The ACIT, - 3(1), Indore V. M/s Mittal Appliances Ltd., Indore

ITA 96/IND/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7532 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 10-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KESHAV SAXENA
• Assessee Lawyers: S N AGARWAL AND
• Section: 143(3); 153A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AABCM1903A I.T.A.NO. 96 & 69 /IND/2011 A.Y S . : 2004 - 05 & 2005 - 06 ACIT, 3(1), M/S. MITTAL APPLIANCES LIMITED, INDORE . VS INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI KESHAV SAXENA, CIT DR RESPONDENT BY : SHRI S.N. AGARWAL AND PANKAJ MOGRA, CAS DATE OF HEARING : 22.02.2012 DATE OF PRONOUNCEMENT : 28 . 0 3 .201 2 O R D E R PER R. C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 31 ST MARCH, 2011, FOR THE ASSESSMENT YEARS 2004-05 & 2005-06. 2. IN THE ASSESSMENT YEAR 2004-05, THE REVENUE IS AGGRIEVED FOR DELETION OF ADDITION OF RS. 22 LAKHS MADE BY THE -: 2: - 2 ASSESSING OFFICER U/S 68 ON ACCOUNT OF SHARE APPLIC ATION MONEY RECEIVED BY THE ASSESSEE COMPANY 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. DURING THE COURSE OF ASSESSMENT, THE ASSES SING OFFICER ASKED THE ASSESSEE TO PRODUCE THE SHARE APP LICANT. IN REPLY TO THE SAID QUERY, THE ASSESSEE HAD FILED :- (I) CONFIRMATION OF SHARE APPLICATION MONEY RECEIVED. (II) THE AMOUNT OF SHARE APPLICATION MONEY WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. COPIES OF BANK STATEMENT WERE FILED. (III) THE ASSESSEE ALSO REQUESTED TO THE ASSESSING OFFICE R THAT IN ASSESSEE OF ANY DOUBT, HE CAN COLLECT INFORMATION DIRECTLY FROM SHAREHOLDERS. 4. THE ASSESSEE ALSO FILED COPY OF BANK STATEMENT HIGHLIGHTING THE INVESTMENT MADE IN THE SHARE APPLI CATION MONEY, COPY OF CERTIFICATE OF BANK STATEMENT, CONFI RMING THE INVESTMENT MADE IN THE SHARE APPLICATION MONEY, COP Y OF AUDITED FINAL ACCOUNTS FOR THE YEAR ENDING ON 31.3. 2005, 31.3.2006 IN THE CASE OF PURVI FINEVEST LIMITED. CO PY OF ASSESSMENT ORDER PASSED U/S 143(3) FOR THE ASSESSME NT YEAR -: 3: - 3 2005-06, 2006-07 AND 2007-08 WAS ALSO FILED. IN RES PECT OF EASTWEST FINVEST PRIVATE LIMITED, THE ASSESSEE HAS FILED COPY OF BANK STATEMENT, COPY OF AUDITED FINAL ACCOUNTS F OR THE YEAR 31.3.2005 AND 31.3.2006 AND COPY OF SHARE APPLICATI ON FORM DULY SIGNED AND PROPERLY FILED. THE ASSESSEE HAS AL SO FILED COPY OF ASSESSMENT ORDER PASSED U/S 143(3) IN THE SAID C OMPANY FOR ASSESSMENT YEAR 2005-06 TO 2007-08. 5. THE ASSESSING OFFICER DID NOT ACCEPT THE GENUINENES S OF SHARE APPLICATION TRANSACTION, ACCORDINGLY, ADDE D THE SAME U/S 68. BY THE IMPUGNED ORDER, THE CIT(A) DELETED A DDITION AND REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE ASSESSEE WAS IN RECEIPT OF SHARE APPLICATION MONEY FROM LUNKAD GROPUP OF COMPANIES. I.T.A.T. VIDE ITS ORDER DATED 30 TH DECEMBER, 2011, IN CASE OF NARMADA EXTRUSION LIMITED, WHICH IS ONE OF THE MITTAL GROUP OF COMPANIES, HAD CATEGORICALLY ACCEPTED THE IDENTITY OF LUNKAD GROUP OF COMPANIES. AT PAGE 43 OF THE ORDER, WHICH READS AS UNDER :- -: 4: - 4 IN THE INSTANT CASE, THERE IS NO DISPUTE TO THE IDENTITY IN SO FAR AS LUNKAD GROUP IS ALSO ON DEPARTMENTS RECORD AND A SURVEY HAS BEEN CARRIED OUT AT PREMISES OF LUNKAD GROUP. 7. FURTHER IN THE CASE OF NARMADA EXTRUSIONS LIMITED, THE DEPARTMENT ITSELF HAS ACCEPTED THE AMOUNT OF SH ARE APPLICATION MONEY RECEIVED FROM LUNKAD GROUP AS GEN UINE AND DID NOT MAKE ANY ADDITION. 8. THAT IN THE FOLLOWING CASES IT WAS HELD THAT WHEN T HE PAN NO. OF THE SHAREHOLDERS WERE PROVIDED AND THE AMOUNT OF SHARE APPLICATION MONEY WAS RECEIVED THROUGH AN ACC OUNT PAYEE CHEQUE IN THAT CASE, THE IDENTITY OF THE SHAR E HOLDER BE TREATED AS EXPLAINED :- 1. CIT VS. ROCK FORT METAL & MINERSL 198 TAXMANN 497 (DEL) 2. CIT VS. WINSTRAL PETROCHEMICALS (P) LTD 330 ITR 603 (DEL) 3. CIT V. OASIS HOSPITALITIES (P) LTD. 333 ITR 119 (DEL) 4. CIT VS. GANGOUR INVESTMENT LTD 335 ITR 359 (DEL) 5. CIT VS. TULIP FINANCE LTD 015 DTR 185 (DEL) -: 5: - 5 9. IN VIEW OF DOCUMENTS FILED BEFORE THE ASSESSING OFF ICER, WHEREIN NOT ONLY THE IDENTITY OF THE SHARE APPLICAN T WAS ESTABLISHED, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF CIT(A) FOR DELETING ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE APPLICATION MONEY. 10. NEXT GRIEVANCE OF THE REVENUE RELATES TO DELETION O F ADDITION MADE ON ACCOUNT OF INTEREST AND COMMISSION PAID ON THE LOAN. THESE ISSUES HAVE BEEN DEALT WITH BY US W HILE DECIDING THE REVENUES APPEAL IN ASSESSMENT YEAR 20 05-06, WHEREIN SIMILAR ADDITIONS WERE MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF UNSECURED LOAN TAKEN FROM THE LUNKAD GROUP AND INTEREST PAID THEREON. 11. NEXT GRIEVANCE OF THE REVENUE RELATES TO DELETION O F ADDITION OF RS. 45,86,946/- U/S 41(1). 12. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE ASSESSING OFFICER HAS ADDED THE SAID A MOUNT BY STATING THAT BALANCES OF THESE PARTIES WERE OUTSTAN DING FOR THE LAST MORE THAN 3 YEARS. BEFORE THE ASSESSING OFFICE R COPY OF ACCOUNT OF ALL THESE PARTIES WERE FURNISHED. THE AM OUNT TO ALL THESE PARTIES HAVE BEEN PAID THROUGH ACCOUNT PAYEE CHEQUE IN -: 6: - 6 THE SUBSEQUENT YEARS, THEREFORE, THERE APPEARS TO B E NO REASON FOR TREATING THE AMOUNT OUTSTANDING AS ON 31 ST MARCH, 2004, AS LIABLE FOR PROVISIONS OF SECTION 41(1). THE LD. CIT(A) HAS ALSO DELETED THE ADDITION BY DISCUSSING VARIOUS DECISION S OF HON'BLE HIGH COURT AS REPORTED AT 282 ITR 379, 49 ITR 578, 62 ITR 34, 24 SOT 393. THE LD. CIT(A) HAS ALSO ELABORATELY DIS CUSSED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SU GALI SUGAR WORKS PRIVATE LIMITED, 236 ITR 518. 13. AS THERE IS NO DISPUTE TO THE FACT THAT THE OUTSTAN DING AMOUNT TO ALL THESE PARTIES HAVE BEEN PAID THROUGH ACCOUNT PAYEE CHEQUES IN SUBSEQUENT YEARS, WE DO NOT FIND A NY REASON TO INTERFERE IN THE ORDER OF CIT(A) FOR DELETING TH E ADDITION MADE U/S 41(1) OF THE INCOME-TAX ACT, 1961,. 14. IN THE ASSESSMENT YEAR 2005-06, THE REVENUE IS AGGRIEVED FOR DELETION OF ADDITION MADE ON ACCOUNT OF UNSECURED LOAN OF RS. 1.10 CRORES FROM FIVE PARTIES AND INTEREST PAID THEREON 15. THE LD. CIT(A) HAS DELETED THE ADDITION BY OBSERVIN G AS UNDER :- 4.2.3 IN THE CONTEXT OF THE FACTS AND FINDINGS AS GIVEN IN THE LUNKAD GROUP OF CASES, IT HAS BEEN -: 7: - 7 HELD THAT THE LUNKAD GROUP HAD FAILED IN DISCHARGING ITS ONUS TO EXPLAIN THE SOURCE OF HUGE SHARE CAPITAL INTRODUCED YEAR AFTER YEAR IN THEIR GROUP COMPANIES. THE DOCUMENTS IMPOUNDED DURING THE SURVEY IN THE LUNKAD GROUP OF CASES, THOUGH, FOR THE LIMITED PERIOD ONLY, DO SUGGEST THE MODUS OPERANDI ADOPTED BY THEM IN PROVIDING ENTRIES TO THE BENEFICIARIES. BUT THIS HAS NOT BEEN ACCEPTED BY THE LUNKAD GROUP SO FAR. RATHER, THEY (LUNKAD GROUP) HAVE ISSUED CONFIRMATORY LETTERS TO THE VARIOUS BENEFICIARIES IN SUPPORT OF HAVING GIVE N GENUINE LOAN AND SHARE APPLICATION MONEY. HAD THEY ACCEPTED THE MODUS OPERANDI OF PROVIDING ONLY ENTRIES, THEN THE REQUIRED COURSE WOULD HAVE BEEN CONFIRMING THE ADDITIONS MADE IN THE HANDS OF BENEFICIARIES. BUT THIS HAS NOT BEEN DONE SO. RATHE R THE LUNKAD GROUP HAD TRIED TO REINFORCE THE STAND O F BENEFICIARIES BY WAY OF ISSUING CONFIRMATORY LETTERS TO THEM BUT IN THEIR OWN CASES THEY HAVE UTTERLY FAILED TO DISCHARGE THE PRIMARY ONUS OF -: 8: - 8 EXPLAINING THE SOURCE. THEREFORE, IN THE CIRCUMSTANCES, THE ADDITIONS MADE ON THIS ISSUE WERE SUSTAINED ON SUBSTANTIVE BASIS IN THE CASES OF LUNKAD GROUP OF COMPANIES ITSELF. CONFIRMING ADDITION ON THE SAME ISSUE IN THE HANDS OF BENEFICIARIES WOULD I AMOUNT DOUBLE ADDITION [ THOUGH ON DIFFERENT HANDS] . FURTHER IN THE FACTS OF THE CASE, THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF METACHEM INDUSTRIES LIMITED SUPPORTS THE GROUNDS OF THE ASSESSEE. ACCORDINGLY, KEEPING IN VIEW THE FINDINGS WHICH HAS BEEN GIVEN BY ME IN LUNKAD GROUP OF CASES AND FOLLOWING THE PRINCIPAL OF CONSISTENCY, THE ADDITION MADE U/S 68 ON THIS ISSUE, CAN NOT BE SUSTAINED IN THE CASES OF BENEFICIARIES. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALS O DECISIONS OF TRIBUNAL IN THE CASE OF MITTAL GROUP VIDE ORDER DATED 30 TH -: 9: - 9 DECEMBER, 2011, AND ALSO THE ORDER OF THE TRIBUNAL IN THE CASE OF LUNKAD GROUP ORDER DATED 31.01.2012. 17. IN THE ORDER DATED 30 TH DECEMBER, 2011, THE DELETION OF ADDITION MADE BY THE LD.CIT(A)ON THE PLEA OF DOUBL E ADDITION, WAS REVERSED BY OBSERVING AS UNDER :- FROM THE ORDER OF THE CIT(A), IT IS CLEAR THAT H E HAS DELETED THE ADDITION IN THE HANDS OF THE ASSESSEE COMPANY ON THE PLEA THAT ADDITION IN THE HANDS OF CREDITOR COMPANY (LUNKAD GROUP) HAS BEEN CONFIRMED ON SUBSTANTIVE BASIS. AS PER CIT(A), IF HE CONFIRME D THE SAME ADDITION IN THE HANDS OF THE ASSESSEE COMPANY, IT WILL AMOUNT TO DOUBLE ADDITION IN RESPECT OF THE SAME AMOUNT OF INCOME. WE FOUND THAT ADDITIONS HAVE BEEN MADE IN THE HANDS OF LUNKAD GROUP ON THE PLEA THAT THE SOURCE OF SHARE CAPITAL RECEIVED BY THEM C OULD NOT BE EXPLAINED. HOWEVER, ADDITION HAS BEEN MADE I N THE HANDS OF THE ASSESSEE COMPANY ON THE PLEA THAT GENUINENESS OF THE LOAN TRANSACTIONS HAS NOT BEEN ESTABLISHED IN VIEW OF THE INCRIMINATING DOCUMENTS FOUND DURING COURSE OF SURVEY AT LUNKAD GROUP. -: 10: - 10 INCRIMINATING DOCUMENTS WAS FOUND PERTAINED TO THE MONTH OF APRIL, 2006, WHICH INDICATED THAT LUNKAD GROUP WAS IN RECEIPT OF CASH FROM VARIOUS BENEFICIARIES INCLUDING ASSESSEE AND WHICH HAS AGAI N BEEN GIVEN TO THE BENEFICIARIES THROUGH CHEQUES. TH ERE IS NO DISPUTE TO THE WELL SETTLED LEGAL PROPOSITION THAT IN CASE OF CASH CREDIT, ASSESSEE IS NOT ONLY REQUIR ED TO PROVE THE IDENTITY OF THE LOAN CREDITOR BUT ALSO TH E GENUINENESS OF TRANSACTION OF LOAN AS WELL AS CAPAC ITY OF THE LOAN CREDITOR TO ADVANCE THE SAID AMOUNT OF LOAN. IN THE INSTANT CASE, THERE IS NO DISPUTE TO T HE IDENTITY IN SO FAR AS LUNKAD GROUP IS ALSO ON DEPARTMENTS RECORD AND A SURVEY HAS BEEN CARRIED OUT AT PREMISES OF LUNKAD GROUP. THE GENUINENESS OF TRANSACTION OF THE LOANS BECOME DOUBTFUL IN VIEW OF THE INCRIMINATING DOCUMENTS FOUND DURING SURVEY AT LUNKAD GROUP. EVEN THOUGH THE ASSESSEE HAS FILED LOAN CONFIRMATION ALONGWITH AFFIDAVIT OF DIRECTOR O F THE CREDITOR COMPANY (LUNKAD GROUP) BUT THEY COULD NOT PRODUCE THE DIRECTOR OF LUNKAD GROUP TO SUBSTANTIAT E -: 11: - 11 THE CONTENTS OF AFFIDAVIT AS WELL AS CONFIRMATION S O FILED. THE CIT(A) HAS DELETED THE ADDITION ON THE P LEA OF DOUBLE ADDITION BY STATING THAT CONFIRMING ADDIT ION IN THE HANDS OF ASSESSEE COMPANY IN RESPECT OF LOAN S RECEIVED BY IT AMOUNTS TO DOUBLE ADDITION. IN THIS REGARD, THERE IS A DIRECT DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF ITO VS. CH ATCHAIAH, 218 ITR 2 39, WHEREIN IT WAS OBSERVED THAT NO OPTION HAS BEEN GIV EN UNDER THE 1961 ACT, AND IT HAS BEEN SPECIFICALLY PROVIDED THAT TAX HAS TO BE LEVIED ON RIGHT PERSON NOTWITHSTANDING THE FACT THAT THE AMOUNT HAS ALREAD Y BEEN ADDED IN THE HANDS OF SOME OTHER PERSON. MEANING THEREBY ADDITION SHOULD BE MADE IN THE HANDS OF THE RIGHT PERSON AND THE SAME CANNOT BE DELETED ONLY ON THE PLEA THAT THE SAME AMOUNT HAS BEEN ADDED IN THE HANDS OF SOME OTHER PERSON. IT WA S OBSERVED BY THE SUPREME COURT THAT THERE IS NO OPTI ON UNDER THE 1961 ACT, UNLIKE THE ONE GIVEN UNDER 1922 ACT AND THE AO MUST TAX THE RIGHT PERSON AND RIGHT PERSON ONLY. BY RIGHT PERSON IS MEANT THE PERSON, -: 12: - 12 WHO IS LIABLE TO BE TAXED ACCORDING TO THE LAW WITH RESPECT TO A PARTICULAR INCOME. THE EXPRESSION WRO NG PERSON IS OBVIOUSLY USED AS OPPOSITE OF THE EXPRESSION RIGHT PERSON. MERELY BECAUSE A WRONG PERSON IS TAXED WITH RESPECT TO A PARTICULAR INCOME , THE AO IS NOT PRECLUDED FROM TAXING THE RIGHT PERSON WI TH RESPECT TO THAT INCOME. THIS IS SO IRRESPECTIVE OF THE FACT, WHICH COURSE IS MORE BENEFICIAL TO THE REVENU E. A PERSON LAWFULLY LIABLE TO BE TAXED CAN CLAIM NO IMMUNITY BECAUSE THE ASSESSING OFFICER HAS TAXED TH E SAID INCOME IN THE HANDS OF ANOTHER PERSON CONTRARY TO LAW. SIMILAR PROVISION HAS BEEN LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SMT. TARADEVI, 88 ITR 323. THE PROPOSITION SO DISCUSSED ABOVE AS LAID DOWN BY THE HON'BLE SUPREME COURT HAS BEEN FOLLOWED BY THE I.T.A.T. SPECIAL BENCH IN THE CASE OF PRADEEP AGENCIES, 111 TTJ 346. APPLYING THE ABOVE PROPOSITION OF LAW TO THE FACTS OF THE INSTANT CASE, WE CAN SAFELY CONCLUDE THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION IN THE HANDS OF -: 13: - 13 THE ASSESSEE COMPANY MERELY ON THE PLEA THAT THE S AME AMOUNT HAS BEEN ADDED IN THE HANDS OF THE CREDITOR COMPANY. WE FOUND THAT IN CASE OF LUNKAD GROUP ADDITION WAS MADE IN RESPECT OF CASH RECEIVED BY I T FROM PERSONS, WHOSE NAME, ADDRESS AND OTHER PARTICULARS COULD NOT BE FURNISHED BEFORE ASSESSING OFFICER. THIS AD DITION IS MOTHERING TO DO WITH THE GENUINENESS OF LOAN RECEI VED BY ASSESSEE FROM LUNKAD GROUP. BEFORE REACHING TO THE THIRD CRITERIA OF CREDITWORTHINESS, ASSESSEE HAVE TO CROSS THE BARRIER OF GENUINENESS OF LOAN TRANSACTI ON, WHICH HAS BECOME DOUBTFUL IN VIEW OF THE INCRIMINAT ING MATERIAL FOUND DURING COURSE OF SURVEY AT LUNKAD GR OUP WITH REGARD TO RECEIPT OF CASH FROM THE ASSESSEE CO MPANY AND ISSUE OF CHEQUE AGAINST SUCH CASH IN FAVOUR OF THE ASSESSEE COMPANY. THUS, A LEGALLY WRONG VIEW HAS BE EN TAKEN BY THE LD.CIT(A), WHICH MADE THE DEPARTMENT ENTITLED TO FILE AN APPEAL AGAINST SUCH ORDER OF CI T(A). THUS, THERE IS NO MERIT IN THE ARGUMENT OF LD. AUTH ORIZED REPRESENTATIVE TO THE EFFECT THAT THE DEPARTMENT HA D WRONGLY COME IN APPEAL AGAINST THE ORDER OF CIT(A). -: 14: - 14 18. HOWEVER, THE ISSUE OF ADDITION HAS ALSO BEEN DEALT ON MERIT IN THE CASE OF MITTAL GROUP (SUPRA) AND MATT ER WAS RESTORED TO THE ASSESSING OFFICER WITH THE FOLLOWIN G OBSERVATIONS :- 19. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM RECORD THAT THE ASSESSEE COMPANY HAS TAKEN LOAN FROM LUNKAD GROUP SINCE ASSESSMENT YEAR 2002-03 ONWARDS. NOT ONLY LOAN WAS TAKEN BUT IT WAS ALSO REPAID EITHER DURING THE YEAR OR IN SUBSEQUENT YEAR. THE ASSESSEE HAS TAKEN LOAN THROUGH ACCOUNT PAYEE CHEQUES AS PER ITS BUSINESS REQUIREMENT, PAID INTEREST THEREON AND ALSO DEDUCTED TDS ON SUCH INTE REST PAYMENT. IN ALL THESE YEARS, THE ASSESSEE HAD FILED LOAN CONFIRMATION LETTERS. THESE LOAN TRANSACTIONS HAVE BEEN ACCEPTED BY THE DEPARTMENT EITHER U/S 143(1) OR 143 (3) OF THE INCOME-TAX ACT, 1961. THE WHOLE PROBLEM AROS E DUE TO THE SURVEY AT BUSINESS PREMISES OF LUNKAD GROUP ON 2.5.2006, WHEREIN CERTAIN DOCUMENTS FOR TH E MONTH OF APRIL, 2006, WAS FOUND AND IMPOUNDED, WHIC H INDICATED THAT LUNKAD GROUP HAD RECEIVED CASH FROM -: 15: - 15 VARIOUS PERSONS INCLUDING ASSESSEE. EVEN THOUGH FUL L NAME OF ASSESSEE WAS NOT MENTIONED ON THE PAPERS SO IMPOUNDED BUT THE ASSESSING OFFICER INFERRED THAT N AME OF NARMADA AS RELATING TO ASSESSEE COMPANY, NAMEL Y, NARMADA EXTRUSION LIMITED. THE LUNKAD GROUP WAS ASKED TO EXPLAIN THESE INCRIMINATING DOCUMENTS INDICATING RECEIPT OF CASH FROM VARIOUS PARTIES, BU T THE LUNKAD GROUP COULD NOT EXPLAIN THE SAME AND DISPUTE AROSE BETWEEN THE LUNKAD GROUP AND DEPARTMENT WITH REGARD TO SURVEY CONDUCTED AT LUNKAD GROUP. THE LUNKAD GROUP HAS ALSO FILED A WRIT PETITION IN THE M.P.HIGH COURT AGAINST THE DEPARTMENT FOR THE SURVE Y SO CONDUCTED AND THE RECORDS SO IMPOUNDED. THIS WR IT PETITION IS STILL PENDING IN THE COURT. IT WAS ALSO BROUGHT TO OUR NOTICE THAT HIGH COURT HAS DIRECTED FOR ISSU E OF COPY OF DOCUMENTS SO IMPOUNDED ALONGWITH COPY OF BOOKS OF ACCOUNTS TO LUNKAD GROUP, BUT AS PER ASSERTION OF LUNKAD GROUP, THE SAME HAVE STILL NOT BEEN FURNISHED TO IT. WHEN THE ASSESSMENT OF THE ASSESSE E COMPANY WAS FRAMED WITH RESPECT OF THE SEARCH -: 16: - 16 CONDUCTED AT BUSINESS PREMISES U/S 153A ON 5.10.2006, THE DEPARTMENT FOUND THAT THE ASSESSEE GROUP HAD ALSO TAKEN LOANS FROM LUNKAD GROUP. THE ASSESSEE WAS AGAIN ASKED DURING PROCEEDINGS U/S 153A TO SUBSTANTIATE THE LOAN TRANSACTION FOR WHICH THE ASSESSEE HAD FURNISHED CONFIRMATION LETTER AS WELL AS AFFIDAVITS OF CREDITORS. THE DEPARTMENT ALSO ASKED TO PRODUCE THE DIRECTOR OF LUNKAD GROUP BEFORE THEM. T HE ASSESSEE HAD PRODUCED LOAN CONFIRMATION LETTERS AND AFFIDAVIT OF LUNKAD GROUP TO SUBSTANTIATE THE LOAN TRANSACTION, BUT THE ASSESSEE FAILED TO PRODUCE THE DIRECTORS OF LUNKAD GROUP IN PERSON. UNDER THESE CIRCUMSTANCES, THE DEPARTMENT HAS TAKEN A VIEW THAT ALL THE TRANSACTION OF LOAN STARTING FROM FINANCIAL YEAR 2001-02 TILL DATE OF SEARCH WERE NOT GENUINE AND IT WAS ASSESSEES OWN MONEY, WHICH HAS BEEN GIVEN BACK TO THE ASSESSEE IN THE FORM OF LOAN ENTRY. HERE THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE WA S THAT MR.LUNKAD HAD CHALLENGED THE SURVEY ACTION CONDUCTED BY INCOME TAX DEPARTMENT BEFORE THE -: 17: - 17 HONBLE HIGH COURT. SINCE THE WRIT AS FILED BY LUNK AD GROUP IS PENDING BEFORE THE HONBLE HIGH COURT FOR THE REASONS HE HAS GRIEVANCE WITH THE INCOME TAX DEPARTMENT. DUE TO DISPUTE OF LUNKAD GROUP WITH DEPARTMENT AND PENDENCY OF WRIT PETITION IN THE HON 'BLE HIGH COURT, ASSESSEE COULD NOT PERSUADE THE LUNKAD GROUP TO APPEAR IN PERSON BEFORE THE DEPARTMENT. HI S FURTHER CONTENTION WAS THAT IMPOUNDED DOCUMENT FROM LUNKAD GROUP ONLY PERTAINED TO THE MONTH OF APRIL, 2006, AND THERE WAS NO INCRIMINATING MATERIAL FOR A NY PERIOD OTHER THAN MONTH OF APRIL, 2006, INDICATING THAT THE ASSESSEE HAS GIVEN ANY CASH TO LUNKAD GROUP FOR TAKING LOAN ENTRY FROM 1.4.2001 TO 31.3.2007. HE FURTHER CONTENDED THAT AT THE MOST ADDITIONS COULD BE MADE ONLY WITH RESPECT TO THE ENTRIES IN THE IMPOUN DED DOCUMENTS, WHICH INDICATED ANY CASH BEING GIVEN BY THE ASSESSEE TO LUNKAD GROUP AND NOT BEYOND IT. HE FURTHER CONTENDED THAT ASSESSING OFFICER HAD NO WHE RE RELATED THE CASH ENTRIES ON THESE DOCUMENTS AS HAVI NG BEEN DEPOSITED IN BANK ACCOUNT FOR ISSUE OF CHEQUE TO -: 18: - 18 ASSESSEE, NOR MADE ANY EFFORTS TO RELATE SUCH CASH DEPOSIT AS HAVING BEEN UTILIZED FOR ISSUE OF CHEQUE IN ASSESSEES FAVOUR NOR ANYTHING WAS BROUGHT ON RECOR D BY ASSESSING OFFICER SUGGESTING RETURN OF CASH TO ASSESSEE WHENEVER ASSESSEE HAD REPAID THE LOAN SO TAKEN FROM LUNKAD GROUP. ON THE OTHER HAND, CONTENTION OF THE LD. CIT DR WAS THAT INCRIMINATING DOCUMENTS AS MENTIONED BY ASSESSING OFFICER IN HIS ASSESSMENT ORDER EVEN THOUGH PERTAINED TO ONE MONTH , IT INDICATED THE MODUS OPERANDI OF LUNKAD GROUP FOR ADVANCING LOANS TO THE ASSESSEE , THEREFORE, THE DEPARTMENT HAS APPLIED THE SAME CONCLUSION EVEN WIT H RESPECT TO THE LOANS, WHICH WERE TAKEN AND ALSO REP AID IN EARLIER YEARS FOR WHICH NO INCRIMINATING DOCUMEN T WAS FOUND EITHER AT THE BUSINESS PREMISES OF THE ASSESSEE OR AT LUNKAD GROUP. 20. AFTER ANALYZING ALL THE DOCUMENTS PLACED ON RECORD, WE FOUND THAT ADDITIONS HAVE BEEN MADE B Y ASSESSING OFFICER IN RESPECT OF ALL THE LOANS WHICH EVEN THOUGH TAKEN AND REPAID BY ASSESSEE IN EARLIER YEAR S -: 19: - 19 STARTING FROM 1.4.2001. CONTENTION OF ASSESSING OFF ICER WAS THAT SINCE THE ASSESSEE COULD NOT PRODUCE THE CREDITOR IN PERSON, THEREFORE, THE CONFIRMATION AND THE AFFIDAVITS FILED BY THE CREDITORS CANNOT BE RELIED UPON. WE FOUND THAT ALL THE NECESSARY DOCUMENTARY EVIDENC E TO SUBSTANTIATE THE LOAN TRANSACTION HAVE BEEN FILE D BY THE ASSESSEE, WHICH INDICATED RECEIPT AND REPAYMENT OF LOAN, PAYMENT OF INTEREST THEREON AND DEDUCTION OF TAX AT SOURCE IN RESPECT OF THE INTEREST PAID THEREON. IT APPEARS THAT DUE TO THE DISPUTE BETWEEN THE DEPARTMENT AND THE LUNKAD GROUP AND THE WRIT PETITION FILED BY LUNKAD GROUP IN THE HIGH COURT, ASSESSEE COULD NOT PERSUADE THE LUNKAD GROUP TO APPEAR IN PERSON BEFORE THE DEPARTMENT. IT IS ALSO NOT IN DISPUTE THAT NO INCRIMINATING DOCUMENT WAS FOUND BY DEPARTMENT IN ASSESSEES PREMISES EITHER DURING COURSE OF SEARCH OR ON SUBSEQUENT INQUIRY SUGGESTIN G ANY CASH GIVEN BY ASSESSEE TO LUNKAD GROUP IN CONSIDERATION OF LOANS SO TAKEN NOR RECEIPT OF ANY CASH WHENEVER THERE WAS REPAYMENT OF LOAN BY ASSESSEE TO -: 20: - 20 LUNKAD GROUP. UNDER THESE CIRCUMSTANCES AND IN THE INTEREST OF JUSTICE, ONE MORE OPPORTUNITY SHOULD BE GIVEN TO ASSESSEE FOR PRODUCING THE LOAN CREDITOR FOR CONFIRMING THE CONTENTS OF CONFIRMATION AND AFFIDAV ITS SO FILED. KEEPING IN VIEW INCRIMINATING DOCUMENTS F OUND DURING THE COURSE OF SURVEY AT LUNKAD GROUP FOR THE PERIOD 1.4.2006 TO 1.5.2006 PERTAINING TO THE ASSESSMENT YEAR 2007-08, EVEN THOUGH RELATED TO ONE MONTH ONLY, THE DEPARTMENT WAS JUSTIFIED IN MAKING ADDITION IN THE HANDS OF THE ASSESSEE COMPANY IN TH E ASSESSMENT YEAR 2007-08 BY DISBELIEVING THE LOAN TRANSACTIONS. AS PER OUR CONSIDERED VIEW, ADDITION SHOULD BE MADE WITH RESPECT TO THE AMOUNT OF CASH FOUND TO BE GIVEN BY THE ASSESSEE TO THE LUNKAD GRO UP AS PER INCRIMINATING DOCUMENTS SO FOUND AT LUNKAD GROUP DURING SURVEY AFTER GIVING OPPORTUNITY TO ASSESSEE FOR CROSS EXAMINATION. MERE PRESUMPTIONS WITHOUT ANY MATERIAL ON RECORD TO THE EFFECT THAT E VEN IN RESPECT OF ALL THE EARLIER YEARS, THE ASSESSEE MIGH T HAVE GIVEN CASH TO THE LUNKAD GROUP FOR GETTING UNSECURE D -: 21: - 21 LOAN, IS NOT JUSTIFIED. ALL THE LOANS WERE RECEIVED BY ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES AND ALSO REPAID THROUGH ACCOUNT PAYEE CHEQUES. ASSESSEE HAD ALSO FILED EVEN CONFIRMATION LETTERS AND AFFIDAVITS TO SUBSTANTIATE THE LOAN TRANSACTIONS. ONLY BECAUSE OF INCRIMINATING DOCUMENT PERTAINING TO PERIOD 1.4.200 6 TO 1.5.2006, THE DEPARTMENT DOUBTED THE GENUINENESS OF ALL THE LOAN TRANSACTIONS PERTAINING TO PERIOD STAR TING FROM 1.4.2001 TO 31.3.2007. BEFORE MAKING ADDITION OR DISALLOWING THE CASH CREDIT, ON THE PLEA OF GENUINE NESS, THE DEPARTMENT IS REQUIRED TO BRING ON RECORD SOME EVIDENCE TO INDICATE THAT THE ASSESSEE HAS PAID CAS H IN CONSIDERATION OF THE CHEQUES SO ISSUED. WITHOUT ANY EVIDENCE, MUCH LESS A COGENT EVIDENCE, IT IS NOT LE GALLY JUSTIFIED TO DOUBT THE GENUINENESS OF LOAN TRANSACT ION OR MAKE ADDITION IN THE HANDS OF THE ASSESSEE COMPANY FOR WHICH NO MATERIAL MUCH LESS A COGENT MATERIAL I S IN POSSESSION OF DEPARTMENT. IN THE INTEREST OF JUSTIC E AND FAIR PLAY, WE RESTORE THE GROUNDS RAISED BY THE ASSESSEE IN THE CROSS OBJECTION TO THE FILE OF THE -: 22: - 22 ASSESSING OFFICER FOR DECIDING AFRESH IN TERMS OF O UR ABOVE DISCUSSION AND AS PER LAW. 19. AS THE ISSUE RAISED BY THE REVENUE ARE COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF MITTAL GRO UP, RESPECTFULLY FOLLOWING THE SAME, WE RESTORE THE MAT TER TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH IN TERMS OF OUR DIRECTIONS GIVEN IN THE ORDER OF MITTA L GROUP DATED 30 TH DECEMBER, 2011. 20. IN THE RESULT, APPEALS OF THE REVENUE ARE ALLOWED I N TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH, 2012. SD/ - SD/ - (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH MARCH, 2012. CPU* 2728