Smt. Bintal D.Baxi, Bhavnagar V. The Income Tax Officer, Ward-1(2), Bhavnagar

ITA 920/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5935 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Source of fund; Difference of opinion; Accommodation entries; Onus to prove; Change of opinion
• Section: 143(3); 142(1); 147; 68; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.920, 921 AND 922/AHD/2014 ASSTT. YEARS: 2007-08, 2008-09 AND 2009-10 ITA NO.1221/AHD/2014 ASSTT.YEAR : 2005-06 AND ITA NO.1365/AHD/2014 ASSTT.YEAR : 2010-11 SMT. BINTAL D. BAXI PROP. OF PARSHWA TRADING CO. PLOT NO.1778/A FALGUNI SOCIETY SARDARNAGAR, BHAVNAGAR 364 001. PAN : AEWPB 9591 F VS. THE ITO, WARD - 1(2) BHAVNAGAR. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI TUSHAR HEMANI REVENUE BY : SHRI PRASOON KABRA, SR.DR / DATE OF HEARING : 05/04/2017 / DATE OF PRONOUNCEMENT: 01 /05/2017 &'/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT FIVE APPEALS ARE DIRECTED AT THE INSTANCE O F THE ASSESSEE AGAINST SEPARATE ORDERS OF THE LD.CIT(A) DATED 21.2.2014 PA SSED IN THE ASSTT.YEARS 2007-08, 2008-09, 2009-10 AND ORDER DATED 24.4.2014 AND 7.3.2014 PASSED IN THE ASTT.YEARS 2005-06 AND 2010-11 RESPECTIVELY. ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 2 2. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN ALL T HESE ASSESSMENT YEARS ARE NOT IN CONSONANCE WITH THE RULE 8 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 - THEY ARE DESCRIPTIVE AND ARGUMENTATIV E IN NATURE. IN THE ASSTT.YEAR 2007-08, THE ASSESSEE HAS CHALLENGED RE OPENING OF ASSESSMENT BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961. EXCEPT THIS, THERE IS ONLY ONE SUBSTANTIAL ISSUE INVOLVED IN ALL THESE APPEALS. THE ASSESSEE HAS CHALLENGED THE FOLLOWING ADDITIONS WHI CH WERE MADE BY THE AO WITH THE AID OF SECTION 68 OF THE ACT IN THE RESPEC TIVE ASSESSMENT YEARS: ASSTT.YEAR AMOUNT (RS.) 2007-08 30,00,000/- 2008-09 73,87,331/- 2009-10 3,14,02,908/- 2005-06 10,00,000/- 2010-11 2,39,50,000/- 3. THE LD.REPRESENTATIVES HAVE ADVANCED THEIR ARGUM ENTS MAINLY IN THE ASSTT.YEAR 2008-09. THE LD.CIT(A) HAS ALSO PASSED A DETAILED ORDER IN THE ASSTT.YEAR 2008-09 AND THIS ORDER HAS BEEN FOLLOWED IN ALL OTHER YEARS ON MERIT. THEREFORE FOR THE FACILITY OF REFERENCE, WE WILL BE TAKING FACTS MAINLY FROM THE ASSTT.YEAR 2008-09. 4. BEFORE TAKING UP THE ISSUE CHALLENGING ADDITIO N MADE WITH THE AID OF SECTION 68 OF THE ACT, WE WOULD LIKE TO TAKE ISSUE OF REOPENING IN THE ASSTT.YEAR 2007-08 FIRST. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WAS RUNNING PROPRIETORSHIP CONCERN IN THE NAME AND STYL E OF M/S.PARSHAWA TRADING CO.. SHE HAS FILED HER RETURN OF INCOME F OR THE ASSTT.YEAR 007-08 ON 29.10.2007 DECLARING TOTAL INCOME AT RS.7,11,187/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND AFTER HEAR ING THE ASSESSEE AN ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT ON 30.12.2009 ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 3 DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS.7,61 ,190/-. THE LD.AO HAS REOPENED THE ASSESSMENT AND ISSUED A NOTICE UNDER S ECTION 148 OF THE INCOME TAX ACT ON 1 ST MARCH, 2011. REASONS RECORDED BY THE AO HAVE BEEN SUPPLIED TO THE ASSESSEE AND OBJECTION RAISED BY THE ASSESSE E HAVE BEEN ADJUDICATED. COPY OF THE REASONS HAS BEEN PLACED ON PAGE NO.4 & 5 OF THE PAPER BOOK. SUCH REASONS READ AS UNDER: REASONS FOR ISSUING NOTICE U/S 148 R.W.S. 147 OF T HE I.T.ACT, 1961 BINTAL D BAXI, PROP: PARSHWA TRADING CO. AY: 2007-0 8 DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE AY 2008-09, IT WAS SEEN FROM 3CD REPORT AND VARIOUS DETAILS FILED BY THE ASSESSEE THAT THE ASSESSEE HAS BORROWED AN AMOUNT OF RS.73,87,331 /- FROM ONE SHRI DIPIN G. PATEL (PROP, OF M/S DEEPAK ENTERPRISES) DU RING THE FY 2007- 08. TO EXAMINE THE GENUINENESS OF TRANSACTION AND C REDITWORTHINESS OF THE LENDER DETAILS WERE CALLED FROM LENDER, M/S DEE PAK ENTERPRISE. FROM CROSS VERIFICATION, IT WAS SEEN THAT M/S DEEPA K ENTERPRISE, IN ITS RETURN FILED FOR A.Y 2008-09, HAD NEITHER DECLARED THE ABOVE SUM OF RS.73,87,331/- AS LOANS AND ADVANCES GIVEN TO ASSES SEE NOR IT HAS SHOWN THE ASSESSEE IN ITS SUNDRY DEBTORS. IN FACT A S PER BALANCE SHEET OF M/S DEEPAK ENTERPRISE TOTAL LOANS AND ADVANCES OUTS TANDING AS AT BALANCE SHEET DATE IS ONLY RS.2,63,881/- AND TOTAL SUNDRY DEBTORS AS AT BALANCE SHEET DATE IS RS.67,600/- ONLY. 2. IN ORDER TO FURTHER EXAMINE THE CASE AND FIND OU T MORE FACTS, SUMMONS WAS ISSUED TO SHRI DIPIN PATEL, PROP, OF M/ S DEEPAK ENTERPRISES AND HIS STATEMENT ON OATH WAS RECORDED ON 13.12.2010 U/S 131(1) OF THE IT ACT. IN HIS STATEMENT, SHRI DIPIN PATEL STATED THAT THE LOAN SHOWN IN THE BOOKS OF THE ASSESSEE WAS NOT GEN UINE AND IT WAS A MERE ENTRY. AS PER SHRI DIPIN PATEL, HE IS IN THE B USINESS OF GIVING ENTRIES AND ANYONE WHO APPROACHES HIM WITH CASH AND WANTS A BANK ENTRY, CASH IS DEPOSITED IN ONE OF HIS ACCOUNTS AND THE SAME IS GIVEN BACK TO THE PARTY IN THE FORM OF CHEQUE OR DEMAND D RAFT OR RTGS OR FUNDS TRANSFER HE ALSO STATED THAT HE ROUTES THE CA SH GIVEN BY HIS CLIENTS THROUGH HIS VARIOUS BANK ACCOUNTS AND ALSO MAKE CHE QUE PAYMENTS TO ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 4 OTHER PARTIES ON BEHALF OF HIS CLIENTS. FOR THIS, H E CHARGES A COMMISSION OF RS. 25/- TO RS.50/- PER ONE LAKH. 3. HE CATEGORICALLY DENIED HAVING GIVEN ANY LOAN TO M/S PARSHAWA TRADING CO. AND STATED THAT WHATEVER LOAN AMOUNT IS APPEARING IN THE BOOKS OF M/S PARSHAWA TRADING CO IN THE NAME OF HIS PROPRIETARY CONCERN IS NOTHING BUT CASH GIVEN TO HIM BY M/S PAR SHWA TRADING CO. WHICH HE DEPOSITED IN HIS ACCOUNT AND GAVE BACK THE SAME TO M/S PARSHWA TRADING CO. HE FURTHER STATED THAT HE IS RE ADY TO BE CROSS EXAMINED BY M/S PARSHAWA TRADING CO. OVER THE ALLEG ED LOAN TRANSACTION. IN OTHER WORDS SHRI PATEL DENIED GIVIN G ANY LOAN TO THE ASSESSEE. HE HAS ACCEPTED THIS FACT EVEN IN HIS STA TEMENT BEFORE THE DIRECTOR GENERAL OF CENTRAL EXCISE INVESTIGATION (D GCEI) AND THE INCOME TAX INVESTIGATION WING. RELEVANT EXTRACT FRO M THE STATEMENT, ON OATH OF SHRI PATEI TAKEN BY THIS OFFICE ON 13.12.20 10, IS REPRODUCED AS UNDER FOR THE SAKE OF CLARITY. Q.2. WHAT IS YOUR BUSINESS? A. WE ACCEPT CASH OR CHEQUE AND ISSUE PAY ORDER OR DD OR RTGS AFTER TAKING COMMISSION. I ALSO ISSUE CASH AFT ER DISCOUNTING CHEQUE. Q.4. DO YOU KNOW PARSHWA TRADING CO. ? A. YES, I KNOW PARSHWA TRADING CO. Q.5. HAVE YOU EVER GIVEN LOAN TO PARSHWA TRADING CO . A. NO, I HAVE NEVER GIVEN LOAN TO PARSHWA TRADING C O. Q.7. IN WHICH YEAR AND FOR HOW MUCH AMOUNT YOU HAVE GIVEN ENTRY TO PARSHWA TRADING CO. ? A. I SAY IT AGAIN THAT I HAVE NOT GIVEN ANY LOAN TO PARSHWA TRADING CO., BUT I HAVE GIVEN ENTRY ONLY AFTER TAKI NG CASH OR CHEQUE AFTER CHARGING COMMISSION. Q. 8. AS YOU SAY THAT YOU ISSUE CHEQUE, DD OR PAY O RDER AFTER RECEIVING CHEQUE OR CASH, THEN, HOW MUCH COMMISSION YOU CHARGE FOR THAT? A. I CHARGE RS.25/- TO RS.50/-COMMISSION FOR PER EN TRY OF ONE LAKH. Q. 9. ARE YOU READY FOR CROSS EXAMINATION WITH PARS HWA TRADING CO. ? A. YES, I AM READY FOR CROSS EXAMINATION AND I WILL COME WHENEVER YOU CALL. ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 5 4. DURING THE FY 2006-07 RELEVANT TO AY 2007-08, TH E ASSESSEE HAD SHOWN RS.30,00,000/- AS LOAN TAKEN FROM THE DEEPAK ENTERPRISE, BHAVNAGAR (SHOWN IN THE AUDIT REPORT OF THE ASSESSE E FOR THE AY 2007- 08), FROM THE DISCUSSION IN PARA-3, IT IS CRYSTAL C LEAR THAT THE LOAN SHOWN BY THE ASSESSEE IS NOT GENUINE BUT A DUBIOUS METHOD ADOPTED BY THE ASSESSEE TO INTRODUCE HIS OWN UNDISCLOSED / UNT AXED MONEY THROUGH BACK DOOR. IN VIEW OF THIS, I HAVE REASON TO BELIEV E THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND THE CA SE IS FIT FOR ISSUE OF NOTICE U/S. 148 OF THE I.T. ACT. SD/- ( HIMANSHU SHARMA ) ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1, BHAVNAGAR 5. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET CONTENDED THAT THE AO HAS EXAMINED THE ISSUE WITH REGARD TO LOANS TAKEN B Y THE ASSESSEE FROM M/S.DEEPAK ENTERPRISES (DE FOR SHORT). THEREFORE , HE WAS NOT POSSESSING ANY NEW INFORMATION WHICH CAN ENABLE HIM TO HARBOR A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THE ASSESSMENT HAS BEEN REOPEN ED ON THE BASIS OF CHANGE OF OPINION. HE PRAYED THAT RE-ASSESSMENT OR DER BE QUASHED. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDERS OF THE LD.CIT(A) AND THE AO. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE AO HAS REOPENED THE ASSESSMENT BY R ECORDING REASONS (EXTRACTED SUPRA). THE LD.CIT(A) CONCURRED WITH TH E CONCLUSIONS OF THE AO FOR REOPENING OF THE ASSESSMENT. A PERUSAL OF THE REASONS WOULD INDICATE THAT AFTER THE ASSESSMENT ORDER PASSED IN THE ASSTT.YEAR 2007-08, DIRECTOR GENERAL OF CENTRAL EXCISE INVESTIGATION HAD CARRIED OUT A S EARCH IN THE PREMISES OF THE CREDITOR. SIMILARLY, INCOME TAX DEPARTMENT HAS ALS O CARRIED OUT SEARCH AT THE PREMISES OF DE. HIS STATEMENT WAS RECORDED UNDER SECTION 131(1) ON 13.12.2010. IN HIS STATEMENT HE HAS DEPOSED THAT N O LOAN WAS ADVANCED TO THE ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 6 ASSESSEE. HE ALSO ALLEGED THAT HE WAS ENGAGED IN P ROVIDING ACCOMMODATION ENTRY. THUS, THIS WAS THE NEW INFORMATION BEFORE T HE AO WHO HELPED HIM TO HARBOR A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. ASSESSMENT HAS BEEN REOPENED WITHIN FOUR YEARS FROM THE END OF THE RELE VANT ASSESSMENT YEAR. THEREFORE, PROVISO APPENDED TO SECTION 147 CANNOT BE INVOKED BY THE ASSESSEE. WE ARE SATISFIED THAT INFORMATION WAS PO SSESSED BY THE AO WHICH HAS NEXUS WITH FORMING OF AN OPINION THAT INCOME HA S ESCAPED ASSESSMENT. HE HAS RIGHTLY REOPENED THE ASSESSMENT, AND WE DO N OT FIND ANY MERIT IN THIS GROUND OF APPEAL. 7. NOW WE TAKE REMAINING GROUNDS OF APPEAL IN ALL O THER YEARS. 8. AS OBSERVED EARLIER, DETAILED ORDER WAS PASSED B Y THE LD.CIT(A) IN THE ASSTT.YEAR 2008-09 AND IT WAS FOLLOWED IN ALL OTHER YEARS. WE TAKE UP THE FACTS MAINLY FROM THIS ASSESSMENT YEAR. 9. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HER RETURN OF INCOME ON 19.9.2008 DECLARING TOTAL INCOME AT RS.40 ,68,811/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT A ND NOTICE UNDER SECTION 143(2) WAS ISSUED ON 31.8.2009 WHICH WAS DULY SERVE D UPON THE ASSESSEE ON 6.9.2009. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT IN FORM NO.3CD REPORT, THE ASSESSEE HAS SHOWN LOAN OF RS.73 ,87,331/- FROM ONE SHRI DIPIN G. PATEL, PROPRIETOR OF DE. IN ORDER TO PR OBE THE ISSUE FURTHER, THE LD.AO HAS CALLED FOR INFORMATION FROM DE AND FROM PERUSAL OF THAT INFORMATION IT REVEALED TO THE AO THAT DE HAS NOT SHOWN ANY LOAN ADVANCED TO THE ASSESSEE. THE LIST OF SUNDRY DEBTORS AND CO PY OF ACKNOWLEDGMENT OF INCOME-TAX RETURN HAS BEEN REPRODUCED BY THE LD.AO ON PAGE NOS.2 AND 3 OF THE ASSESSMENT ORDER. THE AO THEREAFTER MADE REFER ENCE TO THE STATEMENT OF ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 7 DIPIN G. PATEL RECORDED ON 13.12.2010 MADE UNDER SE CTION 131(1) AND MADE ADDITION OF RS.73,87,331/-. IT IS A VERY BRIEF ASS ESSMENT ORDER. THE FINDING OF THE AO IS RUNNING INTO THREE PAGES ONLY. FOR BETTER APPRECIATION OF THE FACTS, WE WOULD LIKE TO TAKE NOTE OF THE FINDING RECORDED BY THE AO. IT READS AS UNDER: 3. IN ORDER TO FURTHER EXAMINE THE CASE AND FIND O UT MORE FACTS, SUMMONS WAS ISSUED TO SHRI DIPIN PATEL, PROP, OF M/ S DEEPAK ENTERPRISES AND HIS STATEMENT ON OATH WAS RECORDED ON 13.12.10 U/S 131(1) OF THE IT ACT. IN HIS STATEMENT, SHRI DIPIN PATEL STATED THAT THE LOAN SHOWN IN THE BOOKS OF THE ASSESSEE IS NOT GENU INE AND IT IS A MERE ENTRY. AS PER SHRI DIPIN PATEL, HE IS IN THE BUSINE SS OF GIVING ENTRIES AND ANYONE WHO APPROACHES HIM WITH CASH AND WANTS A BANK ENTRY, CASH IS DEPOSITED IN ONE OF HIS ACCOUNTS AND THE SA ME IS GIVEN BACK TO THE PARTY IN THE FORM OF CHEQUE OR DEMAND DRAFT OR RTGS OR FUNDS TRANSFER. HE ALSO STATED THAT HE ROUTES THE CASH GI VEN BY HIS CLIENTS THROUGH HIS VARIOUS BANK ACCOUNTS AND ALSO MAKE CHE QUE PAYMENTS TO OTHER PARTIES ON BEHALF OF HIS CLIENTS. FOR THIS, H E CHARGES A COMMISSION OF RS. 25/- TO RS.50/- PER ONE LAKH. HE CATEGORICAL LY DENIED HAVING GIVEN ANY LOAN TO M/S PARSHAWA TRADING CO. AND STAT ED THAT WHATEVER LOAN AMOUNT IS APPEARING IN THE BOOKS OF M/S PARSHA WA TRADING CO IN THE NAME OF HIS PROPRIETARY CONCERN IS NOTHING BUT CASH GIVEN TO HIM BY M/S PARSHWA TRADING CO. WHICH HE DEPOSITED IN HIS A CCOUNT AND GAVE BACK THE SAME TO M/S PARSHWA TRADING CO. HE FURTHER STATED THAT HE IS READY TO BE CROSS EXAMINED BY M/S PARSHAWA - TRADIN G CO. OVER THE ALLEGED LOAN TRANSACTION. IN OTHER WORDS SHRI PATEL DENIED GIVING ANY LOAN TO THE ASSESSEE. RELEVANT EXTRACT FROM THE STA TEMENT ON OATH OF SHRI PATEL IS REPRODUCED AS UNDER FOR THE SAKE OF C LARITY... Q.2. WHAT IS YOUR BUSINESS? A. WE ACCEPT CASH OR CHEQUE AND ISSUE PAY ORDER OR DD OR RTGS AFTER TAKING COMMISSION. I ALSO ISSUE CASH AFT ER DISCOUNTING CHEQUE. Q.4. DO YOU KNOW PARSHWA TRADING CO. ? A. YES, I KNOW PARSHWA TRADING CO. Q.5. HAVE YOU EVER GIVEN LOAN TO PARSHWA TRADING CO . A. NO, I HAVE NEVER GIVEN LOAN TO PARSHWA TRADING C O. Q.7. IN WHICH YEAR AND FOR HOW MUCH AMOUNT YOU HAVE GIVEN ENTRY TO PARSHWA TRADING CO. ? ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 8 A. I SAY IT AGAIN THAT I HAVE NOT GIVEN ANY LOAN TO PARSHWA TRADING CO., BUT I HAVE GIVEN ENTRY ONLY AFTER TAKI NG CASH OR CHEQUE AFTER CHARGING COMMISSION. Q. 8. AS YOU SAY THAT YOU ISSUE CHEQUE, DD OR PAY O RDER AFTER RECEIVING CHEQUE OR CASH, THEN, HOW MUCH COMMISSION YOU CHARGE FOR THAT? A. I CHARGE RS.25/- TO RS.50/-COMMISSION FOR PER EN TRY OF ONE LAKH. Q. 9. ARE YOU READY FOR CROSS EXAMINATION WITH PARS HWA TRADING CO. ? A. YES, I AM READY FOR CROSS EXAMINATION AND I WILL COME WHENEVER YOU CALL. 4. THE ABOVE MAKES IT CRYSTAL CLEAR THAT THE LOAN O F RS.73,87,331/- AS SHOWN BY THE ASSESSEE NOT A GENUINE TRANSACTION BUT A DUBIOUS METHOD ADOPTED BY THE ASSESSEE TO INTRODUCE HIS OWN UNDISCLOSED / UNTAXED MONEY THROUGH BACK DOOR. ACCORDINGLY, SHOW CAUSE NOTICE DATED 10.12.10 WAS ISSUED TO THE ASSESSEE REQUESTIN G TO SHOW CAUSE AS TO WHY THE LOAN OF RS.73, 87,331/- SHOULD NOT BE AD DED BACK TO THE INCOME OF THE ASSESSEE AS CASH CREDIT. 5. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED, THE ASSESSEE FILED ITS WRITTEN SUBMISSION ON 21.12.10. RELEVANT PORTION OF ASSESSEE'S SUBMISSION IS REPRODUCED AS UNDER... '1 IN ABSENCE OF LEDGER COPY OF OUR ACCOUNT FROM TH E BOOKS OF DEEPAK ENTERPRISES WE ARE NOT IN THE POSITION TO EX ACTLY PINPOINT THE DIFFERENCE AND ITS NATURE AND REASONS FOR THE SAME. WE THEREFORE REQUEST YOU TO KINDLY PROVIDE US THE COPY OF LEDGER ACCOUNTS FROM THE BOOKS OF M/S DEEPAK ENTERPRISE. 2. SUBJECT TO THE ABOVE, KINDLY FIND ENCLOSED HERE WITH THE COPY OF THE LEDGER ACCOUNT OF M/S DEEPAK ENTERPRISES ALONG WITH THE NECESSARY AVAILABLE EVIDENCE WHICH INCLUDES COPY OF THE BANK STATEMENTS AND COPY OF THE LEDGER ACCOUNTS OF OTHER PARTIES WHOSE ACCOUNT HAVE BEEN CORRESPONDINGLY DEBITED OR CREDITED. IF REQUIRED BY YOU WE WILL GET THE CONFIRMATION FROM THE CORRESPONDING PARTIES. ' 6. THE REPLIES AND SUBMISSION OF THE ASSESSEE HAVE BEEN PROPERLY CONSIDERED. IN FACT THE ASSESSEE COULD NOT BRING AN YTHING ON RECORD TO ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 9 SUBSTANTIATE HIS CLAIM THAT HE HAS TAKEN GENUINE LO AN. IN FACT ASSESSEE DID NOT SUBMIT ANY EXTERNAL RECORD EXCEPT COPY OF L EDGER ACCOUNTS FROM HIS OWN BOOKS AND HIS BANK ACCOUNTS. HOWEVER IN CAS E OF CASH CREDIT ONLY COPY OF ONLY LEDGER ACCOUNT AND BANK STATEMENT IS NOT A SUFFICIENT EVIDENCE TO PROVE GENUINENESS OF LOAN. IF ASSESSEE IS CLAIMING THE LOAN TO BE GENUINE HE HAS TO PROVE THAT THE .... 01. THE LOAN IS GENUINE 02. CREDIT WORTHINESS OF LENDER 03. CONFIRMATION FROM THE LENDER 7. IN THIS CASE THE ASSESSEE COULD NOT SUBMIT EVEN A SINGLE DOCUMENT AND HE IS ASKING COPY OF LEDGER ACCOUNT OF THE LEND ER FROM THE DEPARTMENT. THE LENDER HIMSELF DENIES GIVING ANY LO AN TO ASSESSEE IN HIS STATEMENT ON OATH. IN FACT HE ADMITTED THE FACT THAT HE HAS GIVEN ENTRY AFTER TAKING CASH FROM THE ASSESSEE. 8. ACCORDINGLY, THE CLAIMS AND ASSERTIONS OF THE ASSESSEE HAVE BEEN FOUND TO BE UNACCEPTABLE ON ACCOUNT OF THE REASONS DETAILED ABOVE. THE FACT THAT THE LOAN IS TAKEN THROUGH BANKING CHANNEL S ALONE CANNOT BE A TEST FOR GENUINENESS. IN FACT THE LENDER HIMSELF HA S GIVEN A STATEMENT THAT HE WAS JUST AN ENTRY PROVIDER AND HAD NO FUNDS OF HIS OWN TO LEND TO ASSESSEE. HE HAS ACCEPTED THIS FACT EVEN IN H IS STATEMENT BEFORE THE DIRECTOR GENERAL OF CENTRAL EXCISE INVESTIGATION ( DGCEI) AND THE INCOME TAX INVESTIGATION WING. HENCE, THE AMOUNT OF RS.73,87,331/- IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AS U NEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. 10. UNDER SIMILAR CIRCUMSTANCES, ADDITIONS HAVE BEE N MADE IN OTHER YEARS ALSO. THE AO IN THE ASSTT.YEARS 2009-10 AND 2010- 11 REPRODUCED LEDGER ACCOUNTS OF THE DE IN THE BOOKS OF THE ASSESSEE, WHEREAS IN THE ASSTT.YEAR 2005-06 AND 2007-08 HE PROCEEDED TO MAKE ADDITIONS ON THE BASIS OF THE DISCUSSION MADE IN THE ASSTT.YAR 2008-09. HIS FIND INGS ARE IN THE LINE OF ASSTT.YEAR 2008-09. 11. DISSATISFIED WITH THE ADDITIONS, THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). SHE CONTENDED THAT THE AO HA S USED THE STATEMENT OF ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 10 DIPIN G. PATEL RECORDED ON 13.12.2010 WITHOUT PROVI DING OPPORTUNITY OF CROSS-EXAMINATION. IT WAS CONTENDED THAT NEITHER C OPY OF THE STATEMENT WAS SUPPLIED NOR COPY OF ANY BANK STATEMENT OR ANY OTHE R MATERIAL COLLECTED FROM DIPIN G. PATEL WAS SUPPLIED TO THE ASSESSEE. ACCOR DING TO THE ASSESSEE THIS STATEMENT DESERVES TO BE EXCLUDED FROM CONSIDERATIO N. THE LD.CIT(A) VERIFIED THE CONTENTION OF THE ASSESSEE AND FOUND IT CORRECT . THEREFORE, HE DIRECTED THE LD.AO TO SUPPLY COPY OF THE STATEMENT OF SHRI DIPIN G. PATEL AND ALSO PROVIDE AN OPPORTUNITY OF CROSS-EXAMINATION. THE AO WAS DI RECTED TO SUBMIT A REMAND REPORT ON THIS ASPECT. THE LD.AO HAD PROVID ED AN OPPORTUNITY OF CROSS-EXAMINATION, AND THEREAFTER, SUBMITTED REPORT . THE LD.CIT(A) HAS REPRODUCED THE QUESTION AND ANSWERS OF THE STATEMEN T OF SHRI DIPIN G. PATEL IN FREE ENGLISH TRANSLATION. THE LD.CIT(A) FURTHER OBSERVED THAT IN THE CASE OF DIPIN G. PATEL AN ADDITION OF RS.73,87,331/- WAS MA DE ON PROTECTIVE BASIS ON ACCOUNT OF UNEXPLAINED INVESTMENT BEING A LOAN GRAN TED TO THE ASSESSEE WITHOUT DISCLOSING THE SOURCE. THIS PROTECTIVE ADD ITION WAS DELETED BY THE LD.CIT(A). THE LD.CIT(A) HAS REPRODUCED COMPLETE O RDER OF THE CIT(A) AND SUCH REPRODUCTION HAVE BEEN MADE FROM PAGE NOS.49 T O 76 OF THE IMPUGNED ORDER. IN OTHER WORDS, THE LD.CIT(A) HAS REPRODUCE D 27 PAGES OF THE LD.CIT(A)S ORDER PASSED IN THE CASE OF DIPIN G. PA TEL. SIMILARLY, IN THE IMPUGNED ORDER, THE LD.CIT(A) HAS REPRODUCED WRITTE N SUBMISSIONS FILED BY THE ASSESSEE, FINDING OF THE AO AND CROSS-EXAMINATI ON. 12. IN BRIEF, THE CASE OF THE AO IS THAT THE ASSESS EE HAS SHOWN LOANS TAKEN FROM DE IN ALL THESE FIVE YEARS. SHE FAILED TO FU LFILL REQUIREMENT OF SECTION 68 I.E. CREDIT-WORTHINESS OF THE DE, GENUINENESS OF THE TRANSACTION, AND THEREFORE, IT DESERVES TO BE TREATED AS UNEXPLAINED CREDIT IN THE HANDS OF THE ASSESSEE. FOR ARRIVING AT SUCH CONCLUSION, THE LD .AO HAS MADE REFERENCE TO THE STATEMENT OF SHRI DIPIN G. PATEL WHO HAS DEPOSE D THAT HE DID NOT GIVE ANY ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 11 LOANS TO THE ASSESSEE, RATHER HE WAS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. ACCORDING TO THE AO, SHRI D IPIN G. PATEL HAS ACCEPTED THE CASH AND PROVIDED CHEQUES TO THE ASSES SEE AND MANY OTHER CONCERNS. ON THE OTHER HAND, THE STAND OF THE ASSE SSEE IS THAT SHE HAS RECEIVED LOANS THROUGH ACCOUNT PAYEE CHEQUES. SHE HAS BEEN S HOWING THESE AMOUNTS AS LOAN. SHE HAS DISCHARGED INITIAL BURDEN PUT UPON H ER BY SECTION 68 OF THE ACT. IT IS NOT IN THE CONTROL OF THE ASSESSEE TO EXPLAIN AS TO HOW CREDITOR WAS MAINTAINING HIS BOOKS OF ACCOUNTS AND WHY HE HAS NO T SHOWN THESE AMOUNTS IN BOOKS OF ACCOUNTS. THE ASSESSEE HAS NO CONTROL OVER THE BOOKS OF ACCOUNTS AS WELL AS BANK STATEMENT OF SHRI DIPIN G. PATEL. THE AO HAS NOT PROVIDED RECONCILIATION STATEMENT OF THE BANKS EXHIBITING TH E CASH DEPOSITED BY SHRI DIPIN G. PATEL, AND THEREAFTER ISSUES CHEQUES TO TH E ASSESSEE AND OTHER CONCERNS. WHEN SHRI DIPIN G. PATEL CAUGHT BY THE I NVESTIGATION AGENCIES, THEN IT WAS MOST SUITABLE FOR HIM TO GIVE THIS TYPE OF STATEMENT, BECAUSE OTHERWISE, HE HAS TO EXPLAIN THE SOURCE OF ADVANCIN G LOANS TO THE ASSESSEE AS WELL AS OTHER CONCERNS. WITH THE HELP OF THIS MODUS OPERANDI , HE HAS BEING ASSESSED TO TAX AT THE RATE OF RS.100/- PER LAKH. HE HAS BEEN ASSESSED FOR COMMISSION INCOME EARNED BY VIRTUE OF PROFIT ON ALL EGED ACCOMMODATION ENTRIES. 13. IN THE ASSTT.YEAR 2010-11 THE ASSESSEE HAS WRIT TEN A LETTER DATED 23.2.2013 TO THE AO AND EXPLAINED THE BANK STATEMEN T SUPPLIED BY THE AO TO THE ASSESSEE. WE DEEM IT APPROPRIATE TO TAKE NOTE OF RELEVANT PART OF THIS LETTER, WHICH IS AVAILABLE ON PAGE NO.1 OF THE PAPE R BOOK FOR THE ASSTT.YEAR 2010-11. IT READS AS UNDER: INSTEAD OF SUPPLYING ALL THE REQUIRED DETAILS YO U WERE KIND ENOUGH TO GIVE US COPY OF TWO STATEMENTS OF BANK OF DEEPAK ENTERPRISE. THOUGH M/S. DEEPAK ENTERPRISE HAS ACCOUNTS IN SO MA NY (ALL MOST NEAR ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 12 TO 10 BANKS) ON OUR CONTINUE PERUSALS YOU GAVE US C OPY OF TWO BANK STATEMENT IS NOT CLEARLY LEGIBLE. (1) THE FIRST STA TEMENT IS FROM YES BANK AND THE PERIOD IS 01.06.2009 TO 16.06.2009 AND (2) THE ANOTHER STATEMENT IS FROM BHAVNAGAR NAGARIK SAHKARI BANK LT D. (THE PERIOD IS LEGIBLE). THOUGH WE CATEGORICALLY DENY HAVING ANY H AWALA BUSINESS WITH THE DEEPAK ENTERPRISE AND ANY ONUS TO PROVE AN Y THINGS FROM HIS BANK STATEMENTS WHICH IS NOT BACKED UP BY ANY OTHER EVIDENCE WE DRAW THE KIND ATTENTION ON THE FOLLOWING FACTS/OBSERVATI ONS. OUR OBSERVATIONS: (A) THE PERIOD AND THE BANK STATEMENTS ARE TOO LESS TOT EH ACTUAL VOLUME AND TIME (B) SO FAR TRANSACTIONS OF DEPOSITS (IN OUR BOOKS) ARE CONCERNED THERE IS VOLUME OF RS.68741579/- AND NUMBER OF TRANSACTIONS (ENTRIES) ARE 77,WHILE SO FAR TRANSACTIONS OF WITHDRAWAL ARE CONC ERNED THERE IS VOLUME OF RS. 68741579/- AND NUMBER OF TRANSACTIONS (ENTRIES) ARE 83. WHILE TOTAL NUMBER OF TRANSACTION WHICH RELATE TO U S OF WITHDRAWAL (CONTRA OF OUR DEPOSIT) AS PER THE BANK STATEMENTS SUPPLIED BY YOU ARE ONLY THREE AND WHICH AMOUNTS TO ONLY RS. 20.00 LAKH S AND SO FAR DEPOSIT (CONTRA OF OUR WITHDRAWAL) THERE IS ONLY ON E TRANSACTION OF RS.17.00 LAKHS ONLY. (C) AS PER THE BANK STATEMENT OF YES BANK AS SUPPLI ED BY YOU THERE IS ONE TRANSACTION OF DEPOSIT OF RS. 17.00 LAKHS (ON 0 3.06.2009) BUT AGAINST THAT THERE IS NO CASH WITHDRAWAL. ALSO WE H AVE FOUND FROM THE BANK STATEMENT OF YES BANK THAT DURING THAT PERIOD RS. 8419830.86/- IS THE TOTAL AMOUNT OF DEBIT WHICH DOES NOT INCLUDE AN Y CASH ENTRY. ALSO DURING THAT PERIOD RS. 9590000/- HAS BEEN DEPOSITED IN THE BANK AND WHICH INCLUDE CASH DEPOSITION OF RS. 23.00 LAKHS ON LY. ALSO DURING THAT PERIOD THERE ARE LOT OF TRANSACTION WITH OTHER PART IES. IF DEEPAK ENTERPRISE IS DOING ONLY HAWALA BUSINESS OF CHEQUE AGAINST CASH AND VICE A VERSA THEN THERE HAS TO BE EQUIVALENT CASH D EPOSITION AND WITHDRAWAL IN CASE OF OTHER PARTY AS WELL. AS PER T HE STATEMENT ON 01.06.2009 THERE IS A CASH DEPOSITION OF RS. 5.00 L AKHS WHILE CHEQUE OF RS. 10.00 HAS BEEN ISSUED. ALSO ON 02.06.2009 THERE IS A CASH DEPOSITION OF RS. 5.00 LAKHS AND FURTHER CHEQUE DEP OSITION OF RS. 5.00 LAKHS WHILE AGAINST THAT THERE IS NO CASH WITHDRAWA L ON 02.06.2009 AND FURTHER ISSUANCE OF CHEQUE OF RS. 214776/- ONLY. AL SO ON 03.06.2009 TOTAL CHEQUE OF RS. 10.00 LAKHS HAS BEEN ISSUED BUT AGAINST THAT THERE IS ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 13 CASH DEPOSITION OF RS. 1.50 LAKHS ONLY. IN CASE OF BHAVNAGAR NAGARIK SAHKARI BANK LTD. TOTAL WITHDRAWAL IN THE ACCOUNT I S RS. 8607201/- AND CASH DEPOSIT OF RS. 7875000/-. SINCE THE DATE IS AB SOLUTELY NOT LEGIBLE FROM THE STATEMENT WE ARE FINDING IT DIFFICULT TO H AVE ANY COMMENTS ABOUT THE DAY TO DAY MOVEMENTS. HOWEVER FROM THE ST ATEMENT IT APPEARS THAT HE HAS DONE TRANSACTION WITH, MANY PAR TIES WHICH EVEN INCLUDE SIZABLE TRANSACTION WITH POST MASTER. HOW I N HAWALA BUSINESS IT IS POSSIBLE? DOES IT MEAN THAT POST MASTER GIVE CAS H AGAINST CHEQUE. DOES ALSO ALL OTHER PARTIES AS APPEARING, IN THE ST ATEMENTS ARE CONFIRMING THAT THEY ARE DOING HAWALA BUSINESS WITH DEEPAK ENTERPRISE. 14. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. ACCORDING TO THE ASSESSEE SHE HAS TAKEN LOAN THROUGH ACCOUNT PAYEE CHEQUE FROM DE AND DULY SHOWN THEM IN THE B OOKS OF ACCOUNTS. SECTION 68 OF THE INCOME TAX ACT CONTEMPLATES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF, OR THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT, IN THE OPINION OF THE AO SATISFACTORY, THEN THE SUM SO CREDITED IN THE ACCOU NTS MAY BE TREATED AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE LD.AO FOUND AMOUNTS CREDITED I N THE BOOKS OF THE ASSESSEE. THE ASSESSEE WAS REQUIRED TO OFFER AN EXPLANATION A BOUT NATURE AND SOURCE OF THESE AMOUNTS FOUND TO BE CREDITED IN HER BOOKS. T HE ASSESSEE SUBMITTED THAT THE AMOUNTS WERE TAKEN AS LOAN FROM DE THROUGH AC COUNT PAYEE CHEQUES. SHE HAS DISCLOSED IDENTITY OF CREDITORS. SHE HAS P RODUCED LEDGER ACCOUNT SHOWING RECEIPTS OF AMOUNTS THROUGH ACCOUNT PAYEE C HEQUES. THE LD.AO VERIFIED THIS ASPECT AND OBSERVED THAT LENDER HAS D ENIED ADVANCEMENT OF ANY LOAN TO THE ASSESSEE. BUT THIS DENIAL IS IN CONTRA DICTION OF DOCUMENTARY EVIDENCE I.E. ADVANCEMENT OF MONEY TO THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUE. NORMALLY, FOR EXPLAINING THE NATURE AND SO URCE OF CREDIT, AN ASSESSEE ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 14 IS REQUIRED TO SUBMIT EVIDENCE GIVING IDENTITY OF T HE CREDITOR, HIS CREDIT- WORTHINESS OF ADVANCEMENT OF LOANS, AND GENUINENESS OF THE TRANSACTION. IF AN ASSESSEE SUBMITS THESE DIRECT EVIDENCES, THEN THAT AMOUNT CAN BE CONSIDERED AS FROM EXPLAINED SOURCES. BUT SOMETIME, A SITUATI ON MAY ARISE, LIKE IN PRESENT APPEAL, I.E. THE ASSESSEE IS NOT IN A POSIT ION TO GIVE DIRECT EVIDENCE BECAUSE OF HOSTILE ATTITUDE OF THE CREDITOR. CAN I N THIS TYPE OF SITUATION AN ASSESSEE COULD HAVE ANY EXPLANATION ? IT IS PERTI NENT TO BEAR IN MIND THAT DIRECT EVIDENCE IS AN EVIDENCE OF FACT BASED ON WIT NESSS PERSONAL KNOWLEDGE OF THAT FACT. IN CASE WHERE DIRECT EVIDENCE IS NOT AVAILABLE, THEN LAW RECOGNIZE SUBSTITUTE IN THE SHAPE OF CIRCUMSTANTIAL EVIDENCE. CIRCUMSTANTIAL EVIDENCE IS ALSO A DIRECT EVIDENCE OF FACT FROM WHICH A PERSON MAY REASONABLY INFER THE EXISTENCE OR NON-EXISTENCE OF ANOTHER FACT. LET US EXPLAIN SITUATION WITH THE HELP OF AN EXAMPLE, WHAT IS THE DIFFERENCE BETWEEN THE DIRECT EVIDENCE AND CIRCUMSTANTIAL EVIDENCE. SUPPOSE IN A GIVEN SITUAT ION, ONE OF THE PARTIES IS TRYING TO PROVE THAT IT WAS RAINING ON CERTAIN MORN ING. A WITNESS TESTIFIES THAT ON THAT MORNING HE WALKED TO THE SUBWAY AND AS HE W ALKED HE SAW RAIN FALLING, HE FELT IT IS STRIKING HIS FACE, AND HE HE ARD IT SPLASHING ON THE SIDEWALK. THAT TESTIMONY OF THE WITNESS'S PERCEPTIONS WOULD B E DIRECT EVIDENCE THAT IT RAINED ON THAT MORNING. SUPPOSE, ON THE OTHER HAND, THE WITNESS TESTIFIED THAT IT WAS CLEAR AS HE WALKED TO THE SUBWAY, THAT HE WE NT INTO THE SUBWAY AND GOT INTO THE TRAIN AND THAT WHILE HE WAS ON THE TRAIN, HE SAW PASSENGERS COME IN AT ONE STATION AFTER ANOTHER CARRYING WET UMBRELLAS AN D WEARING WET CLOTHES AND RAINCOATS. THAT TESTIMONY CONSTITUTES DIRECT EVIDEN CE OF WHAT THE WITNESS OBSERVED, AND BECAUSE AN INFERENCE THAT IT WAS RAIN ING IN THE AREA WOULD FLOW NATURALLY, REASONABLY, AND LOGICALLY FROM THAT DIRE CT EVIDENCE, THE WITNESS'S TESTIMONY WOULD CONSTITUTE CIRCUMSTANTIAL EVIDENCE. THE CIRCUMSTANTIAL EVIDENCE IS AN EVIDENCE THAT RELIES ON AN INFERENCE . THE LAW DRAWS NO ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 15 DISTINCTION BETWEEN CIRCUMSTANTIAL EVIDENCE AND DIR ECT EVIDENCE IN TERMS OF WEIGHT OR INFORMATION. EITHER TYPE OF EVIDENCE MAY BE ENOUGH TO ESTABLISH THE FACT BEYOND A REASONABLE DOUBT. 15. IN THE PRESENT APPEAL, THE QUESTION BEFORE US I S TO FIND OUT WHO IS DEPOSING THE TRUTH I.E. SHRI DIPIN G. PATEL OR THE ASSESSEE. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, SHRI DIPIN G. PATEL DI D NOT GIVE CONFIRMATION AND TO SUPPORT VERSION OF THE ASSESSEE IN ORDER TO SAVE HIS SKIN FOR EXPLAINING THE SOURCE OF FUND GIVEN TO THE ASSESSEE. 16. ON THE OTHER HAND, THE LD.DR POINTED OUT THAT T HE ASSESSEE SHOULD HAVE GIVEN DIRECT EVIDENCE IN SUPPORT OF HER VERSION. S HE CANNOT BLAME REVENUE FOR HER FAILURE FOR FULFILLING INGREDIENTS CONTEMPL ATED UNDER SECTION 68 OF THE INCOME TAX ACT. AS OBSERVED EARLIER THAT SECTION 6 8 REQUIRES THE ASSESSEE TO SUBMIT EVIDENCE GIVING IDENTITY OF THE CREDITORS, H IS CREDIT-WORTHINESS AND GENUINENESS OF THE TRANSACTION. IN THE PRESENT APP EALS NO DOUBT THE ASSESSEE HAS FULFILLED SOME OF THE CONDITIONS, VIZ. SHE HAS DISCLOSED IDENTITY. SHE HAS DISCLOSED GENUINENESS OF THE TRANSACTION TO SOME EX TENT, AS LOANS WERE TAKEN THROUGH BANKING CHANNEL. BUT SHE FAILED TO PROVE C REDIT-WORTHINESS OF THE CREDITORS. WE WOULD HAVE NO HESITATION IN CONCURRI NG WITH THE LD.REVENUE AUTHORITIES UNDER NORMAL CIRCUMSTANCES, BUT AFTER G OING THROUGH THE REPLIES GIVEN BY SHRI DIPIN G. PATEL, IN HIS CROSS-EXAMINAT ION AND THE MANNER AO HAS INVESTIGATED THE ISSUE PERSUADED US NOT TO CONCUR W ITH THE LD.REVENUE AUTHORITIES. 17. LET US FIRST DEAL WITH THE ACTION OF THE AO, HO W HE HAS INVESTIGATED THE ISSUE. THE RETURN OF INCOME WAS FILED ON 19.9.2008 . FIRST NOTICE UNDER SECTION 143(2) WAS ISSUED ON 31.8.2009 I.E. JUST AF TER ONE YEAR OF FILING OF RETURN. ASSESSMENT PROCEEDINGS REMAINED DORMANT FO R ALMOST HALF YEAR. THE ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 16 AO HAS ISSUED NOTICE UNDER SECTION 142(1) ON 16.6.2 010, THEREAFTER, HE HAS CARRIED OUT THE EXERCISE BEHIND BACK OF THE ASSESSE E. STATEMENT OF THE CREDITOR WAS RECORDED ON 13.12.2010 UNDER SECTION 131(1). I T WAS NOT GIVEN TO THE ASSESSEE, BUT USED IN THE ASSESSMENT ORDER. THE AO HAS GIVEN ONE MORE NOTICE ON 10.12.2010 ,WHICH WAS REPLIED BY THE ASSE SSEE ON 21.12.2010. THE ASSESSMENT ORDER WAS PASSED ON 28.12.2010. THE AO DID NOT SUPPLY COPY OF THE STATEMENT AND THE MATERIAL WHICH HE WAS USING A GAINST THE ASSESSEE. ON APPEAL, THE LD.CIT(A) HAS RECTIFIED THIS IRREGULARI TY BY PROVIDING AN OPPORTUNITY TO CROSS-EXAMINE PROPRIETOR OF DE SHR I DIPIN G. PATEL. LET US TAKE NOTE OF QUESTION AND ANSWER/REPLY REPRODUCED B Y THE LD.CIT(A) IN ENGLISH TRANSACTION, WHICH READS AS UNDER: Q.NO.L. SINCE WHEN YOU DOING THE BUSINESS IN THE NA ME OF M/S.DEEPAK ENTERPRISES OR IN ANY OTHER NAME ? ANS: SINCE YEAR OF 1996 Q.NON.2. AS PER YOU, YOU HAVE NOT DONE THE BUSINESS OF BORROWING AND LENDING OF MONEY AND ONLY DOING THE BUSINESS OF ENTRY PROVIDING IN CHEQUES ON RECEIPT OF CASH AND GIVING THE CHEQUE S AGAINST THE CASH. WHETHER IT IS TRUE ? ANS: I, GIVE THE CHEQUES AGAINST THE CASH RECEIVED, DOING CHEQUE DISCOUNTING AND GIVING THE CASH. SOMETIMES, ON ACCO UNT OF RELATIONSHIP, I MIGHT HAVE ENTERED INTO SMALL TRANS ACTION. BUT I DON'T REMEMBER EXACTLY. Q.NO.3. THE CASH TRANSACTIONS IN THE BANK WERE DONE BY YOU OR YOUR PERSONS. IF THAT WORK WAS DONE BY YOUR PERSONS THEN GIVE THEIR NAMES ? ANS: THE QUESTION IS NOT RELATING TO THE TRANSACTI ONS. Q.NO.4 YOU ARE DOING THE HUGE TRANSACTIONS FOR WHICH ARE YOU MAINTAINING ANY RECORD OR DIARY ? ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 17 ANS: IT WAS IN THE CPU BUT THE SAME WAS SEIZED BY T HE DEPARTMENT. Q.NO.5. WHEN YOU ACCEPTED THE CASH, DID YOU ISSUED ANY RECEIPTS AND WHEN YOU HAND OVER THE CASH THEN ANY ACKNOWLEDGEMEN T IS OBTAINED FROM THE PARTY? ANS: THE QUESTION IS NOT RELATING TO THE TRANSACTIO NS Q.NO.6. AS PER YOU AGAINST THE CASH RECEIPTS YOU H AVE GIVEN THE CHEQUE ENTRIES AND AGAINST THE CHEQUES YOU HAD GIVE N THE CASH, PLEASE TELL WHEN THOSE TRANSACTIONS WERE MADE ? ANS: NOT FIT TO BE ANSWERED. Q.NO.7. AS PER YOU, YOU ARE DOING THE TRANSACTIO NS ON COMMISSION, PLEASE TELL WHETHER THE COMMISSION IS DEDUCTED WHEN THE CASH IS PAID OR IT IS CHARGED SEPARATELY ? ANS: COMMISSION WAS TAKEN Q.NO. 8. WE HAVE MADE THE FINANCIAL TRANSACTIONS FOR SO MANY YEARS THROUGH CHEQUES DID YOU RECORD THEM IN YOUR B OOKS OF ACCOUNTS.? : YES. Q.NO.9. ARE YOU PREPARED TO PRESENT ALL THE RECOR DS, DIARIES, VOUCHERS AND ANY OTHER RECORDS FOR VERIFICATION.? ANS: CPU, VOUCHERS ETC. WERE SEIZED BY THE DEPARTME NT. Q.NO.10 AT PRESENT WHERE ARE THOSE RECORDS ? IF THE SAME HAVE BEEN SEIZED BY THE INCOME-TAX DEPARTMENT DID YOU GOT THE COPIES OF THOSE RECORDS ? PLEASE TELL OF HOW MUCH PERIOD AND WHAT R ECORDS ARE LYING IN THE INCOME-TAX DEPARTMENT. ? IF THOSE RECORDS LY ING IN THE DEPARTMENT, DID YOU HAVE ANY OBJECTION IN FURNISHIN G OF THE COPIES OF THOSE RECORDS TO ME? ANS: ANSWER IS GIVEN IN THE QUESTION ABOVE. Q.NO. 11 WE HAVE MADE THE FINANCIAL TRANSACTION WIT H YOU AND WE HAVE NOT MADE ANY ENTRY BUSINESS, WHILE AS PER YOU, YOU HAVE DONE THE BUSINESS OF ACCOMMODATION ENTRY. THIS CLAIM IS NOT ACCEPTABLE TO US. THIS HAS BEEN INFORMED TO YOUR A.O. OF CENTRAL CIRCLE. SO IN THIS REGARD ANY CROSS EXAMINATION HAS BEEN ASKED FOR ? ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 18 ANS: THIS IS NOT REQUIRED FOR US. I DO NOT KNOW. Q.NO. 12. IN OUR CASE, FROM A.Y. 2008-09 AND ONWARD S, REOPENING HAVE BEEN MADE ON THE ABOVE BASIS AND WE HAVE CHALL ENGE THE VARIOUS STATEMENTS. IN THIS REGARD, WE ASKED FOR TH E CROSS EXAMINATION OPPORTUNITY A.O. DID YOU KNOW THIS THIN G.? ANS: I DO NOT KNOW WHAT YOU HAVE DID. YES, BUT I KNOW THAT I HAVE NOT GIVEN LOANS TO YOU. Q.NO.13. AS PER OUR INFORMATION, YOU HAVE TAKEN TH E LOANS FROM OTHERS AND ALSO LENT THE MONEY AND IN THIS REGARD YOU HAD THE DISPUTES WITH VARIOUS PERSONS AND IN CERTAIN CASES POLICE COMPLAINTS HAVE ALSO BEEN FILED. IS IT FALSE? ANS: I DO NOT FEEL IT FIT TO BE ANSWERED. Q.NO.14. AS PER MY INFORMATION YOU HAVE INVESTED TH E MONEY IN THE NAME OF YOUR RELATIVES. IS IT FALSE? ANS: AS ABOVE. Q.NO.15. YOU HAVE ASKED FOR THE 25% MORE . IS IT FA LSE ? ANS: AS ABOVE. Q.NO.16. WE HAVE PAID YOU RS.5,30,0007- AS INTEREST . DO YOU WANT TO SAY ? ANS: I HAVE NOT RECEIVED ANY CHEQUES TOWARDS INTERE ST. Q.NO.17. YOU HAVE GIVEN US AN ACCOUNT CHIT FOR THE INTEREST CALCULATIONS WHICH IS ATTACHED. WHAT DO YOU WANT TO SAY ? ANS: I HAVE NOT RECEIVED ANY INTEREST FROM YOU. I HAVE NOT GIVEN ANY LOAN ON INTEREST TO YOU. SO NO QUESTION REMAINS FOR CHARGING THE INTEREST. Q.NO. 18. THE CONFIRMATION GIVEN BY YOU IN THE PAST IS ATTACHED. IF THE SAME IS PRODUCED AS A WITNESS ARE YOU READY FOR THE CROSS EXAMINATION. ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 19 ANS: I HAD NOT GIVEN ANY CONFIRMATION AS PER LAW. O N THIS CONFIRMATION IS NOTED BUT NO SIGNATURES ARE MADE. Q_NO. 19. YOU HAVE SAID THAT YOU HAVE NOT LEND ANY MONEY AND YOU DO HAVE SUCH MONEY BUT YOU HAVE LENT THE MONEY TO P.R. PATE L & CO. HOW DID YOU ACCEPT THAT LENDING AND WHAT WAS THE SO URCE OF THAT MONEY. GIVE THE PROOF OF SOURCE OF THAT MONEY. ANS. THIS TRANSACTIONS IS NOT RELATED TO US. Q.NO.20. AS YOU SAID THAT YOU DID NOT HAVE ANY FINA NCIAL TRANSACTIONS BUT WHAT YOU SAY ABOUT THE AFFIDAVIT A BOUT THE POLICE COMPLAINT MADE BY SHRI BHAVIN PRADYUMAN PATEL AND ALPESH STEEL. ANS: I DO NOT KNOW. Q.NO.21. AS YOU SAID THAT YOU HAVE NOT MADE ANY INV ESTMENTS BUT WHAT YOU SAY ABOUT THE LIST ATTACHED HEREWITH ?. ANS: NOT KNOWN Q.NO.22 YOU HAVE MADE THE FINANCIAL TRANSACTIONS LE GALLY OR ILLEGALLY. BUT YOU HAVE PLANNED . IN SUCH A WAY THA T IF YOU ARE CAUGHT FOR THE BENAMI FUND TRANSACTIONS THEN YOU WOULD SHI RKED FROM THE RESPONSIBILITY BY INVOLVING THE OTHER PARTY WITH MA LAFIDE INTENTIONS. IF YOU HAVE ANY PROOF IN THIS REGARD, PRODUCE THE S AME. ANS: THIS IS NOT RELATED TO BUSINESS. 18. A PERUSAL OF THE REPLY TO THE QUESTION WOULD IN DICATE THAT ON ALL VITAL POINTS DEPONENT EITHER GAVE VAGUE REPLIES OR DID NO T REPLY. PROVIDING OF AN OPPORTUNITY TO CROSS THE WITNESS IS NOT A MERE FORM ALITY. IT IS AN EXERCISE TO ELICIT FAVOURABLE FACTS FROM WITNESS OR TO IMPEACH CREDIBILITY OF TESTIFYING WITNESS TO LESSEN THE WEIGHT OF UNFAVOURABLE TESTIM ONY. IF IN THE LIGHT OF THE REPLY GIVEN IN THE CROSS-EXAMINATION, EXAMINATION- IN-CHIEF RECORDED BY THE AO UNDER SECTION 131(1) OF SHRI DIPIN PATEL BEHIND THE BACK OF ASSESSEE IS ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 20 APPRECIATED THEN, IT WOULD GIVE A DOUBT ABOUT DEPOS ITION OF THIS WITNESS. HE COULD NOT GIVE SPECIFIC REPLIES RELATING TO THE TRA NSACTION. PARTICULARLY, WE WOULD LIKE TO PUT EMPHASIS ON REPLY TO QUESTION NOS .13, 14, 19 AND 20 EXTRACTED (SUPRA). IF HIS STATEMENT IS APPRECIATED AS WHOLE THEN, IT IS NOT WORTHY OF CREDENCE. THEREFORE, THE DENIAL OF THE L OAN GIVEN TO THE ASSESSEE DESERVES NOT TO BE ACCEPTED SOLELY ON THE BASIS OF HIS STATEMENT. IT IS NOT STRICT RULE OF LAW, BUT AS A GENERAL RULE OF PRUDENCE, THE ADJUDICATING AUTHORITY SHOULD CALL FOR OTHER MATERIAL FOR CORROBORATION. 19. APART FROM TESTIMONY OF THIS WITNESS, IT IS PER TINENT TO MENTION THAT CASE OF THE AO IS THAT THE ASSESSEE DID NOT TAKE LOANS F ROM DE RATHER THESE WERE IN THE SHAPE OF ACCOMMODATION ENTRIES. IN OTHER WO RDS, THE ASSESSEE MIGHT HAVE GIVEN MONEY IN CASH TO SHRI DIPIN G. PATEL, WH O HAD GIVEN CHEQUES TO THE ASSESSEE IN LIEU OF CASH. LOANS HAVE BEEN TAKE N THROUGH ACCOUNT PAYEE CHEQUES, MEANING THEREBY, CASH MUST HAVE BEEN GIVEN NEAR-ABOUT THOSE DATE. THE ASSESSEE HAS SUBMITTED HER LEDGER ACCOUNT TO TH E AO EXHIBITING RECEIPT OF LOAN. CONTRARY TO THIS EVIDENCE, SHE REQUESTED THE AO TO SUPPLY COPIES OF BANK STATEMENT OF DE SO THAT SHE CAN RECONCILE TR ANSACTIONS WITH THE ASSESSEE AND HOW THESE ARE GENUINE LOANS. ACCORDIN G TO THE ASSESSEE DE WAS HAVING ALMOST TEN BANK ACCOUNTS. THE AO HAS SU PPLIED STATEMENT OF BANK ACCOUNTS PERTAINING TO TWO BANKS I.E. YES BANK FOR THE PERIOD 1.6.2009 TO 16.6.2009 VIZ. ROUGHLY 16 DAYS AND BHAVNAGAR SAH . CO. BANK (PERIOD WAS NOT LEGIBLE). THE ASSESSEE HAS GIVEN HER EXPLANATI ON ABOUT THE ENTRIES IN THOSE ACCOUNTS, AND HOW THEY HAVE MATCHED WITH ENTRIES AV AILABLE IN HER LEDGER ACCOUNT. WE HAVE EXTRACTED REPLIES OF THE ASSESSEE DATED 23.2.2013 (EXTRACTED SUPRA). IT SUGGESTS THAT THERE IS NO COHERENCE BET WEEN THE INFORMATION AVAILABLE WITH THE AO VIS--VIS AVAILABLE WITH THE ASSESSEE WITH REGARD TO THESE TRANSACTIONS. ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 21 20. THE LD.CIT(A) HAS DISCUSSED THIS ISSUE IN LITTL E DETAIL, BUT DEVOTED MUCH ENERGY IN REPRODUCTION OF CIT(A)S ORDER PASSED IN THE CASE OF SHRI DIPIN G. PATEL. THE LD.CIT(A) ALSO REPRODUCED THE FINDING O F THE AO, SUBMISSIONS MADE BY THE ASSESSEE. WHILE MAKING AN ANALYSIS OF T HE STATEMENT GIVEN BY SHRI DIPIN G. PATEL, THE LD.CIT(A) JUST REITERATED REPLIES GIVEN BY HIM. BUT HE HAS NOT ANALYSED INFERENCE REQUIRED TO BE DRAWN FRO M THOSE REPLIES. BASICALLY, THE LD.CIT(A) WAS OF THE OPINION THAT IT IS THE ONU S UPON THE ASSESSEE TO PROVE SOURCE OF LOAN AND ITS NATURE. ONCE THE ASSESSEE F AILED TO FILE CONFIRMATION FROM CREDITOR, THEN IT WILL BE CONSTRUED THAT SHE F AILED TO DISCHARGE ONUS. AS OBSERVED EARLIER, IN THE NORMAL CIRCUMSTANCES, THE LD.CIT(A)S ACTION COULD BE APPRECIATED. BUT, IT IS TO BE SEEN IN THE CONTEXT THAT WHEN A CREDITOR TURN HOSTILE, THEN WHETHER AN ASSESSEE SHOULD BE GIVEN A N OPPORTUNITY TO PROVE HIS CASE WITH THE HELP OF CIRCUMSTANTIAL EVIDENCE OR NO T. THE ROLE OF THE AO IS NOT ONLY OF PROSECUTOR, RATHER HE IS AN ADJUDICATOR ALSO. IT IS FOR THE REVENUE TO PROVIDE A PLATFORM TO THE ASSESSEE WHERE WITH TH E HELP OF STATUTORY POWERS OF THE AO, SHE COULD EXPLAIN HER POSITION FOR NOT V ISITING HER WITH TAX LIABILITY. 21. LOOKING INTO THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT IMPUGNED ORDERS DESERVES TO BE SET ASIDE BECAUSE TH E ASSESSEE WAS NOT GRANTED SUFFICIENT OPPORTUNITY AT THE LEVEL OF THE AO. THE SE APPEALS ARE REMITTED TO THE FILE OF THE AO FOR RE-ADJUDICATION. THE LD.AO SHALL EXAMINE THE LEDGER ACCOUNT OF THE ASSESSEE EXHIBITING DETAILS OF LOANS RECEIVED BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUE, AND THEREAFTER HE WOU LD DIRECT THE BANK FOR PROVIDING BANK STATEMENT OF THE CREDITOR DURING THO SE PERIODS. HE WOULD SUPPLY ALL INCRIMINATING MATERIALS TO THE ASSESSEE FOR GIVING AN EXPLANATION. THE ASSESSEE WILL BE AT LIBERTY TO SUBMIT ANY EXPLA NATION OR DETAILS IN SUPPORT OF HER DEFENCE. ITA NO.921/AHD/2014 & 4 OTHERS SMT.BINTAL D. BAXI VS. DCIT, BHAVNAGAR 22 22. THE OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJURE THE CASE OF THE AO AND WILL NOT CAUSE ANY PREJUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSEE. 23. IN THE RESULT ALL APPEALS OF THE ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 1 ST MAY, 2017 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/05/2017