ACIT, CENTRAL CIRCLE- 5, NEW DELHI V. HARVANSH P CHAWLA, NEW DELHI

ITA 5858/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5777 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 13-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Principle of natural justice; Earning of tax free income; Source of fund; Question of law; Wrong claim; Corroborative evidences; Bogus loan; Revised return; Documents seized; Rule 8D
• Section: 69C; 143(3); 14A; 69B; 201; 69A; 264; 64; 113; 43; 48; 73; 72; 13; 22; 68; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 5857/DEL/2017 : ASSTT. YEAR : 2008-09 ITA NO. 5858/DEL/2017 : ASSTT. YEAR : 2009-10 ACIT, CENTRAL CIRCLE-5, NEW DELHI VS SH. HARVANSH P. CHAWLA, 707, KAILASH BUILDING, 26, K.G. MARG, NEW DELHI-110001 (APPELLANT) (RESPONDENT) PAN NO. ADDPC7559G ASSESSEE BY : SH. ROHIT TIWARI, ADV. REVENUE BY : MS. SUNITA SINGH, CIT DR DATE OF HEARING: 21 . 01 .20 21 DATE OF PRONOUNCEMENT: 26 .04 .20 21 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST THE ORDERS OF THE LD. CIT(A)-25, NEW DELHI DATED 31.05.2017. 2. IN THE ITA NO.5857/DEL/2017, FOLLOWING GROUNDS H AVE BEEN RAISED BY THE REVENUE: 1. THAT THE ORDER OF THE LD. CIT (A) IS NOT CORREC T IN LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.28,00,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INCOME AND HAS FAILED TO APPRECIATE THE FACT THAT T HE ADDITION WAS MADE ON THE BASIS OF THE DOCUMENTARY EVIDENCE. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 24 OF RS.37,59,156/-. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.10,91,67,051/- MADE ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS. 3. IN THE ITA NO.5858/DEL/2017, FOLLOWING GROUNDS H AVE BEEN RAISED BY THE REVENUE: 1. THAT THE ORDER OF THE LD. CIT (A) IS NOT CORREC T IN LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.46,00,17,516/- MADE ON ACCOUNT OF UNEXPLAINED CREDITS IN THE BOOKS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.4,15,141/- MADE U/S 14A R.W. RULE 8D. 4. THE APPELLANT IS A PRACTICING LAWYER RUNNING A L AW FIRM BY THE NAME OF M/S K.R. CHAWLA AND CO. AS AGAINST THE RETURNED INCOME OF RS.89,58,460/- AS PER THE RETURN FOR A.Y. 08-09 FILED ON 29.09.08, THE INCOME WAS ASSESSED U/S 143(3) AT RS.40,36,11,984/-. 5. INFORMATION HAS BEEN RECEIVED BY THE ASSESSING O FFICER FROM THE DEPUTY DIRECTOR OF INCOME TAX (INV.) UNIT- II(3) NEW DELHI CONTAINING THE DETAILS PERTAINING TO RC-21 & 22/2008/SVPS/365 DATED 17.08.2009 FROM THE OFFICE O F THE DIRECTOR-CUM-COMMISSIONER, VIGILANCE GANGTOK SIKKIM . 6. AMONG THE DOCUMENTS SEIZED WAS A PRINTOUT OF E-M AIL CONVERSATIONS BETWEEN THE ASSESSEE. SH. HARVANSH CH AWLA (E- ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 3 MAIL [e-mail]), MICHAEL BOETTCHER OF STORM INTERNATIONAL. NARINDER GROVER (E-MAIL: NGROVER@KRC CO.EOM) AND ONE SH. IVO MUIJSER. THE SUBJECT OF THESE E-MAI LS IS 'PAYMENT FOR 2 LICENSES' AND THEY SEEM TO BE RELATE D TO GETTING LICENSES FOR CASINO IN SIKKIM. THE E-MAILS HAVE BEE N EXCHANGED IN THE MONTH OF NOVEMBER AND DECEMBER 2007. IN THE E-MAIL CONVERSATION THERE IS A MENTION OF REMITTANCE OF $7 ,000,000. SH. NARINDER GROVER ALSO ACKNOWLEDGES THE RECEIPT O F THIS MONEY IN HIS E-MAIL, FURTHER MR. MICHAEL IN HIS E-M AIL TO SH. HARVANSH CHAWLA MENTIONS ABOUT THE REFUND OF THE MO NEY PAID TO SH. CHAWLA IN THE SITUATION THAT THE LICENSES FO R CASINO ARE WITHDRAWN. 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2008-09 SUMMONS N/S 131 WERE ISSUED TO THE FOLLOWING PARTIES ON 12.07.2010: SR. NO. NAME OF THE PARTY ADDRESS 1. HARVANSH P. CHAWLA (ASSESSEE) C-17, NIZAMUDDIN EAST, NEW DELHI . 2. SH. NARINDER GROVER C/0 K. R. CHAWLA &. CO. 707, KAILASH BUILDING, 28, K.G. MARG, NEW DELHI - 110001 3. SH. KUNWAR OMKAR SINGH H-3, SECTOR-41, NOIDA, U.P 8. SH. KUNWAR OMKAR SINGH DID NOT COMPLY AND NO RES PONSE WAS RECEIVED IN. THIS OFFICE. THE SUMMONS IN THE CA SE OF SH. NARINDER GROVER WERE SENT TO THE ADDRESS OF M/S K.R . CHAWLA & CO. AS HE WAS USING AN E-MAIL ADDRESS OWNED BY THE SAID FIRM. THIS WAS APPARENT FROM THE E-MAIL CONVERSATION SEIZ ED FROM SH. KUNWAR OMKAR SINGH. THE SUMMON WAS SENT BACK BY M/S K.R. CHAWLA & CO. WITH THE COMMENTS THAT SH. NARINDER GR OVER WAS ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 4 NO LONGER AVAILABLE THERE. SH. HARVANSH P. CHAWLA A PPEARED BEFORE THE UNDERSIGNED ON 17.08.2010 AND GAVE HIS S TATEMENT ON OATH. 9. DURING THE COURSE OF STATEMENT SH. HARVANSH P. C HAWLA HAS ADMITTED THAT HE KNEW SH. KUNWAR OMKAR SINGH AN D ELABORATED ON HIS DEALINGS WITH SH. KUNWAR OMKAR SI NGH. THE RELEVANT PORTION OF THE STATEMENT IS REPRODUCED BEL OW: Q.2 DO YOU KNOW SHRI KUNWAR OMKAR SINGH? ANS. YES, I KNOW SHRI KUNWAR OMKAR SINGH. HE WAS TH E MANAGING DIRECTOR OF SIKKIM DISTILLERS. HE WAS INTR ODUCED TO US BY A LAW FIRM CALLED NORTEN ROSE OF LONDON. I WAS I N TOUCH HIM IN THE FOLLOWING CONTEXTS:- (A) HE WAS INTERESTED IN PURCHASING A NURSING HOME SITUATED A NOIDA. HE HAD GIVEN A CHEQUE OF RS.55 CRORES (SEIZE D DURING THE COURSE OF SEARCH FROM MY RESIDENCE ON 28.02.200 7) AS AN EXPRESSION OF HIS SERIOUS INTEREST IN THE DEAL. THI S DEAL DID NOT MATERIALIZED AND THE CHEQUE WAS NEVER PRESENTED. TH E NURSING HOME IS STILL IN THE NAME OF THE ORIGINAL OWNER. (B) HE INTRODUCED ME IN M/S STORM INTERNATIONAL. I ACTED AS A LEGAL CONSULTATION TO M/S. STORM INTERNATIONAL WHIL E THEY WERE IN THE PROCESS OF OBTAINING A LICENSE FOR CASINO IN INDIA. 3.5 A PERUSAL OF THE E-MAIL DATED 19.12.2007 FROM M R. MICHAEL BOETTCHER ([e-mail]) TO SH. HARVANSH P. CHAW LA SHOWS THAT MONEY WAS RECEIVED BY SH. HARVANSH P. CH AWLA. HOWEVER, SHRI HARVANSH P. CHAWLA HAS DENIED HAVING RECEIVED ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 5 THIS MONEY. THE RELEVANT PORTION OF HIS STATEMENT I N THIS REGARD IS REPRODUCED BELOW: Q9. IN THE E-MAIL DATED 19.12.2007 FROM MR. SHRI M ICHAEL BOETTCHER ([e-mail]) ADDRESSED TO YOU MR. MI CHAEL BOETTCHER WRITTEN AS BELOW:- MR. CHAWLA, MR. SINGH THE MINISTER FROM SIKKIM CALLED ME TODAY AND ADVISED ME THAT YOU TOLD HIM YOU HAD NOT RECEIVED ANY PAYME NT FROM STORM FOR THE CASINO LICENSE(S). I TRIED TO REACH Y OU BY TELEPHONE WITHOUT SUCCESS. I DO NOT HAVE TO TELL YO U HOW DISAPPOINTED I AM ESPECIALLY YOU HAVE HAD THE OPPOR TUNITY IN BUILD SOMETHING UNIQUE AND SPECIAL THAT WOULD HAVE PUT SIKKIM FIRMLY ON THE MAP AS WELL AS CREATING INCREASED EMP LOYMENT AND VISIONS IN THE REGION BASED ON THE INVESTMENTS BY S TORM AS WELL AS THE POSSIBILITY OF A VERY POSITIVE FUTURE BUSINE SS TOGETHER. I AM ALSO ADVISING YOU ON BEHALF OF MR. SINGH TO SE ND $2.5 M TO MR. SINGH TOMORROW. IF YOU NOT HE WILL (QUITE CORRE CTLY IN MY OPINION) TO WITHDRAW THE CASINO LICENCE. IN THE CASE OF THE CASINO LICENSE BEING WITHDRAWN Y OU WILL BE REQUIRED TO RETURN TO STORM THE FULL AMOUNT OF THE SUM WE PAID TO YOU PLUS ANY INTEREST INCURRED. YOURS SINCERELY, MICHAEL BOETTCHER PRESIDENT & CEO STORM INTERNATIONAL B.V. WWW.STORMBV.COM ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 6 FROM THE ABOVE E-MAIL, IT APPEARS THAT THE MONEY HA S BEEN RECEIVED WITH YOUR KNOWLEDGE AND HAS BEEN ENTRUSTED TO YOU BY M/S. STORM INTERNATIONAL. PLEASE COMMENT? ANS. I AFFIRM THAT NEITHER ME, MY FAMILY OR ANY OF MY ASSOCIATES CONCERN HAVE RECEIVED ANY MONEY FROM M/S STORM INTE RNATIONAL NOR WAS I ENTRUSTED WITH ANY MONEY BY M/S STROM INT ERNATIONAL OR MICHEAL BOETTCHER. THE ABOVE EMAIL WAS SENT ERRO NEOUSLY OR IN MISTAKEN BELIEF. THE FACT THAT NEITHER I NOR MY FAMILY OR ASSOCIATES FIRMS HAVE RECEIVED THIS MONEY CAN BE VE RIFIED FROM OUR BANK STATEMENTS. A DETAILED SHOW-CAUSE NOTICE WAS ISSUED TO SH. HARV ANSH P. CHAWLA VIDE LETTER DATED 13.12.2010. THE ABOVE OBSE RVATIONS WERE BROUGHT TO THE NOTICE OF THE ASSESSEE AND HE W AS GIVEN A FINAL OPPORTUNITY TO FURNISH HIS EXPLANATION IN THI S REGARD. THE ASSESSEE VIDE LETTER DATED 20.12.2010 SUBMITTED HIS DETAILED EXPLANATION. THE MAIN POINTS ARE REPRODUCED BELOW: 'IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CAS E, LEGAL PROVISION AND CASE LAWS INCLUDING THE DECISIONS OF DELHI ITAT JURISDICTIONAL HIGH COURT AND HONBLE SUPREME CITED ABOVE, THE ASSESSEE SUBMISSION ARE SUMMARIZED BELOW: A. THAT THE EMAIL REFERRED IN YOUR SHOW CAUSE NOTIC ED DATED 13.12.2010 IS NOT WRITTEN BY THE ASSESSEE AND CONTE NTS OF THE SAID EMAIL ARE DENIED. B. THAT THE AFORESAID PRINT OF EMAIL WAS NOT SEIZED FROM THE PREMISES OF THE ASSESSEE DURING THE COURSE OF SEARC H BUT IT WAS FORWARDED BY SIKKIM POLICE AFTER MORE THAN ONE YEAR THAN THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 7 SEARCH WAS OVER. HENCE, THE PRESUMPTION U/S 132(4A) OF THE IT ACT, 1961 IS NOT APPLICABLE. C. THAT THE AFORESAID PRINT OF EMAIL IS A KIND OF D UMB DOCUMENT WHICH CANNOT BE USED AGAINST THE ASSESSEE. D. THAT IN THE EMAIL THERE IS NO INDICATION OF RECE IPT OF ANY MONEY OR ACCRUAL OF ANY INCOME IN FAVOUR OF THE ASS ESSEE. E. THAT EVEN IN YOUR SHOW CAUSE NOTICE DATED 13.12. 2010 NOTHING IS MENTIONED ABOUT RECEIPT OF ANY MONEY OR ACCRUAL OF ANY INCOME BY THE ASSESSEE. F. THAT IN PARA 2 OF SHOW CAUSE NOTICE DATED 13.12. 2010, YOU HAVE MENTIONED IN THE EMAIL CONVERSATION THERE IS MENTION OF REMITTANCE OF $7,000,000 ON THE INSTRUCTION OF SH. NARENDER GROVER. SH. NARENDER GROWER ALSO ACKNOWLEDGES THE R ECEIPT OF THIS MONEY. THIS SUGGESTS THAT THE ASSESSEE DID NOT RECEIVE ANY MONEY AND HE WAS ALSO NOT RESPONSIBLE FOR THE RECEI PT OF $ 7,000,000 BY SH. NARENDER GROVER AS BOTH ARE INDEPE NDENT PERSONS. G. THAT IN PARA 4 OF SHOW CAUSE NOTICE IT IS MENTI ONED THAT THE MONEY WAS RECEIVED WITH THE KNOWLEDGE OF SHRI H ARVANSH P. CHAWLA (ASSESSEE). THOUGH THERE WAS NO EVIDENCE ABO UT THE KNOWLEDGE OF THE ASSESSEE YET MERE KEEPING THE KNOW LEDGE OF RECEIVING THE MONEY BY SOME INDEPENDENT PERSON (NOT AN AGENT) DOES NOT MAKE THE ASSESSEE RESPONSIBLE FOR A NY TAXATION. 10. THE EXPLANATION OF THE ASSESSEE IS NOT ACCEPTED BY THE AO. HE HELD THAT THE ASSESSEE HAS MERELY DENIED THAT TH E MONEY ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 8 WAS RECEIVED IN HIS BANK ACCOUNTS OR IN THE ACCOUNT S OF ANY OF HIS CONCERNS. THE AO HELD THAT NO SANE PERSON WOULD RECEIVE UNACCOUNTED INCOME IN HIS ACCOUNTS OR IN THE ACCOUN TS OF ANY OF THE CONCERNS RELATED TO HIM. 11. THE AO HELD THAT, THE EMAIL CLEARLY FIXES THE LIABILITY TO PAY BACK O N SHRI CHAWLA IN THE EVENT OF LICENSES BEING CANCELLED. THERE IS ALSO A MENTION OF THE REPAYMENT ALONGWITH INTEREST. THUS, SHRI CHAWLA IS DIRECTLY OR INDIRECTLY THE BEN EFICIARY OF THE AMOUNT OF USD 7,000,000 MENTIONED IN THE EMA IL. IT IS A SETTLED LEGAL PRINCIPAL THAT IN A SITUATIO N WHERE THE EVIDENCE AND PREPONDERANCE OF PROBABILITY POINTS AG AINST THE ASSESSEE, THE ONUS IS ON THE ASSESSEE TO DISPRO VE THE EVIDENCE. THE SUBMISSION OF SHRI CHAWLA THAT HIS FIRM HAS NO RECORDS OF SH NARINDER GROVER IS NOT ACCEPTABLE. THE RELEVANT PORTION OF THE STATEMENT OF THE IS AS UNDER: Q6. PLEASE CLARIFY ON THE STATUS OF SH. NARINDER GR OVER AND THE USE OF YOUR FIRMS E-MAIL ID BY HIM? ANS. HE WAS WORKING ON BEHALF OF M/S STORM INTERNAT IONAL M/S. STORM INTERNATIONAL WAS MY CLIENT. IT IS CUSTOMARY AMONG THE LAW FIRMS TO PROVIDE TABLE SPACE AND COMMUNICATIONS FACILITIES ON TEMPORARY BASIS TO CLIENTS STILL THEY HAVE THEIR OW N SETUP. IN A SIMILAR ARRANGEMENT, SHRI NARINDER GROVER WAS ALLOW ED TO USE THE OFFICE FACILITIES AND THE E-MAIL ADDRESS. WE BI LLED THE USE OF THESE FACILITIES TO OUR CLIENT M/S. STORM INTERNATI ONAL. SH. NARINDER GROVER USED TO CONTINUOUSLY WORK FROM OUR OFFICE FOR THE PERIOD STARTING A FEW DAYS BEFORE DIWALI, 2007 TILL DECEMBER, ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 9 2007. AFTER JANUARY 2008 HE STOPPED COMING TO OFFIC E AND I HAVE NO INFORMATION ABOUT HIS OR HIS WHERE ABOUT AFTER T HAT. THE ASSESSEE HAS CLEARLY ADMITTED THAT SH. NARINDER GROVER WAS USING THE OFFICE PREMISES AND INFRASTRUC TURE AT HIS LAW FIRM M/S. K.R. CHAWLA AND CO. HE HAD EVEN B EEN ALLOTTED AN EMAIL ID ON THE INTERNAL SERVER OF THE ASSESSEES LAW FIRM. THE EMAIL IDS AND OTHER COMMUNICATION EQUIPMENT ARE INSTRUMENTS THAT CAN MISUSED TO UNIMAGINABLE EXTENT. IT IS UNLIKELY THAT A RESPONSI BLE LAWYER LIKE THE ASSESSEE WOULD LET ANYONE USE HIS O FFICE SPACE AND FACILITIES WITHOUT HAVING THE DETAILS REG ARDING THE BACKGROUND OF THE PERSON. THUS SHRI CHAWLA HAS NOT BEEN TELLING THE TRUTH. THE ASSESSEE ADMITTED THE FACT THAT THE EMAIL FROM MR. MICHEAL BOETTCHER WAS RECEIVED BY HIM. HE HAS FURTH ER ACCEPTED HIS ASSOCIATION WITH M/S. STORM INTERNATIO NAL. THE EMAIL CLEARLY MENTIONS BUT MONEY HAS BEEN RECEI VED BY THE ASSESSEE AND FIXES THE LIABILITY ON HIM TO P AY BACK ALONGWITH INTEREST IN THE EVENT OF CASINO LICENSE B EING CANCELLED. IN VIEW OF THE CIRCUMSTANCES LISTED ABOVE, IT IS CL EAR THAT THE EVIDENCE POINTS TO ASSESSEE HAS RECEIVED. USD 7,000,000/- THROUGH UNDISCLOSED SOURCES. HENCE, THE SE USD 7,000,000 ARE TREATED AS HIS UNDISCLOSED INCOME . THE RUPEE EQUIVALENT AT PREVAILING RATE OF USD ON 31.03 .2008 IS RS.28,00,00,000/-. AN ADDITION OF RS.28,00,00,00 0/- IS MADE UNDER THE HEAD INCOME FROM OTHER SOURCES. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 10 12. THE LD. CIT (A) DELETED THE ADDITION. 13. BEFORE US, THE RESPECTIVE PARTIES RELIED ON THE SUBMISSIONS AND INFORMATION AVAILABLE ON RECORD. 14. THE SUBMISSIONS OF THE ASSESSEE WITH REGARD TO THIS ISSUE BEFORE THE LD. CIT (A) ARE AS UNDER: ON GOING THROUGH THE ASSESSMENT ORDER DATED 28.12.2 010 PARA 3, IT IS EVIDENT THAT CERTAIN DOCUMENTS WERE S EIZED FROM THE RESIDENCE OF ONE SHRI KUNWAR OMKAR SINGH B Y THE SIKKIM VIGILANCE POLICE WHICH WAS FORWARDED TO THE INVESTIGATION WING, NEW DELHI, AND IN TURN, THE DDI T (LNV.) UNIT II (3), NEW DELHI VIDE LETTER DATED 17.08.2009 FORWARDED THE SAME TO THE ID. A.O. THE LD. AO OBSER VED THAT IT WAS A PRINTOUT OF EMAIL CONVERSATION BETWEE N SHRI HARVANSH P. CHAWLA, SHRI MICHEAL BOCHCER OF M/S STR OM INTERNATIONAL, SHRI NARENDER GROVER AND ONE SHRI IV O MUJJISER. THE SUBJECT MATTER OF THE EMAILS WERE, PE RTAINING TO LICENCES FOR CASINO IN SIKKIM AND REMITTANCE OF USD 70,00,000. SHRI NARENDER GROVER HAS ALSO ACKNOWLEDG ED THE RECEIPT OF MONEY IN HIS EMAIL. WITH REFERENCE T O SAID EXCHANGE OF EMAIL HELD IN NOVEMBER & DECEMBER 2007. THE LD. A.O ISSUED SUMMON U/S 131 TO SHRI HARVANSH P. CHAWLA (ASSESSEE), SHRI NARENDER GROVER AND SHRI KU NWAR OMKAR SINGH. IN RESPONSE TO SAID SUMMON, SHRI HARVA NSH P CHAWLA (ASSESSEE) APPEARED BEFORE THE LD. A.O, WH OSE STATEMENT WAS RECORDED ON OATH ON 17.08.2010. THE L D. A.O ISSUED SHOW CAUSE NOTICE DATED 13.12.2010 AND I N RESPONSE, THE APPELLANT HAS SUBMITTED HIS REPLY DAT ED 20.12.2010. THUS, AFTER CONSIDERING THE ASSESSEE RE PLY AND ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 11 STATEMENT, RECORDED ON OATH, THE LD. A.0 HELD THAT THE ASSESSEE RECEIVED USD 70,00,000 THROUGH UNDISCLOSED SOURCES, HENCE, THE SAME WAS TREATED AS ASSESSEE'S UNDISCLOSED INCOME IN INDIAN RUPEES AT RS.28,00,00, 000/-. CONSEQUENTLY, THE LD. A.O, MADE AN ADDITION OF RS.28,00,00,000/- IN THE CASE OF APPELLANT. THAT ON GOING THROUGH THE EMAIL AS REPRODUCED IN TH E ASSESSMENT ORDER AND ALSO ENCLOSED WITH THE ASSESSM ENT ORDER, IT IS EVIDENT THAT THE APPELLANT HAS NEITHER WRITTEN /SENT ANY EMAIL NOR HAS ACKNOWLEDGED THE CONTENTS O F THE EMAIL (UNDER DISPUTE). SINCE THE PRINTOUT OF EMAIL WAS NOT/SEIZED FROM THE PREMISES OF THE APPELLANT, THE PRESUMPTION OF SECTION 132(4A) OF THE INCOME TAX AC T, 1961 IS NOT APPLICABLE AGAINST THE APPELLANT. THE L D. A.O. INCOME TAX DEPARTMENT WERE UNDER OBLIGATION TO MAKE NECESSARY ENQUIRY AGAINST THE PERSONS FROM WHOM IT WAS SEIZED. FURTHER, IT CAN BE ENQUIRED WHO HAS EITHER SENT THE EMAIL OR HAS ADMITTED THE CONTENTS OF THE EMAIL. SI NCE THE APPELLANT IS NOT INVOLVED IN EMAILS EXCHANGE, NO AC TION CAN BE TAKEN AGAINST THE APPELLANT. THAT IN RESPONSE TO SUMMON U/S 131 OF THE INCOME TA X ACT 1961, THE APPELLANT APPEARED BEFORE THE LD. A.O. AN D HIS STATEMENT WAS RECORDED ON OATH. THE APPELLANT IN HI S STATEMENT CATEGORICALLY DENIED ABOUT THE RECEIPT OF ANY MONEY AS MENTIONED IN THE EMAIL (UNDER DISPUTE) CIT HER BY HIMSELF OR BY ANYBODY ELSE ON HIS BEHALF. SINCE THE APPELLANT HAS COMPLIED THE SUMMON ISSUED U/S 131 HE SHOULD NOT BE PUNISHED BY MAKING THE ADDITION OF ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 12 RS.28,00,000/- WITHOUT HAVING ANY EVIDENCE. THOSE W HO DID NOT COMPLY THE SUMMONS, NO ACTION HAVE BEEN TAK EN AGAINST THEM. THE APPELLANT BEING LAW ABIDING PERSO N SHOULD NOT BE PENALIZED BY MAKING THE ADDITION OF RS.28,00,00,000/- WITHOUT HAVING ANY EVIDENCE. HENC E, THE ADDITION IS UNJUSTIFIED AND THE SAME IS LIABLE TO BE DELETED. THAT IN RESPONSE TO SHOW CAUSE NOTICE ISSUED DURING COURSE OF ASSESSMENT PROCEEDING, THE APPELLANT FILED A WRI TTEN SUBMISSION DATED 20.12.2010 BEFORE THE LD. A.0 EXPL AINING THE FACTUAL AND LEGAL POSITION IN RESPECT OF ALLEGE D RECEIPT OF RS.28,00,00,000/- AS MENTIONED IN THE DISPUTED E MAIL. HOWEVER, THE LD. A.0 WITHOUT APPRECIATING THE FACTU AL POSITION AND LEGALITY OF THE ISSUE, WRONGLY ADDED RS.28,00,00,000/- IN THE IMPUGNED ASSESSMENT ORDER. HENCE, THE ADDITION OF RS.28,00,00,000/- IS LIABLE TO BE DELETED. THE COPY OF SUBMISSION DATED 20.12.2010 IS ENCLOSED AS ANNEXURE -1. THAT ON GOING THROUGH THE EMAILS EITHER INCORPORATE D IN THE ASSESSMENT ORDER OR ATTACHED WITH THE ASSESSMEN T ORDER, YOUR GOODSELF WILL FIND THAT NOWHERE IT WAS MENTIONED THAT THE APPELLANT HAD RECEIVED USD 70,00 ,000 EQUIVALENT TO RS.28,00,00,000/-. FURTHER, ON GOING THROUGH THE EMAIL DATED 22.11.2007 WRITTEN BY SHRI IVO MUJJ SER TO SHRI NARINDER GROVER, IT IS EVIDENT THAT SHRI IVO M UJJSER HAS INSTRUCTED TO HIS BANKER TO TRANSFER THE AMOUNT OF USD 70,00,000. IN RESPONSE, SHRI NARENDER GROVER REPLIE D ON 26.11.2007 CONFIRMING THE RECEIPT OF SAID MONEY. TH US ON ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 13 THE BASIS OF EMAIL EXCHANGE, IT APPEARS THAT SHRI I VO MUJJSER HAS TRANSFER USD 70,000,000 TO THE BANK INSTRUCTED BY SH. GROVER AND LATER ON SHRI GROVER CONFIRMED THE RECEIPT OF SAID MONEY. ON GOING THROU GH THE EMAIL EXCHANGE, IT IS EVIDENT THAT SHRI HARVANSH P CHAWLA (APPELLANT) IS NOT IN PICTURE AT ALL. HENCE, THE AD DITION OF RS.28,00,00,000/- IN THE CASE OF APPELLANT IS WITHO UT ANY EVIDENCE. THUS, THE ADDITION MADE IN THE CASE OF AP PELLANT IS UNJUSTIFIED AND THE SAME IS LIABLE TO BE DELETED . THAT NOW A QUESTION ARISES, HOW SHRI NARENDER GROVE R WAS CONNECTED WITH THE APPELLANT? SECOND QUESTION IS, W HETHER SHRI GROVER WAS AN AGENT OF THE APPELLANT OR HE WAS WORKING ON BEHALF OF THE APPELLANT? THESE QUESTIONS ARE EXPLAINED BY SHRI HARVANSH P CHAWLA (APPELLANT) IN HIS STATEMENT RECORDED ON OATH. IN RESPONSE TO QUESTION NO. 6 WHICH HAVE BEEN REPRODUCED BY THE LD. A.O IN PARA O F THE ASSESSMENT ORDER, THE APPELLANT EXPLAINED THAT M/S STORM INTERNATIONAL WAS A CLIENT OF THE APPELLANT AND SHR I NARENDER GROVER WAS WORKING ON BEHALF OF SAID STORM INTERNATIONAL. IN THE LIGHT OF CUSTOMARY PRACTICE S HRI NARINDER GROVER WAS ALLOWED TO USE HIS OFFICE AS WE LL AS THE COMMUNICATION FACILITIES OF THE APPELLANT ON BE HALF OF SAID M/S STORM INTERNATIONAL TILL DEC 2007. SINCE T HE WORK OF M/S STORM INTERNATIONAL WAS OVER, HE STOPPED COM ING TO THE APPELLANT OFFICE THEREAFTER. IN THE LIGHT OF FA CTS MENTIONED ABOVE, IT IS EVIDENT THAT SHRI NARENDER G ROVER WAS NEITHER THE STAFF OF THE APPELLANT NOR HE WAS A N AGENT NOR HE WAS WORKING ON BEHALF OF THE APPELLANT. IN T HIS SITUATION, THE APPELLANT IS NOT RESPONSIBLE FOR THE WORK AND ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 14 CONDUCT OF SHRI NARENDER GROVER AND NO ADDITION CAN BE MADE IN THE CASE OF THE APPELLANT, ONLY ON THE REAS ON THAT HE (SHRI GROVER) SENT THE EMAIL BY USING THE OFFICI AL SERVER OF THE APPELLANT. THAT SINCE SHRI NARENDER GROVER WAS WORKING IN THE OFFICE OF THE APPELLANT ON TEMPORARY BASIS IN CONNECTION W ITH WORK OF M/S STORM INTERNATIONAL (APPELLANT'S CLIENT ). HE WAS ALLOWED THE OFFICE FACILITIES INCLUDING THE EMA IL ADDRESSES IN ORDER TO PROFESSIONAL PRACTICE AND REQUIREMENT. ACCORDINGLY, HE MIGHT HAVE SENT THE EM AILS TO SHRI IVO MUJJISER THROUGH THE APPELLANT OFFICE SERV ER BY MISUSING THE FACILITIES PROVIDED BY THE APPELLANT H OWEVER, THIS MAY NOT BE BASIS FOR HOLDING THAT THE SAID USD 70,00,000 WAS RECEIVED EITHER BY THE APPELLANT OR B Y ANYBODY ELSE ON BEHALF OF THE APPELLANT. THUS, THE ADDITION MADE MERELY ON THE REASON OF SENDING THE EMAIL BY S HRI NARENDER GROVER FROM THE OFFICE SERVER OF THE APPEL LANT IS UNJUSTIFIED. HENCE, THE SAME IS LIABLE TO BE DELETE D. THAT THOUGH THE SENDING OF EMAIL BY SHRI NARENDER G ROVER THROUGH THE OFFICE SERVER OF THE APPELLANT MAY BE A BASIS FOR ENQUIRY, YET, IT CANNOT BE A BASIS FOR THE ADDI TION IN THE CASE OF APPELLANT WITHOUT HAVING SUPPORTING EVIDENC ES. NO DOUBT, THE LD. A.O HAS CORRECTLY ENQUIRED THE MATTE R FROM THE APPELLANT BY ISSUING THE SHOW CAUSE NOTICES AND RECORDING THE STATEMENT ON OATH AND ALSO BY EXAMINI NG THE BOOKS OF ACCOUNTS AND BANK PASS BOOK ETC. SINCE THE LD. A.O DID NOT FIND ANY EVIDENCE OF RECEIPT OF USD 70, 00,000, HE WAS REQUIRED TO GRACEFULLY ACCEPT THE APPELLANT ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 15 SUBMISSION AND NOT TO MAKE ANY ADDITION ON PRESUMPT ION BASIS. IN ABSENCE OF ANY SUPPORTING EVIDENCE, THE L D. A.O WAS NOT JUSTIFIED BY HOLDING IN PARA 3.8 OF THE ASS ESSMENT ORDER, 'THUS SHRI CHAWLA IS DIRECTLY OR INDIRECTLY THE BENEFICIARY OF THE AMOUNT OF USD 70,00,000 MENTIONE D IN THE EMAIL.' HOWEVER, THE LD. A.O FAILED TO MENTION AS TO HOW SHRI HARVANSH CHAWLA WAS BENEFICIARY OF THE SAI D AMOUNT. THE OBSERVATION OF THE LD. A.O IS PURELY BA SED ON PRESUMPTION, CONJECTURE AND SURMISES AND THE ADDITI ON MADE ON SUCH PRESUMPTION BASIS IS NOT PERMISSIBLE I N THE EYE OF LAW. THE RELEVANT CASE LAWS ARE DISCUSSED IN PARA 1.2 OF THIS SUBMISSION. THAT IN EMAIL DATED 19.12.2007 ADDRESSED TO MR. CHA WLA SENT BY SHRI MICHAEL P BOETTCHER, THERE IS NO REFER ENCE OF USD 70,00,000 BUT IT WAS MENTIONED IN THE EMAIL DAT ED 22.11.2007 SENT BY SHRI IVO MUJJISER TO SHRI NARIND ER GROVER. FURTHER, THE APPELLANT HAS NO CONNECTION EI THER WITH SHRI IVO MUJJISER OR WITH SHRI NARINDER GROVER (EXCEPT SHRI NARENDER GROVER USED THE APPELLANT'S OFFICIAL SERVER FOR PROFESSIONAL REQUIREMENT IN CONNECTION WITH APP ELLANT'S CLIENT M/S STORM INTERNATIONAL WORK). HENCE, THE AP PELLANT SHOULD NOT BE PUNISHED BY MAKING THE ADDITION OF RS.28,00,00,000/- ONLY BECAUSE OF ALLOWING THE OFFI CIAL SERVER TO SHRI NARENDER GROVER. HENCE, THE ADDITION OF RS.28,00,00,000/- MADE IN APPELLANT CASE IS HIGHLY UNJUSTIFIED AND THE SAME IS LIABLE TO BE DELETED. THAT IN THE EMAIL DATED 22.11.2007, IT IS MENTIONED , 'THE TOTAL HAVE BEEN WIRED IN 6 DIFFERENT AMOUNTS TO THE THREE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 16 BANK ACCOUNTS AS YOU HAVE INSTRUCTED.' AS PER EMAIL , THE AFORESAID AMOUNT HAS BEEN STATED TO BE DEPOSITED IN THREE BANK ACCOUNTS. IN FACT, IT WAS MATTER OF ENQUIRY IN WHICH BANK ACCOUNTS THE SAID SUM HAVE GONE. THE LD. A.O INSTEAD OF MAKING A DETAILED ENQUIRY AND ASCERTAINI NG IN WHOSE BANK ACCOUNTS THE SAID SUM WAS ACTUALLY DEPOS ITED, HE CHOSE TO MAKE THE ADDITION IN APPELLANT CASE, TH OUGH THE APPELLANT BANK ACCOUNT WAS EXAMINED BY THE LD. A.O AND THE SAID SUM WAS NOT FOUND TO BE DEPOSITED. THE LD. A.O MADE HIS JOB OVER BY MAKING THE ADDITION OF RS.28,00,00,000/- IN THE EASE OF APPELLANT, THOUGH, THERE WAS NO EVIDENCE AGAINST THE APPELLANT IN SUBSTANCE, THE APPELLANT DID NOT RECEIVE THE SAID SUM USD 70,00,00 0 EQUIVALENT TO RS. 28,00,00,000/-. THUS, THE ADDITIO N OF RS.28,00,00,000/- IS NOT JUSTIFIED. HENCE YOUR GOOD SELF IS REQUESTED TO KINDLY DELETE THE SAID ADDITION. THAT IN RESPONSE TO SHOW CAUSE NOTICE DATED 13.12.2 010 PARA 2 & 4 THE APPELLANT HAD SUBMITTED FOLLOWING EXPLANATIONS BEFORE THE LD. A.O: 'THAT IN PARA 2 OF SHOW CAUSE NOTICE DATED 13.12.2010, YOU HAVE MENTIONED 'IN THE EMAIL CONVERSATION THERE IS MENTION OF REMITTANCE OF $70,00,000 ON THE INSTRUCTION OF SH. NARENDER GROVER. SH. NARENDER GROVER ALSO ACKNOWLEDGES THE RECEIPT OF THIS MONEY.' THIS SUGGEST THAT THE ASSESSEE DID NOT RECEIVE ANY MONEY AND HE WAS ALSO NOT RESPONSIBLE FOR THE RECEIPT OF $70,00,000 ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 17 BY SH. NARENDER GROVER AS BOTH ARE INDEPENDENT PERSONS. THAT IN PARA 4 OF SHOW CAUSE NOTICE IT IS MENTIONED THAT THE MONEY WAS RECEIVED WITH THE KNOWLEDGE OF SH. HARVASH P CHAWLA (ASSESSEEE)- THOUGH THERE WAS NO EVIDENCE ABOUT THE KNOWLEDGE OF THE ASSESSEE YET MERE KEEPING THE KNOWLEDGE OF RECEIVING THE MONEY BY SOME INDEPENDENT PERSON (NOT AN AGENT) DOES NOT MAKE THE ASSESSEE RESPONSIBLE FOR ANY TAXATION. THAT IN RESPECT OF AFORESAID REPLY, THE LD. A.O IN PARA 3.7 MENTIONED, 'THE EXPLANATION OF ASSESSEE IS NOT ACCE PTABLE. THE ASSESSEE HAS MERELY DENIED THAT THE MONEY WAS RECEIVED IN HIS BANK ACCOUNTS OR IN THE ACCOUNTS OF ANY OF HIS CONCERNS. IT IS GIVEN FACT THAT NO SANE PERSON WOULD RECEIVE UNACCOUNTED INCOME IN HIS ACCOUNTS OR IN TH E ACCOUNTS OF ANY OF THE CONCERN RELATED TO HIM ON GO ING THROUGH THE LD. A.O OBSERVATION, IT IS EVIDENT THAT THE APPELLANT, HAS ALL ALONG DENIED THE RECEIPT OF RS. 28,00,00,000/- EITHER BY HIM DIRECTLY OR BY ANYBODY ELSE ON HIS BEHALF THE LD. A.O HAS ALSO ADMITTED THAT TH E SAID AMOUNT HAS NEITHER GONE TO HIS BANK ACCOUNT NOR IN HIS RELATED CONCERN. SINCE THE AMOUNT OF RS.28,00,00,00 0/- WAS NEITHER RECEIVED BY THE APPELLANT NOR BY HIS RE LATED CONCERNS, IT WAS ONUS ON THE LD. A.0 TO PROVE THAT WHERE SUCH AMOUNT HAD GONE AND HOW THE APPELLANT BECAME T HE OWNER OF THAT AMOUNT. FURTHER, THERE IS NO EVIDENCE TO PROVE THAT THE SAID SUM OF RS. 28,00,00.000/- HAVE BEEN ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 18 DEPOSITED TO THE ACCOUNT OF ANY BENAMI PERSON OF TH E APPELLANT. FURTHER, THE LD. A.O FAILED TO PROVE THA T THE INCOME OF RS. 28,00,00,000/- WAS ACCRUED IN FAVOUR OF THE APPELLANT SINCE, THE INCOME OF RS.28,00,00,000/- WA S NEITHER RECEIVED NOR ACCRUED IN FAVOUR OF THE APPEL LANT, NO ADDITION CAN BE MADE IN APPELLANT CASE. IN THIS SIT UATION, THE ADDITION OF RS.28,00,00,000/- WAS NOT JUSTIFIED AND THE SAME IS LIABLE TO BE DELETED. 15. IT WAS FURTHER EXPLAINED AS UNDER: LEGAL POSITION OF THE PRINTOUT OF THE E-MAILS (A) THAT AS MENTIONED IN EARLIER PARA THAT THE DI SPUTED PRINTOUT OF THE EMAILS WAS NOT FOUND AND SEIZED FRO M THE PREMISES OF THE APPELLANT BUT IT WAS FORWARDED BY T HE SIKKIM VIGILANCE POLICE TO THE INVESTIGATION WING. IN TURN , IT WAS FORWARDED TO THE LD. A.O. HENCE, THE LEGAL PRESUMPT ION AS PRESCRIBED UNDER SECTION 132(4A) IS NOT APPLICABLE AGAINST THE APPELLANT. FURTHER, IT IS ALREADY EXPLAINED IN THE EARLIER PARA OF THIS SUBMISSION THAT OUT OF AFORESAID DISPUTED EMAI LS, NO EMAIL WAS SENT BY THE APPELLANT. NOW, THE QUESTION ARISES ABOUT THE LEGAL STATUS OF THE EMAIL PRINTOUTS FORWARDED BY SI KKIM VIGILANCE POLICE. IN THIS REGARD, THE APPELLANT DUR ING THE COURSE OF ASSESSMENT PROCEEDING HAS SUBMITTED DETAILED EXP LANATION DATED 20.12.2010 AND THE LD. A.O HAS ALSO QUOTED TH E CERTAIN PORTION OF THE SAID EXPLANATION IN THE ASSESSMENT O RDER. IN THE SAID EXPLANATION DATED 20.12.2010, CERTAIN CASE LAW S (INCLUDING THE CASES DECIDED BY THE DELHI ITAT. HON'BLE DELHI HIGH COURT AND ALSO BY HONBLE SUPREME COURT) HAVE BEEN QUOTED EXPLAINING THE; LEGAL POSITION OF THE DISPUTED PRIN TOUTS OF THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 19 EMAIL. HOWEVER, THE LD. A.O DID NOT CONSIDER THE CA SE LAWS UNDER REFERENCE AS HE NEITHER ACCEPTED THE RATIO OF THESE CASES NOR REJECTED THE SAME IN THE ASSESSMENT ORDER. IN F ACT, THE LD. A.O KEPT MUM WITH REFERENCE TO THE CASE LAWS MENTIO NED IN THE EXPLANATION DATED 20.12,2010. HENCE, THE LD. A.0 BE ING QUASI JUDICIAL AUTHORITY WAS NOT JUSTIFIED IGNORING THE C ASE LAWS AS QUOTED IN THE WRITTEN SUBMISSION AND MAKING THE ADD ITION OF RS.28,00,00,000/-. THE ADDITION MADE BY LD. A.O WAS AGAINST THE PRINCIPLE LAID BY THE DELHI ITAT, JURISDICTIONA L HIGH COURT AND BY THE HON'BLE APEX COURT, WHICH WERE BINDING I N NATURE. HENCE, THE ADDITION OF RS.28,00,00,000/- IS LIABLE TO BE DELETED. (B) THAT IN THE LIGHT OF COPY OF EXPLANATION DATED 20.12.2010 ENCLOSED AS ANNEXURE-1 SUBMITTED BEFORE THE LD. A.O ., IT IS BROUGHT TO YOUR KIND NOTICE THAT THE DISPUTED PRINT OUT OF EMAIL WAS NEITHER SIGNED NOR ACKNOWLEDGED BY THE APPELLAN T. HENCE, IT WAS A DUMB DOCUMENT AND IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS, NO ADDITION CAN BE MADE MERELY AND EXCLUSIVELY ON THE BASIS OF SUCH DUMB DOCUMENT WITH OUT HAVING ANY SUPPORTING EVIDENCE. SINCE IN THE LETTER DATED 20.12.2010 THE DETAILED DESCRIPTION ABOUT THE CASE LAWS HAVE A LREADY BEEN GIVEN AND SUCH LETTER IS ENCLOSED WITH THIS SUBMISS ION, THERE IS NO NEED TO REPEAT THE SAME. THE APPELLANT RELY ON F OLLOWING CASE LAWS: A. ATUL KUMAR JAIN VS. DCIT (1999) 64 TTJ 768 A. RAMLI DAYAWAL & SONS PVT. LTD. VS. INVERT IMPOR T AIR 1981 SC 2085 B. MOHAMAD YUSUF VS. D & OTHERS AIR 1968 BOB 112 C. CBI VS. V.C. SHUKLA & OTHER JT (1998) 2 SC 172; B. DY. CIT VS. KRORILAL AGGARWAL (1994) SOM (JAB) 393 ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 20 C. ASHWANI KUMAR VS. ITO (1992) 42 TTJ DELHI 644 D. CIT VS. GIRISH CHAUDHARY (2008) 296ITR 619 (DEL HI) E. AMARJIT SINGH BAKSHI (HUF) VS. ACIT (2003) 263 ITR 75 DELHI F. BANSAL STRIPS PVT. LTD. V. ACIT (2006) 100 TTJ (DEL) 665 G. SWADESHI COTTON MILLS CO. LTD. VS. ITO 1976 CTR (ALL) 6 H. DHAKESHWARI COTTON MILLS LTD. VS. CIT (1954) 26 ITR 775 SC I. CIT VS. RAVI KANT JAIN (2001) 167 CTR (DEL) 566 J. CIT VS. P V KALYAN SUNDRAM (2006) 203 CTR (MAD) 449 K. CIT VS. KAILASH CHAND SHARMA (2005) 198 CTR (RA J) 201 L. S.R. KOSHTI VS. CIT (2005) 193 CTR (GUJ) 518 NO ADDITION ON THE BASIS OF PRESUMPTION (A) THAT IN THE CASE OF APPELLANT, THERE IS NEITHER ANY DIRECT EVIDENCE FOR THE RECEIPT OF RS.28,00,00,000/- NOR A NY CIRCUMSTANTIAL EVIDENCE SUGGESTING THE APPELLANT AS BENEFICIARY OF THAT AMOUNT. IN FACT, THE ADDITION IN APPELLANT CASE WAS MADE ON THE BASIS PRESUMPTION, SURMISES AND CONJECTURE, WHICH IS NOT PERMISSIBLE IN THE EYE OF LAW. THE LD IT AT, DELHI 'A' BENCH, BANSAL STRIPS PVT. LTD. V. ACJT (2006) 100 TTJ (DEL ) 665 RELYING ON THE DECISIONS OF SWADESHI COTTON MILLS CO. LTD. VS. [TO 1976 CTR (ALL) 6 AND DHAKESHWARI COTTON MILLS LTD. VS. C IT (1954) 26 ITR 775 SC HELD THAT THE AO CANNOT DRAW HIS INFEREN CE ON THE BASIS OF SUSPICION, CONJECTURES AND SURMISES. THE A O SHOULD ACT IN THE JUDICIAL MANNER, PROCEED WITH THE JUDICIAL S PIRIT AND COME TO A JUDICIAL CONCLUSION. FOR THE SAKE OF CONVENIEN CE OF YOUR KIND PERUSAL, THE RELEVANT PORTION OF THE FINDING I S REPRODUCED BELOW:- ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 21 'WHILE COMPLETING AN ASSESSMENT THE AO IS NOT A COU RT HE IS ALSO NOT HOUND BY TECHNICAL RULES OF EVIDENCE. HE M AY CONSIDER MATERIAL WHICH WOULD BE WHOLLY INADMISSIBLE IN A CO URT OF LAW. HE MAY DRAW HIS CONCLUSION AND INFERENCES ON THE CU MULATIVE EFFECT OF VARIOUS CIRCUMSTANCES BASED UPON THE TEST OF HUMAN PROBABILITY. AT THE SAME TIME THOUGH TECHNICAL RULE S OF EVIDENCE DO NOT APPLY, THE AO IS BOUND BY THE PRINCIPLES OF NATURAL JUSTICE. HE CANNOT DRAW HIS INFERENCES ON THE BASIS OF SUSPICION, CONJECTURES AND SURMISES. SUSPICION HOWSOEVER STRON G, CANNOT TAKE PLACE OF THE MATERIAL IN SUPPORT OF FINDINGS O F THE AO. THE AO SHOULD ART IN THE JUDICIAL MANNER, PROCEED WITH THE JUDICIAL SPIRIT AND COME TO A JUDICIAL CONCLUSION. SWADESHI COTTON MILLS CO. LTD. VS. ITO 1976 CTR [ALL] 6: (1978) 112 ITR 1 038 (ALL) AND DHAKESHWARI COTTON MILLS LTD. VS. CIT (1954) 26 ITR 775 (SC) APPLIED. IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE , LEGAL PROVISION AND JUDICIAL PRONOUNCEMENTS, IT IS BROUGH T TO YOUR KIND NOTICE THAT THE ADDITION OF RS.28,00,00,000/- WAS MADE ONLY ON THE BASIS OF PRINTOUT OF EMAILS EXCHANGE WH ICH WAS SEIZED FROM THE PREMISES OF ONE SHRI KUNWAR OMKAR S INGH AND NOT FROM THE APPELLANT PREMISES. THE SAID PRINTOUT OF EMAIL WAS FORWARDED BY THE SIKKIM VIGILANCE POLICE TO THE DIT (INV), NEW DELHI WHO FORWARDED THE SAME TO THE LD. A.O FURTHER , THE DISPUTED EMAIL EXCHANGE WAS HELD BETWEEN SHRI MICHA EL BOCCOHER AND SHRI NARENDER GROVER, WHO WERE NEITHER APPELLANT'S AGENT NOR WORKING ON BEHALF OF THE APPE LLANT. SHRI NARENDER GROVER HAS SENT THE EMAIL BY MISUSING THE OFFICIAL SERVER OF THE APPELLANT, WHEN HE WAS WORKING IN APP ELLANT OFFICE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 22 IN ORDER TO PROFESSIONAL PRACTICE AND REQUIREMENT I N CONNECTION WITH M/S STORM INTERNATIONAL CASE (APPELLANT'S CLIE NT). THUS, THE APPELLANT NEITHER SENT ANY EMAIL NOR HE ADMITTED TH E CONTENTS OF ANY EMAIL. MOREOVER, SENDING THE EMAIL BY SHRI G ROVER BY MISUSING THE OFFICIAL SERVER OF APPELLANT MAY NOT B E BASIS FOR THE ADDITION IN APPELLANT CASE, PARTICULARLY WHEN T HE APPELLANT BOOKS OF ACCOUNTS INCLUDING THE BANK ACCOUNT WAS EX AMINED AND APPELLANTS STATEMENT WAS RECORDED ON OATH AND NO A DVERSE EVIDENCE WAS FOUND BY THE LD. A.0. SINCE, THE APPEL LANT NEITHER RECEIVED THE DISPUTED AMOUNT OF RS.28,00,00,000/- N OR IT WAS ACCRUED IN APPELLANT FAVOUR, NO ADDITION CAN BE MAD E MERELY ON THE BASIS OF PRINTOUT OF EMAIL SEIZED FROM THE RESI DENCE OF A THIRD PERSON AND FORWARDED BY THE SIKKIM VIGILANCE POLICE. IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS, WHICH HAVE BE EN DISCUSSED IN THE WRITTEN EXPLANATION DATED 20.12.2010 ENCLOSE D WITH THIS SUBMISSION, THE SAID PRINTOUT OF EMAIL WAS A DUMB D OCUMENT AND NO ADDITION CAN BE MADE ON THE BASIS OF SUCH DU MB DOCUMENT WITHOUT HAVING ANY SUPPORTING EVIDENCES. S INCE IN APPELLANT'S CASE THERE IS NO EVIDENCE EITHER FOR TH E RECEIPT OF RS.28,00,00,000/- OR FOR THE ACCRUAL OF INCOME, THU S, THE ADDITION FOR SUCH AMOUNT WAS NEITHER LEGAL NOR JUST IFIED. HENCE, YOUR GOODSELF IS REQUESTED TO KINDLY DELETE THE ADD ITION OF RS.28,00,00,000/-. 16. THE ASSESSEE FURTHER ARGUED THAT, (A) THE PRINT OUT OF THE EMAIL (UNDER DISPUTE) WAS NOT SEIZED UNDER SECTION 132 FROM THE ASSESSEE'S PREMISES. HEN CE, NO PRESUMPTION UNDER SECTION 132 (4A) IS APPLICABLE AG AINST THE ASSESSEE. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 23 (B) THE ASSESSEE'S STATEMENT WAS RECORDED ON OATH U /S 131(1) WITH REFERENCE TO SUCH PRINT OUT OF EMAIL WHO DENIE D EITHER TO RECEIPT OF MONEY OR SENDING OF EMAIL. THE STATEMENT ON OATH HAS EVIDENTIARY ARE REBUTTED WITH THE HELP OF SUPPO RTING EVIDENCES. (C) THE PERSON FROM WHOM SUCH PRINT OUT OF EMAIL WA S SEIZED, WAS LIABLE TO EXPLAIN AND NOT THE ASSESSEE. (D) THE ASSESSEE IS NOT INVOLVED IN EMAIL EXCHANGE; NO ACTION IS REQUIRED TO BE TAKEN AGAINST THE ASSESSEE. (E) THE ASSESSEE BEING LAW ABIDING PERSON APPEARED BEFORE THE LD. AO AND HIS STATEMENT ON OATH WAS RECORDED AND T HEREAFTER THE ADDITION OF RS.28,00,00,000/- WAS MADE. THE PER SONS WHO DID NOT COMPLY THE SUMMONS, NO ACTION HAVE BEEN TAK EN AGAINST THEM. (F) IN EMAIL NO WHERE IT IS MENTIONED THAT HE ASSES SEE HAS RECEIVED USD 70,00,000. ON THE CONTRARY, THROUGH EM AIL DATED 22.11.2007 IT IS EVIDENT THAT SH. IVO MUJJSER TRANS FERRED USD 70,00,000 IN SIX DIFFERENT AMOUNTS IN THREE BANKS. (G) FURTHER, THROUGH EMAIL DATED 26.11.2007 SH. NAR ENDRA GROVER CONFIRMED THE RECEIPT OF SAID AMOUNT. (H) THESE TWO EMAILS IN WHICH THE TRANSACTION OF US D 70,00,000 HAS BEEN, MENTIONED, WAS NEITHER SENT NOR RECEIVED BY THE ASSESSEE BUT THE SENDER IS MR. IVO MUJJSER AND THE RECEIVER IS MR. NARENDRA GROVER BOTH ARE PERSONS AND THEY ARE N EITHER AGENT OF THE ASSESSEE NOR THEY WERE WORKING FOR AND ON THE BEHALF OF THE ASSESSEE. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 24 (I) IN THIRD AND LAST EMAIL DATED 19.12,2007 ADDRES SED TO MR. CHAWLA (SPECIFIC NAME OF THE ASSESSEE IS NOT MENTIO NED), THERE IS DENIAL BY MR. CHAWLA ABOUT THE RECEIPT OF ANY PA YMENT. THOUGH THE PRINT OUT OF THE EMAIL IS NOT A PRIMARY EVIDENCE, YET IN CASE, IT IS TREATED AS PRIMARY EVIDENCE, IT IS I N FAVOR OF THE ASSESSEE AS IT SUGGESTED THAT MR. CHAWLA DID NOT RE CEIVE ANY MONEY AND BOTH THE PAYER AND THE PAYEE ARE THE INDE PENDENT PERSONS. (J) THE ASSESSEE IN RESPONSE TO QUESTION NO. 6, EXP LAINED THAT M/S STORM INTERNATIONAL WAS ASSESSEE'S CLIENT AND S H. NARENDRA GROVER WAS USING HIS OFFICE ON BEHALF OF SAID CLIEN T FOR CERTAIN PERIOD. (K) DURING THAT PERIOD SH. NARENDRA GROVER MIGHT HA VE SENT THE EMAIL MISUSING THE ASSESSEE'S EMAIL ID. HOWEVER, NO ADDITION CAN BE MADE MERELY ON THE REASON OF SENDING THE EMA IL ASSESSEE'S EMAIL ID. (I) IN EMAIL DATED 19.12.2007 ADDRESSED TO MR. CHAW LA, THERE IS NO INFERENCE OF USD 70,00,000. (M) THE LD. AO OBSERVED THAT NO SANE PERSON WOULD R ECEIVE UNACCOUNTED MONEY IN BANK ACCOUNT BUT HE FORGOT THA T IN EMAIL DATED 22.11.2007 IT IS SPECIFICALLY MENTIONED THAT THE AMOUNT WAS WIRED IN THREE DIFFERENT BANK ACCOUNTS. THUS, T HERE IS CONTRADICTION IN LD. AO'S OBSERVATION AND CONTENT O F EMAIL. (N) IN SHOW .CAUSE NOTICE, THE LD. AO POINTED OUT T HAT MONEY WAS TRANSFERRED WITH THE KNOWLEDGE OF THE ASSESSEE. FIRST OF ALL, THERE IS NO EVIDENCE ABOUT THE KNOWLEDGE OF THE ASS ESSEE; ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 25 SECONDLY, NO ADDITION CAN BE MADE MERELY ON THE BAS IS OF KEEPING THE KNOWLEDGE OF TRANSFER OF MONEY. I. IN LEGAL TERM, THE PRINTOUT OF EMAIL IS NEITHER THE BOOKS OF ACCOUNTS NOR A DOCUMENT AS MENTIONED U/S 132(4A) OF THE INCOME TAX ACT, 1961. J. THE SAID PRINT OUT OF EMAIL IS NEITHER ON PAD OF THE ASSESSEE NOR WRITTEN NOR SIGNED BY HIM. IN OTHER WO RDS, IT IS HEAD LESS AND LEG LESS AND IT IS NOT SELF SPEAKING. IN THIS SITUATION, IT IS A DUMB DOCUMENT. K. IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS, CITED I N THE WRITTEN SUBMISSION, NO ADDITION CAN BE MADE MERELY AND EXCL USIVELY ON THE BASIS OF DUMB DOCUMENT WITHOUT HAVING SUPPORTIN G EVIDENCE. L. THE SAID DUMB DOCUMENT (PRINT OUT OF EMAIL) WAS SEIZED FROM THE PREMISES OF THE THIRD PERSON AND IN THE LIGHT O F NUMBER OF JUDICIAL PRONOUNCEMENTS, CITED IN THE WRITTEN SUBMI SSION; NO ADDITION CAN BE MADE ON THE BASIS OF THE DOCUMENTS SEIZED FROM THIRD PERSON. M. THERE IS NO LEGAL PROVISION FOR MAKING THE ADDIT ION OF RS.28,00,00,000/- MERELY ON THE BASIS OF EMAIL PRIN T OUT SEIZED FROM A THIRD PERSON ON FOLLOWING REASONS: (A) SECTION 4 IS A CHARGING SECTION WHICH SPEAKS A BOUT THE 'TOTAL INCOME'. THE TERM TOTAL INCOME' HAS BEEN DEF INED UNDER SECTION 2(45) WHICH REFER TO SECTION 5 OF THE INCOM E TAX ACT, 1961. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 26 (B) SECTION 5 REFERS ABOUT EITHER RECEIPT OF INCOM E OR ACCRUAL OF INCOME. IN THE INSTANT CASE OF THE ASSESSEE, THE RE IS NO EVIDENCE THAT THE ASSESSEE HAS RECEIVED THE MONEY. ON THE CONTRARY, IN EMAIL DATED 19.12.2007 MR. CHAWLA HAS DENIED THE RECEIPT OF THE MONEY. (C) FURTHER THERE IS NO EVIDENCE THAT THERE WAS AC CRUAL OF ANY INCOME IN FAVOR OF THE ASSESSEE. IN ABSENCE OF ANY RECEIPT OR ACCRUAL OF INCOME, NO ADDITION CAN BE MADE IN CASE OF THE ASSESSEE. (D) WITHOUT PREJUDICE, IF IT IS PRESUMED THAT THE AMOUNT WAS RECEIVED BY THE ASSESSEE EVEN THEN, NO ADDITION CAN BE MADE OF THE GROSS AMOUNT AS THERE IS DESCRIPTION OF PAYMENT IN EMAIL FOR SAKE OF LICENSES OF TWO CASINOS. ONCE THE AMOUNT IS PRESUMED TO BE RECEIVED, IT CAN ALSO BE PRESUMED TO HAVE BEE N PAID. THUS, THE INCOMING AND THE OUTGOING IS THE SAME AND THERE IS ZERO INCOME IN THIS TRANSACTION. HENCE, NO ADDITION IS CALLED FOR. (E) FURTHER, THE PROVISION OF SECTION 68 IS NOT AP PLICABLE IN THIS CASE AS THERE IS NO CASH CREDIT. (F) THE PROVISION OF SECTION 69 IS NOT APPLICABLE AS THERE IS NO UNEXPLAINED INVESTMENT. (G) SIMILARLY, THE PROVISION OF SECTION 69A IS NOT APPLICABLE AS THE ASSESSEE IS NOT FOUND TO BE OWNER OF ANY MONEY, ETC. (H) THE PROVISION OF SECTION 69B IS NOT APPLICABLE AS THERE IS NO UNEXPLAINED INVESTMENT; HENCE THERE IS NO QUESTI ON OF NOT FULLY RECORDING IN THE BOOKS OF ACCOUNTS. (I) THE PROVISION OF SECTION 69C IS NOT APPLICABLE AS THERE IS NO UNEXPLAINED EXPENDITURE. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 27 (J) THE PROVISION OF SECTION 69D IS NOT APPLICABLE AS THERE IS NO QUESTION OF BORROWED AMOUNT OR REPAID ON HUNDI. 17. WE FIND FROM THE RECORDS, THE COMMISSIONER O F INCOME TAX (APPEALS)-XXVIII, NEW DELHI VIDE F.NO. CIT(A)- XXVIII/2013-14/341 DATED 24.02.2014, SENT A LETTER TO THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE -37, N EW DELHI, STATING AS UNDER: 'KINDLY REFER TO YOUR LETTER F. NO. ADDL.CIT/RANGE- 37/2013- 14/965 DATED 24.02.2014 VIDE WHICH YOU HAVE FORWARD ED THE REMAND REPORT OF THE ASSESSING OFFICER IN THE ABOVE REFERRED APPEALS. THE REMAND REPORT HAS BEEN FORWARDED WITHO UT ANY COMMENTS ON YOUR PART. KEEPING IN VIEW THE FACT THA T SUBSTANTIAL REVENUE IS INVOLVED IN THE CASE YOU ARE DIRECTED TO GIVE DETAILED COMMENTS ON THE FOLLOWINGS:- 1. EVIDENCE OTHER THAN THE E-MAILS IN RESPECT OF RE CEIPT OF USD 70 LACS ALLEGEDLY RECEIVED BY SHRI H.P. CHAWLA. 2. AUTHENTICITY AND THE EVIDENTIARY VALUE OF THE E- MAILS SEIZED BY SIKKIM VIGILANCE POLICE FROM THE RESIDENCE OF SH RI KUNWAR QNKAR SINGH. 3. COPY OF THE LETTER ISSUED TO THE ASSESSEE FOR PR ODUCING SHRI NARINDER GROVER. 4. EFFORTS IF ANY MADE TO CONFIRM THE TRANSACTION F ROM MICHAEL BOETTCHER OF STORM INTERNATIONAL AND SHRI IVO MUIIJ SER. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 28 5. COPY OF THE DOCUMENTS REGARDING DETAILS OF US DO LLARS 7,59,485 FROM SBI GANTOK ARID OTHER DOCUMENTS INCLU DING STATEMENT OF ACCOUNT RELATING TO KANCHAN DISTILLERI ES PVT. LTD. FORWARDED LATER BY DIRECTOR CUM COMMISSIONER OF VIG ILANCE DEPARTMENT, SIKKIM REFERENCE TO WHICH IS CONTAINED IN THE COMMISSIONER OF INCOME TAX (A) ORDER FOR ASSESSMENT YEAR 2007-08 (LETTER NO. RC-21 & 22/2008/SVPS/365 DATED 17.08.2009. 6. EVIDENCE THAT THE ABOVE DOCUMENTS HAVE BEEN CONF RONTED TO THE APPELLANT. 7. COMMENTS IN DETAIL ON THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF EACH PERSON WHO HAVE ALLEGEDLY ADVANC ED LOAN TO SHRI HARVANSH P. CHAWLA AND ADDITION REGARDING WHIC H HAVE BEEN MADE BY THE ASSESSING OFFICER UNDER SECTION 68 AND WHETHER YOU ARE SATISFIED OR NOT REGARDING THE SOUR CE OF THE UNSECURED LOANS CLAIMED BY THE APPELLANT AS PER THE BANK ACCOUNT FURNISHED BY THE APPELLANT AND FORWARDED BY YOU. 8. HOW HAVE SHARE APPLICATION MONEY BEEN RECEIVED F ROM ABROAD IN CASE OF PVT. LTD. COMPANY I.E. M/S. KARIN A HOTELS PVT. LTD., M/S. STORM HOTELS PVT. LTD. AND M/S. K R CHAW LA CONSULTING PVT. LTD, YOU ARE ALSO REQUIRED TO SPECI FY THAT IF THE AMOUNT RECEIVED IN FOREIGN CURRENCY IS NOT SHARE AP PLICATION MONEY THEN WHAT IS THE NATURE OF THE FOREIGN CURREN CY RECEIPT AND WHETHER THESE ARE IN ANY WAY CONNECTED TO THE A MOUNT REFERRED TO IN THE E-MAILS, ADDITION IN RESPECT OF WHICH HAS BEEN MADE IN ASSESSMENT YEAR 2008-09 IN THE CASE OF THE APPELLANT. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 29 9. WHETHER THERE IS ANY AMOUNT PAID BY STORM INTER NATIONAL TO SHRI HARVANSH P. CHAWLA FOR PROVIDING LEGAL CONS ULTANCY, IF SO, THE EVIDENCE PRODUCED BY THE ASSESSEE IN THIS R EGARD. 10. IN THE ASSESSMENT ORDER IT HAS BEEN CLAIMED TIM E AND AGAIN AGAINST ADDITION MADE IN RESPECT OF UNSECURED LOANS THAT THE PARTY DID NOT HAVE THE CAPACITY TO FINANCE THE LOAN ARID THE LOAN HAS BEEN FINANCED THROUGH UNACCOUNTED MONEY OF THE APPELLANT BY CREATING LAYER OF INTERMEDIARIES. KIND LY GIVE YOUR COMMENTS ON THESE STATEMENTS OF THE ASSESSING OFFIC ER. THE DETAILED REPORT SHOULD BE RECEIVED WITHOUT FAIL BY 26.02.2014 IN VIEW OF THE FACT THAT IT IS A HIGH DE MAND CASE WHICH HAS BEEN PENDING FOR A LONG TIME. 18. WE FIND THAT, A REPORT WAS SENT TO THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- XXVIII, NEW D ELHI BY THE ASSESSING OFFICER, I.E. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-37(1), NEW DELHI VIDE F. NO. ACIT/CIR-37(1)/ 2013- 14/1884 DATED 26.02.2014, IN RESPONSE TO THE ABOVE MENTIONED LETTER DATED 24.02.14 OF THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS), STATING AS UNDER: KINDLY REFER TO YOUR LETTER NO. CIT (A)-XXVIII/201 3-14/341 DATED 24.02.2014 ON THE ABOVE MENTIONED SUBJECT. 2. IN THIS CONNECTION, AT THE OUTSET, IT IS SUBMITT ED THAT THE REMAND REPORT SENT VIDE THIS OFFICE LETTER DATED 24 .02.2014 AS WELL AS THE PRESENT REPORT HAS BEEN PREPARED UNDER THE CONTINUOUS GUIDANCE AND SUPERVISION OF THE ADDL. C. I.T., RANGE- 37. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 30 3. IN ADDITION TO THE COMMENTS ALREADY FORWARDED VI DE THE ABOVE REFERRED REMAND REPORT DATED 24.02.2014, FOLL OWING PARA-WISE COMMENTS IN RESPONSE TO THE QUERIES RAISE D ARE BEING SUBMITTED: 3.1 AS REGARDS EVIDENCE RELATED TO THE E-MAIL IN R ESPECT OF RECEIPT OF US$ 7 MILLION, IT IS STATED THAT AS PER LAW, THE ONUS IS ON THE ASSESSEE TO REBUT THE PRESUMPTIONS U/S 132 ( 4A) OF THE ACT. AS THE ASSESSEE HAS FAILED TO DISCHARGE HIS ON US ON THIS ISSUE, THE CONCLUSION THAT THE ASSESSEE HIMSELF IS BENEFICIARY OF THE AMOUNT SPECIFIED IN THE E-MAIL IS INESCAPABLE. 3.2 IT HAS BEEN THE STAND OF REVENUE THAT THE E-MA ILS SEIZED BY SIKKIM VIGILANCE POLICE ARE AUTHENTIC AND GENUIN E SOURCE OF INFORMATION, AND IN ABSENCE OF ANY EVIDENCE TO THE CONTRARY, IT MAY NOT BE APPROPRIATE TO DOUBT THE VERACITY OF INF ORMATION RECEIVED FROM AN INDEPENDENT, LAW ENFORCING AGENCY. IN ANY CASE, THE ONUS IS ON THE ASSESSEE TO DISPROVE THE P RESUMPTION IN THIS REGARD; 3.3 AS PER PARA 3.3 OF THE ASSESSMENT ORDER FOR A. Y. 2008-09, SUMMONS WERE ISSUED TO SH. NARINDER GROVER TO THE A DDRESS OF M/S. K.R. CHAWLA & CO.- A LAW FIRM OWNED BY THE ASS ESSEE. THESE SUMMONS WERE RETURNED BY THE ASSESSEES LAW F IRM WITH THE COMMENTS THAT SH. NARINDER GROVER WAS NO LONGER AVAILABLE THERE, AND THEY DID NOT HAVE ANY CONTACT WITH HIM O R HIS FORWARDING ADDRESS. THUS, IT IS CLEAR THAT THE ASSE SSEE WAS GIVEN SUFFICIENT OPPORTUNITY TO PRODUCE SH. NARINDE R GROVER, IF HE DESIRED TO DO SO. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 31 3.4 AS REGARDS EFFORTS MADE TO CONFIRM THE TRANSAC TION FROM MICHAEL BOETTCHER AND IVO MUJJSER, IT IS STATED THA T THE ASSESSEE WAS CONFRONTED, WITH THE DOCUMENTS AND SEIZED MATER IAL DURING THE ASSESSMENT PROCEEDINGS, AND NO PLAUSIBLE EXPLAN ATION COULD, BE GIVEN BY HIM TO REBUT THE PRESUMPTION OF BEING THE BENEFICIARY OF THE AMOUNT IN QUESTION. NO FURTHER C ONFIRMATION WAS REQUIRED IN THE CIRCUMSTANCES OF THE CASE. 3.5 IN CONNECTION TO THE DOCUMENTS REGARDING DETAI LS OF US$ 759,485 FROM SBI GANGTOK AND OTHER DOCUMENTS INCLUD ING STATEMENT OF ACCOUNT RELATING TO KANCHAN DISTILLERI ES PVT. LTD. FORWARDED LATER BY DIRECTOR CUM COMMISSIONER OF VIG ILANCE DEPARTMENT, SIKKIM REFERENCE TO WHICH IS CONTAINED IN THE COMMISSIONER OF INCOME TAX (A) ORDER FOR A.Y. 2007- 08. (LETTER NO. RC-21 & 22/2008/SVPS/365 DATED, 17.08.2009 IT I S SUBMITTED THAT NO SUCH LETTER IS FOUND IN THE ASSES SMENT FILE FORWARDED BY THE CENTRAL CIRCLE AND AVAILABLE WITH THIS OFFICE. IT MAY BE PERTINENT TO MENTION HERE THAT THIS CASE WAS COMPLETED IN CENTRAL CIRCLE AND THE ASSESSMENT FOLDER WAS LAT ER TRANSFERRED TO THE PRESENT JURISDICTION, BUT THE SE IZED RECORD HAS STILL NOT BEEN TRANSFERRED FROM THE CENTRAL CIR CLE. EFFORTS ARE BEING MADE TO GET THE SEIZED MATERIAL ALSO TRAN SFERRED. IT IS PLAUSIBLE THAT THE DESIRED LETTER MAY BE A PART OF SEIZED MATERIAL. IT MAY NOT BE OUT OF PLACE TO MENTION THA T A COPY OF THE SAME LETTER (AS MENTIONED, IN THE CIT(A)S ORDE R IN THE CASE OF THE ASSESSEE HIMSELF FOR A.Y. 2007-08) WAS FORWA RDED TO THE OFFICE OF CIT'(A) BY THE AC IT, CENTRAL CIRCLE-13 D URING THE APPELLATE PROCEEDINGS IN CASE OF THE ASSESSEE FOR T HE A. Y. 2007-08. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 32 3.6 IT IS REITERATED THAT DURING THE ASSESSMENT PR OCEEDINGS, THE ASSESSEE WAS CONFRONTED WITH ALL THE DOCUMENTAR Y EVIDENCES, INCLUDING THE SEIZED MATERIAL, AVAILABLE . A DETAILED STATEMENT OF THE ASSESSEE WAS ALSO RECORDED ON OATH DURING THE ASSESSMENT PROCEEDINGS. AS FAR AS ANY EVIDENCE REGA RDING THE FACT THAT THE ABOVE DOCUMENTS HAVE BEEN CONFRONTED TO THE APPELLANT IS CONCERNED, IT IS RELEVANT MENTION THAT IN THE CIT(A)S ORDER IN THE CASE OF THE ASSESSEE HIMSELF FOR A.Y. 2007-08 IN PARA NO. 16 IT IS MENTIONED THAT THE ACI T CENTRAL CIRLCE-13 SUBMITTED HIS REPORT TO THE CIT(A). THE P OINT 5 OF THE REPORT OF THE ACIT MENTIONS ABOUT SUCH LETTER. THE CIT(A) IN PARA 17 MENTIONS THAT THE AR OF THE APPELLANT WAS GIVEN REPORTS OF THE A.O. FOR REJOINDER. A BARE PERUSAL OF THIS ORDER OF CIT(A) LEADS TO THE CONCLUSION THAT THE ASSESSEE MAY WOULD HAVE BEEN CONFRONTED WITH THESE DOCUMENTS. SINCE, A LL THESE RECORDS MUST BE AVAILABLE IN THE OFFICE OF THE CIT( A) A CONCLUSIVE INFERENCE CAN ONLY BE DRAWN AFTER GOING THROUGH THE SAME. 3.7 AS REGARDS THE UNSECURED LOANS CLAIMED TO HAVE BEEN RAISED BY THE ASSESSEE, IT MAY BE RECALLED THAT IN THE ASSESSMENT ORDER, IT IS POINTED OUT THAT THE LENDER S IN QUESTION DID NOT HAVE ENOUGH MEANS TO JUSTIFY SUCH HIGH LEVE L OF LENDING TO THE ASSESSEE. NOTHING HAS SO FAR COME TO THE NOT ICE TO ALTER THE STAND OF REVENUE ON THIS ACCOUNT. 3.8 IT IS SUBMITTED THAT THE QUERY REGARDING RECEI PT OF SHARE APPLICATION MONEY FROM ABROAD APPEARS TO BE NOT MUC H RELATED TO THE PRESENT CASE. THE CONTENTION OF REVENUE HAS BEEN THAT THE LENDERS WHICH ADVANCED UNSECURED, LOANS TO THE ASSESSEE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 33 DID NOT HAVE SUFFICIENT MEANS, AND AS SUCH, IT WAS ASSESSEES OWN MONEY WHICH WAS BEING ROUTED THROUGH. NATURE OF ENTRY IN THE HANDS OF PVT. LTD. COMPANIES (THE LENDERS) DOES NOT, IN ANY WAY AFFECT THE ABOVE PROPOSITION. HOWEVER, IN CASE ANY NEW LINE OF INVESTIGATION IS CONTEMPLATED, THE UNDERSIGNED, WOULD BE MOST WILLING TO CARRY OUT FURTHER INVESTIGATION TO THE EXTENT POSSIBLE. IT MAY NOT BE OUT OF PLACE TO MENTION THA T THE UNDERSIGNED DOES NOT HAVE JURISDICTION OF THE COMPA NIES MENTIONED ABOVE. 3.9 AS REGARDS ANY AMOUNT PAID TO M/S STROM INTERN ATIONAL, IT IS STATED THAT EVEN IF SOME AMOUNT WAS PAID BY THE ASSESSEE TO M/S STROM INTERNATIONAL, IT DOES NOT AFFECT THE REV ENUES CASE IN ANY WAY. THE QUESTION WHETHER M/S STORM INTERNAT IONAL WAS A CLIENT OF THE ASSESSEE OR NOT IS NOT RELATED TO T HE REVENUES CASE BROUGHT OUT IN PARA 3.10, 3.11 AND 3.12 OF THE ASSESSMENT ORDER FOR A. Y. 2008-09. HOWEVER, IN CASE ANY NEW L INE OF INVESTIGATION IS CONTEMPLATED, THE UNDERSIGNED WOUL D BE MOST WILLING TO CARRY OUT FURTHER INVESTIGATION TO THE E XTENT POSSIBLE. 3.10 THE ISSUE OF CREDITWORTHINESS OF THE LENDERS HAS ALREADY BEEN DEALT WITH IN PARA 3.7 AND 3.8 ABOVE. 4. IT IS ALSO SUBMITTED THAT THE ISSUE RAISED IN T HE LETTER OF CIT (A) DATED 24.02.2014 HAVE BEEN DISCUSSED AT LEN GTH IN THE ASSESSMENT ORDER, AND THE SAME IS RELIED UPON ONCE AGAIN. HOWEVER, IF CIT (A) SO DESIRES, THE ENTIRE ASSESSME NT RECORD CAN BE MADE AVAILABLE IN SUPPORT OF VARIOUS AVERMEN TS MADE IN THE ASSESSMENT ORDERS, FOR PERUSAL AND NECESSARY VE RIFICATION. FURTHER, IF CIT (A) DESIRES TO PURSUE A FRESH LINE OF ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 34 INVESTIGATION, IN CONNECTION WITH THE UNSECURED LOA NS, NOT YET EXPLORED BY REVENUE THE UNDERSIGNED WOULD BE MOST W ILLING TO CARRY OUT FURTHER INVESTIGATION TO THE EXTENT POSSI BLE. ISSUING SPECIFIC INSTRUCTIONS TO THE RELEVANT ASSESSING OFF ICERS MIGHT ALSO BE CONSIDERED. 5. IT IS ALSO HUMBLY, SUBMITTED THAT ONLY ONE DAY TIME WAS GIVEN TO PREPARE THE REMAND REPORT. IT MAY BE APPRE CIATED THAT AT THIS STATE OF THE FINANCIAL YEAR, WITH A LARGE N UMBER OF TIME BANNING MATTERS PENDING FOR DISPOSAL AND THIS BEING A. HIGH DEMAND CASE, THE TIME GIVEN WAS GROSSLY INADEQUATE. 19. HAVING GONE THROUGH THE SUBMISSIONS OF THE ASSE SSEE AFTER GETTING THE VARIOUS REPORTS FROM THE AO, THE LD. CI T (A) HELD AS UNDER: 8.41 PERUSAL OF THE ENTIRE FACTS OF THE CASE SHOWS THAT THE ASSESSING OFFICER HAS RELIED UPON THE EMAIL SENT BY SH. MICHAEL BOETTCHER, PRESIDENT AND CEO, M/S STORM INT ERNATIONAL B.V. TO SH. HARVANSH P CHAWLA, THE APPELLANT, THE F ACT THAT THE PRINTOUTS OF EMAILS WERE FOUND FROM THE PREMISES OF SH. KUNWAR ONKAR SINGH, MANAGING DIRECTOR OF M/S SIKKIM DISTIL LERIES LTD. AND THAT SH. NARINDER GROVER HAS ACKNOWLEDGED THE R ECEIPT OF THE PAYMENTS. THOUGH OTHER THAN THE FACT THAT AN EM AIL WAS SENT BY SH. MICHAEL BOETTCHER TO SH. HARVANSH P CHA WLA, THE OTHER TWO ASPECTS DO NOT INVOLVE SH. HARVANSH P CHA WLA, THE ASSESSING OFFICER HAS LINKED EACH OF THE THREE ASPE CTS TO THE APPELLANT ON THE BASIS THAT THE APPELLANT I.E. SH. HARVANSH P CHAWLA WAS ASSOCIATED WITH M/S STORM INTERNATIONAL B.V., SH. KUNWAR ONKAR SINGH AND WITH SH. NARINDER GROVER IN DIFFERENT WAYS. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 35 8.42 EACH ASPECT OF THE CASE WAS EXAMINED. NO DOUBT , SH. MICHAEL BOETTCHER SENT AN EMAIL TO THE APPELLANT IN WHICH THERE WAS DISCUSSION ABOUT SOME PAYMENTS. HOWEVER, EVEN F ROM THE EMAIL, IT IS NOT CLEAR AS TO WHAT PAYMENT WAS EVEN ALLEGED TO BE PAID TO THE APPELLANT. THE CONTENTS OF THE EMAIL FR OM SH. MICHAEL BOETTCHER TO SH. HARVANSH P CHAWLA DATED 19 .12.07, AS REPRODUCED IN PARA 3.5 OF THE ASSESSMENT ORDER 28.1 2.10 ARE AS UNDER: MR. CHAWLA, MR. SINGH THE MINISTER FROM SIKKIM CALLED ME TODAY AND ADVISED ME THAT YOU TOLD HIM YOU HAD NOT RECEIVED ANY PAYME NT FROM STORM FOR THE CASINO LICENSE(S). I TRIED TO REACH YOU BY TELEPHONE WITHOUT SUCCESS. I DO NOT HAVE TO TELL YOU HOW DISAPPOINTED I AM ESPECIALLY YOU HA VE HAD THE OPPORTUNITY IN BUILD SOMETHING UNIQUE AND SPECIAL T HAT WOULD HAVE PUT SIKKIM FIRMLY ON THE MAP AS WELL AS CREATI NG INCREASED, EMPLOYMENT AND VISIONS IN THE REGION BAS ED ON THE INVESTMENTS BY STORM AS WELL AS THE POSSIBILITY OF A VERY POSITIVE FUTURE BUSINESS TOGETHER. I AM ALSO ADVISING YOU ON BEHALF OF MR. SINGH TO SE NT $2.5 M TO MR. SINGH TOMORROW. IF YOU NOT HE WILL (QUITE CORRE CTLY IN MY OPINION) TO WITHDRAW THE CASINO LICENCE. IN THE CASE OF THE CASINO LICENSE BEING WITHDRAWN Y OU WILL BE REQUIRED TO RETURN TO STORM THE FULL AMOUNT OF THE SUM WE PAID TO YOU PLUS ANY INTEREST INCURRED. YOURS SINCERELY, MICHAEL BOETTCHER PRESIDENT & CEO STORM INTERNATIONAL B.V. WWW.STORRNBV.COM ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 36 8.43 A CAREFUL PERUSAL OF THE ABOVE EMAIL, WHICH IS THE MOST CRUCIAL DOCUMENT RELIED UPON BY THE ASSESSING OFFIC ER TO CONCLUDE THAT THE AMOUNT OF 7 MILLION US DOLLARS WA S RECEIVED BY THE APPELLANT SHOWS THAT: A. THE EMAIL MENTIONS THAT MR. SINGH, WHO IS STATED TO BE A MINISTER IN SIKKIM HAS TOLD THE AUTHOR OF THE EMAIL I.E. SH. MICHAEL BOETTCHER THAT THE RECIPIENT OF THE EMAIL I .E. SH. HARVANSH P CHAWLA TOLD THE MINISTER THAT HE HAD NOT RECEIVED ANY PAYMENT FROM STORM. B. THE EMAIL DOES NOT SPECIFICALLY MENTION THE AMOU NT OF $ 7 MILLION OR EVEN INDIRECTLY INDICATE AS TO WHAT WAS THE SPECIFIC AMOUNT ALLEGED TO BE PAID. C. THE EMAIL DOES ALLEGE THAT SOME PAYMENT HAD BEE N MADE BY M/S STORM, AS IT STATES THAT THE RECIPIENT OF TH E EMAIL WILL HAVE TO RETURN THE FULL AMOUNT OF THE SUM PAID PLUS INTEREST, BUT SUCH FULL AMOUNT IS NOT SPECIFIED. D. THE EMAIL ADVISES THE RECIPIENT TO SEND $ 2.5 M TO MR. SINGH, WHO IS STATED TO BE A MINISTER IN SIKKIM. 8.44 FROM THE ABOVE IT IS SEEN THAT RATHER THAN PRO VING THAT ANY PAYMENT WAS RECEIVED BY SH. HARVANSH P CHAWLA, THE EMAIL RATHER INFORMS ABOUT THE DENIAL BY HIM, REGARDING H AVING RECEIVED ANY PAYMENT AT ALL. FURTHER, THE EMAIL DOE S NOT SPECIFICALLY MENTION AS TO WHAT EXACTLY WAS THE SPE CIFIC OR FULL AMOUNT ALLEGED BY M/S STORM TO BE PAID AND DENIED T O HAVE BEEN RECEIVED BY SH. HARVANSH P CHAWLA. THE EMAIL D OES ADVISE THE RECIPIENT TO SEND AN AMOUNT OF $ 2.5 M, WHICH A PPARENTLY ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 37 STANDS FOR US DOLLARS 25,00,000/-, BUT SUCH PAYMENT IS TO BE MADE TO MR. SINGH, WHO IS A MINISTER IN SIKKIM. 8.45 THE APPELLANT, DURING THE ASSESSMENT PROCEEDIN GS WAS SUMMONED U/S 131 OF THE INCOME TAX ACT, 1961, IN RE SPONSE TO WHICH, HE APPEARED BEFORE THE ASSESSING OFFICER ON 17.08.10 AND HIS STATEMENT ON OATH WAS RECORDED. IN QUESTION NUMBER 9 OF THE STATEMENT, THE APPELLANT WAS CONFRONTED REGA RDING THE EMAIL AND THE ASSESSING OFFICER ENQUIRED THAT FROM THE EMAIL, IT APPEARS THAT THE MONEY HAD BEEN RECEIVED WITH THE K NOWLEDGE OF THE APPELLANT AND HAD BEEN ENTRUSTED TO HIM BY M /S STORM INTERNATIONAL AND REQUIRED HIM TO COMMENT. IN HIS R ESPONSE, THE APPELLANT STATED THAT NEITHER HE NOR HIS FAMILY NOR ANY OF HIS ASSOCIATE CONCERNS HAD RECEIVED ANY MONEY FROM M/S STORM INTERNATIONAL NOR HE WAS ENTRUSTED WITH ANY MONEY B Y M/S STORM INTERNATIONAL OR MICHAEL BOETTCHER. THE APPEL LANT FURTHER STATED THAT THE EMAIL IN QUESTION WAS SENT ERRONEOU SLY OR IN MISTAKEN BELIEF. HE FURTHER, AVERRED THAT NEITHER H E NOR HIS FAMILY OR ASSOCIATES FIRMS HAD RECEIVED THE MONEY C OULD BE VERIFIED FROM THERE BANK STATEMENTS. 8.46 PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER REJECTED THE CONTENTIONS OF THE APPELLANT A ND HAS SOLELY RELIED UPON THE ABOVEMENTIONED EMAIL FROM SH. MICHA EL BOETTCHER TO HOLD THAT APPELLANT HAD RECEIVED THE A MOUNT OF $ 7 MILLION. SUCH CONCLUSION HAS BEEN DRAWN ON THE BASI S OF HIS LOGIC IN PARA 3.7 AND 3.8 ON PAGE 6 OF THE ASSESSME NT ORDER AS UNDER: ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 38 I. NO SANE PERSON WOULD RECEIVE UNACCOUNTED INCOME IN HIS ACCOUNT OR IN THE ACCOUNTS OF ANY OF THE CONCERNS R ELATED TO HIM, (OBSERVATION IN PARA 3.7 OF THE ASSESSMENT OR DER) II. THE EMAIL CLEARLY FIXES THE LIABILITY TO PAY B ACK ON SH. CHAWLA IN THE EVENT OF LICENSES BEEN CANCELLED (OB SERVATION IN PARA 3 .8 OF THE ASSESSMENT ORDER) III. THERE IS ALSO A MENTION OF THE REPAYMENT ALO NGWITH INTEREST (OBSERVATION IN PARA 3.8 OF THE ASSESSMEN T ORDER) 8.47 ON THE BASIS OF THE ABOVE OBSERVATIONS, THE LE ARNED ASSESSING OFFICER HAS CONCLUDED IN PARA 3.8 OF THE ASSESSMENT ORDER THAT THUS, SH. CHAWLA IS DIRECTLY OR INDIREC TLY THE BENEFICIARY OF THE AMOUNT OF USD 7,000,000 MENTIONE D IN THE EMAIL. 8.48 AN ANALYSIS OF EACH OF THE ABOVE THREE OBSERVA TIONS AND THE CONCLUSION BY THE ASSESSING OFFICER SHOWS THAT THERE WAS ABSOLUTELY NO JUSTIFICATION AT ALL FOR SUCH CONCLUS ION. NO DOUBT, IT IS UNLIKELY THAT AN INTELLIGENT PERSON WOULD REC EIVE UNACCOUNTED INCOME IN HIS ACCOUNT S OR IN THE ACCOU NTS OF ANY OF THE CONCERNS RELATED TO HIM, BUT IT IS A FACT TH AT EVERY YEAR NUMEROUS CASES ARE DETECTED BY THE INCOME TAX DEPAR TMENT WHERE UNACCOUNTED INCOME IS RECEIVED IN THE ACCOUNT S OF A PERSON AND IN ACCOUNTS OF RELATED CONCERNS. THE REC EIPT OF SUCH UNACCOUNTED INCOME IN THE BANK ACCOUNT OF THE PERSO N CONCERNED OR IN THE BANK ACCOUNTS OF HIS RELATED CO NCERNS WOULD RATHER BE COMPULSORY WHERE THE PAYMENT WAS BEING RE CEIVED THROUGH BANKING CHANNELS. IN THE PRESENT CASE, THE ALLEGATION IS THAT THE PAYMENTS IN QUESTION AMOUNTING TO $ 70,00, 000/- ( US DOLLARS 7 MILLION) WAS SENT IN 6 DIFFERENT AMOUNTS TO 3 DIFFERENT ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 39 BANK ACCOUNTS. IN SUCH A SITUATION, IT IS OBVIOUS T HAT THE PAYMENTS WOULD BE RECEIVED IN SOME BANK ACCOUNTS, I F THE PAYMENT HAD ACTUALLY BEEN SENT. THE DOCUMENTS IN QU ESTION ONLY SHOW THAT THERE WAS AN ALLEGATION OR CLAIM THA T THE AMOUNT OF US DOLLARS 7 MILLION WAS SENT TO 3 DIFFERENT BAN K ACCOUNTS. IN VIEW OF THE NATURE OF THE ALLEGATIONS, IT IS OBVIOU S THAT IT IS ONLY SOME BANK ACCOUNTS IN WHICH THE AMOUNTS PAID, IF AN Y, WOULD BE RECEIVED. IN SUCH A SITUATION, IF THERE IS AN AL LEGATION AGAINST THE APPELLANT THAT HE RECEIVED THE AMOUNTS PAID, TH E ONUS DEFINITELY LIES UPON THE PERSON CLAIMING SO, TO SHO W THE LINK BETWEEN THE AMOUNTS RECEIVED IN THE BANK ACCOUNTS W ITH THE APPELLANT, OR THE LINK OF THE BANK ACCOUNTS WITH SO ME FAMILY MEMBER OR ASSOCIATED CONCERN OR FIRM OF THE APPELLA NT. IF THERE IS NO LINKAGE BETWEEN THE APPELLANT OR ANY OF HIS F AMILY MEMBERS OR ANY ASSOCIATED CONCERN OR FIRM ETC. WITH ANY SPECIFIC AMOUNT RECEIVED IN ANY SPECIFIC BANK ACCOU NT, THEN IT WOULD BE ILLOGICAL TO PRESUME THAT THE AMOUNT SENT THROUGH A BANK ACCOUNT REACHED THE APPELLANT. 8.49 THE LEARNED ASSESSING OFFICER HAS OBSERVED IN PARA 3.8 OF PAGE 6 OF THE ASSESSMENT ORDER THAT THE EMAIL CLEA RLY FIXES THE LIABILITY TO PAY BACK ON SH. CHAWLA IN THE EVENT OF LICENSES BEEN CANCELLED AND THAT THERE IS ALSO A MENTION OF THE REPAYMENT ALONGWITH INTEREST. HOWEVER, THESE ARE CLAIMS OR A LLEGATIONS MADE BY THE EMAIL SENT TO THE APPELLANT. THERE IS N O CONFIRMATION FROM THE APPELLANT REGARDING THE CLAIM THAT ANY PAYMENT WAS RECEIVED BY HIM. FURTHER, THE ASSESSING OFFICER HAS IGNORED A VERY RELEVANT ASPECT OF THE EMAIL THA T THE OPENING LINES OF THE EMAIL VERY CLEARLY RECORD THAT THE APP ELLANT HAD DENIED HAVING RECEIPT ANY PAYMENT AT ALL FROM M/S S TORM FOR THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 40 CASINO LICENSES. IT IS STATED IN THE OPENING PART O F THE EMAIL AS UNDER: MR. SINGH THE MINISTER FROM SIKKIM CALLED ME TODAY AND ADVISED ME THAT YOU TOLD HIM YOU HAD NOT RECEIVED A NY PAYMENT FROM STORM FOR THE CASINO LICENSE(S). 8.50 THUS THE EMAIL ITSELF CLEARLY RECORDS THE DENI AL OF THE APPELLANT OF HAVING RECEIVED ANY PAYMENT FROM M/S S TORM FOR THE CASINO LICENSES. THUS WE HAVE A SITUATION WHERE RATHER THAN HAVING A CONFIRMATION FROM THE APPELLANT OF HAVING RECEIVED ANY PAYMENT, WE HAVE A CLEAR DENIAL FROM THE APPELLANT RECORDED IN THE EMAIL ITSELF. IN SUCH A SITUATION, MERELY BECAU SE THE EMAIL REQUIRED THE APPELLANT TO PAY BACK THE FULL AMOUNT AND TO PAY IT BACK ALONGWITH INTEREST, OR ADVISED THE APPELL ANT TO PAY $ 2.5 M TO A CERTAIN MINISTER IN SIKKIM BY THE NAME O F MR. SINGH, THE EMAIL BY ITSELF DOES NOT ESTABLISH ANY ALLEGATI ON, AND RATHER IT IS ONLY AN ALLEGATION ON THE APPELLANT. IN THE A BSENCE OF ANY CORROBORATION, IT IS ONLY AN UNSUBSTANTIATED ALLEG ATION. 8.51 THE LEARNED ASSESSING OFFICER ON THE BASIS OF THE ABOVE OBSERVATIONS IN PARA 3.7 AND 3.8 OF THE ASSESSMENT ORDER HAS GONE ON TO DRAW THE CONCLUSION THAT: THUS, SH. CHAWLA IS DIRECTLY OR INDIRECTLY THE BEN EFICIARY OF THE AMOUNT OF USD 7,000,000 MENTIONED IN THE EMAIL. 8.52 IT IS SEEN THAT THE ABOVE CONCLUSION IS NOT AT ALL JUSTIFIED IN VIEW OF THE DISCUSSION IN PARA 8.43 TO 8.45 ABOVE, AS EACH OF THE 3 GROUNDS (MENTIONED IN PARA 8.41) ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS DRAWN SUCH A CONCLUSION H AVE BEEN SHOWN TO BE BASELESS. WHETHER ANY SUCH AMOUNT WAS A CTUALLY ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 41 SENT OR MERELY A CLAIM WAS MADE THROUGH EMAIL, WITH OUT THE AMOUNT HAVING BEEN ACTUALLY SENT, IS A MATTER OF IN VESTIGATION TO PROVE AS TO WHAT EXACTLY WAS THE AMOUNT AND AS T O WHO RECEIVED THE AMOUNT. 8.53 FURTHER, A CAREFUL PERUSAL OF THE EMAIL IN QUE STION SHOWS THAT THERE IS NO MENTION AT ALL OF ANY SPECIFIC AMO UNT HAVING BEEN DIRECTLY OR INDIRECTLY BEEN GIVEN TO SH. CHAWL A, AS CLEARLY POINTED OUT ABOVE IN PARA 8.38 AND PARA 8.39. IN SU CH A SITUATION, THE CLAIM OF THE ASSESSING OFFICER THAT THE APPELLANT WAS ...DIRECTLY OR INDIRECTLY THE BENEFICIARY OF T HE AMOUNT OF USD 7,000,000 MENTIONED IN THE EMAIL, IS NOT ONLY B ASELESS, BUT IS RATHER A CLAIM WHICH IS TOTALLY CONTRARY TO THE FACTS, AS WHAT TO SAY OF USD 7 MILLION, THERE IS NO MENTION OF ANY SPECIFIC AMOUNT HAVING BEEN GIVEN IN THE EMAIL, AS CLEARLY E VIDENT FROM THE EMAIL REPRODUCED IN PARA 3.5 OF THE ASSESSMENT ORDER WHICH HAS BEEN RE-REPRODUCED ABOVE IN PARA 8.37 ABOVE AND AS DISCUSSED IN PARA 8.38 AND 8.39 ABOVE. THUS THE ASS ESSING OFFICER HAS CLEARLY FAILED TO APPRECIATE THE TRUE F ACTS OF THE CASE. 8.54 ANOTHER ASPECT OF THE CONCLUSION DRAWN BY THE ASSESSING OFFICER IN PARA 3.8 OF THE ASSESSMENT ORDER IS THAT THE ASSESSING OFFICER HAS HELD THAT ...SH. CHAWLA IS D IRECTLY OR INDIRECTLY THE BENEFICIARY... . FROM SUCH CONCLUSI ON BY THE ASSESSING OFFICER, IT IS OBVIOUS THAT THE ASSESSING OFFICER HIMSELF IS NOT SURE WHETHER THE APPELLANT WAS A BEN EFICIARY DIRECTLY OR INDIRECTLY. ONCE THE ASSESSING OFFICER DESIRES TO HOLD THAT AN ASSESSEE WAS A BENEFICIARY, THEN THERE SHOU LD BE CLARITY AS TO WHETHER THE ASSESSEE WAS A DIRECT BENEFICIARY OR ANY ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 42 INDIRECT BENEFICIARY. IN THE PRESENT CASE, THE ASSE SSING OFFICER COULD NOT SHOW THAT THE ASSESSEE WAS A DIRECT BENEF ICIARY OR AN INDIRECT BENEFICIARY AND HAS STILL GIVEN THE FINDIN G THAT THE ASSESSEE WAS A BENEFICIARY. THE DOUBT OF THE ASSESS ING OFFICER IS WELL RECORDED IN THE FINDING THAT THE APPELLANT WAS DIRECTLY OR INDIRECTLY THE BENEFICIARY, AND IT GOES ON TO F URTHER SHOW THAT THE ASSESSING OFFICER HAS FAILED TO APPRECIATE THE FACTS OF THE CASE. 8.55 IN FACT, THE ABOVE FINDINGS AND CONCLUSION OF THE ASSESSING OFFICER SHOW THAT ONCE THE ALLEGATION HAD BEEN PUT UPON THE ASSESSEE THAT HE HAD RECEIVED SOME UNACCOUNTED MONE Y, THE ASSESSING OFFICER RUSHED TO CONCLUDE THAT THE ASSES SEE HAD INDEED RECEIVED THAT MONEY, AND IN THAT PROCESS, IG NORED THE BASIC FACTS OF THE CASE. IF THERE IS NO EVIDENCE TH AT ANY SUCH AMOUNT WAS ACTUALLY SENT, THEN DRAWING CONCLUSIONS MERELY ON THE BASIS OF EMAILS THAT SUCH AMOUNT WAS SENT, AND THAT ONCE IT WAS SENT, IT WOULD HAVE BEEN RECEIVED BY SOMEONE, A ND THAT SOMEONE COULD HAVE BEEN THE APPELLANT, IS CERTAINLY A VERY FARFETCHED LOGIC, AND RATHER IT GOES BEYOND THE REA LM OF LOGIC TOWARDS IRRATIONALITY AND SPECULATION. 8.56 IT IS NOTEWORTHY THAT THE DOCUMENTS IN QUESTIO N, I.E. THE PRINTOUTS OF THE EMAILS WERE SEIZED BY THE SIKKIM V IGILANCE POLICE FROM THE RESIDENCE OF SH. KUNWAR ONKAR SINGH , THE MANAGING DIRECTOR OF M/S SIKKIM DISTILLERIES LTD. T HE ASSESSING OFFICER HAS OBSERVED IN THE ASSESSMENT ORDER THAT S H. KUNWAR ONKAR SINGH DID NOT COMPLY TO SUMMONS U/S 131 ISSUE D TO HIM. IT HAS BEEN FURTHER OBSERVED BY THE ASSESSING OFFIC ER IN PARA 3.4 OF THE ASSESSMENT ORDER THAT SH. HARVANSH P CHA WLA, THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 43 APPELLANT, IN HIS STATEMENT RECORDED BY THE ASSESSI NG OFFICER ON 17.08.10 ADMITTED THAT HE KNEW SH. KUNWAR ONKAR SIN GH, WHO WAS THE MANAGING DIRECTOR OF M/S SIKKIM DISTILLERIE S LTD. AND WAS INTERESTED IN PURCHASING A NURSING HOME AT NOID A AND THAT HE HAD GIVEN A CHEQUE OF RS.55 CRORES WHICH WAS SEI ZED DURING THE COURSE OF SEARCH AT THE RESIDENCE OF THE APPELL ANT ON 28.02.07, AS AN EXPRESSION OF HIS SERIOUS INTEREST IN THE DEAL, BUT THE DEAL DID NOT MATERIALIZE AND THE CHEQUE WAS NEVER PRESENTED AND THAT THE NURSING HOME WAS STILL IN TH E NAME OF THE ORIGINAL OWNER. PERUSAL OF THE STATEMENT SHOWS THAT SH. KUNWAR ONKAR SINGH WAS INTRODUCED TO THE APPELLANT THROUGH A LAW FIRM CALLED M/S NORTEN ROSE OF LONDON AND THAT HE I.E. SH. KUNWAR ONKAR SINGH FURTHER INTRODUCED THE APPELLANT TO M/S STORM INTERNATIONAL B.V., AND THAT THE APPELLANT AC TED AS A LEGAL CONSULTANT TO THEM WHILE THEY WERE IN THE PRO CESS OF OBTAINING LICENCES FOR CASINOS INDIA. THUS THE APPE LLANT HAS BEEN ABLE TO SHOW HOW AND WHY HE WAS IN CONTACT WIT H THE PARTIES INVOLVED IN THE EMAILS. IN FACT, IT WAS SH. KUNWAR ONKAR SINGH HIMSELF WHO INTRODUCED THE APPELLANT TO M/S S TORM INTERNATIONAL B.V. IN SUCH A SITUATION, THE EXCHANG E OF EMAILS BETWEEN THOSE PARTIES AND REFERENCE TO THE APPELLAN T WAS NOT AN EXTRAORDINARY EVENT. HOWEVER, WHAT WAS EXTRAORDI NARY WAS THE CLAIM BY SH. MICHAEL BOETTCHER, PRESIDENT & CEO OF M/S STORM INTERNATIONAL B.V. THAT MR. SINGH, THE MINIS TER FROM SIKKIM HAD TOLD SH. MICHAEL BOETTCHER THAT THE APP ELLANT, I.E. SH. HARVANSH P. CHAWLA HAD NOT RECEIVED ANY PAYMENT FROM M/S STORM INTERNATIONAL B.V., AND THAT SH. HARVANSH P. CHAWLA SHOULD SEND $ 2.5 M TO MR. SINGH AND THAT IF THE CASINO LICENSE WAS WITHDRAWN, THE APPELLANT SHOULD RETURN TO STORM ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 44 THE FULL AMOUNT OF THE SUM WE PAID TO YOU PLUS ANY INTEREST INCURRED. 8.57 AN ANALYSIS OF THE LETTER DATED 17.08.09, NO. RC- 21&22/2008/S VPS/365 FROM THE SENIOR SUPERINTENDENT OF POLICE, SIKKIM VIGILANCE POLICE, GANGTOK FROM THE O FFICE OF THE DIRECTOR-CUM-COMMISSIONER, VIGILANCE, GANGTOK SHOWS THAT IT HAS BEEN CLEARLY STATED THAT IN THE SAID EMAIL ONE MR. SINGH HAS BEEN MENTIONED AS A MINISTER FROM SIKKIM. HOWEVER, THE LETTER DATED 17.08.09 ITSELF MAKES IT VERY CLEAR THAT THE RE WAS NO MINISTER IN SIKKIM WITH THE SURNAME SINGH. 8.58 FROM THE ABOVE, IT IS CLEAR THAT ONCE THERE WA S NO MINISTER IN SIKKIM WITH THE SURNAME SINGH, THE CLAIM BY THE ABOVE MENTIONED EMAIL FROM SH. MICHAEL BOETTCHER THAT MR. SINGH, THE MINISTER FROM SIKKIM HAD CALLED SH. MICHAEL BOETTCH ER WAS FALSE OR WAS THE RESULT OF FRAUD OR MISTAKE, AND ALSO THA T THERE WAS NO VALID PERSON TO WHOM THE APPELLANT OR ANY OTHER PERSON COULD HAVE GIVEN $ 2.5 M, I.E. 2.5 MILLION US DOLLA RS. 8.59 IN FACT, THE ABOVE MENTIONED LETTER DATED 17.0 8.09 ITSELF AGAIN MAKES IT VERY CLEAR THAT THE ABOVE MENTIONED SH. KUNWAR ONKAR SINGH COULD HAVE COMMITTED FRAUD OR MISREPRES ENTATION, AS THE LETTER STATES THAT IN ALL PROBABILITY SHRI KUNWAR ONKAR SINGH MIGHT HAVE POSED HIMSELF AS A MINISTER WHILE CONTACTING M/S STORM INTERNATIONAL, RUSSIA. 8.60 IN VIEW OF THE ABOVE OPINION EXPRESSED IN THE PRIMARY LETTER, I.E. THE LETTER DATED 17.08.09 FROM THE SIK KIM VIGILANCE POLICE TO THE DIRECTOR GENERAL OF INCOME TAX (VIGIL ANCE), DELHI, IT IS CLEAR THAT THE SIKKIM VIGILANCE POLICE ITSELF WAS OF THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 45 OPINION THAT SH. KUNWAR ONKAR SINGH WAS COMMITTING FRAUD UPON M/S STORM INTERNATIONAL, OR AT LEAST THAT HIS CONDUCT WAS DUBIOUS. IN SUCH A SITUATION, IT WAS QUITE LIKELY T HAT THE PERSONS COMING IN CONTACT WITH THE SAID PERSON COULD BE ACC USED OF WRONGDOINGS, OR HAVING KNOWLEDGE OF THINGS ABOUT WH ICH THEY KNEW NOTHING OR OF HAVING POSSESSION OF MONEY OR TH INGS ABOUT WHICH THEY HAD NO IDEA. 8.61 THERE IS ABSOLUTELY NO DOUBT THAT THERE WAS NO MINISTER SINGH IN SIKKIM AT THAT TIME, AND WHOSOEVER DISCUSS ED WITH M/S STORM INTERNATIONAL POSING AS MINISTER SINGH FROM SIKKIM WAS COMMITTING FRAUD AND MISREPRESENTATION. THE LETTER DATED 17.08.9 INDICATES THAT THE SIKKIM VIGILANCE POLICE WAS OF THE OPINION THAT IT WAS SH. KUNWAR ONKAR SINGH WHO WAS THE SUSPECT. WHETHER SUCH FRAUD AND MISREPRESENTATION W AS COMMITTED BY SH. KUNWAR ONKAR SING;H (AS STRONGLY S USPECTED BY SIKKIM VIGILANCE POLICE) OR ANY OTHER PERSON IS NOT RELEVANT FOR DECIDING THE ISSUE IN HAND, AS ONCE IT IS CLEAR THAT THE PERSON CLAIMING TO BE MINISTER SINGH FROM SIKKIM WAS COMMITTING FRAUD AND MISREPRESENTATION, IT IS OBVIO US THAT HE WOULD BE MAKING FALSE CLAIMS, AND ANY FURTHER CLAIM MADE BY M/S STORM INTERNATIONAL (EITHER AS VICTIM OF SUCH F ALSE CLAIMS OR AS A CO-CONSPIRATOR) ON THE BASIS OF SUCH FALSE CLA IMS CANNOT BE RELIED UPON. 8.62 IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR T HAT THE EMAIL SENT BY SH. MICHAEL BOETTCHER, PRESIDENT & CEO OF M /S STORM INTERNATIONAL B.V., TO THE APPELLANT, ON WHICH THE ENTIRE CASE HAS BEEN BUILT UP IS NOT AT ALL RELIABLE. FURTHER, IN VIEW OF THE ABSENCE OF ANY CONFIRMATION BY THE RECIPIENT (THE A PPELLANT) ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 46 AND OF ANY CORROBORATIVE EVIDENCE, THERE WAS NO JUS TIFICATION AT ALL FOR THE CONCLUSION THAT THE APPELLANT HAD RECEI VED THE AMOUNT OF 7 MILLION US DOLLARS. HOWEVER, AS POINTED OUT ABOVE, EVEN THE ASSESSING OFFICER WAS NOT SURE WHETHER THE AMOUNT HAD BEEN RECEIVED BY THE APPELLANT, AS THE CONCLUSI ON WAS THAT THE APPELLANT WAS DIRECTLY OR INDIRECTLY THE BENEF ICIARY OF THE AMOUNT OF USD 7,000,000 MENTIONED IN THE EMAIL, WHI CH WAS A TOTALLY UNJUSTIFIED CONCLUSION AS DISCUSSED IN PARA 8.54 AND 8.55 ABOVE. 8.63 THE ASSESSING OFFICER HAS ALSO STATED IN PARA 3.8 THAT IF IS A SETTLED LEGAL PRINCIPAL THAT IN A SITUATION WHERE THE EVIDENCE AND PREPONDERANCE OF PROBABILITY POINTS AGAINST THE ASSESSEE, THE ONUS IS ON THE ASSESSEE TO DISPROVE THE EVIDENC E. THE ONLY WAY THE ASSESSEE COULD HAVE DISCHARGED THE ONUS IS BY FURNISHING THE NAMES AND OTHER DETAILS OF THE BENEF ICIARIES. HOWEVER, AS DISCUSSED ABOVE NEITHER THE EVIDENCE NO R ANY PREPONDERANCE OF PROBABILITY POINTS AGAINST THE ASS ESSEE AND HENCE THE ONUS WAS NOT UPON THE APPELLANT, TUT WAS RATHER UPON THE ASSESSING OFFICER, WHO IN THE ABSENCE OF ANY DI RECT EVIDENCE OR MATERIAL, MONEY TRAIL OR STATEMENT OR ANY OTHER FACTOR AGAINST THE APPELLANT HAS SOUGHT TO CONCLUDE THAT A N AMOUNT OF $ 7 MILLION WAS RECEIVED BY THE APPELLANT. THE ASSE SSING OFFICER HAS FAILED TO DISCHARGE THAT ONUS. 8.64 THE ASSESSING OFFICER HAS FURTHER MENTIONED TH AT THE APPELLANT HAS ADMITTED THAT SH. NARINDER GROVER WAS USING THE OFFICE PREMISES AND INFRASTRUCTURE AT HIS LAW FIRM M/S K.R. CHAWLA AND CO. AND THAT HE HAD EVEN BEEN ALLOTTED A N EMAIL ID ON THE INTERNAL SERVER OF THE ASSESSEES LAW FIRM. THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 47 ASSESSING OFFICER HAS STATED THAT IT IS UNLIKELY T HAT A RESPONSIBLE LAWYER LIKE THE ASSESSEE WOULD LET ANYO NE USED HIS OFFICE SPACE AND FACILITIES WITHOUT HAVING THE DETA ILS REGARDING THE BACKGROUND OF THAT PERSON. HOWEVER, IT HAD BEE N CLARIFIED BY THE APPELLANT AT THE ASSESSMENT PROCEEDINGS ITSE LF THAT SH. NARINDER GROVER WAS WORKING ON BEHALF OF M/S STORM INTERNATIONAL, WHO WAS CLIENT OF THE APPELLANT, AND THAT IT WAS CUSTOMARY AMONG THE LAW FIRMS TO PROVIDE TABLE SPAC E AND COMMUNICATIONS FACILITIES ON TEMPORARY BASIS TO CLI ENTS STILL THEY HAVE THEIR OWN SETUP, AND THAT IN A SIMILAR AR RANGEMENT, SH. NARINDER GROVER WAS ALLOWED TO USE THE OFFICE F ACILITIES AND THE E-MAIL ADDRESS. IT WAS ALSO STATED BY THE APPEL LANT THAT THE USE OF THESE FACILITIES WAS BILLED TO THE CLIENT M/ S. STORM INTERNATIONAL. THE APPELLANT ALSO INFORMED THAT SH. NARINDER GROVER USED TO CONTINUOUSLY WORK FROM THE OFFICE OF M/S K.R. CHAWLA AND CO. FOR THE PERIOD STARTING A FEW DAYS B EFORE DIWALI, 2007 TILL DECEMBER, 2007, AND THAT AFTER JANUARY 20 08 HE STOPPED COMING TO OFFICE. THESE FACTS WERE STATED B Y THE APPELLANT IN REPLY TO QUESTION 6 OF HIS STATEMENT, WHICH HAS ALSO BEEN REPRODUCED IN THE ASSESSMENT ORDER IN PAR A 3.9. THOUGH THE ASSESSING OFFICER HAS REPRODUCED THE INF ORMATION GIVEN BY THE APPELLANT, NO FURTHER INQUIRY ON THE S AME HAS BEEN CONDUCTED, NOR ANY JUSTIFICATION OR REASONING FOR R EJECTION HAS BEEN GIVEN AND THE CLAIMS OF THE APPELLANT HAVE BEE N REJECTED OUTRIGHT STATING THAT IT WAS UNLIKELY THAT A RESPO NSIBLE LAWYER LIKE THE ASSESSEE WOULD LET ANYONE USE.... HERE AG AIN, THE CLAIM OF THE APPELLANT HAS BEEN REJECTED BY THE ASS ESSING OFFICER, MERELY BECAUSE IN THE OPINION OF THE ASSES SING OFFICER, THE ALLOWING OF USE OF OFFICE SPACE AND FACILITIES WAS UNLIKELY, THUS MAKING IT CLEAR THAT THERE WAS NOTHING DEFINIT E, BUT ONLY AN ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 48 OPINION THAT ALLOWING OF THE USE WAS UNLIKELY. EVEN FOR SUCH A CONCLUSION, THE ASSESSING OFFICER REFERS TO THE APP ELLANT AS A RESPONSIBLE LAWYER, WHICH IS A CONTRADICTORY COMM ENT, AS ON ONE HAND IN THE OPINION OF THE ASSESSING OFFICER, T HE APPELLANT IS RESPONSIBLE, BUT ON THE OTHER HAND THE ASSESSI NG OFFICER SUSPECTS HIM OF IRRESPONSIBLE ACTS, AND THAT TOO WI THOUT ANY PROPER JUSTIFICATION. IT IS SEEN THAT THE USE OF TH E FACILITIES OF M/S K.R. CHAWLA & CO. BY SH. NARINDER GROVER WAS ON BEHALF OF M/S STORM INTERNATIONAL B.V. AND THAT THE USE OF TH ESE FACILITIES WAS BILLED TO THE CLIENT M/S STORM INTERNATIONAL B. V. HENCE, THE; DRAWING OF ANY ADVERSE INFERENCE AGAINST THE A PPELLANT WAS NOT AT ALL JUSTIFIED. 8.65 IN PARA 3.11 OF THE ASSESSMENT ORDER THE ASSES SING OFFICER HAS MADE THE FOLLOWING OBSERVATIONS, ON THE BASIS O F WHICH HE HAS DRAWN FINAL CONCLUSIONS: 1. THE ASSESSEE ADMITTED THE FACT THAT THE EMAIL FR OM MR. MICHAEL BOETTCHER WAS RECEIVED BY HIM. 2. THE ASSESSEE ACCEPTED HIS ASSOCIATION WITH M/S. STORM INTERNATIONAL B.V. 3. THE EMAIL CLEARLY MENTIONS THAT MONEY HAS BEEN R ECEIVED BY THE ASSESSEE AND FIXES THE LIABILITY ON HIM TO P AY BACK ALONGWITH INTEREST IN THE EVENT OF CASINO LICENSE B EING CANCELLED. 8.66 AS DISCUSSED ABOVE, NONE OF THE ABOVE POINTS C AN LEAD TO THE CONCLUSION THAT THE APPELLANT RECEIVED ANY MONE Y. THE APPELLANT WAS A LEGAL CONSULTANT TO M/S STORM INTER NATIONAL ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 49 B.V., WHICH HE HAS OPENLY ADMITTED, AND WAS FULLY J USTIFIED IN VIEW OF HIS BEING A PRACTICING LAWYER, AND HENCE NO ADVERSE INFERENCE CAN BE DRAWN ON THE BASIS OF SUCH ASSOCIA TION WITH M/S. STORM INTERNATIONAL B.Y. FURTHER, SH. MICHAEL BOETTCHER BEING THE PRESIDENT & CEO OF M/S. STORM INTERNATION AL B.V. COULD BE IN COMMUNICATION WITH THE APPELLANT AND RE CEIVING AN EMAIL FROM HIM WAS NOT AT ALL EXTRAORDINARY. THE ON LY EXTRAORDINARY OR SUSPICIOUS ISSUE AMONGST THE ABOVE THREE OBSERVATIONS OF THE ASSESSING OFFICER IN PARA 3.11 OF THE ASSESSMENT ORDER WAS THE CONTENT OF THE EMAIL AS PE R WHICH THERE WAS AN ALLEGATION THAT THE APPELLANT HAD RECE IVED SOME MONEY (WITHOUT SPECIFYING THE AMOUNT RECEIVED, WHEN AND HOW RECEIVED), WHICH HAS ALREADY BEEN DISCUSSED ABOVE I N DETAIL FROM PARA 8.43 TO 8.62 ABOVE AND THE CLEAR CONCLUSI ON HAS BEEN DRAWN THAT THERE WAS NO REASON TO HOLD THAT THE APP ELLANT HAD RECEIVED ANY MONEY. 8.67 THE ASSESSING OFFICER ON THE BASIS OF THE ABOV E OBSERVATIONS IN PARA 3.11 OF THE ASSESSMENT ORDER H AS HELD THAT THE EVIDENCE POINTS TO THE ASSESSEE HAVING RECEIVED US DOLLARS 7 MILLION THROUGH UNDISCLOSED SOURCES, THE RUPEE EQ UIVALENT OF WHICH BEING RS.28,00,00,000/- WAS TREATED AS HIS UN DISCLOSED INCOME. AS ALREADY DISCUSSED ABOVE, NEITHER THERE W AS ANY EVIDENCE AGAINST THE ASSESSEE NOR THERE WAS ANY OTH ER MATERIAL TO SHOW THAT THE ASSESSEE HAD RECEIVED THE ALLEGED AMOUNT OF 7 MILLION US DOLLARS, NOR ANY OF THE 3 OBSERVATIONS P ROVE ANY ALLEGATION AGAINST THE APPELLANT. 8.68 FURTHER, THE REMAND. REPORTS FROM THE ASSESSIN G OFFICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMI SSIONER ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 50 HEADING THE RANGE ONLY REITERATE THE STAND OF THE A SSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTI ONS AND CONCLUSIONS OF THE ASSESSING OFFICER. IT HAS BEEN M ENTIONED IN THE REMAND REPORT DATED 26.02.14 THAT IT HAS BEEN T HE STAND OF REVENUE THAT THE EMAILS SEIZED BY SIKKIM VIGILANCE POLICE: ARE AUTHENTIC AND GENUINE SOURCE OF INFORMATION, AND IN THE ABSENCE OF ANY EVIDENCE TO CONTRARY, IT MAY NOT BE: APPROPR IATE TO DOUBT THE VERACITY OF INFORMATION RECEIVED FROM AN INDEPE NDENT LAW ENFORCING AGENCY. HOWEVER, AS DISCUSSED ABOVE, THER E IS NO EVIDENCE THAT ANY SUCH AMOUNT WAS ACTUALLY SENT, AN D DRAWING CONCLUSIONS MERELY ON THE BASIS OF EMAILS (WHICH WE RE NEITHER CONFIRMED BY THE APPELLANT, NOR ANY CORROBORATIVE E VIDENCE WAS FOUND), THAT SUCH AMOUNT WAS SENT, AND THAT ONCE IT WAS SENT, IT WOULD HAVE BEEN RECEIVED BY SOMEONE, AND THAT SOMEO NE COULD HAVE BEEN THE APPELLANT, IS CERTAINLY IN THE REALM, OF IRRATIONALITY AND SPECULATION. AS ALREADY MENTIONED ABOVE, THE SIKKIM VIGILANCE POLICE ITSELF HAS STATED IN THE LE TTER DATED 17.08.9 ITSELF MAKES IT VERY CLEAR THAT THERE WAS NO MINISTER IN SIKKIM WITH THE SURNAME SINGH., AND HENCE IT IS OB VIOUS THAT, THE CLAIM BY THE ABOVE MENTIONED EMAIL FROM SH. MIC HAEL BOETTCHER THAT MR. SINGH, THE MINISTER FROM SIKKIM HAD CALLED SH. MICHAEL BOETTCHER WAS FALSE OR WAS THE RESULT O F FRAUD OR MISTAKE, AND ALSO THAT THERE WAS NO VALID PERSON TO WHOM THE APPELLANT OR ANY OTHER PERSON COULD HAVE GIVEN $ 2. 5 M, I.E. 2.5 MILLION US DOLLARS. THE ABOVE MENTIONED LETTER DATE D 17.08.09 ITSELF AGAIN MAKES IT VERY CLEAR THAT THE ABOVE MEN TIONED SH. KUNWAR ONKAR SINGH COULD HAVE COMMITTED FRAUD OR MISREPRESENTATION, AS THE LETTER STATES THAT IN AL L PROBABILITY SHRI KUNWAR ONKAR SINGH MIGHT HAVE POSED HIMSELF AS A MINISTER WHILE CONTACTING M/S STORM INTERNATIONAL, RUSSIA, FROM ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 51 WHICH IT IS CLEAR THAT THE SIKKIM VIGILANCE POLICE ITSELF WAS OF THE OPINION THAT SH. KUNWAR ONKAR SINGH WAS COMMITT ING FRAUD UPON M/S STORM INTERNATIONAL, OR AT LEAST THAT HIS CONDUCT WAS DUBIOUS, AND HENCE THE ALLEGATION OF M/S STORM INTE RNATIONAL ON THE BASIS OF INFORMATION / CLAIMS / ALLEGATIONS BY SH KUNWAR ONKAR SINGH CANNOT AT ALL TAKEN TO BE AUTHENTIC AND GENUINE . THE REMAND REPORT ALSO STATES THAT THE ONUS WAS ON THE ASSESSEE TO DISPROVE THE PRESUMPTION AGAINST HIM. H OWEVER, THE EMAILS WERE NOT FOUND FROM THE PREMISE OF THE A PPELLANT HENCE THERE WAS NO PRESUMPTION U/S 132(4) OF THE IN COME TAX ACT, 1961 AGAINST THE APPELLANT, NOR THERE WAS ANY OTHER EVIDENCE OR MATERIAL WHICH INDICATED PRESUMPTION AG AINST THE APPELLANT. IN FACT, THE ONUS WAS UPON THE ASSESSING OFFICER, AS MENTIONED IN PARA 8.63 ABOVE, AND HE HAS FAILED TO DISCHARGE THE SAME. 8.69 IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD TH AT THERE IS NO JUSTIFICATION FOR THE CLAIM THAT THE APPELLANT R ECEIVED $ 7 MILLION. ACCORDINGLY, THE ADDITION OF RS.28,00,00,0 00/- AS UNDISCLOSED INCOME HINDER THE HEAD INCOME FROM OTH ER SOURCES IS HEREBY DELETED. GROUND NO. 2 OF THE APP EAL IS HEREBY ALLOWED. 20. WE FIND THAT THE LD. CIT (A) HAS ANALYZED EACH AND EVERY ASPECT OF THE ALLEGATIONS MADE THE AO CALLED FOR RE PORTS, GONE THROUGH THE CONTENTS OF THE INFORMATION RECEIVED, T HE EVIDENCES BEFORE THE REVENUE, THE EXPLANATION OF THE ASSESSEE AND THE REMAND REPORTS AND CAME TO A CONCLUSION THAT THERE IS NO LIABILITIES ON THE PART OF THE ASSESSEE AND THE REV ENUE COULD NOT ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 52 BRING ABOUT ANY COGENT MATERIAL TO PROVE THE ALLEGA TIONS. HENCE, WE DECLINE TO INTERFERE WITH THE ORDER OF TH E LD. CIT (A). UNSECURED LOANS: 21. DURING THE YEAR, THE ASSESSEE RECEIVED UNSECURE D LOANS FROM VARIOUS PARTIES AS MENTIONED UNDER: LOANS RECEIVED FROM RECEIVED M/S. KARINA HOTELS PVT. LTD. RS.1,01,60,000/- M/S. KARINA HOSPITALITY PVT. LTD. RS.1,03,34,000/- M/S. NAVYA SECURITIES PVT. LTD. RS.7,01,49,880/- M/S. K.P. & ASSOCIATES RS.98,80,000/- M/S. STORM HOTELS PVT. LTD. RS.46,50,000/- M/S. H.N. CONSULTANTS PVT. LTD. RS. 9,93,171/- SHRI N.K. AHUJA RS.30,00,000/- RS.10,91,67,051/- 22. FURTHER, ADDITION HAVE BEEN MADE ON THE BASIS T HAT THE ASSESSEE HAS RECEIVED THE FOLLOWING UNSECURED LOANS DURING THE RELEVANT YEAR AND IN THE NEXT ASSESSMENT YEAR. SR. NO. LOAN RECEIVED AMOUNT 1. M/S. KARINA HOTELS PVT. LTD. RS.1,01,60,000 2. M/S. KARINA HOSPITALITY PVT. LTD. RS.1,03,34,000/- 3. M/S. NAVYA SECURITIES PVT. LTD. RS.7,01,49,880/- 4. M/S. KP & ASSOCIATES RS.98,80,000/- 5. M/S. STROM HOTELS PVT. LTD. RS.46,50,000/- 6. M/S. HN CONSULTANT PVT. LTD. RS.9,93,171/- 7. SHRI NK AHUJA RS.30,00,000/- 8. M/S. KARINA HOTELS PVT. LTD. RS.28,00,000/- 9. M/S. NAVYA SECURITIE RS.1,79,201/- 10. M/S. KR CHAWLA CONSULTING PVT. LTD. RS.9,16,42,740/- 11. M/S. K.R. CHAWLA INFRA & AVIATION ACADEMY PVT. LTD. RS.32,88,93,299/- 12. M/S. MANSION HOTELS PVT. LTD. RS.2,80,00,000/ - 13. H T RECON CONSTRUCTION PVT. LTD. RS.85,02,276/- TOTAL RS.56,91,84,,567/ ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 53 23. DURING COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE FILED THE CONFIRMATION, COPY OF ITR, COPY OF BALANC E SHEET, BANK STATEMENT AND OTHER RELEVANT EVIDENCES IN RESPECT O F ALL THE PARTIES EXCEPT FROM SH. NK AHUJA WHO WAS NO MORE AT THAT TIME. 24. THE AO MENTIONED THE EVIDENCES FILED IN THE ASS ESSMENT ORDER AND MADE THE ADDITION HOLDING THAT 'THE ASSES SEE APPEARS TO BE BRINGING IN UNACCOUNTED MONEY IN TO HIS BOOKS AFTER CREATING THE LAYERS OF INTERMEDIARIES. HENCE THE CR EDIT WORTHINESS OF THE LENDER AND THE GENUINENESS OF THE TRANSACTION ARE NOT ESTABLISHED. 25. THE A.O. TREATED THE AFORESAID LOANS FROM THE P ARTIES AS BOGUS AND MADE THE ADDITION THEREOF ON FOLLOWING RE ASONS: A. THE CREDITORS GAVE THE LOAN TO THE APPELLANT EI THER AFTER BORROWING THE FUND OR BY OBTAINING THE SHARE APPLIC ATION MONEY (IN CASE OF CORPORATE CREDITORS ONLY). HENCE, HE HE LD THAT THE CREDITORS HAD NO SUFFICIENT MONEY OF THEIR OWN FOR GIVING THE LOAN TO THE APPELLANT. B. THE ASSESSEE HAS CREATED A LAYER OF INTERMEDIATO RIES TO BRING THE UNACCOUNTED MONEY IN HIS BOOKS OF ACCOUNT S BY WAY OF UNSECURED LOAN. 26. BEFORE THE LD. CIT (A), THE ASSESSEE FILED A PE TITION DATED 16.09.2011 UNDER RULE 46A ENCLOSING THE CONFIRMATIO N FROM THE LEGAL HEIR OF LATE SH. NK AHUJA, AFFIDAVIT, COPY OF ACKNOWLEDGEMENT OF ITR AND BANK STATEMENT OF THE CR EDITOR AND ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 54 ALSO THE DEATH CERTIFICATE, IN RESPECT OF THE LOAN AMOUNTING TO RS.30,00,000/-. 27. THE AO FILED THE REMAND REPORT DATED 16.12.2012 OBJECTING THE ADMISSION OF NEW EVIDENCES AND ON MERIT HE RAIS ED AN OBJECTION THAT CREDITOR'S RETURN INCOME WAS ONLY FO R RS. 6,71,750/-, IT WAS NOT POSSIBLE FOR HIM TO ADVANCE RS. 30,00,000/- TO THE ASSESSEE. 28. THE ASSESSEE FILED THE REJOINDER DATED 14.03.20 12 AGAINST THE REMAND REPORT DATED 16.02.2012 EXPLAINING THE R EASON OF DEATH OF THE CREDITOR WHICH PREVENTED THE ASSESS EE TO FILE THE CONFIRMATION. SINCE THE ASSESSEE'S CASE IS COVERED UNDER CLAUSE (B) OF RULE 46A, THE NEW EVIDENCES WERE ADMITTED BY THE LD. CIT (A). 29. BEFORE THE LD. CIT (A), IT WAS ALSO EXPLAINED T HAT ON THE BASIS OF BANK , THE FACT WAS EVIDENT THAT THE CREDI TOR WAS HAVING REGULAR TRANSACTION OF DEPOSIT OR WITHDRAWALS OF TH E FUNDS. THE ASSESSEE RECEIVED RS.63,00,000/- AND REPAID RS.33,0 0,000/- DURING THE YEAR. THUS, THE BALANCE AMOUNT OF RS.30, 00,000/- WAS APPEARING AT THE END OF THE YEAR. DURING SUBSEQ UENT YEAR, THE ASSESSEE NOT ONLY REFUNDED THE BALANCE AMOUNT O F RS.30,00,000/- BUT HE MADE THE EXCESS PAYMENT OF RS.20,00,000/- TO LATE SH. NK AHUJA. 30. THE LD. CIT (A) HELD THAT THE ON BASIS OF EVIDE NCES FURNISHED WITH PETITION UNDER RULE 46A, IT IS EVIDE NT THAT THE CREDITOR WAS IN EXISTENCE AND ASSESSED TO INCOME TA X. THE LOAN WAS OBTAINED THROUGH BANKING CHANNEL AND THE CREDIT OR HAD CAPACITY TO ADVANCE SUCH LOAN. THE LOAN WAS ALSO RE FUNDED IN ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 55 SUBSEQUENT YEARS THROUGH BANKING CHANNEL. HENCE, TH E IDENTITY OF THE CREDITOR, GENUINENESS OF THE LOAN AND CREDIT WORTHINESS OF THE CREDITOR IS PROVED. HENCE, THE ADDITION OF RS.3 0,00,000/- WAS DELETED. WE HAVE GONE THROUGH THE CONTENTS AND FIND NO INFARCTION OF LAW. HENCE, WE DECLINE TO INTERFERE W ITH THE ORDER OF THE LD. CIT (A). 31. BEFORE THE LD. CIT (A), THE ASSESSEE HAS SUBMIT TED AS UNDER: I. LEGAL PROVISIONS IN CASE OF CASH CREDIT (I) THAT IN RESPECT OF GENUINENESS OF LOAN, IT IS N ECESSARY TO EXAMINE THE LEGAL PROVISION OF SECTION 68 OF THE IN COME TAX ACT. 1961. WHICH IS REPRODUCED AS BELOW:- 'WHERE ANY SUM IS FOUND CREDITED IN THE BOOK OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE (ASSESSING) OFFICER, SATISFACTORY, THE SUM SO CREDI TED MAY BE CHARGED TO INCOME TAX AS THE ASSESSEE OF THAT PREVI OUS YEAR'. THAT GOING THROUGH THE PROVISION OF SECTION 68, IT IS EVIDENT THAT FOLLOWING INGREDIENTS ARE REQUIRED FOR THE APP LICATION OF PROVISION OF SECTION 68 OF THE I.T ACT, 1961 AND AL SO FOR PROVING THE GENUINENESS OF LOANS/DEPOSITS: A. ANY SUM FOUND TO BE CREDITED IN THE BOOKS OF ACC OUNTS OF THE ASSESSEE, B. BOOKS MAINTAINED FOR ANY PREVIOUS YEAR, ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 56 C. EXPLANATION OF THE ASSESSEE IS REQUIRED ABOUT TH E NATURE AND SOURCE OF THE SAID SUM SO CREDITED TO THE SATIS FACTION OF THE A.O. II. ASSESSEE'S EXPLANATION NOT TO BE REJECTED ARBIT RARILY (I) THAT ON GOING THROUGH THE ASSESSMENT ORDER, YOU R GOODSELF WILL FIND THAT THERE IS NO DISPUTE ABOUT THE FIRST TWO INGREDIENTS OF SECTION 68, I.E. FIRST, THE LOAN AMOUNTS CREDITE D IN THE BOOKS OF ACCOUNT OF THE APPELLANT AND SECONDLY, THE LOAN WAS OBTAINED DURING THE PREVIOUS YEAR (UNDER CONSIDERATION). IN RESPECT OF THIRD CONDITION, I.E. 'EXPLANATION OF THE ASSESSEE ABOUT THE NATURE AND SOURCE OF THE SUM SO CREDITED TO THE SAT ISFACTION OF THE A.O', IT IS BROUGHT TO YOUR KIND NOTICE THAT TH E APPELLANT HAD SUBMITTED EXPLANATION ENCLOSING THE SUPPORTING EVIDENCES BEFORE THE LD. A.O. DURING COURSE OF ASSESSMENT PRO CEEDINGS. THE LD. A.O. NEITHER REJECTED THE APPELLANT EXPLANA TION NOR GAVE ANY OBSERVATION SHOWING THE DEFICIENCY IN THE EVIDE NCES. HE FURTHER DID NOT GIVE ANY OBSERVATION ABOUT THE INSU FFICIENCY OF THE EVIDENCES IN SUPPORT OF THE LOANS OBTAINED BY T HE APPELLANT. IN SUM AND SUBSTANCE, IT IS EVIDENT FROM THE ASSESS MENT ORDER THAT THE LD. A.O. WAS SATISFIED WITH THE APPELLANT EXPLANATION AND THE SUPPORTING EVIDENCES ENCLOSED WITH WRITTEN SUBMISSION. HOWEVER, HE MADE ADDITION ON THE GROUND THAT THE CR EDITOR GAVE THE LOAN TO THE APPELLANT AFTER BORROWING THE FUND FROM THIRD PERSON. THUS, THE REASON FOR ADDITION IS NEITHER LE GAL NOR JUSTIFIED AND THE SAME IS LIABLE TO BE DELETED. (II) THAT FARTHER IN RESPECT OF THIRD REQUIREMENT, I.E. 'EXPLANATION OF THE ASSESSEE SHOULD BE TO THE SATIS FACTION OF THE A.O.' THE COURTS ARE OF THE VIEW THAT THE A.O CANNO T REJECT THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 57 ASSESSEE'S EXPLANATION ARBITRARILY. HON'BLE BOMBAY HIGH COURT OF NAGPUR BENCH IN VERY OLD CASE OF NAIDU (RBNJ) VS CIT (1956) 29 ITR 194 (NAG) HELD THAT WHERE THE EXPLANATION FU RNISHED BY AN ASSESSEE ABOUT THE AMOUNT CREDITED IS PRIMA FACI E REASONABLE, THE SAID EXPLANATION CANNOT BE REJECTED ON CAPRICIOUS AND ARBITRARY GROUNDS. (III) THAT HON'BLE SUPREME COURT IN THE CASE OF CIT VS K.S KANNAN KUNHI (1973) 87 ITR 395 (SC) IN PARA 6 OF TH E JUDGMENT EXPRESSED ITS DISPLEASURE EXPLANATION FURNISHED BY THE ASSESSEE AND FOR REJECTING THE SAME ARBITRARILY AND WITHOUT ASSIGNING ANY REASON FOR THE SAME. THE RATIO OF THE JUDGMENT IN T HIS CASE IS THAT THE ASSESSEE'S EXPLANATION MUST, BE EXAMINED C AREFULLY AND IF IT IS FOUND NOT TO BE ACCEPTABLE, THE PROPER REA SON FOR REJECTING THE EXPLANATION SHOULD BE GIVEN IN THE OR DER. THE RELEVANT PORTION OF THE JUDGMENT IS REPRODUCED FPR YOUR KIND PERUSAL. 'THE ITO DID NOT EXAMINE THE MERITS OF THOSE EXPLAN ATIONS. HE REJECTED THEM BY MERELY OBSERVING THAT THEY WERE NO T SATISFACTORY. THE EXPLANATIONS OFFERED BY THE ASSES SEE ARE NOT PRIMA FACIE ABSURD. THEY WERE CAPABLE OF BEING EXAM INED BY THE ITO. IT WAS POSSIBLE FOR THE ITO TO GO INTO THE EXT ENT OF THE IMMOVABLE PROPERTY OWNED BY THE HUF AND ITS INCOME. HE DID NOT CARE TO DO SO. IT WAS ALSO POSSIBLE FOR THE ITO TO GO INTO THE QUESTION OF REMITTANCES MADE BY KANNAN KUNHI FROM C EYLON. HERE AGAIN THE ITO DID NOT CHOOSE TO DO SO. IT WAS NOT EVEN SUGGESTED BY THE ITO THAT THE ASSESSES WAS HAVING A NY BUSINESS ACTIVITY IN INDIA PRIOR TO 17TH AUG., 1950 , OR ANY OTHER SOURCE OF INCOME TAXABLE WIDER THE ACT IF THE EXPLA NATION GIVEN ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 58 BY THE ASSESSEE THAT PART OF THE INITIAL BUSINESS C APITAL WAS SUPPLIED BY KANNAN KUNHI IS CORRECT THEN THE SAME I S A GOOD EXPLANATION. THAT EXPLANATION HAS NOT BEEN EXAMINED AT ALL. SIMILARLY, THE ASSESSEE'S EXPLANATION THAT HE WAS H AVING INCOME FROM THE AGRICULTURAL PROPERTY HAS NOT BEEN EXAMINE D. THE AAC ALSO DID NOT CHOOSE TO EXAMINE THE EXPLANATION GIVE N NOR DID THE TRIBUNAL CARE TO GO INTO THAT EXPLANATION. IT J UST BRUSHED ASIDE THAT EXPLANATION WITH THE OBSERVATION 'THAT T HE ASSESSEE HAD NO PROPER OR SATISFACTORY EXPLANATION FOR THE S OURCES OF THESE AMOUNTS. IN OUR OPINION, THE DEPARTMENTAL AUT HORITIES AS WELL AS THE TRIBUNAL HAD ARBITRARILY REJECTED THE E XPLANATION GIVEN BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES WE DO NOT THINK THAT WE WILL BE JUSTIFIED IN GOING INTO THE N ICETIES OF THE LAW, WHETHER THE HIGH COURT WAS JUSTIFIED IN GOING INTO, THE MERITS OF THE FINDINGS REACHED BY THE TRIBUNAL. ALL THAT WE NEED SAY IS THAT THIS IS NOT A FIT AND PROPER CASE WHERE WE SHOULD EXERCISE OUR DISCRETIONARY JURISDICTION. THAT ON GOING THROUGH THE ASSESSMENT ORDER YOUR GOO DSELF WILL FIND THAT THE LD. A.0 DID NOT PASS ANY COMMENT IN R ESPECT OF THE EVIDENCES FURNISHED IN SUPPORT OF THE AFORESAID CAS H CREDIT IN OTHER WORDS, HE NEITHER ACCEPTED THE ASSESSEES EXP LANATION NOR REJECTED THE SAME. ON THE CONTRARY, THE LD. A.0 MAD E ADDITION OF RS.10,91,67,0517- ON ALTOGETHER DIFFERENT REASON S, WHICH ARE NOT REQUIRED UNDER SECTION 68 OF THE INCOME TAX ACT , 1961. THE LD. A.O. MADE THE AFORESAID ADDITION BY OBSERVING T HAT THE CREDITORS HAD GIVEN THE LOAN TO THE APPELLANT EITHE R BY TAKING THE LOAN/SHARE APPLICATION MONEY (IN THE EASE OF CO RPORATE CREDITORS) OR THEY HAD NO SUFFICIENT THEIR OWN SOUR CE OF FUNDS. IN SUBSTANCE, THE LD. A.O. HAS MADE THE ADDITION UN DER SECTION ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 59 68 IN THE CASE OF APPELLANT BY EXAMINING THE SOURCE OF SOURCES WHICH IS NOT PERMISSIBLE IN THE EYE OF LAW. HENCE, THE ADDITION OF RS.10,91,67,051/- MADE BY LD. A.O. BY EXAMINING THE SOURCE OF SOURCES IS NOT JUSTIFIED AND THE SAME IS LIABLE TO BE DELETED. THE RELEVANT CASE LAWS ON THE ISSUE OF EXAMINING TH E SOURCE OF SOURCES ARE GIVEN IN THIS SUBMISSION ITSELF. III. INGREDIENTS FOR GENUINENESS OF THE LOAN THAT IN THE LAND MARK DECISION IN THE CASE OF SHANK ER INDUSTRIES VS. CIT (1978) 114 ITR 689 (CAT), HOHBLE CALCUTTA HIGH CO.URT LAID DOWN FOLLOWING THREE CONDITIONS TO PROVE PRIMA FACIE THE CASH CREDIT AS GENUINE. A. THE IDENTITY OF THE CREDITOR, B. THE CAPACITY OF SUCH CREDITOR TO ADVANCE THE LOA N, AND C. THE GENUINENESS OF THE TRANSACTION, (II) THAT HON'BLE CALCUTTA: HIGH COURT IN C. KANT A ND CO. VS. CIT (1980) 126 ITR 63(CAL) HELD THAT IN CASE ABOVE THRE E INGREDIENTS HAVE BEEN PROVED BY ADDUCING THE EVIDEN CES, IT WILL BE PRESUMED THAT THE ASSESSEE HAS DISCHARGED HIS ON US IN PROVING THE GENUINENESS OF THE LOAN AND NO ADDITION U/S 68 CAN BE MADE. (III) THAT HON'BLE GUJARAT HIGH COURT IN THE CASE O F CTT VS ROHINI BUILDERS (2002) 256 ITR 360 (GUJ) HELD THAT WHERE THE ASSESSEE HAS PROVED THE IDENTITY OF THE CREDITORS, AND THE AMOUNTS WERE RECEIVED BY ACCOUNT PAYEE CHEQUES, THE INITIAL BURDEN ON THE ASSESSEE IS DISCHARGED. THE FINDING O F THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 60 TRIBUNAL THAT CASH CREDIT SHOULD BE TREATED AS PROV ED IN ABSENCE OF ANY FURTHER MATERIAL TO DISCREDIT THE SAME HAS T O BE UPHELD. (IV) THAT HONBLE GUAHATI HIGH COURT IN THE CASE OF KUNDANMAL KOTHARI(HUF) VS. CIT (1997) 93 TAXMANN 620 (GOA) FO UND THAT THE LOAN OF RS. 1,25,000/- WAS ENTERED IN THE BOOKS OF ACCOUNT AND THE CREDITOR WAS ALSO IDENTIFIED. THE CREDITOR HIMSELF WAS AN ASSESSEE UNDER THE ACT. IN SPITE OF THAT THE AO DID NOT ACCEPT THE ENTRIES MADE IN THE BOOSK OF ACCOUNT AS WELL AS IN THE RETURNS AND REQUIRED FURTHER PROOF. CONFIRMATORY LE TTERS WERE PRODUCED AND THE CREDITOR HIMSELF APPEARED BEFORE T HE ITO TO GIVE HIS STATEMENT CONFIRMING THE FACT THAT THE AMO UNT HAD BEEN PAID BY HIM TO THE ASSESSEE. IN THE LIGHT OF T HESE EVIDENCES THE HON'BLE GUAHATI HIGH COURT HELD THAT THE ADDITION U/S 68 WAS NOT JUSTIFIED. CONSEQUENTLY, THE DELETIO N OF SAID ADDITION WAS UPHELD. (V) THAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF C IT VS TANIA INVESTMENTS PVT. LTD. (2010)322 ITR 394 (BOM) OBSER VED THAT THE CASH CREDITS TO THE EXTENT OFRS.7,41,17,495/- W AS ENTERED IRT BOOKS OF ACCOUNT THE ASSESSEE. THE ASSESSEE WAS REQUIRED TO ESTABLISH, (I) THE IDENTITY OF THE PARTY, (II) CAPA CITY ARID (III) THE GENUINENESS OF THE TRANSACTION. SO FAR AS IDENTITY IS CONCERNED THE PARTIES HAVE BEEN IDENTIFIED AND SIMILARLY IN T HE BOOKS OF ACCOUNT PRODUCED BY THEM CORRESPONDING ENTRIES WERE FOUND BOOKS OF ACCOUNT ITSELF WOULD INDICATE THE CAPACITY OF THE PARTY TO ADVANCE LOAN. THERE WAS NO FURTHER NEED ON THE P ART OF THE ASSESSEE TO PROVE THE CAPACITY OF THE CREDITORS. IN THE LIGHT OF FACTS AND EVIDENCES AVAILABLE, THE HON'BLE HIGH COU RT UPHELD THE DELETION OF ADDITION MADE U/S 68. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 61 THAT HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS MICRO MELT PVT. LTD. (2010) 327 ITR 70 (GUJ) THAT ASSESSEE HAV ING ESTABLISHED THE GENUINENESS OF THE DEPOSITS AND THE IDENTITY OF THE DEPOSITORS BY PRODUCING THEIR AFFIDAVITS AND BA NK STATEMENTS AND THE TRIBUNAL HAVING UPHELD THE ORDER OF THE C1T(A) DELETING THE ADDITION UNDER SEC. 68 ON THE B ASIS OF APPRECIATION OF EVIDENCE, NO QUESTION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW, ARISES. THAT HONBLE PATNA HIGH COURT IN THE CASE OF CIT VS ANSARI CLOTH MERCHANT (1990) 90 CTR (PAT) 172 FOUND THAT THE CAS H CREDIT OF RS.17000/- WAS SATISFACTORILY EXPLAINED BY THE ASSE SSEE AND THIS FINDING HAS BEEN UPHELD BY THE TRIBUNAL. THE COUNSE L FOR THE REVENUE CONTENDED THAT THE ASSESSMENT OF CREDITOR W AS REOPENED AND WAS SUBJECT MATTER OF FURTHER ENQUIRY . THAT ENQUIRY, HOWEVER, CANNOT AFFECT THE FINDING OF THE TRIBUNAL THAT THE ASSESSEE HAD SATISFACTORILY, EXPLAINED THE CASH CREDIT OFRS.17000/-. THEREFORE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE AAC WAS JUSTIFIED IN DELETING THE ADDITION OF R S. 17,000/-. THAT ITAT DELHI BENCH IN THE CASE OF PANKAJ SAWHNEY VS. INCOME TAX OFFICER (2004) 3 SOT 1 (DEL) HELD THAT A SSESSEE HAVING FURNISHED CONSIDERABLE MATERIAL IN SUPPORT O F IDENTITY OF DONORS AND HAVING ESTABLISHED ALL OF THEM TO BE INC OME TAX ASSESSEE, ADDITION WAS LIABLE TO BE DELETED. THAT ITAT, AMRITSAR BENCH IN THE CASE OF ITO VS PAR VEEN KUMAR (2004) 2 SOT 77 (ASR) HELD THAT THE IDENTITY OF THE CREDITOR WAS DISCLOSED AND ALSO SOURCE OF THE CREDITOR WAS DISCL OSED THROUGH AN AFFIDAVIT, THE CREDITWORTHINESS OF THE CREDITOR WAS PROVED BY ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 62 GIVING THE SOURCE AS THE CREDITORS RECEIVED MONEY F ROM LUCKY DRAW. IN THIS REGARD, BEFORE THE AO RELEVANT CERTIF ICATE WAS ALSO PRODUCED, THERE WAS NO VIOLATION OF RULE 46A BY THE CIT(A). CONSIDERING THE TOTALITY OF THE FACTS AND IN THE AB SENCE OF ANY NEW EVIDENCE/MATERIAL, AGAINST THE ORDER OF THE LEA RNED CIT(A), THE CIT(A) RIGHTLY DELETED THE ADDITION AND NO INTE RFERENCE IS REQUIRED IN THE ORDER OF THE CIT(A). THE SAME IS HE REBY UPHELD. THE ASSESSEE SHOULD NOT BE ASKED TO PROVE THE SOURC E OF SOURCES. THAT ON GOING THROUGH THE PROVISION OF SECTION 68 O F THE INCOME TAX ACT, 1961, IT IS EVIDENT THAT THE ASSESSEE IS R EQUIRED TO OFFER THE EXPLANATION ABOUT THE NATURE AND SOURCE O F THE SUM CREDITED IN HIS BOOKS OF ACCOUNTS. IN OTHER WORDS, THE ASSESSEE CANNOT BE ASKED TO PROVE THE SOURCE OF SOURCES, I.E . FROM WHERE THE CREDITOR HAS BROUGHT THE MONEY IS NOT REQUIRED TO BE PROVED BY THE ASSESSEE. HON'BLE MADRAS HIGH COURT IN THE C ASE OF HASTIMAL VS. CIT (1963) 49 ITR 273 (MAD) HERD THAT AN ASSESSEE SHOULD NOT BE PLACED UPON THE RACK AND CAL LED UPON TO EXPLAIN NOT MERELY THE ORIGIN AND SOURCE OF A CAPIT AL CONTRIBUTION BUT THE ORIGIN OF ORIGIN AND SOURCE OF SOURCE AS WELL. THAT HON'BLE HIGH COURT OF ASSAM IN TOLARAM DAGA VS . CIT (1966) 59 ITR 632 (ASSAM) IN PARA 6 OF THE JUDGMENT OBSERVED, THE MERE FACT THAT THE CREDITOR HAPPENS TO BE WIFE OF THE PARTNER OF THE ASSESSEE FIRM DOES NOT IPSO FACTO MA KE THE ASSESSEE COME INTO THE KNOWLEDGE OF (HE SOURCES FRO M WHICH THE MONEY WAS REALIZED. IT WAS FURTHER OBSERVED IN PARA 7 OF THE JUDGMENT, 'TO REQUIRE THE FIRM OR PARTNER THERE OF TO ADDUCE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 63 PROOF OF THE SOURCES FROM WHICH THE DEPOSIT WAS MAD E WOULD BE PLACING A BURDEN ON THE FIRM WHICH IS NOT REQUIRED OR JUSTIFIED BY LAW. THUS, THE ADDITION MADE TREATING THE LOAN G IVEN BY THE WIFE OF THE PARTNER OF THE ASSESSEE FIRM WAS DELETE D WITH THE ASSESSEE FIRM BEING SOURCE OF SOURCES CANNOT BE EXA MINED. THAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF ORIEN T TRADING CO. LTD. VS. CIT (1963) 49 ITR 723 (BOM) HELD THAT IN CASE OF CASH, CREDIT, THE INITIAL, BURDEN LIES ON THE ASSES SEE TO PROVE THE IDENTITY OF THE CREDITOR AND PRODUCED THE EVIDE NCES SHOWING THAT THE AMOUNT CREDITED WAS NOT FICTITIOUS. IN CAS E, THE INITIAL BURDEN IS DISCHARGED, THE BURDEN SHIFTED ON THE REV ENUE TO SHOW THAT THE ENTRY REPRESENTED ASSESSEE SUPPRESSED INCOME. IN CASE, THE REVENUE FAILED TO DISCHARGE ITS BURDEN , THE CASH CREDIT APPEARING IN THE BOOKS OF THE ASSESSEE SHALL BE TREATED AS GENUINE. THE ASSESSEE SHALL NOT BE ASKED TO EXPL AIN FURTHER HOW OR IN WHAT CIRCUMSTANCES THE THIRD PARTY OBTAIN ED MONEY AND HOW OR WHY HE CAME TO MAKE A DEPOSIT OF THE SAM E WHICH THE ASSESSEE. IN SUBSTANCE, HONBLE HIGH COURT HELD THAT THE REVENUE IS NOT ENTITLED TO EXAMINE THE SOURCE OF SO URCES OF THE AMOUNT DEPOSITED. THAT HON'BLE PATNA HIGH COURT IN THE CASE OF SAROGI CREDIT CORPORATION VS. CIT (1976) 103 ITR 344 (PAT) HELD T HAT ONCE THE IDENTITY OF THE THIRD PARTY IS ESTABLISHED BEFORE T HE ITO AND OTHER SUCH EVIDENCE ARE PRIMA FACIE PLACED BEFORE H IM POINTING TO THE FACT THAT THE ENTRY IS NOT FICTITIOUS, THE I NITIAL BURDEN LYING ON THE ASSESSEE CAN HE SAID TO HAVE BEEN DULY DISCHARGED BY HIM. IT WILL NOT, THEREFORE, BE FOR THE ASSESSEE TO EXPLAIN FURTHER AS TO HOW OR IN WHAT CIRCUMSTANCES THE THIR D PARTY ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 64 OBTAINED THE MONEY AND HOW OR WHY HE CAME TO MAKE A N ADVANCE OF THE MONEY AS A LOAN TO THE ASSESSEE. THAT HON'BLE GUAHATI HIGH COURT IN THE CASE OF NEMI CHAND KOTHARI VS CIT(2003) 264 ITR 254 (GUA) RELYING ON T HE JUDGMENT OF ASSAM HIGH COURT IN THE CASE OF TOLA RA M DHAGA VS CIT (SUPRA) HELD THAT ONCE THE ASSESSEE DISCLOSES T HE SOURCE(S) FROM WHICH HE HAS RECEIVED, THE LOANS, HIS BURDEN U NDER SEC. 106 OF THE INDIAN EVIDENCE ACT STANDS DISCHARGED AN D THE ONUS, THEN, SHIFTS TO THE AO TO SHOW, IF HE WANTS TO TREA T THE, LOAN AS AN INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE. THE HONBLE HIGH COURT FURTHER OBSERVED THAT THE HARMONIOUS CON STRUCTION OF SECTION 106 OF THE EVIDENCE ACT AND. SECTION 68 OF THE IT ACT WILL BE THAT THOUGH APART FROM ESTABLISHING THE IDE NTITY, OF THE CREDITOR, THE ASSESSEE MUST ESTABLISH THE GENUINENE SS OF THE TRANSACTION AS WELL AS THE CREDITWORTHINESS OF HIS CREDITOR. THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS AS WELL AS THE CREDITWORTHINESS OF THE CREDITOR MUST REMAIN CONFINED TO THE TRANSACTIONS, WHICH HAVE TAK EN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR. IT IS NOT TH E BUSINESS OF THE ASSESSEE TO FIND OUT THE SOURCE OF MONEY OF HIS CREDITOR OR OF THE GENUINENESS OF THE TRANSACTIONS WHICH TOOK B ETWEEN THE CREDITOR AND SUB-CREDITOR AND/OR CREDITWORTHINESS O F THE SUB- CREDITORS. IN THE INSTANT CASE, THE ASSESSEE HAS PR OVED THE IDENTITY OF THE CREDITORS AND THE AMOUNTS WERE RECE IVED THROUGH CHEQUES. HONBLE HIGH COURT HELD THAT THE LOAN AMOU NT COULD NOT, BE TREATED AS INCOME OF THE ASSESSEE FROM UNDI SCLOSED SOURCE ON MERE FAILURE ON THE PART OF THE CREDITORS TO SHOW THAT THE SUB CREDITORS HAD CREDIT WORTHINESS TO ADVANCE THE SAID LOAN AMOUNTS. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 65 (VI) THAT THE LD. DELHI ITAT IN THE CASE OF UNITED CORES. (P) LTD. VS. ACIT, (1998) 62 TTJ (DEL) 83 HELD THAT THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROVING THE IDENTITY A ND CAPACITY OF SMT. S. THE ASSESSEE HAS ALSO PRODUCED ADEQUATE MATERIAL TO PROVE THAT SMT. S WAS A MAN OF MEANS. HER CREDITWOR THINESS HAS ALSO BEEN FULLY ESTABLISHED. EVEN ASSUMING THAT TWO PETTY LOANS TAKEN BY SMT. S FROM SMT. G AND SMT. K HAVE N OT BEEN FULLY ESTABLISHED, ANY ADDITION OF THAT AMOUNT CAN BE CONSIDERED ONLY IN THE HAND OF SMT. S, WHO IS AN EXISTING INCO ME-TAX ASSESSEE. THE ASSESSEE CANNOT BE REQUIRED TO PROVE THE SOURCE OF SOURCE, PARTICULARLY IN A CASE WHERE THE PERSON WHO GAVE THE LOAN IS AN EXISTING INCOME-TAX ASSESSEE. THE ASSESS ED FURTHER RELY ON FOLLOWING CASE LAWS: A. PRAKASH INDUSTRIES LTD. VS ACIT (2008) 16 DTR (D EL) B. S.K JAIN VS INCOME TAX OFFICER (2004) 2 SOT 579 (AGRA) (VII) FURTHER, DIFFERENT HIGH COURTS IN FOLLOWING CASES OBSERVED, WHERE THE APPELLATE TRIBUNAL ACCEPTED THAT MONEY RE PRESENTED BY THE CASH CREDIT IN THE ACCOUNT BOOKS OF PARTNERS HIP WAS BROUGHT IN TO THE FIRM BY THE FINANCING PARTNER, NO PART OF THAT AMOUNT COULD BE HELD TO BE REVENUE INCOME OF THE PA RTNERSHIP AND THE INCORRECTNESS OF THE EXPLANATION OFFERED AS REGARDS THE SOURCE FROM WHICH THE PARTNER OBTAINED MONEY WOULD BE IMMATERIAL. THE RELIANCE IS PLACED ON FOLLOWING CAS E LAWS: A. BALBHADRA CHAND MUNNA LAI VS CIT (1958) 33 ITR 7 81 (ALL) B. CIT(ADDL.) VS PRECISION METAL WORKS (1985) 156IT R693 (DEL) V ADDITION IN THE CASE OF CREDITOR AND NOT IN THE C ASE OF ASSESSEE. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 66 (I) THAT THE LD. CALCUTTA ITAT IN THE CASE OF ADDL. CIT VS UNIQUE BUILDERS HELD THAT IN CASE THE CREDITORS IS ASSESSED TO TAX AND HIS IDENTITY IS PROVED BUT THE SOURCE OF LO AN AMOUNT IS DISBELIEVED, IN SUCH, CIRCUMSTANCES NO ADDITION CAN BE MADE IN THE ASSESSEE CASE BUT THE SAID AMOUNT SHALL BE TREA TED AS UNEXPLAINED IN THE CASE OF THE CREDITOR ONLY. 32. IN RESPECT OF THE LOAN OF RS.10,61,67,051/-, TH E EVIDENCES RELATING TO EACH PARTY ARE SUMMARIZED BELOW: I. LOAN OF RS.1,01,60,000/- FROM KAREENA HOTEL PVT . LTD. II. LOAN OF RS.1,03,34,000/-FROM KAREENA HOSPITALIT Y PVT. LTD. III. LOAN OF RS.7,01,49,880/- FROM NAVYA SECURITIES PVT. LTD. IV. LOAN OF RS.46,50,000/- FROM STORM HOTEL PVT. LT D. ALL THE AFORESAID PARTIES ARE THE LEGAL ENTITIES RE GISTERED WITH ROC. THERE DETAILS ARE VERIFIABLE FROM MCA21 WEBSIT E. THEY ARE REGULARLY ASSESSED TO INCOME TAX IN DELHI ITSELF. T HE CREDITORS HAVE FILED THEIR CONFIRMATION SHOWING THEIR PAN, TH EIR COPY OF ACKNOWLEDGEMENT OF ITR, COPY OF BALANCE SHEET AND P ROFIT & LOSS ACCOUNT, COPY OF THEIR BANK STATEMENT. ALL THE LOANS WERE RECEIVED THROUGH BANKING CHANNELS AND THE SAME HAVE ALSO BEEN REPAID IN SUBSEQUENT YEARS THROUGH BANKING CHANNEL. IN RESPECT OF LOAN OF RS.98,80,000/- FROM M/S KP AN D ASSOCIATES, THE RELEVANT EVIDENCES HAVE BEEN FILED FROM PAGE 92 TO PAGE 99 OF THE PAPER BOOK DATED 16.03.2012. IT I S A PROPRIETARY CONCERN OF SH. KISHAN PRASAD SHARMA. TH E CONFIRMATION AND COPY OF ACKNOWLEDGEMENT OF ITR HAV E BEEN ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 67 FILED. THE LOAN WAS RECEIVED THROUGH BANKING CHANNE L AND THE SAME WAS REPAID DURING AY 2012-13 THROUGH BANKING C HANNEL FOR WHICH THE COPY OF ACCOUNT IS PLACED ON PAGE 98 OF THE PAPER BOOK. THE LD. CIT (A) - VI VIDE LETTER DATED 18.02.2013, PARA 2 OBSERVED THAT THE COPY OF ITR FOR AY 2006-07 WAS FI LED BUT HE DIRECTED TO FILE THE COPY OF ACKNOWLEDGEMENT OF ITR OF SH. KISHAN PRASAD SHARMA FOR AY 2008-09, 2009-10 AND 20 10-11. IN COMPLIANCE, THE COPY OF ITR WITH COMPUTATION AND BALANCE SHEET OF SH. KRISHAN PRASAD SHARMA FOR AY 2008-09,2 009-10, 2010 -11, 2011-12 & 2012-13 WERE FILED. IN RESPECT OF LOAN OF RS.9,93,171/- FROM M/S HN CON SULTANTS PVT. LTD., THE EVIDENCES, I.E. COPY OF MCA21 CONFIR MATION, COPY OF ACKNOWLEDGEMENT OF ITR, COPY OF BALANCE. SHEET A ND PROFIT & LOSS ACCOUNT, COPY OF BANK STATEMENT OF M/S KAREENA HUMAN RESOURCES FORMERLY KNOWN AS HN CONSULTANTS (P) LTD. & COPY OF ACCOUNT FOR AY 2008-09, 2009-10, 2010-11 & 2011-12 SHOWING THE REPAYMENT OF LOAN WERE FILED. VIDE LETTER DATED 18.12.2012 PARA 3, IT WAS EXPLAIN ED THAT THE LOAN PERTAINING TO ALL THE SEVEN PARTIES HAVE BEEN REPAID DURING THE SUBSEQUENT YEARS AND THE RELEVANT EVIDENCES IN THIS RESPECT HAS BEEN PLACED ON THE PAPER BOOK. ARGUED THAT WHIC H INDICATES THE GENUINENESS OF THE LOAN AND NO ADDITION COULD H AVE BEEN MADE TREATING THE SAID LOAN OF RS.10,91,67,051/- AS UNEXPLAINED AND BOGUS LOAN. THUS, THE ADDITION MADE UNDER SECTION 68 IS LIABLE TO BE DELETED. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 68 EVALUATION OF EVIDENCES CREDITOR WISE: 33. THE DECISION OF THE LD. CIT (A) WHILE DEALING W ITH THE ISSUE OF CREDITORS IS AS UNDER: THAT IN THE LIGHT OF LEGAL PROVISION OF SECTION 68 AND JUDICIAL PRONOUNCEMENTS DISCUSSED IN THE SUBMISSION, IT IS N ECESSARY TO EVALUATE THE EVIDENCES ALREADY FURNISHED BEFORE THE LD. A.0 FOR WHICH THE COPIES ARE ENCLOSED AND THEREAFTER TO ASC ERTAIN THE GENUINENESS OF EACH LOANS. THUS, THE STATUS OF EACH LOANS ARE AS UNDER: LOAN OF RS.1,01,60,000/- RECEIVED FROM M/S KARINA H OTELS PVT. LTD. THAT THE M/S. KARINA HOTELS PVT. LTD. WAS INCORPORA TED ON 03.09.2007 AND ITS LAST AGM WAS HELD ON 23.05.2011 AND BALANCE SHEET AS ON 31.03.2011 WAS FILED TO THE REG ISTRAR OF COMPANIES. THESE FACTS ARE VERIFIABLE FROM THE MAST ER DETAILS FROM THE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH ITO, WARD 5(1), NEW DELHI. THE APPELLANT RECEIVED T HE UNSECURED LOAN OF RS. 1,01,60,000/- ON 18.03.2008 T HROUGH BANKING CHANNEL. CONFIRMATORY LETTER SHOWING THE (P AN AADCK7127) OF THE CREDITOR, COPY OF BANK STATEMENT OF THE CREDITOR, COPY OF THE BALANCE SHEET AS ON 31.03.200 9 SHOWING THE PREVIOUS YEAR FIGURES HAS BEEN FILED. ON GOING THROUGH THE BALANCE SHEET OF M/S. KARINA H OTEL PVT. LTD. AS ON 31.03.2008, IT IS EVIDENT THAT THE SAID LOAN AMOUNT OF RS. 1,01,60,000/- IS APPEARING IN SCHEDULE - 3. THE CREDITOR BALANCE SHEET TALLIES TO THE EXTENT OF RS.5,55,95,5 20/- WITH ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 69 SUGGEST THAT THE CREDITOR HAD CAPACITY TO GIVE THE LOAN TO THE EXTENT OFRS.1,01,60,000/-. THAT ENCLOSING THE AFORESAID EVIDENCES PERTAINING T O THE CREDITOR M/S KARINA HOTEL PVT. LTD. AS ANNEXURE -3, IT IS BR OUGHT TO YOUR KIND NOTICE THAT THE IDENTITY OF THE CREDITOR, BEIN G LEGAL ENTITY HAVING PAN AND ASSESSED TO TAX IS PROVED. SINCE THE LOAN HAS BEEN RECEIVED THROUGH BANKING CHANNEL, ITS GENUINEN ESS CANNOT BE DENIED. THE CREDITOR BALANCE SHEET FOR THE RELEV ANT PERIOD TALLIES TO THE EXTENT OF RS.5,55,95,520/-, HENCE, T HERE IS NO SCOPE TO DENY THE CAPACITY OF THE CREDITOR TO ADVAN CE THE LOAN TO THE EXTENT OFRS.1,01,60,000/-. IN THE LIGHT OF T HESE EVIDENCES, YOUR GOODSELF WILL APPRECIATE THAT ALL T HE CONDITIONS REQUIRED PROVING THE GENUINENESS OF THE LOAN IS FUL FILLED IN THIS CASE. HENCE, THE LD. A.O WAS NOT JUSTIFIED TO TREAT , THE UNSECURED LOAN AS UNEXPLAINED AND MADE THE ADDITION OFRS. 1,01,60,000/-. LOAN OF RS.1,03,34,000/- RECEIVED FROM M/S. KARINA HOSPITALITY PVT. LTD. THAT THE M/S. KARINA HOSPITALITY PVT. LTD. WAS INCO RPORATED ON 22.08.2006 AND ITS LAST AGM WAS HELD ON 25.05.2011 AND BALANCE SHEET AS ON 31.03.2011 WAS FILED TO THE REG ISTRAR OF COMPANIES. THESE FACTS ARE VERIFIABLE FROM THE MAST ER DETAILS FROM THE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH ITO, WARD 5(1), NEW DELHI. THE APPELLANT RECEIVED T HE UNSECURED LOAN OF RS.1,03,34,000/- ON 18.03.2008 TH ROUGH BANKING CHANNEL. CONFIRMATORY LETTER SHOWING THE PA N- AACCK9642H OF THE CREDITOR, COPY OF BANK STATEMENT OF THE CREDITOR, COPY OF THE BALANCE SHEET AS ON 31.03.200 9 SHOWING ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 70 THE PREVIOUS YEAR FIGURES HAS BEEN FILED. ON GOING THROUGH THE BALANCE SHEET OF M/S KARINA HOSPITALITY PVT. LTD. A S ON 31.03.2008, IT IS EVIDENT THAT THE SAID LOAN AMOUNT OF RS.1,03,34,000/- IS APPEARING IN SCHEDULE - 3. THE CREDITOR BALANCE SHEET TALLIES TO THE EXTENT OF RS.5,78,34,0 00/- WHICH SUGGEST THAT THE CREDITOR HAD CAPACITY TO GIVE THE LOAN TO THE EXTENT OF RS.1,03,34,000/-. (B)THAT ENCLOSING THE AFORESAID EVIDENCES PERTAININ G TO THE CREDITOR M/S KARINA HOSPITALITY PVT. LTD., AS ANNEX URE -4, IT IS BROUGHT TO YOUR KIND NOTICE THAT THE ENTITY OF THE CREDITOR, BEING LEGAL ENTITY HAVING-PAN AND ASSESSED TO TAX IS PROV ED. SINCE THE LOAN HAS BEEN RECEIVED THROUGH BANKING CHANNEL, ITS GENUINENESS CANNOT BE DENIED. THE CREDITOR BALANCE SHEET FOR THE RELEVANT PERIOD TALLIES TO THE EXTENT OF RS. 5, 78,34,000/-, HENCE, THERE IS NO SCOPE TO DENY THE CAPACITY OF TH E CREDITOR TO ADVANCE THE LOAN TO THE EXTENT OF RS. 1,03,343000/ IN THE LIGHT OF THESE EVIDENCES, YOUR GOODSELF WILL APPRECIATE T HAT ALL THE CONDITIONS REQUIRED PROVING THE GENUINENESS OF THE LOAN IS FULFILLED IN THIS CASE. HENCE, THE LD. A.0 WAS NOT JUSTIFIED TO TREAT THE UNSECURED LOAN AS UNEXPLAINED AND MADE TH E ADDITION OF RS.1,03,34,000/-. LOAN OF RS.7,01,49,880/- RECEIVED FROM M/S. NAVYA S ECURITIES PVT. LTD. THAT THE M/S. NAVYA SECURITIES PVT. LTD. WAS INCORP ORATED ON 05.05.1995 AND ITS LAST AGM WAS HELD ON 30.09.2010 AND BALANCE SHEET AS ON 31.03.2010 WAS FILED TO THE REG ISTRAR OF COMPANIES. THESE FACTS ARE VERIFIABLE FROM THE MAST ER DETAILS FROM THE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 71 ITO, WARD 13(1), NEW DELHI. THE APPELLANT RECEIVED THE UNSECURED LOAN OF RS.7,01,49,880/- DURING THE YEAR THROUGH BANKING CHANNEL. CONFIRMATORY LETTER SHOWING THE PA N- AAACN3106H OF THE CREDITOR, COPY OF BANK STATEMENT OF THE CREDITOR, COPY OF THE BALANCE SHEET AS ON 31.03.200 8 WAS FILED BEFORE THE A.O. AND THE SAME ARE AGAINST ENCLOSED. ON GOING THROUGH THE BALANCE SHEET OF M/S. NAVYA SECURITIES PVT. LTD. AS ON 31.03.2008, IT IS EVIDENT THAT THE SAID LOAN AMO UNT OF RS.5,92,32,577+1,09,17,303 = RS.7,01,49,880/- IS AP PEARING IN SCHEDULE - 5. THE CREDITOR BALANCE SHEET TALLIES TO THE EXTENT OF RS.8,93,60,445/- WHICH SUGGEST THAT THE CREDITOR HA D CAPACITY TO GIVE THE LOAN TO THE EXTENT OF RS.7,01,49,880/-. (B) THAT ENCLOSING THE AFORESAID EVIDENCES PERTAINI NG TO THE CREDITOR M/S. NAVYA SECURITIES PVT. LTD. AS ANNEXUR E -5, IT IS BROUGHT TO YOUR KIND NOTICE THAT THE ENTITY OF THE CREDITOR, BEING LEGAL ENTITY HAVING-PAN AND ASSESSED TO TAX IS PROV ED. SINCE THE LOAN HAS BEEN RECEIVED THROUGH BANKING CHANNEL, ITS GENUINENESS CANNOT BE DENIED. THE CREDITOR BALANCE SHEET FOR THE RELEVANT PERIOD TALLIES TO THE EXTENT OF RS.8,9 3,60,445/- HENCE, THERE IS NO SCOPE TO DENY THE CAPACITY OF TH E CREDITOR TO ADVANCE THE LOAN TO THE EXTENT OF RS.7,01,49,880/-. IN THE LIGHT OF THESE EVIDENCES, YOUR GOODSELF WILL APPRECIATE T HAT ALL THE CONDITIONS REQUIRED PROVING THE GENUINENESS OF THE LOAN IS FULFILLED IN THIS CASE. HENCE, THE LD. A.0 WAS NOT JUSTIFIED TO TREAT THE UNSECURED LOAN AS UNEXPLAINED AND MADE TH E ADDITION OF RS.7,01,49,880/-. (D) LOAN OFRS.98,80,000/- RECEIVED FROM M/S. K.P. & ASSOCIATES ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 72 THAT M/S. KP &. ASSOCIATES PVT. LTD. IS ASSESSED TO TAX- WITH ITO, WARD 31 (4), NEW DELHI. THE APPELLANT RECEIVED THE UNSECURED LOAN OF RS.98,80,000/- ON 26.02.2008 THRO UGH BANKING CHANNEL. CONFIRMATORY LETTER SHOWING THE PA N- AVZPS4928D OF THE CREDITOR; COPY OF BANK STATEMENT OF THE CREDITOR, COPY OF THE CREDITOR ACCOUNT FOR THE YEAR ENDING ON 31.03.2009; 31.03.2010 & 31.03.2011 HAS BEEN FILED. ON GOING THROUGH THE COPY OF ACCOUNT OF THE CREDITOR AS ON 3 1.03.2011,IT IS EVIDENT THAT THE SAID LOAN AMOUNT OF RS, 98,80,0 00/- WAS REPAID ON 30.03.2011 RS. 90,00,000/- ON 31.01.2011 RS.8.80.000/- FROM ALLAHABAD BANK A/C NO. 500374131 29. (B) THAT ENCLOSING THE AFORESAID EVIDENCES PERTAINI NG TO THE CREDITOR M/S KP & ASSOCIATES PVT. LTD. AS ANNEXURE - 6, IT IS BROUGHT TO YOUR KIND NOTICE THAT THE IDENTITY OF TH E CREDITOR, BEING LEGAL ENTITY HAVING PAN AND ASSESSED TO TAX I S PROVED. SINCE THE LOAN HAS BEEN RECEIVED THROUGH BANKING CH ANNEL, ITS GENUINENESS CANNOT BE DENIED. FURTHER THE SAID LOAN AMOUNT HAS ALREADY BEEN REPAID THROUGH BANKING CHANNEL IN A.Y. 2011- 12. HENCE, THERE IS NO SCOPE, TO DENY THE CAPACITY OF THE CREDITOR TO ADVANCE THE LOAN TO THE EXTENT OF RS.98 ,80,000/-. IN THE LIGHT OF THESE EVIDENCES, YOUR GOODSELF WILL AP PRECIATE THAT ALL THE CONDITIONS REQUIRED PROVING THE GENUINENESS OF THE LOAN IS FULFILLED IN THIS CASE. HENCE, THE LD. A.O. WAS NOT JUSTIFIED TO TREAT THE UNSECURED LOAN AS UNEXPLAINED AND MADE TH E ADDITION OF RS. 98,80,000/-. (E) LOAN OFRS.46.50,000/- RECEIVED FROM M/S STORM H OTELS PVT. LTD. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 73 [A] THAT THE M/S STORM HOTELS PVT. LTD. WAS INCORPO RATED ON 01.01.2008 AND ITS LAST AGM WAS HELD ON 30.09.2010 AND BALANCE SHEET AS ON 31.03.2010 WAS FILED TO THE REG ISTRAR OF COMPANIES. THESE FACTS ARE VERIFIABLE FROM THE MAST ER DETAILS FROM THE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH, IN DELHI. THE APPELLANT RECEIVED THE UNSECURED LOAN OF RS.46,50,000/- ON 17.03.2008 THROUGH BANKING CHANNE L. CONFIRMATORY LETTER SHOWING THE PAN- AAMCS0343K OF THE CREDITOR, COPY OF BANK STATEMENT OF THE CREDITOR, C OPY OF THE BALANCE SHEET AS ON 31.03.2009 HAS BEEN FILED. ON G OING THROUGH THE BALANCE SHEET OF M/S STORM HOTELS PVT. LTD. AS ON 31.03.2009, IT IS EVIDENT, THAT THE SAID LOAN AMOUN T OF RS.46,50,000/- IS APPEARING IN ASSET SIDE. THE CRED ITOR BALANCE SHEET TALLIES TO THE EXTENT OF RS.99,46,918/- WHICH SUGGEST THAT THE CREDITOR HAD CAPACITY TO GIVE THE LOAN TO THE E XTENT OF RS.46,50.000/-. (B] THAT ENCLOSING THE AFORESAID EVIDENCES PERTAINI NG TO THE CREDITOR M/S STORM HOTELS PVT. LTD, AS ANNEXURE - 7 , IT IS BROUGHT TO YOUR KIND NOTICE THAT THE IDENTITY OF TH E CREDITOR, BEING LEGAL ENTITY HAVING PAN AND ASSESSED TO TAX I S PROVED. SINCE THE LOAN HAS BEEN RECEIVED THROUGH BANKING CH ANNEL, ITS GENUINENESS CANNOT BE DENIED. THE CREDITOR BALANCE SHEET FOR A.Y. 2009- 10 TALLIES TO THE EXTENT OF RS.99,46,918 /-, HENCE, THERE IS NO SCOPE TO DENY THE CAPACITY OF THE CREDI TOR TO ADVANCE THE LOAN TO THE EXTENT OF RS.46,50,000/-. I N. THE LIGHT OF THESE EVIDENCES, YOUR GOODSELF WILL APPRECIATE T HAT ALL THE CONDITIONS REQUIRED PROVING THE GENUINENESS OF THE LOAN IS FULFILLED IN THIS CASE. HENCE, THE LD. A.O. WAS NOT JUSTIFIED TO ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 74 TREAT THE UNSECURED LOAN AS UNEXPLAINED AND MADE TH E ADDITION OF RS.46,50,000/-. VII ADDITION ON PRESUMPTION, SURMISES AND CONJECTUR E-NOT PERMISSIBLE (I) THAT IN THE LIGHT OF FACTS OF THE CASE, LEGAL P ROVISION AND JUDICIAL PRONOUNCEMENT DISCUSSED ABOVE, IT IS BROUG HT TO YOUR KIND NOTICE THAT THE LD. A.0 MADE THE ADDITION OF RS.10,61,67,051/- (RS. 10,91,67,051(-)RS. 30,00,000 ) U/S 68 OF THE I.T. ACT, 1961 (THOUGH THE SECTION IS NOT MENTI ONED IN THE ASSESSMENT ORDER), PRESUMING THAT THE APPELLANT HAS BROUGHT HIS OWN UNACCOUNTED MONEY IN HIS BOOKS OF ACCOUNTS BY CREATING THE LAYER OF INTERMEDIARIES BY WAY OF CRED ITORS. FURTHER, THE LD. A.O WAS NOT SURE ABOUT HIS PRESUMP TION, WHICH IS EVIDENT FROM THE TERM 'APPEARS' AS USED WHILE GI VING HIS FINDING FOR BRINGING THE UNACCOUNTED MONEY INTO BOO KS OF ACCOUNTS, THE RELEVANT SENTENCE IS, THE ASSESSEE A PPEARS TO BE BRINGING IN UNACCOUNTED MONEY IN TO HIS BOOKS AFTER CREATING LAYERS OF INTERMEDIARIES' THE SENTENCE USED IN THE ASSESSMENT ORDER SUGGESTS THAT THE LD. A.O WAS NOT CONFIDENT A BOUT HIS PRESUMPTION FOR BRINGING THE UNACCOUNTED MONEY IN T HE SHAPE OF UNSECURED LOAN. THAT IN THE LIGHT OF AFORESAID JUDICIAL PRONOUNCEME NT, IT IS FURTHER BROUGHT TO YOUR KIND NOTICE THAT THE APPELL ANT HAS PROVED THE IDENTITY OF THE CREDITOR BY FILING THE C OPY OF CONFIRMATION LETTERS, COPY OF THEIR PAN AND THEIR I TRS. THE APPELLANT HAS FURTHER PROVED THE GENUINENESS OF THE BY FILING THE BANK STATEMENTS OF THE CREDITORS AS ALL THE LOA NS WERE RECEIVED THROUGH BANKING CHANNELS. IN THE LAST, THE APPELLANT ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 75 HAD ALSO PROVED THE CREDIT WORTHINESS OF THE CREDIT ORS AS ALL THE CREDITORS ARE ASSESSED TO INCOME TAX AND ALL THE CR EDITORS HAD SUFFICIENT FUNDS IN THEIR BANK ACCOUNTS TO GIVE THE LOAN TO THE APPELLANT. FURTHER, THERE IS NO EVIDENCE ON THE PAR T OF LD. A.O. TO PROVE THAT THE APPELLANT HAD DEPOSITED THE FUNDS IN THE BANK ACCOUNT OF THE CREDITORS AND THEREAFTER HE RECEIVED THE SAME BY OBTAINING THE CHEQUE FROM SUCH CREDITORS. IN THIS S ITUATION, THE CREDITWORTHINESS OF THE CREDITORS AND SOURCE OF LOA N AMOUNTS HAVE ALSO BEEN PROVED. IN THE LIGHT FACTS AND CIRCUMSTANCES OF THE BASE, Y OUR GOODSELF WILL FIND THAT ALL THE LOANS HAVE BEEN RECEIVED THR OUGH BANKING CHANNEL. THE CREDITORS ARE ASSESSED TO TAX. ALL THE CREDITORS EXCEPT M/S KP & ASSOCIATES ARE THE LEGAL ENTITIES A ND THEIR STATUS ARE VERIFIABLE FROM THE WEBSITE OF THE ROC. M/S KP & ASSOCIATES IS ALSO A FIRM. ALL THE CREDITORS HAVE F ILED THEIR CONFIRMATORY LETTERS WITH SUPPORTING EVIDENCES. IN THE SITUATION, THE IDENTITY OF THE CREDITORS, GENUINENESS OF THE L OANS & CREDIT WORTHINESS OF THE CREDITORS ARE PROVED. HENCE ALL T HE INGREDIENTS REQUIRED U/S 68 OF THE IT ACT, 1961 ARE FULFILLED. THE LD. A.O. HAVE MADE ADDITION OF RS. 10,61,67,051/- (10,91,67, 051- 30,00,000), ON THE REASON THAT THE CREDITORS HAVE G IVEN THE LOAN, AFTER BORROWING THE FUND FROM THIRD PERSON WH ICH WAS NOT A VALID GROUND FOR MAKING THE ADDITION. THE LD. A.O . WAS NOT ENTITLED TO MAKE THE ADDITION ON ENQUIRING THE SOUR CE OF SOURCES. ALL THE CREDITORS ARE ASSESSED TO TAX AND THE SOURCE OF LOAN AMOUNT CAN HE ENQUIRED ONLY IN CREDITORS CASE AND NOT IN APPELLANT CASE. HENCE, YOUR GOODSELF IS REQUESTED T O KINDLY DELETE THE ADDITION OF RS.10,61,67,051/-. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 76 34. THE ORDER OF THE LD. CIT (A) ON THE ISSUE OF CR EDITORS IS AS UNDER: 8.70 IN GROUND NO. 3 OF THE APPEAL, THE APPELLANT HAS CHALLENGED THE ADDITION OF RS.10,91,67,051/- ON ACC OUNT OF UNEXPLAINED UNSECURED LOANS. IT IS SEEN THAT FOR TH E UNSECURED LOANS RECEIVED BY THE APPELLANT, THIS ASSESSING OFF ICER HAS MADE COMMON COMMENTS THAT THE ASSESSEE APPEARS TO BE BRINGING IN UNACCOUNTED MONEY INTO HIS BOOKS AFTER CREATING LAYERS OF INTERMEDIARIES AND ON SUCH BASIS HAS CON CLUDED THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTION ARE NOT ESTABLISHED, WITHOUT ACTUALLY SHOWING AS TO HOW THE ASSESSEE WAS BRINGING UNACCOUNTED MONEY INT O HIS BOOKS AND AS TO HOW WAS THE APPELLANT CREATING LAYE RS OF INTERMEDIARIES, THOUGH NEITHER THE EXISTENCE OF ANY UNACCOUNTED MONEY WITH THE ASSESSEE NOR THE CREATIO N OF LAYERS OF INTERMEDIARIES COULD BE ESTABLISHED. SUCH OPINIO N OF THE ASSESSING OFFICER WAS ONLY BASED ON SUSPICION WITHO UT ANY EVIDENCE OR MATERIAL IN SUPPORT. THE ADDITIONS TOWA RDS EACH OF THE UNSECURED LOANS HAVE BEEN DISCUSSED BELOW. THE UNSECURED LOANS WERE RECEIVED BY THE APPELLANT FROM THE FOLLO WING 7 PARTIES: 1. M/S KARINA HOTELS PVT. LTD. RS. 1,01,60,000/- 2. M/S KARINA HOSPITALITY PVT. LTD. RS. 1,03,34,00 0/- 3. M/S NAVYA SECURITIES PVT. LTD. RS. 7,01,49,880/ - 4. M/S K.P. & ASSOCIATES RS. 98,80,000/- 5. MS STORM HOTELS PVT. LTD. RS. 46,50,000/- 6. MS H.N. CONSULTANTS PVT. LTD. RS. 9,93,171/- ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 77 M/S KARINA HOTELS PVT. LTD. 8.71 THE ASSESSING OFFICER HAS STATED THAT THE ASSE SSEE RECEIVED UNSECURED LOAN OF RS. 1,01,60,000/- FROM M /S KARINA HOTELS PVT. LTD. DURING THE F.Y. 07-08 AND THAT THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF THE AMOUNT R ECEIVED AND EVIDENCE IN SUPPORT OF IDENTITY AND CREDITWORTHINES S OF THE LENDER AND ALSO THE GENUINENESS OF THE TRANSACTIONS . THE ASSESSMENT ORDER MENTIONS THAT IN RESPONSE THE ASSE SSEE SUBMITTED A CONFIRMATION FROM M/S KARINA HOTELS PVT . LTD. AND FILED A COPY OF INCOME TAX RETURN ACKNOWLEDGMENT, B ANK STATEMENT AND BALANCE SHEET. IT HAS BEEN OBSERVED B Y THE ASSESSING OFFICER THAT THE LENDER COMPANY HAS SHOWN AN INCOME OF ONLY RS. 13,497/- AND THAT THE LOAN GIVEN TO THE APPELLANT HAS BEEN FINANCED THROUGH BORROWING AND T HE COMPANY DOES NOT HAVE ANY SIGNIFICANT FUNDS OF ITS OWN. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT THE AS SESSEE APPEARS TO BE BRINGING IN UNACCOUNTED MONEY INTO HI S BOOKS AFTER CREATING LAYERS OF INTERMEDIARIES', AND ON S UCH BASIS HAS CONCLUDED IN PARA 5.1 OF THE ASSESSMENT ORDER THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF T HE TRANSACTION ARE NOT ESTABLISHED. THUS, DESPITE THE FACT THAT THERE WAS NO DOUBT ABOUT THE IDENTITY OF THE LENDER AND THE AVAILABILITY OF FUNDS WITH THE LENDER AND THE FACT THAT THE FUNDS WERE ACTUALLY GIVEN TO THE APPELLANT, THE ASSESSING OFFICER HAS DRAWN ADVERSE CONCLUSION MERELY ON THE BASIS THAT T HE LENDER COMPANY HAD ITSELF BORROWED FUNDS AND HAS GOT THE S USPICION THAT THE ASSESSEE APPEARS TO BE BRINGING IN UNACC OUNTED MONEY INTO HIS BOOKS HAVING CREATED LAYERS OF INTER MEDIARIES, AND ON BASIS OF SUCH SUSPICION HAS CONCLUDED THAT T HE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 78 CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF T HE TRANSACTION ARE NOT ESTABLISHED. 8.72 THE APPELLANT HAS MENTIONED THAT THAT THE M/S . KARINA HOTELS PVT. LTD. WAS INCORPORATED ON 03.09.2007 AND ITS LAST ACM WAS HELD ON 23:05.2011 AND BALANCE SHEET AS ON 31.03.2011 WAS FILED TO THE REGISTRAR OF COMPANIES. THESE FACTS ARE VERIFIABLE FROM THE MASTER DETAILS FROM T HE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH ITO, W ARD 5(1], NEW DELHI. THE APPELLANT RECEIVED THE UNSECURED LOA N OF RS. 1,01,60,000/- ON 18.03.2008 THROUGH BANKING CHANNEL . CONFIRMATORY LETTER SHOWING THE PAN AADCK7127J OF T HE CREDITOR, COPY OF BANK STATEMENT OF THE CREDITOR, C OPY OF THE BALANCE SHEET AS ON 31.03.2009 SHOWING THE PREVIOUS YEAR FIGURES HAS BEEN FILED. ON GOING THROUGH THE BALANC E SHEET OF M/S. KARINA HOTEL PVT. LTD. AS ON 31.03.2008, IT IS EVIDENT THAT THE SAID LOAN AMOUNT OF RS. 1,01,60,000/- IS APPEAR ING IN SCHEDULE - 3. THE CREDITOR BALANCE SHEET TALLIES TO THE EXTENT OF RS.5,55,95,520/- WITH SUGGEST THAT THE CREDITOR HAD CAPACITY TO GIVE THE LOAN TO THE EXTENT OF RS.L,01,60,000/-'. I T IS SEEN THAT MERELY BECAUSE THE LENDER COMPANY HAD SUBSTANTIAL F UNDS THROUGH BORROWINGS, THE ASSESSING OFFICER SUSPECTED THE ASSESSEE TO HAVE CREATED LAYERS OF INTERMEDIARIES T O BRING IN UNACCOUNTED MONEY, AND ON THE BASIS OF SUCH SUSPICI ON, DREW ADVERSE CONCLUSION AGAINST THE GENUINENESS OF THE U NSECURED LOAN AND TREATED IT AS UNEXPLAINED MERELY ON THE BA SIS OF SUCH SUSPICION, WITHOUT GIVING ANY FINDING REGARDING THE CLAIM AND THE DOCUMENTS SUBMITTED IN SUPPORT OF THE CLAIM REG ARDING AVAILABILITY OF FUNDS WITH THE LENDER AND THE FLOW OF FUNDS FROM THE LENDER TO THE ASSESSEE. NO DOUBT, THE ASSESSING OFFICER CAN ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 79 HAVE SUSPICION REGARDING A PARTICULAR TRANSACTION O R GROUP OF TRANSACTIONS, BUT SUCH SUSPICION CAN ONLY BE A GROU ND FOR FURTHER INVESTIGATION TO DETERMINE THE TRUE FACTS, BUT IT CANNOT BE A GROUND FOR ADVERSE CONCLUSION AGAINST THE ASSE SSEE. THE REMAND REPORTS FROM THE ASSESSING OFFICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMISSIONER HEADING THE RANGE ONLY REITERATE THE STAND OF THE ASSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTIONS AND CONC LUSIONS OF THE ASSESSING OFFICER. IN VIEW OF THE ENTIRE FACTS OF THE CASE, THERE IS NO JUSTIFICATION TO TREAT THE UNSECURED LO AN AMOUNTING TO RS. 1,01,60,000/- FROM M/S KARINA HOTELS PVT. LT D,, AS UNEXPLAINED, AND HENCE THE ADDITION OF RS.L,01,60,0 00/- MADE BY THE ASSESSING OFFICER TREATING THIS LOAN AS UNEX PLAINED IS HEREBY DELETED. KARINA HOSPITALITY PVT. LTD. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS. 1,03,34,000/- FROM M/S KARINA HOSPITALITY PVT. LTD. DURING THE F.Y. 07-08 AND THA T THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF THE AMOUNT RECEIVED AND EVIDENCE IN SUPPORT OF IDENTITY AND CREDITWORTHINESS OF THE LENDER AND ALSO THE GENUINE NESS OF THE TRANSACTIONS. THE ASSESSMENT ORDER MENTIONS THAT IN RESPONSE THE ASSESSEE SUBMITTED A CONFIRMATION FROM M/S KARI NA HOSPITALITY PVT. LTD. AND FILED A COPY OF INCOME TA X RETURN ACKNOWLEDGMENT, BANK STATEMENT AND BALANCE SHEET. I T HAS BEEN OBSERVED BY THE ASSESSING OFFICER THAT THE LEN DER COMPANY HAS SHOWN A LOSS OF RS.33,80,530/- AND THAT THE LOAN GIVEN TO THE APPELLANT HAS BEEN FINANCED THROUGH BO RROWINGS ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 80 AND SHARE APPLICATION MONEY AND THAT THE COMPANY DO ES NOT HAVE ANY SIGNIFICANT FUNDS OF ITS OWN. THE ASSESSIN G OFFICER HAS FURTHER OBSERVED THAT THE ASSESSEE APPEARS TO BE B RINGING IN UNACCOUNTED MONEY INTO HIS BOOKS AFTER CREATING LAY ERS OF INTERMEDIARIES, AND ON SUCH BASIS HAS CONCLUDED IN PARA 6.1 OF THE ASSESSMENT ORDER THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTION ARE NOT ESTABLIS HED. THUS, DESPITE THE FACT THAT THERE WAS NO DOUBT ABOUT THE IDENTITY OF THE LENDER AND THE AVAILABILITY OF FUNDS WITH THE L ENDER AND THE FACT THAT THE FUNDS WERE ACTUALLY GIVEN TO THE APPE LLANT, THE ASSESSING OFFICER HAS DRAWN ADVERSE CONCLUSION MERE LY ON THE BASIS THAT THE LENDER COMPANY HAD ITSELF BORROWED F UNDS AND HAS GOT THE SUSPICION THAT THE ASSESSEE APPEARS TO BE BRINGING IN UNACCOUNTED MONEY INTO HIS BOOKS HAVING CREATED LAYERS OF INTERMEDIARIES, AND ON BASIS OF SUCH SUSPICION HAS CONCLUDED THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINE NESS OF THE TRANSACTION ARE NOT ESTABLISHED. 8.74 THE APPELLANT HAS MENTIONED THAT THAT THE M/S . KARINA HOSPITALITY PVT. LTD. WAS INCORPORATED ON 22.08.200 6 AND ITS LAST AGM WAS HELD ON 25.05.2011 AND BALANCE SHEET A S ON 31.03.2011 WAS FILED TO THE REGISTRAR OF COMPANIES. THESE FACTS ARE VERIFIABLE FROM THE MASTER DETAILS FROM THE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH ITO, WARD 5(1), NEW DELHI. THE APPELLANT RECEIVED THE UNSECURED LOAN OF RS.1,0 3,34,000/- ON 18.03.2008 THROUGH BANKING CHANNEL. CONFIRMATORY LETTER SHOWING THE PAN-AACCK9642H OF THE CREDITOR, COPY OF BANK STATEMENT OF THE CREDITOR, COPY OF THE BALANCE SHEE T AS ON 31.03.2009 SHOWING THE PREVIOUS YEAR FIGURES HAS BE EN FILED. ON GOING THROUGH THE BALANCE SHEET OF M/S KARINA HO SPITALITY ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 81 PVT. LTD. AS ON 31.03.2008, IT IS EVIDENT THAT THE SAID LOAN AMOUNT OF RS.1,03,34,000/- IS APPEARING IN SCHEDULE - 3. THE CREDITOR BALANCE SHEET TALLIES TO THE EXTENT OF RS. 5,78,34,000/- WHICH SUGGEST THAT THE CREDITOR HAD CAPACITY TO GIV E THE LOAN TO THE EXTENT OF RS.L,03,34,000/-. IT IS SEEN THAT M ERELY BECAUSE THE LENDER COMPANY HAD SUBSTANTIAL FUNDS THROUGH BO RROWINGS AND SHARE APPLICATION MONEY, THE ASSESSING OFFICER SUSPECTED THE ASSESSEE TO HAVE CREATED LAYERS OF INTERMEDIARI ES TO BRING IN UNACCOUNTED MONEY, AND ON THE BASIS OF SUCH SUSP ICION, DREW ADVERSE CONCLUSION AGAINST THE GENUINENESS OF THE U NSECURED LOAN AND TREATED IT AS UNEXPLAINED MERELY ON THE BA SIS OF SUCH SUSPICION, WITHOUT GIVING ANY FINDING REGARDING THE CLAIM AND THE DOCUMENTS SUBMITTED IN SUPPORT OF THE CLAIM REG ARDING AVAILABILITY OF FUNDS WITH THE LENDER AND THE FLOW OF FUNDS FROM THE LENDER TO THE ASSESSEE. NO DOUBT, THE ASSESSING OFFICER CAN HAVE SUSPICION REGARDING A PARTICULAR TRANSACTION O R GROUP OF TRANSACTIONS, BUT SUCH SUSPICION CAN ONLY BE A GROU ND FOR FURTHER INVESTIGATION TO DETERMINE THE TRUE FACTS, BUT IT CANNOT BE A GROUND FOR ADVERSE CONCLUSION AGAINST THE ASSE SSEE. THE REMAND REPORTS FROM THE ASSESSING OFFICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMISSIONER HEADING THE RANGE ONLY REITERATE THE STAND OF THE ASSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTIONS AND CONC LUSIONS OF THE ASSESSING OFFICER. IN VIEW OF THE ENTIRE FACTS OF THE CASE, THERE IS NO JUSTIFICATION TO TREAT THE UNSECURED LO AN AMOUNTING TO RS.1,03,34,000/- FROM M/S KARINA HOSPITALITY PVT . LTD. AS UNEXPLAINED, AND HENCE THE ADDITION OF RS. 1,03,34, 000/- MADE BY THE ASSESSING OFFICER TREATING THIS LOAN AS UNEX PLAINED IS HEREBY DELETED. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 82 NAVYA SECURITIES PVT. LTD. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS. 7,01,49,880/- FROM M/S NAVYA SECURITIES PVT. LTD. DURING THE F.Y. 07-08 AND THAT THE ASSESS EE WAS REQUIRED TO FURNISH THE DETAILS OF THE AMOUNT RECEI VED AND EVIDENCE IN SUPPORT OF IDENTITY AND CREDITWORTHINES S OF THE LENDER AND ALSO THE GENUINENESS OF THE TRANSACTIONS . THE ASSESSMENT ORDER MENTIONS THAT IN RESPONSE THE ASSE SSEE SUBMITTED A CONFIRMATION FROM. M/S NAVYA SECURITIES PVT. LTD. AND FILED A COPY OF INCOME TAX RETURN ACKNOWLEDGMEN T, BANK STATEMENT AND BALANCE SHEET. IT HAS BEEN OBSERVED B Y THE ASSESSING OFFICER THAT THE LENDER COMPANY HAS SHOWN AN INCOME OF ONLY RS.25,06,760/- AND THAT THE LOAN GIV EN TO THE APPELLANT HAS BEEN FINANCED THROUGH SUNDRY CREDITOR S AND THAT THE COMPANY DOES NOT HAVE ANY SIGNIFICANT FUNDS OF ITS OWN. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT TH E ASSESSEE APPEARS TO BE BRINGING IN UNACCOUNTED MONEY INTO HI S BOOKS AFTER CREATING LAYERS OF INTERMEDIARIES AND ON SUCH BASIS HAS CONCLUDED IN PARA 7.1 OF THE ASSESSMENT ORDER THAT THE CREDITWORTHINESS OF THE LENDER AND, GENUINENESS OF THE TRANSACTION ARE NOT ESTABLISHED!. THUS, DESPITE TH E FACT THAT THERE WAS NO DOUBT ABOUT THE IDENTITY OF THE LENDER AND THE AVAILABILITY OF FUNDS WITH THE LENDER AND THE FACT THAT THE FUNDS WERE ACTUALLY GIVEN TO THE APPELLANT, THE ASSESSING OFFICER HAS DRAWN ADVERSE CONCLUSION MERELY ON THE BASIS THAT T HE LENDER COMPANY HAD ITSELF BORROWED FUNDS AND HAS GOT THE S USPICION THAT THE ASSESSEE APPEARS TO BE BRINGING IN UNACC OUNTED MONEY INTO HIS BOOKS HAVING CREATED LAYERS OF INTER MEDIARIES, AND ON BASIS OF SUCH SUSPICION HAS CONCLUDED THAT T HE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 83 CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF T HE TRANSACTION ARE NOT ESTABLISHED. 8.76 THE APPELLANT HAS MENTIONED THAT THAT THE M/S . NAVYA SECURITIES PVT. LTD. WAS INCORPORATED ON 05.05.1995 AND ITS LAST AGM WAS HELD ON 30.09.2010 AND BALANCE SHEET AS ON 31.03.2010 WAS FILED TO THE REGISTRAR OF COMPANIES. THESE FACTS ARE VERIFIABLE FROM THE MASTER DETAILS FROM THE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH ITO, WARD 13(1) , NEW DELHI. THE APPELLANT RECEIVED THE UNSECURED LOAN OF RS.7,01,49,880/- DURING THE YEAR THROUGH BANKING CH ANNEL. CONFIRMATORY LETTER SHOWING THE PAN-AAACN3106H OF T HE CREDITOR, COPY OF BANK STATEMENT OF THE CREDITOR, C OPY OF THE BALANCE SHEET AS ON 31.03.2008 WAS FLED BEFORE THE A.O. AND THE SAME ARE AGAINST ENCLOSED. ON GOING THROUGH THE BALANCE SHEET OF M/S. NAVYA SECURITIES PVT. LTD. AS ON 31.0 3.2008, IT IS EVIDENT THAT THE SAID LOAN AMOUNT OF RS.5,92,32,577+1,09,17,303 = RS.7,01,49,880/- IS AP PEARING IN SCHEDULE - 5. THE CREDITOR BALANCE SHEET TALLIES TO THE EXTENT OF RS.8,93,60,445/- WHICH SUGGEST THAT THE CREDITOR HA D CAPACITY TO GIVE THE LOAN TO THE EXTENT OF RS.7,01,49,880/-. ' IT IS SEEN THAT MERELY BECAUSE THE LENDER COMPANY HAD SUBSTANT IAL FUNDS THROUGH BORROWINGS, THE ASSESSING OFFICER SUSPECTED THE ASSESSEE TO HAVE CREATED LAYERS OF INTERMEDIARIES T O BRING IN UNACCOUNTED MONEY, AND ON THE BASIS OF SUCH SUSPICI ON, DREW ADVERSE CONCLUSION AGAINST THE GENUINENESS OF THE U NSECURED LOAN AND TREATED IT AS UNEXPLAINED MERELY ON THE BA SIS OF SUCH SUSPICION, WITHOUT GIVING ANY FINDING REGARDING THE CLAIM AND THE DOCUMENTS SUBMITTED IN SUPPORT OF THE CLAIM REG ARDING AVAILABILITY OF FUNDS WITH THE LENDER AND THE FLOW OF FUNDS FROM ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 84 THE LENDER TO THE ASSESSEE. NO DOUBT, THE ASSESSING OFFICER CAN HAVE SUSPICION REGARDING A PARTICULAR TRANSACTION O R GROUP OF TRANSACTIONS, BUT SUCH SUSPICION CAN ONLY BE A GROU ND FOR FURTHER INVESTIGATION TO DETERMINE THE TRUE FACTS, BUT IT CANNOT BE A GROUND FOR ADVERSE CONCLUSION AGAINST THE ASSE SSEE. THE REMAND REPORTS FROM THE ASSESSING OFFICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMISSIONER HEADING THE RANGE ONLY REITERATE THE STAND OF THE ASSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTIONS AND CONC LUSIONS OF THE ASSESSING OFFICER. IN VIEW OF THE ENTIRE FACTS OF THE CASE, THERE IS NO JUSTIFICATION TO TREAT THE UNSECURED LO AN AMOUNTING TO RS.7,01,49,880/- FROM M/S NAVYA SECURITIES PVT. LTD. AS UNEXPLAINED, AND HENCE THE ADDITION OF RS.7,01,49,8 80/- MADE BY THE ASSESSING OFFICER TREATING THIS LOAN AS UNEX PLAINED IS HEREBY DELETED. M/S H.N. CONSULTANTS PVT. LTD. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS. 9,93,171/- FROM M/S H.N. CONS ULTANTS PVT. LTD. DURING THE F.Y. 07-08 AND THAT THE ASSESS EE WAS REQUIRED TO FURNISH THE DETAILS OF THE AMOUNT RECEI VED AND EVIDENCE IN SUPPORT OF IDENTITY AND CREDITWORTHINES S OF THE LENDER AND ALSO THE GENUINENESS OF THE TRANSACTIONS . THE ASSESSMENT ORDER MENTIONS THAT IN RESPONSE THE ASSE SSEE SUBMITTED A CONFIRMATION FROM M/S H.N. CONSULTANTS PVT. LTD. AND FILED A COPY OF INCOME TAX RETURN ACKNOWLEDGMEN T, BANK STATEMENT AND BALANCE SHEET. IT HAS BEEN OBSERVED B Y THE ASSESSING OFFICER THAT THE LENDER COMPANY HAS SHOWN A LOSS OF RS.7,08,776/- AND THAT THE LOAN GIVEN TO THE APPELL ANT HAS ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 85 BEEN FINANCED THROUGH SHARE APPLICATION MONEY OF RS.22,50,000/- AND LIABILITIES OF RS.63,97,000/- AN D THAT THE COMPANY DOES NOT HAVE ANY SIGNIFICANT FUNDS OF ITS OWN. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT THE AS SESSEE APPEARS TO BE BRINGING IN UNACCOUNTED MONEY INTO HI S BOOKS AFTER CREATING LAYERS OF INTERMEDIARIES, AND ON S UCH BASIS HAS CONCLUDED IN PARA 10.1 OF THE ASSESSMENT ORDER THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF T HE TRANSACTION ARE NOT ESTABLISHED. THUS, DESPITE THE FACT THAT THERE WAS NO DOUBT ABOUT THE IDENTITY OF THE LENDER AND THE AVAILABILITY OF FUNDS WITH THE LENDER AND THE FACT THAT THE FUNDS WERE ACTUALLY GIVEN TO THE APPELLANT, THE ASSESSING OFFICER HAS DRAWN ADVERSE CONCLUSION MERELY ON THE BASIS THAT T HE LENDER COMPANY HAD ITSELF BORROWED FUNDS AND HAS GOT THE S USPICION THAT THE ASSESSEE APPEARS TO BE BRINGING IN UNACC OUNTED MONEY INTO HIS BOOKS HAVING CREATED LAYERS OF INTER MEDIARIES, AND ON BASIS OF SUCH SUSPICION HAS CONCLUDED THAT T HE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF T HE TRANSACTION ARE NOT ESTABLISHED. 8.78 IT IS SEEN THAT MERELY BECAUSE THE LENDER COMP ANY HAD SUBSTANTIAL FUNDS THROUGH BORROWINGS, THE ASSESSING OFFICER SUSPECTED THE ASSESSEE TO HAVE CREATED LAYERS OF IN TERMEDIARIES TO BRING IN UNACCOUNTED MONEY, AND ON THE BASIS OF SUCH SUSPICION, DREW ADVERSE CONCLUSION AGAINST THE GENU INENESS OF THE UNSECURED LOAN AND TREATED IT AS UNEXPLAINED ME RELY ON THE BASIS OF SUCH SUSPICION, WITHOUT GIVING ANY FINDING REGARDING THE CLAIM AND THE DOCUMENTS SUBMITTED IN SUPPORT OF THE CLAIM REGARDING AVAILABILITY OF FUNDS WITH THE LENDER AND THE FLOW OF FUNDS FROM THE LENDER TO THE ASSESSEE. NO DOUBT, TH E ASSESSING ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 86 OFFICER CAN HAVE SUSPICION REGARDING A PARTICULAR T RANSACTION OR GROUP OF TRANSACTIONS, BUT SUCH SUSPICION CAN ONLY BE A GROUND FOR FURTHER INVESTIGATION TO DETERMINE THE TRUE FAC TS, BUT IT CANNOT BE A GROUND FOR ADVERSE CONCLUSION AGAINST T HE ASSESSEE. THE REMAND REPORTS FROM THE ASSESSING OFF ICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMISSIO NER HEADING THE RANGE ONLY REITERATE THE STAND OF THE A SSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTI ONS AND CONCLUSIONS OF THE ASSESSING OFFICER. IN VIEW OF TH E ENTIRE FACTS OF THE CASE, THERE IS NO JUSTIFICATION TO TREAT THE UNSECURED LOAN AMOUNTING TO RS. 9,93,171/- FROM M/S H.N. CONSULTAN TS PVT. LTD AS UNEXPLAINED, AND HENCE THE ADDITION OF RS. 9,93, 171/- MADE BY THE ASSESSING OFFICER TREATING THIS LOAN AS UNEX PLAINED IS HEREBY DELETED. M/S STORM HOTELS PVT. LTD. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS.46,50,000/- FROM M/S STORM HOT ELS PVT. LTD. DURING THE F.Y. 07-08 AND THAT THE ASSESSEE WA S REQUIRED TO FURNISH THE DETAILS OF THE AMOUNT RECEIVED AND E VIDENCE IN SUPPORT OF IDENTITY AND CREDITWORTHINESS OF THE LEN DER AND ALSO THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSMENT ORDER MENTIONS THAT IN RESPONSE THE ASSESSEE SUBMITTED A CONFIRMATION FROM M/S STROM HOTELS PVT. LTD. AND FI LED COPY OF BANK STATEMENT AND BALANCE SHEET. IT HAS BEEN OBSER VED BY THE ASSESSING OFFICER THAT THE INCOME TAX ASSESSMENT PA RTICULARS OF THE LENDER COMPANY WERE NOT PLACED ON RECORD AND HE NCE IDENTITY OF THE LENDER IS NOT ESTABLISHED. THE ASSE SSING OFFICER HAS STATED THAT THE MAIN SOURCE OF FUNDS FOR THE LE NDER ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 87 COMPANY IS SHARE APPLICATION MONEY OF RS.98,00,000/ - AS ON 31.03.09 AND THAT NO PROOF WAS SUBMITTED TO ESTABLI SH THAT THE LENDER COMPANY HAD THE INCOME / CAPITAL ON 31.03.08 TO BE ABLE TO GIVE LOAN OF RS.46,50,000/- TO THE ASSESSEE . ON SUCH BASIS, THE ASSESSING OFFICER HAS CONCLUDED THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF T HE TRANSACTION ARE NOT ESTABLISHED. 8.80 DURING THE APPELLATE PROCEEDINGS, IT WAS STATE D THAT THE LENDER COMPANY I.E. STORM HOTELS PVT. LTD. WAS INCO RPORATED ON 10.01.08 AS WAS EVIDENT FROM THE COMPANY MASTER DET AILS DOWNLOADED FROM ROC WEBSITE AND PLACED AT PAGE NO 1 57 OF THE PAPER BOOK SUBMITTED, AND THAT THE SAME WAS ALSO SU BMITTED BEFORE THE ASSESSING OFFICER. IT WAS FURTHER STATED THAT AS THE COMPANY WAS INCORPORATED ON 10.01.08, THE FIRST SET S OF BOOKS OF ACCOUNT WERE PREPARED FOR THE PERIOD FROM 28.12. 07 TO 31.03.09, I.E. FOR A PERIOD OF 15 MONTHS AND HENCE THE FIRST INCOME TAX RETURN OF THE COMPANY WAS DUE AND FILED FOR THE A.Y.2009-2010 AND NOT FOR A.Y. 2008-2009. IT WAS ST ATED THAT THE COPY OF PROFIT & LOSS ACCOUNT OF THE M/S STORM INTERNATIONAL PM. LTD. EVIDENCING THAT BOOKS WERE PREPARED FOR 15 MONTHS HAD ALREADY BEEN SUBMITTED BEFORE THE ASSESSING OFF ICER AND THAT IT WAS AGAIN SUBMITTED AS PAGE NO 162 ALONG WI TH COPY OF INCOME TAX RETURN FOR A.Y.2009-10 AT PAGE NO 156 OF THE PAPER BOOK. DURING THE APPELLATE PROCEEDINGS, THE LEARNED COUNSEL OF THE APPELLANT RELIED UPON THE SECTION 2(17) OF THE COMPANIES ACT WHICH DEFINES FINANCIAL YEAR IN RELATION TO A NY BODY CORPORATE AND UPON THE SECTION 210(4) OF THE COMPAN IES ACT WHICH PERMITS THE BODY CORPORATE TO MADE ACCOUNTS F OR A PERIOD OF MORE THAN AN YEAR. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 88 8.81 IT IS SEEN THAT THE LENDER COMPANY FROM WHICH THE AMOUNT OF RS.46,50,000/- WAS RECEIVED WAS A GENUINE COMPAN Y AND ITS IDENTITY COULD NOT BE REJECTED MERELY BECAUSE THE L ENDER COMPANY DID NOT FILE INCOME TAX RETURN FOR THE FIRS T YEAR OF OPERATION. IN ANY CASE, THE ASSESSEE HAD PLACED BEF ORE THE LEARNED ASSESSING OFFICER, THE DOCUMENTS EVIDENCING THE MAKING OF ACCOUNTS FOR MORE THAN AN YEAR, BUT RATHE R THAN INVESTIGATING FURTHER, THE ASSESSING OFFICER MERELY TOOK THE NON FILING OF INCOME TAX RETURN FOR A.Y. 08-09 BY THE L ENDER COMPANY AS AN EXCUSE TO DENY ITS IDENTITY, CREDITWO RTHINESS AND GENUINENESS OF THE TRANSACTIONS. ONCE THE ACCOU NTS FOR THE EXTENDED YEAR HAD BEEN PLACED BEFORE THE ASSESSING OFFICER, ALONGWITH BANK STATEMENT, CONFIRMATION FROM THE LEN DER COMPANY, DOCUMENTS FROM ROC ETC., THEN THE NON FILI NG OF INCOME TAX RETURN FOR A.Y. 08-09 AND THE SOURCE OF FUNDS BEING PRIMARILY FROM SHARE APPLICATION MONEY COULD HAVE B EEN CAUSE FOR SUSPICION AND LED TO FURTHER INVESTIGATION BY T HE ASSESSING OFFICER, BUT IT CANNOT BE A GROUND FOR ADVERSE CONC LUSION AGAINST THE ASSESSEE, PARTICULARLY WHEN THE ACCOUNTS HAD BE EN MADE FOR EXTENDED PERIOD FOR A.Y. 09-10. THE REMAND REPORTS FROM THE ASSESSING OFFICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMISSIONER HEADING THE RANGE ONLY REI TERATE THE STAND OF THE ASSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTIONS AND CONCLUSIONS OF THE ASSESSING OFFICE R. IN VIEW OF THE ENTIRE FACTS OF THE CASE, THERE IS NO JUSTIFICA TION TO TREAT THE UNSECURED LOAN AMOUNTING TO RS.46,50,000/- FROM M/S STORM HOTELS PVT. LTD. AS UNEXPLAINED, AND HENCE THE ADDI TION OF RS.46,50,000/- MADE BY THE ASSESSING OFFICER TREATI NG THIS LOAN AS UNEXPLAINED IS HEREBY DELETED. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 89 M/S K.P. & ASSOCIATES THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS. 98,80,000/- FROM M/S K.P. & A SSOCIATES DURING THE F.Y. 07-08 AND THAT THE ASSESSEE WAS REQ UIRED TO FURNISH THE DETAILS OF THE AMOUNT RECEIVED AND EVID ENCE IN SUPPORT OF IDENTITY AND CREDITWORTHINESS OF THE 'LE NDER AND ALSO THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSMENT ORDER MENTIONS THAT IN RESPONSE THE ASSESSEE SUBMITTED A CONFIRMATION FROM M/S K.P. & ASSOCIATES AND ALSO FI LED A COPY OF INCOME TAX RETURN ACKNOWLEDGMENT AND BANK STATEMENT . IT HAS BEEN OBSERVED BY THE ASSESSING OFFICER THAT THE ASS ESSEE HAS SUBMITTED THE ITR ACKNOWLEDGMENT OF ONE SH. KRISHAN PRASAD SHARMA IN SUPPORT OF THE LOAN FROM M/S K.P. & ASSOC IATES AND THAT THE RELATIONSHIP OF WITH SH. KRISHAN PRASAD SH ARMA WITH THE LENDER HAS NOT BEEN CLARIFIED AND ALSO THAT SH. KRISHAN PRASAD SHARMA HAS SHOWN AN INCOME OF ONLY RS.57,467 /- FROM SALARY AND RS.45,980/- AS INCOME FROM OTHER SOURCES FOR A.Y. 06-07. THE ASSESSING OFFICER HAS ALSO POINTED OUT T HAT THERE ARE JUST TWO TRANSACTIONS IN THE BUNK ACCOUNT OF M/S K. P. & ASSOCIATES. IT HAS BEEN CONCLUDED BY THE ASSESSING OFFICER THAT THE IDENTITY OF THE LENDER IS NOT ESTABLISHED AS T HE RELATIONSHIP OF SH. KRISHAN PRASAD SHARMA AND THE LENDER M/S K.P . & ASSOCIATES IS NOT FURNISHED ' AND THAT IT IS APPEA RS THAT THE LOANS SHOWN FROM M/S K.P. & ASSOCIATES IS JUST AN ACCOMMODATION ENTRY. 8.90 MERELY BECAUSE THE LENDER HAD MEAGER RETURNED INCOME AND HAD SUBSTANTIAL HANDS THROUGH BORROWINGS, THE A SSESSING OFFICER SUSPECTED THE ASSESSEE TO HAVE CREATED LAYE RS OF ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 90 INTERMEDIARIES TO BRING IN UNACCOUNTED MONEY, AND O N THE BASIS OF SUCH SUSPICION, DREW ADVERSE CONCLUSION AGAINST THE GENUINENESS OF THE UNSECURED LOAN AND TREATED IT AS UNEXPLAINED MERELY ON THE BASIS OF SUCH SUSPICION. NO DOUBT, THE ASSESSING OFFICER CAN HAVE SUSPICION REGARDING A PARTICULAR TRANSACTION OR GROUP OF TRANSACTIONS, BUT SUCH SUSP ICION CAN ONLY BE A GROUND FOR FURTHER INVESTIGATION TO DETER MINE THE TRUE FACTS, BUT IT CANNOT BE A GROUND FOR ADVERSE CONCLU SION AGAINST THE ASSESSEE. THE REMAND REPORTS FROM THE ASSESSING OFFICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMI SSIONER HEADING THE RANGE HAVE NOT BROUGHT TO LIGHT ANYTHIN G AGAINST THE APPELLANT, DESPITE SPECIFIC DIRECTIONS FOR INQU IRY BY COMMISSIONER (APPEALS). 8.91 THE MOST NOTABLE ASPECT FOR THIS ADDITION IS T HAT THE ASSESSING OFFICER, IN ADDITION TO OBSERVING THAT TH E LOAN APPEARED TO BE AN ACCOMMODATION ENTRY, WAS OF THE O PINION THAT THE IDENTITY OF THE LENDER IS NOT ESTABLISHED AS THE RELATIONSHIP OF SH. KRISHAN PRASAD SHARMA AND THE L ENDER M/S K.P. & ASSOCIATES IS NOT FURNISHED. THE ASSESSING OFFICER HAS DOUBTED WHETHER SH. KRISHAN PRASAD SHARMA WAS THE P ROPRIETOR OF M/S K.P. & ASSOCIATES AND HAS STATED THAT THE RE LATIONSHIP OF THIS PERSON WITH THE LENDOR IS NOT ESTABLISHED. HOW EVER, AS MENTIONED ABOVE, PERUSAL OF THE RETURNS FILED BY SH . KRISHAN PRASAD SHARMA FOR A.Y. 08-09 DOES NOT SPECIFICALLY MENTION THE SAME, BUT THE RETURNS FOR A.Y. 09-10 AND 10-11 SPEC IFICALLY MENTION THAT SH. KRISHAN PRASAD SHARMA WAS PROPRIET OR OF M/S K.P. & ASSOCIATES. IT CAN BE ARGUED THAT THE RETURN S FOR THE SUBSEQUENT YEARS I.E. AY 09-10 AND AY 10-11 WERE NO T BEFORE THE ASSESSING OFFICER AND HENCE THEY CANNOT BE USED TO GIVE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 91 RELIEF TO THE APPELLANT. IN THIS REGARD, IT IS NOTE WORTHY THAT AS PER THE PROVISIONS OF RULE 46A(4) OF THE INCOME TAX RULES, 1962, THE COMMISSIONER (APPEALS) HAS THE POWER TO D IRECT THE PRODUCTION OF ANY DOCUMENT, AND THE ABOVE DOCUMENTS I.E. THE RETURNS FOR SUBSEQUENT YEARS WERE PRODUCED IN COMPL IANCE TO DIRECTIONS BY THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS)-VI, NEW DELHI. 8.92 IT IS SEEN THAT THOUGH THERE ARE SUFFICIENT DO CUMENTS TO SHOW THAT SH. KRISHAN PRASAD SHARMA WAS THE PROPRIE TOR OF M/S K.P. & ASSOCIATES, BUT THE QUESTION CAN ARISE THAT THOSE DOCUMENTS WERE NOT BEFORE THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS, AND WHETHER IN THOSE CIRCUM STANCES, THE OBSERVATIONS OF THE ASSESSING OFFICER WERE CORR ECT OR NOT. IN THIS REGARD, IT IS SEEN THAT THE ASSESSEE HAD FILED A CONFIRMATION FROM M/S K.P. & ASSOCIATES DURING THE ASSESSMENT PR OCEEDING, WHICH HAS BEEN ACKNOWLEDGED BY THE ASSESSING OFFICE R IN PARA 8 ON PAGE 12 OF THE ASSESSMENT ORDER. A PERUSAL OF TH E CONFIRMATION FILED FROM M/S K.P. & ASSOCIATES, WHIC H HAS BEEN SIGNED BY BOTH M/S K.P. & ASSOCIATES (THE LENDOR) A ND M/S K.R. CHAWLA & CO. (OF WHICH, THE APPELLANT IS THE PROPRI ETOR), SHOWS THAT THE PAN OF BOTH M/S K.P. & ASSOCIATES AND M/S K.R. CHAWLA & CO. HAVE BEEN CLEARLY MENTIONED. THE PAN OF THE C REDITOR I.E. M/S K.P. & ASSOCIATES IS MENTIONED AS AVZPS4928D AN D THE PAN OF DEBTOR I.E. M/S K.R. CHAWLA & CO. IS MENTIONED A S ADDPC7559G ON THE CONFIRMATION. IT IS SEEN THAT THE PAN FOR THE CREDITOR I.E. M/S K.P. & ASSOCIATES SHOWN AS AV ZPS4928D IN THE CONFIRMATION IS THE SAME AS IN THE ITR ACKNOWLE DGMENT FOR AY 08-09 FOR SH. KRISHAN PRASAD SHARMA (WHICH WAS F ILED IN THE ASSESSMENT PROCEEDINGS), BEING AVZPS4928D. THUS, TH ERE WAS ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 92 NO REASON FOR THE ASSESSING OFFICER TO SUSPECT THAT THE CONCERN M/S K.P. & ASSOCIATES, WHICH HAD GIVEN CONFIRMATION AND COPY OF BANK: STATEMENT ETC. DID NOT BELONG TO SH. KRISH AN PRASAD SHARMA, AS THE PAN WAS THE SAME, AND BOTH THESE DOC UMENTS WERE PRESENT BEFORE THE ASSESSING OFFICER IN THE AS SESSMENT PROCEEDINGS. HENCE, THE DOUBTS OF THE ASSESSING OFF ICER REGARDING THE IDENTITY OF THE LENDER AND THE RELATI ONSHIP OF THE SH. KRISHAN PRASAD SHARMA WITH THE LENDER, M/S K.P. & ASSOCIATES WAS TOTALLY UNFOUNDED. AS ALREADY DISCUS SED ABOVE, THERE WAS NO COGENT REASON WITH THE ASSESSING OFFIC ER TO HOLD THAT THE LOANS FROM M/S K.P. & ASSOCIATES APPEARED TO BE AN ACCOMMODATION ENTRY. 8.93 IN VIEW OF THE ENTIRE FACTS OF THE CASE, AS DI SCUSSED ABOVE, THERE IS NO JUSTIFICATION TO TREAT THE UNSEC URED LOAN AMOUNTING TO RS.98,80,000/- FROM M/S K.P. & ASSOCIA TES AS UNEXPLAINED, AND HENCE THE ADDITION OF RS.98,80,000 /- MADE BY THE ASSESSING OFFICER TREATING THIS LOAN AS UNEXPLA INED IS HEREBY DELETED. A.Y. 2009-10 KARINA HOTELS PVT. LTD. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS.28,00,000/- FROM M/S KARINA HO TELS PVT. LTD. DURING THE F.Y. 08-09 (RELEVANT TO A.Y. 09-10) AND THAT THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF THE AMOUNT RECEIVED AND EVIDENCE IN SUPPORT OF IDENTITY AND CREDITWORTHINESS OF THE LENDER AND ALSO THE GENUINE NESS OF THE TRANSACTIONS. THE ASSESSMENT ORDER MENTIONS THAT IN RESPONSE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 93 THE ASSESSEE SUBMITTED A CONFIRMATION FROM M/S KARI NA HOTELS PVT. LTD. AND FILED A COPY OF INCOME TAX RETURN ACKNOWLEDGMENT, BANK STATEMENT AND BALANCE SHEET. I T HAS BEEN OBSERVED BY THE ASSESSING OFFICER THAT THE LEN DER COMPANY HAS SHOWN AN INCOME OF ONLY RS.13,500/- AND THAT THE MAIN SOURCE OF FUNDS FOR THE COMPANY IS UNSECURED L OANS OF RS.4,54,25,000/- ON 31.03.09. IT HAS BEEN HELD BY T HE ASSESSING OFFICER THAT THE LOAN GIVEN TO THE APPELL ANT HAS BEEN FINANCED THROUGH BORROWINGS AND THE COMPANY DOES NO T HAVE ANY SIGNIFICANT FUNDS OF ITS OWN. THE ASSESSING OFF ICER HAS FURTHER OBSERVED THAT THE ASSESSEE APPEARS TO BE B RINGING IN UNACCOUNTED MONEY INTO HIS BOOKS AFTER CREATING LAY ERS OF INTERMEDIARIES, AND ON SUCH BASIS HAS CONCLUDED IN PARA 5.1 OF THE ASSESSMENT ORDER THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTION ARE NOT ESTABLIS HED. THUS, DESPITE THE FACT THAT, THERE WAS NO DOUBT ABOUT THE IDENTITY OF THE LENDER AND THE AVAILABILITY OF FUNDS WITH THE L ENDER AND THE FACT THAT THE FUNDS WERE ACTUALLY GIVEN TO THE APPE LLANT, THE ASSESSING OFFICER HAS DRAWN ADVERSE CONCLUSION MERE LY ON THE BASIS THAT THE LENDER COMPANY HAD ITSELF BORROWED F UNDS AND HAS GOT THE SUSPICION THAT THE ASSESSEE APPEARS TO BE BRINGING IN UNACCOUNTED MONEY INTO HIS BOOKS HAVING CREATED LAYERS OF INTERMEDIARIES, AND ON BASIS OF SUCH SUSPICION HAS CONCLUDED THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINE NESS OF THE TRANSACTION ARE NOT ESTABLISHED. 8.27 THE APPELLANT HAS MENTIONED THAT 'THAT THE ISS UE RELATING TO UNSECURED LOAN FROM M/S KARINA HOTELS PVT. LTD. WAS INVOLVED IN LAST YEAR, I.E. A.Y. 2008-09 ALSO. IN THAT YEAR, A DETAIL REPLY HAS BEEN FURNISHED VIDE WRITTEN SUBMISSION DATED 16 .03.2012 & ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 94 28.12.2012. IN THAT YEAR, IT WAS EXPLAINED THAT THE LOAN TAKEN IN A.Y. 2008-09 & 2009-10 WERE FULLY REPAID DURING 2010- 11 & 2011-12. HOWEVER, IT IS FURTHER SUMMARIZED IN THIS YEAR THAT SAID KARINA HOTELS PVT. LTD. WAS INCORPORATED ON 03 .09.2007 AND ITS LAST AGM WAS HELD ON 23.05.2011 AND BALANCE SHE ET AS ON WAS FILED TO THE REGISTRAR OF COMPANIES. THESE FACT S ARE VERIFIABLE FROM THE MASTER DETAILS FROM THE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH ITO, WARD 5(1), NEW DELHI. THE APPELLANT RECEIVED THE UNSECURED LOAN OF RS.28,00,0 00/- DURING THE RELEVANT YEAR THROUGH BANKING CHANNEL. THE FOLL OWING EVIDENCES WHICH WERE FILED BEFORE THE LD. A.O. ARE AGAIN ENCLOSED AS ANNEXURE-4: (A) THE COPY OF CONFIRMATORY LETTER SHOWING THE PA N- AADCK7127J OF THE CREDITOR, (B) THE COPY OF BANK STATEMENT OF THE CREDITOR, (C) THE COPY OF THE BALANCE SHEET AS ON 31.03.2009 OF THE CREDITOR. ON GOING THROUGH THE BALANCE SHEET OF M/S KARINA HOTEL PVT. LTD. AS ON 31.03.2009, IT IS EVIDENT THA T THE BALANCE LOAN AMOUNT OF 'RS.1,17,92,000/ WHICH INCLUDES RS.2 8,00,000/- IS APPEARING IN SCHEDULE - '3' IN THE NAME OF K.R. CHAWLA & CO. THE CREDITOR'S BALANCE SHEET TALLIES TO THE EXTENT OF RS.5,84,96,104/- WHICH SUGGEST THAT THE CREDITOR HA D CAPACITY TO GIVE THE LOAN TO THE EXTENT OF RS. 28,00,000/-. (D) THE COPY OF ACKNOWLEDGMENT OF ITR OF KARINA HO TEL PVT. LTD FOR AY 2009-10 IS ALSO ENCLOSED.' 8.28 IT IS SEEN THAT MERELY BECAUSE THE LENDER COMP ANY HAD SUBSTANTIAL FUNDS THROUGH BORROWINGS, THE ASSESSING OFFICER SUSPECTED THE ASSESSEE TO HAVE CREATED LAYERS OF IN TERMEDIARIES ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 95 TO BRING IN UNACCOUNTED MONEY, AND ON THE BASIS OF SUCH SUSPICION, DREW ADVERSE CONCLUSION AGAINST THE GENU INENESS OF THE UNSECURED LOAN AND TREATED IT AS UNEXPLAINED ME RELY ON THE BASIS OF SUCH SUSPICION, WITHOUT GIVING ANY FINDING REGARDING THE CLAIM AND THE DOCUMENTS SUBMITTED IN SUPPORT OF THE CLAIM REGARDING AVAILABILITY OF FUNDS WITH THE LENDER AND THE FLOW OF FUNDS FROM THE LENDER TO THE ASSESSEE. NO DOUBT, TH E ASSESSING OFFICER CAN HAVE SUSPICION REGARDING A PARTICULAR T RANSACTION OR GROUP OF TRANSACTIONS, BUT SUCH SUSPICION CAN ONLY BE A GROUND FOR FURTHER INVESTIGATION TO DETERMINE THE TRUE FAC TS, BUT IT CANNOT BE A GROUND FOR ADVERSE CONCLUSION AGAINST T HE ASSESSEE. THE REMAND REPORTS FROM THE ASSESSING OFF ICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL., COMMISSI ONER HEADING THE RANGE ONLY REITERATE THE STAND OF THE A SSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTI ONS AND CONCLUSIONS OF THE ASSESSING OFFICER. IN VIEW OF TH E ENTIRE FACTS OF THE CASE, THERE IS NO JUSTIFICATION TO TREAT THE UNSECURED LOAN AMOUNTING TO RS.28,00,000/- FROM M/S KARINA HOTELS PH. LTD. AS UNEXPLAINED, AND HENCE THE ADDITION OF RS.28,00,000 /- MADE BY THE ASSESSING OFFICER TREATING THIS LOAN AS UNEXPLA INED IS HEREBY DELETED. NAVYA SECURITIES PVT. LTD. 8.29 THE ASSESSING OFFICER HAS STATED THAT THE ASSE SSEE RECEIVED UNSECURED LOAN OF RS. 1,79,201/- FROM M/S NAVYA SECURITIES PVT. LTD. DURING THE F.Y. 08-09 (RELEVAN T TO A.Y. 09- 10) AND THAT THE ASSESSEE WAS REQUIRED TO FURNISH T HE DETAILS OF THE AMOUNT RECEIVED AND EVIDENCE IN SUPPORT OF IDEN TITY AND CREDITWORTHINESS OF THE LENDER AND ALSO THE GENUINE NESS OF THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 96 TRANSACTIONS. THE ASSESSMENT ORDER MENTIONS THAT TH E ASSESSEE DID NOT SUBMIT ANY CONFIRMATION OR OTHER DOCUMENTS. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE A PPEARS TO BE BRINGING IN UNACCOUNTED MONEY INTO HIS BOOKS AFT ER CREATING LAYERS OF INTERMEDIARIES'', AND ON SUCH BASIS HAS C ONCLUDED IN PARA 6.1 OF THE ASSESSMENT ORDER THAT THE CREDITWO RTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTION ARE N OT ESTABLISHED. 8.30 THE APPELLANT, IN THE WRITTEN SUBMISSIONS DATE D 03.12.13 HAS INTER ALIA STATED ON THIS ISSUE AS UNDER: 7. THAT THE LD. A.O. MADE AN ADDITION OF RS.1,79,2 01/- ON ACCOUNT OF THE LOAN OF RS.7,01,49,880/- IN THE NAME OF M/S NAVYA SECURITIES PVT. LTD. WITH THE OBSERVATION THA T THE ASSESSEE DID NOT FILE THE CONFIRMATION, COPY OF ITR , BANK STATEMENT AND THE BALANCE SHEET OF THAT PARTY. IN A BSENCE OF THESE EVIDENCES, THE LD. A.O. HELD THAT THE CREDIT WORTHINESS AND GENUINENESS OF THE LOAN WAS NOT PROVED. IN THIS REGARD, IT IS BROUGHT TO YOUR' KIND NOTICE THAT THE APPELLANT IN A.Y. 2008-09 HAD RECEIVED THE LOAN FROM THE SAID PARTY AGAINST W HICH THERE WAS A OPENING CREDIT BALANCE OF RS.7,01,49,880/- IN THIS YEAR. DURING THE YEAR THE APPELLANT HAS REPAID RS.1,52,25 ,846/- AGAINST SUCH OPENING BALANCE OF RS,7,01,49,880/-. II. THAT IN RESPECT OF RECEIPT OF RS.1,79,201/- DU RING THE YEAR, IT IS BROUGHT TO YOUR KIND NOTICE THAT THE SA ID SUM OF RS.1,79,201/- INCLUDED THE CREDIT OF LIBRARY EXPENS ES OF RS.29,201/-. IT MEANS, THE NET RECEIPT IS ONLY FOR RS.1,50,000/- DURING THE YEAR. IN THIS REGARD, IT IS EXPLAINED TH AT DUE TO CERTAIN REASON M/S NAVYA SECURITIES PVT. LTD. REFUN DED ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 97 RS.1,50,000/ - OUT OF REPAYMENT OF RS.1,52,25,846/-. HENCE, THE LD. A.O. WAS NOT JUSTIFIED TO TREAT THE SAID AMOUNT OF RS.1,50,000/- BEING RECEIPT OUT OF REFUNDED AMOUNT AND EXPENDITURE OF RS.29,201/- TOTALING TO RS.1,79,201/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT, 1961. III. THAT IT IS FURTHER BROUGHT TO YOUR KIND NOTIC E THAT THE APPELLANT HAD RECEIVED NEW LOAN IN AY 2008-09 FROM M/S NAVYA SECURITIES PVT. LTD. AND OUT OF THAT THE OPENING CR EDIT BALANCE OF RS.7,01,49,880/- WAS SHOWN IN THIS YEAR. IN RESPECT OF LOAN TAKEN IN AY 2008-09, THE ASSESSEE HAD ALREADY FILED THE WRITTEN SUBMISSION DATED 16.03.2012 AND 18.12.2012 DURING C OURSE OF ASSESSMENT PROCEEDING FOR THAT YEAR. SINCE THE LOAN WAS TAKEN IN AY 2008-09 AND NOT IN THIS YEAR AND THE DETAIL E XPLANATION AND EVIDENCES WERE FILED DURING THAT YEAR, THE ASSE SSEE DID NOT FILE THE CONFIRMATION AND OTHER EVIDENCES DURING TH E YEAR, AS OBSERVED BY THE LD. A.O.' 8.31 THE APPELLANT ADMITTEDLY DID NOT FILE ANY SEPA RATE CONFIRMATION FROM M/S NAVYA SECURITIES PVT. LTD. FO R A.Y. 09-10. HOWEVER, THE ENTIRE FACTS AND CIRCUMSTANCES HAVE TO BE TAKEN INTO CONSIDERATION. THE SAME PARTY I.E. M/S NAVYA S ECURITIES PVT. LTD. HAD GIVEN A LOAN OF RS.7,01,49,880/- IN T HE A.Y. 08-09 (I.E. THE IMMEDIATELY PRECEDING YEAR), AND IT HAD A LSO SUBMITTED CONFIRMATION FOR THE SAME ALONGWITH ITR, BANK STATE MENT ETC. NOT ONLY FOR THE PERIOD 01.04.07 TO 31.03.08 (I.E. RELATING TO A.Y. 08-09) BUT ALSO FOR THE PERIOD 01.04.08 TO 31. 03.09 (I.E. RELATING TO A.Y. 09-10, THE YEAR UNDER CONSIDERATIO N) AND ALSO FOR SUBSEQUENT YEARS BEING THE PERIOD 01.04.09 TO 3 1.03.10 (I.E. RELATING TO A.Y. 10-11) AND FOR THE PERIOD 01 .04,10 TO ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 98 31.03.11 (I.E. RELATING TO A.Y. 11- 12). IT IS ALSO SEEN FROM THE COPY OF THE BANK STATEMENT, THAT FOR THE YEAR UNDER CONSIDERATION, IT WAS NOT AS IF A FRESH AMOUNT OF R S.1,79,201/- WAS RECEIVED FROM M/S NAVYA SECURITIES PVT. LTD., B UT RATHER SUBSTANTIAL PAYMENTS WERE GIVEN BY THE APPELLANT, R UNNING INTO SEVERAL LAKHS, WITH THE FIRST PAYMENT ITSELF BEING OF RS.2,20,000/- FAR EXCEEDING THE AMOUNTS RECEIVED (I .E. RS.1,50,000/- AND RS.29,201/-), AND THEREAFTER THE AMOUNTS WERE RECEIVED FROM THAT PARTY. THUS, DESPITE THE FA CT THAT THERE WAS NO DOUBT ABOUT THE IDENTITY OF THE LENDER AND T HE AVAILABILITY OF FUNDS WITH THE LENDER AND THE FACT THAT THE FUNDS WERE ACTUALLY GIVEN TO THE APPELLANT, THE ASSESSING OFFICER HAS DRAWN ADVERSE CONCLUSION MERELY ON THE BASIS THAT S EPARATE CONFIRMATION FOR A.Y, 09- 10 FOR THE AMOUNT OF RS.1 ,79,201/- WAS NOT RECEIVED AND ON THIS BASIS HAS GOT THE SUSP ICION THAT THE ASSESSEE APPEARS TO BE BRINGING IN UNACCOUNTE D MONEY INTO HIS BOOKS HAVING CREATED LAYERS OF INTERMEDIAR IES, AND ON BASIS OF SUCH SUSPICION HAS CONCLUDED THAT THE CRED ITWORTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTION AR E NOT ESTABLISHED. 8.32 IT IS SEEN THAT MERELY BECAUSE THE LENDER COMP ANY DID NOT GIVE ANY SEPARATE CONFIRMATION FOR A.Y. 09-10 A ND OTHER DOCUMENTS SEPARATELY IN THE ASSESSMENT PROCEEDINGS FOR A.Y. 09-10, THE ASSESSING OFFICER SUSPECTED THE ASSESSEE TO HAVE CREATED LAYERS OF INTERMEDIARIES TO BRING IN UNACCO UNTED MONEY, AND ON THE BASIS OF SUCH SUSPICION, DREW ADVERSE CO NCLUSION AGAINST THE GENUINENESS OF THE AMOUNT OF RS.1,79,20 1/- RECEIVED DURING THE YEAR FROM THAT PARTY AND TREATE D IT AS UNEXPLAINED MERELY ON THE BASIS OF SUCH SUSPICION. HOWEVER, ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 99 THE TRANSACTIONS WITH THE PARTY, I.E. M/S NAVYA SEC URITIES PVT. LTD. HAVE TO BE LOOKED INTO IN TOTALITY, PARTICULAR LY WITH REFERENCE TO THE UNSECURED LOAN OF RS.7,01,49,880/- GIVEN BY THAT PARTY IN THE A.Y. 08-09 (I.E. THE IMMEDIATELY PRECEDING YEAR), AND IT HAVING ALSO SUBMITTED CONFIRMATION FO R THE SAME ALONGWITH ITR, BANK STATEMENTS ETC. NO DOUBT, THE A SSESSING OFFICER CAN HAVE SUSPICION REGARDING A PARTICULAR T RANSACTION OR GROUP OF TRANSACTIONS, BUT SUCH SUSPICION CAN ONLY BE A GROUND FOR FURTHER INVESTIGATION TO DETERMINE THE TRUE FAC TS, BUT IT CANNOT BE THE ONLY GROUND FOR ADVERSE CONCLUSION AG AINST THE ASSESSEE. ONCE THE APPELLANT DID NOT FILE ANY SEPAR ATE CONFIRMATION FOR A.Y. 09-10, THE ASSESSING OFFICER SHOULD HAVE LOOKED INTO THE OTHER DOCUMENTS AVAILABLE, AND PART ICULARLY THE FILE FOR THE PRECEDING YEAR OF THE SAME APPELLANT, IN HIS OWN OFFICE I.E. OFFICE OF ACIT, CENTRAL CIRCLE-13, NEW DELHI. THE REMAND REPORTS FROM THE ASSESSING OFFICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMISSIONER HEADING THE RANGE ONLY REITERATE THE STAND OF THE ASSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTIONS AND CONC LUSIONS OF THE ASSESSING OFFICER. IN VIEW OF THE ENTIRE FACTS OF THE CASE, THERE IS NO JUSTIFICATION TO TREAT THE AMOUNT OF RS . 1,79,201/- RECEIVED FROM M/S NAYYA SECURITIES PVT. LTD. AS UNE XPLAINED, PARTICULARLY WHEN SUBSTANTIAL PAYMENTS AMOUNTING TO MORE THAN SEVERAL TIMES THIS AMOUNT WERE GIVEN BY THE APPELLA NT TO THAT PARTY, AND ALSO IN VIEW OF THE ACCEPTANCE OF THE UN SECURED LOAN OF RS.7,01,49,880/- RECEIVED FROM THAT PARTY IN THE PRECEDING YEAR AS GENUINE, AS PER THE SEPARATE ORDER OF DATE IN THE CASE OF THE APPELLANT IN THE APPEAL FOR THE A.Y. 08-09. ACCORDINGLY, THE ADDITION OF RS.1,79,201/- MADE BY THE ASSESSING OFFICER TREATING THIS AMOUNT AS UNEXPLAINED IS HEREBY DELET ED. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 100 K.R. CHAWLA CONSULTING PVT. LTD. 8.33 THE ASSESSING OFFICER HAS STATED THAT THE ASSE SSEE RECEIVED UNSECURED LOAN OF RS.9,16,42,740/- FROM M/ S K. R. CHAWLA CONSULTING PVT. LTD. DURING THE F.Y. 08-09 ( RELEVANT TO A.Y. 09-10) AND THAT THE ASSESSEE WAS REQUIRED TO F URNISH THE DETAILS OF THE AMOUNT RECEIVED AND EVIDENCE IN SUPP ORT: OF IDENTITY AND CREDITWORTHINESS OF THE LENDER AND ALS O THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSMENT ORD ER MENTIONS THAT IN RESPONSE THE ASSESSEE SUBMITTED A CONFIRMATION FROM M/S K. R. CHAWLA CONSULTING PVT. LTD. AND FILED A COPY OF INCOME TAX RETURN ACKNOWLEDGMENT, B ANK STATEMENT AND BALANCE SHEET. IT HAS BEEN OBSERVED B Y THE ASSESSING OFFICER THAT THE LENDER COMPANY HAS SHOWN A LOSS OF RS. 1,84,52,982/- FOR THE A.Y. 09-10 AND THAT THE M AIN SOURCE OF FUNDS FOR THE COMPANY IS LOANS FUNDS OF RS.51,44 ,72,327/- AS ON 31.03.09. IT HAS BEEN HELD BY THE ASSESSING O FFICER THAT THE LOAN GIVEN TO THE APPELLANT HAS BEEN FINANCED T HROUGH BORROWINGS AND THE COMPANY DOES NOT HAVE ANY SIGNIF ICANT FUNDS OF ITS OWN. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT THE ASSESSEE APPEARS TO BE BRINGING IN UNACCO UNTED MONEY INTO HIS BOOKS AFTER CREATING LAYERS OF INTER MEDIARIES, AND ON SUCH BASIS HAS CONCLUDED IN PARA 7.1 OF THE ASSESSMENT ORDER THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTION ARE NOT ESTABLISHED. THUS, DESP ITE THE FACT THAT THERE WAS NO DOUBT ABOUT THE IDENTITY OF THE L ENDER AND THE AVAILABILITY OF FUNDS WITH THE LENDER AND THE F ACT THAT THE FUNDS WERE ACTUALLY GIVEN TO THE APPELLANT, THE ASS ESSING OFFICER HAS DRAWN ADVERSE CONCLUSION MERELY ON THE BASIS TH AT THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 101 LENDER COMPANY HAD ITSELF BORROWED FUNDS AND HAS GO T THE SUSPICION THAT THE ASSESSEE APPEARS TO BE BRINGIN G IN UNACCOUNTED MONEY INTO HIS BOOKS HAVING CREATED LAY ERS OF INTERMEDIARIES, AND ON BASIS OF SUCH SUSPICION HAS CONCLUDED THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINE NESS OF THE TRANSACTION ARE NOT ESTABLISHED. 8.34 THE APPELLANT HAS MENTIONED THAT THAT M/S K.R . CHAWLA CONSULTING PVT. LTD. WAS INCORPORATED 11/02/2003. T HESE FACTS ARE VERIFIABLE FROM THE MASTER DETAILS F THE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH ITO, W3 5(1), NEW D ELHI. THE APPELLANT RECEIVED THE UNSECURED LOAN OF RS.9,16,42 ,740/- DURING THE YEAR THROUGH BANKING CHANNEL. THE COPY CONFIRMATORY LETTER SHOWING THE PAN-AACCK2723P OF T HE CREDIT COPY OF BANK STATEMENT OF THE CREDITOR, COPY OF BAL ANCE SHEET AS 31.03.2009 WAS FILED BEFORE THE A.O. AND THE SAM E ARE AGAIN ENCLOSED AS ANNEXURE-8. ON GOING THROUGH THE BALANC E SHEET OF M/S K. CHAWLA CONSULTING PVT. LTD. AS ON 31.03.2009 , IT IS EVIDENT THAT SAID LOAN AMOUNT OF RS.9,16,42,740/- I S APPEARING IN SCHEDULE-4, CREDITOR BALANCE SHEET TALLIES TO TH E EXTENT OF RS.60,83,51,695/-WHICH SUGGESTS THAT THE CREDITOR H AD CAPACITY TO GIVE THE LOAN TO THE EXTENT OF RS.9,16,42,740/-. ' 8.35 IT IS SEEN THAT MERELY BECAUSE THE LENDER COMP ANY HAD SUBSTANTIAL FUNDS THROUGH BORROWINGS, THE ASSESSING OFFICER SUSPECTED THE ASSESSEE TO HAVE CREATED LAYERS OF IN TERMEDIARIES TO BRING IN UNACCOUNTED MONEY, AND ON THE BASIS OF SUCH SUSPICION, DREW ADVERSE CONCLUSION AGAINST THE GENU INENESS OF THE UNSECURED LOAN AND TREATED IT AS UNEXPLAINED ME RELY ON THE BASIS OF SUCH SUSPICION, WITHOUT GIVING ANY FINDING REGARDING THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 102 CLAIM AND THE DOCUMENTS SUBMITTED IN SUPPORT OF THE CLAIM REGARDING AVAILABILITY OF FUNDS WITH THE LENDER AND THE FLOW OF FUNDS FROM THE LENDER TO THE ASSESSEE. NO DOUBT, TH E ASSESSING OFFICER CAN HAVE SUSPICION REGARDING A PARTICULAR T RANSACTION OR GROUP OF TRANSACTIONS, BUT SUCH SUSPICION CAN ONLY BE A GROUND FOR FURTHER INVESTIGATION TO DETERMINE THE TRUE FAC TS, BUT IT CANNOT BE A GROUND FOR ADVERSE CONCLUSION AGAINST T HE ASSESSEE. THE REMAND REPORTS FROM THE ASSESSING OFF ICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMISSIO NER HEADING THE RANGE ONLY REITERATE THE STAND OF THE A SSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTI ONS AND CONCLUSIONS OF THE ASSESSING OFFICER. IN VIEW OF TH E ENTIRE FACTS OF THE CASE, THERE IS NO JUSTIFICATION TO TREAT THE UNSECURED LOAN AMOUNTING TO RS.9,16,42,740/- FROM M/S K.R. CHAWLA CONSULTING PVT. LTD. AS UNEXPLAINED, AND HENCE THE ADDITION OF RS.9,16,42,740/- MADE BY THE ASSESSING OFFICER TREA TING THIS LOAN AS UNEXPLAINED IS HEREBY DELETED. K.R. CHAWLA INFRA & AVIATION ACADEMY PVT. LTD. 8.36 THE ASSESSING OFFICER HAS STATED THAT THE ASSE SSEE RECEIVED UNSECURED LOAN OF RS.32,88,93,299/- FROM M /S K. R. CHAWLA INFRA & AVIATION ACADEMY PVT. LTD. DURING TH E F.Y. 08-09 (RELEVANT TO A.Y. 09-10) AND THAT THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF THE AMOUNT RECEIVED ARID EVI DENCE IN SUPPORT OF IDENTITY AND CREDITWORTHINESS OF THE LEN DER AND ALSO THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSMENT ORDER MENTIONS THAT IN RESPONSE THE ASSESSEE SUBMITTED CO PY OF INCOME TAX RETURN ACKNOWLEDGMENT, BANK STATEMENT AN D BALANCE SHEET OF M/S K. R. CHAWLA INFRA & AVIATION ACADEMY ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 103 PVT. LTD. IT HAS BEEN OBSERVED BY THE ASSESSING OFF ICER THAT THE LENDER COMPANY HAS SHOWN A LOSS OF RS.2,27,02,134/- FOR THE A.Y. 09-10 AND THAT THE MAIN SOURCE OF FUNDS FOR TH E COMPANY IS UNSECURED LOANS OF RS.58,82,13,608/- AS ON 31.03 .09. IT HAS BEEN HELD BY THE ASSESSING OFFICER THAT THE LOAN GI VEN TO THE APPELLANT HAS BEEN FINANCED THROUGH BORROWINGS AND THE COMPANY DOES NOT HAVE ANY SIGNIFICANT FUNDS OF ITS OWN. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT THE AS SESSEE APPEARS TO BE BRINGING IN UNACCOUNTED MONEY INTO HI S BOOKS AFTER CREATING LAYERS OF INTERMEDIARIES, AND ON SU CH BASIS HAS CONCLUDED IN PARA 8.1 OF THE ASSESSMENT ORDER THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF T HE TRANSACTION ARE NOT ESTABLISHED. THUS, DESPITE THE FACT THAT THERE WAS NO DOUBT ABOUT THE IDENTITY OF THE LENDER AND THE AVAILABILITY OF FUNDS WITH THE LENDER AND THE FACT THAT THE FUNDS WERE ACTUALLY GIVEN TO THE APPELLANT, THE ASSESSING OFFICER HAS DRAWN ADVERSE CONCLUSION MERELY ON THE BASIS THAT T HE LENDER COMPANY HAD ITSELF BORROWED FUNDS AND HAS GOT THE S USPICION THAT THE ASSESSEE APPEARS TO BE BRINGING IN UNACC OUNTED MONEY INTO HIS BOOKS HAVING CREATED LAYERS OF INTER MEDIARIES, AND ON BASIS OF SUCH SUSPICION HAS CONCLUDED THAT T HE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF T HE TRANSACTION ARE NOT ESTABLISHED. 8.37 IT HAS BEEN STATED BY THE APPELLANT THAT THAT M/S K.R. CHAWLA INFRA & AVIATION ACADEMY PVT. LTD. NOW, THE NAME IS CHANGED AS KARINA AIRLINES INTERNATIONAL LTD. IS AS SESSED TO TAX WITH ITO, WARD-5(3), NEW DELHI. THE APPELLANT RECEI VED THE UNSECURED LOAN OF RS.32,88,93,299/- THROUGH BANKING CHANNEL. THE CONFIRMATORY LETTER SHOWING THE PAN- AADCK1912D OF THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 104 CREDITOR, COPY OF BANK STATEMENT OF THE CREDITOR, C OPY OF ACKNOWLEDGMENT OF THE ITR FOR AY 2009-10 AND FINAL A/C OF THE CREDITOR FOR THIS YEAR WHICH WAS FILED BEFORE THE L D. A.O. ARID' THE SAME ARE AGAIN ENCLOSED AS ANNEXURE-10 & 11. FU RTHER, THE COPY OF A/C FOR AY 2010-11 AND 2011-12 ARE ENCLOSED AS ANNEXURE-12. ON GOING THROUGH THE COPY OF THE ACCOU NT OF THE CREDITOR, IT IS EVIDENT THAT THE MAXIMUM AMOUNT OUT OF THE SAID LOAN AMOUNT OF RS.32,88,93,299/- WAS REPAID ON 31.0 3.2011.' 8.38 IT IS SEEN THAT MERELY BECAUSE THE LENDER COMP ANY HAD SUBSTANTIAL FUNDS THROUGH BORROWINGS, THE ASSESSING OFFICER SUSPECTED THE ASSESSEE TO HAVE CREATED LAYERS OF IN TERMEDIARIES TO BRING IN UNACCOUNTED MONEY, AND ON THE BASIS OF SUCH SUSPICION, DREW ADVERSE CONCLUSION AGAINST THE GENU INENESS OF THE UNSECURED LOAN AND TREATED IT AS UNEXPLAINED ME RELY ON THE BASIS OF SUCH SUSPICION, WITHOUT GIVING ANY FINDING REGARDING THE CLAIM AND THE DOCUMENTS SUBMITTED IN SUPPORT OF THE CLAIM REGARDING AVAILABILITY OF FUNDS WITH THE LENDER AND THE FLOW OF FUNDS FROM THE LENDER TO THE ASSESSEE. IN FACT, THO UGH THE CONFIRMATION FROM THAT PARTY WAS FILED, THE ASSESSM ENT ORDER HAS NOT ACKNOWLEDGED THE SAME. NO DOUBT, THE ASSESS ING OFFICER CAN HAVE SUSPICION REGARDING A PARTICULAR T RANSACTION OR GROUP OF TRANSACTIONS, BUT SUCH SUSPICION CAN ONLY BE A GROUND FOR FURTHER INVESTIGATION TO DETERMINE THE TRUE FAC TS, BUT IT CANNOT BE A GROUND FOR ADVERSE CONCLUSION AGAINST T HE ASSESSEE. THE REMAND REPORTS FROM THE ASSESSING OFF ICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMISSIO NER HEADING THE RANGE ONLY REITERATE THE STAND OF THE A SSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTI ONS AND CONCLUSIONS OF THE ASSESSING OFFICER. IN VIEW OF TH E ENTIRE FACTS ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 105 OF THE CASE, THERE IS NO JUSTIFICATION TO TREAT THE UNSECURED LOAN AMOUNTING TO RS.32,88,93,299/- FROM M/S K. R. CHAWL A INFRA & AVIATION ACADEMY PVT. LTD. AS UNEXPLAINED, AND HENC E THE ADDITION OF RS. 32,88,93,299/- MADE BY THE ASSESSIN G OFFICER TREATING THIS LOAN AS UNEXPLAINED IS HEREBY DELETED . MANSION HOTELS PVT. LTD. 8.39 THE ASSESSING OFFICER HAS STATED THAT THE ASSE SSEE RECEIVED UNSECURED LOAN OF RS.2,80,00,000/- FROM M/ S MANSION HOTELS PVT. LTD. DURING THE F.Y. 08-09 (RELEVANT TO A.Y. 09-10) AND THAT THE ASSESSEE WAS REQUIRED TO FURNISH THE D ETAILS OF THE AMOUNT RECEIVED AND EVIDENCE IN SUPPORT OF IDENTITY AND CREDITWORTHINESS OF THE LENDER AND ALSO THE GENUINE NESS OF THE TRANSACTIONS. THE ASSESSMENT ORDER MENTIONS THAT IN RESPONSE THE ASSESSEE SUBMITTED COPY OF INCOME TAX RETURN ACKNOWLEDGMENT, BANK STATEMENT AND BALANCE SHEET OF M/S MANSION HOTELS PVT. LTD. IT HAS BEEN OBSERVED BY TH E ASSESSING OFFICER THAT THE LENDER COMPANY HAS SHOWN AN INCOME OF ONLY NIL FOR THE A.Y. 09-10 AND THAT THE MAIN SOURCE OF FUNDS FOR THE COMPANY IS UNSECURED LOANS OF RS.8,29,50,000/- AS O N 31.03.09. IT HAS BEEN HELD BY THE ASSESSING OFFICER THAT THE LOAN GIVEN TO THE APPELLANT HAS BEEN FINANCED THROU GH BORROWINGS AND THE COMPANY DOES NOT HAVE ANY SIGNIF ICANT FUNDS OF ITS OWN. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT THE ASSESSEE APPEARS TO BE BRINGING IN UNACCO UNTED MONEY INTO HIS BOOKS AFTER CREATING LAYERS OF INTER MEDIARIES, AND ON SUCH BASIS HAS CONCLUDED IN PARA 9.1 OF THE ASSESSMENT ORDER THAT THE CREDITWORTHINESS OF THE LENDER AND G ENUINENESS OF THE TRANSACTION ARE NOT ESTABLISHED. THUS, DESPI TE THE FACT ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 106 THAT THERE WAS NO DOUBT ABOUT THE IDENTITY OF THE L ENDER AND THE AVAILABILITY OF FUNDS WITH THE LENDER AND THE F ACT THAT THE FUNDS WERE ACTUALLY GIVEN TO THE APPELLANT, THE ASS ESSING OFFICER HAS DRAWN ADVERSE CONCLUSION MERELY ON THE BASIS TH AT THE LENDER COMPANY HAD ITSELF BORROWED FUNDS AND HAS GO T THE SUSPICION THAT THE ASSESSEE APPEARS TO BE BRINGIN G IN UNACCOUNTED MONEY INTO HIS BOOKS HAVING CREATED LAY ERS OF INTERMEDIARIES, AND ON BASIS OF SUCH SUSPICION HAS CONCLUDED THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINE NESS OF THE TRANSACTION ARE NOT ESTABLISHED. 8.40 IT HAS BEEN STATED BY THE APPELLANT THAT THAT M/S MANSION HOTELS PVT. LTD. WAS INCORPORATED ON 10.06. 2008 AND THESE FACTS ARE VERIFIABLE FROM THE MASTER DETAILS FROM THE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH ITO WARD- 6(2), NEW DELHI. THE APPELLANT RECEIVED THE UNSECUR ED LOAN OF RS.2,80,00,000/- THROUGH BANKING CHANNEL. THE COPY OF CONFIRMATORY LETTER SHOWING THE PAN OF THE CREDITOR , COPY OF BANK STATEMENT OF THE CREDITOR, THE COPY OF ACKNOWL EDGMENT OF THE ITR FOR AY 2009-10, COPY OF THE BALANCE SHEET A S ON 31.03.2009 HAS BEEN FILED BEFORE THE LD. A.O. AND T HE SAME ARE AGAIN ENCLOSED AS ANNEXURE-16. ON GOING THROUGH THE BALANCE SHEET OF M/S MANSION HOTELS PVT. LTD. AS ON 31.03.2 009, IT IS EVIDENT THAT THE SAID LOAN AMOUNT OF RS.2,80,00,000 /- IS APPEARING IN THE HEAD OF LOAN AND ADVANCES. THE CRE DITOR BALANCE SHEET TALLIES TO THE EXTENT OF RS.11,18,45, 945/- WHICH SUGGEST THAT THE CREDITOR HAD CAPACITY TO GIVE THE LOAN TO THE EXTENT OF RS.2,80,00,000/-. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 107 8.41 IT IS SEEN THAT MERELY BECAUSE THE LENDER COMP ANY HAD SUBSTANTIAL FUNDS THROUGH BORROWINGS, THE ASSESSING OFFICER SUSPECTED THE ASSESSEE TO HAVE CREATED LAYERS OF IN TERMEDIARIES TO BRING IN UNACCOUNTED MONEY, AND ON THE BASIS OF SUCH SUSPICION, DREW ADVERSE CONCLUSION AGAINST THE GENU INENESS OF THE UNSECURED LOAN AND TREATED IT AS UNEXPLAINED ME RELY ON THE BASIS OF SUCH SUSPICION. IN FACT, THOUGH THE CONFIR MATION FROM THAT PARTY WAS FILED, THE ASSESSMENT ORDER HAS NOT ACKNOWLEDGED THE SAME. NO DOUBT, THE ASSESSING OFFI CER CAN HAVE SUSPICION REGARDING A PARTICULAR TRANSACTION O R GROUP OF TRANSACTIONS, BUT SUCH SUSPICION CAN ONLY BE A GROU ND FOR FURTHER INVESTIGATION TO DETERMINE THE TRUE FACTS, BUT IT CANNOT BE A GROUND FOR ADVERSE CONCLUSION AGAINST THE ASSE SSEE. THE REMAND REPORTS FROM THE ASSESSING OFFICER AND THE COMMENTS/REPORTS FROM THE JOINT/ADDL. COMMISSIONER HEADING THE RANGE ONLY REITERATE THE STAND OF THE ASSESSING OFFICER AND THERE IS NOTHING TO ADD TO THE CONTENTIONS AND CONC LUSIONS OF THE ASSESSING OFFICER. IN VIEW OF THE ENTIRE FACTS OF THE CASE, THERE IS NO JUSTIFICATION TO TREAT THE UNSECURED LO AN AMOUNTING TO RS.2,80,00,000/- FROM M/S MANSION HOTELS PVT. LT D. AS UNEXPLAINED, AND HENCE THE ADDITION OF RS. 2,80,00, 000/- MADE BY THE ASSESSING OFFICER TREATING THIS LOAN AS UNEX PLAINED IS HEREBY DELETED. M/S H.T. RECON CONSTRUCTIONS PVT. LTD. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS.85,02,276/- FROM M/S H.T. RECO N CONSTRUCTIONS PVT. LTD. DURING THE F.Y. 8-09 (RELEV ANT TO A.Y. 09-10) AND THAT THE ASSESSEE WAS REQUIRED TO FURNIS H THE DETAILS ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 108 OF THE AMOUNT RECEIVED AND EVIDENCE IN SUPPORT OF I DENTITY AND CREDITWORTHINESS OF THE LENDER AND ALSO THE GENUINE NESS OF THE TRANSACTIONS. THE ASSESSMENT ORDER MENTIONS THAT IN RESPONSE THE ASSESSEE SUBMITTED A CONFIRMATION FROM M/S H.T. RECON CONSTRUCTIONS PVT. LTD. IT HAS BEEN OBSERVED BY THE ASSESSING OFFICER IN PARA 10.1 OF THE ASSESSMENT ORDER THAT THE CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF T HE TRANSACTION ARE NOT ESTABLISHED, IN THE ABSENCE OF THE INCOME LEVEL AND THE BANK ACCOUNT STATEMENT OF THE LENDER. 8.43 IT HAS BEEN STATED BY THE APPELLANT THAT THAT M/S H.T. RECON CONSTRUCTIONS PVT. LTD. WAS INCORPORATED ON 1 3.02.2004 AND THESE FACTS ARE VERIFIABLE FROM THE MASTER-DETA ILS FROM THE MCA 21 WEBSITE. THE COMPANY IS ASSESSED TO TAX WITH ITO WARD-12(4), NEW DELHI, OUT OF UNSECURED LOAN OF RS.85,02,276/- AS SHOWN IN THE NAME OF APPELLANT, T HE SUM OF RS.47,02,276/- IS AN OPENING BALANCE. HENCE THERE W AS NEW LOAN OF RS.38,00,000/- ONLY WHICH WAS RECEIVED THRO UGH BANKING CHANNEL. THE CONFIRMATORY LETTER SHOWING PAN OF THE CREDITOR, COPY OF BANK STATEMENT OF THE CREDITOR, THE COPY OF ACKNOWLEDGMENT OF ITR FOR AY 2009-10 & COPY OF BALA NCE SHEET AS ON 31.03.2009 WHICH HAD BEEN FILED BEFORE THE LD . A.O. ARE AGAIN ENCLOSED AS ANNEXURE-17. ON GOING THROUGH THE BALANCE SHEET OF M/S H.T. RECON CONSTRUCTIONS PVT. LTD. AS ON 31.03.2009, IT IS EVIDENT THAT THE SAID LOAN AMOUNT OF RS.82,02,276/- IS APPEARING IN SCHEDULE-9. THE CRED ITOR BALANCE SHEET TALLIES TO THE EXTENT OF RS.6,51,63,869/- UND ER THE HEAD OTHER CURRENT ASSET WHICH SUGGEST THAT THE CREDITOR HAD CAPACITY TO GIVE THE LOAN TO THE EXTENT OF RS.82,02,276/-.' ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 109 8.44 IT IS SEEN THAT THE APPELLANT HAD FILED CONFIR MATION FROM THE LENDER COMPANY I.E. M/S H.T. RECON CONSTRUCTION S PVT. LTD., ALONGWITH COPY OF BANK STATEMENT, ACKNOWLEDGMENT OF INCOME TAX RETURN FOR A.Y. 09-10 AND COPY OF BALANCE SHEET AS ON 31.03.09, BUT THE ASSESSMENT ORDER ACKNOWLEDGES THE RECEIPT OF THE ONLY THE CONFIRMATION AND IS SILENT ABOUT TH E OTHER DOCUMENTS, PARTICULARLY THE BALANCE SHEET OF THE LE NDER COMPANY AS ON 31.03.09 AND ALSO THE ITR FOR A.Y. 09 -10. THE ASSESSMENT ORDER MENTIONS THAT THERE WAS ABSENCE OF INCOME LEVEL AND THAT BANK ACCOUNT STATEMENT OF THE LENDER WAS ABSENT, BUT HAS FAILED TO EXPLAIN AS TO HOW THERE W AS ABSENCE OF INCOME LEVEL AND BANK ACCOUNT STATEMENT, PARTICULAR LY WHEN THE APPELLANT HAS CLEARLY STATED THAT ALL THE DOCUM ENTS REQUIRED BY THE ASSESSING OFFICER WERE FILED DURING ASSESSME NT PROCEEDINGS. IT IS SEEN THAT THE ASSESSING OFFICER HAS GIVEN THE CRYPTIC FINDING IN PARA 10.1 OF THE ASSESSMENT ORDE R REGARDING THE UNSECURED LOANS OF RS.85,02,276/- BEING UNEXPLA INED ONLY ON THE BASIS OF HIS OBSERVATION (WITHOUT ANY JUSTIF ICATION) REGARDING ABSENCE OF THE INCOME LEVEL AND THE BANK ACCOUNT STATEMENT OF THE LENDER. IT IS NOTEWORTHY THAT TH E APPELLANT HAS STATED THAT AS IN THE CASE OF OTHERS CREDITORS (OTHER THAN NAVYA SECURITIES PVT. LTD. FOR WHICH THE DOCUMENTS WERE SUBMITTED IN PRECEDING YEAR, I.E. AY 08-09), THE DO CUMENTS BEING CONFIRMATION FROM THAT PARTY ALONGWITH COPY O F BANK STATEMENT, ACKNOWLEDGMENT OF INCOME TAX RETURN FOR A.Y. 09- 10 AND COPY OF BALANCE SHEET AS ON 31.03.09, WERE F ILED IN THE CASE OF M/S H.T. RECON CONSTRUCTIONS PVT. LTD.. HOW EVER, THE ASSESSING OFFICER HAS MENTIONED ABOUT THE RECEIPT O F CONFIRMATION ONLY AND IS SILENT ABOUT THE OTHER DOC UMENTS, BUT IN PARA 10.1 HAS CLAIMED THAT THERE WAS ABSENCE OF BANK ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 110 ACCOUNT STATEMENT OF THE LENDOR, WITHOUT SPECIFICAL LY STATING THAT IT WAS NOT FILED. THUS THE APPELLANT CLAIMS TH AT THE 4 DOCUMENTS BEING CONFIRMATION, BANK STATEMENT, ACKNOWLEDGEMENT OF ITR AND BALANCE SHEET WERE FILED , BUT THE ASSESSING OFFICER CONFIRMS THE FILING OF ONLY THE C ONFIRMATION AND A SILENT ABOUT THE OTHER 3 DOCUMENTS, THOUGH TH E ABSENCE OF ONE OF THE DOCUMENTS, BEING BANK STATEMENT HAS SUBSEQUENTLY BEEN MENTIONED, THOUGH THERE IS NO SPE CIFIC ALLEGATION THAT THE APPELLANT DID NOT FILE ACKNOWLE DGEMENT OF ITR AND BALANCE SHEET, NOR ANY DIRECT ALLEGATION AB OUT NONE FILING OF BANK STATEMENT HAS BEEN MADE, THOUGH ABSE NCE HAS BEEN CLAIMED WITHOUT SPECIFYING AS TO WHO WAS RESPO NSIBLE FOR THE ABSENCE OF SUCH BANK STATEMENTS. 8.45 IT HAS BEEN FURTHER STATED BY THE APPELLANT IN THE WRITTEN SUBMISSIONS DATED 03.12.13 THAT: '...SINCE, THE LOAN OF RS.47,02,276/- WAS AN OPENIN G BALANCE AS ON 01.04.2008, THE SAME CANNOT BE CONSIDERED FOR TH E ADDITION IN THIS YEAR. THE NEW LOAN OF RS.38,00,000/- HAS BE EN RECEIVED THROUGH BANKING CHANNEL, ITS GENUINENESS CANNOT BE DENIED. THE CREDITOR BALANCE SHEET FOR THE A.Y. 2009-10 TALLIES TO THE EXTENT OF RS.6,51,63,869/-. HENCE, THERE IS NO SCOPE TO DE NY THE CAPACITY OF THE CREDITOR TO ADVANCE THE LOAN TO THE EXTENT OF RS.85,02,276/-. III. THAT ON GOING THROUGH THE CONFIRMATORY LETTER FLED BY THE CREDITOR, IT IS EVIDENT THAT THERE WAS AN OPENING C REDIT BALANCE OF RS.47,02,276/- AS ON 01.04.2008 FOR WHICH THE AD DITION IS PATENTLY WRONG/ILLEGAL. THE SAID CREDITOR ADVANCED RS.38,00,000/- ON 02.07.2008 THROUGH BANKING CHANNE L DURING ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 111 THE YEAR. ON GOING THROUGH THE BANK STATEMENT OF CR EDITOR IT IS EVIDENT THAT THE CREDITOR HAD BROUGHT FORWARD AMOUN T RS.3,70,29,950/- AND FURTHER RECEIVED RS.4-1,00,000 /- THROUGH CHEQUE AS ON 2108.2008. THE SAID AMOUNT OF RS.38,00 ,000/- WAS ADVANCED TO THE ASSESSEE OUT OF THE CREDIT BALA NCE BROUGHT FORWARD FROM EARLIER PERIOD. THUS, IT IS EVIDENT TH AT THE CREDITOR HAS ADVANCED THE NEW LOAN OF RS.38,00,000/- OUT OF ITS CREDIT BALANCE BROUGHT FORWARD FROM EARLIER PERIOD.' 8.46 IT IS SEEN THAT OUT OF THE CREDIT BALANCE OF R S.85,02,276/- AS ON 31.03.09 FROM M/S H. T. RECON CONSTRUCTIONS P VT. LTD., THERE WAS AN OPENING CREDIT BALANCE OF RS.47,02,276 /- AS ON 01.04.08, AND THAT THE CREDITOR ADVANCED A FURTHER AMOUNT OF ONLY RS.38,00,000/- DURING THE YEAR. THUS, THE ASSE SSING OFFICER HAS NOT PROPERLY APPRECIATED THE FACTS OF T HE CASE AT ALL. IT APPEARS AS IF HAVING ADDED THE CREDITS FROM OTHE R PARTIES, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE CREDIT F ROM M/S H. T. RECON CONSTRUCTIONS PVT. LTD. SHOULD ALSO BE ADDED, AND PROCEEDED TO ADD THE CREDIT FROM THAT PARTY, IGNORI NG THE DOCUMENTS FILED AND THE FULL FACTS OF THE CASE. THE REMAND REPORTS FROM THE ASSESSING OFFICER AND THE COMMENTS /REPORTS FROM THE JOINT/ADDL. COMMISSIONER HEADING THE RANGE ONLY REITERATE THE STAND OF THE ASSESSING OFFICER AND TH ERE IS NOTHING TO ADD TO THE CONTENTIONS AND CONCLUSIONS OF THE AS SESSING OFFICER. IN VIEW OF THE ENTIRE FACTS OF THE CASE, T HERE IS NO JUSTIFICATION TO TREAT THE CREDIT AS ON 31.03.9 AMO UNTING TO RS.85,02,276/- FROM M/S H.T. RECON CONSTRUCTIONS PV T. LTD. AS UNEXPLAINED, AND HENCE THE ADDITION OF RS.85,02,276 /- MADE BY THE ASSESSING OFFICER TREATING THIS LOAN AS UNEXPLA INED IS HEREBY DELETED. ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 112 35. WE HAVE GONE THROUGH THE COMPLETE FACTUM, THE SUBMISSION OF BOTH THE PARTIES, ARGUMENTS, EVIDENCE S AND FIND THAT THE LD. CIT (A) HAS GIVEN VERY COGENT REASON G OING THROUGH EACH AND EVERY CREDITORS, THE COPY OF ITRS, BANK ST ATEMENT, BALANCE SHEET, RECEIPT AND REPAYMENT. NO PERVERSITY OR FACTUAL INACCURACIES OR LEGAL IN CONGRUENCIES COULD BE ESTA BLISHED. HENCE, WE DECLINE TO INTERFERE WITH THE ORDER OF TH E LD. CIT (A). DISALLOWANCE OF INTEREST AMOUNTING TO RS. 37,34,407 /- 36. THE APPELLANT HAD DISCLOSED THE AMOUNT OF RS.1,25,59,001/- AS INCOME FROM MISCELLANEOUS RECEI PTS IN THE PROFIT & LOSS ACCOUNT. IT WAS CLAIMED IN THE ASSESS MENT PROCEEDINGS THAT THE MISCELLANEOUS RECEIPTS OF RS.1 ,25,59,001/- INCLUDED RENTAL RECEIPT OF RS.1,25,30,519/- FROM M/ S HHG GLOBAL PTE. LTD. AND REVISED COMPUTATION OF TOTAL I NCOME WAS FILED DISCLOSING THE ANNUAL LETTABLE VALUE U/S 23 F OR THE PROPERTY AT DLF PHASE II, GURGAON AT RS.1,25,30,519 /- AND AFTER DEDUCTING THE DEDUCTION U/S 24(A) AT RS.37,59 ,156/- @ 30% OF THE ANNUAL VALUE. 37. A PERUSAL OF THE LEDGER ACCOUNT FOR MISCELLANEO US RECEIPTS AS PER THE BOOKS OF M/S K.R. CHAWLA & CO., A COPY O F WHICH WAS FILED IN THE PAPER BOOK IN THE APPELLATE PROCEEDING S SHOWS THAT THERE ARE THE FOLLOWING CREDITS IN THIS ACCOUNT SHO WN AS RECEIPTS FROM M/S HHG GLOBAL PTE. LTD.: S. NO. DATE NARRATION AMOUNT (IN RS.) 1. 11.07.07 BEING THE AMOUNT OF EURO 25000 @ 54.30 RECEIVED FROM HHG GLOBAL PTE. LTD. AGAINST RENT RS. 13,57,500/- ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 113 2. 07.09.07 BEING THE AMOUNT OF EURO 48380 @ 55.10 RECEIVED FROM HHG GLOBAL PTE. LTD. AGAINST RENT RS.26,65,738/- 3. 08.11.07 EURO 49980 @ 57.50 RECEIVED FROM HHG GLOBAL PTE. LTD. RS.28,73,850/- 4. 03.03.08 USD 70000 @ 40.20 RECEIVED FROM HHG GLOBAL THROUGH AXIS BANK AGAINST RENT RS.28,13,831/- 5. 12,03.08 USD 70000 @ 40.28 RECEIVED FROM HHG GLOBAL THROUGH ABN AMRO BANK AGAINST RENT RS.28,19,600/- TOTAL RS.1,25,30,519/- 38. A PERUSAL OF THE FACTS OF THE CASE AND THE LEGA L POSITION SHOWS THAT THERE WAS NO CHALLENGE TO THE FACT THAT THE AMOUNT OF RS. 1,25,30,519/- WAS RECEIVED FROM M/S HHG GLOB AL PTE. LTD. AS RENT, AND THAT THE APPELLATE AUTHORITIES HA D THE JURISDICTION TO ENTERTAIN ADDITIONAL CLAIMS MADE BE FORE THEM. IN THE INSTANT CASE, THE CLAIM FOR DEDUCTION U/S 24(A) HAD BEEN MADE BEFORE THE ASSESSING OFFICER DURING THE ASSESS MENT PROCEEDINGS (THOUGH NOT BY REVISED RETURN), BUT BY REVISED COMPUTATION OF INCOME, AND IN VIEW OF THE FACT THAT THE AMOUNT IN QUESTION I.E. RS.1,25,30,519/- WAS BASICALLY REN TAL RECEIPT, IT HAD TO BE TAXED AS INCOME FROM HOUSE PROPERTY AND H ENCE THE DEDUCTION ALLOWABLE HAD TO BE GIVEN TO THE APPELLAN T. RELIANCE IS BEING PLACED ON ORDER OF THE HONBLE APEX COURT IN THE CASE OF GOETZE INDIA LTD. VS CIT 284 ITR 323. HENCE, WE DECLINE TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). DIVIDEND U/S 14A: 39. THE ASSESSING OFFICER DISALLOWED RS.4,15,141/- U/S 14A. WE FIND THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME AND HENCE WE DIRECT THAT NO DISALLOWANCE IS CALLED FOR, AS THE ITA NOS. 5857 & 5858/DEL/2017 HARVANSH P. CHAWLA 114 SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS R ECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. 40. AS A RESULT, THE APPEALS OF THE REVENUE ARE DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/04/2021. SD/- SD/- (BHAVNESH SAINI) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 26/04/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR