SHRI NITIN RAJ JAIN, JAIPUR V. INCOME TAX OFFICER , JAIPUR

ITA 69/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5695 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 18-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA CIT DHK
• Keywords: Unexplained cash credit; Principle of natural justice; Accommodation entries; Non compliance; Bogus loan; Set aside
• Section: 142(1); 133(6); 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH JES'K LH- 'KEKZ] YS[KK LNL; ,O A H JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C. SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA-@ ITA NO. 69/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. SHRI NITIN RAJ JAIN, 4/435, MALVIYA NAGAR, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 6(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AGLPJ 9645 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28.03.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 14/05/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 20 TH NOVEMBER, 2017 OF LD. CIT (A), AJMER FOR THE ASSESS MENT YEAR 2012-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF LD. AO IN REJECTING THE BOOKS OF ACCOUNTS BY INVOKING PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961 ON THE OBSERVATION OF DECL INE IN GP RATE BY COMPLETELY IGNORING THE MANIFOLD INCREASE I N TURNOVER, THUS THE ACTION OF LD. AO DESERVES TO BE HOLD BAD I N LAW AND CONSEQUENT ADDITION DESERVES TO BE DELETED. 1.1. THAT LD. CIT (A) HAS FURTHER ERRED IN CONFIRMI NG THE TRADING ADDITION OF RS. 5,13,878/- BY ESTIMATING TURNOVER A T RS. 11,00,00,000/- AS AGAINST TURNOVER OF RS. 10,53,89, 705/- DECLARED BY ASSESSEE AND FURTHER ERRED BY APPLYING GP RATE OF 2 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 0.80% ON SUCH ESTIMATED TURNOVER. APPELLANT PRAYS A DDITION SO CONFIRMED DESERVES TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 50,000/- OUT OF DISALLOWANCE OF RS. 1,00,000/- MADE BY LD. AO, W ITHOUT POINTING OUT ANY SPECIFIC DISCREPANCY IN THE BOOKS OF ACCOUNTS. IT IS THUS PRAYED DISALLOWANCE SO CONFIRMED DESERVE S TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 3,0 0,00,000/- MADE BY LD. AO BY ALLEGING THE UNSECURED LOANS RECE IVED BY ASSESSEE AS BOGUS SOLELY ON THE BASIS OF STATEMENTS OF THIRD PARTIES RECORDED IN SOME OTHER MATTER, BY SOME OTHE R OFFICERS AND THAT TOO BEHIND THE BACK OF ASSESSEE, THUS THE ADDITION SO MADE DESERVES TO BE DELETED. 3.1. THAT THE LD. CIT (A) FURTHER ERRED IN CONFIRMI NG THE ADDITION OF RS. 3,00,00,000/- MADE BY LD. AO WITHOUT PROVIDING OPPORTUNITY TO CROSS EXAMINE OF PERSONS, WHOSE STATEMENTS WERE RELIED UPON FOR MAKING ADDITION, WHICH IS AGAINST THE PRIN CIPLE OF NATURAL JUSTICE, THUS ADDITION SO MADE IS NOT IN AC CORDANCE WITH LAW AND DESERVES TO BE DELETED. 3.2. THAT THE LD. CIT (A) HAS FURTHER ERRED IN CONF IRMING THE ADDITION BY NOT APPRECIATING THE FACT THAT THE ASSESSEE COMP ANY HAS SUBMITTED ALL THE PLAUSIBLE EVIDENCES LIKE CONFIRMA TIONS, ITR, BALANCE SHEET SET ETC. IN ORDER TO ESTABLISH THE ID ENTITY, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S OF THE LENDER BEYOND DOUBT, THUS THE ASSESSEE HAS DULY DIS CHARGED THE ONUS LIED UPON IT, THEREFORE THE ADDITIONS SO MADE DESERVES TO BE DELETED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LOWER AUTHORITIES HAS ERRED IN NOT ALLOWING THE BEN EFIT OF TELESCOPING AND SET OFF OF TRADING ADDITION MADE AG AINST THE ADDITION MADE U/S 68 OF THE ACT. APPELLANT PRAYS TH AT THE WITHOUT PREJUDICE TO GROUNDS OF APPEAL NO. 1 TO 3 T ELESCOPING SET OFF DESERVES TO BE ALLOWED. 5. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELE TE, AMEND OR ABANDON THE GROUND OF THIS APPEAL AT THE TIME OR BE FORE THE ACTUAL HEARING OF THE CASE. 3 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. GROUND NO. 1 & 1.1 ARE REGARDING REJECTION OF BOOKS OF ACCOUNT BY INVOKING PROVISIONS OF SECTION 145(3) AND CONSEQUEN TIAL TRADING ADDITION BY APPLYING GP RATE OF 0.80%. 2. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. VINOD STEELS WHICH IS ENGAGED IN THE BUSINESS OF TRADING OF TMT BARS. TH E ASSESSEE FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 19.09.20 12 DECLARING TOTAL INCOME OF RS. 1,86,260/-. THE AO IN THE ASSESSMENT ORDER HAS OBS ERVED THAT THE ASSESSEE WAS NOT COOPERATIVE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS AS UNDER : BEFORE PROCEEDING TO COMPLETE THE ASSESSMENT IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS NOT BEEN COOPERATIVE DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. IN ORDER TO EXAMINE THE VERACITY OF FA CTS, ASSESSEE HAS BEEN ASKED TO PRODUCE BOOKS OF ACCOUNTS VIDE ISSUE OF NOTICE U/S 142(1) ON 5.3.2015 AND THE CASE WAS FIXED FOR 12.3.2015, HOWEVER ON THE GIVEN DATE NO BODY APPEARED AND PRODUCED BOOKS OF ACCOUNTS. THE ASSESSEE HAD ALSO BEEN ISSUE D SUMMONS U/S 131 OF THE INCOME TAX ACT, TO KNOW THE EXACT NATURE OF HIS BUS INESS, HOWEVER, HE DID NOT BOTHER TO ATTEND THE PROCEEDINGS NOR HAS THE REPLY BEEN FILED BY THE ASSESSEE FOR NON COMPLIANCE OF THE SUMMONS. WHEN SHRI AMIT GOYAL & RAJEEV KUMAR ATTENDED TO PRODUCE BOOKS OF ACCOUNTS, IN REPLY TO SHOW CAUSE I SSUED, HE SUBMITTED THAT THE ASSESSEE HAD FALLEN ILL AND HENCE HE DID NOT COMPLY WITH THE SUMMONS ISSUED WHERE AS THE DISCREET ENQUIRY OF THE INSPECTOR OF THE WAR D REVEALED THAT THE ASSESSEE WAS NOT ILL AND HE HAD BEEN GOING TO HIS A.RS OFFICE R EGULARLY. IN SUPPORT OF THE CLAIM MADE BY THE A.R NO MEDICAL CERTIFICATE HAS BEEN SUB MITTED. THUS IMPLYING THAT THE 4 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. ASSESSEE HAS BEEN NON COOPERATIVE AND HE HAS BEEN A BSCONDING SO THAT BY WAY OF INVESTIGATION THE TRUE NATURE OF HIS BUSINESS WOULD NOT BE REVEALED. 2.1. APART FROM THE CONDUCT OF THE ASSESSEE AVOIDIN G THE PROCEEDINGS AND ENQUIRY TO BE CONDUCTED BY THE AO TO FIND OUT THE CORRECTNE SS OF THE BOOKS OF ACCOUNT AND RETURN OF INCOME, THE AO FURTHER NOTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS DECLARED TURNOVER OF RS. 10,53,89,705/ - AND GP OF RS. 3,66,122/- WHICH GIVES GP RATE OF 0.35% IN COMPARISON TO THE G P RATE OF 0.80% DECLARED BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR ON T HE TURNOVER OF RS.3,44,23,099/-. THE ASSESSEE WAS ASKED TO GIVE THE REASON FOR FALL IN THE GP RATE. IN RESPONSE, THE ASSESSEE EXPLAINED THAT THE PROFIT RATE HAS DECLINE D DUE TO MASS SUPPLY TO M/S. RSWM AND AS PER THE TERMS AND CONDITIONS FOR SUPPLY , THE GOODS WERE TO BE DELIVERED AT THE DOOR STEP. THUS THE ASSESSEE EXPL AINED THAT DUE TO THE FREIGHT EXPENSES OF RS. 6,98,586/- BORNE BY THE ASSESSEE ON THE SALE TO M/S. RSWM THE GROSS PROFIT RATE DECLINED. THE AO NOTED THAT THER E HAS BEEN NO BILLS OF UNLOADING EXPENSES SHOWN AT RS. 1,02,376/- IN THE TRADING ACC OUNT AND FURTHER THE GODOWN RENT OF RS. 75,150/- CLAIMED BY THE ASSESSEE IS ALS O NOT FOUND TO BE USED FOR THE BUSINESS PURPOSES OF THE ASSESSEE. THUS THE AO DOUB TED THE GENUINENESS OF THE CLAIM OF GODOWN RENT. SIMILARLY, THE AO OBSERVED T HAT THE VALUATION OF CLOSING STOCK IS ALSO NOT POSSIBLE AS THE ASSESSEE HAS NOT MAINTA INED STOCK REGISTER ITEM-WISE. SALE BILLS OF CASH BILL DO NOT MENTION NAME OF THE PERSO N OR ADDRESS, THEREFORE, IN THE ABSENCE OF NECESSARY PARTICULARS EVEN THE DESCRIPTI ON OF THE GOODS SOLD, THE SAME CANNOT BE VERIFIED. EVEN THE SALE BILLS ON CREDIT OR THROUGH CHEQUE DID NOT HAVE COMPLETE ADDRESS OF PURCHASER NOR WAS DELIVERY ADDR ESS MENTIONED. ACCORDINGLY, 5 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. THE AO OBSERVED THAT THE TRANSACTIONS OF PURCHASE A S WELL AS SALES ARE NOT VERIFIABLE. FINALLY, THE AO HELD THAT WHEN MAJORITY OF ENTRIES OF TRADING ACCOUNT REMAINED UNPROVED/UNVERIFIABLE, THEN THE BOOKS OF ACCOUNT AR E LIABLE TO BE REJECTED AND TRADING RESULTS OF THE ASSESSEE TO BE ESTIMATED. T HE AO ESTIMATED THE TURNOVER OF THE ASSESSEE AT RS. 11,00,00,000/- AS AGAINST RS. 1 0,53,89,705/- AND APPLIED GP RATE OF 0.80% TO ESTIMATE THE INCOME OF THE ASSESS EE. CONSEQUENTLY THE AO HAS MADE THE ADDITION OF RS. 5,13,878/- ON THIS ACCOUNT . THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD N OT SUCCEED. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE BOOKS WERE REJECTED BY THE AO PRIMARILY FOR THE REASON THAT GP RATE DECLARED BY THE ASSESSEE HAS DECLINED DURING THE YEAR UNDER CONSIDERATION IN COMPARISON TO THE IMMEDIATELY PRECEDING YEAR. THE AO HAS ALSO OBSERVED THAT THE A SSESSEE IS NOT MAINTAINING ITEM- WISE STOCK REGISTER AND THE CLAIM OF GODOWN RENT IS ALSO NOT FOUND GENUINE. THE LD. A/R HAS CONTENDED THAT THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNT FOLLOWING THE MERCANTILE METHOD OF ACCOUNTING REGUL ARLY EMPLOYED ON YEAR TO YEAR BASIS. THE BOOKS OF ACCOUNT WERE SUBJECTED TO AUDI T AS PER THE PROVISIONS OF SECTION 44AB OF THE IT ACT AND NO IRREGULARITY WAS FOUND BY THE AUDITOR. AS REGARDS THE DECLINE IN GP RATE, IT WAS SUBMITTED THAT DUE TO TH E BULK SUPPLY TO M/S. RSWM WITH THE CONDITION THAT THE ASSESSEE HAS TO SUPPLY GOODS AT THE DOOR STEP AND BEAR THE COST OF FREIGHT, THE ASSESSEE HAS INCURRED AN EXPEN DITURE OF RS. 6,98,586/- ON THIS ACCOUNT. FURTHER, WHEN THE TURNOVER OF THE ASSESSEE WAS INCREASED FOR MORE THAN 3 TIMES, THEN A MARGINAL DECLINE IN GP RATE IS NATURA L AND NORMAL. THE AO HAS NOT DISPUTED THE BULK SUPPLY TO M/S. RSWM ON THE CONDIT ION OF SUPPLY AT DOOR STEP OF 6 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. THE PURCHASER. THEREFORE, ONCE THE ASSESSEE HAS EX PLAINED THE REASON FOR DECLINE, IT CANNOT BE A REASON FOR REJECTION OF BOOKS OF ACCOUN T. THE ASSESSEE FURNISHED COMPLETE DETAILS OF CLOSING STOCK ALONG WITH ITS VA LUATION BUT THE AO HAS DISREGARDED THE SAME ON GENERAL REMARKS THAT ASSESSEE WAS NOT M AINTAINING ITEM-WISE, QUALITY- WISE STOCK REGISTER. HE HAS CONTENDED THAT THE AO HAS NOT POINTED OUT ANY SINGLE DEFECT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT SOME GENERAL AND MINOR REMARKS WERE MADE. THE ENTIRE TURNOVER OF THE ASSESSEE WAS DULY REPORTED IN VAT RETURN AND ACCEPTED BY THE SALES TAX DEPARTMENT. THEREFORE , THERE WAS NO REASON TO ESTIMATE THE TURNOVER WITHOUT ANY BASIS. THE LD. A /R HAS RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MA LANI RAMJIVAN JAGANNATH VS. ACIT, 316 ITR 120 (RAJ.) AS WELL AS THE DECISION OF JODHP UR BENCH OF THE TRIBUNAL IN CASE OF HARIDAS PARIKH VS. ITO, 29 SOT 13 (JODH.). HE H AS SUBMITTED THAT WHEN THE ASSESSEE HAS FURNISHED THE REASONABLE EXPLANATION F OR REDUCTION IN THE PROFIT DURING THE YEAR, THEN THE BOOKS ARE NOT REQUIRED TO BE REJ ECTED ON THIS GROUND. THE LD. A/R HAS SUBMITTED THAT THE ACTION OF THE AO REJECTING T HE BOOKS OF ACCOUNT AND THEN MAKING TRADING ADDITION IS NOT JUSTIFIED. 4. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE CONDUCT OF THE ASSESSE E WAS NOT COOPERATIVE AS STATED BY THE AO AND FURTHER THE CLOSING STOCK OF THE ASSE SSEE WAS ALSO NOT SUBJECTED TO VERIFICATION AS THE ASSESSEE WAS NOT MAINTAINING IT EM-WISE STOCK REGISTER. THE SALE BILLS DO NOT CONTAIN THE NECESSARY PARTICULARS AND, THEREFORE, WERE NOT SUBJECTED TO VERIFICATION. THUS THE AO HAS POINTED OUT VARIOUS DEFECTS IN THE BOOKS OF ACCOUNT AND ACCORDINGLY RIGHTLY REJECTED THE BOOK RESULT. THE AO HAS ESTIMATED THE INCOME 7 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. OF THE ASSESSEE BASED ON THE PAST HISTORY AND APPLI ED THE GP AS DECLARED BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THOUGH THE AO HAS MADE SOME DISTURBING REMA RKS ABOUT THE CONDUCT OF THE ASSESSEE BEING NOT COOPERATIVE DURING THE ASSESSMEN T PROCEEDINGS, HOWEVER, SUBSEQUENTLY THE ASSESSEE PRODUCED THE RELEVANT REC ORD BEFORE THE AO WHICH WERE EXAMINED BY THE AO. AS REGARDS THE DECLINE IN GP R ATE, WE FIND THAT THE EXPLANATION OF THE ASSESSEE THAT THE ASSESSEE HAD TO INCUR FREI GHT CHARGES IN RESPECT OF BULK SUPPLY TO M/S. RSWM AND, THEREFORE, DUE TO THE COST OF FREIGHT OF RS. 6,98,586/- BORNE BY THE ASSESSEE IN THE SAID SUPPLY ORDER, THE GP RATE DECLINED FOR THE YEAR UNDER CONSIDERATION. WE FURTHER NOTE THAT THE AO H AS COMPARED THE GP DECLARED BY THE ASSESSEE WITH THE GP OF IMMEDIATELY PRECEDING Y EAR. HOWEVER, THE TURNOVER FOR THE YEAR UNDER CONSIDERATION HAS INCREASED MANIFOLD FROM RS. 3.44 CRORES IN THE PRECEDING YEAR TO RS. 10.53 CRORES DURING THE YEAR UNDER CONSIDERATION. THIS INCREASE IN THE TURNOVER IS ALSO DUE TO THE BULK SU PPLY MADE TO M/S. RSWM. THEREFORE, WHEN THE AO HAS NOT DISPUTED THIS FACT O F BULK SUPPLY AND FREIGHT COST BORNE BY THE ASSESSEE THEN THE REASONS EXPLAINED BY THE ASSESSEE CANNOT BE REJECTED WITHOUT ANY CONTRARY FACTS OR MATERIAL. A NOTHER REASON FOR REJECTING THE BOOKS OF ACCOUNT FOUND BY THE AO IS NON VERIFICATIO N OF THE VALUATION OF CLOSING STOCK AND SALE BILLS. WE FIND THAT THE ASSESSEE IS NOT A MANUFACTURER BUT TRADER OF TMT BARS AND, THEREFORE, ONCE THE QUANTITY OF PURCHASE, SALE AND CLOSING STOCK IS DULY RECORDED IN THE STOCK REGISTER THEN THE ITEM-WISE M AINTENANCE OF STOCK REGISTER IS NOT A NECESSARY CONDITION. THE BOOKS OF THE ASSESS EE ARE AUDITED AND NO DEFECT WAS 8 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. FOUND BY THE AUDITORS. FURTHER, THE ENTIRE SALES O F THE ASSESSEE WERE SUBJECTED TO VAT AND WERE ACCEPTED BY THE SALES TAX DEPARTMENT. THEREFORE, MERELY BECAUSE THE ASSESSEE HAS NOT GIVEN THE FULL PARTICULARS OF THE PURCHASER ON THE CASH SALE BILLS WHEN THE QUANTITY AS RECORDED IN THE BOOKS OF ACCOU NT IS NOT IN DISPUTE, THEN THE SALE TRANSACTIONS OF THE ASSESSEE WITHOUT ANY OTHER CONTRARY RECORD OR FINDING CANNOT BE DOUBTED. THE AO HAS ALSO DOUBTED THE GENUINENES S OF THE GODOWN RENT, HOWEVER, FOR REJECTION OF BOOKS AND ESTIMATION OF I NCOME BY APPLYING THE GP, THE SAID ITEM IS NOT RELEVANT AS IT IS NOT PART OF THE TRADING ACCOUNT. THEREFORE, WE FIND THAT THE MINOR ADVERSE REMARKS BY THE AO WITHOUT PO INTING OUT A SPECIFIC AND MATERIAL DEFECT IN THE BOOKS OF ACCOUNT CANNOT BE A REASON FOR REJECTION OF BOOKS EVEN OTHERWISE IF THE CLAIM OF EXPENDITURE IS NOT F OUND TO BE GENUINE OTHERWISE THE SAME CAN BE DISALLOWED BUT IT CANNOT BE A REASON FO R REJECTION OF BOOKS OF ACCOUNT. HENCE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145(3) AND CONSE QUENT ESTIMATION OF INCOME BY THE AO BY APPLYING THE GP AS DECLARED IN THE IMMEDI ATELY PRECEDING YEAR WITHOUT CONSIDERING THE AVERAGE OF PAST HISTORY WHICH SHOUL D BE AT LEAST 3 TO 5 YEARS. HENCE THE ORDERS OF THE AUTHORITIES BELOW QUA THIS ISSUE ARE SET ASIDE AND THE TRADING ADDITION MADE BY THE AO IS DELETED. GROUND NO. 2 IS REGARDING CONFIRMING ADHOC DISALLOW ANCE OF RS. 50,000/- OUT OF DISALLOWANCE OF RS. 1,00,000/- MADE BY THE A.O. 6. THE AO NOTED THAT IN THE PROFIT & LOSS ACCOUNT T HE ASSESSEE HAS DEBITED THE EXPENSES OF RS. 1,58,093/-, HOWEVER, NONE OF THE EX PENSES CAN BE PROVED AS BILLS 9 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. AND VOUCHERS FOR THE EXPENSES HAS NOT BEEN PRODUCED FOR VERIFICATION. ACCORDINGLY IN THE ABSENCE OF PROPER BILLS AND VOUCHERS OF EXPE NSES DEBITED THROUGH SELF MADE VOUCHERS, THE AO DISALLOWED A SUM OF RS. 1,00,000/- OUT OF THE TOTAL EXPENSES OF RS. 1,58,093/-. ON APPEAL, THE LD. CIT (A) HAS RESTRIC TED THE DISALLOWANCE TO RS. 50,000/- AS AGAINST RS. 1,00,000/- MADE BY THE AO. 7. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE AO HAS MADE AN ADHOC ADDITION OF EXPENSES WHICH WERE CONFIRMED BY THE LD. CIT (A) WHICH IS NOT PERMISSIBLE UNDER THE LAW. IN SUPPORT OF HIS CONTE NTION, HE HAS RELIED UPON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN CA SE OF INDWELL CONSTRUCTIONS VS. CIT, 232 ITR 776 (AP). THE LD. A/R HAS FURTHER SUB MITTED THAT THE DISALLOWANCE WAS MADE SOLELY ON THE PRESUMPTION WITHOUT GIVING A FIN DING THAT THE CLAIM OF EXPENSES WAS ON HIGHER SIDE, THEREFORE, SUCH DISALLOWANCE ON AD HOC BASIS IS NOT JUSTIFIED WHEN THE ASSESSEE HAS DECLARED THE TURNOVER OF RS. 10.53 CRORES DURING THE YEAR UNDER CONSIDERATION. 8. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THERE IS NO DISPUTE THAT THE ASSESSEE HAS NOT PRODUCED ANY SUPPORTING BILLS OR V OUCHERS TO SHOW THAT THE SAID EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE, THEREFORE, THE DISALLOWANCE RESTRICTED BY THE LD. CIT (A) TO RS. 50,000/- IS JUST AND REASONABLE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE AO HAS DISCUSSED THIS ISS UE IN PARA 3 AS UNDER :- 10 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 3. DISALLOWANCE FROM THE EXPENSES DEBITED IN PRO FIT & LOSS ACCOUNT. IN PROFIT & LOSS ACCOUNT THE ASSESSEE HAS DEBITED T HE EXPENSES OF RS. 1,58,093/- HOWEVER DURING THE EXAMINATION OF THE BO OKS OF ACCOUNTS THE NONE OF THE EXPENSES COULD BE PROVED AS THE BIL LS AND VOUCHERS FOR THE EXPENSES DEBITED HAD NOT BEEN PRODUCED FOR VERI FICATION. IN ABSENCE OF THE PROPER BILLS AND VOUCHERS THE EXPENS ES DEBITED THROUGH SELF MADE VOUCHERS CANNOT BE CONSIDERED TO BE EXPLA INABLE, HENCE I RESTRICT THE EXPENSES IN ALL TO RS. 58,093/- AND A SUM OF RS. 1,00,000/- IS ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE HAS NOT CONTROVERTED THE FINDINGS RECO RDED BY THE AO THAT THE ASSESSEE HAS NOT PRODUCED ANY BILL/VOUCHER FOR VERI FICATION OF THE AO. THEREFORE, WHEN THE EXPENDITURE CLAIMED BY THE ASSESSEE ARE NO T SUPPORTED BY THE PROPER BILLS AND VOUCHERS, THEN THE ASSESSEE HAS FAILED TO DISCH ARGE ITS ONUS TO ESTABLISH THAT THE EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVEL Y FOR THE BUSINESS OF THE ASSESSEE. THE LD. CIT (A) HAS RESTRICTED THIS DISA LLOWANCE TO RS. 50,000/- WHICH WE FIND AS PROPER AND REASONABLE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, WE DO NOT FIND ANY ERROR OR ILL EGALITY IN THE IMPUGNED ORDER OF LD. CIT (A) QUA THIS ISSUE. GROUND NOS. 3 TO 3.2 ARE REGARDING AN ADDITION OF R S. 3,00,00,000/- UNDER SECTION 68 OF THE IT ACT ON ACCOUNT OF UNSECU RED LOANS TREATED AS UNEXPLAINED CASH CREDIT. 11 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 10. THE AO NOTED THAT THE ASSESSEE HAS RECEIVED LOA N OF RS. 1,00,00,000/- FROM M/S. PUNIT OILS & CHEMICALS AND RS. 2,00,00,000/- F ROM M/S. TANISH TRADECOM PVT. LTD. IN ORDER TO EXAMINE THE GENUINENESS OF THE LO ANS, THE ASSESSEE WAS ASKED TO GIVE THE COMPLETE ADDRESS OF THE LOAN CREDITORS. T HE AO ISSUED NOTICES UNDER SECTION 133(6) AT THE ADDRESSES PROVIDED BY THE ASS ESSEE. THE NOTICE SENT TO M/S. PUNIT OILS & CHEMICALS RECEIVED BACK UNSERVED AND T O M/S. TANISH TRADECOM PVT. LTD. WAS SERVED AND A CONFIRMATION OF LOAN IN THE F ORM OF LEDGER OF THE ASSESSEE WAS SENT BY THE LOAN CREDITOR. THE AO THEN ISSUED A LE TTER UNDER SECTION 133(6) TO THE BANKER OF M/S. TANISH TRADECOM PVT. LTD. I.E. MANAG ER, KARNATAKA BANK LTD., KOLKATA AS WELL AS THE BANKER OF M/S. PUNIT OILS & CHEMICAL S LTD. IN REPLY, THE AO FOUND THAT BOTH LOANS WERE GIVEN TO THE ASSESSEE FROM THE SAME BRANCH OF KARNATAKA BANK LTD. AND THE SOURCE OF THE LOAN WAS FOUND TO BE RTGS FRO M THE BANK OF BARODA, BRANCH C-SCHEME, JAIPUR. THE AO THEN REFERRED TO THE INVE STIGATION CARRIED OUT BY THE DDIT KOLKATA AND INFORMATION RECEIVED VIDE LETTER D ATED 12 TH JANUARY, 2015 WHEREIN IT WAS STATED THAT M/S. PUNIT OILS & CHEMICALS LTD. AND M/S. TANISH TRADECOM PVT. LTD. WERE ENGAGED IN PROVIDING BOGUS ENTRY FOR LOAN , LONG TERM CAPITAL GAIN AND ASSESSEE HAS RECEIVED BOGUS LOANS FROM THESE COMPAN IES. THE AO ACCORDINGLY PROPOSED TO MAKE AN ADDITION UNDER SECTION 68 OF TH E IT ACT AND ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE. AFTER CONSIDERING TH E REPLY OF THE ASSESSEE, THE AO HAS MADE THE ADDITION OF RS. 3,00,00,000/- UNDER SE CTION 68 BY TREATING THE SAME AS UNEXPLAINED CASH CREDIT. IN APPEAL, THE ASSESSEE R AISED VARIOUS OBJECTIONS THAT THE REPORT OF THE INVESTIGATION WING OF KOLKATA WAS CON SIDERED WITHOUT SUPPLYING THE COPY TO THE ASSESSEE. THE LD. CIT (A) THEN ASKED T HE AO TO SUBMIT THE REPORT AND 12 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. AFTER CONSIDERING THE REPORT OF THE AO AS WELL AS F URTHER INVESTIGATION CARRIED OUT BY THE AO THROUGH DDIT, KOLKATA WING, THE LD. CIT(A) H AS CONFIRMED THE ADDITION MADE BY THE AO. 11. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBM ITTED THAT THE AO HAS TREATED THE LOAN TRANSACTION AS ACCOMMODATION ENTRY ON THE BASIS OF REPORT RECEIVED FROM DDIT INVESTIGATION WING KOLKATA AS WELL AS THE STAT EMENT OF SHRI ANAND SHARMA IN WHOSE CASE SEARCH WAS CONDUCTED. FURTHER, THE AO H AS OBSERVED THAT THE LENDER COMPANIES HAVE NO OPERATIONAL INCOME AND NO INTERES T WAS CHARGED ON UNSECURED LOANS GIVEN TO THE ASSESSEE. HE HAS REFERRED TO PR OVISIONS OF SECTION 68 AND SUBMITTED THAT AS PER THE SAID PROVISIONS, AN ADDIT ION CAN BE MADE BY THE AO ONLY WHEN THE ASSESSEE DOES NOT OFFER ANY EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT UPTO THE SATISFACTION OF THE AO. TH E LD. A/R HAS CONTENDED THAT IN THE INSTANT CASE, APPELLANT HAS NOT ONLY OFFERED EX PLANATION REGARDING NATURE AND SOURCE OF CREDITS BUT ALSO SUBSTANTIATED THE SAME W ITH DOCUMENTARY EVIDENCES IN THE SHAPE OF ITRS, CONFIRMATIONS, BALANCE SHEET, BANK S TATEMENT OF LENDER WHICH WERE NOT AT ALL DOUBTED BY AO BUT ALL SUCH VITAL EVIDENC ES HAVE BEEN IGNORED SOLELY BECAUSE SUMMONS ISSUED IN THE NAME OF LENDERS RETUR NED UNSERVED AND FURTHER AS PER REPORT OF DDIT INV, COMPANIES WERE BOGUS AND WE RE PROVIDING ACCOMMODATION ENTRIES. IT IS FURTHER SUBMITTED THAT TO COME OUT OF RIGORS OF SECTION 68, AN ASSESSEE HAS TO PROVE IDENTITY AND CREDITWORTHINESS OF THE C REDITOR AND GENUINENESS OF THE TRANSACTION. IN THE INSTANT CASE, ASSESSEE HAS EST ABLISHED ALL THE THREE CONDITIONS. THE IDENTITY OF CREDITOR IS ESTABLISHED AS BOTH THE LENDERS ARE COMPANIES 13 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. INCORPORATED UNDER COMPANIES ACT AND HOLDING PAN. COPIES OF THEIR ITRS, CONFIRMATIONS, ASSESSMENT ORDERS WERE FURNISHED TO PROVE THEIR IDENTITY. CREDITWORTHINESS WAS PROVED BY PRODUCING COPY OF AU DITED FINANCIAL STATEMENTS AS WELL AS BANK STATEMENT WAS FURNISHED WHERE THE LOAN GIVEN IS DULY EVIDENT. GENUINENESS OF TRANSACTION IS PROVED AS LOAN WAS RE CEIVED THROUGH BANKING CHANNEL. ASSESSEE HAS FURNISHED CONFIRMATION FROM THE PARTY AS WELL AS FINANCIAL STATEMENTS WHEREIN LOAN TAKEN BY ASSESSEE IS APPEARING. IT IS ALSO A MATTER OF FACT THAT NOWHERE IN THE ASSESSMENT ORDER, LD. AO HAS ESTABLI SHED THAT THE MONEY PAID BY SUCH COMPANY WAS THAT OF APPELLANT. IT IS FURTHER SUBMITTED THAT ASSESSEE WAS NEITHER SUPPLIED WITH COPY OF INVESTIGATION REPORT RELIED UPON BY LD. AO NOR WAS PROVIDED WITH OPPORTUNITY TO CROSS EXAMINE SHRI ANA ND SHARMA, WHOSE STATEMENTS HAVE BEEN HEAVILY RELIED UPON FOR MAKING SUCH A HUG E ADDITION IN THE HANDS OF ASSESSEE. EVEN THE COPY OF STATEMENTS OF SHRI ANAN D SHARMA WAS NOT PROVIDED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS. MOREOVER, NOWHERE IN THE ASSESSMENT ORDER, LD. AO HAS SPECIFIED THAT SHR I ANAND SHARMA HAS ANYWHERE ADMITTED THE ASSESSEE TO BE THE BENEFICIARY OF THE ALLEGED ENTRY PROVIDING ACTIVITY. YOUR HONOURS WOULD APPRECIATE THAT SUCH STATEMENTS WERE RECORDED BEHIND THE BACK OF ASSESSEE AND NOT IN THE ASSESSMENT PROCEEDINGS O F THE ASSESSEE AND IN SOME OTHER CASE. IN SUCH SCENARIO, LD. AO WAS DUTY BOUN D TO MAKE FURTHER SPECIFIC ENQUIRIES DURING ASSESSMENT PROCEEDINGS IN THE CASE OF ASSESSEE AND FURTHER TO PROVIDE ASSESSEE WITH THE OPPORTUNITY TO CROSS EXAM INE HIM. IT IS A SETTLED PREPOSITION OF LAW THAT OPPORTUNITY TO CROSS EXAMIN E IS ONE OF THE BASIC PRINCIPLES OF NATURAL JUSTICE AND NOT PROVIDING ASSESSEE WITH IT AMOUNTS TO GROSS VIOLATION OF THE 14 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. PRINCIPLES OF NATURAL JUSTICE AND RENDERS ENTIRE PR OCEEDINGS VOID. HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF AN DAMAN TIMBER INDUSTRIES VS. CCE, (2016) 15 SCC 785 (SC) AND SUBMITTED THAT THE STATEMENT RELIED UPON BY THE AO WITHOUT GIVING THE OPPORTUNITY OF CROSS EXAMINAT ION BY THE ASSESSEE CANNOT BE A BASIS FOR ASSESSMENT ORDER AND ADDITION MADE BY THE AO. HE HAS ALSO RELIED UPON THE FOLLOWING DECISIONS :- M/S. KOTA DALL MILL VS. DCIT IN ITA NO. 997 TO 1002/JP/2018 & 1119/JP/2018) M/S. CHOICE BUILDESTATE P. LTD. VS. ITO IN ITA NO. 431/JP/2016) DCIT VS. M/S. PREMIUM BARS (P) LTD. IN ITA NO. 143/JP/2017) THUS THE LD. A/R HAS PLEADED THAT THE ADDITION MADE BY THE AO UNDER SECTION 68 OF THE IT ACT MAY BE DELETED. 12. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED TH AT THE AO HAS CONDUCTED DUE ENQUIRY AND INVESTIGATION THROUGH DDIT KOLKATA AND HAS BROUGHT ON RECORD THE FACT THAT THE IMMEDIATE SOURCE OF THE LOAN GIVEN TO THE ASSESSEE WAS A TRANSFER OF FUND FROM BANK OF BARODA, C-SCHEME, JAIPUR TO THE LOAN C REDITORS AT THEIR BANK AT KOLKATA. FURTHER IT WAS ALSO BROUGHT ON RECORD THA T BOTH THESE COMPANIES WERE BELONGING TO SHRI ANAND SHARMA WHO WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES OF LOANS, LONG TERM CAPITAL GAIN, SHARE CAP ITAL ETC. THUS THE AO HAS 15 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. ESTABLISHED THE FACT THAT THE TRANSACTIONS ARE NOT GENUINE AND FURTHER THE LENDER COMPANIES WERE NOT HAVING ANY SOURCE FROM THEIR OPE RATING INCOME TO GRANT SUCH LOANS THAT TOO WITHOUT CHARGING ANY INTEREST. EVEN THE LD. CIT (A) FURTHER CALLED FOR A REPORT FROM THE AO AND DURING THE APPELLATE PROCEED INGS FURTHER INVESTIGATION WAS CARRIED OUT WHICH HAS PROVED THAT THE TRANSACTIONS ARE NOT GENUINE BUT IT IS ACCOMMODATION ENTRIES PROVIDED BY THESE COMPANIES T O THE ASSESSEE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMIT TED THAT THE AO HAS RELIED UPON VARIOUS DECISIONS INCLUDING THE DECISION OF HONBLE SUPREME COURT IN CASE OF KALE KHAN MOHAMMED HANIF VS. CIT, 50 ITR 1 (SC). THE DE CISIONS RELIED UPON BY THE AO HAVE BEEN REAFFIRMED BY THE HONBLE SUPREME COURT I N THE LATEST DECISION IN CASE OF PR. CIT VS. NRA IRON & STEEL PVT. LTD., 412 ITR 161 (SC) 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. IN THE CASE IN HAND, THE ASSESSEE HAS SHOW N UNSECURED LOAN OF RS. 3,00,00,000/- TAKEN FROM TWO COMPANIES, NAMELY, M/S . PUNIT OILS & CHEMICALS LTD. OF RS. 1,00,00,000/- AND M/S. TANISH TRADECOM PVT. LTD. OF RS. 2,00,00,000/-. THERE IS NO DISPUTE THAT THE UNSECURED LOANS TAKEN FROM THESE KOLKATA BASED COMPANIES BY THE ASSESSEE WERE WITHOUT ANY CHARGE O F INTEREST. THIS FACT IS NOT FOUND IN THE NORMAL TRANSACTION OF LOAN THAT TOO UN SECURED LOANS TAKEN FROM THESE SO CALLED UNRELATED PARTIES. THE AO HAS CONDUCTED AN ENQUIRY TO FIND THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE LOAN CREDITORS. THE ENQUIRY CONDUCTED FROM THE CONCERNED BANKS REVEALED THAT THESE LOANS WERE GIVEN BY LOAN CREDITOR COMPANIES FROM THE SAME BRANCH OF KARNATAKA BANK LTD SITUATED AT 16 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. KOLKATA AND THE IMMEDIATE SOURCE OF LOAN WAS RTGS F ROM THE BANK OF BARODA, BRANCH C-SCHEME, JAIPUR. THIS FACT REVEALED IN THE ENQUIRY FURTHER GIVES THE REASON TO THE AO TO FIND OUT THE GENUINENESS OF TRANSACTIO N. THE AO THEN CONSIDERED THE INVESTIGATION CARRIED OUT BY THE DDIT KOLKATA IN CA SE OF SEARCH OF SHRI ANAND SHARMA AND FOUND THAT THE LOAN CREDITOR COMPANIES A RE OPERATED BY SHRI ANAND SHARMA AND ENGAGED IN PROVIDING BOGUS ENTRY FOR LOA N/LTCG. IT IS SETTLED PROPOSITION THAT AS PER THE PROVISIONS OF SECTION 6 8 OF THE IT ACT, THE INITIAL BURDEN IS ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSACTION, CREDITWORTHINESS AND IDENTITY OF THE CREDITOR. THUS THE IDENTITY AN D CAPACITY OF THE CREDITOR TO ADVANCE THE MONEY HAS TO BE ESTABLISHED BY PRODUCIN G SOME COGENT EVIDENCE. SIMILARLY, THE GENUINENESS OF THE TRANSACTION IS AL SO REQUIRED TO BE ESTABLISHED FROM THE FACT THAT THE CREDITOR WAS HAVING THE CAPACITY AND CREDITWORTHINESS AS WELL AS A REASON TO ADVANCE THE MONEY TO THE ASSESSEE. IN TH E CASE IN HAND, THE ASSESSEE HAS NOT DISPUTED THE FACT THAT THE LOAN CREDITORS H AVE NOT CHARGED ANY INTEREST. THEREFORE, IT DEFIES THE COMMERCIAL PURPOSE OF TRAN SACTION. THE AO HAS DISCUSSED THIS ISSUE IN PARA 4 AS UNDER :- 17 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 18 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 19 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 20 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 21 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 22 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 23 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. WE FURTHER NOTE THAT DURING THE APPELLATE PROCEEDIN GS BEFORE THE LD. CIT (APPEALS), THE AO WAS AGAIN ASKED TO FURNISH THE REPORT AND IN FORMATION SOUGHT FOR. THE LD. CIT (APPEALS) HAS DISCUSSED THE RELEVANT FACTS AND ISSU E IN PARA 4.3 AS UNDER :- 24 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 25 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 26 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 27 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. 28 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. THUS IT IS CLEAR THAT THE AO HAS CONDUCTED AN ENQUI RY DURING THE ASSESSMENT PROCEEDINGS AND THEREAFTER AS PER THE DIRECTION OF THE LD. CIT (A) A FURTHER ENQUIRY WAS CONDUCTED THROUGH THE DDIT INVESTIGATION WING K OLKATA AND REPORT OF THE INVESTIGATION CLEARLY ESTABLISHED THAT THESE COMPAN IES ARE OPERATED BY SHRI ANAND SHARMA AND WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRY. THE STATEMENTS OF DIRECTOR OF THESE COMPANIES WERE ALSO RECORDED DURI NG THE INVESTIGATION CARRIED OUT AS PER THE DIRECTION OF THE LD. CIT (A) WHICH ESTAB LISHED THE FACT THAT THESE COMPANIES WERE NOT HAVING ANY OPERATING INCOME BUT WERE PROVIDING ACCOMMODATION ENTRIES. ONCE THE AO HAS BROUGHT ON RECORD ALL THESE MATERIAL TO SHOW THAT THE TRANSACTIONS OF LOANS ARE NOT GENUINE , THEN THE BURDEN WAS SHIFTED ON THE ASSESSEE TO CONTROVERT THE SAID MATERIAL BROUGH T ON RECORD BY THE AO. THE ASSESSEE HAS NOT PRODUCED ANY CONTRARY MATERIAL TO CONTROVERT THE EVIDENCE BROUGHT ON RECORD BY THE AO. FURTHER, WE NOTE THAT THE ASS ESSEE NEVER DEMANDED CROSS EXAMINATION OF SHRI ANAND SHARMA BUT RAISED THIS PL EA FIRST TIME BEFORE US. EVEN OTHERWISE THE FINDING OF THE AO AS WELL AS OF THE L D. CIT (A) IS NOT BASED SOLELY ON THE BASIS OF STATEMENT OF SHRI ANAND SHARMA BUT IT IS BASED ON THE INVESTIGATION CARRIED DURING THE ASSESSMENT PROCEEDINGS AS WELL A S FIRST APPELLATE PROCEEDINGS BEFORE THE LD. CIT (A). AS REGARDS THE DECISIONS R ELIED UPON BY THE ASSESSEE IN THE CASE OF KOTA DALL MILLS AND OTHER DECISIONS OF COOR DINATE BENCH OF THIS TRIBUNAL, WE FIND THAT IN THOSE CASES THE AO DID NOT CONDUCT ANY ENQUIRY BUT RELIED UPON THE REPORT OF THE INVESTIGATION WING, KOLKATA BASED ON THE SEARCH CONDUCTED IN THE CASE OF SHRI ANAND SHARMA. THEREFORE, THE SAID DECISIONS CANNOT BE APPLIED IN THE FACTS OF THE PRESENT CASE WHERE THE AO HAS CONDUCTED DUE AND PROPER ENQUIRY AND THE 29 ITA NO. 69/JP/2018 SHRI NITIN RAJ JAIN, JAIPUR. FINDINGS OF THE AO AND LD. CIT (A) ARE BASED ON THE EVIDENCE IN THE NATURE OF ENQUIRY CONDUCTED. ACCORDINGLY, IN VIEW OF THE FACTS AND C IRCUMSTANCES OF THE CASE WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED OR DER OF LD. CIT (A) QUA THIS ISSUE. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14/05/ 2019. SD/- SD/- ( JES'K LH- 'KEKZ ) ( FOT; IKY JKWO (RAMESH C. SHARMA ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 14/05/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI NITIN RAJ JAIN, JAIPUR. 2. THE RESPONDENT THE ITO, WARD 6(1), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 69/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR