AJAY MALSHI DEDHIA, MUMBAI V. JCIT 31(1), MUMBAI

ITA 641/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2829 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 27-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHANT SAMAIYA
• Assessee Lawyers: NITIN M FURIA
• Keywords: Bogus purchase; Unexplained cash credit; Search and seizure; Opportunity of being heard; Principle of natural justice; Additional evidence; Accommodation entries; Retraction; Bogus loan
• Section: 143(3); 234B; 133(6); 68; 132

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 641 / MUM/2017 ( / ASSESSMENT YEAR : 2012 - 13 ) SHRI. AJAY MALSHI DEDHIA 17/134, MOTILAL NAGAR NO.1,GOREGAON (W), MUMBAI 400104 / V. JCIT 31(1) MUMBAI ./ PAN : AACPD8829Q ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. NITIN M. FURIA ,CA REVENUE BY : SHRI NISHANT SAMAIYA, DR / DATE OF HEARING : 08 .08.2018 / DATE OF PRONOUNCEMENT : 28 .08.2018 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE , BEING ITA NO. 641/MUM/2017 , IS DIRECTED AGAINST APPELLATE ORDER DATED 13.09.2016 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 42 , MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2012 - 13 , THE APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM ASSESSMENT ORDER DATED 27.03.2015 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143 (3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FOR AY 2012 - 13 . I.T.A. NO. 641/MUM/2017 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUN AL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - 1. ADDITION OF UNSECURED LOANS OF RS. 90,00,000 A) THE ID. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE LD. A.O IN TREATING THE UNSECURED LOANS OF RS. 90,00,000 IN AGGREGATE RECEIVED FORM 3 PARTIES NAMELY M/S. ANKITA EXPORTS, M/S. ROSHAN GEMS PVT LTD. AND M/S. PRIME STAR AS UNEXPL AINED CASH CREDITS U/S. 68 AND AS A CONSEQUENCE ERRED IN MAKING AN ADDITION OF RS. 90,00,000 TO THE RETURNED I NCOME WITHOUT DISCHARGING THE ON US CAST ON HIM AND THE ID. CIT(A) AGAIN ERRED IN LAW AND IN FACTS IN HOLDING THAT; AFFIDAVIT OF RETRACTION OF SHRI BHANWARLAL JAIN IS AN ADDITIONAL EVIDENCE AND HENCE DID NOT ADMIT THE SAME AS NO APPLICATION SEEKING ITS INTRODUCTION WAS MADE AS PER RULE 46A (PG. 7 OF CIT(A)'S ORDER) THE DEPONENT WAS NOT PRODUCED BEFORE THE A.O AND A RETRACTION MADE AFTER SEVERAL MONTHS DOES NOT SATISFY THE LAW. (PG. 7 OF CIT(A)'S ORDER) THE ONUS WAS ON THE APPELLANT TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS (PG. 7OF CIT(A)'SORDER) THE APPELLANT HAS NOT PRODUCED THE LOAN CRED ITORS (PG. 7 OF CIT(A)'S ORDER). B) YOUR APPELLANT SUBMITS THAT HE HAD OBTAINED UNSECURED LOANS IN THE COURSE OF HIS BUSINESS BY ACCOUNT PAYEE CHEQUES FROM THE IDENTIFIED PERSONS WITH CREDIBILITY AND HAD FULLY DISCHARGED THE ONUS CAST ON HIM AND FURTHE R SUBMITS THAT THE ID. AO HAD FAILED IN DISCHARGING THE BURDEN CAST ON HIM BY LAW WHILE MAKING THE ADDITION. C) YOUR APPELLANT PRAYS FOR THE DELETION OF THE SAID ADDITION OF RS. 90,00,000. 2 . DISALLOWANCE OF INTEREST OF RS. 7,55,411 A) THE L D. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF T HE L D. A.O OF DISALLOWING THE CLAIM OF INTEREST OF RS. 7,55,411 BEING INTEREST PAID ON THE LOANS TAKEN FROM THE 3 PARTIES NAMELY M/S. ANKITA EXPORTS, M/S. ROSHAN GEMS PVT. LTD. AND M/S. PRIME S TAR. B) YOUR APPELLANT SUBMITS THAT THE INTEREST WAS PAID BY ACCOUNT PAYEE CHEQUES AFTER DEDUCTING TAX AT SOURCE TO THE LENDERS WHOSE IDENTITY, GENUINENESS AND CREDIBILITY WERE ESTABLISHED AND THE COMPLETE DETAILS OF INTEREST WERE FURNISHED WHICH INTER EST WAS TAXED IN THE HANDS OF THE LENDERS BY THE INCOME TAX DEPARTMENT. C) YOUR APPELLANT PRAYS THAT THE SAID INTEREST OF RS. 7,55,411 BE ALLOWED AS CLAIMED. 3. VIOLATION OF NATURAL JUSTICE I.T.A. NO. 641/MUM/2017 3 A) THE L D CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE L D. A.O OF PASSING THE ORDER OF ASSESSMENT IN GROSS VIOLATIONS OF THE PROVISIONS OF NATURAL JUSTICE AND OF EQUITY AND FAIRNESS IN AS MUCH AS; I. HE HAD RELIED ON THE INFORMATION BEHIND THE BACK OF THE APPELLANT, II. HE HAD NOT PARTED WITH THE INFORMATION SO COLLECTED WITH THE ASSESSEE. II I. HE IN THE PROCESS HAD DENIED THE OPPORTUNITY TO THE APPELLANT TO PRESENT HIS CASE ON SUCH INFORMATION. IV. HE HAD FOLLOWED THE INSTRUCTIONS OF HIS SUPERIOR INSTEAD OF APPLYING HIS MIND TO TAKE HIS INDEPENDENT DECISION, V. HE HAD RELIED ON EXTRACT OF SOME OF THE STATEMENTS OF BHANWARLAL JAIN THAT WAS UNRELATED TO THE LENDERS. VI. HE HAD NOT TAKEN IN TO CONSIDERATION THE RETRACTION OF THE ABOVE REFERRED BHANWARLAL JAIN. VII. HE HAD NOT PRODUCED THE ABOVE REFERRED PARTY FOR EXAMINATION, VIII. HE HAD NOT PRODUCED THE LENDERS FOR EXAMINATION BEFORE RELYING ON 3RD PARTY STATEMENT IN ASSESSMENT OF YOUR APPELLANT'S I NCOME, IX. HE HAD NOT EXAMINED THE BANKERS OF THE APPELLANT. X. HE HAD NOT EXAMINED THE FACTS STATED BY THE APPELLANT WITH THE BANKERS OF THE LENDERS OR THE AO OF THE LENDERS. XI. HE HAD NOT EXAMINED AND HAD REFUSED TO THE OVERWHELMING EVI DENCES PRODUCED BY YOUR APPELLANT IN SUPPORT OF THE GENUINENESS OF LOANS INCLUDING THE EVIDENCE PRODUCED IN THE FORM OF AFFIDAVITS OF THE LENDERS CONFIRMING THE FACTS STATED BY YOUR APPELLANT. XII. HE HAD NOT TAKEN IN TO CONSIDERATION THE RETRACTION S TATEMENT OF THE LENDERS. XIII. HE IGNORED THE AFFIDAVIT AND RETRACTIONS FROM THE LENDERS, XIV. HE HAD NOT DIRECTED THE ASSESSEE TO PRODUCE THE LENDERS, XV. HE FAILED TO ENFORCE THE ATTENDANCE OF THE LENDERS. XVI . HE FAILED TO ESTABLISH INVOLVEMENT OF YOUR APPELLANT IN DI'S REPORTS, XVII. HE DID NOT VERIFY AND ALSO FAILED TO FURNISH COPIES OF REQUESTED DOCUMENTS DURING ASSESSMENT. B) YOUR APPEL LANT STRONGLY SUBMITS THAT THE L D. AO HAD SYSTEMATICALLY WITH APPLICATION OF MIND FRUSTRATED THE APPELLANT'S RIGHT AND WITH THAT VIOLATED THE PROVISIONS OF NATURAL JUSTICE, EQUITY AND FAIRNESS. C) THE HON. C1T(A) ERRED IN LAW AND ON FACTS IN PASSING THE ORDER IN GROSS VIOLATION OF NATURAL JUSTICE BY NOT REC TIFYING THE ABOVEMENTIONED MISTAKES OF THE L D. A.O. WHILE PASSING THE APPEAL ORDER. D) YOUR APPELLANT PRAYS THAT AN ORDER PASSED IN THE ABOVE CIRCUMSTANCES THAT VIOLATED THE NATURAL JUSTICE, EQUITY AND FAIRNESS BE HELD TO BE BAD IN LAW AND BE QUASHED. 4 . SHRI BHANWARLAL JAIN WITNESS OF THE DEPARTMENT A) THE HON. CIT(A) HAS ERRED IN LAW AND ON FACTS IN TREATING SHRI BHANWARLAL JAIN AS THE APPELLANT'S WITNESS ESPECIALLY WHEN THE ENTIRE ADDITION WAS BASED ON THE STATEMENT OF SHRI BHANWARLAL JAIN. I.T.A. NO. 641/MUM/2017 4 B) YOUR APPELLANT PRAYS THAT SHRI BHANWARLAL JAIN BE TREATED AS WITNESS OF THE DEPARTMENT AND THE APPELLANT BE PROVIDED AN OPPORTUNITY TO CROSS - EXAMINE HIM. 5. REJECTION OF RETRACTION STATEMENT OF SHRI BHANWARLAL JAIN A) THE HON. CIT(A) ERRED IN LAW A ND ON FACTS IN REJECTING THE RETRACTION STATEMENT OF SHRI BHANWARLAL JAIN. B) YOUR APPELLANT STRONGLY SUBMITS THAT THE RETRACTION STATEMENT WAS A VAILABLE WITH THE L D. A.O. AT THE TIME OF SCRUTINY PROCEEDINGS AND THEREFORE NO ADDITIONAL EVIDENCE APPLICATIO N U/S. 46A WAS REQUIRED FROM YOUR APPELLANT. C) YOUR APPELLANT PRAYS THAT THE RETRACTION STATEMENT OF SHRI BHANWARLAL JAIN BE ADMITTED AS EVIDENCE IN FAVOUR OF YOUR APPELLANT. 6. LEVY OF INTEREST U/S 234B: A) THE HON. CIT(A) ERRED IN LAW ON FACTS IN NOT ADJUDICATING THE GROUND RAISED BY YOUR APPELLANT OR IN THE ALTERNATIVE ERRED IN LAW AND IN FACTS I N CONFIRMING THE ACTION OF THE L D. A.O OF LEVYING INTEREST U/S 234B OF RS. 10,76,112 WITHOUT GIVING AN OPPORTUNITY OF HEARING AND WITHOUT PASSING A SPE AKING ORDER. B) YOUR APPELLANT DENIES ANY LIABILITY TO PAYMENT OF INTEREST AND FURTHER SUBMITS THAT THE TAX WAS PAID AS PER THE PROVISIONS OF THE LAW. C) YOUR APPELLANT PRAYS THAT THE INTEREST SHOULD BE DELETED. 7. YOUR APPELLANT PRAYS FOR THE LEAVE TO ADD, AMEND, ALTER, DELETE OR MODIFY ANY OF THE ABOVE GROUNDS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS BUILDER & DEVELOPER AND IS MAINLY ENGAGED IN THE BUSINESS OF CONSTRUCTING AND DEVELOPING COMMERCIAL AND RESIDENTIAL BUILD INGS. THE ASSESSEE IS PROPRIETOR OF VARIOUS CONCERNS VIZ. M/S. ASMI REALTORS, M/S. ASMI DEV ELOPERS, M/S. ESHA CONSTRUCTION, M/S KAJAL DEVELOPERS AND M/S AS MI DEVELOPMENT CONSTRUCTION. DURING COURSE OF ASSESSMENT PROCEEDINGS U/S 143(2) R.W.S. 143(3) OF THE 1961 ACT, T HE AO OBSERVED FROM THE BALANCE SHEET OF THE ASSESSEE THAT THE ASSESSEE HAD SUBSTANTIAL AMOUNT OF LOANS APPEARING IN LIABILITY SIDE OF THE BALAN CE SHEET. THE ASSESSEE WAS ASKED BY THE AO TO SUBMIT THE DETAILS AND ALSO TO PROVE WITH EVIDENCES SATISFACTION OF INGREDIENTS OF SECTION 68 OF THE 1961 ACT. THE AO OBSERVED FROM THE DETAILS SUBMITTED BY THE ASSESSEE THAT T HE ASSESSEE HAD , INTER - ALIA, RECE IVED LOANS AMOUNTING I.T.A. NO. 641/MUM/2017 5 TO RS. 90,00,000/ - FROM THREE PARTIES NAMELY M/S. ANKITA EXPORTS , M/S. ROSHAN GEMS PRIVATE LTD. AND M/S. PRIME STAR AND THESE THREE PARTIES ARE APPEA RING IN THE LIST OF BOGUS ENTRY PROVIDERS AS PER LIST PROVIDED BY DGIT(INV.) IN THE C ASE OF BHANWARLAL JAIN GROUP. A SEARCH & SEIZURE ACTION U/S. 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED ON 03.10.2014 BY INVESTIGATION WING, MUMBAI ON BHANWARLAL JAIN GROUP OF CASES WHEREIN IT WAS FOUND THAT SHRI BHANWARLAL JAIN ALONG WITH HIS SONS WER E OPERATING AND MANAGING MORE THAN 70 BENAMI CONCERNS IN THE NAMES OF THEIR EMPLOYEES THROUGH WHICH THEY WERE PROVIDING ACCOMMODATION ENTRIES OF BOGUS UN - SECURED LOANS AND PURCHASES TO VARIOUS BENEFICIARIES AND THE ASSESSEE WAS LISTED AS ONE OF THE BENEFI CIARIES OF THE BOGUS ACCOMMODATION ENTRIES BY WAY OF UNSECURED LOANS OF RS. 90 LACS IN THE LIST PROVIDED TO THE AO BY DGIT(INV) RECEIVED BY ASSESSEE FROM THESE THREE LENDERS NAMELY M/S. ANKITA EXPORTS, M/S. ROSHAN GEMS PRIVATE LTD. AND M/S. PRIME STAR . SEV ERAL INCRIMINATING MATERIAL WAS STATED TO BE FOUND AND SEIZED DURING SEARCHES U/S 132(1) OF THE 1961 ACT CONDUCTED ON MR BHANWARLAL JAIN GROUP BY RE V E NUE AND STATEMENTS WERE STATED TO BE RECORDED U/S 132(4) OF THE 1961 ACT OF SH . BHANWARLAL JAIN AND HIS SO NS WHEREIN THEY ADMITTED TO BOGUS NATURE OF THESE ACCOMMODATION ENTRIES. THE MODUS OPERANDI OF THESE AC COMMODATION BOGUS ENTRIES WERE FURNISHED BY DGIT(INV) TO AO . IT WAS OBSERVED BY REVENUE THAT VARIOUS D IRECTORS / P ARTNERS/ P ROPRIETORS OF THESE VARIOUS BENAMI CONCERNS BELONGING TO BHANWARLAL JAIN GROUP WERE FROM THE NATIVE PLACE OF SHRI BHANWARLAL JAIN AND/OR HIS FAMILY IN RAJASTHAN AND THEY WERE IN FACT DUMMY DIRECTORS/PARTNERS / PROPRIETORS . IN THEIR STATEMENT RECORDED U/S. 132(4) OF THE 1961 AC T THESE ALLEGED BENAMI PARTNERS/PROPRIETORS / DIRECTORS OF THESE BANAMI CONCERNS OF MR BHANWARLAL JAIN AND HIS FAMILY MEMBERS ADMITTED THAT THEY WERE BENAMI PARTNERS/D IRECTORS /P ROPRIETOR OF VARIOUS CONCERNS AT THE DIRECTION OF SHRI. BHANWARLAL JAIN AND /OR HIS FAMILY MEMBERS AND THEY WERE MERELY EMPLOYEES OF SHRI BHANWARLAL JAIN AND /OR HIS FAMILY MEMBERS RECEIVING MEAGRE SALARY . THEY ADMITTED TO HAVE NO I.T.A. NO. 641/MUM/2017 6 KNOWLEDGE OF DIAMOND BUSINESS IN WHICH THEY WERE SHOWN AS DIRECTOR/P ARTNERS /P ROPRIETOR FOR NAME SAKE AS BE NAMI S OF SH . BHANWARLAL JAIN AND/OR HIS FAMILY . ALL THESE BENAMI CONCERNS WERE FOUND BY REVENUE TO BE OPERATING FROM PREMISES LOCATED IN OPERA HOUSE WHICH ARE IN THE NAME OF BHANWARLAL JAIN AND HIS FAMILY. THESE CONCERNS WERE FOUND INDULGING IN IMPORT AND EXPORT OF DIAMOND WHEREIN NO STOCK OF DIAMOND WAS FOUND AT ANY OF THE IR PREMISES , NO BOOKS OF ACCOUNTS WERE MAINTAINED AT THEIR REGISTERED ADDRESSES AND THE STATEMENTS UNDER OATH WERE GIVEN BY THESE DUMMY/BENAMI DIRECTORS/P ARTNERS /P ROPRIETOR OF THESE CONCERNS THAT THESE CONCERNS WERE ENGAGED IN THE PROVIDING BOGUS ACCOMMODATION ENTRIES ONLY. THE ENTIRE MODUS OPERANDI OF THESE BENAMI CONCERNS BELONGING TO BHANWARLAL JAIN GROUP IN PROVIDING BOGUS ACCOMMODATION ENTRIES WAS FOUND DISCU SSED BY THE AO IN THE ASSESSMENT ORDER AND THE SAME IS NOT REPEATED HERE . THE CODES WERE USED TO RECORD THESE ACCOMMODATION ENTRIES WHICH WERE DECODED BY REVENUE FROM THE INCRIMINATING MATERIAL FOUND AND SEIZED DURING SEARCHES CONDUCTED BY REVENUE. THE LD . AO ALSO OB SERVED THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES BY WAY OF UN - SECURED LOANS FROM THESE THREE BENAMI CONCERNS NAMELY M/S. ANKITA EXPORTS, M/S. ROSHAN GEMS PRIVATE LTD. AND M/S. PRIME STAR AGGREGATING TO RS. 90,00,000/ - . THE AO ISSUED NOTICES U/ 133(6) OF THE 1961 ACT TO ALL THE SE THREE PARTIES WHO LENT RS. 90 LACS TO THE ASSESSEE . TWO OF THE PARTIES NAMELY M/S ROSHAN GEMS PRIVATE LIMITED AND M/S PRIME STAR REPLIED TO NOTICES ISSUED U/S 133(6) ISSUED BY THE AO WHILE IN THE CASE OF M/S. ANKITA EXPORTS , NOTICES U/S 133(6) OF THE 1961 ACT COULD NOT BE SERVED TO M/S ANKITA EXPORTS ON THE GIVEN ADDRESS. THE AO ON PERUSAL OF REPLIES FILED BY BOTH THE PARTIES FROM WHOM NOTICES U/S 133(6) OF THE 1961 ACT WERE SERVED , OBSERVED THAT BOTH THE PARTIES WERE ENGAGED IN BUSINESS OF TRADING AND POLISHING OF DIAMONDS. IT WAS ALSO OBSERVED , INTER - ALIA, BY THE AO THAT BALANCE SHEET OF BOTH THE PARTIES REVEALED THAT THEY HAVE HIGH TURNOVER, HAVE MAJOR COMPONENT IN THEIR BALANCE SHEET AS LOANS AND ADVAN CES , DEBTORS AND I.T.A. NO. 641/MUM/2017 7 INVESTMENTS AND LARGE AMOUNT OF CREDITORS. IT WAS ALSO OBSERVED BY THE AO THAT OWN CAPITAL WAS VERY LOW. THE AO OBSERVED THAT ANALYSIS OF THEIR FINANCIAL STATEMENTS PROVED THAT CREDITWORTHINESS OF THESE PARTIES FROM WHOM THE ASSESSEE AVAI LED BOGUS LOANS COULD NOT BE PROVED. THE AO OBSERVED THAT THE ASSESSE COULD NOT PRODUCE THESE PARTIES BEFORE THE AO. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE INQUIRI ES HAVE BEEN INITIATED AT FAG END WHEN THE ASSESSMENT WAS GETTING TIME BARRED . T H E AO DENIED THESE ALLEGATION OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE WAS ASKED VIDE QUESTIONNAIRE DATED 11.08.2014 TO SUBSTANTIATE THAT CONDITIONS AS STIPULATED U/S 68 OF THE 1961 ACT WRT THESE LOANS OF RS. 90 LACS WERE FULFILLED AS VIDE SCN DATED 1 6.03.2015 AS IS REFERRED TO BY THE ASSESSEE IS THE FINAL OPPORTUNITY GIVEN BY THE AO TO THE ASSESSEE . THE ASSESSEE ALSO CONTENDED THAT THE AO DID NOT FURNISH COMPLETE DETAILS WITH RESPECT TO ALLEGATIONS MADE IN CONTEXT OF SEARCHES CONDUCTED BY REVENUE ON BHANWARLAL JAIN GROUP SUCH AS COPIES OF STATEMENT RECORDED AND EVIDENCES COLLECTED DURING SEARCHES WERE NOT SUPPLIED TO ASSESSEE NOR APPRAISAL REPORT PREPARED IN THE CASE OF SH BHANWARLAL JAIN GROUP BY INVESTIGATION DEPARTMENT WAS SUPPLIED TO THE ASSESSEE . THE ASSESSEE ALSO SUBMITTED THAT COPIES OF INCOME - TAX R ETURNS FILED BY ENTITIES IN THE C ASE OF BHANWARLAL JAIN GROUP WERE NOT FURNISHED TO THE ASSESSEE NOR REPLIES SUBMITTED BY T HESE ENTITIES BEFORE REVENUE WERE FURNISHED TO THE ASSESSEE. THE AO OBSERVED THAT HUNDREDS OF ENTITIES WERE BENEFICIARIES OF ACCOMMODATION ENTRIES PROVIDED BY BHANWARLAL JAIN AND INVESTIGATION WING DID NOT SHARED ALL INFORMATION/EVIDENCES WITH THE AO. THE AO OBSERVED THAT THE COPIES OF STATEMENT RECORDED IN THE C ASE OF BHANWARLAL JAIN CASE WERE FURNISHED TO THE ASSESSEE FOR REBUTTAL ALONG WITH NOTICES U/S 133(6) ISSUED TO THE SE THREE LENDERS WHO LENT ASSESSEE RS. 90 LACS AS UNSECURED LOANS ALONG WITH THEIR REPLIES DURING ASSESSMENT PROCEEDINGS. THE AO OBSERVED THAT ADDITIONS WITH RESPECT TO THESE THREE LENDERS TO THE TUNE OF RS. 90 LACS WITH RESPECT TO LOAN GRANTED BY THEM TO ASSESSEE ARE NOT PROPOSED J U S T BECAUSE OF INCRIMINATING REPORT OF THE INVESTIGATION WING BUT BECAUSE I.T.A. NO. 641/MUM/2017 8 THAT DESPITE OPPORTUNITY GRANTED TO THE ASSESSEE, THE ASS ESSEE HAD FAILED TO SATISFY THE CONDITIONS STIPULATED U/S 68 OF THE 1961 ACT. THE AO OBSERVED THAT GENUINENESS OF THESE LOANS AND CREDITWORTHINESS OF THESE LENDERS COULD NOT BE PROVED BY THE ASSESSEE. THE ASSESSEE ON ITS PART SUBMITTED BEFORE THE AO , THE ANNUAL ACCOUNT S, ITR ACKNOWLEDGEMENT , CONFIRMATION AND BANK STATEMENT S OF THESE THREE LENDING ENTITIES BUT THE AO OBSERVED THAT CUMULATIVE EFFECT OF ALL THE SE MATERIAL ON RECORDS PROVE THESE TTHREE LENDING ENTITIES ARE SHELL C ONCERNS WHEREIN THE ASSESSEE FAILED TO PROVE IDENTITY AND CREDITWORTHINESS OF THESE LENDING C ONCERNS AND ALSO THE AO HELD THAT THE ASSESSEE COULD NOT PR O VE GENUINENESS OF THESE LOAN TRANSACTIONS AMOUNTING TO RS. 90 LACS. THE AO RELIED UPON FOLLOWING CASE LAWS TO COME TO THE AFORESAID CONCLUSION: - A) SUMATI DAYAL V. CIT (SC) 214 ITR 801 B) VASNTIBAI N SHAH V. CIT (BOM) 213 ITR 805 C) SREELEKHA BANERJEE & OTHS. V. CIT (SC) 4 9 ITR 112 D) CIT V . BIJU PATNAIK (SC) 160 ITR 674 E) ROSHAN DE HA TTI V. CIT (SC) 107 ITR 938 HENCE ADDITIONS WERE MADE BY THE AO IN THE HANDS OF THE ASSESSEE TO THE TUNE OF RS. 90,00,000/ - BEING UNEXPLAINED CASH CREDIT U/S 68 OF THE 1961 ACT . SIMILARLY INTEREST PAID TO THESE THREE LEND ING PARTIES TO THE TUNE OF RS. 7,55, 411/ - WAS ALSO DISALLOWED BY THE AO AS UN - SECURED LOANS TRANSACTION S WITH THESE THREE PARTIES WERE ALREADY HELD BY AO TO BE BOGUS. THE AO PASSED ASSESSMENT ORDER DATED 27.03.2015 U/S 143(3) OF THE 1961 ACT. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) . T HE ASSESSEE SUBMITTED THAT THESE THREE LOANS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE AND LOAN CREDITOR S WERE CREDIBLE . IT WAS SUBMITTED THAT THE AO RELIED UPON THE INFORMATION WHICH WAS COLLECTED AT THE BACK OF THE ASSESSEE . IT WAS SUBMITTED THAT COMPLETE INFORMATION COLLECTED BY THE AO WAS NOT SUBMITTED TO THE ASSESSEE WHICH PREVENTED ASSESSEE TO PRESENT ITS CASE . THE ASSESSEE SUBMITTED THAT THE AO DID NOT A RRIVE AT DECISION INDEPENDENTLY AND FULL INQUIRIES I.T.A. NO. 641/MUM/2017 9 WERE NOT MADE BY TH E AO BEFORE MAKING ADDITIONS TO THE TUNE OF RS. 90,00,000/ - . THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE DID SUBMIT LOAN CONFIRMATIONS , BANK STATEMENT , FINAL ACCOUNTS OF LOAN CREDITORS BUT INCRIMINATING INFORMATION WAS RECEIVED BY THE AO THAT THESE TH REE LENDERS WERE BENAMIS OF SH BHANWARLAL JAIN GROUP AND THESE ENTITIES WERE MERELY ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENTRIES . IT WAS OBSERVED BY LEARNED CIT(A) THAT THERE WAS A SEARCH AND SEIZURE OPERATIONS CARRIED ON BY THE REVENUE AGAINST SAID SH. BHANWARLAL JAIN GROUP U/S 132(1) OF 30.10.2013 WHEREIN IT WAS FOUND THAT THE SAID SH BHANWARLAL JAIN ALONG WITH HIS SONS WERE ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENTRIES TOWARDS PURCHASE S AND LOANS THROUGH BENAMI CONCERN S OPENED IN THE NAME OF EM PLOYEE S WHO WERE GETTING MEAGRE SALARIES. THE SAID BENAMI CONCERNS ALSO INCLUDED THESE THREE LENDING COMPANIES WHO LENT RS. 90 LACS TO THE ASSESSEE. THERE WERE SEIZURE OF SEVERAL INCRIMINATING MATERIAL DURING SEARCH OPERATIONS AND THE AO DID EXTRACTED ENTI RE MODUS OPERANDI OF THE SAID SH BHANWARLAL JAIN IN PROVIDING THESE ACCOMMODATION ENTRIES. THE LEARNED CIT(A) OBSERVED THAT THE AO HAD EXTRACTED CONTENTS FROM APPRAISAL REPORT PREPARED BY INVESTIGATION WING ABOUT THE ACTIVITIE S AND MODUS OPERANDI OF THESE BE NAMI CONCERNS CONTROLLED BY SH BHANWARLAL JAIN AND HIS FAMILY MEMBERS. IT WAS CLAIMED BY THE ASSESSEE BEFORE LEARNED CIT(A) THAT AO HAD NOT SUPPLIED COPY OF THE APPRAISAL REPORT OF BHANWARLAL JAIN GROUP AND CROSS EXAMINATION WAS NOT ALLOWED. THE LD. CIT( A) OBSERVED THAT THE AO HANDED OVER TO THE ASSESSEE COPY OF STATEMENT GIVEN BY SHRI B HANWARLAL JAIN TO THE SEARCH T E AM . IT WAS OBSERVED BY LEARNED CIT(A) THAT ASSESSEE IS ASKING FOR EXTRANEOUS DETAILS SUCH AS INCOME TAX R ETURNS OF THE LOAN CREDITOR AND A COPY OF ITS SEARCH REPORT WHICH IS SECURED U/S. 138 OF THE ACT. THE LEARNED CIT(A) OBSERVED THAT THE AO SHARE D ALL THE INFORMATION AVAILABLE WITH HIM WITH THE ASSESSEE . THE LOAN CREDITORS ARE WITNESS ES OF THE ASSESSEE AND IT I S F OR THE ASSESSEE TO ADDUCE THE DOCUMENTS OR TO PRODUCE HIS WITNESS ES . THE LD. CIT(A ) OBSERVED THAT THE ASSESSEE IS SEEKING TO FILE COPY OF AN I.T.A. NO. 641/MUM/2017 10 AFFIDAVIT OF SH. BHANWARLA L JAIN DATED 15.5.2014 DURING APPELLATE PROCEEDINGS WHEREIN SH BHANWARLAL JAIN IS OSTENSIBLY RESILING FROM THE STATEMENTS GIVEN BY HIM IN THE COURSE OF SEARCH OPERATIONS FROM 03.10.2013 TO 12.10.2013 . THE LEARNED CIT(A) OBSERVED THAT THIS REFLECTS CLOSENESS OF THE ASSESSEE WITH HIS LOAN CREDITORS AND PUTS A QUESTION MARK ON THE ASSE SSEES INSISTENCE OF DOCUMENTS OF THE LOAN CREDITORS FROM THE AO. THE LEARNED CIT(A) OBSERVED THAT THIS AFFIDAVIT OF SHRI BHANWARLAL JAIN WAS NOT PRODUCED BY THE ASSESSEE BEFORE THE AO AND IS FRESH EVIDENCE WHICH IS INTRODUCED FOR THE FIRST TIME BY THE AS SESSEE IN APPELLATE PROCEEDINGS. T HE LD. CIT(A) OBSERVED THAT ASSESSEE HAS NOT FILED ANY APPLICATION UNDER RULE 46A OF THE INCOME - TAX RULES, 1962 PRIOR TO INTRODUCING THIS FRESH EVIDENCE AND HENCE LEARNED CIT(A) REFUSED TO ADMIT THIS PIECE OF EVIDENCE ON THE GROUNDS OF BEING FRESH EVIDENCES WHICH WAS INTRODUCED FOR THE FIRST TIME BEFORE HIM . THE LEARNED CIT(A) ALSO OBSERVED THAT THE SAID SH. BHANWARLAL JAIN WAS NOT PRODUCED BY THE A SSESSEE BEFORE THE AO AND A RETRACTION MADE AFTER SEVERAL MONTHS DOES NO T SATISFY THE REQUIREMENT OF LAW . THE LEARNED CIT(A) RELIED UPON FOLLOWING CASE LAWS TO COME TO ABOVE CONCLUSIONS : - A ) ACIT V. HUKUM CHAND JAIN (2011) 337 ITR 238(CHHATISGARH) B ) HIRALAL MAGANLAL & CO. V. DCIT(2005) 96 ITD 113(MUM.) C ) ITO V. DEVJI PREMJI PUJARA & SONS. (2013) 60 SOT 6 (MUM - TRIB.) THUS, THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE WAS NOT ABLE TO PROVE GENUINENESS OF THE LOAN TRANSACTIONS WHICH WERE ALL ACCOMMODATION ENTRIES. THE ASSESSEE FAILED TO PRODUCE THESE LOAN CREDITORS WERE THE OBSERVATIONS OF THE LEARNED CIT(A). THIS LED TO THE DISMISSAL OF THE APPEAL BY LEARNED CIT(A). SIMILARLY THE LEARNED CI T(A) CONFIRMED THE ADDITION S WITH RESPECT TO INTEREST PAID ON THESE THREE LOANS TO THE TUN E OF RS. 7 ,55,411/ - . HENCE, IN NUTSHELL THE LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY CONFIRMING BOTH THE ADDITIONS AS WERE MADE BY THE AO ON THE GROUNDS THAT THE ASSESSEE I.T.A. NO. 641/MUM/2017 11 FAILED TO PROVE GENUINENESS OF THE LOAN TRANSACTIONS WITH THESE THREE LENDERS AND THE ADDITIONS STOOD CONFIRMED U/S 68 OF THE 1961 ACT AND APPEAL OF THE ASSESSEE STOOD DISMISSED BY LEARNED CIT(A) VIDE APPELLATE ORDERS DATED 13.09.2016 . 5. AGGRIEVED BY APPELLATE ORDER DATED 13.09.2016 PASSED BY LEARNED CIT(A) , THE ASSESSEE HAS FILED AN SECOND APPEAL BEFORE THE TRIBUNAL . ONE OF THE GROUND HAS BEEN RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL THAT LD. CIT(A ) ERRED IN HOLDING THAT ADDITIONAL EVIDENCES HAVE BEEN FILED BY THE ASSESSEE BEFORE LEARNED CIT(A) FOR THE FIRST TIME VIDE RETRACTION STATEMENT OF SH. BHANWARLAL JAIN IN THE FORM OF AFFIDAVIT VIDE DATED 15.05.2014 WHILE THE FACT OF THE MATTER IS THAT THE SAID DOCU MENTS WERE FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE FINDING OF LEARNED CIT(A) ARE ERRONEOUS . IT WAS SUBMITTED THAT COMPLETE DETAILS WERE FILED BEFORE THE AO WHILE THE DEPARTMENT HAS NOT GIVEN COMPLETE DOCUMENTS RELATING TO ALLEGATION MADE BY SH. BHANWARLAL JAIN. IT WAS SUBMITTED THAT SAID LOAN CREDITOR S COULD NOT BE PRODUCED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW . THE ASSESSEE HAS FILED PAPER BOOK CONTAINING LARGE NUMBER OF EVIDENCES RUNNING INT 358 PAGES IN SUPPO RT OF ITS CONTENTIONS. THE ASSESSEE HAS MOVED AN ADJOURNMENT APPLICATION AS ITS COUNSEL SHRI. PRADI P N. KALPASI WAS BUSY IN ARGUING OTHER MATTER BEFORE H BENCH OF ITAT , MUMBAI. H OWEVER, THE ASSESSEES CHARTE R E D ACCOUNT A N T SHRI. NITIN M FURIA WAS PERSONALLY PRESENT BEFORE THE BENCH. THE SAID LEARNED CA SUBMITTED THAT HE IS CA OF THE ASSESSEE AND IS FULLY AWARE OF THE FACTS OF THE CASE AS HE REPRESENTED ASSESSEES CASE BEFORE THE AO AND IS AUTHORISED TO ARGUE ON BEHALF OF THE ASSESSEE. IT WAS SUBMIT TED BY SAID SH. NITIN M FURIA, CA THAT IF THE ASSESSEE IS GIVEN ONE MORE OPPORTUNITY BY THE BENCH , THE ASSESSEE WILL PROVIDE ALL NECESSARY DETAILS TO SATISFY THE INGREDIENTS OF SECTION 68 OF THE ACT TO P ROVE THAT THE SE LOANS AGGREGATING TO RS. 90 LACS RA ISED FROM THREE LENDERS ARE GENUINE INCLUDING PRODUCTION OF THESE LENDERS BEFORE THE AO . THE ASSESSEE HAS FILED PAPER CONTAINING I.T.A. NO. 641/MUM/2017 12 358 PAGES WHEREIN IT IS CONTENDED THAT THE PAPER BOOK CONTAINED THE EVIDENCES TO SUBSTANTIATE THAT THESE LOANS OF RS. 70 LACS RAISED FROM THREE LENDERS ARE GENUINE . THE LD. DR SUBMITTED THAT IF MATTER IS RESTORED TO THE FILE OF THE AO THEY WILL HAVE NO OBJECTION BUT THE ASSESSEE SHOULD BE DIRECTED TO PRODUCE THE RELEVANT DOCUMENT S AND EVIDENCES TO SUPPORT ITS CONTENTIONS TO SATIS FY THE INGREDIENTS OF SECTION 68 OF THE 1961 ACT . THE LEARNED DR SUBMITTED THAT ONUS IS ON THE ASSESSEE TO PROVE THAT THESE LOANS ARE GENUINE AS THESE LOANS ARE APPEARING IN BOOKS OF ACCOUNTS OF THE ASSESSEE . 6. WE HAVE CONSIDERED RIVAL CONTENTION S AND PERUSED THE MATERIAL ON RECORD INCLUDING CITED CASE LAWS . WE HAVE OBSERVED THAT THE ASSESSEE IS BUILDER & DEVELOPER AND IS MAINLY ENGAGED IN THE BUSINESS OF CONSTRUCTING AND DEVELOPING COMMERCIAL AND RESIDENTIAL BUILDINGS. THE CASE OF THE ASSESSEE FOR IMPUGNED ASSESSMENT YEAR WAS SELECTED BY REVENUE FOR UNDERTAKING SCRUTINY ASSESSMENT U/S 143(3) R.W.S. 143(2) OF THE 1961 ACT. THE AO ON PERUSAL OF THE ASSESSEES BALANCE SHEET DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 143(2) OF THE 1961 ACT OBSERVED THAT IT HAD HUGE LIABILITY OUTSTANDING TO BE PAYABLE IN ITS BALANCE SHEET . THE AO ASKED ASSES SEE TO SUBMIT COMPLETE DETAILS OF LOANS RAISED AND TO SATISFY THE MANDATE AND INGREDIENTS OF SECTION 68 OF THE 1961 ACT W . R . T . THE LOANS RAISED BY THE ASSESSEE . T HE ASSESSEE , INTER - ALIA, HAD RECEIVED UN - SECURED LOANS OF RS. 90,00,000/ - FROM THREE PARTIES NAMELY M/S. ANKITA EXPORTS, M/S. ROSHAN G EMS P. LTD. AND M/S. PRIME STAR DURING THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR . DURING ASSESSMENT PROCEEDINGS CONDUCTED BY THE AO U/S 143(3) R.W.S. 143(2) OF THE 1961 ACT , THE AO GOT INFORMATION FROM DGIT(INV.) ,MUMBAI THAT THE SAID THREE L ENDERS WERE CONCERNS BELONGING TO SH. BHANWARLAL JAIN GROUP WHICH WERE UNEARTH ED BY REVENUE DURING THE COURSE OF SEARCH AND SEIZURE OPERATION S CARRIED OUT BY REVENUE U/S. 132(1) OF THE ACT ON 03.10.2014 AGAINST SAID SH. BHANWARLAL JAIN GROUP. IT WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS CONDUCTED BY I.T.A. NO. 641/MUM/2017 13 REVENUE U/S 132(1) OF THE 1961 ACT AGAINST SAID BHANWARLAL JAIN GROUP THAT SAID SH. BHANWARLAL JAIN AND HIS SONS HAD FLOATED SEVERAL BENAMI CONCER NS MORE THAN SEVENTY IN NUMBERS WHO WERE ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENT RIES BY WAY OF UN - SECURED LOANS AND BOGUS PURCHASES/SALE BILLS . S EVERAL PERSONS WHO WERE KNOWN TO SAID SHRI BHANWARLAL JAIN AND HIS FAMILY BELONGING TO RAJASTHAN WERE EMPLOYED BY SAID SHRI B H A NWARLAL JAIN AND HIS FAMILY AT A MEAGRE SALARY AND THEY WERE SHOWN AS DIRECTOR/P ARTNERS /P ROPRIETORS OF THE S E BOGUS CONCERNS . S TATEMENTS U/S. 132(4) OF THE 1961 ACT WERE RECORDED BY R EVENUE OF SAID SHRI BHANWA RLAL JAIN , HIS SONS AND THEIR EMPLOYEES WHO ON OATH ADMITTED TO BE PROVIDERS OF BOGUS ACCOMMODATION ENTRIES BY WAY OF UNSECURED LOANS AND / OR BOGUS PURCHASES ETC. . THESE PERSONS WHO WERE IN - FACT EMPLOYEES GETTING MEAGRE SALARY WERE SHOWN AS PROPRIETOR/PARTNERS/DIRECTORS OF BENAMI CONCERN BELONGING TO SHRI BHANWARLAL JAIN ADMITTED THAT THEY HAVE NO KNOWLEDGE OF THE BUSINESSES OF WHICH THEY WERE SHOWN AS PARTNERS/PROPRIETORS OR DIRECTORS BY SH. BHANWARLAL JAIN AND FAMILY . ALL TH ESE CONCERNS WERE OPERATING FROM THE PREMISES BELONGING TO SAID SH. BHANWARLAL JAIN AND FAMILY AT OPERA H OUSE. T HE A SSESSEE WAS CONFRONTED WITH THE STATEMENT S RECORDED U/S 132(4) OF THE 1961 ACT WHEREIN IT WAS ADMITTED BY THESE PERSONS THAT THESE BENAMI CO NCERNS WERE PROVIDING BOGUS ACCOMMODATION ENTRIES BY WAY OF BOGUS LOANS AND PURCHASES . THE ASSESSEE ON ITS PART PRODUCE D LOAN CONFIRMATION S FROM THESE THREE PARTIES, BANK STATEMENT , FINAL ACCOUNTS ETC. BUT ASSESSEE COULD NOT PRODUCE THE PARTIES BEFORE THE AUTHORITIES BELOW. THE AO ON PERUSAL OF THE FINANCIAL STATEMENTS OF THESE THREE CONCERNS CAME TO CONCLUSION THAT THESE ARE SHELL COMPANIES. I T IS THE SAY OF THE LEARNED COUNSEL FOR THE AS SESSEE THAT COMPLETE DETAILS WERE NOT PROVIDED BY REVENUE WITH RE SPECT TO THE STATEMENTS GIVEN BY SHRI BHANWARLAL JAIN AND HIS SONS AND EMPLOYEES LEVELLING ALLEGATION AGAINST THE ASSESSEE THAT IT HAS OBTAINED BOGUS ACCOMMODATION ENTRIES BY WAY OF UNSECURED LOANS . WE HAVE OBSERVED THAT THESE ENTRIES WITH RESPECT TO UN - SE CURED LOANS ARE APPEARING IN THE BOOKS OF I.T.A. NO. 641/MUM/2017 14 ACCOUNTS OF THE ASSESSEE AND THE ONUS IS ON THE ASSESSEE TO ESTABLISH IDENTI TY AND CREDITWORTHINESS OF THE L ENDERS AND ALSO TO PROVE GENUINENESS OF THE LOAN TRANSACTION WHICH IS THE MA NDATE OF SECTION 68 OF THE AC T . T HE ASSESSEE HAD FAILED TO PRODUCE THE SE PARTIES BEFORE THE AO . W E HAVE OBSERVED AT THE SAME TIME THAT R EVENUE IS ALSO RELYING UPON STATEMENT OF SHRI BHANWARLAL JAIN AND HIS SONS AND THEIR EMPLOYEES LEVELLING ALLEGATION THAT ITS CONCERNS WERE ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENTRIES TOWARDS UNS E CURED LOANS WHEREIN THE ASSESSE E WAS STATED TO BE BENEFICIARY OF THESE ALLEGED ACCOMMODATION ENTRIES . IF THE REVENUE WANTS TO RELY ON INCRIM INATING MATERIAL TO FASTEN LIABILITY ON THE ASSESSEE THEN THE ASSESSEE HAS TO BE GIVEN COPIES OF ALL THOSE INCRIMINATING MATERIAL RELIED UPON BY THE REVENUE AND OPPORTUNITY TO CROS S EXAMINATION HAS TO BE GIVEN TO THE ASSESSEE OF THE PERSONS WHO HAVE GIVEN STATEMENTS INCRIMINATING ASSESSEE OR FROM WHOSE POSSESSION T HE SEIZED MATERIAL WAS SEIZED , BEFORE FASTENING ANY LIABILITY ON THE ASSESSEE. RELIANCE IS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES V. COMMISSIONER OF CENTRAL EXCISE IN CIVIL APPEAL NO. 4228 OF 2006, JUDGM ENT DATED 2 ND SEPTEMBER 2015 . THE ASSESSEE ON ITS PART IS REQUIRED TO PROVE IDENTITY AND CREDITWORTHINESS OF THESE THREE LENDING CONCERNS AS WELL PROVE GENUINENESS OF THE LOAN TRANSACTION S FROM THESE THREE PARTIES AS THE SAID LOANS ARE APPEARI NG IN THE BOOKS OF THE ASSESSEE INCLUDING PRODUCTION OF THESE PARTIES BEFORE THE AO SO AS TO SATISFY THE INGREDIENTS AND MANDATE OF SECTION 68 OF THE 1961 ACT . THE ASSESSEE HAS FILED PAPER BOOK CONTAINING 358 DOCUMENTS WHICH ARE CLAIMED TO BE EVIDENCES IN ITS SUPPO RT. THE ASSESSEE HAS ALSO FILED RETRACTION AFFIDAVIT EXECUTED BY MR BHANWARLAL JAIN WHICH THE LEARNED CIT(A) REFUSED TO ADMIT ON THE GROUNDS THAT THIS IS AN ADDITIONAL EVIDENCE FILED FOR THE FIRST TIME BEFORE LEARNED CIT(A) WHILE THE ASSESSEE HAS STATED TH AT THIS AFFIDAVIT WAS FILED BEFORE THE AO AND IS NOT AN ADDITIONAL EVIDENCE . THE PAPER BOOK FILED BEFORE THE TRIBUNAL CONTAINED DECLARATION TO THAT EFFECT SIGNED BY THE ASSESSEE THAT THIS AFFIDAVIT WAS FILED BEFORE THE AO . THIS AFFIDAVIT IS REQUIRED TO B E I.T.A. NO. 641/MUM/2017 15 CONSIDERED AND DEALT WITH ON MERITS IF THE REVENUE WANTS TO RELY ON THE STATEMENTS U/S 132(4) OF THE 1961 ACT OBTAINED DURING THE COURSE OF SEARCHES IN THE CASE OF BHANWARLAL JAIN GROUP CASES . THE ASSESSEE HOWEVER, COULD NOT PRODUCE THE SE THREE PARTIES WHO HAVE EXTENDED LOAN S TO THE ASSESSEE BEFORE THE AUTHORITIES BELOW BUT NOW THE LEARNED CA OF THE ASSESSEE HAS PRAYED THAT IF AN OPPORTUNITY IS GIVEN BY THE TRIBUNAL , IT WILL SUBMIT ALL NECESSARY EVIDENCES TO SATISFY MANDATE AND INGREDIENTS OF SECTION 68 OF THE 1961 ACT INCLUDING PRODUCING THESE PARTIES BEFORE THE AO . UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDER ED VIEW THAT ALL THE ISSSUES ARISING OF THIS APPEAL NEED TO BE SET ASIDE AND RESTORED TO THE FILE OF THE AO FOR FRESH ADJUDICATION WHEREIN THE ASSESSEE SHALL BE ALLOWED BY THE AO T O FILE ALL THE NECESSARY EVIDENCES /EXPLANATIONS IN ITS DEFENCE WHICH SHALL BE ADMITTED BY THE AO IN THE INTEREST OF JUSTICE AND DEALT WITH ON MERITS IN ACCORDANCE WITH LAW . THE ONUS IS ON THE ASSESSEE TO PROVE CREDITWOR THINESS AND IDENTITY OF THESE THREE LENDERS AND ALSO TO PROVE GENUINENESS OF THESE LOAN TRANSACTIONS AGGREGATING TO RS. 90 LACS, INCLUDING PRODUCING THE SE THREE PARTIES BEFORE THE AO AS THE SAID LOANS ARE APPEARING IN THE BOO KS OF THE ASSESSEE IN ORDER TO SATISFY INGREDIENTS AND MAN DATE OF SECTION 68 OF THE ACT . THE AO SHALL ADMIT ALL SUCH EVIDENCES FILED BY THE ASSESSEE AND ADJUDICATE THE SAME ON MERITS IN ACCORDANCE WITH LAW . N EEDLESS TO SAY THAT THE ASSESSE E SHALL BE PROVIDED WITH PROPER AN D ADEQUA TE OPPORTUNITY OF BEING HEARD BY THE AO IN SET ASIDE DENOVO PROCEEDINGS FOR FRAMING ASSESSMENT DENOVO IN ACCORDANCE WITH LAW ON MERITS. IN CASE REVENUE WANTS TO RELY ON ANY INCRIMINATING MATERIAL SEIZED DURING SEARCHES OR STATEMENTS OF SHRI BHANWARLAL JAIN , HIS SONS OR OTHER PERSONS OBTAINED U/S 132(4) OF THE 1961 ACT DURING SEARCHES AND ON ANY OTHER INCRIMINATING MATERIAL IN POSSESSION OF REVENUE , THE COPIES OF SUCH INCRIMINATING MATERIAL SHALL BE PROVIDED BY AO TO ASSESSEE FOR REBUTTAL BEFORE PREJUDICIN G AND FASTENING LIABILITY ON THE ASSESSEE . THE AO SHALL MAKE AVAILABLE THESE PERSONS GIVING STATEMENTS AGAINST THE ASSESSEE OR FROM WHOSE POSSESSION INCRIMINATING MATERIAL WAS SEIZED FOR CROSS I.T.A. NO. 641/MUM/2017 16 EXAMINATION BY THE ASSESSEE . THE ONUS OF PRODUCING THESE THRE E LENDERS BEFORE THE AO IS ON THE ASSESSEE AS THESE LOANS ARE APPEARING IN THE BOOKS OF THE ASSESSEE. WE REITERATE THAT IN CASE THE ASSESSEE FAILS TO DISCHARGE PRIMARY ONUS CAST ON IT TO SATISFY MANDATE AND INGREDIENTS OF SECTION 68 OF THE 1961 ACT, THE LI ABILITY CAN STILL BE FASTENED ON THE ASSESSEE BUT ONCE THE ASSESSEE DISCHARGES ITS PRIMARY ONUS AS IS CAST U/S 68 OF THE 1961 ACT, THE ONUS SHIFTS TO REVENUE TO BRING ON RECORD INCRIMINATING MATERIAL TO DISCREDIT THE VERSION OF THE ASSESSEE. IN CASE ANY IN CRIMINATING MATERIAL IS BROUGHT ON RECORD BY REVENUE TO DISCREDIT VERSION OF THE ASSESSEE , IT IS INCUMBENT ON REVENUE TO CONFRONT ASSESSEE WITH SA ID INCRIMINATING MATERIAL FOR REBUTTAL BEFORE FASTENING LIABILITY ON THE ASSESSEE INCLUDING ALLOWING CROSS E XAMINATION OF THE PERSONS WHOSE STATEMENTS INCRIMINATING ASSESSEE ARE RECORDED BY REVENUE AT THE BACK OF THE ASSESSEE OR FROM WHOSE POSSESSION THE SAID INCRIMINATING MATERIAL WAS SEIZED BY REVENUE . THE APPEAL OF THE ASSESSEE IS , THUS, ALLOWED FOR STATIST ICAL PURPOSES AS ALL THE ISSUES ARISING IN THIS APPEAL ARE SET ASIDE AND RESTORED TO THE FILE OF THE AO FOR DENOVO FRAMING OF ASSESSMENT ON MERITS IN ACCORDANCE WITH LAW . WE ORDER ACCORDINGLY. 7. IN THE RESULT, T HE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 .08.2018 28 .08.2018 SD/ - SD/ - (JOGINDER SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28 .08.2018 NISHANT VERMA SR. PRIVATE SECRETARY I.T.A. NO. 641/MUM/2017 17 COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI