE FACT REMAINS THAT NOTHING HAS COME OUT SO AS TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE IN THE VERIFICATION CARRIED OUT BY THE AO. O N THE CONTRARY THIS REPORT CONFIRMS THAT EXISTENCE OF SUCH CREDITORS AND THEIR BANK ACCOUNT. 9.7 WE ALSO NOTE THAT VIDE ANOTHER REPORT DATED 02.05.2012, THE AO HAS CONFIRMED THAT IT HAS OBTAINED INCOME TAX RETURNS FROM THE RESPECTIVE AOS OF THESE CREDIT ORS. IN THIS REPORT ALSO NOTHING ADVERSE HAS BEEN POINTED OUT. 30 . AFTER CONSIDERING THE AFORESAID REPORTS O F THE AO, THE ITAT DELETED THE ADDITION BY OBSERVING IN PARA 9.8 OF THE ORDER DATED 06.01.2017 AS UNDER: 9.8 KEEPING IN VIEW OF THE FACTS AND C IRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT IN THE PRESENT CASE NOT ONLY THE ASSESSEE HAS LED SUFFICIENT EVIDENCES IN SUPPORT OF ITS CONTENTION BUT ALSO IN THE DETAILED VERIFICATION CARRIED OUT BY THE AO NOTHING HAS COME OUT SO AS TO DRAW ADVERSE INF ERENCE AGAINST THE ASSESSEE. THE ASSESSEE HAS RECEIVED ADVANCES FOR BOOKING OF FLATS IN RESPECT OF THE PROJECT BEING DEVELOPED BY IT IN GURGAON. THE ASSESSEE HAS RECEIVED ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 55 NOT ONLY THESE ADVANCES FOR BOOKING OF FLATS BUT ALSO FROM OTHER CUSTOMERS AS IS EV IDENT FROM THE FIGURES STATED HEREINABOVE. THE ASSESSEE HAVING DULY ACCOUNTED FOR THESE ADVANCES AND HAVING SUBMITTED THE NECESSARY EVIDENCES IN SUPPORT THEREOF, WE ARE ALSO OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN MAKING THESE ADDITIONS IN THE HANDS OF THE ASSESSEE. IT IS A CASE WHERE THE ASSESSEE HAS LED SUFFICIENT EVIDENCES IN SUPPORT OF ITS CONTENTION AND ACCORDINGLY WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HEN CE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND AS A RESULT THEREOF, THE APPEALS FILED BY THE REVENUE STAND DISMISSED. 31 . THEREFORE, IT IS CLEAR THAT THE MATTER ATTAINED THE FINALITY RELATING TO THE ADVANCES RECEIVED FOR BOOKING OF FLATS AND IN THE MEANT IME, THE SEARCH TOOK PLACE ON 25.09.2008, CONSEQUENT TO THAT THE AO INITIATED THE PROCEEDINGS U/S 153A OF THE ACT AND MADE THE IMPUGNED ADDITION. IT IS ALSO RELEVANT TO POINT OUT THAT FOR THE PRECEDING YEAR, THE ASSESSMENT WAS REOPENED BY THE AO U/S 148 OF THE ACT. THE SAID ASSESSMENT FOR THE ASSESSMENT YEAR 2002 - 03 WAS BEYOND A PERIOD OF SIX YEARS AND HENCE OUTSIDE THE PURVIEW OF SECTION 153A OF THE ACT. THE AO COMPLETED THE REASSESSMENT VIDE ORDER DATED 31.12.2009 WHEREIN NO ADVERSE VIEW WAS TAKEN REGARDI NG ADVANCE S RECEIVED AGAINST BOOKING OF FLATS. HOWEVER, THE SAID REASSESSMENT ORDER WAS CANCELLED BY THE LD. CIT UNDER HI S POWER OF REVISION U/S 263 OF THE ACT VIDE ORDER DATED 29.03.2012 AND THEREAFTER THE AO CARRIED OUT THE VERIFICATION AND REFRAMED THE ASSESSMENT AFTER MAKING DETAILED INQUIRIES AND HAD ACCEPTED THAT THE ADVANCE S RECEIVED BY THE ASSESSEE WERE GENUINE VIDE HIS ORDER DATED 28.03.2013. HOWEVER, FOR THE YEAR UNDER CONSIDERATION, THE AO MADE THE ADDITION IN ITA NO. 5740/DEL/2013 SUN CITY PROJECTS PVT. LTD. 56 RESPECT OF AT LEAST 7 PARTIES WHICH WERE FOUND TO BE GENUINE WHILE FRAMING THE REGULAR ASSESSMENT AS WELL AS REASSESSMENT FRAMED, ON THE DIRECTION OF THE LD. CIT FOR THE ASSESSMENT YEAR 2002 - 03. SIMILARLY, THE ADDITIONS MADE BY THE AO IN THE REASSESSMENT PROCEEDINGS U/S 148 OF THE ACT FOR TH E YEAR UNDER CONSIDERATION HAD BEEN DELETED BY THE ITAT VIDE ORDER DATED 06.01.2017. HOWEVER, THE AO AGAIN MADE THE ADDITION IN RESPECT OF THE SAME ADVANCES WHILE FRAMING THE ASSESSMENT U/S 153A OF THE ACT. THEREFORE, THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION. 32 . IN VIEW OF THE ABOVE, ON MERIT ALSO, WE ARE OF THE VIEW THAT THE LD. CIT(A) RIGHTLY DELETED THE ADDITION MADE BY THE AO. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 33 . IN THE RESULT, T HE APPEAL OF THE DEPARTMENT IS DISMISSED . (ORDER PR ONO UNCED IN TH E OPEN COUR T ON 12 / 0 7 /2018 ) SD/ - SD/ - ( SUCHITRA KAMBLE ) ( N. K. SAINI ) JUDIC IAL MEMBER ACCOUNTANT MEMBER DATED: 12 /07 /2018 *SUBODH* COPY F ORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR