DILSA DISTRIBUTERS COMBINES, MUMBAI V. ITO 11(1)(1), MUMBAI

ITA 7007/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4025 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 25-06-2015
• Assessment Year: 1998-1999
• Appeal Filed On: 17-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Unexplained cash credit; Business income; Search and seizure; Opportunity of being heard; Principle of natural justice; Accommodation entries
• Section: 143(3); 131; 6; 68

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 7007 /MUM/2011 ( / ASSESSMENT YEAR : 1998-99) DILSA DISTRIBUTORS COMBINE, FIRST FLOOR, NAAZ BUILDING, LAMINGTON ROAD, MUMBAI 400 004. . / V. ITO WARD 11(1)(1), 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI 400 020. ./ PAN : AAAFD3288K ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI DEEPAK TRALSHAWALA REVENUE BY SHRI B.S. BIST (SR. D.R.) / DATE OF HEARING : 01-02-2016 / DATE OF PRONOUNCEMENT : 20-04-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE BEING ITA NO. 7 007/MUM/2011, IS DIRECTED AGAINST THE ORDER DATED 19-08-2011 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 3, MUMBAI (HEREINAFTER CAL LED THE CIT(A) ), FOR THE ASSESSMENT YEAR 1998-99, THE APPELLATE PROCEEDINGS BEFORE THE CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 31-12-2009 PASSED B Y THE ASSESSING OFFICER(HEREINAFTER CALLED THE AO) U/S 143(3) R.W .S. 254 OF THE INCOME TAX ACT,1961(HEREINAFTER CALLED THE ACT). 2. THE GROUNDS RAISED BY THE ASSESSEE IN THE MEMO O F APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI(HEREINAFTER C ALLED THE TRIBUNAL) READ AS UNDER:- ITA 7007/MUM/2011 2 (1) ON ADDITION OF RS. 45,50,000/- ON A/C. OF UNEXPLAINED CASH CREDIT - (1) ON THE FACTS AND CIRCUMSTANCES, THE LEARNED CIT (A) ERRED IN CONFIRMING THE ALLEGED ADDITION OF RS. 45,50,000/- U/S. 68 WITHOUT APPRECIATING THAT- (I) THE LEARNED AO. HAD TOTALLY IGNORED THE RELEVAN T DETAILS, DOCUMENTS/CONFIRMATIONS, AND NECESSARY EXPLANATION, AND (II) THAT THE LEARNED AO. HAD CLEARLY VIOLATED THE PRINCIPLES OF NATURAL JUSTICE BY NOT AFFORDING ANY OPPORTUNITY TO CROSS- EXAMINE MR. SURENDRA KHANDAR [MR. KHANDAR]. (2) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ERRO NEOUS FINDING THAT NO CONFIRMATIONS WERE FILED WHICH WAS CONTRARY TO THE FACTS AVAILABLE ON RECORD. (3) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E LEARNED AO. WAS DUTY BOUND TO PROVIDE AN OPPORTUNITY TO CROSS-E XAMINE MR. KHANDAR AS HIS STATEMENT WAS RECORDED BEHIND THE BA CK OF YOUR APPELLANT THAT TOO DURING THE SEARCH AND SEIZURE AC TION AT HIS PLACE AND NOT DURING ANY ASSESSMENT PROCEEDINGS OF YOUR APPELLANT. (4) WITHOUT PREJUDICE TO THE ABOVE, LEARNED CIT(A) FAILED TO APPRECIATE THAT THE LEARNED AO COMPLETELY FAILED TO FOLLOW THE SPECIFIC DIRECTION OF THE HON'BLE TRIBUNAL AND FAIL ED TO VERIFY THE INCOME TAX RECORD OF THE LENDERS DESPITE OF THE FAC T THAT THE PAN OF THE RESPECTIVE PARTIES WAS ALREADY KNOWN FROM TH E HUNDI PAPERS, ETC., WHICH WAS NECESSARY PARTICULARLY WHEN MR. KHANDAR COULD NOT BE PRODUCED BY THE LEARNED A.O. FOR CROSS -EXAMINATION. 5) WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTANCE S, THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT YOUR APPELLAN T HAD DISCHARGED INITIAL ONUS BY GIVING PARTICULARS OF TR ANSACTIONS LIKE ADDRESS, NAME OF THE LENDERS WITH PAN OF THE PARTIE S. (6) ON THE FACTS AND CIRCUMSTANCES, YOUR APPELLANT PRAYS THAT THE IMPUGNED ASSESSMENT ORDER MAY BE QUASHED. ITA 7007/MUM/2011 3 (7) ALTERNATIVELY, YOUR APPELLANT PRAYS THAT A SPEC IFIC DIRECTION MAY BE GIVEN TO THE LEARNED A.O. FOR GIVING OPPORTU NITY TO CROSS- EXAMINE MR. KHANDAR, PARTICULARLY, IF HE HAS TO SOL ELY RELY UPON HIS STATEMENT. (LL) ON ADDITION OF RS. 4,00,000/- ON A/C OF INTERE ST - (1) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ALLE GED ADDITION OF RS. 4,00,000/- ON A/C. OF INTEREST ON THE ALLEGED L OANS MERELY BECAUSE THE ADDITIONS ON A/C OF ALLEGED HAWALA LOAN S WERE CONFIRMED BY HIM. (2) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT THE LEARNED A.O. MADE THE ALLEGED ADDITION WITHOUT ANY FINDING/ DISCUSSION DESPITE OF SPECIFIC SUBMISSION THAT NO INTEREST WAS CLAIMED ON THE ALLEGED LOANS. (3) ON THE FACTS CIRCUMSTANCES YOUR APPELLANT PRAYS THAT THE ALLEGED ADDITIONS MAY BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) R.W.S. 147 R.W.S. 144A OF THE ACT ON 31-3-2005 DETERMINING INCOME AT RS. 49,50,000/- BASED ON AN I NTIMATION RECEIVED FROM THE DDIT(INV.), MUMBAI VIDE LETTER DATED 22-9-2003. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO VIDE HIS ORDERS DATED 15.2.2006 REJECTED THE APPEAL OF THE ASSESSEE ON THE BASIS OF HIS ORDER FO R THE ASSESSMENT YEAR 1997- 98 AS THE FACTS AND CIRCUMSTANCES WERE IDENTICAL IN THE ASSESSMENT YEAR 1998-99 I.E. THE YEAR UNDER INSTANT APPEAL. THE AS SSESSEE WENT IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL SET ASIDE THE ASSESSMENT VIDE ORDERS DATED 23.07.2008 BY STATING AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E RELEVANT MATERIAL ON RECORD. IT IS NOTED THAT AN ADDITION U/S 6 8 AMOUNTING TO RS. 49,50,000/- WAS MADE. THE LEARNED CIT(A) VIDE A SIN GLE PAGED ORDER HAS DISMISSED THE ASSESSEE'S APPEAL BY RELYING ON HI S ORDER PASSED IN ASSESSMENT YEAR 1997-98. THE LEARNED A.R. HAS PLACE D ON RECORD THE COPY OF THE ORDER PASSED BY THE TRIBUNAL IN ASSESS EE'S OWN CASE FOR THE SAID PRECEDING YEAR IN WHICH MATTER HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER. THE LEARNED D.R. HAS GONE THROUGH THE SAID ORDER AND ITA 7007/MUM/2011 4 CONCEDED THAT THE FACTS AND CIRCUMSTANCES OF THIS YEAR AR E SIMILAR TO THOSE OF THE PRECEDING YEAR. RESPECTFULLY FOLLOWING THE PRECEDENT WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FI LE OF THE ASSESSING OFFICER FOR A FRESH DECISION AS PER LAW A FTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. NEEDLESS TO SAY, DIRECTIONS CONTAINED IN THE TRIBUNAL ORDER FOR THE PRE CEDING YEAR WOULD BE TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER W HILE DEALING WITH THIS ISSUE IN THE DE NOVO PROCEEDING. THE A.O. BASED ON THE OBSERVATION OF THE TRIBUNAL S TARTED THE PROCEEDINGS AGAIN BY ISSUE OF LETTER TO SHRI SURENDRA KHANDHAR FIXING THE HEARING ON 12- 10-2009. THE LETTER WAS RETURNED UN-SERVED FOR THE REASON REFUSED AS MENTIONED BY THE POSTAL AUTHORITIES. FURTHER EFFOR TS WERE MADE BY THE A.O. BY ISSUING SUMMON U/S 131 OF THE ACT TO SAID MR SU RENDRA KHANDHAR WHICH WAS ALSO RETURNED UN-SERVED. INSPECTOR WAS DEPUTED WHO SERVED THE SUMMON ON THE OFFICE OF SUMAN MOTELS LIMITED BUT THERE WER E NO COMPLIANCE MADE BY THE SAID MR. SURENDER KHANDHAR. IN-SPITE OF SEVERA L EFFORTS MADE BY THE A.O. BY ISSUING AND SERVING OF SEVERAL SUMMONS AND SHOW CAUSE NOTICES TO SAID SHRI SURENDRA KHANDHAR AS PER DETAILS IN ASSESSMENT ORDER DATED 31.12.2009, SAID MR SURENDER KHANDHAR DID NOT APPEA R BEFORE THE A.O. . PENALTY NOTICES WERE ALSO ISSUED U/S 272A(I)(E) OF THE ACT TO SAID MR. SURENDER KHANDHAR BUT THE SAME ALSO RETURNED BACK . THE INSP ECTOR WAS DEPUTED WHO SERVED THE SAME AT RESIDENCE OF SAID SH SURENDER KH ANDAR . THE ASSESSEE WAS ALSO ASKED TO PRODUCE SAID SH SURENDER KHANDAR . LA TER THE INSPECTOR PERSONALLY SERVED THE SUMMONS TO SHRI SURENDRA KHA NDHAR AND THE INSPECTOR REPORTED THAT MRS. BHARATI KHANDHAR, WIFE OF SHRI SURENDRA KHANDHAR REFUSED TO ACCEPT THE SUMMONS DATED 24.12. 09 AND 29.12.2009 AND THE SUMMONS WERE SERVED BY AFFIXTURE ON 29.12.2 009 IN PRESENCE OF WATCHMAN OF THE BUILDING. DUE TO NON-COMPLIANCE BY SHRI SURENDRA KHANDHAR, THE CROSS EXAMINATION OF SHRI SURENDRA KH ANDHAR BY THE ASSESSEE COULD NOT TAKEN PLACE. THE ASSESSEE SUBMI TTED BEFORE THE A.O. THAT THE ASSESSEE HAS RECEIVED LOAN OF RS. 45,50,000/- F ROM VARIOUS FIRMS DURING THE INSTANT ASSESSMENT YEAR AND ALSO REPAID THE LOA N FULLY BY A/C PAYEE ITA 7007/MUM/2011 5 CHEQUES. THE ASSESSEE ALSO SUBMITTED THAT IT HAS GI VEN THE CONFIRMATION WITH THE PAN OF THE FIRMS FROM WHOM LOANS WERE BORROWED IN THE FORM OF HUNDI PAPERS AND REFUNDED AS PER TERMS OF HUNDI/PROMISSO RY NOTES. THE NATURE OF TRANSACTIONS IS FULLY VALID AND LEGAL AS MONEY HAS BEEN GIVEN AND PAID BY A/C PAYEE CHEQUES ONLY AND NOT BY WAY OF CASH. THE ASS ESSEE ALSO REQUESTED TO ALLOW CROSS EXAMINATION OF SHRI SURENDRA KANDHAR AS HE HAS GIVEN FALSE STATEMENT TO THE REVENUE WITH THE SOLE INTENTION O F HARASSING THE ASSESSEE FIRM AND MISLEADING THE REVENUE AND ONLY IF HE IS C ONFRONTED , THE TRUTH CAN COME OUT. THUS, THE A.O. HELD THAT THE ASSESSEE FA ILED TO PRODUCE LOAN CONFIRMATIONS WHICH IS A PRIMARY EVIDENCE TO ESTABL ISH THAT THE LOANS WERE TAKEN BY THE ASSESSEE. THE ASSESSEE HAS TAKEN LOANS FROM THE FOLLOWING PARTIES APPEARING IN THE LIST OF CONCERNS FLOATED B Y SHRI SURENDRA KHANDHAR:- SR. NO. NAME DATE AMOUNT 1 VIJAY SALES CORPN. 2.4.1997 5,00,000 2 KARTIK TRADING CO 14.5.1997 5,00,000 3 SHITAL INTERNATIONAL 14.5.1997 5,00,000 4 PRABHAVEE 7.6.1997 2,50,000 5 SHREEJI CORPN. 7.6.1997 5,00,000 6 GAYATRI ENTRP. 7.6.1997 2,50,000 7 VIPCO SALES CORPN. 7.6.1997 5,00,000 8 RAY ENGINEERING CO. 24.6.1997 4,00,000 9 GAYATRI ENTRP. 24.6.1997 4,00,000 10 RAJ ENTERPRISES 4.8.1997 2,50,000 11 KARTIKI TRADING CO. 8.8.1997 2,50,000 12 GAYATRI ENTRP. 8.8.1997 2,50,000 TOTAL 45,50,000 AS THE ASSESSEE FAILED TO PRODUCE LOAN CONFIRMATION U/S 68 OF THE ACT AND RELYING ON THE STATEMENT ON OATH PROVIDED BY LENDER OF THE LOAN MR. SURENDRA KHANDHAR THAT THESE LOANS ARE MERELY ACCOMMODATION ENTRIES , IT WAS HELD BY ITA 7007/MUM/2011 6 THE AO THAT THERE IS NO IOTA OF DOUBT THAT THE ASSE SSEE HAS INTRODUCED HIS UNDISCLOSED CASH UNDER THE GARB OF ACCOMMODATION LO AN AND ACCORDINGLY A SUM OF RS. 45,50,000/- PLUS INTEREST RS. 4,00,000 T OTALING TO RS. 49,50,000/- IS TREATED AS UNDISCLOSED INCOME AND ADDED TO THE I NCOME OF THE ASSESSEE AFTER REJECTING THE SUBMISSIONS OF THE ASSESSEE BY THE AO VIDE ASSESSMENT ORDERS DATED 31.12.2009 U/S. 143(3) READ WITH SECTI ON 254 OF THE ACT. 4.AGGRIEVED BY THE ASSESSMENT ORDER DATED 31.12.200 9 PASSED BY THE A.O. U/S. 143(3) READ WITH SECTION 254 OF THE ACT, THE A SSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A) , THE ASSESSEE REITERATED THE SUBMISSIONS WHAT WERE SUBMITTED BEFORE THE A.O. AND SUBMITTED THAT THE A. O. SHOULD HAVE PROVIDED THE CROSS EXAMINATION OF SHRI SURENDRA KHANDHAR TO THE ASSESSE AS DIRECTED BY THE TRIBUNAL IN FIRST ROUND OF LITIGATION VIDE O RDERS DATED 23.07.2008 BUT NO OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE AND HENCE NO ADVERSE INFERENCE CAN BE TAKEN AGAINST THE ASSESSEE WITH RE SPECT TO THE STATEMENT GIVEN BY SHRI SURENDRA KHANDHAR. THE ASSESSEE SUBM ITTED THAT THE EVIDENCE IN THE FORM OF THE LOAN CONFIRMATION ETC. HAVE ALRE ADY BEEN GIVEN TO THE AO AT THE TIME OF HEARING. THE ASSESSEE SUBMITTED THAT I T HAS NOT BORROWED ANY AMOUNT DIRECTLY FROM SHRI SURENDRA KHANDHAR. THE A .O. HAS NOT VERIFIED WHETHER THE PARTNERSHIP FIRMS FROM WHOM THE ASSESSE E HAD BORROWED AND REPAID THE AMOUNT IS THE ONE IN WHICH SHRI SURENDRA KHANDHAR IS A PARTNER OR NOT. THE ASSESSEE SUBMITTED THE ASSESSMENT WAS SET ASIDE BY THE TRIBUNAL TO THE FILE OF A.O. WITH A DIRECTION TO PROVIDE AN OPPORTUNITY OF BEING HEARD AND TO PROVIDE CROSS EXAMINATION OF SHRI SURENDRA K HANDHAR TO THE ASSESSEE. THE A.O. SERVED SUMMONS TO SHRI SURENDRA KHANDHAR BUT HE DID NOT COMPLY WITH THE SUMMONS. THE CIT(A) OBSERVED THAT THE SAI D MR SURENDER KHANDHAR HAS GIVEN A STATEMENT TO THE INCOME TAX DEPARTMENT THAT HE HAS FLOATED SEVERAL FIRMS TO GIVE ACCOMMODATION LOAN ENTRIES TO VARIOUS CONCERNS WHICH ITA 7007/MUM/2011 7 ALSO INCLUDED THE ASSESSEE . THE CIT(A) OBSERVED TH AT THE ASSESSEE ALSO FAILED TO PRODUCE SHRI SURENDRA KHANDHAR BEFORE THE A.O. T HE CIT(A) HELD THAT THE CONFIRMATIONS FILED IN EARLIER PROCEEDINGS WERE NO T FOUND TO BE GENUINE AND THEREFORE THE A.O. AS WELL AS CIT(A) HAVE TREATED T HE SAME AS UNEXPLAINED CASH CREDIT HENCE THE UNEXPLAINED CASH CREDIT INTRO DUCED IN THE NAME OF VARIOUS CONCERNS TO BE TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE AND THE ORDERS OF THE AO WAS CONFIRMED, VIDE CIT(A) ORDERS DATED 19.08.2011. 6.AGGRIEVED BY THE ORDERS DATED 19.08.2011 OF THE C IT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL HAS SET ASIDE THE MATTER BACK TO THE FILE OF A.O. WITH A DI RECTION TO CONSIDER THE MATTER AFRESH AFTER VERIFICATION. HOWEVER, THE A.O. HAS N OT DONE ANY VERIFICATION ON MERITS WITH RESPECT TO THE RAISING OF LOAN OF RS.45 ,50,000/- BY THE ASSESSEE DURING THE INSTANT ASSESSMENT YEAR AND MERELY CONFI RMED THE ADDITION U/S 68 OF THE ACT AS WAS MADE IN THE FIRST ROUND OF LITIGA TION, HENCE THE DIRECTION OF THE TRIBUNAL HAS NOT BEEN COMPLIED BY THE A.O. THE ASSESSEE HAS RECEIVED LOANS OF RS.45,50,000/- FROM VARIOUS PARTIES AS PE R THE DETAILS GIVEN AND THE LOANS HAVE BEEN DULY REPAID THROUGH BANKING CHANNEL S. THE LD. COUNSEL SUBMITTED THAT AS PER THE STATEMENT GIVEN BY SHRI S URENDRA KHANDHAR WHEREBY HE ADMITTED THAT HE HAS FLOATED VARIOUS FIR MS TO GIVE ACCOMMODATION LOAN ENTRIES TO VARIOUS PERSONS WHICH INCLUDED THE ASSESSEE ALSO , THE SAID STATEMENT OF SH SURENDER KHANDHAR WAS RECORDED BY T HE REVENUE AT THE BACK OF THE ASSESSEE AND HENCE THE SAME CANNOT BE USED A GAINST THE ASSESSEE UNTIL IT HAS STOOD SCRUTINY BY WAY OF CROSS EXAMINATION O F SAID SH SURENDER KHANDHAR BY THE ASSESSEE. THE CROSS EXAMINATION OF SHRI SURENDRA KHANDHAR BY THE ASSESSEE HAS NOT TAKEN PLACE. SUMM ONS U/S 131 OF THE ACT AND SHOW CAUSE NOTICES WERE ISSUED BY THE REVENUE T O SHRI SURENDRA ITA 7007/MUM/2011 8 KHANDHAR BUT HE DID NOT COMPLY WITH THE SAID SUMMON S/SHOW CAUSE NOTICES. THE CONFIRMATIONS WERE FILED BEFORE THE A.O. IN THE FORM OF HUNDI/PROMISSORY NOTES. THE LD. COUNSEL SUBMITTED THAT IN THE IMME DIATELY PRECEDING ASSESSMENT YEAR 1997-98, THE MATTER WENT UP TO THE TRIBUNAL IN THE SECOND ROUND OF LITIGATION WHEREBY THE TRIBUNAL ON IDENTIC AL FACTS AND GROUNDS IN ITA NO.5849/MUM/2011 VIDE ORDERS DATED 06.09.2013, HAS ORDERED DELETION OF ADDITION AFTER VERIFICATION BY THE AO , WITH RESPEC T TO THE LOAN RAISED BY THE ASSESSEE IN THE ASSESSMENT YEAR 1997-98 AS THE ASSE SSEE HAS CLAIMED TO HAVE DULY REPAID THE SAID LOANS BY BANKING CHANNEL. IN SUPPORT, THE LD. COUNSEL RELIED ON THE DECISION OF HONBLE HIGH COURT OF DEL HI IN THE CASE OF CIT V. ASHWANI GUPTA (2010) 322 ITR 396 (DEL) AND ALSO THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF M/S ANDAMAN TIMBER IND USTRIES V. CCE IN CIVIL APPEAL NO. 4228 OF 2006 VIDE ORDERS DATED SEPTEMBER , 02, 2015. THE LD COUNSEL SUBMITTED THAT THE REVENUE HAS NOW FRAMED T HE ASSESSMENT VIDE ORDERS DATED 31/3/2015 U/S 143(3) READ WITH SECTION 254 OF THE ACT WITH RESPECT TO ASSESSMENT YEAR 1997-98 IN PURSUANCE OF DIRECTIONS OF THE TRIBUNAL IN SECOND ROUND OF LITIGATION VIDE ITA NO. 5849/MUM/2011 VIDE ORDERS DATED 06.09.2013, WHEREBY THE ENTIRE ADDITIO N OF RS.30,00,000/- MADE IN ASSESSMENT YEAR 1997-98 WITH RESPECT TO LOANS RA ISED BY THE ASSESSEE HAS BEEN DELETED. THE LD. COUNSEL SUBMITTED THAT THE MA TTER MAY BE SET ASIDE TO THE FILE OF A.O. FOR VERIFICATION AND DECISION THER EOF IN LINES WITH THE ORDERS OF THE TRIBUNAL FOR ASSESSMENT YEAR 1997-98 IN SECOND ROUND OF LITIGATION VIDE ITA NO. 5849/MUM/2011 DATED 06.09.2013. 8. THE LD. D.R. SUBMITTED THAT THE FACTS ARE DIFFER ENT IN EACH YEAR. PRINCIPLES OF RES JUDICATA ARE NOT APPLICABLE TO IN COME TAX PROCEEDINGS. THE A.O. HAS PROVIDED OPPORTUNITY TO THE ASSESSEE TO CR OSS EXAMINE SHRI SURENDRA KHANDHAR AND ISSUED SUMMONS/SHOW CAUSE NOTICES ALSO . THE ASSESSEE COULD NOT ALSO PRODUCE SHRI SURENDRA KHANDHAR. IT CANNOT BE SAID THAT CROSS ITA 7007/MUM/2011 9 EXAMINATION HAS NOT BEEN GRANTED BY THE A.O. FURTH ER, THE LD. D.R RELIED ON THE ORDER OF THE CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERU SED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASS ESSEE HAS RAISED LOANS OF RS.45,50,000/- FROM VARIOUS PARTIES DURING THE INS TANT ASSESSMENT YEAR 1998-99 UNDER APPEAL AND ONE SHRI SURENDRA KHANDHAR HAS GIVEN STATEMENT U/S 131 OF THE ACT AGAINST THE ASSESSEE THAT HE HAS FLOATED VARIOUS FIRMS TO GIVE ACCOMMODATION LOAN ENTRIES TO VARIOUS PERSONS WHICH ALSO INCLUDED THE ASSESSEE . THE SAID STATEMENT OF SH.SURENDER KHANDH AR WAS RECORDED BY THE REVENUE AT THE BACK OF THE ASSESSEE. THE SAID SHRI SURENDRA KHANDHAR HAS NOT BEEN SUBJECTED TO CROSS EXAMINATION BY THE ASSE SSEE AND HENCE THE STATEMENT OF SHRI SURENDRA KHANDHAR CANNOT BE USED AGAINST THE ASSESSEE UNTIL AND UNLESS THE CROSS EXAMINATION OF THE SAID SHRI SURENDRA KHANDHAR BY THE ASSESSEE TAKES PLACE. WE FIND THAT THE TRIB UNAL IN THE FIRST ROUND OF LITIGATION, SET ASIDE THE MATTER TO THE FILE OF A.O . WITH A DIRECTION TO RE-VERIFY THE LOAN TRANSACTIONS AS PER PROVISIONS OF THE ACT AFTER AFFORDING OPPORTUNITY TO THE ASSESSEE, THE TRIBUNAL ALSO HOLDING THAT SIN CE SH SURENDER KHANDHAR COULD NOT BE OFFERED FOR CROSS EXAMINATION BY THE A SSESSEE , HIS STATEMENT CANNOT BE USED AGAINST THE ASSESSEE. THE SAID SHRI SURENDRA KHANDHAR DID NOT APPEAR BEFORE THE REVENUE ALSO. THE A.O. ALSO FAILED TO MAKE VERIFICATION AND ENQUIRIES ON MERITS WITH RESPECT TO THE LOAN RA ISED BY THE ASSESSEE. THE ASSESSEE, ON THE OTHER HAND, PRODUCED THE COPIES OF PROMISSORY NOTE/HUNDI AS LOAN CONFIRMATIONS. IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 1997- 98, THE TRIBUNAL IN THE SECOND ROUND OF LITIGATION DELETED THE ADDITION WITH A DIRECTION TO THE A.O. TO VERIFY THE CONTENTIONS OF THE ASSESSEE REGARDING REPAYMENT OF LOAN IN ITA NO. 5849/MUM/2011 FOR ASSE SSMENT YEAR 1997-98 VIDE ORDERS DATED 6 TH SEPTEMBER, 2013, THE SAID DIRECTIONS OF THE TRIBUN AL ARE REPRODUCED BELOW:- ITA 7007/MUM/2011 10 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREF ULLY PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE EARLIER ROU ND OF LITIGATION THIS TRIBUNAL HAS REMANDED THE MATTER TO THE RECORD OF T HE ASSESSING OFFICER VIDE ORDER DATED 11-9-2009 IN PARA 5 AND 5. 1 AS UNDER:- 5. WE HAVE 'HEARD THE RIVAL SUBMISSIONS AND CONSID ERED THEM CAREFULLY. AS MENTIONED ABOVE, THE ASSESSMENTS WERE COMPLETED ORIGINALLY WHICH WERE SET ASIDE BY THE TR IBUNAL WITH A DIRECTION TO ALLOW CROSS EXAMINATION OF ONE SHRI KHANDHAR ON WHOSE STATEMENT BASIS, THE ADDITIONS WE RE MADE IN THE HANDS OF THE ASSESSEE. SHIR KHANDHAR CO ULD NOT BE TRACED OUT IN SPITE OF BEST EFFORTS MADE BY THE AO; THEREFORE, CROSS EXAMINATION COULD NOT BE ALLOWED. IT IS WELL SETTLED LAW THAT WITHOUT CONFRONTING THE STATEMENT OF WITNESS OR ALLOWING CROSS EXAMINATION, NO ADVERSE INFERENCE CAN BE MADE AGAINST A PERSON, AGAINST WHICH STATEMENT OF A THIRD PARTY IS USED. SINCE CROSS EXAMINATION COULD NOT BE ALLOWED; THEREFORE, WE HOLD THAT THE STATEMENT OF SHRI KHAND HAR CANNOT BE USED AGAINST THE ASSESSEE. 5.1 HOWEVER, ON MERIT, WE ARE OF THE CONSIDERED VIE W THAT THE MATTER NEEDS RE-VERIFICATION AT THE END OF THE AO AS THE CASE HAS NOT BEEN EXAMINED PROPERLY ON MERIT. IF TH E STATEMENT OF A THIRD PARTY IGNORED THEN IN THAT CAS E, ONUS LAY UPON THE ASSESSEE TO PROVE THE TRANSACTION BY ADDUC ING NECESSARY CONFIRMATION AND EVIDENCES. NO SUCH EFFOR TS WERE MADE BY THE ASSESSEE TO OBTAIN THE CONFIRMATION FRO M THE RESPECTIVE PARTIES. NEITHER THE DEPARTMENT HAS TRIE D TO VERIFY FROM THE INCOME TAX DEPARTMENT, INSPITE OF FURNISH ING PAN ETC., OF THE RESPECTIVE PARTIES, AS STATED BY THE L D. COUNSEL OF THE ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED V IEW THAT TO MEET THE END OF JUSTICE, THE MATTER SHOULD GO BA CK TO THE FILE OF THE AO IN RESPECT TO ALL THESE APPEALS TO E XAMINE THE ISSUE AFRESH ON MERIT AND AFTER AFFORDING REASONABL E OPPORTUNITY TO THE ASSESSEE TO FILE NECESSARY DETAI LS IN RESPECT OF RESPECTIVE LOANS TAKEN BY THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER A UTHORITIES AND RESTORE THE MATTER TO THE FILE OF THE AO TO PAS S A FRESH ORDER AS PER OUR ABOVE OBSERVATIONS. 7. IT IS CLEAR FROM THE ORDER OF THIS TRIBUNAL THAT THE ADDITION MADE ON THE BASIS OF THE STATEMENT OF MR. SURENDRA KHANDHAR WITHOUT GIVING AN OPPORTUNITY OF CROSS-EXAMINATION WAS HELD TO BE NOT PROPER AND ACCORDINGLY IT WAS OBSERVED THAT THE STATEMENT OF ITA 7007/MUM/2011 11 MR. SURENDRA KHANDHAR CANNOT BE USED AGAINST THE AS SESSEE: THE AO WAS DIRECTED TO DECIDE THE ISSUE ON MERITS AFTER AFFORDING AN OPPORTUNITY TO THE ASSESSEE TO FILE NECESSARY DETAI LS IN RESPECT OF RESPECTIVE LOANS TAKEN BY THE ASSESSEE. WE NOTE THA T IN THE ASSESSMENT ORDER PASSED IN PURSUANT TO THE DIRECTIO NS OF THIS TRIBUNAL, THE AO HAS REPEATED THE ADDITION IN PARA 10-12 AS UNDER: '10. IN VIEW OF THE ABOVE, IT CAN BE SEEN THAT THER E IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. UNDER THE CIRCUMSTANCES, THERE IS NO ALTERNATIVE THAN TO PASS THE ORDER WITH THE MATERIALS AVAILABLE ON RECORD. THE DETAILS AND FACTS OF THE CASE ARE ELABORATELY DISCUSSED IN THE ORIGIN AL ORDER PASSED ON 31.3.2005 BY THE ERSTWHILE ASSESSING OFFI CER. HENCE THEY ARE NOT REPEATED HERE AGAIN. 11. I DO NOT FIND THAT THE SUBMISSION MADE BY THE A UTHORISED REPRESENTATIVE HAS ANY MATERIALS TO SERVE HIS PURPO SE. CONSIDERING THE STATEMENT ON OATH PROVIDED BY THE L ENDER OF THE LOAN; THERE IS NO IOTA OF DOUBT THAT THE ASSESS EE HAS INTRODUCED HIS UNDISCLOSED CASH UNDER THE GARB OF ACCOMMODATION LOAN. IN THE CIRCUMSTANCES, THE LOAN SO RECEIVED ARE UNEXPLAINED CASH CREDIT U/S 68 OF THE I. T. ACT 1961 AND SAME ARE BROUGHT TO TAX. ACCORDINGLY, A SU M OF RS. 55,25,000/- IS ASSESSED AS UNDISCLOSED INCOME OF TH E ASSESSEE FOR THE YEAR. PENALTY PROCEEDINGS U/S 271( 1)(C) OF THE I.T. ACT, 1961 ARE INITIATED SEPARATELY.' SUBJECT TO THE ABOVE REMARKS, THE THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER:- BUSINESS INCOME INCOME AS PER ORDER DTD. 31.3.2005 RS.2,35,505 ADD: DISALLOWANCE OF LOAN AS PER ORDER RS.30,00,000 DTD. 31.3.2005 INTEREST ON LOAN RS.25,25,000 TOTAL INCOME RS. 57,60,505 ROUNDED OFF RS.57,60,510 IT IS CLEAR THAT THE AO HAS NOT TAKEN PAIN TO EXAMI NE THE ISSUE ON MERITS ON THE BASIS OF THE DETAILS TO BE FILED BY T HE ASSESSEE AS DIRECTED BY THE TRIBUNAL. NOW BEFORE US THE ASSESSE E HAS CLAIMED THAT THE LOANS HAVE BEEN REPAID THEREFORE, THE CLAI M OF THE ITA 7007/MUM/2011 12 ASSESSEE BASED ON THE RECORD SHOWING THE REPAYMENT OF LOAN IS REQUIRED TO BE VERIFIED. IF THE CLAIM OF THE ASSESS EE THAT LOANS HAVE ALREADY BEEN REPAID IS FOUND CORRECT THEN THE ADDIT ION U/S 68 ISNOT SUSTAINABLE AND LIABLE TO BE DELETED. THEREFORE IN THE INTEREST OF JUSTICE WE SET ASIDE THIS ISSUE FOR LIMITED PURPOS E OF VERIFICATION OF THE FACT AND THE RECORD FILED BY THE ASSESSEE TO SH OW THAT THE LOANS IN QUESTION HAVE BEEN REPAID BY THE ASSESSEE. THE A O TO DECIDE THE ISSUE IN TERMS OF OUR OBSERVATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ACCORDINGLY, THE A.O. VIDE ORDER DATED 31-3-2015 IN COMPLIANCE TO THE DIRECTIONS OF THE TRIBUNAL IN SECOND ROUND OF LITIG ATION, DELETED THE ADDITIONS SO MADE FOR ASSESSMENT YEAR 1997-98 AFTER VERIFYING THAT THE LOANS HAVE BEEN DULY REPAID BY THE ASSESSEE VIDE ORDERS DATED 31-03 -2015 (COPY PLACED IN THE FILE). THE ASSESSEE HAS CLAIMED THAT THE LOANS RAIS ED DURING THE INSTANT YEAR UNDER APPEAL HAVE ALSO BEEN REPAID AND CLAIM OF THE ASSESSEE BASED ON RECORDS SHOWING THE REPAYMENT OF THE LOAN IS REQUIR ED TO BE VERIFIED. IN THE INSTANT CASE, THE ISSUE AND GROUNDS ARE IDENTICAL A ND IN THE INTEREST OF JUSTICE, RESPECTFULLY FOLLOWING THE ORDER OF THE CO -ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 5849/MUM/2011 VIDE ORDERS DATED 06-09-2013, THE ISSUE IS SET ASIDE TO THE FILE OF A.O. ON THE SIMIL AR LINES AS WAS DONE BY THE TRIBUNAL IN THE IMMEDIATELY PRECEDING ASSESSMENT YE AR 1997-98 , FOR THE LIMITED PURPOSE OF VERIFICATION BY THE AO OF THE FA CT AND THE RECORD FILED BY THE ASSESSEE TO SHOW THAT THE LOANS IN QUESTION RAISED DURING THE INSTANT ASSESSMENT YEAR OF RS.45,50,000/- HAVE BEEN REPAID BY THE ASSESSEE. THE AO TO DECIDE THE ISSUE IN TERMS OF OUR ABOVE OBSERVATI ONS .WITH RESPECT TO ADDITIONS MADE ON ACCOUNT OF INTEREST OF RS.4,00,00 0/- ON THESE LOANS, WE FIND THAT THE AO HAS MADE ADDITIONS BASED ON NOTION AL INTEREST BEING PAID/PAYABLE BY THE ASSESSEE ON THESE LOANS, WE DID NOT FIND ANY BASIS/JUSTIFICATION FOR THE SAME AS PER THE FACTS E MANATING FROM THE RECORDS. THIS ISSUE IS ALSO SET-ASIDE TO THE FILE OF THE AO TO BE DECIDED BASED ON MERITS AFTER BRINGING ON RECORD COGENT MATERIAL/BASIS FOR THE SAID INTEREST TO BE ITA 7007/MUM/2011 13 BROUGHT TO TAX AS INCOME OF THE ASSESSEE. NEEDLESS TO SAY PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD SHALL BE PROVID ED BY THE AO TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL J USTICE IN ACCORDANCE WITH LAW AND THE ASSESSEE SHALL BE ALLOWED TO PRODUCE EV IDENCES/EXPLANATIONS IN ITS DEFENSE WHICH SHALL BE ADMITTED AND CONSIDERED BY THE AO ON MERITS. WE ORDER ACCORDINGLY. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 7007/MUM/2011 FOR THE ASSESSMENT YEAR 1998-99 IS TREATED AS ALLOWED FOR S TATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH APRIL, 2016. # $% &' 20-04-2016 ( ) SD/- SD/- (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 20-04-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI D BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI