JITENDRA M KITAVAT (HUF), MUMBAI V. ITO 18(1)(5), MUMBAI

ITA 7048/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6486 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 02-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Unexplained cash credit; Search and seizure; Principle of natural justice; Opportunity of cross examination; Peak credit; Question of law; Difference of opinion; Accommodation entries; Bogus loan; Change of opinion; TDS; Set aside
• Section: 69C; 143(3); 54F; 133(6); 143(1); 264; 147; 131; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.7048/M/2016 ASSESSMENT YEAR: 2008-09 SHRI JITENDRA M. KITAVAT, PROP. OF M/S. JIVRAJ EXPORTS, 61, PURNIMA APARTMENT, 43, RIDGE ROAD, MUMBAI 400 006 PAN: AABPK 9960C VS. INCOME TAX OFFICER 18(1)(5), MUMBAI (APPELLANT) (RE SPONDENT) ITA NO.7101/M/2016 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER 18(1)(5), ROOM NO.206, 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-21 VS. SHRI JITENDRA M. KITAVAT, PROP. OF M/S. JIVRAJ EXPORTS, 61, PURNIMA APARTMENT, 43, RIDGE ROAD, MUMBAI 400 006 PAN: AABPK 9960C (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIMAL PUNMIYA, A.R. REVENUE BY : SHRI SUNIL KUMAR AGARWAL, D.R. DATE OF HEARING : 16.01.2019 DATE OF PRONOUNCEMENT : 15.02.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE HAVE BEEN PREFERRED AGAINST TH E ORDER DATED 26.09.2016 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008-09. ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 2 ITA NO.7048//M/2016 2. AT THE TIME OF HEARING THE LD. A.R. SUBMITTED TH AT GROUND NOS.1, 2, 3, 4 & 5 ARE NOT PRESSED AND THEREFORE DI SMISSED AS NOT PRESSED. 3. THE ISSUE RAISED IN GROUND NO.6 OF APPEAL IS AGA INST THE ORDER OF LD. CIT(A) DIRECTING THE AO TO ESTIMATE TH E PROFIT ON THE BOGUS PURCHASES AT THE RATE OF 12.5% AND THEREBY CO NFIRMING THE ADDITION TO THE EXTENT OF RS.52,04,317/-. THE LD. A.R. SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUN AL IN ASSESSEES OWN CASE IN A.Y. 2007-08 IN ITA NO.7047/ M/2016 VIDE ORDER DATED 11.04.2008 WHEREIN ENTIRE ADDITION HAS BEEN DELETED BY THE TRIBUNAL. THE LD. A.R. THEREFORE PR AYED THAT FACTS BEING SAME THE ADDITION THE CURRENT YEAR SHOULD BE DELETED BY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE. 4. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF AO HEAVILY AND SUBMITTED THAT SINCE THIS IS THE CASE O F ACCOMMODATION ENTRIES AS ADMITTED BY THE SHRI BHANV ARLAL JAIN AND RELATED PARTIES DURING THE SEARCH OPERATION AND THEREFORE ORDER OF LD. CIT(A) SHOULD BE SET ASIDE AND THE ORD ER OF AO BE RESTORED AS THE REVENUE HAS ALSO CHALLENGED THE PAR T DELETION OF ADDITION IN THE REVENUE APPEAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DE CISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.7045/M/ 2016 A.Y. 2007-08 (SUPRA). WE FIND THAT THE PRESENT ADDITION IN THE ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 3 INSTANT YEAR HAS BEEN MADE UNDER SAME FACTS AS WERE IN THE EARLIER YEAR IN WHICH THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS RENDERED ITS DECISION DELETING THE ENTIRE ADDITION ON THE GROUND THAT ASSESSEE WAS DENIED OPPORTUNITY OF CROSS EXAMI NATION THOUGH THE ASSESSEE HAS SPECIFICALLY REQUESTED DURI NG THE COURSE OF ASSESSMENT PROCEEDING TO PROVIDE A CROSS EXAMINA TION. THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS OBSERVED THAT BY NOT ALLOWING THE CROSS EXAMINATION OF THE THIRD PARTY W HOSE STATEMENT WAS BEING USED AGAINST THE ASSESSEE, THE AO HAD VIOLATED THE PRINCIPLE OF NATURAL JUSTICE. FURTHER , THE CO-ORDINATE BENCH OF THE TRIBUNAL OBSERVED THAT SHRI BHANVARLAL JAIN HAS RETRACTED HIS STATEMENT SO THERE IS HARDLY ANY AUTH ENTICITY OF THE MATERIAL RELIED UPON BY THE AO. THE OPERATIVE PART OF THE DECISION IS REPRODUCED AS UNDER: CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE ISSUE OF BOGUS PURCHASE OF DIAMONDS FROM BJ GROUP HAS BEEN ALREADY BEEN DELIBE RATED UPON BY THE TRIBUNAL AND IT STANDS DECIDED. FACTS OF THE CASE UNDER CONS IDERATION ARE ALMOST IDENTICAL TO THE FACTS OF VAMA INTERNATIONAL(SUPRA).IN THAT CASE ALSO THE AO HAD ADDED THE ENTIRE PURCHASES TO THE INCOME OF THE ASSESSEE AND THE FAA HAD GIVEN PART RELIEF TO THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE WAS DENIED THE OPPORTUNITY OF CROSS EXAMINATION THOUGH IT HAD MADE A REQUEST TO THE AO DURING THE ASSESSMENT PROCEEDINGS. BY NOT ALLOWING CROSS EXAMINATION OF T HE THIRD PARTY, WHOSE STATEMENT WAS BEING USED AGAINST THE ASSESSEE, THE AO HAD VIO LATED THE BASIC PRINCIPLES OF NATURAL JUSTICE. ONLY ON THAT COUNT THE ORDER CAN B E QUASHED. BUT, WE ARE CONSIDERING OTHER FACTORS.BJ HAS RETRACTED HIS STAT EMENT. SO, THE AUTHENTICITY OF THE MATERIAL RELIED UPON BY THE AO REDUCES TO A GREAT E XTENT. THE SUPPLIER HAS ADMITTED THE TRANSACTION AND THE AO HAS NOT DOUBTED THE SALE S. IT IS ALSO FOUND THAT DD HAD FILED VAT RETURNS. CONSIDERING THE ALL THESE FACTS AND RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF VAMA INTERNATI ONAL (SUPRA),WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. 6. SINCE THE FACTS IN THE PRESENT CASE ARE MATERIAL LY SAME WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE CO-ORDINATE BENCH OF THE TRIBUNAL, ALLOW THE APPEAL OF THE ASSE SSEE ON THIS GROUND. ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 4 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ITA NO.7101/M/2016 (REVENUES APPEAL) 8. THE ISSUE RAISED IN GROUND NO.1 & 2 IS AGAINST T HE DELETION OF ADDITION AS MADE BY THE AO UNDER SECTION 69C TO THE TUNE OF RS.4,16,34,535/- ON ACCOUNT OF PEAK CREDIT OF TRANS ACTION OF BOGUS PURCHASES. 9. SINCE WE HAVE ALREADY DECIDED THE ISSUE IN ASSES SEES APPEAL IN FAVOUR OF THE ASSESSEE WHEREIN THE ASSESS EE HAS CHALLENGED THE PART CONFIRMATION OF ADDITION ON THI S ISSUE IN ITA NO.7048/M/2016, THEREFORE IN VIEW OF OUR DECISION IN ITA NO.7048/M/2016M, THE GROUND NO. 1 AND 2 BECAME INFR UCTUOUS AND ACCORDINGLY DISMISSED. ACCORDINGLY, GROUNDS NO .1 & 2 OF THE REVENUE ARE DISMISSED. 10. THE ISSUE RAISED IN GROUND NO.3 IS AGAINST THE DELETION OF ADDITION OF RS.52,25,000/- BY LD. CIT(A) AS MADE BY THE AO UNDER SECTION 68 OF THE ACT ON ACCOUNT OF UNSECURED LOAN FROM PERSONS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. 11. AT THE OUTSET, THE LD. A.R. SUBMITTED THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE PRECEDING YEAR AND SUCCEEDING YEARS I.E. IN ITA NO.7047/M/2016 A.Y. 2007-08 & OTHERS AND ITA NO.7100/M/2016 A.Y. 2007-08. THE LD. A.R. SUBMITTE D THAT SINCE THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS ALSO BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE THE GROUND RA ISED BY THE REVENUE SHOULD BE DISMISSED. ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 5 12. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF AO. 13. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE IDENTICAL ISSUE WAS ALSO INVOLVED IN THE EARLIER AND SUCCEEDING YEAR IN ITA NO.7047/M/2016 A .Y. 2007- 08 AND ITA NO.7100/M/2016 A.Y. 2007-08 WHEREIN THE CO- ORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THE ISSU E IN FAVOUR OF THE ASSESSEE AND THE OPERATIVE PART FROM THE ABOVE SAID ORDER IS REPRODUCED AS UNDER: 8.3.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL BEFORE US. WE FIND THAT THE FAA HAD OBSERVED THAT THE TRANSACTION WITH LD COULD NOT BE CONSIDERED GENUINE AS IT HAD ADVANCED UNSECURED LOA NS TO THE ASSESSEE. IT IS FOUND THAT LD IN ITS AFFIDAVIT HAS ADMITTED THAT IT HAD A DVANCED LOAN TO THE ASSESSEE. HERE WE WOULD LIKE TO REFER TO THE CASE OF RELIANCE CORPORATION (ITA/1069- 71/MUM/ 2017, AY.2008-09 TO 2010-11,DTD.12/04/2017) WHEREIN THE SIMILAR ISSUE WAS DEALT WITH. IN THAT CASE ALSO, ON THE BASIS OF SEARCH AND SEIZURE OPERATIONS CARRIED OUT IN THE CASE OF BJ, ADDITIONS U/S.68 WER E MADE TO THE TOTAL INCOME OF THE ASSESSEE. WE ARE REPRODUCING THE RELEVANT PORTION O F THE ORDER AND IT READS AS UNDER: 4.FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 15.10.2010 DECLARING A TOTAL INCOME AT RS.56,732/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) AND THE ASSESSMENT WAS COMPLETED U/S 143(3) ASSESSING AND OTHER THREE APPEALS THE TOTAL INCOME OF THE ASSESSEE AT AN INCOME OF RS.33,82,280/- VIDE ORDER DATED 20.3.2 013. THE CASE OF THE ASSESSEE WAS RE-OPENED UNDER SECTION 147 , ON THE BASIS THAT THE INFORMATION HAS BEEN RECEIVED FROM DGIT(INV), MUMBA I UPON SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT CARRIED OUT ON TH E GROUP OF SHRI BHANWARLAL JAIN THAT THE ASSESSEE HAS RECEIVED ACCOMMODATION E NTRIES FROM THE SAID PARTIES/ CONCERNS MANAGED AND OPERATED BY HIM.ACCOR DING TO THE INFORMATION,THE ASSESSEE OBTAINED ACCOMMODATION ENT RIES IN THE FORM OF UNSECURED LOANS FROM M/S LAXMI TRADING COMPANY, M/S ROSE IMPEX AND MEGHA GEMS, WHICH ARE BELONGING TO SHRI BHANWARLAL JAIN. THE AO ACCORDINGLY FORMED AN OPINION THAT THE INCOME TO TH E TUNE OF RS.2,02,62,016/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT AND ACCORDINGLY REOPENED THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT DATED18.3.2015 AND ULTIMATELY THE ASSES SMENT WAS COMPLETED VIDE ORDER DATED 4.3.2016 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT ASSESSING THE TOTAL INCOME OF THE ASSES SEE AT AN INCOME OF RS.1,66,31,511/- AS AGAINST THE EARLIER A SSESSMENT MADE AT RS.33,82,280/- MADE UNDER SECTION 143(3) DATED 20.3.2013 THEREBY MAKING TWO ADDITIONS NAMELY UNEXPLAINED CASH CREDIT FROM T HE PARTIES REFERRED ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 6 HEREINABOVE OF RS.1,29,04,231/- AND UNEXPLAINED EXP ENDITURE OF RS.3,45,000/- UNDER SECTION 69C OF THE ACT. THE ASSESSEE FILED BEFORE THE AO VARIOUS INFORMATIONS/DETAILS LIKE LOAN CONFIRMATION S FROM THE LENDERS, LEDGER ACCOUNT, PAN OF THE PARTIES, PROFIT & LOSS ACCOUNT AND THE AND OTHER THREE APPEALS BALANCE SHEET ETC INCLUDING THE BANK STATEM ENT OF THE LENDERS AND ALSO OF THE ASSESSEE CONFIRMING THE RECEIPT OF MONE Y THROUGH BANKING CHANNEL AND FORM NO.16 QUA THE TDS DEDUCTED. THE LE NDERS CONFIRMED THE LOANS HAVING BEEN GIVEN TO THE ASSESSEE DURING PERS ONAL APPEARANCE BEFORE THE AO IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT HOWEVER, THE AO ACTING SOLELY ON THE INFORMATION RECEIVED FROM DGIT(INV), MUMBAI REJECTED THE CONTENTIONS OF THE ASSESSEE AND FRAMED THE ASSESSME NT AS STATED ABOVE. 5. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED AND APPEAL BEFORE THE LD.CIT(A) WHO DISMISSED THE APPEAL OF TH E ASSESSEE EX-PARTE ON THE GROUND THAT THE ASSESSEE FAILED TO APPEAR BEFOR E THE LD.CIT(A) BY OBSERVING AND HOLDING AS UNDER : '4 DECISION ON GROUNDS OF APPEAL NO.1: 4.1 THE RELE VANT FACTS ARE LIKE THIS. THE ASSESSEE IS A FIRM WHICH IS ENGAGED IN THE BUSI NESS OF BUILDERS & DEVELOPERS. A SEARCH & SEIZURE ACTION WAS CONDUCTED IN THE BHANWARLAL JAIN GROUP OF CASES BY INVESTIGATION WING MUMBAI. AS A R ESULT OF SEARCH, IT WAS FOUND BY THE INVESTIGATION WING THAT THIS GROUP IS A LEADING ENTRY PROVIDER OF MUMBAI. THERE ARE MANY CONCERNS FLOATED BY THE GROU P WHO PROVIDE ACCOMMODATION ENTRIES OF BOGUS LOAN THE AO RECEIVED AN INFORMATION THAT THE APPELLANT HAS ALSO TAKEN LOAN FROM CONCERNS FOU ND IN THE LIST OF ENTRY PROVIDERS RELATED WITH BHANWARLAL JAIN GROUP OF CAS ES. THE AO ASKED THE APPELLANT TO SHOW CAUSE AS TO WHY LOAN TAKEN FROM M LS LAXMI TRADING COMPANY & MLS RAJAN DIAMONDS SHOULD NOT BE DISALLOW ED AND ADDED TO THE TOTAL INCOME. AS PER THE ASSESSMENT ORDER THE APPEL LANT DID NOT FILE ANY WRITTEN SUBMISSION ON THIS ISSUE. THE AO ADDED THE AMOUNT OF FRESH LOANS AND INTERESTS ON EXISTING DOUBTFUL LOANS PAID DURIN G THE AY 2010-11 TO THE TOTAL INCOME OF THE APPELLANT. IN THIS WAY, ADDITIO N OF RS 1,29,04,231/- WAS MADE TO THE TOTAL INCOME OF THE APPELLANT AND OTHER THREE APPEALS 4.2 DURING THE COURSE OF APPEAL PROCEEDINGS, NO ONE APP EARED NOR WAS ANY WRITTEN SUBMISSION MADE. IN THE STATEMENT OF FACTS AND GROUNDS OFAPPEAL ONLY GENERAL FACTS ARE STATED. IN ABSENCE OF ANY WR ITTEN SUBMISSION AGAINST THE VIEW TAKEN BY THE AO IN THE ASSESSMENT ORDER IT IS HELD THAT THE AO HAS RIGHTLY MADE THE ADDITION. THE GROUNDS OF APPEAL NO .1 IS ACCORDINGLY DISMISSED. 5 DECISION ON GROUNDS OF APPEAL NO.2: 5.1 AS PER THE ASSESSMENT ORDER THE AO TOOK A VIEW THAT THE APPELLANT HAD INTRODUCED UNEXPLAINED CASH CREDITS FROM ENTITIES R ELATED WITH BHANWARLAL JAIN GROUP OF CASES THROUGH ACCOMMODATION ENTRIES A RRANGED ON COMMISSION BASIS. THE AO ACCORDINGLY COMPUTED 3% OF RS 1,15,00,000/- AS UNDISCLOSED EXPENDITURE WITHIN THE MEANING OF SECTI ON 69C OF THE ACT. IN THIS WAY ADDITION OF RS 3,45,000/- WAS MADE TO THE TOTAL INCOME OF THE APPELLANT. 5.2 DURING THE COURSE OF APPEAL PROCEEDI NGS, NO ONE APPEARED NOR WAS ANY WRITTEN SUBMISSION MADE. IN THE STATEME NT OF FACTS AND GROUNDS OF APPEAL ONLY GENERAL FACTS ARE STATED. IN ABSENCE OF ANY WRITTEN ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 7 SUBMISSION AND/OR DOCUMENT TO SUBSTANTIATE THE ARGU MENT OF THE APPELLANT AGAINST THE VIEW TAKEN BY THE AO IN THE ASSESSMENT ORDER IT IS HELD THAT THE AO HAS RIGHTLY MADE THE ADDITION. THE GROUNDS OF AP PEAL NO.2 IS ACCORDINGLY DISMISSED. AGGRIEVED BY THE ORDER OF THE FAA, THE A SSESSEE IS IN APPEAL BEFORE US. 6. THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT T HE ORDER UPHOLDING THE ADDITION BY THE FAA WAS WRONG AND AGAINST THE PROVI SIONS OF THE ACT. THE LD. AR RESPECTFULLY SUBMITTED BEFORE THE BENCH IN ORDER TO MAKE ADDITION U/S 68C OF THE ACT WHEN THE FOLLOWING THREE THINGS ARE NOT ESTABLISHEDI.E. (I) IDENTITY OF THE CREDITORS (II) GENUINENESS OF THE T RANSACTIONS AND (III) CREDITWORTHINESS OF THE CREDITORS. THE LD.AR SUBMIT TED THAT THE ONUS IS CAST UPON THE ASSESSEE TO EXPLAIN THE SOURCES FROM WHICH HE HAS RECEIVED THE CASH CREDIT AND THE CREDITWORTHINESS OF THE CREDITO RS IS TO BE GAUGED VIS -A- VIS THE TRANSACTIONS AND OTHER THREE APPEALS WHICH OCCURRED BETWEEN THE ASSESSEE AND THE CREDITORS. THE LD. AR SUBMITTED TH AT IT WAS NOT THE BURDEN OR RESPONSIBILITY OF THE ASSESSEE TO FIND OUT THE S OURCE OF CREDITORS OR THE CAPACITY OF THE CREDITORS IN ORDER TO PROVE THE GEN UINENESS OF TRANSACTIONS AS HAS BEEN HELD BY THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF CIT V/S SMT. SANGMITRA BHARALI REPORTED IN 361 ITR 481). TH E LD AR FURTHER SUBMITTED THAT THE ADDITION WAS MADE OUT OF UNSECUR ED LOANS RAISED BY THE ASSESSEE FROM THE GROUP CONCERN OF BHANWARILAL JAIN GROUP ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. ON THE CONTRARY, T HERE WAS NO INDICATION OR PROOF THAT LOANS TAKEN BY THE ASSESSEE WERE MERE LY ACCOMMODATION ENTRIES AND THE MONEY ACTUALLY GONE BACK TO THE LEN DERS . THE LD.AR ALSO SUBMITTED THAT THE CREDITORS APPEARED BEFORE THE AO IN RESPONSE TO THE NOTICE ISSUED U/S 133(6) AND DURING THE COURSE OF R ECORDING STATEMENTS BY THE AO THE LENDERS CONFIRMED THE LOANS HAVING GIVEN TO THE ASSESSEE. BESIDES ALL THE NECESSARY DETAILS WERE SUBMITTED BE FORE THE AO DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO PROVIDED THE LOAN CONFIRMATION FROM THE CREDITORS, PAN OF CREDITORS LEDGER EXTRACT COPY OF INCOME TAX RETURN, PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND BANK STATEMENT OF THE CREDITORS AND ALSO OF THE ASSESSEE AND FORM NO.16 I SSUED QUA THE TDS DEDUCTED AND DEPOSITED. THE LD. AR FURTHER SUBMITTE D THAT THE ASSESSEE HAS COMPLETELY DISCHARGED ITS ONUS CAST UPON IT BY FILI NG NECESSARY INFORMATIONS/DETAILS BEFORE THE AO AND THE AO WITHO UT CARRYING OUT ANY FURTHER INVESTIGATIONS AND VERIFICATION IN THE MATT ER SOLELY RELIED UPON THE AND OTHER THREE APPEALS INFORMATION RECEIVED FROM T HE DGIT(INV) MUMBAI THAT THE CREDITORS WERE ENGAGED IN ISSUING ACCOMMOD ATION ENTRIES. IN SUPPORT OF HIS CONTENTION, THE LD.AR RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ITO V/S LAKHMANI MEWAL DAS REPORTED IN (1976) 103 ITR 437 (SC), THE DECISION OF THE HON'BL E DELHI HIGH COURT IN THE CASE OF CIT V/S GANGESHWARI METAL (P) LTD REPORTED IN (2013) 96 DTR 299, WHEREIN IT HAS BEEN HELD THAT THERE WAS A CLEAR LAC K OF ENQUIRY ON THE PART OF THE AO. ONCE THE ASSESSEE HAD FURNISHED ALL THE MAT ERIAL INCLUDING PAN, LOAN CONFIRMATIONS AND BANK STATEMENTS, IN SUCH AN EVENT UALITY, NO ADDITION CAN BE MADE U/S 68 OF THE ACT. ACCORDING TO THE LD.AR, THE AO MERELY PROCEEDED ON THE BASIS OF INFORMATION RECEIVED FROM THE THIRD PARTY AND FRAMED THE ASSESSMENT BY MAKING ADDITIONS BY STATING IN THE AS SESSMENT ORDER THAT THE ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 8 EXPLANATION OF THE ASSESSEE IS NOT ACCEPTABLE. THE LD. AR FURTHER RELIED UPON THE NUMBER OF DECISIONS LIKE : I) CIT V/S VARINDER RAWLEY (2014) 366 ITR 232 (P&H) ; II) CIT V/S SACHITAL COMMUNICATIONS (2014) 227 TAXM AN 219 (MAG); III) CIT V/S PATEL RAMNIKLAL HIRJI (2004) 222 TAXMA N 15 (MAG); IV) CIT V/S JAIKUMAR BAKLIWAL (2014) 366 ITR 217 (R AJ); V) NEMI CHAND KOTHARI V/S CIT (2003) 264 ITR 254(GA UHATI); VI) CIT V/S SHALIMAR BUILDWELL PVT (2014) 220 TAXMA N 138) (ALL); VII) CIT V/S LALPURIA CONSTRUCTION P L (2013) 215 T AXMAN 12(MAG) (RAJ) VIII) M/S RUSHABH ENTERPRISE V/S ACIT (MUM) WP 167/ 2015 AND OTHER THREE APPEALS IX) ANDAMAN TIMBER INDUSTRIES V/S CCE (2015) 281 CT R 0241 (SC) X) CIT V/S M/S ASHISH INTERNATIONAL IN ITA 4299/MUM /2009 7. PER CONTRA, THE LD.DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW BY SUBMITTING THAT THE LOAN CREDITORS M/S BHANVARILAL JAIN GROUP WAS FOUND TO BE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATI ON ENTRIES DURING THE SEARCH AND SEIZURE ACTION HIS GROUP AND THE ASSESSE E WAS FOUND TO BE THE ONE OF THE BENEFICIARIES OF THE SAID ACCOMMODATION ENTRIES. THE LD. DR SUBMITTED THAT IN THE PRESENT CASE THOUGH THE ASSES SEE HAS FILED ALL THE NECESSARY INFORMATION BUT SINCE THE ASSESSEE BORROW ING MONIES FROM THE TAINTED PARTIES WHO WERE PROVIDED ACCOMMODATION ENT RIES, IT IS BEYOND DOUBT THAT MONEY BORROWED BY THE ASSESSEE WAS NOTHI NG BUT ACCOMMODATION ENTRIES. LASTLY, THE LD. DR PRAYED TH AT IN VIEW OF THE FACTS AND THE ORDER OF THE FAA SHOULD BE UPHELD BY DISMIS SING THE APPEAL OF THE ASSESSEE. 8.WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE M ATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND OR DERS RELIED UPON BY THE PARTIES. WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS BORROWED MONEY BY WAY OF LOAN FROM THREE AFORESAID THREE PARTIES I.E. M/S LAXMI TRADING COMPANY, M/S ROSE IMPEX AND MEGHA GEMS FROM WHOM TH E ASSESSEE BORROWED THE MONEY AND TOTAL OUTSTANDING INCLUDING THE INTEREST AS ON 31.3.2010 WERE AMOUNTING TO RS.1,29,04,231/-. THE C ASE OF THE ASSESSEE WAS RE-OPENED UPON RECEIVING THE AND OTHER THREE AP PEALS INFORMATION FROM DGIT(INV), MUMBAI THAT THE ASSESSEE WAS ONE OF THE BENEFICIARY OF THE SAID ACCOMMODATION ENTRIES PROVIDED BY MR.BHANWARLA L JAIN AND GROUP. WE FIND FROM THE RECORD THAT THE ASSESSEE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALL THE DETAILS LIKE LOAN CONFIRMATION LETTERS FROM THE CREDITORS, PAN OF THE CREDITORS, BANK STATEMENTS OF THE CREDIT ORS AND THE ASSESSEE, FORM NO.16 QUA TDS ON INTEREST ,PROFIT AND LOSS ACC OUNT AND BALANCE SHEET INCLUDING THE LEDGER ACCOUNT OF THE CREDITORS, AND ITR ETC. MOREOVER, THE LOAN CREDITORS ALSO APPEARED BEFORE THE AO IN COMPL IANCE TO THE NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT AND FILED CONFIRMATIONS BEFORE THE AO THAT LOANS WERE ACTUALLY GIVEN TO THE ASSESSEE. FRO M ALL THESE DETAILS AND FACTS ON RECORD, WE FIND THAT THE ASSESSEE HAS DISC HARGED ITS ONUS CAST UPON IT BY FILING ALL THE NECESSARY DETAILS AS CALLED FO R BY THE AO TO CORROBORATE THE TRANSACTIONS OF BORROWING THE MONEY AND THEREBY SAT ISFIED ALL THE THREE ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 9 MAIN INGREDIENTS I.E. CREDITWORTHINESS OF THE CREDI TORS, GENUINENESS OF THE TRANSACTIONS AND IDENTITY OF THE CREDITORS BY FILIN G ALL THE DETAILS AS DISCUSSED ABOVE WHICH PROVED THAT THE IDENTITY OF THE CREDITO RS, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS HAVE BEEN ESTABLISHED BY THE ASSESSEE. SO MUCH SO THAT THE LOAN CREDITORS IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 133(6) APPEARED BEFORE THE AO AND CONFIRMED THE THAT THEY HAVE GIVEN INTEREST BEARING LOANS TO THE ASSES SEE ON WHICH TDS HAVE BEEN DEDUCTED AND PAID AND FORM NO.16A ISSUED TO TH E LOAN CREDITORS ALSO FILED BEFORE THE AO. ONCE THE ASSESSEE HAS FILED AL L AND OTHER THREE APPEALS THE NECESSARY DOCUMENTS BEFORE THE AO THEN THE ONUS IS SHIFTED TO THE DEPARTMENT TO DISPROVE THE STAND OF THE ASSESSEE, W HICH DEPARTMENT HAS FAILED TO DO SO IN THE PRESENT CASE. THE AO HAS MER ELY PROCEEDED AND RELIED ON THE INFORMATION RECEIVED FROM THE DGIT(INV), MUM BAI THAT THE ASSESSEE IS ONE OF THE BENEFICIARY OF THE ACCOMMODATION ENTR IES WITHOUT BRINGING ANY MATERIAL AGAINST THE ASSESSEE ON RECORD BY CONTRARY TO THE DEFENSE PUT UP BY THE ASSESSEE DURING THE COURSE OF APPELLANT PROC EEDINGS. NO CROSS EXAMINATION WAS ALLOWED TO THE ASSESSEE AND INFORMA TION WAS USED AGAINST THE ASSESSEE CAUSING VIOLATION OF NATURAL JUSTICE. THE FAA DISMISSED THE APPEAL OF THE ASSESSEE EXPARTE FOR NON ATTENDANCE O F THE LD.AR. IN THE CASE OF LAKHMANI MEWAL (SUPRA) THE HON'BLE SUPREME COURT HAS HELD AS UNDER : ' SECTION 147 OF THE INCOME-TAX ACT, 1961 [CORRESPONDING TO SECTION 34(1) OF INDIAN INCOME-TAX ACT, 1922] - INCOME ESCAPING ASSESSMENT - ILLUSTRATIONS - ASSESSMENT YEAR 1958-59 - WHETHER REASONS FOR FORMATION OF BELIEF CONTEMPLATED BY SECTION 147(A) FOR REOPENING OF ASSESSMENT MUST HAVE RATIONAL CONNECTION WITH OR RE LEVANT BEARING ON FORMATION OF BELIEF, AND RATIONAL CONNECTION POS TULATES THAT THERE MUST BE DIRECT NEXUS OR LIVE LINK BETWEEN MATERIAL COMING TO INCOME-TAX OFFICER'S NOTICE AND FORMATION OF HIS BE LIEF THAT THERE HAS BEEN ESCAPEMENT OF ASSESSEE'S INCOME FROM ASSESSMEN T IN PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS - HELD, YES - WHETHER DUTY CAST UPO N ASSESSEE IS TO MAKE TRUE AND FULL DISCLOSURE OF PRIMARY FACTS AT T IME ORIGINAL ASSESSMENT, AND IT IS FOR INCOME-TAX OFFICER TO DRA W CORRECT INFERENCE FROM PRIMARY FACTS - HELD, YES - WHETHER IF INCOME-TAX OFFICER DRAWS INFERENCE WHICH APPEARS SUBSEQUENTLY TO BE ERRONEOUS, MERE CHANGE OF OPINION WITH REGARD TO TH AT INFERENCE WOULD NOT JUSTIFY INITIATION OF ACTION FOR REOPENIN G ASSESSMENT - HELD, YES - ITO COMPLETED ORIGINAL ASSESSMENT BY ALLOWING DEDUCTION OF INTEREST PAID TO CERTAIN CREDITORS - SUBSEQUENTLY, HE REOPENED ASSESSMENT FOR REASONS RECORDED IN REPORT SUBMITTED TO COMMISSIONER FOR AND OTHER THREE APPEALS OBTAINING SANCTION UNDER SECTION 147(A) THAT ONE CREDITORS HAD CONFESSED THAT HE WAS DOING ONLY NAME LENDING AND THAT OTHER CREDITORS WERE ONL Y NAME LENDERS - THERE WAS NO MATERIAL TO SHOW THAT CONFESSION MADE BY SAID CREDITOR RELATED TO LOAN TO ASSESSEE AND NOT TO SOME ONE ELS E AND ALSO THAT SAID CONFESSION RELATED TO PERIOD WHICH WAS SUBJECT MATTER OF ASSESSMENT - THERE WAS ALSO NO MATERIAL TO SHOW THA T OTHER CREDITORS WERE NAME LENDERS - WHETHER LIVE LINK OR CLOSE NEXU S WHICH SHOULD ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 10 BE THERE BETWEEN MATERIAL BEFORE INCOME-TAX OFFICER AND BELIEF WHICH HE WAS TO FORM REGARDING ESCAPEMENT OF INCOME OF ASSESSEE FROM ASSESSMENT BECAUSE OF LATTER'S FAILURE OR OMIS SION TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS WAS MISSING IN C ASE - HELD, YES - WHETHER, THUS, HIGH COURT WAS NOT IN ERROR IN HOLDI NG THAT SAID MATERIAL COULD NOT HAVE LED TO FORMATION OF BELIEF THAT INCOME OF ASSESSEE HAD ASSESSMENT BECAUSE OF HIS FAILURE OR O MISSION TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS - HELD, YES. IN THE CASE OF SMT. SANGMITRA BHARALI (UPRA) THE HO N'BLE GAUHATI HIGH-COURT HELD AS UNDER : ' I. SECTION 68 , READ WITH SECTIONS 45 AND 54F , OF THE INCOME-TAX ACT , 1961 - CASH CREDITS (UNDISCLOSED INCOME V. LTCG) - ASSESSM ENT YEAR 2001-02 - ASSESSEE HELD SHARES OF COMPANY BPAL JUST FOR A PER IOD OVER 12 MONTHS AND DECLARED SALE VALUE 25 TIMES MORE THAN PURCHASE PRI CE - COMPANY BPAL WAS NOT FOUND AT GIVEN ADDRESS NOR WERE ITS DIRECTORS T RACEABLE - PURCHASE WAS NOT MADE THROUGH BANKING CHANNEL NOR PURCHASE PRICE WAS VERIFIABLE IN ANY WAY - WHETHER IT WAS SIMPLY A SORT OF MODUS OPERAND I TO CONVERT UNDISCLOSED INCOME INTO A LONG-TERM 'CAPITAL GAIN' CLAIMING SAME TO BE EXEMPTED INVOKING SECTION 54F - HELD, YES [PARA 44] [IN FAVOUR OF REVENUE] II. SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDITS (ADVANC E BY PURCHASER) - ASSESSMENT YEAR 2001-02 - ONE VHPL ALL EGEDLY ADVANCED ASSESSEE CASH AGAINST BOOKING OF FLAT - ASSESSEE PR OVED THAT AMOUNT SO RECEIVED WAS DULY RECORDED IN BOOKS OF ACCOUNT OF V HPL - IDENTITY OF VHPL WAS ALSO ESTABLISHED BY FILING ITS IT RETURNS, BALA NCE SHEETS, ETC. - WHETHER NO ADDITION COULD BE MADE IN HANDS OF ASSESSEE - HE LD, YES [PARA 59] [IN FAVOUR OF ASSESSEE] III. SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDITS (ADVANCE BY PURCHASER) - PURCHASER OF CAR ADVANCED CERTAIN SUM TO ASSESSEE - IDENTITY OF PURCHASER AND GENUINENESS OF TRANSACT ION WAS ESTABLISHED - WHETHER TRANSACTION COULD NOT BE TREATED AS BOGUS A ND IMPUGNED AMOUNT COULD NOT BE TREATED AS AN UNDISCLOSED INCOME OF AS SESSEE - HELD, YES [PARA 64] [IN FAVOUR OF ASSESSEE]' IN THE CASE OF GANGESHWARI METAL (P)LTD (SUPRA), TH E HON'BLE DELHI HIGH COURT HAS HELD AS UNDER : ' THERE ARE TWO TYPES OF CASES, ONE IN WHICH THE AS SESSING OFFICER CARRIES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER 'SITS BACK WITH FOLDED HANDS' TILL THE ASSE SSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COM ES FORWARD TO MERELY REJECT THE SAME ON THE PRESUMPTIONS. THE PRESENT CA SE FALLS IN THE LATTER CATEGORY. HERE THE ASSESSING OFFICER, AFTER NOTING THE FACTS, MERELY REJECTED THE SAME. [PARA 9] THERE WAS A CLEAR LACK OF INQU IRY ON THE PART OF THE ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISHED A LL THE RELEVANT MATERIAL. IN SUCH AN EVENTUALITY NO ADDITION CAN BE MADE UNDE R SECTION 68 . [PARA 10] IN VIEW OF ABOVE, IMPUGNED ORDER PASSED BY THE TRIB UNAL WAS TO BE UPHELD. [PARA 11] ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 11 IN THE CASE OF VARINDER RAWLEY (SUPRA), THE HON'BLE PUNJAB AND HARIYANA HIGH COURT HAS HELD AS UNDER : 'WHERE THE ASSESSEE SHOWS THAT THE ENTRIES REGARDIN G CREDIT IN A THIRD PARTY'S ACCOUNT WERE IN FACT RECEIVED FROM THIRD PA RTY AND ARE GENUINE, HE DISCHARGES THE ONUS. IN THAT CASE, THE SUM CANNOT B E CHARGED AS THE ASSESSEE'S INCOME IN THE ABSENCE OF ANY MATERIAL TO INDICATE THAT IT BELONGS TO THE ASSESSEE', PARTICULARLY IN A CASE WHERE NO S UMMONS U/S 131 IS ISSUED AGAINST THE THIRD PARTY' IN THE CASE OF SACHITEL COMMUNICATIONS P.LTD (SUPRA ), THE HON'BLE GUJARA HIGH COURT HAS HELD AS UNDER : 'II. SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDIT (LOANS) - ASSESSMENT YEAR 2006-07 - COMMISSIONER (APPEALS) AN D TRIBUNAL CONCURRENTLY FOUND THAT ASSESSEE PROVED IDENTITY OF CREDITOR AND CAPACITY TO PAY AND THAT PAYMENT WAS MADE THROUGH BANKING CHANN EL - WHETHER NO ADDITION COULD BE MADE ON ACCOUNT OF UNSECURED LOAN - HELD, YES [PARA 3] [IN FAVOUR OF ASSESSEE]' IN THE CASE OF PATEL RAMNIKLAL HIRJI, THE HON'BLE G UJRAT HIGH COURT HAS HELD AS UNDER: 'THE ADDITION ON THE BASIS THAT FOUR DEPOSITORS FUR NISHED REQUISITE DETAILS TO PROVE THEIR IDENTITY AND SHOWED THE PLACE OF THEIR RESIDENCE. THE LOAN WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. COPIES OF B ANK STATEMENTS WAS GIVEN AND THE DETAILS OF PAN WERE AVAILABLE. ALL TH E MATERIALS DULY PROVED THE GENUINENESS OF THE TRANSACTION OF LOAN AS WELL AS CREDITWORTHINESS OF THE DEPOSITORS. HENCE, THE ADDITION U/S. 68' IN THE CASE OF JAIKUMAR BAKLIWAL (SUPRA), THE HON'B LE RAJASTHAN HIGH COURT HAS HELD AS UNDER: 'THREE THINGS ARE REQUIRED TO BE PROVED BY RECIPIEN T OF MONEY I.E. (1) IDENTITY OF THE CREDITOR (2) CAPACITY OF THE CREDIT OR TO ADVANCE MONEY AND (3) GENUINENESS OF THE TRANSACTION. HELD, DISMISSING TH E APPEAL, THAT ALL CASH CREDITORS WERE ASSESSED TO INCOME-TAX AND THEY PROV ED A CONFIRMATION AS WELL AS THEIR PERMANENT ACCOUNT NUMBER. THEY HAD TH EIR OWN RESPECTIVE BANK ACCOUNTS WHICH THEY HAD BEEN OPERATING AND IT WAS NOT THE CLAIM OF THE ASSESSING OFFICER THAT THE ASSESSEE WAS OPERATI NG THEIR BANK ACCOUNTS. MOST OF THE CASH CREDITORSAPPEARED BEFORE THE ASSES SING OFFICER AND THEIR STATEMENTS UNDER SECTION 131 OF THE INCOME-TAX ACT, 1961, WERE ALSO RECORDED ON OATH. THERE WAS NO CLINCHING EVIDENCE N OR HAD THE ASSESSING OFFICER BEEN ABLE TO PROVE THAT THE MONEY ACTUALLY BELONGED TO NONE BUT THE ASSESSEE. THE ADDITION OF RS.17,27,2501- UNDER SECTION 68 WAS NOT JUSTIFIED.' IN THE CASE OF NEMI CHAND KOTHARI (SUPRA), THE HON' BLE HIGH COURT HAS HELD AS UNDER: ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 12 '16. A PERSON MAY HAVE FUNDS FROM ANY SOURCE AND AN ASSESSEE, ON SUCH INFORMATION RECEIVED, MAY TAKE LOAN FROM SUCH A PER SON. IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT WHETHER THE SO URCE OR SOURCES FROM WHICH THE CREDITOR HAD AGREED TO ADVANCE THE AMOUNT S WERE GENUINE OR NOT. IF A CREDITOR HAS, BY ANY UNDISCLOSED SOURCE, A PAR TICULAR AMOUNT OF MONEY IN THE BANK, THERE IS NO LIMITATION UNDER THE LAW ON T HE PART OF THE AND OTHER THREE APPEALS ASSESSEE TO OBTAIN SUCH AMOUNT OF MON EY OR PART THEREOF FROM THE CREDITOR, BY WAY OF CHEQUE IN THE FORM OF LOAN AND IN SUCH A CASE, IF THE CREDITOR FAILS TO SATISFY AS TO HOW HE HAD ACTU ALLY RECEIVED THE SAID AMOUNT AND HAPPENED TO KEEP THE SAME IN THE BANK, T HE SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE FROM UN DISCLOSED SOURCE. IN OTHER WORDS, THE GENUINENESS AS WELL AS THE CREDITW ORTHINESS OF A CREDITOR HAVE TO BE ADJUDGED VIS-A-VIS THE TRASNACTIONS, WHI CH HE HAS WITH THE ASSESSEE. THE REASON WHY WE HAVE FORMED THE OPINION THAT IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT THE ACTUAL SOU RCE OR SOURCES FROM WHERE THE CREDITOR HAS ACCUMULATED THE AMOUNT, WHICH HE A DVANCES, AS LOAN, TO THE ASSESSEE IS THAT SO FAR AS AN ASSESSEE IS CONCE RNED, HE HAS TO PROVE THE GENUINENSS OF THE TRANSACTION AND THE CREDITWORTHIN ESS OF THE CREDITOR VISA- VIS THE TRANSACTIONS, WHICH HAD TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR AND NOT BETWEEN THE CREDITOR AND THE SUB-C REDITORS, FOR, IT IS NOT EVEN REQUIRED UNDER THE LAW FOR THE ASSESSEE TO TRY TO FIND OUT AS TO WHAT SOURCE OR SOURCES FROM WHERE THE CREDITOR HAD RECEI VED THE AMOUNT, HIS SPECIAL KNOWLEDGE UNDER SECTION 106 OF THE EVIDENCE ACT MAY VERY WELL REMAIN CONFINED ONLY TO THE TRANSCTIONS, WHICH HE H AD WITH THE CREDITOR AND HE MAY NOT KNOW WHAT TRANSACTION(S) HAD TAKEN PLACE BETWEEN HIS CREDITOR AND THE SUB-CREDITOR. NO SUCH ADDITIONAL BURDEN CAN BE PLACED ON AN ASSESSEE, WHICH IS NOT ENVISAGED BY SECTION 106 OF THE THE EVIDENCE ACT. THE REVENUE/ASSESSING OFFICER, HOWEVER, REMAINS FREE TO SHOW THAT THE AMOUNT, WHICH HAS COME TO THE HANDS OF THE ASSESSEE BY WAY OF LOAN FROM THE CREDITOR ACTUALLY BELONGED TO THE ASSESSEE, BUT THI S CONCLUSION CANNOT BE REACHED BY MERE FAILURE ON THE PART OF THE SUB-CRED ITOR TO SHOW HIS CREDITWORTHINESS AND/OR THE GENUINENESS OF THE TRAN SACTION BETWEEN THE CREDITOR AND SUB-CREDITOR, FOR, THE CREDITOR MAY RE CEIVE ANY AMOUNT FROM SOURCES KNOWN TO THE CREDITOR ONLY AND IF HE FAILS TO SHOW HOW HE HAS RECEIVED THE AMOUNT, IN QUESTION, OR IF HE FAILS TO SHOW THE CREDITWORTHINESS OF HIS SUB-CREDITOR, SUCH AN AMOUNT MAY BE TREATED AS THE INCOME FROM UNDISCLOSED SOURCE OF THE CREDITOR OR OF THE SUB-CR EDITOR, AS THE CASE MAY BE, BUT SUCH FAILURE, ON THE PART OF THE CREDITOR C ANNOT, IN THE ABSENCE OF ANY CLINCHING EVIDENCE, BE TREATED AS THE INCOME OF THE ASSESSEE DERIVED FROM UNDISCLOSED SOURCE. :HELD (I) THAT THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF THE CREDITORS. THE ASSESSEE HAD ALSO SHOWN, IN A CCORDANCE WITH THE BURDEN, WHICH RESTED ON HIM, UNDER SECTION 106 OF THE EVIDENCE ACT, THAT THE SAID AMOUNTS HAD BEEN RECEIVED BY HIM BY WAY OF CHEQUES FROM THE CREDITORS WHICH WAS NOT IN DISPUTE. ONCE THE ASSESS EE HAD ESTABLISHED THESE, THE ASSESSEE MUST BE TAKEN TO HAVE PROVED TH AT THE CREDITOR HAD THE CREDITWORTHINESS TO ADVANCE THE LOANS. THEREAFTER, THE BURDEN HAD SHIFTED AND OTHER THREE APPEALS TO THE ASSESSING OFFICE TO PROVE THE CONTRARY. THE FAILURE ON THE PART OF THE CREDITORS TO SHOW THAT T HEIR SUB-CREDITORS HAD CREDITWORTHINESS TO ADVANCE THE SAID LOAN AMOUNTS T O THE ASSESSEE, COULD ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 13 NOT, UNDER THE LAW BE TREATED AS THE INCOME BY THE APPELLANT FROM UNDISCLOSED SOURCES MERELY ON THE FAILURE OF THE SU B-CREDITORS TO PROVE THEIR CREDITWORTHINESS FROM UNDISCLOSED SOURCES OF THE AS SESSEE HIMSELF, WHEN THERE WAS NEITHER DIRECT NOR CIRCUMSTANTIAL EVIDENC E ON RECORD THAT THE SAID LOAN AMOUNTS ACTUALLY BELONGED TO, OR WHERE OWNED B Y, THE ASSESSEE. THE ASSESSING OFFICER FAILED TO SHOW THAT THE AMOUNTS, WHICH HAD COME TO THE HANDS OF THE CREDITORS FROM THE HANDS OF THE SUB-CR EDITORS, HAD ACTUALLY BEEN RECEIVED BY THE SUB-CREDITORS FROM THE ASSESSE E. THEREFORE, THE ASSESSING OFFICER COULD NOT HAVE TREATED THE SAID A MOUNTS AS INCOME DERIVED BY THE ASSESSEE FROM UNDISCLOSED SOURCES.' (II) THAT NO ASSESSMENT COULD BE MADE CONTRARY TO THE PROVISIONS OF LAW. IN THE INSTANT CASE, THE VERY BASIS FOR MAKING THE ASSESSMENT WAS UNDER CHAL LENGE. IF THE ASSESSMENT WAS BASED ON A COMPLETELY ERRONEOUS VIEW OF LAW, SUCH FINDINGS COULD NOT BE REGARDED AS MERE FINDINGS OF FACTS, BU T MUST BE TREATED AS SUBSTANTIAL QUESTIONS OF LAW. THEREFORE, THE QUESTI ON RAISED IN THE APPEAL WAS A SUBSTANTIAL QUESTION OF LAW BECAUSE IT WENT T O THE VERY ROOT OF THE ASSESSMENT MADE. THE AFORESAID VIEW HAS BEEN ALSO C ONSIDERED AND FORTIFIED AND FAVOURABLY REFERRED TO BY THE ALLAHABAD HIGH CO URT IN THE CASE OF C.I.T. V. SHALIMAR BUILDWELL PVT. LTD . (2014) 220 TAXMAN 138 (ALL.) IN THE CASE OF LALPURIA CONSTRUCTION P. LTD (SUPRA) THE HON. RAJASTHAN HIGH COURT HAS HELD T 'THAT IN THE CASE OF ACCOMMODATION ENTRY - WITHOUT GIVING AN OPPORTUNITY OF CROSS EXAMINATION MERELY ON THE BASIS OF ORAL ST ATEMENT ADDITIONS CANNOT BE MADE U/S. 68. IT IS FURTHER HELD THAT: 'THE ORAL STATEMENT OF A THIRD PARTY RECORDED BY SEARCH AUTHORITIES WHICH WAS NEVER PLAC ED TO BE CONFRONTED BY ASSESSEE AND NO DOCUMENTARY EVIDENCE WAS SUPPLIED T O ASSESSEE, COULD NOT BE CONSIDERED IN MAKING ADDITION U/S. 68 ON ACCOUNT OF ALLEGED ACCOMMODATION ENTRIES. ' BESIDES, IT IS FURTHER SUB MITTED THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF MLS. RUSHABH ENTER PRISE V. ACIT HAD OCCASION TO GO THROUGH THE IDENTICAL ISSUE AND TWO OF THE CREDITORS IN THAT CASE, I.E. MLS. LAXMI TRADING CO. AND MLS. ROSE IMP EX WERE ALSO PARTIES IN THE CASE OF THE ASSESSEE. IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA), T HE HON'BLE SUPREME HELD AS UNDER :. 'NOT ALLOWING THE ASSESSEE TO CROSS EXARRUNE THE WI TNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS F LAW WHICH MAKES THE ORDER NULLIFY IN AS MUCH AS IT AMOUNTED TO VIOLATIO N OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED.' THE ORDER WAS VACATED. THE AFORESAID VIEW WAS EARLI ER CONSIDERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. ASHISH INTERNATIONAL . IN OUR CONSIDERED VIEW THE FACTS OF THE ASSESSEE CA SE ARE SQUARELY COVERED BY THE RATIO LAID DOWN IN THE DECISIONS REFERRED TO ABOVE. WE ,THEREFORE , IN VIEW OF OUR ITA NO.7048/M/2016 & ITA NO.7101/M/2016 SHRI JITENDRA M. KITAVAT 14 OBSERVATIONS AND THE RATIO LAID DOWN BY THE VARIOU S DECISIONS ARE INCLINED TO SET ASIDE THE ORDER OF CIT(A) AND DIRECT HE AO TO DELET E THE ADDITIONS OF RS. 1,29,04,231/-. SINCE WE HAVE DECIDED THE ISSUE OF A DDITION U/S 68 IN FAVOUR OF THE ASSESSEE, THE ADDITION AS SUSTAINED BY THE LD CIT(A ) U/S 69C OF THE ACT OF RS. 3,45,000/- IS ALSO ORDERED TO BE DELETED. IN RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED.' WE FIND THAT IN THE CASES RELIED UPON BY THE ASSESS EE I.E. SANGHAVI REALITY PVT. LTD.(SUPRA), VIKRAM MUKTILAL VORA(SUPRA),GUJARAT CO NSTRUCTION(SUPRA),THE ORDER OF THE RELIANCE CORPORA - TION(SUPRA) HAS BEEN FOLLOWE D. AS THE FACT OF THE CASE UNDER CONSIDERATION ARE SIMILAR TO ABOVE REFERRED CASES, SO, FOLLOWING THOSE ORDERS, WE DECIDE SEVENTH GROUND OF APPEAL, RAISED BY THE ASSE SSEE, IN ITS FAVOUR. 14. WE, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF CO- ORDINATE BENCH OF THE TRIBUNAL DISMISS THE GROUND R AISED BY THE REVENUE. 15. THE OTHER GROUNDS RAISED BY THE REVENUE ARE GEN ERAL IN NATURE AND NEEDS NO ADJUDICATION. 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.02.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 15.02.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.