M/s Poddar Rubber Industries, Guwahati V. Deputy Commissioner of Income Tax, Circle-3, Guwahati

ITA 87/GTY/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8347 (ITAT-GUWAHATI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 20-05-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Transactions in derivatives; Corroborative evidences; Accommodation entries
• Section: 133A

Judgement Text

1 ITA NO. 87/GAU/2020 PODDAR RUBBER INDUSTRIES, AY 2014-15 IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI BENCH, VIRTUAL HEARING AT KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 87/GAU/2020 ASSESSMENT YEAR:2014-15 M/S. PODDAR RUBBER INDUSTRIES (PAN: AAIFP1157D) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-3, GUWAHATI APPELLANT RESPONDENT DATE OF HEARING 13.01.2021 DATE OF PRONOUNCEMENT 15.01.2021 FOR THE APPELLANT SHRI AKKAL DUDHEWALA, AR FOR THE RESPONDENT SHRI ARUP CHATTERJEE, ADDL. CIT, SR. DR ORDER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), GUWAHATI-2, DATED 31-01-2020 FOR ASSESSMENT YEAR 2014-15. 2. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSEE IS AGAINST THE ACTION OF THE LD. CIT(A) CONFIRMING THE ADDITION OF RS.29,65,952/- MA DE BY THE AO ON ACCOUNT OF LOSS CLAIMED BY THE ASSESSEE IN FUTURE & OPTIONS (IN SHO RT F&O). 3. BRIEF FACTS OF THE CASE AS NOTED BY THE AO ARE T HAT THE ASSESSEE HAS DEBITED LOSS ON ACCOUNT OF TRANSACTION IN STOCK EXCHANGE OF F&O TO THE TUNE OF RS.29,65,952/-. ACCORDING TO THE AO, FROM THE DETAILS FURNISHED BY THE ASSESS EE IT COULD BE SEEN THAT THE F&O TRANSACTIONS WERE CARRIED OUT BY THE ASSESSEE FROM END OF JANUARY, 2014 I.E. AT THE NEAR END OF THE FINANCIAL YEAR. ACCORDING TO THE AO, THE TR ANSACTION TO THE TUNE OF RS.39,91,078/- WAS MADE THROUGH ONE BROKER NAMELY M/S. KAYAN SECUR ITIES PVT. LTD. (IN SHORT M/S. KSPL) AND ACCORDING TO THE AO INFORMATION WAS AVAILABLE W ITH HIM THAT ONE OF THE DIRECTORS SHRI HARSHVARDHAN KAYAN OF M/S. KSPL THROUGH WHICH COMPA NY THE ASSESSEE HAS TRANSACTED THE F&O HAS ADMITTED IN HIS STATEMENT RECORDED U/S. 133 A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 28.01.201 5 THAT THIS COMPANY M/S. KSPL HAS INDULGED IN PROVIDING BOGUS LONG TERM CAPITAL GAIN (IN SHORT LTCG). THEREAFTER, IN THE 2 ITA NO. 87/GAU/2020 PODDAR RUBBER INDUSTRIES, AY 2014-15 ASSESSMENT ORDER HE REPRODUCED CERTAIN PORTIONS OF THE STATEMENT OF SHRI HARSHVARDHAN KAYAN AS UNDER: Q.9. PLEASE EXPLAIN THE BUSINESS ACTIVITY OF THE ABOVE MENTIONED JAMAKHARCHEE COMPANIES. ANS. THE COMPANIES ARE ENGAGED IN PROVIDING ACCOMM ODATION ENTRY IN DIFFERENT FORMS AS BOGUS LONG TERM CAPITAL GAIN OR LOSS. .. Q.14. PLEASE EXPLAIN THE DETAILS OF BUSINESS ACTIV ITY DONE BY M/S. KAYAN SECURITIES PVT. LTD., M/S. ASHOK KUMAR KAYAN. ANS. THE MAIN BUSINESS ACTIVITY IS THAT OF BUYING A ND SELLING OF SHARE AND SECURITIES COMMISSIONED EARNED BY THE THROUGH VARIOUS JAMAKHA RCHEE COMPANIES REGISTERED WITH US AS CLIENT 4. THEREAFTER ACCORDING TO THE AO FROM THE AFORESAI D ADMISSION OF SHRI HARSHVARDHAN KAYAN IT IS CLEAR THAT M/S. KSPL IS ENGAGED IN PROV IDING ACCOMMODATION ENTRIES AND SINCE THE ASSESSEE HAS ALSO TRANSACTED WITH THIS BROKER A T THE FAG END OF THE FINANCIAL YEAR WHICH RESULTED IN LOSS, SO, THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THIS LOSS CLAIMED BY ASSESSEE SHOULD NOT BE TREATED AS BOGUS. THEREAFTE R, IN THE ASSESSMENT ORDER HE ALSO REFERRED TO THE STATEMENT OF SHRI MUKESH AGARWAL RECORDED U/ S. 133A OF THE ACT WHO WAS LOOKING AFTER THE SHARE TRADING ACTIVITY AND ACCOUNTING OF M/S. KSPL. ACCORDING TO THE AO, SHRI MUKESH AGARWAL HAS ALSO ADMITTED THAT THE MAIN BUSI NESS OF M/S. KSPL WAS BUYING AND SELLING OF SHARES AND SECURITIES FOR COMMISSION TH ROUGH JAMA-KHARCHEE COMPANIES REGISTERED WITH THEM AS CLIENT AND HE REPRODUCED C ERTAIN PORTION OF THE STATEMENT OF SHRI MUKESH AGARWAL AS UNDER: Q.7. PLEASE EXPLAIN THE BUSINESS ACTIVITY OF M/S. ASHOK KUMAR KAYAN AND M/S. KAYAN SECURITIES PVT. LTD. ANS. THE MAIN BUSINESS ACTIVITY IS THAT OF BUYING A ND SELLING OF SHARES AND SECURITIES COMMISSION EARNED BY THE SAME THROUGH VARIOUS JAMA KHARCHI COMPANIES REGISTERED WITH US AS CLIENT. Q.9. IT IS SEEN THAT THE CONTACT NO. OF ALL SCRIPT OPERATORS HAVE BEEN STORED IN YOUR MOBILE, PLEASE STATE WHAT SORT OF INSTRUCTION RECEIVED FROM THE SCRIP CONTROLLER/OPERATOR. ANS. THE DETAILS OF SCRIP TO BE TRADED, PRICE ON TH E DAY OF TRADE, NAME OF THE CLIENTS, AMOUNT OF SHARE TO BE TRADED, MODE OF PAYMENT ETC. ARE RECEIV ED ON CALL FROM THE SCRIP CONTROLLER/OPERATOR. 5. ACCORDING TO THE AO, THE STATEMENT OF SHRI HAR SHAVARDHAN KAYAN, DIRECTOR OF M/S KSPL AND SHRI MUKESH AGARWAL WAS SHOWN TO ASSESSEE AND THEREAFTER THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE SAID TRAN SACTION MADE BY THE ASSESSEE IN F&O WHICH RESULTED IN LOSS TO THE TUNE OF RS.29,65, 952/- BE DISALLOWED. ACCORDING 3 ITA NO. 87/GAU/2020 PODDAR RUBBER INDUSTRIES, AY 2014-15 TO THE AO, NO SATISFACTORY EXPLANATION WAS GIVEN BY THE ASSESSEE OTHER THAN THE SUBMISSION THAT THE SCRIP/DERIVATIVES WERE TRANSACT ED THROUGH RECOGNIZED STOCK EXCHANGE WITH CTT PAID AND TRANSACTIONS WERE DONE T HROUGH ON-LINE WITH PAYMENTS AND RECEIPT MADE THROUGH BANKING CHANNEL. THIS REP LY OF ASSESSEE WAS REPELLED BY THE AO BY OPINING THAT BOGUS TRANSACTIONS LIKE LTCG /LTCL WERE ALSO CARRIED OUT METICULOUSLY THROUGH STOCK EXCHANGE ONLINE AND SO T HE ASSESSEES CONTENTION THAT THE SCRIP/DERIVATIVES WERE TRANSACTED THROUGH RECOGNIZE D STOCK EXCHANGE WITH CTT PAID AND TRANSACTIONS WERE DONE THROUGH ON-LINE WITH PAY MENTS AND RECEIPT MADE THROUGH BANKING CHANNEL CANNOT COME TO THE AID OF THE ASSESSEE AND , THERE FORE, HE TREATED THE LOSS FROM F&O AS NOTHING BUT BOGUS AND ADDED BACK R S.29,65,952/-AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE SAME. AGGRIEVED, THE ASSESSEE IS BEFORE THIS TRIBUNAL. 6. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. I NOTE THAT THE ASSESSEE IS INTO RUBBER MANU FACTURING/TYRE RELATED BUSINESS. ASSESSEE HAD SHOWN TOTAL INCOME OF RS.16,50,480/-. DURING THE SCRUTINY PROCEEDING, THE AO NOTED THAT THE ASSESSEE HAD DEBITED LOSS ON ACCOUNT OF F& O TRADING TO THE TUNE OF RS.29,65,952/-. FROM THE DETAILS FILED IN RESPECT OF THIS CLAIM OF LOSS, THE AO NOTED THAT THE ASSESSEE HAD TRANSACTED F&O BUSINESS TO THE TUNE OF RS.39,91,078 /- THROUGH ONE BROKER M/S. KSPL AND ACCORDING TO AO, ONE OF THE DIRECTORS OF M/S. KSPL SHRI HARSHAVARDHAN KAYAN HAS ADMITTED DURING SURVEY U/S. 133A OF THE ACT ON 28.0 1.2015 THAT THIS BROKING COMPANY M/S. KSPL HAS INDULGED IN PROVIDING BOGUS LTCG. THE AO AFTER REPRODUCING CERTAIN PORTIONS OF SHRI HARSHVARDHAN KAYAN AS WELL AS THE STATEMENT OF SHRI MUKESH AGARWAL, THE DIRECTOR AND ACCOUNTANT OF M/S. KSPL (SUPRA) RESPECTIVELY, HAD TREATED THE CLAIM OF THE LOSS ON F&O TRANSACTION OF ASSESSEE AS BOGUS AND MADE THE ADDITION. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE SAME BY NOTING THAT ASSESSEE COUL D NOT PROVE ANY PAST OR FUTURE RECORD OF SUCH TRANSACTIONS; AND THAT THERE IS NO PROOF THAT ASSESSEE WAS AWARE OF THE SHARE TRADING OR MECHANISM PERTAINING TO THE TRADING OF F&O; AND FUR THER OBSERVED THAT THE ASSESSEE HAS ENTERED INTO THIS TRANSACTION AT THE LATER PART OF THE YEAR IN ORDER TO MITIGATE THE TAX LIABILITY AND SO IT WAS INTENDED TO DEFRAUD THE REVENUE. THU S, ACCORDING TO THE LD. CIT(A), THE ASSESSEES CASE FALLS INTO THE REALM OF SUSPICION AND DUBIOUS TRANSACTION AND, THEREFORE, HE CONFIRMED THE ORDER OF THE AO. 4 ITA NO. 87/GAU/2020 PODDAR RUBBER INDUSTRIES, AY 2014-15 7. ASSAILING THE ACTION OF THE LD. CIT(A) AS WELL A S THAT OF THE AO, IT WAS POINTED OUT BY THE LD. AR SHRI AKKAL DUDHEWALA THAT THE ASSESSE E IS A PARTNERSHIP FIRM DEALING IN MANUFACTURING OF TYRE RETREADING ETC; AND IT CLAIME D LOSS ON F&O TRANSACTION TO THE TUNE OF RS.29,65,952/- WHICH THE ASSESSEE HAS TRANSACTED T HROUGH RECOGNIZED STOCK EXCHANGE FOR WHICH CTT WAS DULY REMITTED AND TRANSACTIONS WERE CARRIED OUT ONLINE ON ELECTRONIC PLATFORM OF RECOGNIZED STOCK EXCHANGE OF BSE & NSE AND THE PAYMENTS AND RECEIPTS WERE MADE THROUGH BANKING CHANNEL. AND DESPITE THE ASSE SSEE PROVIDING SUPPORTING EVIDENCE OF THE TRANSACTIONS, THE AO AS WELL AS THE FIRST APPE LLATE AUTHORITY WITHOUT FINDING ANY FAULT IN THE DOCUMENTS PRODUCED HAS SIMPLY DISCARDED THE SA ME BY RELYING ON THE PURPORTED STATEMENT OF SHRI HARSHAVARDHAN KAYAN (DIRECTOR OF M/S. KSPL) THE BROKER AS WELL AS THAT OF SHRI MUKESH AGARWAL THROUGH WHOM THE ASSESSEE HA S TRANSACTED THE F&O. ACCORDING TO THE LD. A.R, THE AO FAILED TO EVEN GIVE THE ASSESSE E THE ENTIRE STATEMENT OF SHRI HARSHAVARDHAN KAYAN AND SHRI MUKESH AGARWAL; AND IT WAS POINTED OUT BY HIM THAT ON A PERUSAL OF THESE STATEMENT (SUPRA) IT CAN BE DISCER NED THAT THE AO HAS ONLY EXTRACTED SELECTED FEW LINES/WORDS FROM THE STATEMENT AND MOR EOVER EVEN THE SO CALLED ADMISSION BY SHRI HARSHAVARDHAN KAYAN & SHRI MUKESH AGARWAL WAS ONLY REGARDING CERTAIN SHARE TRANSACTIONS WHICH GAVE RISE TO LTCG/STCL AND NOTHI NG TO DO WITH THE TRANSACTIONS REGARDING F&O AND THERE IS NO WHISPER IN THESE STAT EMENTS WHICH CASTS ANY WRONG DOING ON THE PART OF ASSESSEE. THEREFORE, ACCORDING TO LD. A.R, THE STATEMENTS OF BOTH THESE PERSONS ARE NOT INCRIMINATING AGAINST THE ASSESSEE IN ANY M ANNER. FURTHER, ACCORDING TO LD. A.R, STATEMENT OF BOTH THESE PERSONS CANNOT BE RELIED UP ON FOR VARIOUS OTHER LEGAL INFIRMITIES LIKE THE STATEMENTS WERE RECORDED DURING SURVEY AND IN V IOLATION OF NATURAL JUSTICE. ACCORDING TO THE LD. AR, THE AO HIMSELF ADMITS IN THE ASSESSMENT ORDER THAT THE STATEMENTS OF SHRI HARSHAVARDHAN KAYAN AS WELL AS SHRI MUKESH WERE REC ORDED U/S. 133A OF THE ACT (SURVEY) AND THE HONBLE SUPREME COURT HAS HELD IN CIT VS. S . KADER KHAN & SON (2013) 352 ITR 480 (SC) THAT SURVEY STATEMENTS ARE WEAK EVIDENCE A ND CANNOT BE THE SOLE BASIS ON WHICH ADVERSE FINDINGS CAN BE DRAWN AGAINST THE ASSESSEE. FURTHER ACCORDING TO THE ASSESSEE, THE STATEMENT OF SHRI HARSHAVARDHAN KAYAN AS WELL AS TH AT OF SHRI MUKESH AGARWAL CANNOT BE RELIED UPON BECAUSE THE ASSESSEE WAS NOT GIVEN AN O PPORTUNITY TO CROSS EXAMINE THESE TWO PERSONS, AND SINCE THEIR STATEMENTS HAVE NOT BEEN T ESTED ON THE TOUCH-STONE OF CROSS- EXAMINATION, THE VERACITY OF THEIR ALLEGATION/STATE MENTS AGAINST THE ASSESSEE IF ANY CANNOT BE ACTED UPON. FOR THAT PROPOSITION HE RELIED ON THE O RDER OF THE HONBLE SUPREME COURT IN 5 ITA NO. 87/GAU/2020 PODDAR RUBBER INDUSTRIES, AY 2014-15 M/S. ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER CE NTRAL EXCISE, CIVIL APPEAL NO. 4228 OF 2006. THUS ACCORDING TO LD AR, LOOKING FROM ANY ANGLE, THE STATEMENT OF THESE TWO PERSONS CANNOT BE RELIED UPON TO DRAW ADVERSE FINDI NG AGAINST ASSESSEES THE CLAIM OF LOSS IN F&O AND THEREFORE HE PLEADED FOR ALLOWING THIS CLAI M. PER CONTRA, THE LD. DR , SHRI ARUP CHATTERJEE VEHEMENTLY OPPOSED THE CONTENTIONS OF LD . AR AND SUBMITTED THAT ASSESSEE IN ORDER TO REDUCE THE TAX LIABILITY HAD VENTURED INTO THIS F&O TRANSACTIONS FOR THE FIRST TIME AND THAT TOO AT THE FAG END OF THE AY; AND WITHOUT ANY EXPERIENCE IN THIS FIELD GOES ON TO SHOW THAT ASSESSEE HAD COLLUDED WITH THE BROKER WHO HAD BAD TRACK RECORD IN FACILITATING BOGUS LTCG AND SO, THE AO & LD. CIT(A) TOOK A PLAU SIBLE VIEW DISALLOWING THE CLAIM OF LOSS WHICH NEED NOT BE INTERFERED. 8. IT IS NOTED THAT THE ASSESSEE HAS TRADED IN F&O THROUGH RECOGNIZED STOCK EXCHANGES OF BSE & NSE WHICH ADMITTEDLY HAPPENS THROUGH ELECT RONIC PLATFORM; AND WHEN THE TRANSACTIONS ARE FINALIZED THE PAYMENTS ARE MADE TH ROUGH BANKING CHANNEL/ONLINE. ALL THE SUPPORTING DOCUMENTS TO PROVE THE F&O TRANSACTIONS WERE PRODUCED BEFORE THE LOWER AUTHORITIES WHICH HAS BEEN DISCARDED BY THEM WITHOU T ASSIGNING ANY REASON. OTHER THAN THE SUSPICION WHICH HAS BEEN RAISED BY THE AO ON THE ST RENGTH OF THE PURPORTED STATEMENT OF SHRI HARSHAVARDHAN KAYAN (DIRECTOR OF M/S. KSPL) AS WELL AS THAT OF SHRI MUKESH AGARWAL, THE ACCOUNTANT OF M/S. KSPL THAT TOO OF SELECTED EX TRACTS, (SUPRA) THERE ARE NO OTHER MATERIAL AGAINST THE ASSESSEE. ON A CAREFUL READING OF THE STATEMENT OF SHRI HARSHAVARDHAN KAYAN AND SHRI MUKESH AGARWAL WHICH HAS BEEN RELIED UPON BY THE AO/LD. CIT(A) TO DISALLOW THE CLAIM, IT IS DISCERNED THAT THEY HAVE NOT MADE ANY ALLEGATION AGAINST THE ASSESSEES INVOLVEMENT IN ANY BOGUS TRANSACTIONS. IT IS NOTED THAT THESE STATEMENTS DOES NOT REFER ANYTHING IN RESPECT OF ANY BOGUS TRANSACTION IN F&O . THEIR STATEMENT ONLY SAYS ABOUT THE CERTAIN JAMAKHARCHI COMPANIES WHICH WERE THEIR CLIE NTS FACILITATING BOGUS LTCG/LTCL. OTHER THAN THAT THERE IS NO OTHER MATERIAL. FROM T HEIR STATEMENTS IT IS NOT DISCERNIBLE WHICH ARE THESE JAMAKHARCHI COMPANIES. FURTHER, THE AO FA ILED TO BRING OUT ANY NEXUS OF ASSESSEES TRANSACTIONS WITH THE SO CALLED JAMAKHAR CHI COMPANIES REFERRED TO BY THESE TWO PERSONS. THE AO FAILED TO EXPOSE ANY DEALING BY THE ASSESSEE COMPANY THROUGH ITS BROKER M/S KSPL WITH THESE SO CALLED JAMAKHARCHI COMPANIES REFERRED TO BY THESE TWO PERSONS. THE AO HAS NEITHER SUMMONED THESE PERSONS (SHRI HAR SHVARDHAN KAYAN AND SHRI MUKESH AGARWAL) AND HIMSELF QUESTIONED THEM. IT IS NOTED T HAT WITHOUT BOTHERING TO EVEN 6 ITA NO. 87/GAU/2020 PODDAR RUBBER INDUSTRIES, AY 2014-15 SUMMONING THEM AND QUESTIONING THEM, THE AO BY EXTR ACTING SELECTIVELY CERTAIN PORTIONS OF THEIR STATEMENT [ WHICH DOES NOT EVEN SAY ANYTHING ABOUT F&O TRANSACT ION] , HAD DRAWN ADVERSE FINDING AGAINST THE ASSESSEE. IN THIS BACKG ROUND, THE QUESTION IS WHETHER THIS STATEMENT OF SHRI HARSHAVARDHAN KAYAN AS WELL AS TH AT OF SHRI MUKESH AGARWAL CAN BE A BASIS TO DRAW ADVERSE INFERENCE/FINDING AGAINST THE ASSESSEE IN RESPECT OF ITS CLAIM OF LOSS SUFFERED IN F&O TRANSACTIONS. ACCORDING TO ME, THE ASSESSEE HAD DISCHARGED ITS PRIMARY ONUS IN PROVING THE TRANSACTION ON F&O BY PRODUCING THE CORROBORATING EVIDENCE BEFORE THE AO/LD. CIT(A). BOTH THE AUTHORITIES COULD NOT FIND ANY INFIRMITY ON THESE DOCUMENTS. HOWEVER, THE AO DISCARDED THE PRIMARY DOCUMENTS PRO DUCED BY THE ASSESSEE TO ESTABLISH THE VERACITY OF THE TRANSACTION IN F&O, BY BRINGING IN THE STATEMENT OF DIRECTOR AND ACCOUNTANT OF M/S KSPL WHICH WAS THE BROKER OF THE ASSESSEE IN THE TRANSACTION OF F&O. THE STATEMENT OF BOTH SHRI HARSHVARDHAN KAYAN AND S HRI MUKESH AGARWAL EXTRACTED BY THE AO NEITHER BRING OUT ANY WRONG DOINGS ON THE PART O F ASSESSEE NOR SAY ANYTHING ABOUT F&O TRANSACTIONS. IT ONLY SAYS ABOUT FACILITATION OF BO GUS LTCG THROUGH JAMAKHARCHI COMPANIES WHICH WERE THEIR CLIENTS. HOWEVER, IF THE AO HAD AN Y DOUBTS LINGERING IN HIS MIND, THEN HE SHOULD HAVE SUMMONED THESE PERSONS AND QUESTIONED THEM AND UN-EARTHED THE TRUTH. RATHER THAN DOING SO, HE SIMPLY RELIED UPON THE STATEMENTS OF BOTH THESE PERSONS DURING SURVEY OF A THIRD PARTY AND WITHOUT ANY INCRIMINATING ORAL STA TEMENTS/DOCUMENTARY EVIDENCE OR MATERIAL AGAINST THE ASSESSEE OR THE F&O TRANSACTIONS CARRIE D OUT BY THE ASSESSEE, BASED ON SUSPICION ONLY HAS DRAWN ADVERSE INFERENCE/FINDING AGAINST TH E ASSESSEE WHICH ACTION OF BOTH AO AS WELL AS LD CIT(A) CANNOT BE COUNTENANCED. MOREOVER, IT IS NOTED THAT THERE ARE OTHER LEGAL INFIRMITIES AGAINST THE STATEMENTS. IT IS NOTED THA T THE AO HIMSELF HAS ADMITTED THAT THE STATEMENT OF SHRI HARSHAVARDHAN KAYAN AS WELL AS TH AT OF SHRI MUKESH AGARWAL HAS BEEN RECORDED DURING SURVEY U/S. 133A OF THE ACT AND IT IS NOTED THAT THE STATEMENT IS NOT INCRIMINATING AGAINST THE ASSESSEE SINCE ITS NAME O R THE TRANSACTION OF F&O HAS NOT BEEN NEGATIVELY COMMENTED UPON BY THEM. FURTHER, IT IS TRITE THAT THE STATEMENT RECORDED DURING SURVEY U/S. 133A OF THE ACT CANNOT BE THE SOLE BASI S ON WHICH ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE. MOREOVER, THE ASSESSEE HAS BEEN KEPT IN THE DARK AND HAS NOT BEEN GIVEN THE ENTIRE COPY OF THE STATEMENT OF SHRI HARSHAVARDHAN KAYAN AS WELL AS THAT OF SHRI MUKESH AGARWAL; AND NO OPPORTUNITY HAS BEEN GR ANTED TO THE ASSESSEE TO CROSS EXAMINE SHRI HARSHAVARDHAN KAYAN AS WELL AS THAT OF SHRI MU KESH AGARWAL. THEREFORE, THE VERACITY OF THE STATEMENTS COULD NOT BE TESTED, SO THEIR STA TEMENT CANNOT BE RELIED ON AS HELD BY THE 7 ITA NO. 87/GAU/2020 PODDAR RUBBER INDUSTRIES, AY 2014-15 HONBLE SUPREME COURT IN ANDAMAN TIMBERS INDUSTRIES (SUPRA). THEREFORE, THE STATEMENT OF SHRI HARSHAVARDHAN KAYAN AS WELL AS THAT OF SHRI MUKESH AGARWAL CANNOT BE LOOKED INTO FOR DRAWING AN ADVERSE INFERENCE AGAINST THE ASSESS EE. AND THOUGH THEIR STATEMENTS ARE NOT INCRIMINATING AGAINST THE ASSESSEE, ANY WAY IF BOTH THEIR STATEMENTS REPRODUCED (SUPRA) ARE KEPT ASIDE FOR THE LEGAL INFIRMITIES, THERE ARE NO OTHER MATERIAL AGAINST THE ASSESSEE IN RESPECT OF ITS TRANSACTION IN F&O. IN SUCH A SCENARIO, BAS ED ON THE SUPPORTING EVIDENCE PRODUCED BY THE ASSESSEE TO VALIDATE ITS TRANSACTION OF F&O IN RECOGNIZED STOCK EXCHANGE, THE LOSS SUFFERED IN THE SAID TRANSACTION HAS TO BE ALLOWED AND IT IS ORDERED ACCORDINGLY. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2021 SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED: 15.01.2021 JD(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. PODDAR RUBBER INDUSTRIES, C/O R AHUL RAJ JAIN & CO. H NO. 15, 1 ST FLOOR, BYE LANE-2, SHAKTIGARH PATH, BHANGAGARH, G. S. ROAD, ASSAM-781005. 2 RESPONDENT DCIT, CIRCLE-3, GUWAHATI 3. 4. 5. CIT(A), GUWAHATI-2, GUWAHATI CIT- GUWAHATI DR, ITAT, GUWAHATI / TRUE COPY, BY ORDER, SENIOR PVT. SECY.