Appeal Details
Counselvise Citation
[2018] 118 COUNSELVISE.COM (IT) 7976 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
4 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-12-2018
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2011-2012
Appeal Filed On
29-08-2018
Judgement Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 997 TO 1002/JP/2018 & 1119/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08. M/S. KOTA DALL MILL C-BLOCK, MULTIMETALS LTD. CAMPUS 6/7, HEAVY INDUSTRIAL AREA, KANSUA ROAD, KOTA. CUKE VS. THE DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE, ROOM NO. 212, 2 ND FLOOR, C.R. BUILDING, RAWAT BHATA ROAD, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAAFK 8105 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 1057 TO 1062/JP/2018 & 1210/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, KOTA. CUKE VS. M/S. KOTA DALL MILL C-BLOCK, MULTIMETALS LTD. CAMPUS 6/7, HEAVY INDUSTRIAL AREA, KANSUA ROAD, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAAFK 8105 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL & SHRI GULSHAN AGARWAL (CAS) JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28.11.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 31/12/2018. VKNS'K@ ORDER PER BENCH : THESE ARE SEVEN SETS OF CROSS APPEALS DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE LD. CIT (A) ARISE FROM THE ASSESSMENT FRAMED IN PURSUANT TO THE SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE IT ACT FOR THE ASSESSMENT YEARS 2010-11 TO 2016-17 RESPECTIVELY. OUT OF THESE SEVEN ASSESSMEN T YEARS, THE ASSESSMENTS WERE 2 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. FRAMED UNDER SECTION 153A FOR THE ASSESSMENT YEARS 2010-11 TO 15-16 AND THE ASSESSMENT FOR THE ASSESSMENT YEAR 2016-17 WAS FRAM ED UNDER SECTION 143(3) READ WITH SECTION 153B(1)(B) OF THE IT ACT. 2. COMMON GROUNDS HAVE BEEN RAISED BY THE ASSESSEE AS WELL AS BY THE DEPARTMENT IN THESE APPEALS. HOWEVER, FOR THE SAKE OF CONVENIENCE AND THE ISSUE INVOLVED IN THESE APPEALS, THE ASSESSMENT YEARS 201 0-11 TO 13-14 ARE TAKEN AS A SEPARATE GROUP OF CROSS APPEALS DUE TO THE REASON T HAT THE ASSESSMENTS FOR THESE FOUR ASSESSMENT YEARS WERE NOT PENDING AS ON THE DA TE OF SEARCH AND HENCE THE OBJECTION RAISED BY THE ASSESSEE AGAINST THE ADDITI ONS MADE BY THE AO IS REQUIRED TO BE CONSIDERED SEPARATELY FOR THESE FOUR ASSESSMENT YEARS. FOR THE PURPOSE OF RECORDING THE FACTS AND GROUNDS RAISED BY THE ASSES SEE AS WELL AS DEPARTMENT, THE APPEAL FOR THE ASSESSMENT YEAR 2010-11 IS TAKEN AS A LEAD CASE. 3. FOR THE ASSESSMENT YEAR 2010-11 THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE RAISED THE FOLLOWING GROUNDS :- ASSESSEES GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE ORDER PASSED U/S 153A READ WITH SECTION 143(3) OF THE INC OME TAX ACT 1961 IS BAD IN LAW, VOID AB-INITIO, AND DESERVES TO BE ANNU LLED AS THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS NOT ABATED AS ON THE DATE OF SEARCH AND CIT (A) ERRED IN HOLDING THAT THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED IN VIEW OF SLPS ADMITTED IN VARIOUS CASES. THE LD. CIT (A) FURTHER ERRED IN HOLDING THAT THE ADDITIONS ARE TO BE ADJUD ICATED ON MERITS AS PER RELEVANT GROUND OF APPEAL HENCE THE ISSUE REMAINS F OR ACADEMIC DISCUSSION ONLY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT (A) ERRED IN NOT DECLARING THE ASSESSMENT ORDER AS BAD IN LAW AND VOID AB INITIO. THE FINDINGS OF LD. CIT (A) IN THIS REGARD ARE PERVERSE AND ERRONEOUS. IT IS CONTENDED THAT THE LD. AO PASSED T HE ASSESSMENT ORDER AGAINST THE DOCTRINE OF AUDI ALTERM PARTEM, VIOLA TING THE PRINCIPLE OF NATURAL JUSTICE AND NOT GIVING THE OPPORTUNITY OF C ROSS EXAMINATION OF THE 3 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ALLEGED ACCOMMODATION ENTRY PROVIDERS, THEREFORE TH E ASSESSMENT ORDER OUGHT TO HELD AS BAD IN LAW AND DESERVES TO BE ANNU LLED. 3. THAT THE ORDER OF THE LD. CIT (A), CONFIRMING THE A DDITION MADE BY THE AO IS ARBITRARY, WHIMSICAL, CAPRICIOUS, PERVERSE, BASE D ON NO EVIDENCE OR IRRELEVANT MATERIAL OR IRRELEVANT EVIDENCE, AND AGA INST THE LAW AND FACTS OF THE CASE. THE ADDITION CONFIRMED BY LD. CIT (A) DE SERVES TO BE DELETED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITIONS MADE U/S 68 O F THE INCOME TAX ACT, 1961 BY :- A) SOLELY RELYING ON THE STATEMENTS OF SOME ALLEGED AC COMMODATION ENTRY PROVIDERS RECORDED BY SOME OTHER AUTHORITIES IN SOM E OTHER CASES/ACTIONS AND THE OPPORTUNITY TO CROSS EXAMINATION WAS ALSO N OT PROVIDED TO ASSESSEE. B) GIVING A CONTRADICTORY FINDING THAT A DOUBT IS RAIS ED ON THE IDENTITY AND GENUINENESS OF THE COMPANY WHOSE NAME IS MENTIONED IN THE STATEMENT OF ACCOMMODATION ENTRY PROVIDERS AS WELL AS REPORTS OF DDIT (INV.), KOLKATA. C) HOLDING THAT THE ASSESSEE HAS NOT ADDUCED ANY EVIDE NCE TO REBUT THE ADVERSE FACTUAL FINDING MADE BY THE AO IN THE ASSES SMENT ORDER THOUGH DETAILED PAPER BOOK FOR RELEVANT AY AND COMMON PAPE R BOOKS HAVE BEEN SUBMITTED, AND D) HOLDING THAT INCRIMINATING MATERIAL HAD BEEN FOUND DURING THE COURSE OF SEARCH OF ACCOMMODATION ENTRY PROVIDER. FURTHER IN CRIMINATING MATERIAL HAD BEEN GATHERED BY ISSUING COMMISSION TO DDIT (IN V.) KOLKATA. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT (A) ERRED IN CONFIRMATION THE ADDITION OF RS. 12,36 ,49,999/- MADE BY LD. AO U/S 68 OF INCOME TAX ACT, 1961 ON ACCOUNT OF UNS ECURED LOANS TAKEN FROM FOLLOWING PARTIES AND ERRONEOUSLY HELD THAT TH E IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE UNDER MENTI ONED COMPANY IS DOUBTFUL :- NAME OF THE COMPANY FROM WHOM LOAN RECEIVED AMOUNT NAME OF ALLEGED ENTRY OPERATOR WHOSE STATEMENT WERE RELIED JALSAGAR COMMERCE PVT. LTD. 12,36,49,999 SHRI ANAND SHARMA 4 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT (A) ERRED IN REJECTING THE THEORY OF PEAK CREDIT AN D ERRED IN NOT ALLOWING THE BENEFIT OF TELESCOPING, RECYCLING AND ROTATION OF FUNDS. 7. THE ASSESSEE PRAYS FOR LEAVE TO ADD, TO AMEND, TO D ELETE, OR MODIFY THE ALL OR ANY GROUNDS OF APPEAL ON OR BEFORE THE HEARING O F APPEAL. DEPARTMENTS GROUNDS : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 1 2,36,40,000/- MADE BY THE AO U/S 68 OF THE IT ACT ON ACCOUNT OF UNEXPLAIN ED UNSECURED LOANS ALLEGEDLY OBTAINED BY THE ASSESSEE FROM M/S. BIRLA ARTS PVT. LTD., M/S. TEAC CONSULTANT PVT. LTD. AND M/S. SANGAM DISTRIBUTORS P VT. LTD. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF UNSEC URED LOANS BY OBSERVING THAT THE ALLEGED LENDERS M/S. BIRLA ARTS PVT. LTD., M/S. TEAC CONSULTANT PVT. LTD. AND M/S. SANGAM DISTRIBUTORS PVT. LTD. WERE NO T SHELL COMPANIES WITHOUT CONSIDERING THE FINANCIAL STATEMENTS OF THE SE COMPANIES. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF UNSEC URED LOANS ALLEGEDLY OBTAINED FROM M/S/ BIRLA ARTS PVT. LTD., M/S. TEAC CONSULTANT PVT. LTD. AND M/S. SANGAM DISTRIBUTORS PVT. LTD. MERELY FOR THE R EASON THAT EVIDENCES IN THE FORM OF STATEMENT ON OATH OF THE RELEVANT ENTRY OPERATORS WERE NOT AVAILABLE ON RECORD. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF UNSEC URED LOANS ALLEGEDLY OBTAINED FROM M/S. BIRLA ARTS PVT. LTD., M/S. TEAC CONSULTANT PVT. LTD. AND M/S. SANGAM DISTRIBUTORS PVT. LTD. DESPITE THE FACT THAT THE DIRECTORS OR PRINCIPAL OFFICERS OF THESE COMPANIES WERE NEVER PR ODUCED BEFORE THE AO FOR EXAMINATION DESPITE NUMBER OF OPPORTUNITIES PRO VIDED BY THE AO FOR PRODUCING AND ALSO IGNORING THE FACT THAT THE ASSES SEE NEITHER EXPRESSED ITS INABILITY IN PRODUCING THE LENDERS NOR PRODUCED THEM EITHER. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF UNSEC URED LOANS ALLEGEDLY OBTAINED FROM M/S. BIRLA ARTS PVT. LTD., M/S. TEAC CONSULTANT PVT. LTD. AND M/S. SANGAM DISTRIBUTORS PVT. LTD. MERELY BY OBSERV ING THAT THE ASSESSEE HAS COOPERATED IN ASSESSMENT BY SHOWING HIS WILLING NESS TO PRODUCE THE DIRECTORS OF LENDER COMPANIES AND SOME DIRECTORS/OF FICERS WERE ALSO PRODUCED BEFORE THE AO DESPITE THE FACT THAT EVEN T HE DIRECTORS WHICH 5 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. WERE PRODUCED BEFORE THE AO FAILED TO SUBSTANTIATE THE GENUINENESS OF THE ALLEGED TRANSACTIONS. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF UNSEC URED LOANS BY OBSERVING THAT THE APPELLANT CANNOT BE FASTENED UPON THE BURD EN TO PRODUCE THE LENDERS BEFORE THE AO AND IN NOT CONSIDERING THE DE CISION OF THE HONBLE SUPREME COURT IN NAVODAYA CASTLES (P) LTD. VS. CIT (2015) 56 TAXMANN.COM 18 (SC) WHEN THERE WERE GENUINE CONCERN S OF THE GENUINENESS OF THE TRANSACTIONS. 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 4 2,47,25,000/- MADE BY THE AO U/S 68 OF THE IT ACT ON ACCOUNT UNEXPLAINED PARTNERS CAPITAL RECEIPTS FROM ALLEGED PARTNERS NAMELY M/S. BANSHIDH AR ADVISORY PVT. LTD., M/S. VASUNDHARA ADVISORY PVT. LTD., M/S. PRITHVI VI NIMAY PVT. LTD. AND M/S. MACRO SOFT TECHNOLOGY PVT. LTD. BY OBSERVING THAT T HE BURDEN CASTED UPON U/S 68 OF THE IT ACT TO EXPLAIN NATURE AND SOURCE O F THE TRANSACTION HAD BEEN DISCHARGED BY THE ASSESSEE. 8. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF PARTN ERS CAPITAL DESPITE THE FACT THAT ALLEGED PARTNERS WERE NEVER PRODUCED BEFO RE THE AO FOR EXAMINATION. 9. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN IGNORING THE FACT THAT BUSINES S OF THE ASSESSEE FIRM IS THE BUSINESS OF THE PARTNERS CONSTITUTING IT AND TH E ASSESSEE FIRM IS A MERE MUTUAL AGENCY OF THE PARTNERS AND THEREFORE, MERE FILING OF DOCUMENTARY EVIDENCES WITHOUT PRODUCING THE PARTNERS FOR VERIFI CATION WAS NOT SUFFICIENT FOR HOLDING THE PARTNERS CAPITAL AS GENUINE. 10. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN HOLDING THE PARTNERS CAPITAL AS GENUINE DESPITE THE FACT THAT CIT (A) IN THE SUBSEQUENT YEAR ON THE BAS IS OF EVIDENCES AVAILABLE ON RECORD HELD M/S. DOSHI MANAGEMENT PVT. LTD. A COMPANY IN WHICH 3 ALLEGED PARTNERS NAMELY M/S. BANSHIDHAR MAN AGEMENT PVT. LTD., M/S. VASUNDHARA ADVISORY PVT. LTD., AND M/S. PRITHV I VINIMAY PVT. LTD. AMALGAMATED, A SHELL COMPANY. 11. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN CONSIDERING THE AMALGAMATING C OMPANIES AS GENUINE AND THE RESULTANT AMALGAMATED COMPANY AS SHELL COMP ANY WHICH IS A THEORETICAL IMPOSSIBILITY AS THE CONSTITUENTS CAN N EVER BE GREATER THAN THE WHOLE. 6 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE APPELLANT CRAVE, LEAVE OR RESERVING THE RIGHT TO AMEND MODIFY, ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. GROUND NO. 1 IS REGARDING VALIDITY OF RE-ASSESSMENT OF INCOME OF THE ASSESSEE UNDER SECTION153A FOR WANT OF INCRIMINATIN G MATERIAL. 4. THE ASSESSEE IS A PARTNERSHIP FIRM AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEARS 2010-11 TO 13-14 ON 31.08.2010, 31 .08.2011, 22.07.2012 AND 03.08.2013 RESPECTIVELY. THEREFORE, THE ASSESSMENT ON THE ORIGINAL RETURN OF INCOME FILED UNDER SECTION 139(1) WAS NOT PENDING ON THE D ATE OF SEARCH UNDER SECTION 132 CONDUCTED ON 2 ND JULY, 2015. EVEN FOR THE ASSESSMENT YEAR 2010-11 THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 15.03.2013. THEREFORE, AS PER THE PROVISIONS OF SECTION 153A, THE AO IS BOUND TO ISSU E NOTICE TO THE ASSESSEE TO FURNISH THE RETURN OF INCOME FOR EACH ASSESSMENT YEAR FALLI NG WITHIN THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR REL EVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH OR REQUISITION WAS MADE. THE AO I S EMPOWERED TO ASSESS OR REASSESS THE TOTAL INCOME OF ALL THE SIX YEARS WHIC H MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IN WHICH BOTH DISCLOSED AND UNDISCLOSED INCOME WOULD BE BROUGHT T O TAX. IF THERE IS NO UNDISCLOSED INCOME FOR ANY OF THE ASSESSMENT YEAR OUT OF THE SI X ASSESSMENT YEARS IN QUESTION, THEN THE AO HAS TO COMPLETE THE ASSESSMENT OR REASS ESSMENT ON THE TOTAL INCOME AS ASSESSED UNDER SECTION 143(1)OR 143(3)OF THE IT ACT .THE COMMON FACTS AND DISPUTES RUNNING THROUGH ALL THE ASSESSMENTS FRAMED UNDER SE CTION 153A ARE THAT THE AO PROPOSED TO MAKE THE ADDITION UNDER SECTION 68 OF T HE IT ACT IN RESPECT OF THE UNSECURED LOANS AND PARTNERS CAPITAL RECEIVED BY T HE ASSESSEE. THE AO RELIED UPON THE INFORMATION/DETAILS AND STATEMENT RECORDED BY T HE INVESTIGATION WING, KOLKATA IN 7 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. CASE OF THIRD PARTY. THE ASSESSEE RECEIVED UNSECURE D LOANS AND PARTNERS CAPITAL FROM NBFC AND OTHER COMPANIES. 4.1. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUB MITTED THAT IN COMPLIANCE TO NOTICE UNDER SECTION 153A OF THE IT ACT, THE ASSESS EE SUBMITTED ITS E-RETURN OF INCOME ON 9 TH MARCH, 2016 DECLARING TOTAL INCOME WHICH WAS SAME FOR THE ASSESSMENT YEAR 2010-11 THOUGH THERE WERE SOME VARI ATIONS IN SOME OF THE ASSESSMENT YEARS. THE ASSESSEE OBJECTED TO THE PR OPOSED ADDITION ON THE GROUND THAT THE SAID STATEMENT RECORDED BY THE DEPARTMENT IS BEHIND THE BACK OF THE ASSESSEE AND, THEREFORE, THE SAME CANNOT BE USED AG AINST THE ASSESSEE WITHOUT GIVING OPPORTUNITY OF CROSS EXAMINATION OF THE WITN ESSES. FURTHER IT WAS CONTENDED SINCE THERE IS NO INCRIMINATING MATERIAL FOUND DURI NG THE COURSE OF SEARCH AND SEIZURE ACTION, THEREFORE, THE AO IS NOT EMPOWERED TO MAKE ANY ADDITION IN THE TOTAL INCOME OF THE ASSESSEE. IT IS A SETTLED POSITION O F LAW THAT THERE CANNOT BE A REVIEW UNDER THE GARB OF REASSESSMENT PROCEEDING UNDER SEC TION 153A OF THE ACT AND, THEREFORE, THE PROPOSED REASSESSMENT PROCEEDINGS AR E ABSOLUTELY IN ABUSE OF PROCESS OF LAW, ILLEGAL AND BAD IN LAW. THE PROVIS IONS OF SECTION 153A CANNOT BE APPLIED IN RESPECT OF ASSESSMENT WHICH HAS ALREADY BEEN COMPLETED UNLESS SOME INCRIMINATING MATERIAL/INFORMATION COMES INTO THE P OSSESSION/KNOWLEDGE OF THE AO DURING THE COURSE OF SEARCH PROCEEDINGS. SINCE THE ASSESSMENTS FOR THESE FOUR ASSESSMENT YEARS I.E. 2010-11 TO 13-14 WERE NOT PEN DING AS ON THE DATE OF SEARCH AND THERE IS NO INCRIMINATING MATERIAL FOUND OR SEI ZED DURING THE COURSE OF SEARCH, THEN THE AO IS BOUND TO REASSESS THE TOTAL INCOME A S IT WAS ASSESSED ON THE ORIGINAL RETURN OF INCOME. THOUGH THE AO IS LEGALLY BOUND T O ASSESS OR REASSESS THE TOTAL 8 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. INCOME OF SIX YEARS IMMEDIATELY PRECEDING TO THE YE AR OF SEARCH, HOWEVER, THE ASSESSMENTS WHICH ARE PENDING ON THE DATE OF SEARCH GETS ABATED AND THE ASSESSMENTS WHICH WERE NOT PENDING ON THE DATE OF S EARCH HAD ATTAINED THE FINALITY AND, THEREFORE, THE ADDITION OVER AND ABOVE THE ASS ESSED INCOME CANNOT BE MADE DE HORS THE INCRIMINATING MATERIAL FOUND AT THE TIME O F SEARCH WHILE COMPLETING THE ASSESSMENT UNDER SECTION 153A OF THE ACT. IF THERE IS NO INCRIMINATING MATERIAL THEN THE ORIGINAL ASSESSMENT MADE CAN BE REITERATED AND NO FURTHER ADDITION IS CALLED FOR OTHERWISE ADDITION CAN ONLY BE MADE ON THE BASIS OF UNDISCLOSED INCOME DERIVED FROM MATERIAL/DOCUMENTS SEIZED AS A RESULT OF SEARC H. THE COMPLETED ASSESSMENT CAN BE INTERFERED OR DISTURBED BY THE AO WHILE MAKI NG THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERI AL UNEARTHED DURING THE COURSE OF SEARCH AND REQUISITION OF INCOME DISCLOSING UNDI SCLOSED INCOME NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL A SSESSMENT. THEREFORE, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND OR SEIZ ED DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS, THE ADDITIONS MADE BY THE AO DURING THE COURSE OF REASSESSMENT UNDER SECTION 153A OF THE ACT ARE WITH OUT JURISDICTION AND LIABLE TO BE DELETED. IN SUPPORT OF HIS CONTENTION THE LD. A/R HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF KABUL CHAWLA, 3 80 ITR 573 (DELHI) AND SUBMITTED THAT HONBLE HIGH COURT HAS HELD THAT IN CASE OF COMPLETED ASSESSMENT NOT ABATED BY VIRTUE OF SEARCH UNDER SECTION 132 OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, THE SAME CAN BE REITERATED AND, THEREFORE, NO ADDITION COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. THE LD. A/R HAS ALSO RELIED UPON THE FOLLOWING DECISIONS :- 9 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 1. PRINCIPAL CIT VS. KURELE PAPER MILLS PVT. LTD. (2016) 380 ITR 571 (DELHI) SLP FILED BEFORE THE HONBLE SUPREME COURT WAS D ISMISSED VIDE ORDER DATED 07.12.2015. 2. PRINCIPAL CIT VS. MEETA GUTGUTIA (2017) 395 ITR 526 (DELHI) SLP FILED BEFORE THE HONBLE SUPREME COURT WAS D ISMISSED VIDE ORDER DATED 2 ND JULY, 2018. 3. JAI STEEL (INDIA) VS. ACIT (2013) 219 TAXMAN 223 (RAJ.) THUS THE LD. A/R HAS SUBMITTED THAT THE HONBLE JUR ISDICTIONAL HIGH COURT HAS HELD THAT THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT UNDER SECTION 153A HAS TO BE READ IN THE CONTEXT OF SECTION 132 OR 132A OF THE I T ACT, IN AS MUCH AS IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SUCH S EARCH OR REQUISITION, THEN THE QUESTION OF REASSESSMENT OF CONCLUDED ASSESSMENT DO ES NOT ARISE, WHICH WOULD REQUIRE MERE REITERATION AND IT IS ONLY IN THE CONT EXT OF ABATED ASSESSMENT UNDER SECOND PROVISO WHICH IS REQUIRED TO BE ASSESSED. T HE UNDERLINED PURPOSE OF MAKING ASSESSMENT OF TOTAL INCOME UNDER SECTION 153A OF TH E ACT IS, THEREFORE, TO ASSESS INCOME WHICH WAS NOT DISCLOSED OR WOULD NOT HAVE BE EN DISCLOSED. THE ASSESSMENT OR REASSESSMENT PROCEEDINGS WHICH HAVE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEES TOTAL INCOME AND, SUCH ORDERS ARE SUBSISTING AT THE TIME WHEN SEARCH OR REQUISITI ON IS MADE, THERE IS NO QUESTION OF ANY ABATED ASSESSMENT SINCE NO PROCEEDINGS WERE PEN DING AND, THEREFORE, THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESS ED WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL. IN THE ABSENCE OF ANY INCR IMINATING MATERIAL, THE COMPLETED 10 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THUS THE LD. A/R HAS SUBMITTED THAT THE AO H AS MADE THE ADDITIONS IN THE ASSESSMENT UNDER SECTION 153A WHEREBY THE COMPLETED ASSESSMENTS HAVE BEEN DISTURBED WITHOUT EVEN REFERRING TO ANY INCRIMINATI NG MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH AND SEIZURE UNDER SECTION 132 OF THE ACT. THE ONLY BASIS OF ADDITION IS THE STATEMENT OF THIRD PARTY RECORDED I N THE SEARCH OF THE THIRD PARTY THAT HAS NO CONNECTION WITH THE SEARCH PROCEEDINGS OF TH E ASSESSEE AND, THEREFORE, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND OR SEIZ ED DURING THE SEARCH OF THE ASSESSEE, NO ADDITION CAN BE MADE IN THE ASSESSMENT FRAMED UNDER SECTION 153A OF THE ACT. 5. ON THE OTHER HAND, THE LD. D/R SUBMITTED THAT TH E ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE RELATE TO THE UNEXPLAINED CA SH CREDIT IN THE BOOKS OF ACCOUNT INTRODUCED IN THE GARB OF UNSECURED LOANS, PARTNERS CAPITAL WHICH IN FACT IS THE RE- ROUTING OF THE ASSESSEES UNDISCLOSED INCOME. IT I S CLEARLY EVIDENT FROM THE INNUMERABLE EVIDENCES WHICH CAME TO THE FORE IN THE NUMEROUS INVESTIGATIONS, ENQUIRIES, SEARCH AND SURVEY ACTIONS CARRIED OUT BY THE INVESTIGATION WING OF THE DEPARTMENT THAT THE AO RECEIVED INFORMATION FROM TH E INVESTIGATION WING KOLKATA REGARDING THE INVOLVEMENT OF KBM GROUP (ASSESSEE) I N OBTAINING ENTRIES OF BOGUS UNSECURED LOANS, PARTNERS CAPITAL, SPECIAL DEPOSIT S ETC. DETECTED IN THE INVESTIGATION CARRIED OUT BY THE INVESTIGATION WING KOLKATA. SUCH INFORMATION WAS RECEIVED PRIOR TO THE INITIATION OF PROCEEDINGS UNDER SECTION 153A AND ALSO DURING THE PENDENCY OF PROCEEDINGS UNDER SECTION 153A. ACCORDINGLY, DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 153A, THE AO CONDUCTED FU RTHER ENQUIRY ABOUT THE 11 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. GENUINENESS OF THE TRANSACTION OF UNSECURED LOANS, PARTNERS CAPITAL, SPECIAL DEPOSITS ETC. THE ASSESSEE WAS DULY CONFRONTED WITH THE RES ULTS OF ALL THESE ENQUIRIES AND INFORMATION SHARED BY THE INVESTIGATION WING. IN T HESE CIRCUMSTANCES IT CANNOT BE A CASE OF ADDITION MADE WITHOUT ANY INCRIMINATING MAT ERIAL BUT THE AO WAS HAVING SUFFICIENT MATERIAL DISCLOSING THE UNDISCLOSED AND UNEXPLAINED CASH CREDIT INTRODUCED BY THE ASSESSEE IN THE GARB OF UNSECURED LOANS AND PARTNERS CAPITAL. ONCE THE INSURMOUNTABLE EVIDENCES UNEARTHED BY THE INVESTIGA TION WING KOLKATA WHICH IS THE BASIS OF THE ADDITIONS MADE BY THE AO, THE ASSESSEE WAS REQUIRED TO DISCHARGE ITS ONUS BY PRODUCING THE CONTRARY EVIDENCE OR BY PRODU CING ALLEGED CREDITORS FOR VERIFICATION. THE LD. CIT D/R HAS FURTHER SUBMITTE D THAT THE INFORMATION RECEIVED FROM THE INVESTIGATION WING KOLKATA IS ALSO THE INC RIMINATING MATERIAL FOUND DURING THE SEARCH AND PERTAINS TO THE ASSESSEE DISCLOSING UNDISCLOSED INCOME. THEREFORE, IT IS NOT A CASE OF REASSESSMENT FRAMED BY THE AO UNDE R SECTION 153A WITHOUT ANY INCRIMINATING MATERIAL. THE AO EVEN CONDUCTED FURT HER INVESTIGATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS THROUGH THE INVEST IGATION WING KOLKATA AND, THEREFORE, THE ADDITION IS FULLY BASED ON THE EVIDE NCE IN THE POSSESSION OF THE AO. AS PER THE PROVISIONS OF SECTION 132 READ WITH SECT ION 153A OF THE IT ACT, THE AO HAS TO ASSESS OR REASSESS THE INCOME OF LAST SIX YEARS AND TOTAL INCOME REFERS TO THE SUM TOTAL OF INCOME IN RESPECT OF WHICH A PERSON IS ASS ESSABLE. THE TOTAL INCOME WILL THEREFORE COVER NOT ONLY THE INCOME EMANATING FROM THE DECLARED SOURCE OR ANY MATERIAL OMISSION BEFORE AO BUT FROM ALL SOURCES I NCLUDING UNDISCLOSED ONES OR BASED ON UNPLACED MATERIAL BEFORE THE AO. THE LD. CIT D/R HAS THUS SUBMITTED THAT THE DECISIONS IN THE CASE OF M/S. ALL CARGO GLOBAL LOGISTICS LTD. AS WELL AS KABUL 12 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. CHAWLA (SUPRA) WERE CHALLENGED BEFORE THE HONBLE S UPREME COURT AND THE HONBLE SUPREME COURT HAS ADMITTED THE SLP FOR EXAMINATION OF THE ISSUE. HENCE THE ISSUE IS STILL PENDING ADJUDICATION BEFORE THE HONBLE SUPRE ME COURT. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSMENTS FOR THE ASSE SSMENT YEARS 2010-11 TO 13-14 WERE NOT PENDING ON THE DATE OF SEARCH ON 2 ND JULY, 2015. EVEN IN SOME OF THE ASSESSMENT YEARS ORDERS UNDER SECTION 143(3) WERE P ASSED AND IN OTHER CASES THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(1) OF TH E ACT. THUS THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2010-11 TO 13-14 WERE NOT GOT ABATED BY VIRTUE OF SEARCH UNDER SECTION 132 ON 2 ND JULY, 2015 AND THE AO WOULD REASSESS THE TOTAL INC OME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 153A IN RESPECT OF THESE FOUR ASSESSMENT YEARS I.E. 2010-11 TO 13-14. THE PROCEE DINGS UNDER SECTION 153A IN RESPECT OF THESE FOUR ASSESSMENT YEARS WOULD BE IN THE NATURE OF REASSESSMENT AND NOT IN THE NATURE OF ASSESSMENT AS IN THE CASES OF THE REMAINING TWO ASSESSMENT YEARS I.E. 2014-15 AND 15-16 THOSE WERE GOT ABATED BY VIRTUE OF SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT ON 2 ND JULY, 2015. IT IS A SETTLED PROPOSITION OF LAW THAT THE ASSESSMENT OR REASSESSMENT UNDER SECTI ON 153A IN RESPECT OF THE ASSESSMENT YEARS WHICH HAVE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEES TOTAL INCOME , THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL. IN THE ABSENCE OF ANY INCRIMINATING MATE RIAL THE COMPLETED ASSESSMENT CAN ONLY BE REITERATED. THE PROVISIONS OF SECTION 132 READ WITH SECTION 153A OF THE 13 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ACT STIPULATE TWO TYPES OF SITUATIONS ONE WHERE T HE ASSESSMENT OF ANY ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IS PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SE CTION 132A OF THE ACT. THEREFORE, THE ASSESSMENT UNDER SECTION 153A IN RES PECT OF THOSE ASSESSMENT YEARS WHICH STAND ABATED DUE TO THE REASON OF PENDING ON THE DATE OF INITIATION OF SEARCH OR REQUISITION SHALL BE THE ORIGINAL/FIRST ASSESSME NT. IN THE SECOND CATEGORY WHERE THE ASSESSMENT OR REASSESSMENT HAS ALREADY BEEN COM PLETED ON THE DATE OF INITIATION OF SEARCH OR MAKING OF REQUISITION AS TH E CASE MAY BE, THE ASSESSMENT UNDER SECTION 153A WOULD BE IN THE NATURE OF REASSE SSMENT. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA WHILE ANA LYZING THE PROVISIONS OF SECTION 153A READ WITH SECTION 132 OF THE ACT HAS OBSERVED IN PARA 37 AND 38 AS UNDER :- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, REA D WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I . ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERS ON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVI OUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II . ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHA LL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III . THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTION ED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS TH ERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AN D THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV . ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH , OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELA TED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE 14 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASS ESSMENT HAS TO BE MA DE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V . IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MA DE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DA TE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PRO CEEDINGS. VI . INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SEC TION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT O N THE RECORD OF THE AO. VII . COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE A O WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCE D OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE O F ORIGINAL ASSESSMENT. CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005-06 AND 2006-07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPL ETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITI ONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. THUS THE HONBLE HIGH COURT HAS HELD THAT IN THE AB SENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATE D AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE HONBLE HIGH COURT H AS ALSO REFERRED THE TERM USED IN SECTION 153A AS ASSESS WHICH IS RELATABLE TO A BATED PROCEEDINGS AND THE WORD REASSESS RELATED TO COMPLETED ASSESSMENT PROCEEDI NGS. THEREFORE, THE COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATIN G MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENT OR UNDI SCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. THE HONBLE DELHI HIGH COURT 15 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. HAS REITERATED ITS VIEW IN CASE OF PRINCIPAL CIT VS . KURELE PAPER MILLS (SUPRA) IN PARA 1 TO 3 AS UNDER :- 1. THE REVENUE HAS FILED THE APPEAL AGAINST AN ORDER D ATED 14.11.2014 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (ITAT) IN 3761 /DEL/2011 PERTAINING TO THE ASSESSMENT YEAR 2002-03. THE QUESTION WAS WHETH ER THE LEARNED CIT (APPEALS) HAD ERRED IN LAW AND ON THE FACTS IN DELE TING THE ADDITION OF RS. 89 LACS MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 ('ACT') ON BOGUS SHARE CAPITAL. BUT, THE ISSUE WAS WHETHER THERE WAS ANY INCRIMINATING MATERIAL WHATSOEVER FOUND DURING THE SEARCH TO JUSTIFY INITIATION OF PROCEEDINGS UNDER SECTION 153A OF THE ACT. 2. THE COURT FINDS THAT THE ORDER OF THE CIT(APPEALS) REVEALS THAT THERE IS A FACTUAL FINDING THAT 'NO INCRIMINATING EVIDENCE REL ATED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AS IS MANIFES T FROM THE ORDER OF THE AO.' CONSEQUENTLY, IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN INVOKING SECTION 68 OF THE ACT FOR THE PURPOSES OF MAKING AD DITIONS ON ACCOUNT OF SHARE CAPITAL. 3. AS FAR AS THE ABOVE FACTS ARE CONCERNED, THERE IS N OTHING SHOWN TO THE COURT TO PERSUADE AND HOLD THAT THE ABOVE FACTUAL DETERMI NATION IS PERVERSE. CONSEQUENTLY, AFTER CONSIDERING ALL THE FACTS AND C IRCUMSTANCES OF THE CASE, THE COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUESTIO N OF LAW ARISES IN THE IMPUGNED ORDER OF THE ITAT WHICH REQUIRES EXAMINATI ON. THE SLP FILED BY THE REVENUE AGAINST THE SAID DECIS ION OF HONBLE DELHI HIGH COURT WAS DISMISSED BY THE HONBLE SUPREME COURT VIDE ORD ER DATED 7 TH DECEMBER, 2015. IN A SUBSEQUENT DECISION, THE HONBLE DELHI HIGH CO URT IN THE CASE OF PRINCIPAL CIT VS. MEETA GUTGUTIA HAS AGAIN ANALYZED THIS ISSUE IN PARA 55 TO 71 AS UNDER :- 55. ON THE LEGAL ASPECT OF INVOCATION OF SECTION 153A IN RELATION TO AYS 2000-01 TO 2003-04, THE CENTRAL PLANK OF THE REVENUE'S SUBMISS ION IS THE DECISION OF THIS COURT IN SMT. DAYAWANTI GUPTA ( SUPRA ). BEFORE BEGINNING TO EXAMINE THE SAID DECISION, I T IS NECESSARY TO REVISIT THE LEGAL LANDSCAPE IN LIGHT O F THE ELABORATE ARGUMENTS ADVANCED BY THE REVENUE. 56. SECTION 153A OF THE ACT IS TITLED 'ASSESSMENT IN C ASE OF SEARCH OR REQUISITION'. IT IS CONNECTED TO SECTION 132 WHICH DEALS WITH 'SEARC H AND SEIZURE'. BOTH THESE PROVISIONS, THEREFORE, HAVE TO BE READ TOGETHER. SE CTION 153A IS INDEED AN EXTREMELY 16 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. POTENT POWER WHICH ENABLES THE REVENUE TO RE-OPEN A T LEAST SIX YEARS OF ASSESSMENTS EARLIER TO THE YEAR OF SEARCH. IT IS NOT TO BE EXER CISED LIGHTLY. IT IS ONLY IF DURING THE COURSE OF SEARCH UNDER SECTION 132 INCRIMINATING MA TERIAL JUSTIFYING THE RE-OPENING OF THE ASSESSMENTS FOR SIX PREVIOUS YEARS IS FOUND THA T THE INVOCATION OF SECTION 153A QUA EACH OF THE AYS WOULD BE JUSTIFIED. 57. THE QUESTION WHETHER UNEARTHING OF INCRIMINATING M ATERIAL RELATING TO ANY ONE OF THE AYS COULD JUSTIFY THE RE-OPENING OF THE ASSESSMENT FOR ALL THE EARLIER AYS WAS CONSIDERED BOTH IN ANIL KUMAR BHATIA ( SUPRA ) AND CHETAN DAS LACHMAN DAS ( SUPRA ). INCIDENTALLY, BOTH THESE DECISIONS WERE DISCUSSED T HREADBARE IN THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ). AS FAR AS ANIL KUMAR BHATIA ( SUPRA ) WAS CONCERNED, THE COURT IN PARAGRAPH 24 OF THAT DECISION NOTED THAT 'WE ARE NOT CONCERNED WITH A CASE WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE THEREFORE EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN BE INVOKED EVEN UNDER SUCH SITUATION'. THAT QUESTION WAS, THEREFORE , LEFT OPEN. AS FAR AS CHETAN DAS LACHMAN DAS ( SUPRA ) IS CONCERNED, IN PARA 11 OF THE DECISION IT WAS O BSERVED: '11. SECTION 153A (1) (B) PROVIDES FOR THE ASSESSME NT OR REASSESSMENT OF THE TOTAL INCOME OF THE SIX ASSESSMENT YEARS IMMEDIATEL Y PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEA RCH TOOK PLACE. TO REPEAT, THERE IS NO CONDITION IN THIS SECTION THAT ADDITION S SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSIN G OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND. THIS, HOWEVER, DOES NOT MEAN THAT THE ASSESSMENT UNDER SECTION 153A CAN BE ARBITRARY OR M ADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEI ZED MATERIAL.' 58. IN KABUL CHAWLA ( SUPRA ), THE COURT DISCUSSED THE DECISION IN FILATEX INDIA LTD. ( SUPRA ) AS WELL AS THE ABOVE TWO DECISIONS AND OBSERVED A S UNDER: '31. WHAT DISTINGUISHES THE DECISIONS BOTH IN CIT V. CHETAN DAS LACHMAN DAS ( SUPRA ), AND FILATEX INDIA LTD. V. CIT-IV ( SUPRA ) IN THEIR APPLICATION TO THE PRESENT CASE IS THAT IN BOTH THE SAID CASES THERE W AS SOME MATERIAL UNEARTHED DURING THE SEARCH, WHEREAS IN THE PRESENT CASE THER E ADMITTEDLY WAS NONE. SECONDLY, IT IS PLAIN FROM A CAREFUL READING OF THE SAID TWO . DECISIONS THAT THEY DO NOT HOLD THAT ADDITIONS CAN BE VALIDLY MADE TO I NCOME FORMING THE SUBJECT MATTER OF COMPLETED ASSESSMENTS PRIOR TO THE SEARCH EVEN IF NO INCRIMINATING MATERIAL WHATSOEVER WAS UNEARTHED DURING THE SEARCH . 32. RECENTLY BY ITS ORDER DATED 6TH JULY 2015 IN IT A NO. 369 OF 2015 ( PR. COMMISSIONER OF INCOME TAX V. KURELE PAPER MILLS P. LTD. ), THIS COURT DECLINED TO FRAME A QUESTION OF LAW IN A CASE WHERE , IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE SEARC H UNDER SECTION 132 OF THE ACT, THE REVENUE SOUGHT TO JUSTIFY INITIATION OF PR OCEEDINGS UNDER SECTION 153A OF THE ACT AND MAKE AN ADDITION UNDER SECTION 68 OF THE ACT ON BOGUS SHARE CAPITAL GAIN. THE ORDER OF THE CIT (A), AFFIR MED BY THE ITAT, DELETING THE ADDITION, WAS NOT INTERFERED WITH.' 17 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 59. IN KABUL CHAWLA ( SUPRA ), THE COURT REFERRED TO THE DECISION OF THE RAJAST HAN HIGH COURT IN JAI STEEL (INDIA) V. ASSTT. CIT [2013] 36 TAXMANN.COM 523/219 TAXMAN 223 . THE SAID PART OF THE DECISION IN KABUL CHAWLA ( SUPRA ) IN PARAS 33 AND 34 READS AS UNDER: '33. THE DECISION OF THE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA), JODHPUR V. ACIT ( SUPRA ) INVOLVED A CASE WHERE CERTAIN BOOKS OF ACCOUNTS A ND OTHER DOCUMENTS THAT HAD NOT BEEN PRODUCED IN THE C OURSE OF ORIGINAL ASSESSMENT WERE FOUND IN THE COURSE OF SEARCH. IT W AS HELD WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF THE SEARCH, THE SAME WOULD ALSO BE TAKEN INTO CONSIDERA TION WHILE COMPUTING THE TOTAL INCOME UNDER SECTION 153A OF THE ACT. THE COU RT THEN EXPLAINED AS UNDER: '22. IN THE FIRM OPINION OF THIS COURT FROM A PLAIN READING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPORT OF THE SAID PROV ISION, WHICH IS INTRICATELY LINKED WITH SEARCH AND REQUISITION UNDER SECTIONS 1 32 AND 132A OF THE ACT, IT IS APPARENT THAT: ( A ) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND ABATE D IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO ACTS UNDER HIS ORIGINAL JURISDIC TION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; ( B ) REGARDING OTHER CASES, THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESS ED, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATI NG MATERIAL; AND ( C ) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE.' 34. THE ARGUMENT OF THE REVENUE THAT THE AO WAS FRE E TO DISTURB INCOME DE HORS THE INCRIMINATING MATERIAL WHILE MAKING ASSESSMENT UNDER SECTION 153A OF THE ACT WAS SPECIFICALLY REJECTED BY THE COURT O N THE GROUND THAT IT WAS 'NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION' WH ICH WAS IN THE CONTEXT OF SEARCH AND/OR REQUISITION. THE COURT ALSO EXPLAINED THE PURPORT OF THE WORDS 'ASSESS' AND 'REASSESS', WHICH HAVE BEEN FOUND AT M ORE THAN ONE PLACE IN SECTION 153A OF THE ACT AS UNDER: '26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT Y EARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS'-HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD ASSESS HAS BE EN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR C OMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION A ND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE 18 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATIN G MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS.'' 60. IN KABUL CHAWLA ( SUPRA ), THE COURT ALSO TOOK NOTE OF THE DECISION OF THE BOMBAY HIGH COURT IN CIT V. CONTINENTAL WAREHOUSING CORPN (NHAVA SHEVA) LTD. [2015] 58 TAXMANN.COM 78/232 TAXMAN 270/374 ITR 645 (BOM.) WHICH ACCEPTED THE PLEA THAT IF NO INCRIMINATING MATERIAL WAS FOUND DURING THE C OURSE OF SEARCH IN RESPECT OF AN ISSUE, THEN NO ADDITIONS IN RESPECT OF ANY ISSUE CA N BE MADE TO THE ASSESSMENT UNDER SECTION 153A AND 153C OF THE ACT. THE LEGAL POSITIO N WAS THEREAFTER SUMMARIZED IN KABUL CHAWLA ( SUPRA ) AS UNDER: '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UN DER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHE D REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE. AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY O NE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSE D INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBV IOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECT ION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A ME RGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS O F THE FINDINGS OF THE SEARCH AND AN Y OTHER 19 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE A O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATI NG MATERIAL UNEARTHED DURING THE COURSE OF SEA RCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCO ME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALR EADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 61. IT APPEARS THAT A NUMBER OF HIGH COURTS HAVE CONCU RRED WITH THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ) BEGINNING WITH THE GUJARAT HIGH COURT IN SAUMYA CONSTRUCTION (P.) LTD. ( SUPRA ). THERE, A SEARCH AND SEIZURE OPERATION WAS CARRIE D OUT ON 7TH OCTOBER, 2009 AND AN ASSESSMENT CAME TO BE FRAM ED UNDER SECTION 143(3) READ WITH SECTION 153A(1)(B) IN DETERMINING THE TOTAL INCOME OF THE ASSESSEE OF RS. 14.5 CRORES AGAINST DECLARED INCOME OF RS. 3.44 CRORES. THE ITA T DELETED THE ADDITIONS ON THE GROUND THAT IT WAS NOT BASED ON ANY INCRIMINATING M ATERIAL FOUND DURING THE COURSE OF THE SEARCH IN RESPECT OF AYS UNDER CONSIDERATION I.E., AY 2006-07. THE GUJARAT HIGH COURT REFERRED TO THE DECISION IN KABUL CHAWLA ( SUPRA ), OF THE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA) ( SUPRA ) AND ONE EARLIER DECISION OF THE GUJARAT HIGH COUR T ITSELF. IT EXPLAINED IN PARA 15 AND 16 AS UNDER: '15. ON A PLAIN READING OF SECTION 153A OF THE ACT, IT IS EVIDENT THAT THE TRIGGER POINT FOR EXERCISE OF POWERS THEREUNDER IS A SEARCH UNDER SECTION 132 OR A REQUISITION UNDER SECTION 132A OF THE ACT. ONCE A S EARCH OR REQUISITION IS MADE, A MANDATE IS CAST UPON THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 153A OF THE ACT TO THE PERSON, REQUIRING HIM TO FURNISH THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE AND ASSESS OR REASSESS THE S AME. SINCE THE ASSESSMENT UNDER SECTION 153A OF THE ACT IS LINKED WITH SEARCH AND R EQUISITION UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS EVIDENT THAT THE OBJECT OF THE SECTION IS TO BRING TO TAX THE UNDISCLOSED INCOME WHICH IS FOUND DURING THE COURSE OF OR PURSUANT TO THE SEARCH OR REQUISITION. HOWEVER, INSTEAD OF THE EARLIER REG IME OF BLOCK ASSESSMENT WHEREBY, IT WAS ONLY THE UNDISCLOSED INCOME OF THE BLOCK PER IOD THAT WAS ASSESSED, SECTION 153A OF THE ACT SEEKS TO ASSESS THE TOTAL INCOME FO R THE ASSESSMENT YEAR, WHICH IS CLEAR FROM THE FIRST PROVISO THERETO WHICH PROVIDES THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF E ACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. THE SECOND PROVISO MAKES THE INTENTION OF THE LEGISLATURE CLEAR AS THE SAME PROVIDES THAT ASSESSM ENT OR REASSESSMENT, IF ANY, RELATING TO THE SIX ASSESSMENT YEARS REFERRED TO IN THE SUB-SECTION PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR R EQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. SUB-SECTION (2) OF SE CTION 153A OF THE ACT PROVIDES THAT IF ANY PROCEEDING OR ANY ORDER OF ASSESSMENT O R REASSESSMENT MADE UNDER SUB- SECTION (1) IS ANNULLED IN APPEAL OR ANY OTHER LEGA L PROVISION, THEN THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHI CH HAD ABATED UNDER THE SECOND PROVISO WOULD STAND REVIVED. THE PROVISO THERETO SA YS THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT IF SUCH ORDER OF ANNULMENT IS SET AS IDE. THUS, ANY PROCEEDING OF ASSESSMENT OR REASSESSMENT FALLING WITHIN THE SIX A SSESSMENT YEARS PRIOR TO THE 20 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. SEARCH OR REQUISITION STANDS ABATED AND THE TOTAL I NCOME OF THE ASSESSEE IS REQUIRED TO BE DETERMINED UNDER SECTION 153A OF THE ACT. SIM ILARLY, SUB-SECTION (2) PROVIDES FOR REVIVAL OF ANY ASSESSMENT OR REASSESSMENT WHICH STOOD ABATED, IF ANY PROCEEDING OR ANY ORDER OF ASSESSMENT OR REASSESSME NT MADE UNDER SECTION 153A OF THE ACT IS ANNULLED IN APPEAL OR ANY OTHER PROCEEDI NG. 16. SECTION 153A BEARS THE HEADING 'ASSESSMENT IN C ASE OF SEARCH OR REQUISITION'. IT IS 'WELL SETTLED AS HELD BY THE SUPREME COURT IN A CATENA OF DECISIONS THAT THE HEADING OR THE SECTION CAN BE REGARDED AS A KEY TO THE INTERPRETATION OF THE OPERATIVE PORTION OF THE SECTION AND IF THERE IS NO AMBIGUITY IN THE LANGUAGE OR IF IT IS PLAIN AND CLEAR, THEN THE HEADING USED IN THE SE CTION STRENGTHENS THAT MEANING. FROM THE HEADING OF SECTION 153. THE INTENTION OF T HE LEGISLATURE IS CLEAR, VIZ., TO PROVIDE FOR ASSESSMENT IN CASE OF SEARCH AND REQUIS ITION. WHEN THE VERY PURPOSE OF THE PROVISION IS TO MAKE ASSESSMENT IN CASE OF SEAR CH OR REQUISITION, IT GOES WITHOUT SAYING THAT THE ASSESSMENT HAS TO HAVE RELATION TO THE SEARCH OR REQUISITION, IN OTHER WORDS, THE ASSESSMENT SHOULD CONNECTED WITH SOMETHI NG ROUND DURING THE SEARCH OR REQUISITION VIZ., INCRIMINATING MATERIAL WHICH R EVEALS UNDISCLOSED INCOME. THUS, WHILE IN VIEW OF THE MANDATE OF SUB-SECTION (1) OF SECTION 153A OF THE ACT, IN EVERY CASE WHERE THERE IS A SEARCH OR REQUISITION, THE ASSESSING OFFICER IS OBLIGED TO ISSUE NOTICE TO SUCH PERSON TO FURNISH RETURNS OF I NCOME FOR THE SIX YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH THE SEARCH IS CONDUCTED OR REQUISITION IS MADE, ANY ADDITION' OR DISALLOWAN CE CAN BE MADE ONLY ON THE BASIS OF MATERIAL COLLECTED DURING THE SEARCH OR REQUISIT ION, IN CASE NO INCRIMINATING MATERIAL IS FOUND, AS HELD BY THE RAJASTHAN HIGH CO URT IN THE CASE OF JAI STEEL (INDIA) V. ASST. CIT ( SUPRA ), THE EARLIER ASSESSMENT WOULD HAVE TO BE REITERAT ED, IN CASE WHERE PENDING ASSESSMENTS HAVE ABATED, THE ASS ESSING OFFICER CAN PASS ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS DETERMI NING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE INCOME DECLARED IN THE RETURNS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQUISITION. IN CASE WHERE A PENDING REASSESSMENT U NDER SECTION 147 OF THE ACT HAS ABATED, NEEDLESS TO STATE THAT THE SCOPE AND AMBIT OF THE ASSESSMENT WOULD INCLUDE ANY ORDER WHICH THE ASSESSING OFFICER COULD HAVE PA SSED UNDER SECTION 147 OF THE ACT AS WELL AS UNDER SECTION 153A OF THE ACT. ** ** * * 19. ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTEND ED THAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTANDING THAT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INCRIMINATING MATERIAL IS FOUND, IT WOULD BE PER MISSIBLE TO MAKE ADDITIONS AND DISALLOWANCE IN RESPECT OF AN THE SIX ASSESSMENT YE ARS. IN THE OPINION OF THIS COURT, THE SAID CONTENTION DOES NOT MERIT ACCEPTANCE, INAS MUCH AS. THE ASSESSMENT IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IS A SE PARATE AND DISTINCT ASSESSMENT. UNDER SECTION 153A OF THE ACT, ASSESSMENT HAS TO BE MADE IN RELATION TO THE SEARCH OR REQUISITION, NAMELY, IN RELATION TO MATERIAL DIS CLOSED DURING THE SEARCH OR REQUISITION. IF IN RELATION TO ANY ASSESSMENT YEAR, NO INCRIMINATING MATERIAL IS FOUND, NO ADDITION OR DISALLOWANCE CAN BE MADE IN R ELATION TO THAT ASSESSMENT YEAR IN EXERCISE OF POWERS UNDER SECTION 153A OF THE ACT AND THE EARLIER ASSESSMENT SHALL HAVE TO BE REITERATED. IN THIS REGARD, THIS C OURT IS IN COMPLETE AGREEMENT WITH 21 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE VIEW ADOPTED BY THE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) V. ASST. CIT ( SUPRA ). BESIDES, AS RIGHTLY POINTED OUT BY THE LEARNED C OUNSEL FOR THE RESPONDENT, THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CONCLUDED BY THE DECISION OF THIS COURT IN THE CASE OF CIT V. JAYABEN RATILAL SORATHIA ( SUPRA ) WHEREIN IT HAS BEEN HELD THAT WHILE IT CANNOT BE DI SPUTED THAT CONSIDERING SECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN REOPEN A ND/OR ASSESS THE RETURN WITH RESPECT TO SIX PRECEDING YEARS ; HOWEVER, THERE MUS T BE SOME INCRIMINATING MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT T O THE SALE TRANSACTIONS IN THE PARTICULAR ASSESSMENT YEAR.' 62. SUBSEQUENTLY, IN DEVANGI ALIAS RUPA ( SUPRA ), ANOTHER BENCH OF THE GUJARAT HIGH COURT REITERATED THE ABOVE LEGAL POSITION FOLLOWING ITS EARLIER DECISION IN SAUMYA CONSTRUCTION (P.) LTD. ( SUPRA ) AND OF THIS COURT IN KABUL CHAWLA ( SUPRA ). AS FAR AS KARNATAKA HIGH COURT IS CONCERNED, IT HAS IN IBC KNOWLEDGE PARK (P.) LTD. ( SUPRA ) FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ) AND HELD THAT THERE HAD TO BE INCRIMINATING MATERIAL QUA EACH OF THE AYS IN WHICH ADDITIONS WERE SOUGHT TO B E MADE PURSUANT TO SEARCH AND SEIZURE OPERATION. THE CALCUTTA HIGH COURT IN SALASAR STOCK BROKING LTD. ( SUPRA ), TOO, FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA ( SUPRA ). IN GURINDER SINGH BAWA ( SUPRA ), THE BOMBAY HIGH COURT HELD THAT: '6. . . . . . ONCE AN ASSESSMENT HAS ATTAINED FINAL ITY FOR A PARTICULAR YEAR, I.E., IT IS NOT PENDING THEN THE SAME CANNOT BE SUBJECT TO TAX IN P ROCEEDINGS UNDER SECTION 153A OF THE ACT. THIS OF COURSE WOULD NOT APPLY IF INCRI MINATING MATERIALS ARE GATHERED IN THE COURSE OF SEARCH OR DURING PROCEEDINGS UNDER SECTION 153A OF THE ACT WHICH ARE CONTRARY TO AND/OR NOT DISCLOSED DURING THE REG ULAR ASSESSMENT PROCEEDINGS.' 63. EVEN THIS COURT HAS IN MAHESH KUMAR GUPTA ( SUPRA ) AND RAM AVTAR VERMA ( SUPRA ) FOLLOWED THE DECISION IN KABUL CHAWLA ( SUPRA ). THE DECISION OF THIS COURT IN KURELE PAPER MILLS (P.) LTD. ( SUPRA ) WHICH WAS REFERRED TO IN KABUL CHAWLA ( SUPRA ) HAS BEEN AFFIRMED BY THE SUPREME COURT BY THE DISMISSAL OF T HE REVENUE'S SLP ON 7TH DECEMBER, 2015. THE DECISION IN DAYAWANTI GUPTA 64. THAT BRINGS US TO THE DECISION IN SMT. DAYAWANTI GUPTA ( SUPRA ). AS RIGHTLY POINTED OUT BY MR. KAUSHIK, LEARNED COUNSEL APPEARING FOR T HE RESPONDENT, THAT THERE ARE SEVERAL DISTINGUISHING FEATURES IN THAT CASE WHICH MAKES IT S RATIO INAPPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE FIRST PLACE, THE ASSESSEES THE RE WERE ENGAGED IN THE BUSINESS OF PAN MASALA AND GUTKHA ETC. THE ANSWERS GIVEN TO QUESTIO NS POSED TO THE ASSESSEE IN THE COURSE OF SEARCH AND SURVEY PROCEEDINGS IN THAT CAS E BRING OUT THE POINTS OF DISTINCTION. IN THE FIRST PLACE, IT WAS STATED THAT THE STATEMEN T RECORDED WAS UNDER SECTION 132(4) AND NOT UNDER SECTION 133A. IT WAS A STATEMENT BY THE A SSESSEE HIMSELF. IN RESPONSE TO QUESTION NO. 7 WHETHER ALL THE PURCHASES MADE BY TH E FAMILY FIRMS, WERE ENTERED IN THE REGULAR BOOKS OF ACCOUNT, THE ANSWER WAS: 'WE AND OUR FAMILY FIRMS NAMELY M/S. ASSAM SUPARI T RADERS AND M/S. BALAJI PERFUMES GENERALLY TRY TO RECORD THE TRANSACTIONS M ADE IN RESPECT OF PURCHASE, MANUFACTURING AND SALES IN OUR REGULAR BOOKS OF ACC OUNTS BUT IT IS ALSO FACT THAT SOME TIME DUE TO SOME FACTORS LIKE INABILITY OF ACC OUNTANT, OUR BUSY SCHEDULE AND SOME FAMILY PROBLEMS, VARIOUS PURCHASES AND SAL ES OF SUPARI, GUTKA AND 22 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. OTHER ITEMS DEALT BY OUR FIRMS IS NOT ENTERED AND S HOWN IN THE REGULAR BOOKS OF ACCOUNTS MAINTAINED BY OUR FIRMS.' 65. THEREFORE, THERE WAS A CLEAR ADMISSION BY THE ASSE SSEES IN SMT. DAYAWANTI GUPTA ( SUPRA ) THERE THAT THEY WERE NOT MAINTAINING REGULAR BOOK S OF ACCOUNTS AND THE TRANSACTIONS WERE NOT RECORDED THEREIN. 66. FURTHER, IN ANSWER TO QUESTION NO. 11, THE ASSESSE E IN SMT. DAYAWANTI GUPTA ( SUPRA ) WAS CONFRONTED WITH CERTAIN DOCUMENTS SEIZED DURI NG THE SEARCH. THE ANSWER WAS CATEGORICAL AND READS THUS: 'ANS:- I HEREBY ADMIT THAT THESE PAPERS ALSO CONTEN D DETAILS OF VARIOUS TRANSACTIONS INCLUDE PURCHASE/SALES/MANUFACTURING T RADING OF GUTKHA, SUPARI MADE IN CASH OUTSIDE BOOKS OF ACCOUNTS AND THESE AR E ACTUALLY UNACCOUNTED TRANSACTIONS MADE BY OUR TWO FIRMS NAMELY M/S. ASOM TRADING AND M/S. BALAJI PERFUMES.' 67. BY CONTRAST, THERE IS NO SUCH STATEMENT IN THE PRE SENT CASE WHICH CAN BE SAID TO CONSTITUTE AN ADMISSION BY THE ASSESSEE OF A FAILUR E TO RECORD ANY TRANSACTION IN THE ACCOUNTS OF THE ASSESSEE FOR THE AYS IN QUESTION. O N THE CONTRARY, THE ASSESSEE HEREIN STATED THAT, HE IS REGULARLY MAINTAINING THE BOOKS OF ACCOUNTS. THE DISCLOSURE MADE IN THE SUM OF RS. 1.10 CRORES WAS ONLY FOR THE YEAR OF SEARCH AND NOT FOR THE EARLIER YEARS. AS ALREADY NOTICED, THE BOOKS OF ACC OUNTS MAINTAINED BY THE ASSESSEE IN THE PRESENT CASE HAVE BEEN ACCEPTED BY THE AO. IN R ESPONSE TO QUESTION NO. 16 POSED TO MR. PAWAN GADIA, HE STATED THAT THERE WAS NO POS SIBILITY OF MANIPULATION OF THE ACCOUNTS. IN SMT. DAYAWANTI GUPTA ( SUPRA ), BY CONTRAST, THERE WAS A CHART PREPARED CONFIRMING THAT THERE HAD BEEN A YEAR-WISE NON-RECO RDING OF TRANSACTIONS. IN SMT. DAYAWANTI GUPTA ( SUPRA ), ON THE BASIS OF MATERIAL RECOVERED DURING SEARCH , THE ADDITIONS WHICH WERE MADE FOR ALL THE YEARS WHEREAS ADDITIONS IN THE PRESENT CASE WERE MADE BY THE AO ONLY FOR AY 2004-05 AND NOT ANY OF THE OTHER YEARS. EVEN THE ADDITIONS MADE FOR AYS 2004-05 WERE SUBSEQUENTLY DE LETED BY THE CIT (A), WHICH ORDER WAS AFFIRMED BY THE ITAT. EVEN THE REVENUE HA S CHALLENGED ONLY TWO OF SUCH DELETIONS IN ITA NO. 306/2017. 68. IN PARA 23 OF THE DECISION IN SMT. DAYAWANTI GUPTA ( SUPRA ), IT WAS OBSERVED AS UNDER: '23. THIS COURT IS OF OPINION THAT THE ITAT'S FINDI NGS DO NOT REVEAL ANY FUNDAMENTAL ERROR, CALLING FOR CORRECTION. THE INFE RENCES DRAWN IN RESPECT OF UNDECLARED INCOME WERE PREMISED ON THE MATERIALS FO UND AS WELL AS THE STATEMENTS RECORDED BY THE ASSESSEES. THESE ADDITIO NS THEREFORE WERE NOT BASELESS. GIVEN THAT THE ASSESSING AUTHORITIES IN S UCH CASES HAVE TO DRAW INFERENCES, BECAUSE OF THE NATURE OF THE MATERIALS - SINCE THEY COULD BE SCANTY (AS ONE HABITUALLY CONCEALING INCOME OR INDULGING I N CLANDESTINE OPERATIONS CAN HARDLY BE EXPECTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG AND IN ALL PROBABILITY BE ANXIOUS TO DO AWAY WITH SUCH EVIDENCE AT THE SHORTEST POSSIBILITY) THE ELEMENT OF GUESS WORK IS TO HAVE S OME REASONABLE NEXUS WITH THE STATEMENTS RECORDED AND DOCUMENTS SEIZED. IN TI LLS CASE, THE DIFFERENCES OF OPINION BETWEEN THE CIT (A) ON THE ONE HAND AND THE AO AND ITAT ON THE OTHER CANNOT BE THE SOLE BASIS FOR DISAGREEING WITH WHAT IS ESSENTIALLY A FACTUAL 23 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. SURMISE THAT IS LOGICAL AND PLAUSIBLE. THESE FINDIN GS DO NOT CALL FOR INTERFERENCE. THE SECOND QUESTION OF LAW IS ANSWERE D AGAIN IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE.' 69. WHAT WEIGHED WITH THE COURT IN THE ABOVE DECISION WAS THE 'HABITUAL CONCEALING OF INCOME AND INDULGING IN CLANDESTINE OPERATIONS' AND THAT A PERSON INDULGING IN SUCH ACTIVITIES 'CAN HARDLY BE ACCEPTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG.' THESE FACTORS ARE ABSENT IN THE PRESENT CASE . THERE WAS NO JUSTIFICATION AT ALL FOR THE AO TO PROCEED ON SURMISES AND ESTIMATES WITHOUT THERE BEING ANY INCRIMINATING MATERIAL QUA THE AY FOR WHICH HE SOUGHT TO MAKE ADDITIONS OF FRA NCHISEE COMMISSION. 70. THE ABOVE DISTINGUISHING FACTORS IN SMT. DAYAWANTI GUPTA ( SUPRA ), THEREFORE, DO NOT DETRACT FROM THE SETTLED LEGAL POSITION IN KABUL CHAWLA ( SUPRA ) WHICH HAS BEEN FOLLOWED NOT ONLY BY THIS COURT IN ITS SUBSEQUENT D ECISIONS BUT ALSO BY SEVERAL OTHER HIGH COURTS. 71. FOR ALL OF THE AFOREMENTIONED REASONS, THE COURT I S OF THE VIEW THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT THE INVOCATION OF SECTION 153A BY THE REVENUE FOR THE AYS 2000-01 TO 2003-04 WAS WITHOUT ANY LEGAL BASIS AS T HERE WAS NO INCRIMINATING MATERIAL QUA EACH OF THOSE AYS. THE HONBLE DELHI HIGH COURT HAS CONCURRED WITH THE VIEW AS TAKEN IN CASE OF KABUL CHAWLA (SUPRA) AS WELL AS THE DECISION OF HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF M/S. JAI STEEL INDIA LTD. VS. ACIT (SUPRA). EVEN ON THE ISSUE OF ADDITION MADE BY THE AO IN THE PROCEEDINGS UNDER SECTION 153 A IN RESPECT OF THE ASSESSMENT YEAR WHICH WAS ALREADY COMPLETED ON THE DATE OF SEA RCH, THE HONBLE HIGH COURT HAS HELD THAT IN THE ABSENCE OF ANY MATERIAL WHICH WAS SUBSEQUENTLY UNEARTHED DURING THE SEARCH AND WAS NOT ALREADY AVAILABLE TO THE AO, THE ADDITIONS MADE BY THE AO ON ACCOUNT OF SECURITY DEPOSITS WERE RIGHTLY DELETE D BY THE LD. CIT (A). THE RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT IN CASE OF P RINCIPAL CIT VS. MEETA GUTGUTIA (SUPRA) ARE IN PARA 53 AS UNDER :- 53. AT THIS STAGE, IT IS ALSO TO BE NOTICED THAT AN EL ABORATE ARGUMENT WAS MADE BY MR. MANCHANDA ON THE ASPECT OF THE SECURITY DEPOSIT S ACCEPTED BY THE ASSESSEE. 24 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THESE WERE OF TWO KINDS - ONE WAS OF REFUNDABLE SEC URITY DEPOSITS AND THE OTHER FOR NON-REFUNDABLE SECURITY DEPOSITS. AS FAR AS THE REF UNDABLE SECURITY DEPOSITS WERE CONCERNED, THE AO HIMSELF IN HIS REMAND REPORT ACCE PTED THEM AS HAVING BEEN DISCLOSED. THIS HAS BEEN NOTICED BY THE CIT (A) IN PARA 7.2.1 OF HIS ORDER FOR AY 2004- 05. AS REGARDS NON-REFUNDABLE SECURITY DEPOSIT, THE CIT (A) ACCEPTED THE AO'S FINDINGS THAT TREATING THE SUM AS 'GOODWILL WRITTEN OFF ON DEFERRED BASIS' WAS NOT CORRECT, HENCE THE ADDITION OF RS. 5,09,343 WAS HEL D TO BE JUSTIFIED AND CORRECT. IT WAS DULY ACCOUNTED FOR UNDER 'LIABILITIES' AND TRANSFER RED TO INCOME IN A PHASED MANNER. THIS WAS NOT DONE BY MANIPULATING THE ACCOUNT BOOKS OF THE ASSESSEE AS ALLEGED BY THE REVENUE. THIS WOULD HAVE BEEN EVIDENT HAD THE R ETURN BEEN PICKED UP FOR SCRUTINY UNDER SECTION 143(3) OF THE ACT. THIS, THE REFORE, WAS NOT MATERIAL WHICH WAS SUBSEQUENTLY UNEARTHED DURING THE SEARCH WHICH WAS NOT ALREADY AVAILABLE TO THE AO. CONSEQUENTLY, THE ADDITIONS SOUGHT TO BE MADE B Y THE AO ON ACCOUNT OF SECURITY DEPOSITS WERE RIGHTLY DELETED BY THE CIT (A). THUS THE ESSENTIAL COROLLARY OF THESE DECISIONS IS THAT NO ADDITION CAN BE MADE IN THE PROCEEDINGS UNDER SECTION 153A IN RESPECT OF THE AS SESSMENTS WHICH WERE COMPLETED PRIOR TO THE DATE OF SEARCH EXCEPT BASED ON SOME INCRIMINATING MATERIAL UNEARTHED DURING THE SEARCH WHICH WAS NOT ALREADY A VAILABLE TO THE AO. IT IS PERTINENT TO NOTE THAT THE SLP FILED BY THE REVENUE AGAINST THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF PRINCIPAL CIT VS. MEETA GUTGUTIA WAS DISMISSED VIDE ORDER DATED 2 ND JULY, 2018. THERE ARE SERIES OF DECISIONS ON THIS ISSUE INCLUDING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CA SE OF M/S. JAI STEEL INDIA VS. ACIT (SUPRA) WHEREIN THE HONBLE HIGH COURT HAS HELD IN PARA 23 TO 30 AS UNDER :- 23. THE RELIANCE PLACED BY THE COUNSEL FOR THE APPELLA NT ON THE CASE OF ANIL KUMAR BHATIA ( SUPRA ) ALSO DOES NOT HELP THE CASE OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE SAID JUDGMENT READS AS UNDER: 25 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. '19. UNDER THE PROVISIONS OF SECTION 153A, AS WE HA VE ALREADY NOTICED, THE ASSESSING OFFICER IS BOUND TO ISSUE NO TICE TO THE ASSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH OR REQUISI TION WAS MADE. ANOTHER SIGNIFICANT FEATURE OF THIS SECTION IS THAT THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSESS THE 'TOTAL INCOM E' OF THE AFORESAID YEARS. THIS IS A SIGNIFICANT DEPARTURE FROM THE EAR LIER BLOCK ASSESSMENT SCHEME IN WHICH THE BLOCK ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 15 3A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO ASSES S OR REASSESS THE 'TOTAL INCOME' OF THE SIX ASSESSMENT YEARS IN QUEST ION IN SEPARATE ASSESSMENT ORDERS. THIS MEANS THAT THERE CAN BE ONL Y ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEAR S, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUG HT TO TAX. 20. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT T O BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESP ECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UNDER SECTION 14 3(1)(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN E XISTENCE, HAVING OBVIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF TH E SEARCH/REQUISITION, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME, TAKING N OTE TO THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SE ARCH. FOR THIS PURPOSE, THE FETTERS IMPOSED UPON THE ASSESSING OFF ICER BY THE STRICT PROCEDURE TO ASSUME JURISDICTION TO REOPEN THE ASSE SSMENT UNDER SECTIONS 147 AND 148, HAVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB-SECTION (1) OF SECTION 153A OPENS. T HE TIME-LIMIT WITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE IS SUED, AS PROVIDED IN SECTION 149 HAS ALSO BEEN MADE INAPPLICABLE BY T HE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUIRES SANCTION TO BE O BTAINED BY THE ASSESSING OFFICER BY ISSUE OF NOTICE TO REOPEN THE ASSESSMENT UNDER SECTION 148 HAS ALSO BEEN EXCLUDED IN A CASE COVERE D BY SECTION 153A. THE TIME-LIMIT PRESCRIBED FOR COMPLETION OF AN ASSE SSMENT OR REASSESSMENT BY SECTION 153 HAS ALSO BEEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. WITH ALL THE STOPS HAVING BEEN PULLED OUT, THE ASSESSING OFFICER UNDER SECTION 153A HAS BEEN E NTRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSE SSEE WHOSE CASE IS COVERED BY SECTION 153A, BY EVEN MAKING REASSESSMEN TS WITHOUT ANY FETTERS, IF NEED BE. 21. NOW THERE CAN BE CASES WHERE AT THE TIME WHEN T HE SEARCH IS INITIATED OR REQUISITION IS MADE, THE ASSESSMENT OR REASSESSMENT PROCEEDINGS RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF THE SIX ASSESSMENT YEARS MENTIONED ABOVE, MAY BE PE NDING. IN SUCH A CASE, THE SECOND PROVISO TO SUB-SECTION (1) OF SECT ION 153A SAYS THAT SUCH PROCEEDINGS 'SHALL ABATE'. THE REASON IS NOT F AR TO SEEK. UNDER SECTION 153A, THERE IS NO ROOM FOR MULTIPLE ASSESSM ENT ORDERS IN 26 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. RESPECT OF ANY OF THE SIX ASSESSMENT YEARS UNDER CO NSIDERATION. THAT IS BECAUSE THE ASSESSING OFFICER HAS TO DETERMINE NOT MERELY THE UNDISCLOSED INCOME OF THE ASSESSEE, BUT ALSO THE 'T OTAL INCOME' OF THE ASSESSEE IN WHOSE CASE A SEARCH OR REQUISITION HAS BEEN INITIATED. OBVIOUSLY THERE CANNOT BE SEVERAL ORDERS FOR THE SA ME ASSESSMENT YEAR DETERMINING THE TOTAL INCOME OF THE ASSESSEE. IN OR DER TO ENSURE THIS STATE OF AFFAIRS NAMELY, THAT IN RESPECT OF THE SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE YEAR IN WHICH THE SEARCH TOOK PLACE THERE IS ONLY ONE DETERMINATION OF THE T OTAL INCOME, IT HAS BEEN PROVIDED IN THE SECOND PROVISO OF SUB-SECTION (1) OF SECTION 153A THAT ANY PROCEEDINGS FOR ASSESSMENT OR REASSES SMENT OF THE ASSESSEE WHICH ARE PENDING ON THE DATE OF INITIATIO N OF THE SEARCH OR MAKING REQUISITION 'SHALL ABATE'. ONCE THOSE PROCEE DINGS ABATE, THE DECKS ARE CLEARED, FOR THE ASSESSING OFFICER TO PAS S ASSESSMENT ORDERS FOR EACH OF THOSE SIX YEARS DETERMINING THE TOTAL I NCOME OF THE ASSESSEE WHICH WOULD INCLUDE BOTH THE INCOME DECLARED IN THE RETURNS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS THE UNDISCLOSE D INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQUISITION. THE POS ITION THUS EMERGING IS THAT THE SEARCH IS INITIATED OR REQUISITION IS M ADE, THEY WILL ABATE MAKING WAY FOR THE ASSESSING OFFICER TO DETERMINE T HE TOTAL INCOME OF THE ASSESSEE IN WHICH THE UNDISCLOSED INCOME WOULD ALSO BE INCLUDED, BUT IN CASE WHERE THE ASSESSMENT OR REASSESSMENT PR OCEEDINGS HAVE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE B EEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH OR DERS SUBSISTING AT THE TIME WHEN THE SEARCH OR THE REQUISITION IS MADE , THERE IS NO QUESTION OF ANY ABATEMENT SINCE NO PROCEEDINGS ARE PENDING. IN THIS LATTER SITUATION, THE ASSESSING OFFICER WILL REOPEN THE ASSESSMENTS OR REASSESSMENTS ALREADY MADE (WITHOUT HAVING THE NEED TO FOLLOW THE STRICT PROVISIONS OR COMPLYING WITH THE STRICT COND ITIONS OF SECTIONS 147, 148 AND 151) AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE ORDERS PASSED UNDER SECTION 15 3A WOULD BE SIMILAR TO THE ORDERS PASSED IN ANY REASSESSMENT, W HERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND THE INCOME THAT ESCAPED ASSESSMENT ARE CLUBBED TOGETHER AND AS SESSED AS THE TOTAL INCOME. IN SUCH A CASE, TO REITERATE, THERE IS NO QUESTION OF ANY ABATEMENT OF THE EARLIER PROCEEDINGS FOR THE SIMPLE REASON THAT NO PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT WERE PEN DING SINCE THEY HAD ALREADY CULMINATED IN ASSESSMENT OR REASSESSMEN T ORDERS WHEN THE SEARCH WAS INITIATED OR THE REQUISITION WAS MADE.' (EMPHASIS SUPPLIED) 24. THE SAID JUDGMENT ALSO IN NO UNCERTAIN TERMS HOLDS THAT THE REASSESSMENT OF THE TOTAL INCOME OF THE COMPLETED ASSESSMENTS HA VE TO BE MADE TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH AND THE INCOME THAT ESCAPED ASSESSMENTS ARE REQUIRED TO BE CLUBBED TOGETHER WITH THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT AND AS SESSED AS THE TOTAL INCOME. THE OBSERVATIONS MADE IN THE JUDGMENT CONTRASTING T HE PROVISIONS OF DETERMINATION OF UNDISCLOSED INCOME UNDER CHAPTER X IVB WITH DETERMINATION OF TOTAL INCOME UNDER SECTIONS 153A TO 153C OF THE ACT HAVE TO BE READ IN THE 27 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. CONTEXT OF SECOND PROVISO ONLY, WHICH DEALS WITH TH E PENDING ASSESSMENT/REASSESSMENT PROCEEDINGS. THE FURTHER OB SERVATIONS MADE IN THE CONTEXT OF DE NOVO ASSESSMENT PROCEEDINGS ALSO HAVE TO BE READ IN CONTEXT THAT IRRESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH, THE NOTICE AND CONSEQUENTIAL ASSE SSMENT UNDER SECTION 153A HAVE TO BE UNDERTAKEN. 25. THE ARGUMENT OF THE LEARNED COUNSEL THAT THE AO IS ALSO FREE TO DISTURB INCOME, EXPENDITURE OR DEDUCTION DE HORS THE INCRIM INATING MATERIAL, WHILE MAKING ASSESSMENT UNDER SECTION 153A OF THE ACT IS ALSO NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION WHICH AS NOTICED A BOVE IS ESSENTIALLY IN CONTEXT OF SEARCH AND/OR REQUISITION. THE PROVISION S OF SECTIONS 153A TO 153C CANNOT BE INTERPRETED TO BE A FURTHER INNINGS FOR T HE AO AND/OR ASSESSEE BEYOND PROVISIONS OF SECTIONS 139 (RETURN OF INCOME ), 139(5) (REVISED RETURN OF INCOME), 147 (INCOME ESCAPING ASSESSMENT) AND 26 3 (REVISION OF ORDERS) OF THE ACT. 26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT Y EARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR C OMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION A ND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATIN G MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. 27. THE ALLAHABAD HIGH COURT IN SMT. SHAILA AGARWAL'S ( SUPRA ) HAS HELD AS UNDER: '19. THE SECOND PROVISO TO SECTION 153A OF THE ACT, REFERS TO ABATEMENT OF THE PENDING ASSESSMENT OR RE-ASSESSMEN T PROCEEDINGS. THE WORD 'PENDING' DOES NOT OPERATE ANY SUCH INTERP RETATION, THAT WHEREVER THE APPEAL AGAINST SUCH ASSESSMENT OR REAS SESSMENT IS PENDING, THE SAME ALONG WITH ASSESSMENT OR REASSESS MENT PROCEEDINGS IS LIABLE TO BE ABATED. THE PRINCIPLES OF INTERPRET ATION OF TAXING STATUTES DO NOT PERMIT THE COURT TO INTERPRET THE SECOND PRO VISO TO SECTION 153A IN A MANNER THAT WHERE THE ASSESSMENT OR REASS ESSMENT PROCEEDINGS ARE COMPLETE, AND THE MATTER IS PENDING IN APPEAL IN THE TRIBUNAL, THE ENTIRE PROCEEDINGS WILL ABATE. 20. THERE IS ANOTHER ASPECT TO THE MATTER, NAMELY T HAT THE ABATEMENT OF ANY PROCEEDINGS HAS SERIOUS CAUSES AND EFFECT IN AS MUCH AS THE ABATEMENT OF THE PROCEEDINGS, TAKES AWAY ALL THE CO NSEQUENCES THAT ARISE THEREAFTER. IN THE PRESENT CASE AFTER DEDUCTI NG BOGUS GIFTS IN THE REGULAR ASSESSMENT PROCEEDINGS, THE PROCEEDINGS FOR PENALTY WERE 28 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. DRAWN UNDER SECTION 271(1)(C) OF THE ACT. THE MATERIAL FOUND IN THE SEARCH MAY BE A GROUND FOR NOTICE AND ASSESSMENT UN DER SECTION 153A OF THE ACT BUT THAT WOULD NOT EFFACE OR TERMINATE A LL THE CONSEQUENCE, WHICH HAS ARISEN OUT OF THE REGULAR ASSESSMENT OR R EASSESSMENT RESULTING INTO THE DEMAND OR PROCEEDINGS OF PENALTY . ' (EMPHASIS SUPPLIED) THE SAID JUDGMENT WHICH ESSENTIALLY DEALS WITH SECO ND PROVISO TO SECTION 153A OF THE ACT ALSO SUPPORTS THE CONCLUSION, WHICH WE HAVE REACHED HEREINBEFORE. 28. IT HAS BEEN OBSERVED BY THE HON'BLE SUPREME COURT IN K.P. VARGHESE V. ITO [1981] 131 ITR 597/7 TAXMAN 13 THAT 'IT IS WELL RECOGNIZED RULE OF CONSTRUCTION THAT A STATUTORY PROVISION MUS T BE SO CONSTRUED, IF POSSIBLE THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED.' 29. THE ARGUMENT OF THE COUNSEL FOR THE APPELLANT IF T AKEN TO ITS LOGICAL END WOULD MEAN THAT EVEN IN CASES WHERE THE APPEAL ARIS ING OUT OF THE COMPLETED ASSESSMENT HAS BEEN DECIDED BY THE CIT(A), ITAT AND THE HIGH COURT, ON A NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE AO WOULD HAVE POWER TO UNDO WHAT HAS BEEN CONCLUDED UP TO THE HIGH COURT. ANY INTERPRETATION WHICH LEADS TO SUCH CONCLUSION HAS TO BE REPELLED AND/OR AVOIDED AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE ( SUPRA ). 30. CONSEQUENTLY, IT IS HELD THAT IT IS NOT OPEN FOR T HE ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT BEEN C LAIMED IN THE ORIGINAL ASSESSMENT, WHICH ASSESSMENT ALREADY STANDS COMPLET ED, ONLY BECAUSE A ASSESSMENT UNDER SECTION 153A OF THE ACT IN PURSUAN CE OF SEARCH OR REQUISITION IS REQUIRED TO BE MADE. IN THE CASE IN HAND, THE TRANSACTIONS OF UNSECURED LOANS AS WELL AS INTRODUCTION OF CAPITAL BY THE PARTNERS WERE DULY RECORDED IN THE B OOKS OF ACCOUNT AND AVAILABLE WITH THE AO. FURTHER, DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT ON 2 ND JULY 2015 NO MATERIAL MUCH LESS INCRIMINATING MATE RIAL WAS EITHER FOUND OR SEIZED TO DISCLOSE ANY UNDISCLOSED INCOME ON ACCOUNT OF UN SECURED LOANS OR PARTNERS CAPITAL RECEIVED BY THE ASSESSEE FIRM. THE AO HAS PROPOSED TO MAKE THE ADDITION ON ACCOUNT OF UNSECURED LOANS AND PARTNERS CAPITAL UN DER SECTION 68 BEING UNEXPLAINED CASH CREDIT SOLELY ON THE BASIS OF THE INFORMATION RECEIVED FROM INVESTIGATION WING KOLKATA. IT IS PERTINENT TO NOTE THAT THE SAID IN FORMATION WAS AVAILABLE WITH THE AO 29 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. PRIOR TO THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT IN CASE OF THE ASSESSEE ON 2 ND JULY, 2015. THEREFORE, EVEN THE SOLE BASIS OF ASSE SSMENTS FRAMED UNDER SECTION 153A OF THE ACT IS THE INFORMATION RECEIVED FROM INVESTIGATION WING KOLKATA AND STATEMENT OF ONE SHRI ANAND SHARMA, WHO IS STAT ED TO BE AN ENTRY OPERATOR AND MANAGED VARIOUS CONCERNS/COMPANIES INCLUDING M/S.RO YAL CRYSTAL DEALERS, ONE OF THE LOAN CREDITORS OF THE ASSESSEE. EXCEPT THE SAID STATEMENT AND REPORT OF THE INVESTIGATION WING KOLKATA, THE AO HAS NEITHER REFE RRED TO OR WAS HAVING IN POSSESSION OF ANY MATERIAL TO INDICATE THAT THE UNS ECURED LOANS SHOWN IN THE BOOKS OF ACCOUNTS AS WELL AS PARTNERS CAPITAL RECEIVED B Y THE ASSESSEE ARE NOTHING BUT ASSESSEES OWN UNACCOUNTED AND UNDISCLOSED INCOME R OUTED BACK IN THE GARB OF UNSECURED LOANS AND PARTNERS CAPITAL. THERE IS NO DISPUTE THAT THESE TRANSACTIONS OF UNSECURED LOANS AND PARTNERS CAPITAL CONTRIBUTION ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS AND DISCLOSED IN THE RETURN OF INCOME WHIC H WERE ALREADY COMPLETED AS THE ASSESSMENTS FOR THESE FOUR ASSESSMENT YEARS WERE NO T PENDING ON THE DATE OF SEARCH, THEREFORE, IT IS MANIFEST FROM THE RECORD T HAT DURING THE COURSE OF SEARCH AND SEIZURE UNDER SECTION 132 OF THE ACT IN THE CASE OF THE ASSESSEE NO MATERIAL MUCH LESS THE INCRIMINATING MATERIAL WAS UNEARTHED OR AN Y UNDISCLOSED INCOME WHICH WAS NOT DISCLOSED IN THE BOOKS OF ACCOUNTS WAS DETECTED OR FOUND. THE ONLY INCRIMINATING MATERIAL WHICH WAS REFERRED BY THE AO IS PAGES 21 T O 26 OF ANNEXURE AS-1 IN RESPECT OF LONG TERM CAPITAL GAIN EARNED BY SHRI RA JENDRA AGARWAL AND HIS FAMILY MEMBERS. THE SAID LONG TERM CAPITAL GAIN WAS DISCL OSED BY SHRI RAJENDRA AGARWAL IN HIS STATEMENT UNDER SECTION 132(4) AND, THEREFORE, IT WAS SURRENDERED AND OFFERED TO TAX BY SHRI RAJENDRA AGARWAL AND HIS FAMILY MEMBERS IN THE YEAR OF SEARCH. THE AO 30 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. HIMSELF HAS NOT MADE ANY ADDITION IN THE HAND OF TH E ASSESSEE ON ACCOUNT OF LONG TERM CAPITAL GAIN WHICH WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE. THUS, EXCEPT THE MATERIAL DISCLOSING THE LONG TERM CAPITA L GAIN IN THE HAND OF SHRI RAJENDRA AGARWAL, NO OTHER INCRIMINATING MATERIAL EITHER FOU ND OR REFERRED OR IS THE BASIS OF THE ADDITION MADE BY THE AO WHILE FRAMING THE ASSES SMENT UNDER SECTION 153A OF THE ACT FOR THE ASSESSMENT YEARS 2010-11 TO 13-14. IT IS APPROPRIATE TO REFER RELEVANT PART OF THE ASSESSMENT ORDER IN PARA 12 PA GES 48 TO 50, PARA 19 PAGE 83 AND PARA 22 PAGE 86 AS UNDER :- 12. SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE FI RM HAVE BEEN DULY CONSIDERED. HOWEVER, EVEN THE VERY ELABORATE A ND CASE LAWS LOADED SUBMISSIONS OF THE ASSESSEE ARE TOTALLY OFF THE MARK. AGAINST THE SELF-SPEAKING FACTS OF THE VERY NATURE OF THE A CTIVITIES OF THE SO CALLED PARTNERS PROVIDING HUGE PARTNERS CAPITAL I N THE MOST UNINTERESTED MANNER AND PROVIDING HUGE UNSECURED LO ANS WITHOUT ANY COLLATERAL OR OTHER SECURITY, THE EMPHASIS OF THE A SSESSEE FIRM IN ITS SUBMISSIONS HAS BEEN ON SEEKING PROTECTION UNDER VA RIOUS JUDICIAL DECISIONS EVEN WITHOUT HAVING ANY FACT COHERENCE. T HE SUBMISSIONS MADE BY THE ASSESSEE ARE COMPLETELY DEVOID OF MERIT IN THE LIGHT OF THE FOLLOWING FACTS AND CIRCUMSTANCES; A. THE DEPARTMENT HAS VERY SOUND BASIS TO TREAT, THE R ECEIPTS OF UNSECURED LOAN AND PARTNERS CAPITAL FROM THE ABOVE MENTIONED COMPANIES AS BOGUS AND IN GENUINE. THE FINDINGS OF THIS OFFICE AND INVESTIGATION REPORT OF THE INVESTIGATION DIRECTORA TE KOLKATA ARE NOT BASED ON ANY PRESUMPTION, ASSUMPTION, GUESS OR BARE SUSPICION. WHERE THE NATURE AND SOURCE OF A RECEIPT, WHETHER I T BE OF MONEY OR OTHER PROPERTY, CANNOT BE SATISFACTORILY EXPLAIN ED BY THE 31 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ASSESSEE, IT IS OPEN FOR THE REVENUE TO HOLD THAT I T IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVE NUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE AS EN UMERATED THE HONBLE SUPREME COURT IN THE CASE OF ROSHAN DI HATT I V. CIT (1977) 107 ITR 938 (SC) AND KALE KHAN MOHAMMAD HANIF V. CI T (1963) 50 ITR 1 (SC). PRIMA FACIE ONUS IS ALWAYS ON THE ASSESSEE TO PROVE THE CASH CREDIT ENTRY FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN LAND MARK CASES LIKE KALE KHAN MOHAMM AD HANIF V CIT (1963) 50 ITR 1 (SC), ROSHAN DI HATTI V CIT (1977) 107 ITR (SC) IT HAS BEEN HELD THAT THE LAW I S WELL SETTLED THAT THE ONUS OF PROVING THE SOURCE OF A SU M OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE, I S ON HIM. WHERE THE NATURE AND SOURCE THEREOF CANNOT BE EXPLAINED SATISFACTORILY, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHE R BURDEN IS ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE. IT MAY ALSO BE POINTED OUT T HAT THE BURDEN OF PROOF IS FLUID FOR THE PURPOSES OF SECTIO N 68. ONCE ASSESSEE HAS SUBMITTED BASIC DOCUMENTS RELATIN G TO IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORT HINESS THEN AO MUST DO SOME INQUIRY TO CALL FOR MORE DETAI LS TO INVOKE SECTION 68. B. THE ASSESSEE FIRM HAS FILED CONFIRMATION LETTERS AN D THIS OFFICE HAS CARRIED OUT FURTHER ENQUIRY TO EXAMINE THE REALITY OF THE TRANSACTIONS. AN ENQUIRY WAS SENT TO THE INVESTIGA TION DIRECTORATE KOLKATA AND IT HAS BEEN ESTABLISHED THAT THESE INVE STOR OR LENDER COMPANIES ARE CONTROLLED BY THE ENTRY OPERATORS. T HE STATEMENTS OF VARIOUS ENTRY OPERATORS ARE SUFFICIENT EVIDE4NCE S TO SHOW THAT THE UNSECURED LOAN AND PARTNERS CAPITAL ARE ASSESS EES OWN UNDISCLOSED INCOME BROUGHT INTO THE BOOKS OF THE AS SESSEE UNDER THE GARB OF UNSECURED LOAN AND PARTNERS CAPITAL. C. THE DEPARTMENT HAS CARRIED OUT SEARCH OVER THE ASSE SSEE GROUP AND DURING THE COURSE OF SEARCH ACTION U/S 132 OF T HE I.T. ACT, 32 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 1961, THE INCRIMINATING DOCUMENTS SEIZED DURING SEA RCH PROCEEDINGS VIDE PG NO. 21 TO 26 OF ANNEXURE AS-1 O F PARTY B-1, WHEREIN THE DETAILS OF YEAR-WISE LTCG EARNED BY SHR I RAJENDRA AGRAWAL AND HIS FAMILY MEMBERS, IS MAINTAINED, WHIC H DURING SEARCH ACTION HAS BEEN ACCEPTED TO BE BOGUS BY ALL FAMILY MEMBERS IN THEIR RESPECTIVE STATEMENTS. 19. IN VIEW OF ABOVE FACTS OF THE CASE AND IN THE LIGHT OF ABOVE JUDICIAL DECISION, IT IS ESTABLISHED THAT GENUINENE SS OF THE TRANSACTION HAS NOT BEEN PROVED. SECTION 68 OF THE I.T. ACT PRO VIDES FOR CHARGING TO INCOME TAX ON ANY SUM CREDITED IN THE BOOKS OF T HE ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR IF THE ASSESSEE OF FERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANAT ION OFFERED IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTO RY. IT PLACES NO DUTY UPON THE ASSESSING OFFICER TO POINT TO THE SOURCE F ROM WHICH THE MONEY WAS RECEIVED BY THE ASSESSEE. WHERE AN ASSES SEE FAILS TO PROVE SATISFACTORILY THE SOURCE AND THE NATURE OF C ERTAIN AMOUNT OF CREDIT DURING THE ACCOUNTING YEAR, THE INCOME-TAX O FFICER IS ENTITLED TO DRAW THE INFERENCE THAT THE RECEIPT ARE OF AN ASSES SABLE NATURE. THUS, THE ASSESSEE IS UNABLE TO DISCHARGE ITS BURDEN OF P ROOF BY FAILING TO ESTABLISH LENDERS IDENTITY, FORGET THE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE LENDER. HENCE, THE UNSECUR ED LOANS AND PARTNERS CAPITAL SHOWN TO HAVE BEEN RECEIVED FROM VARIOUS KOLKATA BASED COMPANIES AND OTHER COMPANIES REMAINED UNEXPL AINED. IN THE CIRCUMSTANCES, I AM LEFT WITH NO OPTION THAN TO TAX THE ENTIRE UNEXPLAINED CREDITS BY WAY OF PARTNERS CAPITAL AND UNSECURED LOANS RECEIVED FROM THE PERSONS MENTIONED IN PARA 5 ABOVE AS UNEXPLAINED CASH CREDITS U/S 68 OF THE INCOME TAX ACT, CHARGEAB LE TO TAX AS INCOME OF THE ASSESSEE FIRM FOR THE RESPECTIVE ASSESSMENT YEARS. 33 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 22. AFTER EXAMINATION OF THE INFORMATION AND DETA ILS PLACED ON RECORD AND DISCUSSION WITH THE ASSESSEE, THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER :- RETURNED INCOME AS PER ITR U/S 153A OF THE ACT. RS. 2,82,83,460/ - ADDITIONS | UNEXPLAINED CASH CREDITS U/S | 68 OF THE ACT IN THE FORM OF | UNSECURED LOAN AND PARTNERS | CAPITAL RS. 67,20,14,999/ - ASSESSED INCOME RS. 70,02,98,459/ - R/O RS. 70,02,98,459/ - THE TOTAL INCOME OF THE ASSESSEE IN THE STATUS OF F IRM FOR ASSESSMENT YEAR 2010-11 RELEVANT TO PREVIOUS YEAR 2009-10 IS A SSESSED AT RS. 70,02,98,459/- U/S 153A READ WITH SECTION 143(3) OF I.T. ACT, 1961. THE FORM ITNS-150 SHOWING CALCULATION OF TAX AND IN TEREST CHARGEABLE, IF ANY, IS ATTACHED HEREWITH AND FORMS A PART OF TH IS ORDER. A NOTICE OF DEMAND U/S 156 OF THE ACT AND CHALLAN FOR PAYMENT O F TAX, IF PAYABLE, IS HEREBY ISSUED. PENALTY NOTICE U/S 274 RWS 271(1) (C) IS ISSUED SEPARATELY. THE ENTIRE FINDING OF THE AO IS BASED ON THE INFORM ATION RECEIVED FROM THE INVESTIGATION WING KOLKATA AND STATEMENT OF SHRI AN AND SHARMA. THE LD. CIT (A) THOUGH HAS NOT DISPUTED THE LEGAL PROPOSITION ON TH IS ISSUE, HOWEVER, THE CONTENTION OF THE ASSESSEE WAS TURNED DOWN MERELY ON THE GROUN D THAT THE SLPS FILED BY THE REVENUE IN THE CASES OF KABUL CHAWLA (SUPRA) AND M/ S. ALL CARGO GLOBAL LOGISTICS (SUPRA) ETC. HAVE BEEN ADMITTED FOR DECISION BY THE HONBLE SUPREME COURT. THE RELEVANT PART OF THE FINDING OF THE LD. CIT (A) IN PARA 3.2.2 AND 3.2.4 AT PAGES 35 AND 36 ARE AS UNDER :- 34 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 3.2.2 AS PER THE PROVISIONS OF THIS SECTION WHERE A SEARCH IS INITIATED U/S 132 OF THE ACT, THE A.O SHALL ISSUE A NOTICE RE QUIRING THE PERSON SEARCHED TO FURNISH HIS RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATEL Y PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. ONCE SUCH RETURNS ARE FILED, THE AO HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF SUCH SIX ASSESSMENT YEARS.(EMPHASIS SUPPLIED BY ME). (THE DECISIVE WORDS USED IN THE PROVISIONS ARE TO 'ASSESSEE OR REASSESS THE TOTAL I NCOME' ). THE A.O. IS THUS DUTY BOUND TO DETERMINE THE 'TOTAL INCOME' OF THE ASSESSEE FOR SUCH SIX ASSESSMENT YEARS AND IT IS OBVIOUS THAT 'TOTAL INCOME' REFERS TO THE SUM TOTAL OF INCOME IN RESPECT OF WHICH A PERSON IS ASSESSABLE. THE TOTAL INCOME THEREFORE WILL COVER NOT ONLY THE INCOME EMA NATING FROM DECLARED SOURCES OR ANY MATERIAL PLACED BEFORE THE ASSESSING OFFICER BUT FROM ALL SOURCES INCLUDING THE UNDISCLOSED ONES, OR BASED ON THE UNPLACED MATERIAL BEFORE THE AO. 3.2.3 THE CONCEPT OF ASSESS OR REASSESS AND SHALL ABATE AS CONTEMPLATED U/S 153A IS UNDER HOT JUDICIAL DEBATE. I FIND THAT LEGALLY, THIS ISSUE IS VERY CONTENTIOUS IN VIEW OF THE DIVER GENT VIEWS OF THE VARIOUS AUTHORITIES. THE APPELLANT HAS TRIED TO HIG HLIGHT MOST OF THEM. HOWEVER, IT IS EQUALLY PERTINENT TO MENTION HERE TH AT THE DEPARTMENT HAS NOT ACCEPTED THE DECISIONS OF HON'BLE MUMBAI HIGH C OURT IN THE CASE OF M/S ALL CARGO GLOBAL LOGISTICS AS WELL AS CONTINENT AL WAREHOUSING (NHAVA SHEVA) LTD., AND SLP HAS BEEN FILED BEFORE T HE HON'BLE SUPREME COURT. THE HON'BLE SUPREME COURT HAS GRANTED LEAVE VIDE ORDER DATED 12.10.2015 AS REPORTED IN 64 TAXMANN.COM 34 (S.C.). SIMILARLY, IN THE CASE OF KABUL CHAWLA SLP HAS ALSO BEEN FILED. 35 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 3.2.4 IN VIEW OF SLPS ADMITTED IN CASE OF KABUL CHAWLA, M/S ALL CARGO GLOBAL LOGISTICS AS WELL AS CONTINENTAL WAREH OUSING (NHAVA SHEVA) LTD., (SUPRA), ASSESSEES CONTENTION CANNOT BE ACCEPTED. MOREOVER, IN ANY CASE, THE ADDITIONS ARE TO BE ADJUDICATED ON MERITS AS PER RELEVANT GROUND OF APPEAL, THE ISSUE RAISED IN THIS GROUND FOR PRESENT REMAINS FOR ACADEMIC DISCUSSION ONLY. ACCORDINGLY, ISSUE RAISED IN GROUND NO. 12 IS DISMISSED. THEREFORE, NEITHER IN THE ASSESSMENT ORDER NOR IN T HE ORDER OF THE LD. CIT (A) THERE IS ANY MENTION OR FINDING THAT THE ADDITIONS HAVE B EEN MADE BY THE AO ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH AND SEIZURE IN THE CASE OF THE ASSESSEE. THE AO HAS SOLELY RELIED UPO N THE REPORT OF THE INVESTIGATION WING KOLKATA AND STATEMENT OF ONE SHRI ANAND SHARMA RECORDED BY THE INVESTIGATION WING DURING THE SURVEY UNDER SECTION 133A OF THE ACT. THEREFORE, EVEN IF THE INFORMATION/REPORT OF THE INVESTIGATION WING KOLKATA IS CONSIDERED AS A RELEVANT EVIDENCE, THE SAME CANNOT BE REGARDED AS I NCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH AND SEIZURE UNDER SECTI ON 132 OF THE IT ACT IN CASE OF THE ASSESSEE. THE REQUIREMENT FOR MAKING THE ADDIT ION UNDER SECTION 153A IN THE ASSESSMENT YEARS WHERE THE ASSESSMENT WAS NOT PENDI NG ON THE DATE OF SEARCH AND THE PROCEEDINGS ARE IN THE NATURE OF REASSESSMENT I S ESSENTIALLY THE INCRIMINATING MATERIAL DISCLOSING UNDISCLOSED INCOME WHICH WAS NO T DISCLOSED BY THE ASSESSEE. IN THE CASE IN HAND, THE AO HIMSELF HAS NOT CLAIMED A NY INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE IN THE CASE OF THE AS SESSEE. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE BI NDING PRECEDENTS ON THIS ISSUE IN WHICH THE SLP FILED BY THE REVENUE WAS ALSO DISMISS ED BY THE HONBLE SUPREME 36 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. COURT, THE ADDITIONS MADE BY THE AO WHILE PASSING T HE ASSESSMENT ORDERS UNDER SECTION 153A FOR THE ASSESSMENT YEARS 2010-11 TO 13 -14 ARE NOT SUSTAINABLE AND ACCORDINGLY THE SAME ARE LIABLE TO BE DELETED. WE ORDER ACCORDINGLY. NOW ON MERITS : GROUND NO. 3 TO 5 : 7. ON MERITS OF THE ADDITION MADE UNDER SECTION 68 OF THE IT ACT, THE AO MADE THE ADDITION OF THE ENTIRE AMOUNT OF UNSECURED LOAN S RECEIVED FROM 5 (FIVE) PERSONS AND PARTNERS CAPITAL FROM 4 (FOUR) PERSONS FOR THE ASSESSMENT YEAR 2010-11 TREATING THE SAME AS UNEXPLAINED CASH CREDIT. ON APPEAL, TH E LD. CIT (A) HAS DELETED THE ADDITIONS MADE BY THE AO IN RESPECT OF ALL THE PART IES EXCEPT IN CASE OF M/S. JALSAGAR COMMERCE PVT. LTD. WHICH WAS STATED TO BE THE COMPA NY MANAGED BY SHRI ANAND SHARMA. THE LD. CIT (A) HAS DELETED THE ADDITION I N RESPECT OF ALL OTHER PARTIES ON THE GROUND THAT THE AO WAS NOT HAVING ANY DOCUMENTA RY EVIDENCE OR EVEN STATEMENT OF THE PERSONS WHO HAVE ALLEGEDLY PROVIDE D THE ACCOMMODATION ENTRIES TO THE ASSESSEE THROUGH THE OTHER COMPANIES/CONCERNS. THUS BOTH THE ASSESSEE AS WELL AS THE REVENUE ARE AGGRIEVED BY THE ORDER OF T HE LD. CIT (A) ON THE MERITS OF THE ADDITION AND FILED THESE CROSS APPEALS. 8. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE RECEIVED UNSECURED LOANS FROM REGISTERED NBFC AND O THER COMPANIES. THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE CALLING UP ON TO FILE THE SUPPORTING EVIDENCE. THE ASSESSEE FILED DETAILED REPLY OF THE SHOW CAUSE NOTICE WHICH HAS BEEN REPRODUCED BY THE AO AT PAGES 26 TO 48 OF THE ASSES SMENT ORDER. THE LD. A/R HAS POINTED OUT THAT WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3), THE AO HAS ACCEPTED THE LOAN AS GENUINE TRANSACTION. FURT HER, THE PARTNERS CAPITAL WAS ALSO 37 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ACCEPTED BY THE AO. SIMILARLY, FOR THE ASSESSMENT YEAR 2012-13 WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3), THE AO AGAIN ACCEPTED THE LOANS AS WELL AS PARTNERS CAPITAL AS GENUINE TRANSACTIONS. ONCE THE ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) AND THE AO HAS ACCEPTED THE TR ANSACTIONS AS GENUINE, THEN IN THE PROCEEDINGS UNDER SECTION 153A THE SAME CANNOT BE TREATED AS UNEXPLAINED CASH CREDIT WHEN THERE IS NO MATERIAL OR EVIDENCE T O REVIEW HIS OWN DECISION. THE AO HAS MADE THE ADDITIONS UNDER SECTION 68 ON ACCOU NT OF UNSECURED LOANS BY APPLYING PEAK CREDIT THEORY. THE LD. A/R HAS SUBMI TTED THAT THE ASSESSEE HAS DULY DISCHARGED ITS BURDEN CAST UNDER SECTION 68 OF THE ACT BY PROVIDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. ALL THE CREDITORS HAVE COMPLIED WITH THE NOTICES/SUMMONS ISSUED BY THE AO/ DEPARTMENT AND ALSO REPLIED TO THE QUERIES RAISED BY THE DEPARTMENT. THEREFORE , THE EXISTENCE OF ALL THE COMPANIES WAS ESTABLISHED WHEN THESE COMPANIES HAVE DULY RESPONDED TO THE NOTICES ISSUED BY THE DEPARTMENT. THE ASSESSEE PRO DUCED ALL RELEVANT DOCUMENTARY EVIDENCES IN SUPPORT OF THE TRANSACTIONS WHICH REMA INED UNCONTROVERTED BY THE AO DURING THE ASSESSMENT OR APPELLATE PROCEEDINGS. TH EREFORE, THE VERACITY OF DOCUMENTARY EVIDENCE FORMING PART OF THE ASSESSMENT RECORD IS NOT DOUBTED. THE AO HAS RELIED UPON STATEMENT RECORDED BY THE INVEST IGATION WING KOLKATA BEHIND THE BACK OF THE ASSESSEE AND MUCH BEFORE THE DATE OF SE ARCH. THE LD. A/R HAS SUBMITTED THAT THE AO WAS HAVING ONLY ONE STATEMENT OF SHRI ANAND SHARMA WHO HAS STATED THAT THE ACCOMMODATION ENTRIES WERE GIVE N TO M/S. JALSAGAR COMMERCE PVT. LTD. BY M/S. ROYAL CRYSTAL DEALERS PVT. LTD. THEREFORE, EVEN SHRI ANAND SHARMA HAS NOWHERE STATED THAT CASH WAS GIVEN BY THE ASSES SEE. DURING THE COURSE OF 38 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED THE F OLLOWING DOCUMENTS OF M/S. JALSAGAR COMMERCE PVT. LTD :- S. NO. PARTICULARS OF DOCUMENTS PAPER BOOK PAGE 1 COPY OF ACK. OF ITR OF AY 2010-11 704 2 COPY OF BALANCE SHEET AND ANNEXURE OF LOANS & ADV ANCE OF AY 2010-11 705-706 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING T HE ENTRY OF PAYMENT MADE TO ASSESSEE. 707-775 4 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS OF ACCOUNTS OF PARTY. 776-783 5 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS OF ACCOUNTS OF ASSESSEE. 784-787 6 COPY OF AFFIDAVIT OF SANGEETA SOMANI DIRECTOR OF COMPANY. 788-791 7 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 3 1-03- 2011,31-03-2012, 31-03-2013, 31-03-2014,31-03-2015 AND 31-03-2016 792-798 8 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF AB OVE NAMED COMPANY FOR AY 2005-06, AY 2007-08, AY 2011-12, AY 2012-13 AND 2014-15. 799-839 9 COPY OF ROC MASTER DATA. 840-841 10 COPY OF PAN CARD. 842 ALL THE LOANS WERE RECEIVED THROUGH BANK AND VERIFI ABLE FROM BANK STATEMENT OF THE ASSESSEE AS WELL AS BANK STATEMENTS OF THE LOAN CRE DITORS. THE ONUS UNDER SECTION 68 OF THE ACT IS TO PROVE THE IDENTITY, CAPACITY AN D GENUINENESS OF THE TRANSACTION WHICH HAS BEEN DISCHARGED BY THE ASSESSEE BY PRODUC ING THE DOCUMENTARY EVIDENCE AS WELL AS THE NOTICES ISSUED BY THE AO WERE DULY R ESPONDED BY THE LOAN CREDITORS. THE LD. A/R HAS SUBMITTED THAT THE LOAN CREDITOR CO MPANY WAS ASSESSED TO TAX AND THERE WERE ASSESSMENT ORDERS UNDER SECTION 143(3) F OR THE ASSESSMENT YEARS 2005- 06, 2007-08, 2011-12, 12-13 & 2014-15. HE HAS REF ERRED TO THE COPIES OF THE 39 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ASSESSMENT ORDERS IN CASE OF M/S. JALSAGAR COMMERCE PVT. LTD. FOR ALL THESE ASSESSMENT YEARS AT PAGES 804 TO 838 OF THE PAPER B OOK. THEREFORE, ONCE THE LOAN CREDITOR IS SUBJECTED TO SCRUTINY ASSESSMENT FOR AL L THESE YEARS, THEN THE AO CANNOT TREAT THIS COMPANY AS ONLY PAPER COMPANY AND TRANSA CTIONS OF LOAN AS BOGUS TRANSACTIONS. THESE TRANSACTIONS WERE ACCEPTED BY THE AO IN THE ASSESSMENTS FRAMED UNDER SECTION 143(3) IN THE HAND OF THE LOAN CREDITOR. FURTHER, THE ASSESSEE FILED ROC MASTER DATA SHOWING THE LOAN CREDITOR COM PANY UNDER THE CATEGORY ACTIVE. APART FROM THESE EVIDENCES, THE ASSESSEE ALSO FILED CONFIRMATION FROM THE LOAN CREDITOR, THEIR ITR, BANK STATEMENT, BALANCE S HEETS WHICH PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE JUDGMENT OF HONBLE JURISDIC TIONAL HIGH COURT IN CASE OF ARAVALI TRADING CO. VS. ITO, 8 DTR 199 (RAJ.) AND S UBMITTED THAT THE HONBLE HIGH COURT HAS HELD THAT ONCE THE EXISTENCE OF CREDITOR IS PROVED AND SUCH PERSON OWNS THE CREDIT, THE ASSESSEES ONUS STAND DISCHARGED AN D THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE FROM WHICH THE CREDITOR COULD HAVE ACQUIRED THE MONEY DEPOSITED WITH HIM. EVEN OTHERWISE, WHEN THE LOAN CREDITOR W AS SUBJECTED TO SCRUTINY ASSESSMENT UNDER SECTION 143(3) WHEREIN THE TRANSAC TIONS OF LOAN WERE ACCEPTED BY THE AO THEN THE CREDITWORTHINESS OF THE LOAN CREDIT OR WAS ALSO ACCEPTED. THE LD. A/R HAS ALSO REFERRED TO THE AVAILABILITY OF THE FUNDS WITH LOAN CREDITOR BEING SHARE CAPITAL WHICH IS MUCH MORE THAN THE LOAN GIVEN TO THE ASSES SEE. THE AO HAS NOT FOUND ANY DISCREPANCY IN THE ACCOUNTS OF THE LOAN CREDITOR AN D PARTICULARLY THE BANK STATEMENT OF THE LOAN CREDITOR. HENCE TREATING THE TRANSACTI ON AS BOGUS AND IN THE NATURE OF MERE ENTRY PROVIDED AGAINST THE CASH WITHOUT ANY MA TERIAL IS NOT SUSTAINABLE IN LAW. 40 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE CREDITOR HAS GIVEN THE CONFIRMATION OF THE LOAN AMOUNT AND, THEREFORE, ADMITTED THE LOAN GIVEN TO THE ASSESSEE. THE ASSESSEE HAS P AID INTEREST AFTER DEDUCTION OF TDS AND THE INTEREST EXPENDITURE WAS ACCEPTED BY TH E AO AS A GENUINE CLAIM IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) AS WELL AS I N THE ASSESSMENT FRAMED UNDER SECTION 153A OF THE IT ACT. ONCE THE INTEREST PAYM ENT IS ACCEPTED, THEN THE LOAN AMOUNT CANNOT BE TREATED AS BOGUS AND UNEXPLAINED C REDIT. THE LD. A/R HAS POINTED OUT THAT EVEN THE ASSESSEE HAS REPAID THE LOAN AMOU NT IN THE SUBSEQUENT YEARS WHICH PROVES THE GENUINENESS OF THE TRANSACTION OF LOAN AND REPAYMENT OF THE SAME. THEREFORE, THE FINDING OF THE AO TREATING THE LOAN AS AN ACCOMMODATION ENTRY IS WITHOUT ANY BASIS, MATERIAL EVIDENCE BUT THE SAME I S BASED PURELY ON SURMISES, CONJECTURES AND IRRELEVANT MATERIAL. NO POSITIVE M ATERIAL WAS BROUGHT ON RECORD BY THE AO TO SHOW THE LOAN CREDITOR COMPANY IS A SHELL COMPANY WHEREAS THE ASSESSEE HAS PRODUCED ALL THE RELEVANT DOCUMENTS TO ESTABLIS H THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AS WELL AS LOAN CREDITOR. 9. THE NEXT OBJECTION/CONTENTION OF THE LD. A/R IS THAT THE SOLE BASIS OF ADDITION IS THE STATEMENT OF SHRI ANAND SHARMA WHEREAS THE A SSESSEE WAS NOT GIVEN THE OPPORTUNITY OF CROSS EXAMINATION DESPITE REPEATED R EQUESTS AND DEMANDS. THE AO HAS VIOLATED THE PRINCIPLES OF NATURAL JUSTICE BY N OT PROVIDING THE COPIES OF MATERIAL USED AGAINST THE ASSESSEE AT THE ASSESSMENT STAGE AND FURTHER NOT PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION OF THE WITNESS DUR ING THE ASSESSMENT STAGE AS WELL AS APPELLATE STAGE. THOUGH THE LD. CIT (A) CALLED FOR A REMAND REPORT AND ASKED THE AO TO PROVIDE OPPORTUNITY OF CROSS EXAMINATION TO T HE ASSESSEE, HOWEVER, AFTER THE REMAND PROCEEDINGS THE AO DID NOT AFFORD AN OPPORTU NITY OF CROSS EXAMINATION 41 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. RATHER THE AO HAS ASKED THE ASSESSEE TO PRODUCE THE WITNESS INSTEAD OF ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESS. IN SUPPORT OF HIS CONTENTION, THE LD. A/R HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT I N CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE (2016 ) 15 SCC 785 (SC). HE HAS ALSO RELIED ON THE DECISION HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ASHWANI GUPTA, 322 ITR 396 (DELHI) AND SUBMITTED THAT THE HONBLE HIGH COURT HAS HELD THAT ONCE THERE IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTI CE INASMUCH AS SEIZED MATERIAL IS NOT PROVIDED TO THE ASSESSEE NOR WAS PERMITTED TO CROSS EXAMINE A PERSON ON WHOSE STATEMENT THE AO RELIED UPON, IT WOULD AMOUNT TO DE FICIENCY AND DENIAL OF NATURAL JUSTICE. THE LD. A/R HAS THEN REFERRED TO THE DEC ISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF H.R. MEHTA VS. ACIT, 387 ITR 561 (BO MBAY). THUS THE LD. A/R HAS SUBMITTED THAT ONCE THE ASSESSEE HAS ALREADY DISCHA RGED ITS PRIMARY ONUS TO PROVE THE CASH CREDIT BY FURNISHING RELEVANT DOCUMENTS, S UBSTANTIATED IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION , THEN THE BURDEN IS SHIFTED ON THE AO TO DISPROVE THE DOCUMENTS PRODUCED BY THE AS SESSEE IN SUPPORT OF THE CLAIM. THE AO HAS RELIED UPON THE STATEMENT OF SHRI ANAND SHARMA AND NO MATERIAL WAS BROUGHT ON RECORD TO CONTROVERT THE DOCUMENTARY EVI DENCE FILED BY THE ASSESSEE. THUS THE LD. A/R HAS STATED THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT (A) BE DELETED. 10. ON THE OTHER HAND, THE LD. CIT D/R HAS SUBMITTE D THAT THE AO HAS RECEIVED THE INFORMATION FROM INVESTIGATION DIRECTORATE, KOL KATA REGARDING INVOLVEMENT OF THE ASSESSEE GROUP IN OBTAINING ENTRIES OF BOGUS UNSECU RED LOANS, SHARE CAPITAL, SPECIAL DEPOSITS ETC. DETECTED IN THE INVESTIGATION CARRIED OUT BY THE DIT KOLKATA. SUCH 42 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. INFORMATION WAS RECEIVED EVEN PRIOR TO INITIATION O F PROCEEDINGS UNDER SECTION 153A AND ALSO DURING THE PENDENCY OF PROCEEDINGS UNDER S ECTION 153A. ONCE THE AO HAS CONFRONTED THE ASSESSEE WITH THE REPORT OF THE INVE STIGATION WING KOLKATA AS WELL AS THE STATEMENT OF SHRI ANAND SHARMA AND OTHER PERSON S WHO HAVE ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRIES OF BOGUS UNSECURED L OANS, SHARE CAPITAL, SPECIAL DEPOSITS ETC. TO THE VARIOUS PARTIES THROUGH THEIR COMPANIES AND CONCERNS AND ASSESSEE HAS SHOWN THE UNSECURED LOANS AS WELL AS P ARTNERS CAPITAL FROM THOSE CONCERNS, THEN ONUS WAS SHIFTED ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS OF UNSECURED LOANS AND PARTNERS CAPIT AL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO AGAIN CONDUCTED ENQU IRIES THROUGH INVESTIGATION WING KOLKATA REGARDING THE GENUINENESS OF THE TRANS ACTION AND THE ASSESSEE WAS DULY CONFRONTED WITH THE RESULTS OF ALL THESE ENQUI RIES AND INFORMATION SHARED BY THE INVESTIGATION WING KOLKATA. IN THESE CIRCUMSTANCES AND IN THE INTEREST OF NATURAL JUSTICE, THE ASSESSEE WAS REQUIRED TO PRODUCE THE A LLEGED CREDITORS FOR EXAMINATION SO THAT GENUINENESS OF CASH CREDIT COULD BE VERIFIE D BY THE AO. DESPITE PROVIDING SEVERAL OPPORTUNITIES, THE ASSESSEE MISERABLY FAILE D TO PRODUCE ANY CREDITOR. THE ASSESSEE NEVER EXPRESSED ITS INABILITY TO PRODUCE T HE ALLEGED CREDITOR NOR THE ASSESSEE REQUESTED THE AO TO ISSUE SUMMON TO THE AL LEGED CREDITOR FOR VERIFICATION OF THE GENUINENESS OF THE CASH CREDIT IN THE FORM O F UNSECURED LOAN AND PARTNERS CAPITAL. IT IS EVIDENT THAT THE ASSESSEE NEVER INT ENDED TO PRODUCE THE ALLEGED CREDITOR. THE LD. D/R HAS FURTHER SUBMITTED THAT T HE PRESENT CASE IS NOT ONE WHERE ASSESSEE OBTAINED SMALL LOANS OR INSIGNIFICANT SHAR E CAPITAL SO THAT THE ASSESSEE COULD TAKE THE PLEA THAT IT IS NOT IN A POSITION TO ENSURE PRESENCE OF ALLEGED CREDITORS. 43 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE SIZE OF THE TRANSACTIONS WHICH ARE TAINTED UNSE CURED LOANS AND PARTNERS CAPITAL CONSTITUTE THE MAJOR PORTION OF ENTIRE CAPITAL OF T HE ASSESSEE AND OTHER GROUP COMPANIES. EVEN THE ASSESSEE DID NOT PRODUCE THE P ARTNERS WHO INTRODUCED THE CAPITAL FOR EXAMINATION. THUS THE ASSESSEE HAS FA ILED TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THE ADDITION IS NOT MADE MERELY ON THE BASIS OF REPORT OF THE INVES TIGATION WING KOLKATA BUT THE AO CONDUCTED ENQUIRY THROUGH INVESTIGATION WING AND ST ATEMENTS OF ENTRY OPERATORS WERE ALSO RECORDED, THEREFORE, OVERWHELMING EVIDENC ES IN THE POSSESSION OF THE AO INDICATE BOGUS NATURE OF TRANSACTION OF LOAN AND PA RTNERS CAPITAL WHICH HAS BEEN EXTENSIVELY DISCUSSED IN THE ASSESSMENT ORDER. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS PROVIDED A NUMBER OF OPPORTUNITIES FOR PRODUCING THE ALLEGED CREDITORS FOR VERIFICATION AND FAILURE OF T HE ASSESSEE IN PRODUCING THE CREDITORS IN THE LIGHT OF THE EVIDENCES WAS ENOUGH TO INVOKE THE PROVISIONS OF SECTION 68 OF THE IT ACT. THE LD. D/R HAS FURTHER SUBMITTE D THAT THE REPAYMENT OF LOAN FOR CREDIT ENTRIES ALSO DOES NOT IN ITSELF PROVE THE TR ANSACTIONS TO BE GENUINE. SHELL COMPANIES ARE USED TO PROVIDE ACCOMMODATION ENTRIES AND EVEN REVERSAL OF AN ENTRY DOES NOT IPSO FACTO PROVE THE GENUINENESS OF THE IN ITIAL CREDIT ENTRY. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAVODAYA CASTLES PVT. LTD., 226 TAX MAN 190 (MAG.) AND SUBMITTED THAT THE SLP FILED BY THE ASSESSEE WAS DISMISSED BY THE HONBLE SUPREME COURT REPORTED IN 230 TAXMAN 268 (SC). THUS IT IS EVIDEN T THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS TO REBUT THE EVIDENCE UNEARTHED BY THE INVESTIGATION WING KOLKATA WHICH SHOWS THAT THE TRANSACTIONS OF UNSECU RED LOANS AS WELL AS PARTNERS 44 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. CAPITAL ARE NOTHING BUT BOGUS ACCOMMODATION ENTRIES WHEREIN THE ASSESSEES OWN UNDISCLOSED INCOME HAS BEEN ROUTED IN THE GARB OF U NSECURED LOAN AND PARTNERS CAPITAL. AS REGARDS CROSS EXAMINATION OF THE WITNE SSES, SINCE THE WITNESSES BELONG TO KOLKATA AND STATEMENTS WERE ALSO RECORDED AT KOL KATA BY THE INVESTIGATION WING, THEREFORE, IT WAS NOT POSSIBLE FOR THE AO TO ISSUE SUMMON TO THE WITNESSES FOR CROSS EXAMINATION AT THE OFFICE OF THE AO AT KOTA. THE LD. CIT D/R HAS RELIED UPON THE ORDER OF THE AO. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. FOR THE ASSESSMENT YEAR 2010-11, THE ASSES SEE HAS CHALLENGED THE ADDITION SUSTAINED BY LD. CIT (A) IN RESPECT OF UNSECURED LO AN FROM M/S. JALSAGAR COMMERCE PVT. LTD. THE OTHER ADDITIONS MADE BY THE AO ON AC COUNT OF UNSECURED LOANS AS WELL AS PARTNERS CAPITAL FOR THE ASSESSMENT YEAR 2010-1 1 WERE DELETED BY THE LD. CIT (A) ON THE GROUND THAT THE AO WAS NOT HAVING IN HIS POS SESSION EVEN THE STATEMENT OF THE CONCERNED PERSONS IN SUPPORT OF HIS FINDING THA T THE ALLEGED LOAN AND PARTNERS CAPITAL IS NOTHING BUT BOGUS ACCOMMODATION ENTRIES. THEREFORE, THE REVENUE HAS CHALLENGED THAT PART OF THE ORDER IN THE CROSS APPE AL. THE LD. A/R OF THE ASSESSEE HAS POINTED OUT THAT FOR THE ASSESSMENT YEAR 2010-1 1 THERE WAS NO LOAN FROM THE COMPANY CONTROLLED BY SHRI ANAND SHARMA, M/S. ROYAL CRYSTAL DEALERS PVT. LTD. BUT THE ASSESSEE TOOK THE LOAN FROM M/S. JALSAGAR COMME RCE PVT. LTD. WHICH IS NOT THE COMPANY OWNED OR CONTROLLED BY SHRI ANAND SHARMA. THE LD. CIT (A) HAS SUSTAINED THE ADDITION IN RESPECT OF LOAN FROM M/S. JALSAGAR COMMERCE PVT. LTD. IN PARA 5.1 TO 5.12 AS UNDER :- 45 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 5.1 IN THIS RESPECT, I FIND THAT SHRI ANAND SHARMA WHOSE STATEMENT IS REPRODUCED AT PAGE 56 OF THE ASSESSMENT ORDER HAS C LEARLY ACCEPTED THAT M/S JALSAGAR COMMERCE PVT. LTD. IS BENEFICIARY COMP ANY LIKE KOTA DAL MILL AND BOTH OF THESE WERE PROVIDED BOGUS LOANS/AD VANCES BY ROYAL CRYSTAL DEALER PVT. LTD WHICH IS A PAPER COMPANY CO NTROLLED BY HIM. HE FURTHER STATED THAT THE BENEFICIARY PARTY SUCH I.E, M/S JALSAGAR COMMERCE PVT. LTD. GAVE HIM CASH IN LIEU OF WHICH CHEQUES WA S GIVEN BY HIM FOR SOME COMMISSION INCOME. HE ALSO ADMITTED THAT SOME PAPER COMPANIES HAVE SOLD TO BENEFICIARY PARTIES. THOUGH, IN THE IN ITIAL REPORT DATED 28.11.2017, M/S JALSAGAR COMMERCE PVT. LTD. WAS TRE ATED A PARTY IN RAJASTHAN, IN LATER REPORT DATED 06.12.2017 THE ENT RY OPERATOR SHRI ANAND SHARMA WAS LINKED WITH M/S JALSAGAR COMMERCE PVT. LTD. AS PER THE DATA BASE PREPARED BY DIRECTORATE OF INVESTIGAT IONKOLKATA THE RELEVANT PART OF THE SAID STATEMENT AS REPRODUCED O N PAGE NO.57 OF THE ASSESSMENT ORDER IS AS UNDER: - 46 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 5.2 HOWEVER, IT IS THE SUBMISSION OF THE APPELLANT THAT NO NOTICE UNDER SECTION 131 OR 133(6) OF THE ACT WAS ISSUED TO THIS COMPANY, EITHER BY THE LD. AO OR BY THE CONCERNED AO OR BY THE DDIT (INV.) KOL KATA. ALSO, ON BARE PERUSAL OF THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE NAME OF THE SAID COMPANIES DOES NOT APPEAR IN THE STATEMENT OF ANY O F THE ENTRY OPERATORS AS REPRODUCED BY THE AO IN THE ASSESSMENT ORDER. HOWEV ER, THE RELEVANT DOCUMENTS INCLUDING THE LEDGER A/C SHOWING THE TRAN SACTIONS WITH APPELLANT COMPANY, SOURCE SHEET OF FUNDS OF TRANSACTIONS MADE WITH THE APPELLANT, COPY 47 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. OF BANK STATEMENT SHOWING THE TRANSACTIONS, ETC. ST AND SUBMITTED FOR CONFIRMATION OF THE TRANSACTION OF LOAN WITH THE AP PELLANT. 5.3 IN MY CONSIDERED VIEW, AS THE NAME OF M/S JALSA GAR COMMERCE PVT. LTD. IS CLEARLY MENTIONED AS BENEFICIARY COMPANY IN THE STATEMENT OF SHRI ANAND SHARMA, AND SHRI ANAND SHARMA IS MENTIONED THAT SO ME OF SUCH PAPER COMPANY ARE SOLD TO BENEFICIARY PARTY, IN VIEW OF F ACT THAT NAME OF M/S JALSAGAR COMMERCE PVT. LTD. IS MENTIONED IN THE REP ORTS AS DISCUSSED IN PARA 4.4.7 ABOVE, A GENUINE DOUBT IS RAISED ON THE IDENT ITY AND GENUINENESS OF COMPANY. FURTHER, THE ADVERSE FACTS POINTED OUT IN THE REPORTS AS DISCUSSED IN PARA 4.4.7 ABOVE FOR ESTABLISHED BACKGROUND OF ALL THESE SHARE HOLDERS / DEPOSITORS BEING THE PUPPET IN THE HAND OF ONE OR O THER ACCOMMODATION ENTRY PROVIDERS, LAYERING THE TRANSACTION BY CHEQUE DEPOS IT ON THE SAME DAY OR PRECEDING DAY OF SHARE APPLICATION / DEPOSITS, THE ASSERTIONS OF THE AO FOR NO- CREDITWORTHINESS OR IN-ADEQUATE CREDITWORTHINESS OF THE SO-CALLED SHAREHOLDERS / DEPOSITORS HOLDS FIELDS. DURING THE APPELLATE PROCE EDING BEFORE ME, THOUGH PAPER BOOKS FOR RELEVANT AY AND COMMON PAPER BOOKS HAVE BEEN SUBMITTED, THE SAME DOES NOT ADDUCE ANY EVIDENCE TO REBUT THE ADVERSE FACTUAL FINDING MADE BY THE AO IN THE ASSESSMENT ORDER AS MENTIONED BY ME IN PARA 4.1 ABOVE AND CATEGORICALLY MENTIONED IN THE REPORTS AS DISCU SSED IN PARA 4.4.7 ABOVE. UNDER THESE ADVERSE BACKGROUND OF APPELLANT EMPLOYI NG MODUS-OPERENDI OF RESORTING ACCOMMODATION ENTRY PROVIDER TO BUILD-UP SHARE CAPITAL / UNSECURED LOANS BY FOUL MEANS, WHAT THE AO IS VEHEMENTLY MAKING TH E CASE FOR IS THE LAW ON THE ISSUE-SECTION 68 OF INCOME-TAX ACT HAS TO BE APPLIED BY EVOLVING PERCEPTIONS FOR THE LAW ON THE ISSUE AND NOT ON THE BASIS OF ROUTINE PERCEPTIONS ON THE LAW ON THE ISSUE THAT IS LOSING THEIR RELEVA NCE. 5.4 WITH ALL DUE RESPECT TO AUTHORITIES CITED BY TH E APPELLANT FOR CANVASSING HIS STAND POINT, I AM NOT ABLE TO PERSUADE MY CONSC IENCE TO AGREE WITH APPELLANTS ARGUMENTS. IN MY CONSIDERED OPINION, UND ER THE ADVERSE BACKGROUND OF APPELLANT EMPLOYING MODUS-OPERENDI OF RESORTING ACCOMMODATION ENTRY PROVIDER TO BUILD-UP UNSECURED LOANS AS ESTABLISHED IN THE ASSESSMENT ORDER AS 48 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. BRIEFLY HIGHLIGHTED IN PARA 4.1 ABOVE, AND ARMED WI TH SEVERAL AUTHORITIES ON THE ISSUE CITED BY THE AO, I FULLY AGREE WITH THE VIEW TAKEN BY AO. HOWEVER, TO FORTIFY THE FINDING OF THE AO AND TO HIGHLIGHT THE GUIDING PRINCIPLE ON ADJUDICATING NON-GENUINE UNSECURED LOANS RAISED THR OUGH ACCOMMODATION ENTRY PROVIERS, I PLACE FURTHER RELIANCE ON FEW MORE CASE LAWS WITH UNDERLINING THE SIMILARITY OF ADVERSE FACTS PREVAILING IN THE PRESE NT CASE AS FOLLOWS:- 5.5 IN CASE OF SUMAN GUPTA V/S. INCOME TAX OFFICER ITAT, AGRA BENCH (2012) 138 ITD 0153 HELD AS UNDER:- THE AO DISCUSSED EACH AND EVERY CREDITOR IN THE ASS ESSMENT ORDER AND THE CRUX OF THE FINDINGS OF THE AO HAD BEEN THAT THERE WERE VERY SMALL BANK BALANCES IN THE BANK ACCOUNTS OF THE CREDITORS AND THEY WERE HA VING MEAGER INCOME AND AS SUCH, THEY WERE NOT MEN OF MEANS TO ADVANCE ANY LOA N TO THE ASSESSEE. IT IS WELL SETTLED LAW THAT BURDEN IS UPON THE ASSESSEE TO PRO VE INGREDIENTS OF SECTION 68 OF THE ACT BY PROVING IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS, HOWEVER, FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITORS WHO WERE HAVING O NLY MEAGER INCOME. NO DETAILS OF THEIR SAVINGS HAVE BEEN FILED. THE ASSES SEE HAS NEVER SHOWN HIS WILLINGNESS TO PRODUCE THE REMAINING CREDITORS FOR EXAMINATION BEFORE THE AO. THEREFORE, THE GENUINENESS OF THE TRANSACTION COULD NOT HAVE BEEN EXAMINED BY THE AO. THE SMALLNESS OF THE BANK BALANCE IN THE BA NK ACCOUNTS OF THE CREDITORS PRIOR TO ISSUE OF CHEQUES WOULD CLEARLY REVEAL THAT THEY WERE NOT HAVING ANY SOURCE AND IT WAS THE MONEY OF THE ASSESSEE WHICH W AS ROUTED THROUGH THE BANK ACCOUNTS OF THE CREDITORS FOR THE PURPOSE OF GIVING CREDITS TO THE ASSESSEE. THESE WERE, THEREFORE, ACCOMMODATION ENTRIES ONLY A ND AS SUCH, COULD NOT BE CONSIDERED AS GENUINE TRANSACTIONS. MERELY BECAUSE THE LOANS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL, IS NOT SACROSANCT TO MAKE A NON-GENUINE TRANSACTION AS GENUINE TRANSACTION. ON CONSIDERATION OF THE FACTS OF THE CASE IN THE LI GHT OF ABOVE DISCUSSION AND DECISION, THERE IS NO JUSTIFICATION TO INTERFERE WI TH THE ORDER OF THE LD. CIT(A). 49 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINE SS OF ALL THE CREDITORS AND NO SOURCE OF THEIR INCOME HAS BEEN FILED. AT THE BEST THE ASSESSEE IS ABLE TO PROVE IDENTITY OF THE CREDITORS, BUT THE ASSESSEE FAILED TO PROVE THE GENUINE CREDIT IN THE MATTER. ALL THE CREDITORS HAVE BEEN RIGHTLY FOU ND TO BE MEN OF MEAGER MEANS AND NO SOURCE OF INCOME HAVE BEEN FILED TO PROVE THAT THEY WERE HAVING SUFFICIENT FUNDS OR SAVINGS IN ORDER TO GIVE LOANS TO THE ASSESSEE. ON VERIFICATION OF THE BANK ACCOUNT OF THE DEPOSITORS, IT WAS SPECIFICALLY FOUND THAT THERE WERE NO SUFFICIENT FUNDS AVAILABLE IN THEIR B ANK ACCOUNT AND THEY WERE HAVING ONLY SMALL BANK BALANCE, WHICH WAS EVEN NOT SUFFICIENT TO MEET OUT THEIR HOUSEHOLD EXPENSES OR DAY-TO-DAY REQUIREMENTS. THER EFORE, IT IS UNBELIEVABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT SAID PERSONS WERE HAVING CREDITWORTHINESS TO ADVANCE ANY LOAN TO THE ASSESSE E. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION U/S. 68 OF THE IT ACT. IN T HE PRESENT CASE, THE ASSESSEE HAS NOT ADDUCED ANY SUFFICIENT EVIDENCE BEFORE THE AUTHORITIES BELOW TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENE SS OF THE TRANSACTIONS IN THE MATTER. THEREFORE, THE ASSESSEE HAS NOT SATISFIED T HE ESSENTIAL INGREDIENTS OF SECTION 68 OF THE IT ACT. CONCLUSION: MERELY BECAUSE THE LOANS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL, IS NOT SACROSANCT TO MAKE A NON-GENUINE TRANSACTION AS GEN UINE TRANSACTION. THE ABOVE DECISION IS CONFIRMED BY HONBLE ALLAHABA D HIGH COURT VIDE THEIR JUDGMENT IN ITA NO.680/12 VIDE JUDGMENT DATED 07.08 .2012 AND SLP OF ASSESSEE WAS DISMISSED BEFORE THE HONBLE APEX COUR T AS REPORTED IN 2013-LL- 0122-69 5.6 HONBLE HIGH COURT OF DELHI IN CASE OF COMMISSI ONER OF INCOME TAX V/S. NAVODAYA CASTLES PVT. LTD. REPORTED AT (2014) 367 ITR 0306 INVOLVING EXACTLY SIMILAR FACTS OBSERVED IN PARA 2, 3 THEN PA RA 2 AS UNDER:- 50 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 2. THE APPEAL ARISES OUT OF THE IMPUGNED ORDER DATE D 31 ST OCTOBER, 2011, PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, UPHOLD ING THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) DELETING A DDITION OF RS.54,00,000/- MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (ACT, FOR SHORT), BY T HE ASSESSING OFFICER ON ACCOUNT OF SHARE APPLICATION. 3. THE ASSESSEE, A COMPANY, HAD FILED THEIR RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 DECLARING LOSS OF RS.1,58,035/- ON 20 TH OCTOBER, 2002, WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUE NTLY, ON THE BASIS OF A REPORT SUBMITTED BY THE INVESTIGATION WING THAT THE ASSESSEE WAS A RECIPIENT OF ACCOMMODATION ENTRIES IN FORM OF SHARE APPLICATION MONEY/SHARE CAPITAL/SHARE PREMIUM, NOTICE UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT WAS ISSUED AND SERVED ON 25 TH MARCH, 2009 .. 7. SUMMONS UNDER SECTION 131 OF THE ACT WERE SENT T O THE ALLEGED SHAREHOLDERS AND THEY WERE ASKED TO FURNISH DETAILS ON 10 TH DECEMBER, 2009. DIRECTORS/PRINCIPAL OFFICERS WERE REQUIRED TO PERSO NALLY COME AND DEPOSE. THE SUMMONSES, AS PER THE ASSESSMENT ORDER, WERE RECEIV ED BACK UNSERVED. AT THE SAME TIME, THE ASSESSEE FILED DETAILS AND CONFIRMAT IONS OF THE ALLEGED SHARE CAPITAL. EARLIER ON 8 TH DECEMBER, 2009, A DETAILED SHOW CAUSE NOTICE WAS ISSUED, FIXING THE HEARING ON 14 TH DECEMBER, 2009. THE ASSESSEE WAS ASKED TO PRODUCE THE SHAREHOLDERS ALONG WITH THEIR BOOKS OF ACCOUNTS TO SUBSTANTIATE ITS CLAIM OF GENUINENESS OF THE CASH CREDITS. IN FACT ON 10 TH DECEMBER, 2009, AUTHORIZED REPRESENTATIVE HAD APPEARED AND HE WAS A PPRISED THAT THE SUMMONS ISSUED TO THE SHAREHOLDERS UNDER SECTION 131 HAD BE EN RECEIVED BACK UNSERVED IN FIVE CASES AND HE WAS REQUESTED TO PROVIDE THE P RESENT POSTAL ADDRESS OF THE PARTIES. INTHEMEANWHILE, THE ASSESSING OFFICER MANA GED TO GET HOLD OF THE BANK STATEMENTS OF THE SHAREHOLDERS, WHO HAD ALLEGEDLY M ADE DEPOSITS BY WAY OF CHEQUES AND PAY ORDERS. THE ASSESSMENT ORDER SPECIF ICALLY RECORDS THAT HUGE 51 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. CASH DEPOSITS IN LACS WERE BEING REGULARLY DEPOSITE D IN THE SAID ACCOUNTS AND THEN PAY ORDERS/CHEQUES WERE ISSUED TO THE RESPONDE NT ASSESSEE. 8. ON 14 TH DECEMBER, 2009, AUTHORIZED REPRESENTATIVE APPEARED AND STATED THAT THE ASSESSEE WAS UNABLE TO PRODUCE DIRECTORS OR PRI NCIPAL OFFICERS OF THE SIX SHAREHOLDER COMPANIES PLEADING THAT THEY WERE NOT S HAREHOLDERS NOW AND SEVEN YEARS HAD PASSED SINCE THE TRANSACTIONS TOOK PLACE. THE ASSESSMENT ORDER RECORDS AND MENTIONS ABOUT THE TRANSACTIONS RECORDE D IN THE BANK ACCOUNTS OF THE SHAREHOLDER/ENTRY OPERATOR COMPANIES TO SHOW AN D ESTABLISH THAT THERE WAS IMMEDIATE DEPOSIT OF CASH AND THEN ISSUE OF CHEQUES . IT WAS FURTHER MENTIONED THAT THESE COMPANIES WERE UNDER CONTROL OF ONE MAHE SH GARG AND HIS GROUP, WHO WERE OPERATING VARIOUS ACCOUNTS. THE ASSESSING OFFICER MADE ADDITION OF RS.54,00,000/- UNDER SECTION 68 OF THE ACT AND RS.1 ,08,000/- AS COMMISSION PAID FOR PROCURING THE SAID SHARES BEING 2% OF RS.5 4,00,000/-. ................................................... ................................................... .............. .. 11. WE HAVE HEARD THE SENIOR STANDING COUNSEL FOR T HE REVENUE, WHO HAS RELIED UPON DECISIONS OF THE DELHI HIGH COURT IN COMMISSIO NER OF INCOME TAX VS. NOVA PROMOTERS AND FINLEASE (P) LTD. [2012] 342 ITR 169 (DELHI), COMMISSIONER OF INCOME TAX VS. N.R. PORTFOLIO PVT. LTD., 206 (2014) DLT 97 (DB) (DEL) AND COMMISSIONER OF INCOME TAX-II VS. MA F ACADEMY P. LTD., 206 (2014) DLT 277 (DB) (DEL). THE AFORESAID DECISIONS MENTIONED ABOVE REFER TO THE EARLIER DECISIONS OF DELHI HIGH COURT IN COMMIS SIONER OF INCOME TAX VS. SOPHIA FINANCE LTD., [1994] 205 ITR 98 (FB)(DELHI), CIT VS. DIVINE LEASING AND FINANCE LIMITED [2008] 299 ITR 268 (DELHI) AND OBSERVATIONS OF THE SUPREME COURT IN CIT VS. LOVELY EXPORTS P. LTD. [20 08] 319 ITR (ST.) 5 (SC). 12. THE MAIN SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT ONCE THE ASSESSEE HAD BEEN ABLE TO SHOW THAT THE SHARE HOLDE R COMPANIES WERE DULY INCORPORATED BY THE REGISTRAR OF COMPANIES, THEIR I DENTITY STOOD ESTABLISHED, GENUINENESS OF THE TRANSACTIONS STOOD ESTABLISHED A S PAYMENTS WERE MADE 52 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THROUGH ACCOUNTS PAYEE CHEQUES/BANK ACCOUNT; AND ME RE DEPOSIT OF CASH IN THE BANK ACCOUNTS PRIOR TO ISSUE OF CHEQUE/PAY ORDERS E TC. WOULD ONLY RAISE SUSPICION AND, IT WAS FOR THE ASSESSING OFFICER TO CONDUCT FURTHER INVESTIGATION, BUT IT DID NOT FOLLOW THAT THE MONEY BELONGED TO TH E ASSESSEE AND WAS THEIR UNACCOUNTED MONEY, WHICH HAD BEEN CHANNELIZED. 13. AS WE PERCEIVE, THERE ARE TWO SETS OF JUDGMENTS AND CASES, BUT THESE JUDGMENTS AND CASES PROCEED ON THEIR OWN FACTS. IN ONE SET OF CASES, THE ASSESSEE PRODUCED NECESSARY DOCUMENTS/EVIDENCE TO S HOW AND ESTABLISH IDENTITY OF THE SHAREHOLDERS, BANK ACCOUNT FROM WHI CH PAYMENT WAS MADE, THE FACT THAT PAYMENTS WERE RECEIVED THOROUGH BANKING C HANNELS, FILED NECESSARY AFFIDAVITS OF THE SHAREHOLDERS OR CONFIRMATIONS OF THE DIRECTORS OF THE SHAREHOLDER COMPANIES, BUT THEREAFTER NO FURTHER IN QUIRIES WERE CONDUCTED. THE SECOND SET OF CASES ARE THOSE WHERE THERE WAS E VIDENCE AND MATERIAL TO SHOW THAT THE SHAREHOLDER COMPANY WAS ONLY A PAPER COMPANY HAVING NO SOURCE OF INCOME, BUT HAD MADE SUBSTANTIAL AND HUGE INVESTMENTS IN THE FORM OF SHARE APPLICATION MONEY. THE ASSESSING OFFICER HAS REFERRED TO THE BANK STATEMENT, FINANCIAL POSITION OF THE RECIPIENT AND BENEFICIARY ASSESSEE AND SURROUNDING CIRCUMSTANCES. THE PRIMARY REQUIREMENTS , WHICH SHOULD BE SATISFIED IN SUCH CASES IS, IDENTIFICATION OF THE C REDITORS/SHAREHOLDER, CREDITWORTHINESS OF CREDITORS/SHAREHOLDER AND GENUI NENESS OF THE TRANSACTION. THESE THREE REQUIREMENTS HAVE TO BE TESTED NOT SUPE RFICIALLY BUT IN DEPTH HAVING REGARD TO THE HUMAN PROBABILITIES AND NORMAL COURSE OF HUMAN CONDUCT. 14. CERTIFICATE OF INCORPORATION, PAN NUMBER ETC. A RE RELEVANT FOR PURCHASE OF IDENTIFICATION, BUT HAVE THEIR LIMITATION WHEN THER E IS EVIDENCE AND MATERIAL TO SHOW THAT THE SUBSCRIBER WAS A PAPER COMPANY AND NO T A GENUINE INVESTOR. IT IS IN THIS CONTEXT, THE SUPREME COURT IN CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) HAD OBSERVED:- NOW WE SHALL PROCEED TO EXAMINE THE VALIDITY OF TH OSE GROUNDS THAT APPEALED TO THE LEARNED JUDGES. IT IS TRUE THAT THE APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE RE ASONS TO BELIEVE THAT 53 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE APPARENT IS NOT THE REAL. IN A CASE OF THE PRES ENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND R ELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS T O HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUT ED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APP ARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS. 15. SUMMARIZING THE LEGAL POSITION IN NOVA PROMOTER S AND FINLEASE (P) LTD.(SUPRA), AND HIGHLIGHTING THE LEGAL EFFECT OF S ECTION 68 OF THE ACT, THE DIVISION BENCH HAS HELD AS UNDER:- 32. THE TRIBUNAL ALSO ERRED IN LAW IN HOLDING ASSE SSING OFFICER OUGHT TO HAVE PROVED THAT THE MONIES EMANATED FROM THE CO FFERS OF THE ASSESSEE-COMPANY AND CAME BACK AS SHARE CAPITAL. SE CTION 68 PERMITS THE ASSESSING OFFICER TO ADD THE CREDIT APPEARING I N THE BOOKS OF ACCOUNT OF THE ASSESSEE IF THE LATTER OFFERS NO EXPLANATION REGARDING THE NATURE AND SOURCE OF THE CREDIT OR THE EXPLANATION OFFERED IS NOT SATISFACTORY. IT PLACES NO DUTY UPON HIM TO POINT TO THE SOURCE FROM WHICH THE MONEY WAS RECEIVED BY THE ASSESSEE. IN A. GOVINDARAJULU M UDALIAR V CIT, (1958) 34 ITR 807, THIS ARGUMENT ADVANCED BY THE AS SESSEE WAS REJECTED BY THE SUPREME COURT. VENKATARAMA IYER, J., SPEAKING FOR THE COURT OBSERVED AS UNDER (@ PAGE 810):- 54 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. NOW THE CONTENTION OF THE APPELLANT IS THAT ASSUMI NG THAT HE HAD FAILED TO ESTABLISH THE CASE PUT FORWARD BY HIM, IT DOES N OT FOLLOW AS A MATTER OF LAW THAT THE AMOUNTS IN QUESTION WERE INCOME REC EIVED OR ACCRUED DURING THE PREVIOUS YEAR, THAT IT WAS THE DUTY OF T HE DEPARTMENT TO ADDUCE EVIDENCE TO SHOW FROM WHAT SOURCE THE INCOME WAS DERIVED AND WHY IT SHOULD BE TREATED AS CONCEALED INCOME. IN TH E ABSENCE OF SUCH EVIDENCE, IT IS ARGUED, THE FINDING IS ERRONEOUS. W E ARE UNABLE TO AGREE. WHETHER A RECEIPT IS TO BE TREATED AS INCOME OR NOT , MUST DEPEND VERY LARGELY ON THE FACTS AND CIRCUMSTANCES OF EACH CASE . IN THE PRESENT CASE THE RECEIPTS ARE SHOWN IN THE ACCOUNT BOOKS OF A FI RM OF WHICH THE APPELLANT AND GOVINDASWAMY MUDALIAR WERE PARTNERS. WHEN HE WAS CALLED UPON TO GIVE EXPLANATION HE PUT FORWARD TWO EXPLANATIONS, ONE BEING A GIFT OF RS. 80,000 AND THE OTHER BEING RECE IPT OF RS. 42,000 FROM BUSINESS OF WHICH HE CLAIMED TO BE THE REAL OWNER. WHEN BOTH THESE EXPLANATIONS WERE REJECTED, AS THEY HAVE BEEN IT WA S CLEARLY UPON TO THE INCOME-TAX OFFICER TO HOLD THAT THE INCOME MUST BE CONCEALED INCOME. THERE IS AMPLE AUTHORITY FOR THE POSITION THAT WHER E AN ASSESSEE FAILS TO PROVE SATISFACTORILY THE SOURCE AND NATURE OF CERTA IN AMOUNT OF CASH RECEIVED DURING THE ACCOUNTING YEAR, THE INCOME-TAX OFFICER IS ENTITLED TO DRAW THE INFERENCE THAT THE RECEIPT ARE OF AN AS SESSABLE NATURE. THE CONCLUSION TO WHICH THE APPELLATE TRIBUNAL CAME APP EARS TO US TO BE AMPLY WARRANTED BY THE FACTS OF THE CASE. THERE IS NO GROUND FOR INTERFERING WITH THAT FINDING, AND THESE APPEALS AR E ACCORDINGLY DISMISSED WITH COSTS.(EMPHASIS SUPPLIED) SECTION 68 RECOGNIZES THE AFORESAID LEGAL POSITION. THE VIEW TAKEN BY THE TRIBUNAL ON THE DUTY CAST ON THE ASSESSING OFFICER BY SECTION 68 IS CONTRARY TO THE LAW LAID DOWN BY THE SUPREME COURT IN THE JUDGM ENT CITED ABOVE. EVEN IF ONE WERE TO HOLD, ALBEIT ERRONEOUSLY AND WITHOUT BE ING AWARE OF THE LEGAL POSITION ADUMBRATED ABOVE, THAT THE ASSESSING OFFIC ER IS BOUND TO SHOW THAT 55 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE SOURCE OF THE UNACCOUNTED MONIES WAS THE COFFER S OF THE ASSESSEE, WE ARE INCLINED TO THINK THAT IN THE FACTS OF THE PRESENT CASE SUCH PROOF HAS BEEN BROUGHT OUT BY THE ASSESSING OFFICER. THE STATEMENTS OF MUKESH GUPTA AND RAJANJASSAL, THE ENTRY PROVIDERS, EXPLAINING THEIR MODUS OPERANDI TO HELP ASSESSEES HAVING UNACCOUNTED MONIES CONVERT THE SA ME INTO ACCOUNTED MONIES AFFORDS SUFFICIENT MATERIAL ON THE BASIS OF WHICH T HE ASSESSING OFFICER CAN BE SAID TO HAVE DISCHARGED THE DUTY. THE STATEMENTS RE FER TO THE PRACTICE OF TAKING CASH AND ISSUING CHEQUES IN THE GUISE OF SUBSCRIPTI ON TO SHARE CAPITAL, FOR A CONSIDERATION IN THE FORM OF COMMISSION. AS ALREADY POINTED OUT, NAMES OF SEVERAL COMPANIES WHICH FIGURED IN THE STATEMENTS G IVEN BY THE ABOVE PERSONS TO THE INVESTIGATION WING ALSO FIGURED AS SHARE-APP LICANTS SUBSCRIBING TO THE SHARES OF THE ASSESSEE-COMPANY. THESE CONSTITUTE MA TERIALS UPON WHICH ONE COULD REASONABLY COME TO THE CONCLUSION THAT THE MO NIES EMANATED FROM THE COFFERS OF THE ASSESSEE-COMPANY. THE TRIBUNAL, APART FROM ADOPTING AN ERRONEOUS LEGAL APPROACH, ALSO FAILED TO KEEP IN VI EW THE MATERIAL THAT WAS RELIED UPON BY THE ASSESSING OFFICER. THE CIT (APPE ALS) ALSO FELL INTO THE SAME ERROR. IF SUCH MATERIAL HAD BEEN KEPT IN VIEW, THE TRIBUNAL COULD NOT HAVE FAILED TO DRAW THE APPROPRIATE INFERENCE. 16. IN THE SAID CASE, THE DIVISION BENCH HAD ALSO E XAMINED THE DECISION OF THE SUPREME COURT IN LOVELY EXPORTS P. LTD. (SUPRA) AND OTHER CASES IN WHICH THE ASSESSEE HAD SUCCEEDED. IT WAS NOTICED THAT IN THE CASE OF LOVELY EXPORTS P. LTD. AFFIDAVITS/CONFIRMATIONS OF SHAREHOLDERS WERE FILED AND INCOME TAX RECORD NUMBERS OF THE SHAREHOLDERS WERE MADE AVAILABLE, BU T THE ASSESSING OFFICER, WHO HAD SUFFICIENT TIME, FAILED TO CARRY OUT INQUIR Y AND EXAMINATION. REFERENCE WAS MADE TO THE OBSERVATIONS IN DIVINE LEASING (SUP RA) TO THE EFFECT THAT THERE CANNOT BE TWO OPINIONS ON THE ASPECT THAT THE PERNI CIOUS PRACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE MASQUERADE OR CHAN NEL OF INVESTMENT AS SHARE CAPITAL MUST BE FIRMLY EXCORIATED BY THE REVE NUE, BUT WHEN THERE IS PREPONDERANCE OF EVIDENCE TO SHOW ABSENCE OF CULPAB ILITY, THE ASSESSEE SHOULD NOT BE HARASSED BY THE REVENUE. A DELICATE BALANCE MUST BE MAINTAINED 56 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. BETWEEN THE TWO INTERESTS. IN DIVINE LEASING (SUPRA ), THE FOLLOWING PROPOSITION WAS ELUCIDATED:- IN THIS ANALYSIS, A DISTILLATION OF THE PRECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68 OF THE IT ACT. THE ASSESSED HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CREDIT OR/SUBSCRIBER; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDIT WORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER. (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS RE GISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER ETC. IT WOULD CONSTI TUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSED. (5) THE DEP ARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY BECA USE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND TO ITS NOTICES; (6) TH E ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIES OR REP UDIATES THE TRANSACTION SET UP BY THE ASSESSED NOR SHOULD THE AO TAKE SUCH REPU DIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST THE ASSESSED. (7 ) THE ASSESSING OFFICER IS DUTY-BOUND TO INVESTIGATE THE CREDITWORTHINESS OF T HE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION. 17. NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) AF TER REFERRING TO THE DISMISSAL OF SLP AGAINST DIVINE LEASING CASE (SUPRA ) OBSERVED AS UNDER:- SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADD RESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHE D TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTI CULARS ARE FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY 57 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. UNDER SEC.68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHE S THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWE EN SELF-CONFESSED ACCOMMODATION ENTRY PROVIDERS, WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIE S THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF T HE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MAD E AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT B Y THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH ENTRY PROVIDERS. THE EXIST ENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIP TIONS WERE COLLECTED AS PART OF A PRE-MEDITATED PLAN A SMOKESCREEN CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A C ASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE IDENTITY AN D CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACT ION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE ORMATERIAL IN HIS POSSESSION AND T HEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VERIFICAT ION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JU STICE TO EXPRESS A VIEW TO THE CONTRARY. 18. LOVELY EXPORTS PVT. LTD.(SUPRA) WAS ALSO CONSID ERED AND DISTINGUISHED IN N.R. PORTFOLIO PVT. LTD. (SUPRA) AND IT WAS HELD TH AT THE ENTIRE EVIDENCE AVAILABLE ON RECORD HAS TO BE CONSIDERED, AFTER REL YING UPON CIT VS. NIPUN BUILDERS AND DEVELOPERS, [2013] 350 ITR 407 (DELHI) , WHEREIN IT HAS BEEN HELD 58 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THAT A REASONABLE APPROACH HAS TO BE ADOPTED AND WH ETHER INITIAL ONUS STANDS DISCHARGED WOULD DEPEND UPON FACTS AND CIRCUMSTANCE S OF EACH CASE. IN CASE OF PRIVATE LIMITED COMPANIES, GENERALLY PERSONS KNO WN TO DIRECTORS OR SHAREHOLDERS, DIRECTLY OR INDIRECTLY, BUY OR SUBSCR IBE TO SHARES. UPON RECEIPT OF MONEY, THE SHARE SUBSCRIBERS DO NOT LOSE TOUCH AND BECOME INCOMMUNICADO. CALL MONEY, DIVIDENDS, WARRANTS, ETC. HAVE TO BE SE NT AND THE RELATIONSHIP REMAINS A CONTINUING ONE. THEREFORE, AN ASSESSEE CA NNOT SIMPLY FURNISH SOME DETAILS AND REMAIN QUIET WHEN SUMMONS ISSUED TO SHA REHOLDERS REMAIN UN- SERVED AND UNCOMPLIED. AS A GENERAL PROPOSITION, IT WOULD BE IMPROPER TO UNIVERSALLY HOLD THAT THE ASSESSEE CANNOT PLEAD THA T THEY HAD RECEIVED MONEY, BUT COULD DO NOTHING MORE AND IT WAS FOR THE ASSESS ING OFFICER TO ENFORCE SHAREHOLDERS ATTENDANCE IN SPITE OF THE FACT THAT THE SHAREHOLDERS WERE MISSING AND NOT AVAILABLE. THEIR RELUCTANCE AND HIDING MAY REFLECT ON THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CRED ITOR. IT WOULD BE ALSO INCORRECT TO UNIVERSALLY STATE THAT AN INSPECTOR MU ST BE SENT TO VERIFY THE SHAREHOLDERS/SUBSCRIBERS AT THE AVAILABLE ADDRESSES , THOUGH THIS MIGHT BE REQUIRED IN SOME CASES. SIMILARLY, IT WOULD BE INCO RRECT TO STATE THAT THE ASSESSING OFFICER SHOULD ASCERTAIN AND GET ADDRESSE S FROM THE REGISTRAR OF COMPANIES WEBSITE OR SEARCH FOR THE ADDRESSES OF S HAREHOLDERS THEMSELVES. CREDITWORTHINESS IS NOT PROVED BY SHOWING ISSUE AND RECEIPT OF A CHEQUE OR BY FURNISHING A COPY OF STATEMENT OF BANK ACCOUNT, WHE N CIRCUMSTANCES REQUIRES THAT THERE SHOULD BE SOME MORE EVIDENCE OF POSITIVE NATURE TO SHOW THAT THE SUBSCRIBERS HAD MADE GENUINE INVESTMENT OR HAD, ACT ED AS ANGEL INVESTORS AFTER DUE DILIGENCE OR FOR PERSONAL REASONS. THE FINAL CO NCLUSION MUST BE PRAGMATIC AND PRACTICAL, WHICH TAKES INTO ACCOUNT HOLISTIC VI EW OF THE ENTIRE EVIDENCE INCLUDING THE DIFFICULTIES, WHICH THE ASSESSEE MAY FACE TO UNIMPEACHABLY ESTABLISH CREDITWORTHINESS OF THE SHAREHOLDERS. 19. IN N.R. PORTFOLIO PVT. LTD. (SUPRA), IT HAS BEE N HELD AS UNDER:- 59 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 18. IN THE REMAND REPORT, THE ASSESSING OFFICER RE FERRED TO THE PROVISIONS OF SECTION 68 OF THE ACTAND THEIR APPLIC ABILITY. THE WORD IDENTITY AS DEFINED, IT WAS OBSERVED MEANT THE CO NDITION OR FACT OF A PERSON OR THING BEING THAT SPECIFIED UNIQUE PERSON OR THING. THE IDENTIFICATION OF THE PERSON WOULD INCLUDE THE PLAC E OF WORK, THE STAFF, THE FACT THAT IT WAS ACTUALLY CARRYING ON BUSINESS AND RECOGNITION OF THE SAID COMPANY IN THE EYES OF PUBLIC. MERELY PRODUCIN G PAN NUMBER OR ASSESSMENT PARTICULARS DID NOT ESTABLISH THE IDENTI TY OF THE PERSON. THE ACTUAL AND TRUE IDENTITY OF THE PERSON OR A COMPANY WAS THE BUSINESS UNDERTAKEN BY THEM. THIS ACCORDING TO US IS THE COR RECT AND TRUE LEGAL POSITION, AS IDENTITY, CREDITWORTHINESS AND GENUINE NESS HAVE TO BE ESTABLISHED. PAN NUMBERS ARE ALLOTTED ON THE BASIS OF APPLICATIONS WITHOUT ACTUAL DE FACTO VERIFICATION OF THE IDENTIT Y OR ASCERTAINING ACTIVE NATURE OF BUSINESS ACTIVITY. PAN IS A NUMBER WHICH IS ALLOTTED AND HELPS THE REVENUE KEEP TRACK OF THE TRANSACTIONS. PAN NUM BER IS RELEVANT BUT CANNOT BE BLINDLY AND WITHOUT CONSIDERING SURROUNDI NG CIRCUMSTANCES TREATED AS SUFFICIENT TO DISCHARGE THE ONUS, EVEN W HEN PAYMENT IS THROUGH BANK ACCOUNT. 19. ON THE QUESTION OF CREDIT WORTHINESS AND GENUIN ENESS, IT WAS HIGHLIGHTED THAT THE MONEY NO DOUBT WAS RECEIVED TH ROUGH BANKING CHANNELS, BUT DID NOT REFLECT ACTUAL GENUINE BUSINE SS ACTIVITY. THE SHARE SUBSCRIBERS DID NOT HAVE THEIR OWN PROFIT MAKING AP PARATUS AND WERE NOT INVOLVED IN BUSINESS ACTIVITY. THEY MERELY ROTA TED MONEY, WHICH WAS COMING THROUGH THE BANK ACCOUNTS, WHICH MEANS DEPOS ITS BY WAY OF CASH AND ISSUE OF CHEQUES. THE BANK ACCOUNTS, THERE FORE, DID NOT REFLECT THEIR CREDITWORTHINESS OR EVEN GENUINENESS OF THE T RANSACTION. THE BENEFICIARIES, INCLUDING THE RESPONDENT-ASSESSEE, D ID NOT GIVE ANY SHARE- DIVIDEND OR INTEREST TO THE SAID ENTRY OPERATORS/SU BSCRIBERS. THE PROFIT MOTIVE NORMAL IN CASE OF INVESTMENT WAS ENTIRELY AB SENT. IN THE PRESENT 60 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. CASE, NO PROFIT OR DIVIDEND WAS DECLARED ON THE SHA RES. ANY PERSON, WHO WOULD INVEST MONEY OR GIVE LOAN, WOULD CERTAINLY SE EK RETURN OR INCOME AS CONSIDERATION. THESE FACTS ARE NOT ADVERTED TO A ND AS NOTICED BELOW ARE TRUE AND CORRECT. THEY ARE UNDOUBTEDLY RELEVANT AND MATERIAL FACTS FOR ASCERTAINING CREDITWORTHINESS AND GENUINENESS O F THE TRANSACTIONS. 30. WHAT WE PERCEIVE AND REGARD AS CORRECT POSITION OF LAW IS THAT THE COURT OR TRIBUNAL SHOULD BE CONVINCED ABOUT THE IDE NTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . THE ONUS TO PROVE THE THREE FACTUM IS ON THE ASSESSEE AS THE FACTS AR E WITHIN THE ASSESSEES KNOWLEDGE. MERE PRODUCTION OF INCORPORATION DETAILS , PAN NOS. OR THE FACT THAT THIRDPERSONS OR COMPANY HAD FILED INCOME TAX DETAILS INCASE OF A PRIVATE LIMITED COMPANY MAY NOT BE SUFFICIENT WHE N SURROUNDING AND ATTENDING FACTS PREDICATE A COVER UP. THESE FACTS INDICATE AND REFLECT PROPER PAPER WORK OR DOCUMENTATION BUT GENUINENESS, CREDITWORTHINESS, IDENTITY ARE DEEPER AND OBTRUSIVE. COMPANIES NO DOU BT ARE ARTIFICIAL OR JURISTIC PERSONS BUT THEY ARE SOULLESS AND ARE DEPE NDENT UPON THE INDIVIDUALS BEHIND THEM WHO RUN AND MANAGE THE SAID COMPANIES. IT IS THE PERSONS BEHIND THE COMPANY WHO TAKE THE DECISIO NS, CONTROLS AND MANAGE THEM. 20. NOW, WHEN WE GO TO THE ORDER OF THE TRIBUNAL IN THE PRESENT CASE, WE NOTICE THAT THE TRIBUNAL HAS MERELY REPRODUCED THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) AND UPHELD THE DELETION OF THE ADDITION. IN FACT, THEY SUBSTANTIALLY RELIED UPON AND QUOTED THE DECISION O F ITS COORDINATE BENCH IN THE CASE OF MAF ACADEMY P. LTD., A DECISION WHICH HAS B EEN OVERTURNED BY THE DELHI HIGH COURT VIDE ITS JUDGMENT IN C.I.T VS. MAF ACADEMY P.LTD [ (2014) 206 DLT 277). IN THE IMPUGNED ORDER IT IS ACCEPTED THAT THE ASSESSEE WAS UNABLE TO PRODUCE DIRECTORS AND PRINCIPAL OFFICERS OF THE SIX SHAREHOLDER COMPANIES AND ALSO THE FACT THAT AS PER THE INFORMA TION AND DETAILS COLLECTED BY 61 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE ASSESSING OFFICER FROM THE CONCERNED BANK, THE ASSESSING OFFICER HAS OBSERVED THAT THERE WERE GENUINE CONCERNS ABOUT IDE NTITY, CREDITWORTHINESS OF SHAREHOLDERS AS WELL AS GENUINENESS OF THE TRANSACT IONS. 21. IN VIEW OF THE AFORESAID DISCUSSION, WE FEEL TH AT THE MATTER REQUIRES AN ORDER OF REMIT TO THE TRIBUNAL FOR FRESH ADJUDICATI ON KEEPING IN VIEW THE AFORESAID CASE LAW. THE QUESTION OF LAW IS, THEREFO RE, ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE RESPONDENT-ASSESSEE, BUT WI TH AN ORDER OF REMIT TO THE TRIBUNAL TO DECIDE THE WHOLE ISSUE AFRESH. AS REPORTED AT 2015-TIOL-314-SC-IT, IN THE ABOVE CA SE, THE HONBLE SUPREME COURT OBSERVED TO EFFECT THAT MERELY BECAUSE THE A SSESSEE HAS BEEN ABLE TO SHOW THAT THE SHAREHOLDER COMPANIES WERE DULY INCOR PORATED AND THEIR IDENTITY & GENUINENESS STANDS ESTABLISHED, THERE WERE DEPOSI TS OF CASH IN THE BANK ACCOUNTS PRIOR TO ISSUE OF CHEQUE OR PAY ORDERS, TH E SAME WOULD RAISE SUSPICION AND ADDITION CAN BE MADE ON SUCH ACCOUNT 5.7 IT MAY BE MENTIONED THAT AS REPORTED AT 2016-TI OL-207-SC-IT, THE HONBLE SUPREME COURT DISMISSED SLP BY RICK LUNSFOR D TRADE & INVESTMENT LTD IN CASE OF RICK LUNSFORD TRADE & INVESTMENT LTD VS CIT UPHOLDING THAT IT IS OPEN TO THE REVENUE DEPARTMENT TO MAKE ADDITION ON ACCOUNT OF ALLEGED SHARE CAPITAL U/S 68, WHERE THE ASSESSEE COMPANY HA S FAILED TO SHOW GENUINENESS OF ITS SHAREHOLDERS. 5.8 HONBLE DELHI HIGH COURT IN CASE OF COMMISSIONE R OF INCOME TAX-II V/S MAF ACADEMY PVT. LTD. INVOLVING EXACTLY SIMILAR FACTS IN ITA 341/2012 DATED 28 TH NOVEMBER, 2013 OBSERVED IN PARA 33 TO 36 AS UNDER: 33. THE ASSESSEE COMPANY IS A PRIVATE LIMITED COMPA NY AND HAD NOT COME OUT WITH ANY PUBLIC ISSUE NOR MADE ANY ADVERTISEMENT FO R ISSUANCE OF SHARE CAPITAL. HOWEVER, IN ONE YEAR THERE IS INFUSION OF SHARE CAP ITAL INCLUDING PREMIUM OF RS.4,35,00,000/-, OUT OF WHICH ONLY RS.92,00,000/- WAS INFUSED FROM THE 62 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. DIRECTORS/FAMILY MEMBERS OF THE DIRECTORS. THE REMA INING SHARE CAPITAL HAD BEEN INFUSED FROM PARTIES WHICH WERE COMPLETELY UNR ELATED EITHER TO THE ASSESSEE OR TO ANY OF ITS DIRECTORS. IN A PRIVATE L IMITED COMPANY, NORMALLY THE INVESTMENT OF SHARES IS FROM PARTIES OR PERSONS WHO ARE FRIENDS OR RELATIVES OF PROMOTERS/DIRECTORS. 34. IT IS NOTICED THAT THE SHARES HAD FACE VALUE OF RS.100 /- AND WERE ALLOTTED AT A PREMIUM OF RS.100 /- TO RS.200/- AND WERE THEN SU BSEQUENTLY PURCHASED BY THE PROMOTERS/DIRECTORS, WHO HAD ORIGINALLY TRANSFE RRED THESE SHARES AT RS.35 /- PER SHARE. 35. IT IS REALLY SURPRISING THAT A PERSON WHO HAD P URCHASED SHARES AT A PREMIUM OF RS.100 /- TO RS.200/- PER SHARE I.E. AT A PRICE OF RS.200 /- TO RS.300/- PER SHARE, SOLD THE SHARES AT RS.35 /- PER SHARE I.E AT A SUBSTANTIAL LOSS. ANOTHER SURPRISING FACTOR IS THAT THE ENTIRE INVESTMENT HAPPENED DURING A SHORT SPAN OF TIME AND RE-TRANSFER OF THE SHARES TO THE FOUR PROMOTERS/DIRECTORS OF THE COMPANY AT RS.35 /- PER SHARE BY DIFFERENT P ARTIES ALSO HAPPENED DURING A SHORT SPAN OF FEW DAYS. THE MODUS OPERANDI AND TH E MANNER IN WHICH CASH IS DEPOSITED IN A BANK AND THEN UTILIZED BY WAY OF AN ACCOUNT PAYEE CHEQUE FOR PURCHASE OF SHARES FOR A PREMIUM OF RS.100 /- TO RS .200/- PER SHARE AND THEN THE SALE OF SHARES AT A LOSS CLEARLY ESTABLISHES TH AT THE SAID TRANSACTION WAS A CAMOUFLAGE TRANSACTION. THE ASSESSEE HAS CLEARLY AT TEMPTED TO CAMOUFLAGE THE ACCOMMODATION ENTRIES AND TRIED TO GIVE IT A COLOUR OF PURCHASE OF SHARE CAPITAL AND THEN SALE OF THE SAME AT A LOSS. THUS T HE ASSESSEE'S CAPITAL INCREASED OR WAS ENHANCED BY A SUBSTANTIAL FIGURE T HROUGH THESE DUBIOUS TRANSACTIONS. THIS SHOULD BE AND HAS TO BE CHECKED. 36. OUT OF RS.4.35 CRORES RECEIVED AS SHARE CAPITAL INCLUDING PREMIUM, ONLY RS.92 LACS HAS BEEN RECEIVED FROM THE DIRECTORS OR THEIR FAMILY MEMBERS AND THE REMAINING AMOUNT HAS BEEN RECEIVED FROM PARTIES TOTALLY UNRELATED TO THE ASSESSEE. NOTICES TO SOME OF THE INVESTORS COULD NO T BE SERVED AND EVEN THE INSPECTOR WHO WAS DEPUTED TO SERVE THE SUMMONS STAT ED THAT NONE OF THE ADDRESSES COULD BE FOUND. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE 63 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. REFUSED TO PRODUCE THE PARTIES WHO HAD INVESTED IN THE SHARE CAPITAL ON THE GROUND THAT THEY WERE NOT IN A POSITION TO PRODUCE THEM. THE FACT THAT THE ASSESSEE FAILED TO PRODUCE THE PERSONS WHO HAD INVE STED TOWARDS SHARE CAPITAL SHOWS THAT THESE WERE PEOPLE WHO WERE COMPLETELY UN RELATED TO THE ASSESSEE AND AS SUCH, ALL THE ENTRIES WERE MERELY ACCOMMODAT ION ENTRIES. OTHERWISE, IN A PRIVATE LIMITED COMPANY, IT WOULD NOT HAVE BEEN D IFFICULT ON THE PART OF THE ASSESSEE TO PRODUCE PERSONS WHO WERE INVESTING SUBS TANTIAL AMOUNT OF MONEY IN THE COMPANY TOWARDS SHARE CAPITAL. 37. THE ASSESSING OFFICER IN HIS ORDER HAS AS A SAM PLE REFERRED TO THE ENTRIES IN THE ACCOUNT OF SOME OF THE SHARE HOLDERS NOTICING T HAT THERE ARE CASH DEPOSITS OF THE EXACT AMOUNT FOR WHICH CHEQUE IS SUBSEQUENTL Y ISSUED TO THE ASSESSEE. PERUSAL OF THE BANK STATEMENTS CLEARLY ESTABLISHES THAT THESE PARTIES WERE DEPOSITING CASH AND IMMEDIATELY EITHER ON THE SAME DAY OR IN THE NEAR FUTURE WITHDRAWING THE SAME THROUGH A CHEQUE WHICH WAS ISS UED IN FAVOUR OF THE ASSESSEE. THEN HONBLE DELHI HIGH COURT HELD IN PARA 53 TO 5 4 AS UNDER:- 53. IN CONTRAST TO THE ABOVE JUDGMENTS, IN THE PRES ENT CASE, THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IN THE FACTUAL MATRIX, WE HAVE HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE THE INITIAL ONUS AND HAS NOT BEEN ABLE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTION. THOUGH, IN OUR CONSIDERED OPINION, NONE OF THE ABOVE JUDGMENTS, REFERRED TO BY THE ASSESSEE RESPON DENT, ARE APPLICABLE IN THE FACTS OF THE PRESENT CASE AND IN VIEW OF THE FINDIN GS RECORDED BY US HEREINABOVE. 54. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT T HE ASSESSEE HAS NOT DISCHARGED THE ONUS SATISFACTORILY AND THE ADDITION S MADE BY THE ASSESSING OFFICER WERE JUSTIFIED AND SUSTAINABLE . 64 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 5.9 HONBLE INCOME TAX APPELLATE TRIBUNAL DELHI BEN CH: 'B IN CASE OF M/S. AMTRAC AUTOMOTIVE INDIA PVT. LTD. VERSUS ACIT, CIRCLE 1(1), INVOLVING EXACTLY SIMILAR FACTS IN THEIR APPELLATE ORDER ITA NO.2920/DEL/09 FOR A.Y. 2005-06 DATED 31.12.2009 OBSERVED IN PARA 3 & THEN PARA 2 AS UNDER:- 3. THE ASSESSEE COMPANY IS ENGAGED IN SHARE TRADING IN THE YEAR UNDER CONSIDERATION. IN THE COURSE OF SCRUTINY, THE ASSES SING OFFICER NOTED THAT THE APPELLANT HAS INTRODUCED FRESH SHARE CAPITAL TO THE TUNE OF RS. 15,00,000/- AT A SHARE PREMIUM OF RS. 1,35,00,000/-......... 2.1 THE AO ASKED THE APPELLANT TO FURNISH DETAIL S OF SUCH SHARE HOLDERS MENTIONING THEIR IDENTITY, GENUINENESS OF TRANSACTI ON AND CREDIT-WORTHINESS. APPELLANT PRODUCED CONFIRMATION OF DEPOSIT FROM DIR ECTORS OF THE RESPECTIVE COMPANY, COPIES OF INCOME TAX RETURN FILED AND COPI ES OF BANK STATEMENT REFLECTING THE ABOVE TRANSACTIONS. IN ORDER TO VERI FY THE ENTIRE TRANSACTIONS IN THE ASSTT. YEAR 2005-06 LIGHT OF GENUINENESS AND CR EDITWORTHINESS, HE ISSUED SUMMONS U/S 131 OF THE ACT TO ALL THE ABOVE 15 PERS ONS. THEY WERE ASKED TO PRODUCE THE COPIES OF RETURN FOR AY. 2005-06 AND TH EIR LEDGER ACCOUNTS FROM WHICH THE SOURCE OF ABOVE SHARE APPLICATION MONEY C OULD HAVE BEEN VERIFIED. ALL THE ABOVE SUMMONS WERE RETURNED UNSERVED WITH T HE COMMENTS FROM THE POSTAL AUTHORITIES AS 'NO SUCH PERSON IN THE ABOVE ADDRESS'. THE AO ACCORDINGLY BROUGHT THIS FACT TO THE NOTICE OF THE COUNSEL OF THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 18.12.2007 AND HE WAS GIVEN AN OPPORTUNITY TO PRODUCE THE FUNCTIONAL DIRECTORS OF THE ABOVE COMPANIES FOR VERIFICATION. AS MENTIONED IN THE ASSESSMENT ORDER, AFTER CERTAIN ADJOURNMENTS , A LETTER WAS FINALLY FILED FROM THE APPELLANT MENTIONING THAT IT IS NO IN TOUC H OF THE ABOVE SHARE HOLDERS AND THEIR PRESENT WHEREABOUTS ARE NOT KNOWN TO IT. THE APPELLANT, HOWEVER, RELYING UPON THE DECISION OF HON'BLE DELHI HIGH COU RT IN THE CASE OF CIT VS. SOPHIA FINANCE LTD. IN WHICH THE POWERS OF THE ASSESSING OFFICER WAS NOT 65 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. PRECLUDED FROM MAKING ENQUIRIES IN SHARE APPLICATIO N MONEY, SUBMITTED THAT NO ADDITION CAN BE MADE. 2.1.1 THE AO HOWEVER WAS NOT CONVINCED WITH THE SUB MISSION OF THE APPELLANT. HE OBSERVED THAT THAT IT WAS ONLY IN THE COURSE OF ENQUIRY THAT HE TRIED TO EXAMINE THE ABOVE SHARE APPLICANTS. SINCE THE SUMMO NS ISSUED TO SUCH PERSONS REMAINED UNSERVED, IT BECAME THE DUTY OF THE APPELL ANT EITHER TO PRODUCE THEM FOR VERIFICATION OR TO STATE THEIR CORRECT ADDRESSE S. IT APPEARS TO BE HIGHLY IMPROPER THAT IN A PRIVATE LTD. COMPANY, THE ASSESS EE IS NOT IN A POSITION TO STATE THE EXACT WHEREABOUTS OR FAIL TO PRODUCE THE PERSONS WHO COLLECTIVELY HOLD MORE THAN 25% OF ITS TOTAL SHARE HOLDING. HE ALSO O BSERVED THAT MERE FILING OF ASSTT. YEAR 2005-06 CONFIRMATION LETTERS DO NOT ABSOLVE THE APPELLANT FROM ITS ONUS TO PROVE THE CREDIT ENTRIES REFLECTED IN ITS B OOKS OF ACCOUNTS AS HAS BEEN HELD BY HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. UNITED COMMERCIAL & INDUSTRIAL CO. (P) LTD .[1991] 187 ITR 596. HE FURTHER OBSERVED THAT THE FACTS THAT THE AMOUNT WERE PAID BY ACCOUNT PAYEE CH EQUES DO NOT MAKE IT SATISFACTORY AS HELD IN CIT VS. PRECISION FINANCE PVT. LTD. 208 ITR 465 (CAL.). EVEN INCOME -TAX FILE PARTICULARS, WHERE THE SHARE HOLDER IS ASSESSED TO TAX IS NOT SUFFICIENT AS FOUND IN CIT VS. KORLAY TRADING CO. LTD . 232 ITR 820 (CAL.) 2.1.2 THE AO ALSO REFERRED THE ENQUIRY INITIATED BY INVESTIGATION WING OF THE DEPARTMENT IN AUGUST 2003 WHICH CULMINATED INTO DET ECTION OF MANY ENTRY OPERATORS WHO ARE OPERATING NUMBER OF ACCOUNTS IN T HE SAME BANK/BRANCH OR IN DIFFERENT BRANCHES, IN THE NAMES OF COMPANIES, FIRM S, PROPRIETARY CONCERNS AND INDIVIDUALS. FOR THE OPERATIONS OF THESE BANK ACCOUNTS, FILING INCOME TAX RETURNS ETC. PERSONS ARE HIRED. LIKE ANY OTHER BUSI NESS IT DOES REQUIRES MANPOWER ACCORDING TO THE SCALE OF OPERATION. EXCEP T FOR TWO OR THREE PERSONS WHO ARE REQUIRED REGULARLY TO VISIT BANKS AND DO OT HER SPADE WORK LIKE COLLECTION OF CASH ETC., MOST OF THE OTHER PERSONS INVOLVED ARE ON PART TIME BASIS. THE PART TIME EMPLOYEES ARE CALLED AS AND WH EN REQUIRED TO SIGN DOCUMENTS, CHEQUE BOOKS ETC. SOME OF THE ENTRY OPER ATORS HAVE ALSO ROPED IN THEIR OWN RELATIVES FOR OPERATION OF ENTRY ACCOUNTS AND FILING THE INCOME TAX 66 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. RETURNS. INTERESTINGLY MOST OF THESE CONCERNS / IND IVIDUALS HAVE OBTAINED PAN FROM THE DEPARTMENT AND ARE FILING RETURNS AS WELL. WHAT IS SHOWN IN THE RETURNS IS NOT THE ACTUAL STATE OF AFFAIRS. FOR EXA MPLE WITH ONE PAN SEVERAL BANK ACCOUNTS ARE SIMULTANEOUSLY ASSTT. YEAR 2005-0 6 OPERATED AND ONLY ONE ACCOUNT MIGHT BE SHOWN FOR THE PURPOSE OF AUDIT AND FILING INCOME TAX RETURNS. THE ENTRY OPERATORS PROVIDE ENTRY IN THE GARB OF SH ARE APPLICATION MONEY , GIFTS, LOANS ETC. THROUGH THESE ACCOUNTS, IN LIEU OF CASH, TO ANY PERSON WHO IS HAVING UNACCOUNTED MONEY. 2.1.2.1 THE AO OBSERVED THAT SOME OF THE COMPANIES SHOW ABOVE BY THE APPELLANT AS ITS SHARE HOLDERS WERE FOUND TO HAVE S TATED BEFORE INVESTIGATION WING THAT THEY WERE MERE NAME LENDER FOR ADVANCING MONEY. TO QUOTE SOME OF THEM, SHRI RAJESH BANSAL, DIRECTOR OF M/S. RUBICON ASSOCIATES PVT. LTD., SHRI MAHESH GARG, DIRECTOR OF M/S. S.J. HOSIERY PVT. LTD . ETC. HAVE CATEGORICALLY STATED BEFORE THE INVESTIGATION WING, IN THEIR STAT EMENT TAKEN ON OATH, THAT THEY USED TO TAKE THE AMOUNT IN CASH AND GIVE ENTRIES TO DIFFERENT CONCERNS AS GIFT, LOAN OR SHARE APPLICATION MONEY. ACCORDING TO AO, T O ENQUIRE INTO THIS ASPECT ALSO, THE APPELLANT WAS ASKED TO PRODUCE THE FUNCTI ONAL DIRECTORS OF SUCH SHARE HOLDERS. 2.1.3. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, TH E ASSESSING OFFICER CONCLUDED THAT THE CREDIT IN THE NAME OF THESE SHAREHOLDERS A RE NOT GENUINE AND REPRESENTS UNEXPLAINED CASH CREDITS. ACCORDINGLY HE MADE ADDITION OF RS. 1.50 LAKHS TO THE RETURNED INCOME. THEN HONBLE INCOME TAX APPELLATE TRIBUNAL DELHI BE NCH: 'B HELD IN PARA 6 AS UNDER: 6. AS REGARDS GROUND NO. 2, WE FIND THAT THE ASSESS EE HAS STATED TO HAVE RECEIVED FRESH SHARE CAPITAL TO THE TUNE OF RS. 15 LACS AND SHARE PREMIUM OF RS.1,00,35,000/- I.E. A SHARE OF FACE VALUE OF RS. 10/- EACH ISSUED AT A PREMIUM 67 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. OF RS. 90/- TOTALING TO RS. 100/-. WHEN THE AO ASKE D THE APPELLANT TO FURNISH THE DETAILS THE ASSESSEE PRODUCED SHARE APPLICATION FOR MS AND OTHER DETAILS LIKE BANK STATEMENT, COPY OF ACKNOWLEDGMENT OF RETURN ET C. HOWEVER WHEN THE AO CONDUCTED INQUIRY AT THE STATED ADDRESS, SUMMONS WE RE RECEIVED BACK UNSERVED WITH THE POSTAL REMARK 'NO SUCH PERSON IN THE ABOVE ADDRESS'. THIS FACT WAS ASSTT. YEAR 2005-06 BROUGHT TO THE NOTICE OF AS SESSEE ALSO. THEREAFTER THE ASSESSEE EXCEPT PRODUCING THE PAPERS COULD NOT PROV E EXISTENCE OR AVAILABILITY OF THE RESPECTIVE SHARE APPLICANTS. WHEN THE IDENTI TY OF THE PERSON IS REQUIRED TO BE PROVED SO AS TO EXAMINE WHETHER IN FACT THEY HAVE APPLIED FOR ALLOTMENT OF SHARES, THE EXISTENCE ITSELF IS NOT PROVED. THE EXI STENCE OF A PERSON IS NOT MERELY ON PAPER. PARTICULARLY WHEN THE AO REQUIRED THE ASSESSEE TO PRODUCE THE SHARE APPLICANTS AND PARTICULARLY WHEN AT THE S TATED ADDRESS THE SHARE APPLICANTS DO NOT FOUND TO BE EXISTING, IT CANNOT B E SAID THAT THE AMOUNT RECEIVED BY ASSESSEE IS PROVED TO BE TOWARDS SHARE CAPITAL. THE TRANSACTION CANNOT BE PROVED MERELY ON PAPER. NEITHER BEFORE AO NOR BEFORE LD. CIT (A) THE ASSESS EE COULD MAKE THE SHARE APPLICANTS AVAILABLE. THEREFORE WHEN THE IDENTITY OF THE PERSON ITSELF I S NOT PROVED, THE AMOUNT RECEIVED BY ASSESSEE CANNOT BE C ONSIDERED TO BE GENUINELY RECEIVED. 6.1. IT IS ALSO TO BE NOTED THAT THE ASSESSEE COMPA NY IS STATED TO HAVE ISSUED SHARES AT PREMIUM 9 TIMES ITS FACE VALUE. THE ASSES SEE IS A PRIVATE LIMITED COMPANY. IT HAS NOT ISSUED PROSPECTUS FOR ISSUE OF SHARES NOR UNDER THE COMPANIES ACT 1956, IT CAN INVITE THE PUBLIC TO APPLY FOR AND AL LOT THE SHARES. THE COMPANY IS PROHIBITED FROM MAKING ANY I NVITATION FOR ALLOTMENT OF SHARES. HOW THE PREMIUM WAS FIXED IS NOT FORTH COMI NG. LOOKING TO THE BALANCE SHEET OR PAST HISTORY OF ASSESSEE, THE ASSESSEE COM PANY HAS NEVER DECLARED DIVIDEND IN THE PAST. THE COMPANY HAS NO BUSINESS P LANS WHICH CAN RAISE ITS PROFITABILITY IN THE NEAR FUTURE. THE INCOME DECLAR ED BY THE ASSESSEE IS ONLY BY 68 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. WAY OF SHORT TERM CAPITAL GAIN AND THE ASSESSEE DO NOT SEEM TO HAVE CARRIED ON ANY BUSINESS. ASSTT. YEAR 2005-06 IN SUCH CIRCUMSTANCES THE SHARE PREMIUM IS NOT FOUND TO BE JUSTIFIED BY ANY OF THE ACT ON THE PART OF ASSESSEE . THESE FACTS ARE REVEALING MORE THAN THE APPARENT SHOWN ON THE PAPER. ALL THES E FACTS PUT TOGETHER REVEAL THAT NEITHER THE IDENTITY OF THE SHARE APPLICANTS A RE PROVED NOR JUSTIFICATION FOR SHARE PREMIUM HAS BEEN PROVED. IN SUCH CIRCUMSTANCE S THE COURT CANNOT PUT BLINKER ON THE EYE AND LOOK ONLY AT THE PAPERS PRES ENTED BEFORE IT. THERE IS SOMETHING MORE THAN THAT MEETS THE EYE. AS RIGHTLY CONTENDED BY LD. DR IN SUCH SITUATION THE OBSERVATION OF HON'BLE SUPREME C OURT IN THE CASE OF CIT VS. DURGA PRASAD MORE 82 ITR 540 AND IN THE CASE OF SUM ATI DAYAL VS. CIT 214 ITR 801 ARE APT FOR APPLICATION. WE THEREFORE DO NO T FIND ANY REASON TO HOLD THAT THE SHARE CAPITAL RECEIPTS BY ASSESSEE WERE FR OM PERSONS WHOSE IDENTITY IS ESTABLISHED AND THE AMOUNT IS GENUINELY RECEIVED TO WARDS SHARE CAPITAL. 5.10 IN A RECENT DECISION IN CASE OF PRINCIPAL COMM ISSIONER OF INCOME VS BIKRAM SINGH IN ITA 55/2017, THE HONBLE HIGH COUR T OF DELHI HELD ON 25 AUGUST, 2017 AS UNDER:- 25. THE LAW APPLICABLE TO TRANSACTIONS OF THIS NATU RE IS WELL SETTLED BY THIS COURT IN DIVINE LEASING (SUPRA). BOTH PARTIES HAVE REFERRED TO AND RELIED UPON THIS JUDGMENT. THIS COURT, AFTER ANALYZING THE ENTI RE LAW ON THE SUBJECT IN THE CONTEXT OF SECTION 68 OF THE ACT, HELD AS UNDER: '...16. IN THIS ANALYSIS, A DISTILLATION OF THE PRE CEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68 OF THE IT ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CREDIT OR/SUBSCRIBER; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER. (4) IF RELEVANT DETAILS OF THE 69 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS RE GISTER, SHARED APPLICATION FORMS, SHARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSEE. (5 ) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY B ECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND TO ITS NOTICES; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIB ER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSEE NOR SHOULD THE A O TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST T HE ASSESEE. (7) THE ASSESSING OFFICER IS DUTY-BOUND TO INVESTIGATE THE CREDITWORT HINESS OF THE CREDITOR /SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION....' 26. IN DIVINE LEASING (SUPRA), ON THE QUESTION OF B URDEN OF PROOF, THE COURT RELIED UPON CIT V. MUSADDILAL RAM BHAROSE , (1987) 165 ITR 14, TO HOLD THAT THE INITIAL BURDEN IS UPON THE ASSESSEE TO SHOW THE ABSENCE OF FRAUD AND THIS IS NOT DISCHARGED BY THE ASSESSEE TENDERING AN INCREDI BLE AND FANTASTIC EXPLANATION. THE COURT ALSO HELD THAT EVERY EXPLANA TION GIVEN BY THE ASSESSEE NEED NOT BE ACCEPTED. 27. IN KAMDHENU (SUPRA), THIS COURT CATEGORICALLY H ELD THAT THE INITIAL BURDEN LIES ON THE ASSESSEE TO ESTABLISH THE IDENTITY OF T HE SHAREHOLDERS, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHI NESS OF THE SHAREHOLDERS. IT IS ONLY AFTER THE INITIAL BURDEN IS DISCHARGED THAT THE ONUS SHIFTS TO THE REVENUE. THIS COURT IN KAMDHENU (SUPRA) REFERRED TO CIT V. SOPHIA FINANCE , 205 ITR 98 WHICH HAD HELD TO THE SAME EFFECT. THE DIVINE LE ASING (SUPRA) AND SOPHIA FINANCE (SUPRA) JUDGMENTS WERE REITERATED BY THIS C OURT IN DWARKADHISH (SUPRA). THUS, THE LAW IN RELATION TO SECTION 68 IS WELL SETTLED. ................................................... ................................................... ......................... 43. THE TRANSACTIONS IN THE PRESENT APPEAL ARE YET ANOTHER EXAMPLE OF THE CONSTANT USE OF THE DECEPTION OF LOAN ENTRIES TO BR ING UNACCOUNTED MONEY INTO 70 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. BANKING CHANNELS. THIS DEVICE OF LOAN ENTRIES CONTI NUES TO PLAGUE THE LEGITIMATE ECONOMY OF OUR COUNTRY. AS SEEN FROM THE FACTS NARR ATED ABOVE, THE TRANSACTIONS HEREIN CLEARLY DO NOT INSPIRE CONFIDEN CE AS BEING GENUINE AND ARE SHROUDED IN MYSTERY, AS TO WHY THE SO-CALLED CREDIT ORS WOULD LEND SUCH HUGE UNSECURED, INTEREST FREE LOANS - THAT TOO WITHOUT A NY AGREEMENT. IN THE ABSENCE OF THE SAME, THE CREDITORS FAIL THE TEST OF CREDITW ORTHINESS AND THE TRANSACTIONS FAIL THE TEST OF GENUINENESS. 5.11 IN MY CONSIDERED VIEW, THE TECHNICAL OBJECTION S RAISED BY THE APPELLANT IN RESPECT OF LOAN FROM M/S JALSAGAR COMMERCE PVT. LTD. ARE OF NO AVAIL TO THE APPELLANT DUE TO FOLLOWING UNDISPUTED FACTS:- I. IT IS UNDISPUTED FACT THAT THE INCOME TAX DEPART MENT HAS MADE TREMENDOUS INVESTIGATIONS IN SUCH SHELL COMPANIES O F KOLKATA, MUMBAI AND DELHI PROVIDING ACCOMMODATION ENTRY AND STATEMENTS MADE BY SEVERAL ACCOMMODATION ENTRY PROVIDERS HAVE BECOME VIRTUALLY IN PUBLIC DOMAIN. IT IS NO ARGUMENT THAT THE AO DID NOT PROVIDE SUCH STATEM ENT BEFORE THE ASSESSEMENT OR IN ANY OF THE NOTICES. THESE FACTS WERE WELL KNO WN TO THE APPELLANT GROUP AND IGNORANCE IS MERE PRETENCE. II. MOREOVER, SUCH STATEMENTS ARE SO VOCAL AND UNDE NIABLE THAT AS MENTIONED IN SOME OF THE CASE LAWS ABOVE, CROSS-EXA MINATION OF SUCH ACCOMMODATION ENTRY PROVIDES BY THOUSANDS OF BENEFI CIARIES ACROSS INDIA IS NEITHER PRACTICABLE NOR VIABLE AND THEREFORE UNCALL ED FOR. III. IT IS UNDISPUTED FACT THAT IN THE STATEMENT DA TED 06.02.2014 SHRI ANAND SHARMA HAD ADMITTED TO BE ONE OF SUCH ACCOMMODATION ENTRY PROVIDERS. THE SUM AND SUBSTANCE OF THE SAID STATEMENT IS THAT THE CONCERN M/S JALSAGAR COMMERCE PVT. LTD. WAS ENGAGED IN THE ACTIVITIES O F PROVIDING ACCOMMODATION ENTRIES AND THE APPELLANT HAPPENED TO BE ONE OF SUCH BENEFICIARY OF SUCH CONCERN. IT IS ALSO ADMITTED FA CT THAT SHRI ANAND SHARMA HAD BEEN RUNNING THE AFFAIR OF THE SAID COMPANY. 71 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. V. THE STATEMENT OF SHRI ANAND SHARMA IN WHICH NAM E OF M/S JALSAGAR COMMERCE PVT. LTD. CANNOT BE COMPLETELY IGNORED SO LELY ON THE LEGAL GROUNDS RAISED BY THE APPELLANT. 5.12 IN VIEW OF ABOVE DISCUSSION, IT IS CLEAR THAT THE INCRIMINATING MATERIAL HAD BEEN FOUND DURING THE COURSE OF SEARCH OF ACCOM MODATION ENTRY PROVIDER. FURTHER INCRIMINATING MATERIAL HAD BEEN GATHERED BY ISSUING COMMISSION TO DDIT (INV.) KOLKATA, DURING THE ASSESSMENT PROCEEDI NGS AND ALL SUCH MATERIAL HAVE BEEN SHARED WITH THE APPELLANT AT LEAST DURING THE REMAND REPORT PROCEEDING. IN VIEW OF NATION-WIDE KNOWN SCAM BY TH E ACCOMMODATION ENTRY PROVIDERS OF KOLKATA AND ELSEWHERE BURST BY THE INC OME TAX DEPARTMENT, THERE WAS NO NEED TO PROVIDE OPPORTUNITY FOR CROSS-EXAMIN ATION OF SAME ACCOMMODATION ENTRY PROVIDERS. ANY WAY IN THE REJOI NDER SUBMISSION TO REMAND REPORT THE APPELLANT IS ABSOLUTELY SILIENT O N CROSS-EXAMINATION AND BY SUCH CONDUCT HE HAS FORGONE HIS RIGHT TO CROSS-EXAM INE. THEREFORE, THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN FOLLOWED. A S DISCUSSED IN PRECEDING PARAS, UNDER THE FACTS AND CIRCUMSTANCE OF THE CASE , IT COULD NOT BE SAID THAT AO DID NOT FOLLOWED THE BINDING DECISION OF THE HONBL E SUPREME COURT AND THE HONBLE JURISDICTION COURT. THEREFORE, IN VIEW OF A BOVE FACTS DISCUSSED IN PARA 4.1 & 4.4.7, 5.1 TO 5.3 AND LEGAL POSITION APPRISED IN PARA 5.5 TO 5.11 ABOVE, IT IS HELD THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF UNSECURED LOANS AMOUNTING TO RS. 12,36,49,999/- FROM M/S JALSAGAR C OMMERCE PVT. LTD. SUSTAINABLE AND THE SAME IS CONFIRMED. THUS THE ADDITION WAS CONFIRMED BASED ON THE REPORT OF THE DDIT (INV.) KOLKATA. WE FIND THAT THE REPORT OF THE DDIT (INV.) KOLKATA IS ALSO BASED ON THE STATEMENTS OF VARIOUS PERSONS RECORDED DURING THEIR INVESTIGATION AND THE STATEMENT OF SHRI ANAND SHARMA WAS ALSO SENT ALONG WITH THE REPORT OF THE A O. THE LD. CIT (A) HAS 72 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. CONFIRMED THE ADDITION BECAUSE OF THE REASON THAT T HE STATEMENT OF SHRI ANAND SHARMA WAS VERY MUCH IN THE POSSESSION OF THE AO WH O HAS ADMITTED IN HIS STATEMENT THAT M/S. JALSAGAR COMMERCE PVT. LTD. WAS ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRY. HOWEVER, WE FIND TH AT M/S. JALSAGAR COMMERCE PVT. LTD IS NOT MANAGED OR CONTROLLED BY SHRI ANAND SHARMA, RATHER THE COMPANY M/S. ROYAL CRYSTAL DEALERS PVT. LTD. WAS STATED TO HAVE BEEN OWNED BY SHRI ANAND SHARMA AND IN HIS STATEMENT DATED 6 TH FEBRUARY, 2014 SHRI ANAND SHARMA HAS STATED TO HAVE BEEN PROVIDING ENTRIES FROM M/S. ROY AL CRYSTAL DEALERS PVT. LTD. TO M/S. JALSAGAR COMMERCE PVT. LTD. THEREFORE, THERE IS NO ALLEGATION OR ANY ADMISSION IN THE STATEMENT OF SHRI ANAND SHARMA THAT HE HAS P ROVIDED BOGUS LOAN ENTRY TO THE ASSESSEE OR ANY GROUP CONCERNS OF THE ASSESSEE. SI NCE THE NAME OF M/S. JALSAGAR COMMERCE WAS CREPTED IN HIS STATEMENT, THE AO HAS P RESUMED THAT THE LOAN PROVIDED BY M/S. JALSAGAR COMMERCE PVT LTD IS NOTHI NG BUT THE BOGUS ACCOMMODATION ENTRY PROVIDED BY SHRI ANAND SHARMA T HROUGH M/S. ROYAL CRYSTAL DEALERS PVT. LTD. THE AO HAS TRIED TO ESTABLISH TH E NEXUS OF THE LOAN RECEIVED BY THE ASSESSEE THROUGH THE STATEMENT OF SHRI ANAND SHARMA WHERE HE HAS PURPORTED TO HAVE PROVIDED THE ALLEGED ENTRY. SINCE THERE IS NO DIRECT ALLEGATION OR ADMISSION OF PROVIDING LOAN BY SHRI ANAND SHARMA TO THE ASSESSEE THROUGH M/S.ROYAL CRYSTAL DEALERS PVT. LTD., THEN EVEN IF THERE IS A POSSIBIL ITY OF BOGUS ACCOMMODATION ENTRY ROUTED THROUGH ANOTHER INTERMEDIARY COMPANY M/S.JAL SAGAR COMMERCE PVT. LTD., IT REQUIRES A DEFINITE LINK OF THE TRANSACTIONS FROM M /S.ROYAL CRYSTAL DEALERS PVT. LTD. TO M/S.JALSAGAR COMMERCE PVT. LTD. AND THEN THE LOAN T O THE ASSESSEE. ONCE THE CHAIN OF TRANSACTIONS AND FLOW OF MONEY FROM ONE ENTITY T O ANOTHER ENTITY AND FINALLY TO THE 73 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ASSESSEE HAS NOT BEEN ESTABLISHED, THEN THE ADDITIO N MADE MERELY ON SUSPICION, HOW SO STRONG IT MAY BE, IS NOT SUSTAINABLE. ON THE CO NTRARY, WHEN THE ASSESSEE PRODUCED ALL THE RELEVANT RECORD WHICH CONTAINS THE IR FINANCIAL STATEMENTS, BANK ACCOUNTS STATEMENT OF LOAN CREDITOR, RETURN OF INCO ME, ASSESSMENT ORDERS FRAMED UNDER SECTION 143(3), CONFIRMATION OF THE LOAN CRED ITOR, THEN A PROPER EXAMINATION COULD HAVE VERY WELL ESTABLISHED THE LINK, IF ANY, IN PROVIDING THE ACCOMMODATION ENTRY FROM ONE ENTITY TO ANOTHER AND FINALLY TO THE ASSESSEE. HOWEVER, NO SUCH LINK WAS FOUND IN THE DOCUMENTS AND FINANCIAL STATEMENTS OF THESE COMPANIES, RATHER IN THE BANK ACCOUNT STATEMENT OF LOAN CREDITOR M/S. JA LSAGAR COMMERCE PVT. LTD. THERE WAS NO SUSPICIOUS TRANSACTION OF RECEIVING ANY ENTR Y OR ANY DEPOSIT OF AN EQUAL AMOUNT PRIOR TO GIVING THE LOAN TO THE ASSESSEE. T HE ASSESSEE HAS PAID INTEREST TO THE CREDITOR, WHICH WAS DULY ACCEPTED BY THE AO AS BUSINESS EXPENDITURE. UNDISPUTEDLY, THE ASSESSEE HAS PRODUCED THE INCOME- TAX RECORD OF THE LOAN CREDITOR, BANK STATEMENT, FINANCIAL STATEMENTS INCLUDING BALA NCE SHEET, COPY OF ROC MASTER DATA SHOWING THE STATUS OF LOAN CREDITOR COMPANY AS ACTIVE, CONFIRMATION OF LOAN GIVEN TO THE ASSESSEE. FURTHER, THE AO ISSUED SUMM ONS AND ALSO GOT THE SUMMONS SERVED THROUGH DDIT KOLKATA UNDER SECTION 131 OF TH E IT ACT WHICH WERE DULY RESPONDED BY THE LOAN CREDITOR. EXCEPT THE STATEMEN T OF SHRI ANAND SHARMA AND THE REPORT OF THE INVESTIGATION WING KOLKATA, THE AO HA S NOT BROUGHT ON RECORD ANY OTHER MATERIAL TO CONTROVERT OR DISPROVE THE DOCUME NTARY EVIDENCE PRODUCED BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE LOAN CR EDITOR WAS ASSESSED TO TAX AND THE AO COMPLETED THE ASSESSMENT UNDER SECTION 143 (3) F OR VARIOUS ASSESSMENT YEARS WHICH ARE RELEVANT FOR THE ASSESSMENT YEAR UNDER CO NSIDERATION. THE AO IN CASE OF 74 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. LOAN CREDITOR HAS NOT DISTURBED THE TRANSACTIONS OF LOAN GIVEN BY THIS COMPANY TO THE ASSESSEE. FROM THE FINANCIAL STATEMENTS OF THE L OAN CREDITOR IT IS APPARENT THAT THE LOAN CREDITOR WAS HAVING SUFFICIENT FUNDS TO ADVANC E THE LOAN AMOUNT TO THE ASSESSEE AND ONCE THE SAID FINANCIAL STATEMENTS WER E NOT DISTURBED, THEN THE CREDITWORTHINESS OF THE LOAN CREDITOR CANNOT BE DOU BTED WHEN IT WAS ACCEPTED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE IT ACT. WE FURTHER NOTE THAT THE AO INSISTED THE ASSESSEE TO PRODUCE THE DIRECTO RS OF THE LOAN PROVIDER COMPANY. THE ASSESEE PRODUCED THE AFFIDAVIT, AND THE NOTICES ISSUED BY THE AO UNDER SECTION 131 AND 133(6) OF THE ACT WERE DULY COMPLIED WITH B Y THE CREDITOR. THE STATEMENT OF THE DIRECTOR OF M/S. ROYAL CRYSTAL DEALERS PVT. LTD. WAS ALSO RECORDED BY THE AO WHEREIN THE DIRECTOR HAS CONFIRMED THE TRANSACTION OF LOAN. THERE ARE VARIOUS REPORTS OF THE DDIT KOLKATA WHICH ARE PLACED AT PAG ES 406 TO 422 OF THE PAPER BOOK. WE FIND THAT ALL THESE REPORTS ARE BASED ON THE STATEMENTS RECORDED DURING THE INVESTIGATION BUT NO DOCUMENTARY EVIDENCE WAS E ITHER GATHERED OR HAS BEEN REFERRED IN THESE REPORTS. THEREFORE, EVEN IF THES E REPORTS ARE TO BE TAKEN INTO CONSIDERATION, THESE ARE NOTHING BUT NARRATION OF T HE STATEMENTS OF VARIOUS PERSONS TAKEN DURING THE INVESTIGATION. IT IS WELL SETTLED PRINCIPLE AS WELL AS THE DIRECTIONS OF THE CBDT ISSUED UNDER THE CIRCULARS THAT DURING THE COURSE OF INVESTIGATION, THE DEPARTMENT SHOULD CONCENTRATE AND FOCUS ON COLLECTI NG DOCUMENTARY EVIDENCE DISCLOSING UNDISCLOSED INCOME INSTEAD OF OBTAINING THE STATEMENT AND THEN SUPPORT OF THEIR CLAIM MERELY ON THE BASIS OF THE STATEMENT . THEREFORE, THE STATEMENTS RECORDED BY THE DDIT KOLKATA ARE ALSO NOT BASED ON ANY DOCUMENTARY EVIDENCE SO AS TO HAVE AN EVIDENTIARY VALUE FOR SUSTAINING THE ADDITIONS MADE BY THE AO. THE 75 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ENTIRE REPORT OF THE INVESTIGATION WING IS BASED ON STATEMENTS RECORDED DURING SURVEY AND SEARCH. ONCE THE ASSESSEE HAS PRODUCED THE DOCUMENTARY EVIDENCE AND PARTICULARLY THE FINANCIAL STATEMENTS OF THE LOAN C REDITORS, THEIR BANK ACCOUNT STATEMENT, THEN IN THE ABSENCE OF ANY DISCREPANCY O R FAULT IN THESE FINANCIAL STATEMENTS OR IN THE BANK ACCOUNT STATEMENT TO REFL ECT THAT THE TRANSACTIONS IN QUESTION ARE NOTHING BUT BOGUS ACCOMMODATION ENTRIE S, THE ADDITION MADE BY THE AO IS NOT SUSTAINABLE AS IT IS MERELY ON THE BASIS OF SURMISES AND CONJECTURES AND NOT ON ANY TANGIBLE MATERIAL DISCLOSING THE NON-GEN UINENESS OF THE TRANSACTIONS. THE AO HAS NOT DISPUTED THE TRANSACTIONS ROUTED THR OUGH BANKING CHANNEL HAVING SUFFICIENT FUNDS WHICH IS ALSO SUPPORTED BY THE FIN ANCIAL STATEMENTS AND FURTHER THE ASSESSMENTS OF THE LOAN CREDITOR WERE COMPLETED UND ER SECTION 143(3). THE DETAILS OF LOANS TAKEN FROM M/S. JALSAGAR COMMERCE PVT. LTD ., INTERESTS CREDITED/PAID AND REPAYMENT OF LOAN AMOUNT AS WELL AS CLOSING BALANCE ARE AS UNDER :- NAME OF COMPANY AY OPENING BALANCE LOAN TAKEN DURING THE YEAR INTEREST CREDITED IN LOAN A/C DURING THE YEAR INTEREST CREDITED IN INTEREST PAID /PAYABLE A/C LOAN REPAYMENT/ TDS/TRANSFER IN PARTNER CAPITAL DURING THE YEAR CLOSING BALANCE JALSAGAR COMMERCE PRIVATE LTD 10-11 41,298 34,70,40,000 13,96,176 12,56,558 34,21 ,15,916 51,05,000 JALSAGAR COMMERCE PRIVATE LTD 11-12 51,05,000 77,18,70,000 16,71,599 15,04,439 77 ,18,37,160 53,05,000 JALSAGAR COMMERCE PRIVATE LTD 12-13 53,05,000 78,95,00,000 1,07,08,434 96,37,591 31,72,80,655 47,85,95,188 JALSAGAR COMMERCE PRIVATE LTD 13-14 47,85,95,188 2,76,31,50,000 0 0 2,97,53,40,00 0 26,64,05,188 JALSAGAR COMMERCE PRIVATE LTD 14-15 26,64,05,188 97,34,50,000 0 0 1,24,03,55,188 (5,00,000) JALSAGAR COMMERCE PRIVATE LTD 15-16 0 1,34,89,00,000 49,00,600 44,10,540 1,34,93, 90,060 0 JALSAGAR COMMERCE PRIVATE LTD 16-17 0 87,11,00,000 1,67,23,178 1,50,50,860 87,27, 72,318 0 76 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ALL THESE DETAILS WERE BEFORE THE AO AS ALL THESE A SSESSMENT YEARS WERE PASSED BY THE AO PURSUANT TO THE SEARCH AND SEIZURE ACTION UN DER SECTION 132 OF THE IT ACT. THUS IT IS CLEAR THAT FOR THE ASSESSMENT YEAR 2015- 16 THERE WAS NIL BALANCE ON ACCOUNT OF LOAN TAKEN FROM M/S. JALSAGAR COMMERCE P VT. LTD. AND THE ENTIRE LOAN WAS ALREADY REPAID BY THE ASSESSEE. WE FURTHER NOT E THAT IT IS NOT THE CASE OF REPAYMENT OF LOAN AFTER THE SEARCH ACTION ON 2 ND JULY, 2015 BUT THERE IS A REGULAR REPAYMENT OF LOAN FOR EACH YEAR AS IT IS EVIDENT FR OM THE DETAILS REPRODUCED ABOVE. THEREFORE, THE TRANSACTIONS OF TAKING LOAN AND REPA YMENT CANNOT BE TREATED AS BOGUS ONCE THE ASSESSEE HAS BEEN REGULARLY REPAYING THE LOAN AMOUNT AND SMALL BALANCE WAS THERE AT THE END OF THE YEAR. ONCE THE RE WAS NO BALANCE AT THE END OF THE YEAR ON THE LOAN ACCOUNT, THEN THE ADDITION CAN NOT BE MADE BY TREATING THE LOAN TAKEN AND REPAID AS BOGUS TRANSACTION. APART FROM THESE FACTS, THE ASSESSEE HAS ALSO MADE THE PAYMENT OF INTEREST WHICH WAS ALSO SU BJECTED TO TDS. THIS SHOWS THE GENUINENESS OF THE TRANSACTIONS AND ALL THESE TRANS ACTIONS HAVE TAKEN PLACE PRIOR TO THE DATE OF SEARCH AND DULY RECORDED IN THE BOOKS O F ACCOUNTS AND ALSO SUBJECTED TO ASSESSMENT UNDER SECTION 143(3) FOR SOME OF THE ASS ESSMENT YEARS. THEREFORE, EVEN AS PER THE EVIDENCE PRODUCED BY THE ASSESSEE, THE ALLEGED SUSPICION OF THE AO WAS GOT DISPELLED AND IN THE ABSENCE OF ANY CONTRAR Y EVIDENCE EXCEPT THE STATEMENT WHICH IS NOT EVEN A CONCLUSIVE PROOF OF TRANSACTION OF BOGUS ENTRY TO THE ASSESSEE, THE ADDITIONS MADE BY THE AO ARE NOT SUSTAINABLE. 11.1. EVEN OTHERWISE, THE ASSESSMENT ORDER IS SOLEL Y BASED ON THE REPORT OF THE INVESTIGATION WING KOLKATA WHICH IN TURN IS NOTHING BUT THE NARRATION OF THE STATEMENTS RECORDED DURING THE INVESTIGATION AND TH E AO WAS HAVING IN POSSESSION 77 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE STATEMENT OF ONLY SHRI ANAND SHARMA. THEREFORE, ALL THESE PROCEEDINGS CONDUCTED BY THE INVESTIGATION WING KOLKATA WERE AT THE BACK OF THE ASSESSEE AND HENCE THE STATEMENT WHICH IS THE FOUNDATION OF THE REPORT OF THE INVESTIGATION WING KOLKATA AS WELL AS THE ASSESSMENT ORDER CANNOT BE A CCEPTED IN THE ABSENCE OF GIVING AN OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE . WE FIND THAT THE ASSESSEE HAS INSISTED FOR CROSS EXAMINATION DURING THE ASSESSMEN T PROCEEDINGS AND FURTHER DURING THE APPELLATE PROCEEDINGS. THE LD.CIT(A) EVEN CALLE D FOR A REMAND REPORT AND DIRECTED THE AO TO ALLOW CROSS EXAMINATION TO THE A SSESSEE. HOWEVER, THE AO HAS EXPRESSED HIS INABILITY TO ALLOW THE ASSESSEE CROSS EXAMINATION OF THE WITNESSES DUE TO THE REASON THAT THE WITNESSES BELONG TO KOLKATA AND IT IS NOT POSSIBLE FOR AO TO MAKE SUCH ARRANGEMENT. THE LD. CIT(A) HAS FINALLY D ENIED THE CROSS EXAMINATION TO THE ASSESSEE BY GIVING HIS FINDING IN PARA 5.11 AT PAGE 188 ALREADY REPRODUCED IN THE EARLIER PART OF THIS ORDER AND, THEREFORE, THE ONLY REASON FOR DENIAL OF CROSS EXAMINATION BY THE LD.CIT(A) IS THAT THE STATEMENTS ARE SO VOCAL AND UNDENIABLE THAT CROSS EXAMINATION OF SUCH ACCOMMODATION ENTRY PROVI DED BY THOUSANDS OF BENEFICIARIES ACROSS INDIA IS NEITHER PRACTICABLE N OR VIABLE AND THEREFORE UNCALLED FOR. WE FIND THAT THE ASSESSEE HAS DEMANDED THE CROSS EX AMINATION ONLY IN RESPECT OF THE ALLEGED TRANSACTIONS OF LOANS AND NOT FOR THE E NTIRE BUSINESS OF THE ENTRY PROVIDERS PROVIDING THE BOGUS ENTRIES. UNDISPUTEDLY , THE STATEMENT OF SHRI ANAND SHARMA WAS RECORDED BY THE INVESTIGATION WING KOLKA TA AT THE BACK OF THE ASSESSEE, EVEN THE PROCEEDINGS BY THE INVESTIGATION WERE COND UCTED AT THE BACK OF THE ASSESSEE, THEREFORE, THE SAID STATEMENT OF SHRI ANA ND SHARMA CANNOT BE THE SOLE BASIS OF ASSESSMENT WITHOUT GIVING AN OPPORTUNITY O F CROSS EXAMINATION TO THE 78 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE O F ANDAMAN TIMBER INDUSTRIES VS. CCE (SUPRA) WHILE DEALING WITH THE ISSUE OF VIO LATION OF PRINCIPLES OF NATURAL JUSTICE FOR NOT PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED ON BY THE AO HAS HELD IN PARA 6 TO 9 AS UNDER :- 6. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS -EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS F LAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRI NCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTE D. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON T HE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOUL D BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHO RITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAV E BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT T HEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS N OT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WA NTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WAN TED FROM THEM. 7. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPO N THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OFLEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS.WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF C OULD BE THE SUBJECT-MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE AD JUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT-MATTER O F THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALS O POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME UP BEFORE THI S COURT IN CCE V. ANDAMAN TIMBER INDUSTRIES LTD., ORDER DATED 17.3.20 05 WAWS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DI RECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJEC TING THE SUBMISSIONS. 8. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE 79 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW-CA USE NOTICE. 9. WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. NO COSTS. ONCE THE ASSESSEE HAS DISPUTED THE CORRECTNESS OF T HE STATEMENT AND WANTED TO CROSS EXAMINE THE WITNESS WHICH WAS NOT GIVEN BY TH E AO AS WELL AS LD. CIT (A), THEN THE ORDERS PASSED BASED ON SUCH STATEMENT ARE NOT SUSTAINABLE IN LAW. THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. ASHWANI GUPTA, 322 ITR 396 (DELHI) WHILE DEALING WITH THE ISSUE OF NOT PROVIDING THE O PPORTUNITY TO CROSS EXAMINE THE WITNESSES HAS HELD IN PARA 5 TO 7 AS UNDER :- 5. SECONDLY, IN FACT, A RECTIFICATION APPLICATION BEI NG MA 264/DELHI/2008 UNDER SECTION 254(2) OF THE INCOME-TAX ACT, 1961 HA D BEEN FILED BY THE REVENUE BEFORE THE SAID TRIBUNAL. IN THAT ALSO, IN PARAGRAPH ( G ) OF THE MISCELLANEOUS APPLICATION, THE REVENUE HAD SUBMITTE D AS UNDER: '( G )BECAUSE, ALTHOUGH FINDINGS OF THE TRIBUNAL ARE FACTUALLY COR RECT BUT THE DECISION OF THE TRIBUNAL IS NOT ACCEPTABLE BECAUSE VIOLATION OF THE CANONS OF NATURAL JUSTICE IN ITSELF IS NOT FATA L ENOUGH SO AS TO JEOPARDIZE THE ENTIRE PROCEEDINGS. IN THE INTEREST OF JUSTICE, THE TRIBUNAL COULD HAVE SET ASIDE THE ASSESSMENT ORDER WITH THE LIMITED PURPOSE OF OFFERING ASSESSEE AN OPPORTUNITY TO CROS S-EXAMINE SHRI MANOJ AGGARWAL BEFORE COMPLETING THE PROCEEDINGS.' [EMPHASIS SUPPLIED] 6. A READING OF THE SAID PARAGRAPH ( G ) MAKES IT CLEAR THAT THE REVENUE HAD ACCEPTED THE FINDINGS OF THE TRIBUNAL ON FACTS AS A LSO THE POSITION THAT THERE HAD BEEN A VIOLATION OF PRINCIPLES OF NATURAL JUSTI CE. HOWEVER, THE REVENUE'S PLEA WAS THAT THE VIOLATION OF PRINCIPLES OF NATURA L JUSTICE WAS NOT FATAL SO AS TO JEOPARDIZE THE ENTIRE PROCEEDINGS. THE SAID MISCELL ANEOUS APPLICATION WAS ALSO REJECTED BY THE TRIBUNAL BY ITS ORDER DATED 28-11-2 008. 7. IN VIEW OF THE FOREGOING CIRCUMSTANCES, WE FEEL TH AT NO INTERFERENCE WITH THE IMPUGNED ORDER IS CALLED FOR. THE TRIBUNAL HAS CORR ECTLY UNDERSTOOD THE LAW AND APPLIED IT TO THE FACTS OF THE CASE. ONCE THERE IS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SEIZED MA TERIAL IS NOT PROVIDED TO AN ASSESSEE NOR IS CROSS-EXAMINATION OF THE PERSON ON WHOSE STATEMENT THE ASSESSING OFFICER RELIES UPON, GRANTED, THEN, SUCH DEFICIENCIES WOULD AMOUNT 80 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. TO A DENIAL OF OPPORTUNITY AND, CONSEQUENTLY, WOULD BE FATAL TO THE PROCEEDINGS. FOLLOWING APPROACH ADOPTED BY US IN SMC SHARE BROKERS LTD.'S CASE ( SUPRA ), WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED ORDER. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDER ATION. THUS THE HONBLE HIGH COURT HAS HELD THAT ONCE THER E IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SEIZED MATERIAL IS NOT PROVIDED TO THE ASSESSEE NOR IS CROSS EXAMINATION OF THE PERSON ON WHOSE STATEMENT THE AO RELIED UPON, GRANTED, THEN, SUCH DEFICIENCIES WOULD AMOUNT TO DENIAL OF O PPORTUNITY AND CONSEQUENTLY WOULD BE FATAL TO THE PROCEEDINGS. THE HONBLE BOM BAY HIGH COURT IN THE CASE OF H.R. MEHTA VS. ACIT, 387 ITR 561 (BOMBAY) HAS ALSO CONSIDERED THE ISSUE OF NOT PROVIDING OPPORTUNITY OF CROSS EXAMINATION IN PARA 11 TO 17 AS UNDER :- 11. WE HAVE THEREFORE PROCEEDED TO HEAR AND DECIDE THE MATTER UNASSISTED BY THE REVENUE. IN THE COURSE OF HIS SUBMISSIONS MR. T RALSHAWALA HAD PRESSED INTO SERVICE INTER ALIA THE DECISION OF THE CALCUTTA HIG H COURT IN MATHER & PLATT (INDIA) LTD. ( SUPRA ) AND SUBMITTED THAT MERELY BECAUSE A PERSON IS NOT FOUND AT AN ADDRESS AFTER SEVERAL YEARS IT CANNOT BE HELD TH AT HE IS NON EXISTENT AND THAT THE ASSESSEE HAD DISCHARGED HIS PRIMARY ONUS BY IDE NTIFYING THE SOURCE OF THE AMOUNT PAID. THE COURT OBSERVED THAT ONCE THE PRIMA RY ONUS IS DISCHARGED, THE ONUS SHIFTED TO THE REVENUE TO VERIFY GENUINENESS O F THE TRANSACTION. IN THE PRESENT CASE NO SUCH EFFORT WAS MADE BY THE REVENUE . WE FIND THAT IN S. HASTIMAL ( SUPRA ) THE MADRAS HIGH COURT OBSERVED THAT AFTER A LAPSE OF SEVERAL YEARS THE ASSESSEE SHOULD NOT BE PLACED UPON THE RA CK AND CALLED UPON TO EXPLAIN NOT ONLY MERELY, THE ORIGIN AND SOURCE OF H IS CAPITAL CONTRIBUTION BUT THE ORIGIN OF ORIGIN AND THE SOURCE OF SOURCE AS WE LL. IN YET ANOTHER CASE OF BAHRI BROTHERS (P) LTD. ( SUPRA ) THE DIVISION BENCH OF PATNA HIGH COURT OBSERVED THAT WHERE THE ASSESSEE UPON WHOM THE INIT IAL BURDEN LIES, PRODUCES BANK CERTIFICATE TO ESTABLISH THAT THE TRANSACTION WAS CARRIED OUT THROUGH ACCOUNT PAYEE CHEQUES THUS DISCLOSING THE IDENTITY OF THE CREDITORS AS ALSO THE SOURCE OF INCOME, THE BURDEN SHIFTS ON TO THE DEPAR TMENT AND THE DEPARTMENT CANNOT ADD THE CASH CREDITS TO HIS INCOME FROM UNDI SCLOSED SOURCE. 12. THE HON'BLE SUPREME COURT IN NEMI CHAND KOTHARI ( SUPRA ) OBSERVED THAT IN ORDER TO ESTABLISH THE RECEIPT OF A CASH CREDIT, THE ASSESSEE MUST SATISFY THREE CONDITIONS I.E. IDENTITY OF THE CREDITOR, GENUINENE SS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. IN THE INSTANT CA SE BY VIRTUE OF THE FACT THAT THE 81 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. TRANSACTION WAS COMPLETED BY CHEQUE PAYMENTS, THE A PPELLANT HAS CONTENDED THAT IT HAD SATISFIED ALL THE THREE TESTS. 13. IN KISHANCHAND CHELLARAM ( SUPRA ) WHEREIN THE SUPREME COURT OBSERVED THAT THE REVENUE AUTHORITIES HAD NOT RECORDED THE S TATEMENT OF THE MANAGER OF THE BANK AND IT WAS DIFFICULT TO APPRECIATE AS TO W HY IT WAS NOT DONE AND WHY THE MATTER WAS NOT PROBED FURTHER BY THE REVENUE. 14. THE DELHI HIGH COURT IN ASHWANI GUPTA ( SUPRA )HELD THAT ONCE THERE IS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE INAS MUCH AS WHEN ITS SEIZED MATERIAL WAS NOT PROVIDED TO AN ASSESSEE NOR WAS HE PERMITTED TO CROSS EXAMINE A PERSON ON WHOSE STATEMENT THE ASSESSING O FFICER RELIED, IT WOULD AMOUNT TO DEFICIENCY, AMOUNTING TO A DENIAL OF OPPO RTUNITY AND THEREFORE VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. IN THAT CASE CIT (A) HAD DELETED ADDITION MADE BY THE ASSESSING OFFICER SINCE THE AS SESSING OFFICER HAD FAILED TO PROVIDE COPIES OF SEIZED MATERIAL TO THE ASSESSE E NOR HAD HE ALLOWED THE ASSESSEE TO CROSS-EXAMINE THE PARTY CONCERNED. THE DIVISION BENCH HELD THAT ONCE THERE IS VIOLATION OF THE PRINCIPLES OF NATURA L JUSTICE INASMUCH AS SEIZED MATERIAL WAS NOT PROVIDED TO THE ASSESSEE NOR WAS G IVEN OPPORTUNITY OF CROSS EXAMINING THE PERSON WHOSE STATEMENT WAS BEING USED AGAINST THE ASSESSEE THE ORDER COULD NOT BE SUSTAINED. 15. IN ANDAMAN TIMBER INDUSTRIES ( SUPRA ) THE SUPREME COURT FOUND THAT THE ADJUDICATING AUTHORITY HAD NOT GRANTED AN OPPORTUNI TY TO THE ASSESSEE TO CROSS EXAMINE THE WITNESSES AND THE TRIBUNAL MERELY OBSER VED THAT THE CROSS EXAMINATION OF THE DEALERS IN THAT CASE, COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT OTHERWISE BE IN POSSESSION OF THE APPELLANT-ASSESSEE. THE SUPREME COURT SET ASIDE THE IMPUGNED ORDER AND OBSERVED THAT IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS EXAMINATION AND MAKE THE REMARK S SUCH AS WAS DONE IN THAT CASE. 16. IN THE INSTANT CASE ALTHOUGH THE APPELLANT ASSESSE E HAS CALLED UPON US TO DRAW AN INFERENCE THAT THE BURDEN SHIFTED TO THE RE VENUE IN THE PRESENT CASE ONCE IT WAS ESTABLISHED THAT THE PAYMENTS WERE MADE AND REPAID BY CHEQUE WE NEED NOT HASTEN AND ADOPT THAT VIEW AFTER HAVING GI VEN OUR THOUGHT TO VARIOUS ISSUES RAISED AND THE DECISIONS CITED BY MR.TRALSHA WALLA AND FINDING THAT ON A VERY FUNDAMENTAL ASPECT, THE REVENUE WAS NOT JUSTIF IED IN MAKING ADDITION AT THE TIME OF REASSESSMENT WITHOUT HAVING FIRST GIVEN THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THE DEPONENT ON THE STATEMENTS REL IED UPON BY THE ACIT. QUITE APART FROM DENIAL OF AN OPPORTUNITY OF CROSS EXAMINATION, THE REVENUE DID NOT EVEN PROVIDE THE MATERIAL ON THE BASIS OF W HICH THE DEPARTMENT SOUGHT TO CONCLUDE THAT THE LOAN WAS A BOGUS TRANSACTION. 17. IN OUR VIEW IN THE LIGHT OF THE FACT THAT THE MONI ES WERE ADVANCED APPARENTLY BY THE ACCOUNT PAYEE CHEQUE AND WAS REPA ID VIDE ACCOUNT PAYEE CHEQUE THE LEAST THAT THE REVENUE SHOULD HAVE DONE WAS TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO MEET THE CASE AGAINST HIM BY PRO VIDING THE MATERIAL SOUGHT TO BE USED AGAINST ASSESSEE IN ARRIVING BEFORE PASS ING THE ORDER OF REASSESSMENT. THIS NOT HAVING BEEN DONE, THE DENIAL OF SUCH OPPORTUNITY GOES 82 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. TO ROOT OF THE MATTER AND STRIKES AT THE VERY FOUND ATION OF THE REASSESSMENT AND THEREFORE RENDERS THE ORDERS PASSED BY THE CIT (A) AND THE TRIBUNAL VULNERABLE. IN OUR VIEW THE ASSESSEE WAS BOUND TO B E PROVIDED WITH THE MATERIAL USED AGAINST HIM APART FROM BEING PERMITTI NG HIM TO CROSS EXAMINE THE DEPONENTS. DESPITE THE REQUEST DATED 15TH FEBRU ARY, 1996 SEEKING AN OPPORTUNITY TO CROSS EXAMINE THE DEPONENT AND FURNI SH THE ASSESSEE WITH COPIES OF STATEMENT AND DISCLOSE MATERIAL, THESE WE RE DENIED TO HIM. IN THIS VIEW OF THE MATTER WE ARE INCLINED TO ALLOW THE APP EAL ON THIS VERY ISSUE. THUS THE DENIAL OF OPPORTUNITY TO CROSS EXAMINE WAS CONSIDERED BY THE HONBLE HIGH COURT WHICH GOES TO THE ROOT OF THE MATTER AND STRI KES AT THE VERY FOUNDATION OF THE ASSESSMENT AND, THEREFORE, RENDERS THE ASSESSMENT O RDER PASSED BY THE AO NOT SUSTAINABLE. THE LD. A/R HAS SUBMITTED THAT COORDI NATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS. SHRI PRATEEK KOTHARI VIDE ORDER DA TED 16 TH DECEMBER, 2012 IN ITA NO. 159/JP/2016 HAS CONSIDERED THIS ISSUE IN PARA 2 .8 TO 2.11 AS UNDER :- 2.8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. THE TRANSACTION UNDER QUESTION RELATES TO UNSECURED LOANS TAKEN BY THE ASSESSEE AMOUNTING TO RS 1 CRORES FROM M/S MEHUL GEMS PVT LTD DURING THE IMPUN GED ASSESSMENT YEAR AND NOT ACCEPTING THE SAID LOAN TRA NSACTION AS A GENUINE TRANSACTION BY THE ASSESSING OFFICER AND THE RESULTANT ADDITION MADE UNDER SECTION 68 OF THE ACT. UNDISPUT EDLY, THE PRIMARY ONUS TO ESTABLISH GENUINENESS OF THE LOAN T RANSACTION IS ON THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE HAS PROVIDED THE NECESSARY EXPLANATION, FURNISHED DOCUMENTARY EV IDENCE IN TERMS OF TAX FILINGS, AFFIDAVITS AND CONFIRMATION O F THE DIRECTORS, BANK STATEMENTS OF THE LENDER, BALANCE S HEET OF THE LENDER COMPANY, AND AN INDEPENDENT CONFIRMATION HAS ALSO BEEN OBTAINED BY THE ASSESSING OFFICER TO SATISFY T HE CARDINAL TEST OF IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN TRANSACTION. HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING IN RESPECT OF SUCH EXPLANATION, DOCUMENTARY EVIDENCE AS WELL AS INDEPENDENT CONFIRMATION. APPARENTLY, TH E REASON FOR 83 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. NOT ACCEPTING THE SAME IS THAT THE ASSESSING OFFICE R WAS IN RECEIPT OF CERTAIN INFORMATION FROM THE INVESTIGATI ON WING OF THE TAX DEPARTMENT AS PER WHICH THE TRANSACTION UNDER CONSIDERATION IS A BOGUS LOAN TRANSACTION. THE SAID INFORMATION RECEIVED FROM THE INVESTIGATION WING THUS OVERWEIGH ED THE MIND OF THE ASSESSING OFFICER. THE ASSESSING OFFICER STA TED THAT THE PRIMARY ONUS IS ON THE ASSESSEE TO ESTABLISH THE GE NUINENESS OF THE TRANSACTION CLAIMED BY IT AND IF THE INVESTIGAT ION DONE BY THE DEPARTMENT LEADS TO DOUBT REGARDING THE GENUINE NESS OF THE TRANSACTIONS, IT IS INCUMBENT ON THE ASSESSEE TO PR ODUCE THE PARTIES ALONGWITH NECESSARY DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN RESPONSE, THE AS SESSEE SUBMITTED THAT SHRI BHANWARLAL JAIN IS NOT KNOWN TO HIM AND REGARDING VARIOUS INCRIMINATING DOCUMENTARY EVIDENC ES SEIZED DURING THE COURSE OF SEARCH AND STATEMENTS RECORDED OF SHRI BHANWARLAL JAIN AND OTHER PERSONS, HE SPECIFICALLY REQUESTED THE AO TO PROVIDE COPIES OF SUCH INCRIMINATING DOCU MENTS AND STATEMENT OF ALL VARIOUS PERSONS RECORDED IN THIS R EGARD AND PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXA MINE SUCH PERSONS. HOWEVER, THE AO DIDNT PROVIDE TO THE ASSE SSEE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENTS OF V ARIOUS PERSONS RECORDED AND ALLOW THE CROSS-EXAMINATION OF ANY OF THESE PERSONS. WHILE DOING SO, THE AO STATED THAT IN HIS STATEMENTS, BHANWARLAL JAIN HAD DESCRIBED THAT THEY ARE INDULGED IN PROVIDING ACCOMMODATION ENTRIES OF BOGU S UNSECURED LOANS AND ADVANCES THROUGH VARIOUS BENAMI CONCERNS (70) OPERATED AND MANAGED BY THEM. THIS AD MISSION AUTOMATICALLY MAKES ALL THE TRANSACTIONS DONE BY TH EM AS MERE PAPER TRANSACTIONS AND IN THESE CIRCUMSTANCES, FURT HER AS PER THE INFORMATION NAME AND ADDRESS OF ASSESSEE AND TH E BENAMI CONCERN THROUGH WHICH ACCOMMODATION ENTRY OF UNSECU RED LOANS WAS PROVIDED IS APPEARING IN THE LIST OF BENE FICIARIES TO WHOM THE SAID GROUP HAS PROVIDED. THIS ADMISSION IS SUFFICIENT TO REJECT THE CONTENTIONS OF THE ASSEESSE. FURTHER , REGARDING CROSS EXAMINATION, THE AO STATED THAT THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AND IT DEPENDS UPON THE CIRCUMSTANCES OF EACH CASE AND ALSO ON THE STATUTE CONCERNED. IN THE PRESENT CASE, NO SUCH CIRCUMSTANCES ARE WARR ANTED AS IN THE LIST OF BENEFICIARIES TO WHOM ACCOMMODATION ENT RIES WERE PROVIDED BY THE SAID GROUP CATEGORICALLY CONTAINS T HE NAME AND ADDRESS OF THE ASSESSEE. FURTHER THE GROUP HAS CATE GORICALLY ADMITTED TO PROVIDING OF ACCOMMODATION ENTRIES OF U NSECURED LOANS THROUGH VARIOUS BENAMI CONCERNS. THE AO FURT HER RELIED UPON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206(SC) AND HO NBLE RAJASTHAN HIGH COURT IN CASE OF RAMESHWARLAL MALI V S. CIT 256 ITR 536(RAJ.) AMONG OTHERS. IN THIS REGARD, IT WAS SUBMITTED BY THE ASSESSEE THAT IF THE ENTRIES AND M ATERIAL ARE 84 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. GATHERED BEHIND THE BACK OF THE ASSESSEE AND IF THE AO PROPOSES TO ACT ON SUCH MATERIAL AS HE MIGHT HAVE G ATHERED AS A RESULT OF HIS PRIVATE ENQUIRIES, HE MUST DISCLOSE ALL SUCH MATERIAL TO THE ASSESSEE AND ALSO ALLOW THE CROSS E XAMINATION AND IF THIS IS NOT DONE, THE PRINCIPLES OF NATURAL JUSTICE STAND VIOLATED. 2.9 IN LIGHT OF ABOVE DISCUSSIONS, IN OUR VIEW, TH E CRUX OF THE ISSUE AT HAND IS THAT WHETHER THE PRINCIPLE OF NATURAL JU STICE STAND VIOLATED IN THE INSTANT CASE. IN OTHER WORDS, WHERE THE AO DOESNT WANT TO ACCEPT THE EXPLANATION OF THE ASSES SEE AND THE DOCUMENTATION FURNISHED REGARDING THE GENUINENESS O F THE LOAN TRANSACTION AND INSTEAD WANTS TO RELY UPON THE INFO RMATION INDEPENDENTLY RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT IN RESPECT OF INVESTIGATION CARRIED OUT AT A THIRD PARTY, CAN THE SAID INFORMATION BE USED AGAINST THE ASSESSEE WITHOUT SHARING SUCH INFORMATION WITH THE ASSESSEE AND ALLOWING AN OPPORTUNITY TO THE ASSESSEE TO EXAMINE SUCH INFORMATION AND EXPLAIN ITS POSITION ESPECIALLY WHE N THE ASSESSEE HAS REQUESTED THE SAME TO THE ASSESSING OF FICER. 2.10 IN THIS REGARD, THE HONBLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT (1954) 26 ITR 7 75 (SC) (COPY AT CASE LAW PB 812-818) HAS HELD THAT THE RULE OF LAW ON THIS SUBJECT HAS BEEN FAIRLY AND RIGHTLY STA TED BY THE LAHORE HIGH COURT IN THE CASE OF SETH GURMUKH SINQH WHERE IT WAS STATED THAT WHILE PROCEEDING UNDER SUB-SECTION (3) OF SECTION 23, THE INCOME-TAX OFFICER, THOUGH NOT BOUN D TO RELY ON EVIDENCE PRODUCED BY THE ASSESSEE AS HE CONSIDERS T O BE FALSE, YET IF HE PROPOSES TO MAKE AN ESTIMATE IN DISREGARD OF THAT EVIDENCE, HE SHOULD IN FAIRNESS DISCLOSE TO THE ASS ESSEE THE MATERIAL ON WHICH HE IS GOING TO FIND THAT ESTIMATE ; AND THAT IN CASE HE PROPOSES TO USE AGAINST THE ASSESSEE THE RE SULT OF ANY PRIVATE INQUIRIES MADE BY HIM, HE MUST COMMUNICATE TO THE ASSESSEE THE SUBSTANCE OF THE INFORMATION SO PROPOS ED TO BE UTILIZED TO SUCH AN EXTENT AS TO PUT THE ASSESSEE I N POSSESSION OF FULL PARTICULARS OF THE CASE HE IS EXPECTED TO MEET AND THAT HE SHOULD FURTHER GIVE HIM AMPLE OPPORTUNITY TO MEET I T. IT WAS HELD IN THAT CASE THAT IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNAL VIOLATED CERTAIN FUNDAMENTAL RULES OF JUSTICE IN REACHING ITS CONCLUSIONS. FIRSTLY, IT DID NOT DISCL OSE TO THE ASSESSEE WHAT INFORMATION HAD BEEN SUPPLIED TO IT B Y THE DEPARTMENTAL REPRESENTATIVE. NEXT, IT DID NOT GIVE ANY OPPORTUNITY TO THE COMPANY TO REBUT THE MATERIAL FU RNISHED TO IT BY HIM, AND LASTLY, IT DECLINED TO TAKE ALL THE MAT ERIAL THAT THE ASSESSEE WANTED TO PRODUCE IN SUPPORT OF ITS CASE. THE RESULT IS THAT THE ASSESSEE HAD NOT HAD A FAIR HEARING. 85 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE HONBLE SUPREME COURT IN CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206 (SC) HAS HELD THAT THE ITO IS NOT B OUND BY ANY TECHNICAL RULES OF THE LAW OF EVIDENCE. IT IS O PEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY P RIVATE ENQUIRY. BUT, IF HE DESIRES TO USE THE MATERIAL SO COLLECTED, THE ASSESSEE MUST BE INFORMED ABOUT THE MATERIAL AND GI VEN ADEQUATE OPPORTUNITY TO EXPLAIN IT. THE STATEMENTS MADE BY PRAVEEN JAIN AND GROUP WERE MATERIAL ON WHICH THE I T AUTHORITIES COULD ACT PROVIDED THE MATERIAL WAS DIS CLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RENDER THEIR EXP LANATION IN THAT REGARD. THE HONBLE SUPREME COURT IN CASE OF KISHINCHAND CH ELLARAM V. CIT (1980) 125 ITR 713 (SC) (COPY AT CASE LAW PB 585- 591) HAS HELD THAT WHETHER THERE WAS ANY MATERIAL EVIDE NCE TO JUSTIFY THE FINDINGS OF THE TRIBUNAL THAT THE AMOUN T OF RS. 1,07,350 SAID TO HAVE BEEN REMITTED BY TILOKCHAND F ROM MADRAS REPRESENTED THE UNDISCLOSED INCOME OF THE AS SESSEE. THE ONLY EVIDENCE ON WHICH THE TRIBUNAL COULD RELY FOR THE PURPOSE OF ARRIVING AT THIS FINDING WAS THE LETTER, DATED 18-2- 1955 SAID TO HAVE BEEN ADDRESSED BY THE MANAGER OF THE BANK TO THE ITO. NOW IT IS DIFFICULT TO SEE HOW THIS LET TER COULD AT ALL BE RELIED UPON BY THE TRIBUNAL AS A MATERIAL PIECE OF EVIDENCE SUPPORTIVE OF ITS FINDING. IN THE FIRST PLACE, THIS LETTER WAS NOT DISCLOSED TO THE ASSESSEE BY THE ITO AND EVEN THOUG H THE AAC REPRODUCED AN EXTRACT FROM IT IN HIS ORDER, HE DID NOT CARE TO PRODUCE IT BEFORE THE ASSESSEE OR GIVE A COPY OF IT TO THE ASSESSEE. THE SAME POSITION OBTAINED ALSO BEFORE TH E TRIBUNAL AND THE HIGH COURT AND IT WAS ONLY WHEN A SUPPLEMEN TAL STATEMENT OF THE CASE WAS CALLED FOR BY THIS COURT BY ITS ORDER, DATED 16-8-1979 THAT, ACCORDING TO THE ITO, THIS LE TTER WAS TRACED BY HIM AND EVEN THEN IT WAS NOT SHOWN BY HIM TO THE ASSESSEE BUT IT WAS FORWARDED TO THE TRIBUNAL AND I T WAS FOR THE FIRST TIME AT THE HEARING BEFORE THE TRIBUNAL IN RE GARD TO THE PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CA SE THAT THIS LETTER WAS SHOWN TO THE ASSESSEE. IT WILL, THEREFOR E, BE SEEN THAT, EVEN IF WE ASSUME THAT THIS LETTER WAS IN FACT ADDR ESSED BY THE MANAGER OF THE BANK TO THE ITO, NO RELIANCE COULD B E PLACED UPON IT, SINCE IT WAS NOT SHOWN TO THE ASSESSEE UNT IL AT THE STAGE OF PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CASE AND NO OPPORTUNITY TO CROSS EXAMINE THE MANAGER OF THE BAN K COULD IN THE CIRCUMSTANCES BE SOUGHT OR AVAILED OF BY THE AS SESSEE. IT IS TRUE THAT THE PROCEEDINGS UNDER THE INCOME-TAX LAW ARE NOT GOVERNED BY THE STRICT RULES OF EVIDENCE AND, THERE FORE, IT MIGHT BE SAID THAT EVEN WITHOUT CALLING THE MANAGER OF TH E BANK IN EVIDENCE TO PROVE THIS LETTER, IT COULD BE TAKEN IN TO ACCOUNT AS EVIDENCE. BUT BEFORE THE INCOME-TAX AUTHORITIES COU LD RELY UPON IT, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESS EE SO THAT THE 86 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ASSESSEE COULD CONTROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTUNITY TO CROSS EXAMINE THE MANA GER OF THE BANK WITH REFERENCE TO THE STATEMENTS MADE BY HIM. 2.11 IN LIGHT OF ABOVE PROPOSITION IN LAW AND ESPE CIALLY TAKING INTO CONSIDERATION THE DECISION OF THE HONBLE SUPREME C OURT IN CASE OF C. VASANTLAL & CO. (SUPRA) RELIED UPON BY T HE REVENUE AND WHICH ACTUALLY SUPPORTS THE CASE OF THE ASSESSE E, IN THE INSTANT CASE, THE ASSESSMENT WAS COMPLETED BY THE A O RELYING SOLELY ON THE INFORMATION RECEIVED FROM THE INVESTI GATION WING, STATEMENT RECORDED U/S 132(4) OF SHRI BHANWARLAL JA IN AND OTHERS, AND VARIOUS INCRIMINATING DOCUMENTARY EVIDE NCE FOUND FROM THE SEARCH AND SEIZURE CARRIED OUT BY INVESTIG ATION WING, MUMBAI ON THE SHRI BHANWARLAL JAIN GROUP ON 03.10.2 013. IT REMAINS UNDISPUTED THAT THE ASSESSEE WAS NEVER PROV IDED COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMEN TS OF SHRI BHANWARLAL JAIN AND VARIOUS PERSONS AND AN OPPORTUN ITY TO CROSS EXAMINE SUCH PERSONS THOUGH HE SPECIFICALLY A SKED FOR SUCH DOCUMENTS AND CROSS EXAMINATION. ON THE OTHER HAND, THE BURDEN WAS SOUGHT TO BE SHIFTED ON THE ITA NO. 159/ JP/16 THE ACIT, CENTRAL -2, JAIPUR VS. M/S PRATEEK KOTHARI, J AIPUR 21 ASSESSEE BY THE A.O. IT IS CLEAR CASE WHERE THE PRI NCIPLE OF NATURAL JUSTICE STAND VIOLATED AND THE ADDITIONS MA DE UNDER SECTION 68 THEREFORE ARE UNSUSTAINABLE IN THE EYE O F LAW AND WE HEREBY DELETE THE SAME. THE ORDER OF THE LD CIT(A) IS ACCORDINGLY CONFIRMED AND THE GROUND OF THE REVENUE IS DISMISSED. THUS WHEN THE ASSESSEE HAS SPECIFICALLY ASKED FOR C ROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON BY THE AO, THEN THE DENIAL OF THE OPPORTUNITY TO CROSS EXAMINE WOULD CERTAINLY IN VIO LATION OF PRINCIPLES OF NATURAL JUSTICE AND CONSEQUENTLY RENDERS THE ASSESSMENT ORD ER BASED ON SUCH STATEMENT AS NOT SUSTAINABLE IN LAW. HENCE IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE ASSESSEE HAS REPEATEDLY REQUESTED AND DEM ANDED THE CROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON BY THE AO IN THE ASSESSMENT ORDER AND FURTHER THE REPORT OF THE DDIT INVESTIGAT ION KOLKATA IS ALSO BASED ON THE STATEMENT OF SUCH PERSON THEN THE DENIAL OF CROSS E XAMINATION BY THE AO AS WELL AS 87 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. LD. CIT (A) DESPITE THE FACT THAT THE ASSESSEE WAS READY TO BEAR THE COST OF THE CROSS EXAMINATION OF THE WITNESSES IS A GROSS VIOLATION O F PRINCIPLES OF NATURAL JUSTICE. THUS THE ADDITIONS MADE BY THE AO ON THE BASIS OF S UCH STATEMENT WITHOUT ANY TANGIBLE MATERIAL IS NOT SUSTAINABLE IN LAW AND LIA BLE TO BE DELETED. ACCORDINGLY THE ADDITION MADE BY THE AO IS ALSO DELETED ON MERITS A PART FROM THE LEGAL ISSUE DECIDED IN FAVOUR OF THE ASSESSEE. GROUND NO. 6 IS REGARDING DENIAL OF BENEFIT OF TELE SCOPING, RECYCLING AND ROTATION OF FUNDS BY REJECTING THE PEAK CREDIT THEORY. 12. SINCE THE ISSUE RAISED IN THIS GROUND IS DEPEND ENT ON THE OUT-COME OF THE ADDITIONS IN THE CROSS APPEAL, THEREFORE, THIS GROU ND WILL BE TAKEN UP AFTER CONSIDERING THE REVENUES APPEAL, IF NEED ARISES. 13. IN THE DEPARTMENTS APPEAL GROUND NOS. 1 TO 6 A RE REGARDING THE ADDITION OF RS. 12,16,40,000/- MADE ON ACCOUNT OF UNSECURED LOA NS FROM M/S. BIRLA ARTS PVT. LTD., M/S. TEAC CONSULTANT PVT. LTD AND M/S. SANGAM DISTRIBUTORS PVT. LTD. WAS DELETED BY THE LD. CIT (A). 13.1 THE LD. CIT (A) HAS DELETED THE ADDITION ON AC COUNT OF UNSECURED LOANS FROM THESE THREE PARTIES DUE TO THE REASON THAT THE AO W AS NOT HAVING ANY EVIDENCE TO SHOW THAT THESE ARE ACCOMMODATION ENTRIES. THE AO WAS NOT HAVING IN HIS POSSESSION THE STATEMENTS OF THE CONCERNED PERSONS AND THESE PARTIES HAVE DULY COMPLIED WITH THE SUMMONS ISSUED BY THE DDIT KOLKAT A UNDER SECTION 131 AS WELL AS THE ASSESSEE PRODUCED ALL SUPPORTING DOCUMENTARY EV IDENCES TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. 88 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 13.2. BEFORE US, THE LD. CIT D/R HAS REITERATED THE CONTENTIONS AS RAISED IN RESPECT OF THE GROUNDS IN THE ASSESSEES APPEAL. THUS HE HA S CONTENDED THAT AS PER THE OUTCOME OF THE INVESTIGATION CARRIED OUT BY THE INV ESTIGATION WING KOLKATA, IT WAS DISCOVERED THAT ALL THESE PARTIES WERE ENGAGED IN P ROVIDING ACCOMMODATION ENTRIES OF LOANS, PARTNERS CAPITAL ETC. HE HAS RELIED UPO N THE ORDER OF THE AO. 14. ON THE OTHER HAND, THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMI TTED ALL THE RELEVANT SUPPORTING DOCUMENTARY EVIDENCES TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS IN RESPECT OF THE LOANS TAKEN FROM M/S. BIRLA ARTS PVT. LTD., M/S. TEAC CONSULTANT PVT. LTD AND M/S. SANGAM DISTRIBUTO RS PVT. LTD. HE HAS REFERRED TO THE DETAILS OF THE DOCUMENTARY EVIDENCES PRODUCED I N RESPECT OF THESE THREE COMPANIES AS UNDER :- 1. M/S BIRLA ARTS PVT. LTD PB PAGES 1 COPY OF ACK. OF ITR OF AY 2010-11 481 2 COPY OF BALANCE SHEET OF COMPANY AND ANNEXURE OF LOANS & ADVANCES OF AY 2010-11 482-483 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING T HE ENTRY OF PAYMENT MADE TO ASSESSEE. 484-492 4 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS OF ACCOUNTS OF PARTY. 493-495 5 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS OF ACCOUNTS OF ASSESSEE. 496 6 COPY OF AFFIDAVIT OF NEELAM GAUTAM DIRECTOR OF COMPANY. 497-500 7 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 AND 31.03.2016. 501-507 8 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF AB OVE NAMED COMPANY FOR AY 2006-07,AY 2012-13, AY 2013- 14, AY 2014-15 508-530 9 COPY OF ROC MASTER DATA. 531-532 89 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 10 COPY OF PAN CARD. 533 11 COPY OF ORDER PASSED BY CALCUTTA HIGH COURT REGA RDING AMALGAMATION OF OTHER COMPANIES IN THIS COMPANY. 534-560 2. M/S TEAC CONSULTANTS PVT. LTD 1 COPY OF ACK. OF ITR OF AY 2010-11 561 2 COPY OF BALANCE SHEET OF COMPANY AND ANNEXURE OF LOANS & ADVANCES OF AY 2010-11 562-563 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING T HE ENTRY OF PAYMENT MADE TO ASSESSEE. 564-574 4 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS OF ACCOUNTS OF PARTY. 575-577 5 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS OF ACCOUNTS OF ASSESSEE. 578-579 6 COPY OF AFFIDAVIT OF JITENDRA SHARMA DIRECTOR OF COMPANY. 580-583 7 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 AND 31.03.2016. 584-590 8 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF AB OVE NAMED COMPANY FOR AY 2005-06,AY 2006-07, AY 2012- 13, AY 2014-15 591-610 9 COPY OF ROC MASTER DATA. 611-612 10 COPY OF PAN CARD. 613 11 COPY OF SUMMON NO 1433 DATED 13/10/2017 AND REMINDER NOTICE NO 1592 DATED 31-10-2017 ISSUED BY DDIT(INV), UNIT-1(3), KOLKATA U/S 131 OF INCOME TAX ACT, 1961 614-617 12 COPY OF REPLY SUBMITTED BY COMPANY IN RESPONSE T O NOTICE/SUMMON ISSUED TO IT ALONGWITH DISPATCHED PRO OF. 618-620 13 COPY OF CERTIFICATE OF NBFC REGISTRATION 621-622 3. M/S SANGAM DISTRIBUTORS PVT LTD 1 COPY OF ACK. OF ITR OF AY 2010-11 623 2 COPY OF BALANCE SHEET OF COMPANY AY 2010-11 624 3 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING T HE ENTRY OF PAYMENT MADE TO ASSESSEE. 625-644 4 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS OF ACCOUNTS OF PARTY. 645-646 5 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS OF ACCOUNTS OF ASSESSEE. 647 90 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 6 COPY OF AFFIDAVIT OF NEELAM GAUTAM DIRECTOR OF COMPANY. 648-651 7 COPY OF ORDER PASSED BY CALCUTTA HIGH COURT REGAR DING AMALGAMATION OF OTHER COMPANIES IN THIS COMPANY. 652-678 8 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 679-682 9 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF AB OVE NAMED COMPANY FOR AY 2006-07,AY 2007-08, AY 2013- 14, AY 2014-15 683-698 10 COPY OF ROC MASTER DATA. 699 11 COPY OF PAN CARD. 700 12 COPY OF SUMMON NO 1755 DATED 06/10/2017 ISSUED B Y DCIT KOTA, CENTRAL CIRCLE U/S 13(1) OF INCOME TAX A CT, 1961. 701 13 COPY OF REPLY DATED 06-10-2017 & 13-11-2017 SUBM ITTED BY COMPANY IN RESPONSE TO NOTICE/SUMMON ISSUED TO I T ALONGWITH DISPATCHED PROOF. 702-703 THE LD. A/R HAS THUS SUBMITTED THAT ALL THE LOANS W ERE RECEIVED THROUGH BANK AND VERIFIABLE FROM THE BANK STATEMENTS OF THE ASSESSEE AS WELL AS BANK STATEMENTS OF THE CREDITORS. THE ONUS UNDER SECTION 68 OF THE IT ACT TO PROVE THE IDENTITY, CAPACITY AND GENUINENESS OF THE TRANSACTIONS HAS BE EN DISCHARGED BY THE ASSESSEE BY PRODUCING ALL THE RELEVANT DOCUMENTARY EVIDENCES . FURTHER, THE ASSESSEE ALSO PRODUCED THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) OF THE IT ACT IN THE CASE OF THE CREDITORS. THUS THE DEPARTMENT HAS NOT DISPUTED THE IDENTITY OF THESE CREDITOR COMPANIES WHEN ALL ARE REGULARLY ASSESSED TO INCOME-TAX. THE LD. A/R HAS REFERRED TO THE ASSESSMENT ORDERS PASSED UNDER SECT ION 143(3) OF THESE THREE CONCERNS AS UNDER :- 91 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ASSESSMENT ORDERS PASSED U/S 143(3) : NAME OF COMPANY ASSESSMENT YEAR INCOME ASSESSED M/S BIRLA ARTS PVT. LTD 2012-13 44,76,461 M/S BIRLA ARTS PVT. LTD 2013-14 1,15,36,592 M/S BIRLA ARTS PVT. LTD 2014-15 47,95,890 M/S TEAC CONSULTANTS PVT. LTD 2005-06 13,980 M/S TEAC CONSULTANTS PVT. LTD 2006-07 45,395 M/S TEAC CONSULTANTS PVT. LTD 2012-13 49,91,290 M/S TEAC CONSULTANTS PVT. LTD 2014-15 10,14,150 M/S SANGAM DISTRIBUTORS PVT.LTD 2006-07 NIL M/S SANGAM DISTRIBUTORS PVT.LTD 2007-08 9,600 M/S SANGAM DISTRIBUTORS PVT.LTD 2013-14 6,79,400 M/S SANGAM DISTRIBUTORS PVT.LTD 2014-15 NIL THE LD. A/R HAS THEN REFERRED TO THE COPIES OF THE MASTER DATA OF ROC OF ALL THREE COMPANIES AND SUBMITTED THAT THE STATUS OF THESE TH REE COMPANIES HAVE BEEN SHOWN BY THE ROC AS ACTIVE AND, THEREFORE, THESE COMPAN IES CANNOT BE TREATED AS SHELL COMPANY. FURTHER, AS PER FINANCIAL STATEMENTS OF T HESE COMPANIES, THEY ARE HAVING MORE THAN SUFFICIENT FUNDS TO GIVE THE LOAN. IN SU PPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ARAVALI TRADING COMPANY VS. ITO, 8 DTR (RAJ.) 199. THUS TH E LD. A/R HAS REITERATED HIS CONTENTION AS RAISED IN GROUND NOS. 3 TO 5 OF THE A SSESSEES APPEAL. HE HAS ALSO SUPPORTED THE ORDER OF THE LD. CIT (A). 92 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE AO HAS MADE THE ADDITION ON ACCOUNT OF UNSECURED LOANS TAKEN FROM ALL THE PARTIES WHEREAS THE LD. CIT (A) HAS DELETED THE ADDITION IN RESPECT OF THE LOANS TAKEN FROM M/S. BIRLA ARTS PVT. LTD., M/S. TEAC CON SULTANT PVT. LTD AND M/S. SANGAM DISTRIBUTORS PVT. LTD. AND CONFIRMED THE ADDITION M ADE ON ACCOUNT OF LOAN TAKEN FROM M/S. JALSAGAR COMMERCE PVT. LTD. THE ISSUE OF ADDITION MADE IN RESPECT OF THE UNSECURED LOANS TAKEN FROM M/S. JALSAGAR COMMERCE P VT. LTD. WAS CONSIDERED AND DECIDED BY US IN THE ASSESSEES APPEAL. THE REVENU E IS AGGRIEVED BY THE ORDER OF THE LD. CIT (A) AS THE UNSECURED LOANS TAKEN FROM T HESE THREE COMPANIES WERE DELETED ON THE GROUND THAT THE AO WAS NOT HAVING AN Y MATERIAL TO SUBSTANTIATE THAT THESE COMPANIES ARE CONTROLLED BY SO CALLED ENTRY O PERATORS. THE RELEVANT FINDING OF THE LD. CIT (A) IN PARA 6.1 TO 6.14 ARE AS UNDER : 6.1 AS DISCUSSED IN PARA 4.4.8 ABOVE, IN RESPECT OF THESE THREE LENDERS NAMELY M/S BIRLA ARTS PRIVATE LIMITED, M/S TEAC CON SULTANTS PRIVATE LIMITED AND M/S SANGAM DISTRIBUTORS PRIVATE LIMITED ADVERSE FINDINGS ALONGWITH ELOQUENT EVIDENCES IN THE FORM OF STATEME NT ON OATH OF RELEVANT ENTRY OPERATORS ARE NOT VISIBLE IN THE REP ORTS DATED 28.11.2017 AND 06.12.2017 FROM INVESTIGATION DIRECTORATE, KOLK ATA AND THEREFORE IT COULD NOT BE TREATED AS SHELL COMPANY. 6.2 NOW, COMING TO THE LOAN FROM M/S BIRLA ARTS PRI VATE LIMITED NO NOTICE UNDER SECTION 131 OR 133(6) OF THE ACT WAS I SSUED TO THIS COMPANY, EITHER BY THE AO OR BY THE CONCERNED AO OR BY THE DDIT (INV.) KOLKATA. THIS SHOWS THAT NO INDEPENDENT ENQU IRY WAS DONE BY THE AO TO ESTABLISH THAT THE SAID COMPANIES WERE SHELL COMPANIES, BLIND RELIANCE HAS BEEN PLACED BY THE AO ON THE INVESTIGA TION REPORT OF THE 93 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. DDIT, KOLKATA. ALSO, ON BARE PERUSAL OF THE ASSESSM ENT ORDER, IT IS EVIDENT THAT THE NAME OF THE SAID COMPANIES DOES NO T APPEAR IN THE STATEMENT OF ANY OF THE ENTRY OPERATORS AS REPRODUC ED BY THE AO IN THE ASSESSMENT ORDER. 6.3 AS FAR AS THE REMAINING LENDER COMPANIES NAMELY , M/S TEAC CONSULTANTS PRIVATE LIMITED AND M/S SANGAM DISTRIBU TORS PVT. LTD. ARE CONCERNED, IT IS EVIDENT FROM THE DOCUMENTS PLACED ON RECORD THAT NOTICE WAS ISSUED BY DDIT, KOLKATA U/S 131 TO THESE COMPAN IES WHICH WAS DULY COMPLIED WITH AND RELEVANT DOCUMENTS WERE FILE D. THERE IS NO FACT ON RECORD THAT THE NOTICES REMAINED UNSERVED OR THE SE COMPANIES WERE NOT FOUND EXISTENT ON THE GIVEN ADDRESSES. FURTHERM ORE, AFFIDAVIT OF THE DIRECTORS WERE ALSO SUBMITTED WHEREIN THE DIRECTORS CONFIRMED PROVIDING UNSECURED LOAN TO THE APPELLANT AND SOURCE OF PROVI DING THE SAID LOAN. ALSO, IT IS EVIDENT FROM THE ASSESSMENT ORDER THA T NO STATEMENT/EVIDENCE HAS BEEN RELIED UPON OR PROVIDED BY THE AO FOR SUBSTANTIATING THAT THESE COMPANIES ARE CONTROLLED BY THE SO-CALLED ENTRY OPERATORS. 6.4 FOR THESE THREE CREDITORS NAMELY, M/S BIRLA AR TS PRIVATE LIMITED, M/S TEAC CONSULTANTS PRIVATE LIMITED AND M/S SANGAM DISTRIBUTORS PRIVATE LIMITED, THE APPELLANT IN DISCHARGE OF ITS ONUS U/S 68 OF THE ACT HAS FILED CONFIRMATION OF ACCOUNTS AS WELL AS BANK STATEMENT REFLECTING THE TRANSACTIONS WITH OTHER SUBSTANTIATING DOCUMENT S ALONG WITH ASSESSMENT ORDERS IN CASE OF LENDER COMPANIES, WHIC H ARE AVAILABLE AT PAGE NO.443 TO 644 OF PB. FROM THESE DOCUMENTARY EVIDENCES PLACED ON RECORD, IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS IS ESTABLISHED. THERE IS NO GAIN SAYING THAT THE ONUS SQUARELY LIES ON THE APPELLANT TO PROVE THE IDENTITY, CREDITWORTHINESS A ND GENUINENESS OF THE CASH CREDITS. IN THE CASE OF ADDL. CIT V. BAHRI BRO S. (P) LTD. [1985] 154 ITR 244 (PAT), THE HON'BLE PATNA HIGH COURT HAS HEL D ' IF THE LOANS ARE 94 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. GIVEN BY AN ACCOUNT PAYING CHEQUE, IT AMOUNTS TO ID ENTIFICATION OF THE PARTIES AND DISCHARGE OF BURDEN BY THE BORROWER .' IN VIEW OF THE ABOVE, IT IS CLEAR THAT APPELLANT DISCHARGED ITS BURDEN U/ S 68 OF THE ACT. EVEN OTHERWISE, THERE IS NO ADVERSE FINDING OF ANY INVES TIGATION CONDUCTED BY THE DEPARTMENT IN RELATION TO THESE COMPANIES. THER EFORE, IN THE ABSENCE OF ANY INDEPENDENT INQUIRY AND ANY ADVERSE FINDINGS TO REBUT THE EVIDENCES FILED BY THE APPELLANT, I FIND THAT THE A DDITION IN RESPECT OF UNSECURED LOANS FROM 03 COMPANIES NAMELY, M/S BIRLA ARTS PRIVATE LIMITED, M/S TEAC CONSULTANTS PRIVATE LIMITED AND M /S SANGAM DISTRIBUTORS PRIVATE LIMITED TOTALING TO RS. 12,36, 40,000/- IS UNJUSTIFIED; FIRSTLY, ON THE GROUND THAT NO INQUIRIES WERE MADE TO REBUT THE EVIDENCES FILED BY THE APPELLANT AND SECONDLY, ON THE GROUND THAT APPELLANT DULY DISCHARGED ITS BURDEN CASTED UPON U/S 68 OF THE ACT TO EXPLAIN NATURE AND SOURCE OF THE TRANSACTIONS BY PROVING THE IDENTITY, CREDITWORTHINESS OF CREDITOR AND GENUINENESS OF THE TRANSACTION. IN PAR TICULAR, NONE OF THE MATERIAL OR STATEMENTS HAVE BEEN PROVIDED IN THE AS SESSMENT ORDER WHEREIN NAMES OF THE SAID COMPANIES ARE MENTIONED. NOTABLY, THE TRANSACTIONS WITH THE SAID FOUR COMPANIES ARE DULY VERIFIABLE FROM CONFIRMATION OF ACCOUNTS PLACED AT PAGE NO. 453 TO 455, 532 TO 534 & 588 TO 589 OF PB WITH SUPPORTING BANK STATEMENTS PLACED AT PAGE NO. 444 TO 452, 521 TO 531 & 571 TO 587 PB AND HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS ONLY AND THUS, APPELLANT H AS DULY PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS. 6.5 FURTHERMORE, FROM THE PERUSAL OF DOCUMENTARY EV IDENCES SUBMITTED BY THE APPELLANT, IT IS SEEN THAT TRANSAC TIONS HAVE BEEN DONE THROUGH BANKING CHANNELS AND ON THE DATE OF MAKING OF LOANS, THERE IS BALANCE AVAILABLE IN THE ACCOUNTS OF THE BORROWERS, WHICH PROVES THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. THERE IS NO CASE OF ANY CASH DEPOSITION IN THE ACCOUNT OF ANY OF THE CREDITORS AT THE TIME OF ISSUING CHEQUES/RTGS IN FAVOUR OF THE ASSESSEE. THEREFORE, IN VIEW 95 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. OF THE SETTLED JUDICIAL PRECEDENT IN CASE OF CIT V. VARINDER RAWLLEY [2014] 366 ITR 232 (PUNJAB & HARYANA), CIT V. VIJAY KUMAR JAIN [2014] 221 TAXMAN 180, CIT V. VICT OR ELECTRODES LTD. [2010] 329 ITR 271, ADDL. CIT V. BA HRI BROS. (P) LTD. [1985] 154 ITR 244 (PAT) AND OTHERS AS REFERRED BY THE APPELLANT, I AM OF THE CONSIDERED VIEW THAT APPELLANT DULY DISCHARG ED ITS BURDEN CASTED UPON IT U/S 68 OF THE ACT. IT IS FURTHER SEEN THAT NO NOTICE U/S 131 OR 133(6) OF THE IT ACT WERE ISSUED TO M/S BIRLA ARTS PRIVATE LIMITED, HOWEVER AS FAR AS THE COMPANIES M/S TEAC CONSULTANT S PRIVATE LIMITED AND M/S SANGAM DISTRIBUTORS PRIVATE LIMITED ARE CON CERNED, THESE HAVE DULY REPLIED TO THE NOTICES ISSUED BY DCIT/DDIT(INV .), KOLKATA IN RESPECT OF COMMISSION, THESE FACTS REMAIN UNCONTROV ERTED BY THE AO. 6.6 THE AO DURING ASSESSMENT PROCEEDINGS TOOK NEGAT IVE INFERENCE FROM THE STATEMENT OF SHRI RAJENDRA AGARWAL RECORDE D DURING SEARCH U/S 132(4) WHEREIN HE MADE DISCLOSURE IN RESPECT OF LON G TERM CAPITAL GAIN IN HIS INDIVIDUAL HANDS. I HAVE GONE THROUGH T HE STATEMENT OF SHRI RAJENDRA AGARWAL AND HIS DISCLOSURE MADE IN HIS STA TEMENT, NOTABLY, THE DISCLOSURE MADE WAS IN HIS PERSONAL CAPACITY ONLY A ND WITH RESPECT TO LTCG ONLY AND NOT IN RESPECT OF ANY OTHER TRANSACTI ONS BE IT BE RECEIPT OF UNSECURED LOANS. FURTHER, RAJENDRA AGARWAL IS NO T A PARTNER IN THE APPELLANT FIRM. THEREFORE, I FIND THAT IN THE ABSEN CE OF ANY NEXUS OF THE STATEMENT OF SHRI RAJENDRA AGARWAL WITH THE APPELLA NT FIRM OR ITS TOTAL INCOME, THIS BASIS OF ADDITION ADOPTED BY THE AO IS FARFETCHED & CANNOT BE CONCURRED. 6.7 IT IS FURTHER SEEN THAT AO HAS NOT BROUGHT ANY SPECIFIC DEFECT / DISCREPANCIES IN THE DIRECT EVIDENCE BROUGHT ON REC ORD BY THE APPELLANT. THE AO HAS OBSERVED THAT ON THE DATE OF DEBIT IN TH E ACCOUNT STATEMENT OF CREDITOR, THERE IS CORRESPONDING CREDIT ENTRY OF EQUAL AMOUNT, HOWEVER, THIS OBSERVATION OF THE AO IS ITSELF NOT S UFFICIENT TO PROVE BEYOND DOUBT THAT APPELLANT ROUTED ITS UNACCOUNTED INCOME BY THESE 96 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. COMPANIES RATHER IT PROVES THE SOURCE IN THE HANDS OF THE APPELLANT. IT IS USUAL BUSINESS PRACTICE, WHILE MAKING LOANS TO PART Y, FUNDS ARE REQUIRED TO BE ARRANGED BY THE LENDER, THEREFORE REFLECTION OF SUCH ENTRIES IN BANK STATEMENT DOESNT LEAD TO DRAW ANY ADVERSE INFERENC E AGAINST THE APPELLANT. NEEDLESS TO SAY THAT APPELLANT IS NOT RE QUIRED TO PROVE SOURCE OF THE SOURCE U/S 68 OF THE ACT IN VIEW OF THE SETT LED JUDICIAL PRECEDENTS. 6.8 IN MY CONSIDERED VIEW, MERE NOT BELIEVING AN EX PLANATION CANNOT LEAD TO A CONCLUSION THAT THE BORROWED AMOUNT IS TH E INCOME OF THE ASSESSEE (BORROWER) FROM SOME UNDISCLOSED SOURCES W HILE IN THE PRESENT CASE, NO EVIDENCES OF ANY GENERATION OF UNDISCLOSED INCOME OR THEIR UTILIZATION IN THE FORM OF UNSECURED LOANS HAS BEEN FOUND AND BROUGHT ON RECORD. 6.9 SIMILARLY, I FIND THAT VARIOUS OBSERVATIONS OF THE AO ON BALANCE SHEET / ITR OF THE LENDER COMPANIES ARE MISCONSTRUE D, MISCONCEIVED AND ARE FACTUALLY INCORRECT. I FURTHER FIND THAT THE VA RIOUS OTHER ALLEGATIONS / OBSERVATIONS OF THE AO ARE MISCONCEIVED AND PREMATU RE ONLY AND IN VIEW THE APPELLANTS SUBMISSION MADE IN PARA 10 AS REPRODUCED IN PARA NO. 4.2 OF THIS ORDER, THE SAME DOES NOT LEAD ANY W HERE TO DRAW ANY ADVERSE INFERENCE AGAINST THE APPELLANT. FURTHER, T HE VARIOUS CASE LAWS RELIED UPON BY THE AO ARE DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE AS CATEGORICALLY COUNTERED BY THE APPELLANT IN HIS WRITTEN SUBMISSIONS AS MENTIONED IN PARA 16 AS REPRODUCED I N PARA NO. 4.2ABOVE. 6.10 IT IS SETTLED JUDICIAL PRECEDENTS THAT UNDER T HE INCOME TAX LAW PRIMARY BURDEN U/S 68 OF THE ACT IS ON THE APPELLAN T AND ONCE THIS BURDEN IS DISCHARGED U/S 68 OF THE ACT, NO ADDITION U/S 68 OF THE ACT IS JUSTIFIABLE IN THE HANDS OF THE ASSESSEE IN VIEW OF THE JUDGMENTS IN CASE OF SHREE BARKHA SYNTHETICS LTD. V/S ASSISTANT COMMI SSIONER OF INCOME- TAX (2006) 155 TAXMAN 289 (RAJ.), COMMISSIONER OF INCOME-TAX, JAIPUR -II V. MORANI AUTOMOTIVES (P.) L TD. 97 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. [2014] 264 CTR 86 (RAJASTHAN-HC), CIT V. ORISSA COR PN. (P.) LTD. [1986) 159 ITR 78/25 TAXMAN 80F (SC), COMMISSIONER OF INCOME-TAX V/S MARK HOSPITALS (P.) LTD. [2015] 373 ITR 115 (MA DRAS)(MAG.), COMMISSIONER OF INCOME-TAX, AJMER V. JAI KUMAR BAKL IWAL [2014] 366 ITR 217 (RAJASTHAN), CIT V/S. CREATIVE WORLD TELEF ILMS LTD (2011) 333 ITR 100 (BOM), COMMISSIONER OF INCOME-TAX-I V. PATE L RAMNIKLAL HIRJI [2014] 222 TAXMAN 15 (GUJARAT)(MAG.), PRINCIPAL COM MISSIONER OF INCOME-TAX-4 V. G & G PHARMA INDIA LTD. [2016] 384 ITR 147 (DELHI) REFERRED ABOVE WHICH HAVE BEEN ALSO BEEN FOLLOWED R ECENTLY BY HONBLE DELHI TRIBUNAL IN CASE OF ITO VS. SOFTLINE CREATION S (P) LTD. IN ITA NO. 744/DEL/2012 VIDE ITS ORDER DATED 10.02.2016. FURTH ER, HONBLE APEX COURT AS WELL AS HIGH COURT HAS HELD THAT ONCE THE IDENTITY OF CREDITOR IS ESTABLISHED, THE DEPARTMENT IS FREE TO REOPEN THE A SSESSMENT OF CREDITOR AND NO ADDITION CAN BE MADE IN THE HAND OF BORROWER AS RIGHTLY HELD IN CASE OF CIT V/S LOVELY EXPORTS PVT. LTD. [2008] 216 CTR 195 (SC), COMMISSIONER OF INCOME-TAX V. ROCK FORT METAL & MIN ERALS LTD. [2011] 198 TAXMAN 497 (DELHI), DIVINE LEASING & FIN ANCE LIMITED [2008] 299 ITR 268 (DELHI) CIT V. ORISSA CORPORATIO N (P.) LTD. [1986) 159 ITR 78/25 TAXMAN 80F (SC) AND OTHERS ON THIS QU ESTION OF LAW. 6.11 FURTHER, POWER TO CALL FOR INFORMATION/PRODUCT ION OF EVIDENCES OR ENFORCING ATTENDANCE UNDER THE LAW IS GIVEN TO THE INCOME TAX AUTHORITIES ONLY AND THEREFORE, IN VIEW OF THE JUDGMENT CIT V/S VICTOR ELECTRODES LTD. [2010] 329 ITR 271, THE APPELLANT CANNOT BE FA STENED UPON THE BURDEN TO PRODUCE THE LENDERS BEFORE THE ASSESSING AUTHORITIES THOUGH IN THE INSTANCE CASE, APPELLANT HAS COOPERATED IN ASSE SSMENT BY SHOWING HIS WILLINGNESS TO PRODUCE THE DIRECTORS OF LENDER COMP ANIES AND SOME DIRECTORS/OFFICER WERE ALSO PRODUCED BEFORE THE AO. THUS, IN VIEW OF THE JUDICIAL PRECEDENTS REFERRED ABOVE, UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE IT IS UNTENABLE TO MAKE ANY ADDITI ON FOR ALLEGED NON- 98 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. APPEARANCE BY THE CONCERNED PERSON BEFORE THE AUTHO RITIES THOUGH THEY COMPLIED WITH THE NOTICES/SUMMON ISSUED TO THEM. 6.12 IN THE PRESENT CASE IN HAND, I FIND THAT AO AS KED ASSESSEE TO PRODUCE LENDER COMPANIES WITHOUT VERIFYING THE FACT S OF LENDING MONEY FROM RESPECTIVE JURISDICTION ASSESSING OFFICER AND WITHOUT VERIFYING THEIR RETURNS OF INCOME AND BALANCE SHEET WHEREIN THESE T RANSACTIONS ARE REPORTED, ACCORDINGLY THE AO HAS NOT FOLLOWED THE P RINCIPLES LAID DOWN UNDER SECTION 68 OF THE ACT. THE HONBLE GUJRAT HIG H COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. RANCHHOD JIVABHAI NAKHAVA [2012] 21 TAXMANN.COM 159 (GUJ.) HAS HELD THAT:- ONCE THE ASSESSEE HAS ESTABLISHED THAT HE HAS TAKEN MONEY BY WAY OF ACCOUNT PAYEE CHEQUES FROM THE LENDERS WHO A RE ALL INCOME TAX ASSESSEES WHOSE PAN HAVE BEEN DISCLOSED, THE INITIAL BURDEN UNDER SECTION 68 WAS DISCHARGED. IT FURTHER APPEARS THAT THE ASSESSEE HAD ALSO PRODUCED CONFIRMATION LETTERS GIVEN BY THOSE LENDERS. [PARA 15] ONCE THE ASSESSING OFFICER GETS HOLD OF THE PAN OF THE LENDERS, IT WAS HIS DUTY TO ASCERTAIN FROM THE ASSESSING OFFICE R OF THOSE LENDERS, WHETHER IN THEIR RESPECTIVE RETURNS THEY H AD SHOWN EXISTENCE OF SUCH AMOUNT OF MONEY AND HAD FURTHER S HOWN THAT THOSE AMOUNT OF MONEY HAD BEEN LENT TO THE ASSESSEE . IF BEFORE VERIFYING OF SUCH FACT FROM THE ASSESSING OFFICER O F THE LENDERS OF THE ASSESSEE, THE ASSESSING OFFICER DECIDES TO EXAM INE THE LENDERS AND ASKS THE ASSESSEE TO FURTHER PROVE THE GENUINEN ESS AND CREDITWORTHINESS OF THE TRANSACTION, THE ASSESSING OFFICER DOES NOT FOLLOW THE PRINCIPLE LAID DOWN UNDER SECTION 68 . [PARA 16] IN THE INSTANCE CASE BEFORE ME , THE AO HAS NOT FOL LOWED THE DUE PROCEDURE OF LAW U/S 68 OF THE ACT. THEREFORE, REQU IRING THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE LENDER COMPANY WAS NOT LEGALLY TENABLE IN VIEW OF THE JUDGMENT OF GUJRAT HIGH COURT (SUPRA). 6.13 IT IS NOTED THAT NO CLINCHING EVIDENCES HAS BE EN BROUGHT ON RECORD THAT ANY UNACCOUNTED INCOME WAS ROUTED THROUGH UNSE CURED LOANS BY THE 99 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. APPELLANT FIRM AS NO EVIDENCES AS TO RECEIPT/PAYMEN T OF CASH FOR RECEIPT OF UNSECURED LOANS WERE FOUND DURING SEARCH IN CASE OF THE APPELLANT. MERE SUSPICION HOWSOEVER STRONG CANNOT TAKE PLACE O F EVIDENCE. THUS, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH TO REBUT THE EVIDENCES FILED BY THE APPELLANT, THE IMP UGNED ADDITION MADE IN RESPECT OF UNSECURED LOAN U/S 68 OF THE ACT IS L EGALLY UNTENABLE AND UNJUSTIFIED. 6.14 IN VIEW OF THE ABOVE DISCUSSION OF RELEVANT F ACTS AND FOLLOWING THE SEVERAL RATIOS ON THE SUBJECT FROM HONBLE APEX COURT, HIGH COURTS INCLUDING JURISDICTIONAL HIGH COURTS, TRIBUNALS INC LUDING JURISDICTIONAL TRIBUNALS, THE IMPUGNED ADDITION IN RESPECT OF UNSE CURED LOANS FROM 03 COMPANIES NAMELY, M/S BIRLA ARTS PRIVATE LIMITED, M /S TEAC CONSULTANTS PRIVATE LIMITED AND M/S SANGAM DISTRIBU TORS PRIVATE LIMITED TOTALING TO RS.12,36,40,000/- IS NOT SUSTAI NABLE AND HENCE THE SAME STANDS DELETED. THUS THE LD. CIT (A) WAS OF THE VIEW THAT SO FAR AS THE LOANS TAKEN FROM M/S. JALSAGAR COMMERCE PVT. LTD., THE AO WAS HAVING THE STATEMENT OF SHRI ANAND SHARMA TO THE EFFECT THAT THE SAID COMPANY WAS INVO LVED IN PROVIDING ACCOMMODATION ENTRY AND CONTROLLED BY THE ENTRY OPE RATOR WHEREAS IN RESPECT OF THESE THREE COMPANIES THE AO WAS NOT HAVING ANY DOC UMENT OR EVEN THE STATEMENT OF ANY PERSON WHO ARE ENTRY OPERATORS AND CONTROLLI NG THESE COMPANIES SO AS TO ESTABLISH THAT THE TRANSACTIONS ARE IN THE NATURE O F BOGUS ACCOMMODATION ENTRIES. WE HAVE ALREADY CONSIDERED THE ISSUE ON MERITS IN R ESPECT OF THE ADDITION MADE ON ACCOUNT OF UNSECURED LOANS TAKEN FROM M/S. JALSAGAR COMMERCE PVT. LTD. WHEREAS THE LOANS TAKEN FROM THESE COMPANIES ARE EVEN AS PE R THE REVENUE ON BETTER 100 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. FOOTINGS OF GENUINENESS THAN M/S. JALSAGAR COMMERCE PVT. LTD. THERE IS NO DISPUTE THAT THE AO WAS NOT HAVING ANY EVIDENCE OR EVEN ANY STATEMENT TO IMPUGN THE TRANSACTIONS AS BOGUS ACCOMMODATION ENTRIES. FURTH ER, THE ASSESSEE HAS PRODUCED ALL THE RELEVANT SUPPORTING DOCUMENTARY EVIDENCE AS WE HAVE REPRODUCED IN THE FOREGOING PARAS AS REFERRED BY THE LD. A/R OF THE A SSESSEE AND THESE CREDITOR COMPANIES WERE SUBJECT TO REGULAR ASSESSMENTS AND S CRUTINY ASSESSMENTS UNDER SECTION 143(3) WERE COMPLETED BY THE DEPARTMENT AS PER THE DETAILS REPRODUCED. THEREFORE, ONCE THESE CREDITOR COMPANIES ARE REGULA RLY ASSESSED TO TAX AND DULY EXAMINED BY THE DEPARTMENT AT THE SCRUTINY ASSESSME NTS, THEN THE TRANSACTIONS OF LOANS CANNOT BE HELD AS BOGUS WHEN THE SAME WERE AC CEPTED IN THE HANDS OF THE CREDITORS. WE FURTHER NOTE THAT THESE COMPANIES WE RE HAVING SUFFICIENT FUNDS IN THE SHAPE OF SHARE CAPITAL, RESERVES AND SURPLUS. THE DETAILS OF THE SHARE CAPITALS OF THESE COMPANIES ARE AS UNDER :- M/S BIRLA ARTS PVT. LTD ASSESSMENT YEAR FINANCIAL YEAR SHARE CAPITAL RAISED 1998-1999 1997-1998 12,90,000 1999-2000 1998-1999 16,82,000 2003-2004 2002-2003 50,00,000 2004-2005 2003-2004 2,74,40,000 2005-2006 2004-2005 3,69,50,000 2007-2008 2006-2007 3,26,00,000 2010-2011 2009-2010 250,00,000 2011-2012 2010-2011 20,00,000 2014-2015 2013-2014 67,57,37,000 101 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. M/S TEAC CONSULTANTS PVT. LTD ASSESSMENT YEAR FINANCIAL YEAR SHARE CAPITAL RAISED 1996-1997 1995-1996 26,00,000 2001-2002 2000-2001 73,98,000 2003-2004 2002-2003 1,00,00,000 2005-2006 2004-2005 4,85,50,000 2007-2008 2005-2006 3,35,00,000 2010-2011 2009-2010 2,76,00,000 2011-2012 2010-2011 94,00,000 M/S SANGAM DISTRIBUTORS PVT. LTD . ASSESSMENT YEAR FINANCIAL YEAR SHARE CAPITAL RAISED 2005-2006 2004-2005 2,47,50,000 2006-2007 2005-2006 10,50,00,000 2007-2008 2006-2007 7,93,50,000 2011-2012 2010-2011 2,50,00,000 2013-2014 2012-2013 13,00,00,000 THESE DETAILS CLEARLY SHOW THAT AT THE TIME OF GRAN TING OF LOANS TO THE ASSESSEE THESE COMPANIES WERE HAVING SUFFICIENT FUNDS. FURTHER, W E HAVE ALREADY RECORDED THE DETAILS OF REPAYMENT MADE BY THE ASSESSEE OF THESE LOANS AND ONCE REGULAR REPAYMENT WAS THERE EVEN PRIOR TO THE DATE OF SEARC H, THEN THE TRANSACTIONS CANNOT BE DOUBTED AS NOTHING CAN BE ACHIEVED BY TAKING THE LOAN AND THEN REPAYING THE SAME THROUGH BANKING CHANNEL EVEN IF THERE IS CORRE SPONDING CHANNELIZATION OF CASH. AS WE HAVE DISCUSSED EARLIER THAT THE AO HAS NOT PO INTED OUT ANY DISCREPANCY IN THE FINANCIAL STATEMENTS OR IN THE BANK ACCOUNT STATEME NTS OF THE LOAN CREDITORS TO SHOW THAT THERE WAS DEPOSIT OR INTRODUCTION OF THE CASH PRIOR TO GIVING THE LOAN TO THE ASSESSEE, ACCORDINGLY, IN VIEW OF THE FACTS AND CI RCUMSTANCES OF THE CASE AS WELL AS 102 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. OUR FINDING ON THE ISSUE OF ADDITION IN CASE OF M/S . JALSAGAR COMMERCE PVT. LTD., WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF LD. CIT (A) QUA THIS ISSUE. GROUND NOS. 7 TO 11 OF THE REVENUE ARE REGARDING TH E ADDITION OF RS. 42,47,25,000/- MADE ON ACCOUNT OF PARTNERS CAPITAL RECEIVED FROM FOUR PARTIES WAS DELETED BY THE LD. CIT (A) ON THE SIMIL AR GROUND THAT THE AO WAS NOT HAVING ANY EVIDENCE OR MATERIAL TO ESTABLIS H THAT THE TRANSACTIONS ARE BOGUS ACCOMMODATION ENTRIES. 16. THE ASSESSEE FIRM WAS HAVING CORPORATE PARTNERS , NAMELY, M/S. BANSHIDHAR ADVISORY PVT. LTD., M/S. VASUNDHARA ADVISORY PVT. L TD., M/S. PRITHVI VINIMAY PVT. LTD. AND M/S. MACRO SOFT TECHNOLOGY PVT. LTD. THE AFORE SAID CORPORATE PARTNERS OF THE ASSESSEE INTRODUCED CAPITAL IN THE ASSESSEE FIRM TO THE TUNE OF RS. 42,47,25,000/-. WHILE PASSING THE ASSESSMENT ORDER, THE AO MADE THE ADDITION OF THE SAID AMOUNT UNDER SECTION 68 OF THE IT ACT TREATING THE SAME AS UNEXPLAINED CASH CREDIT. THE FINDING AND THE REASONING OF THE AO IS IDENTICAL AS IN RESPECT OF THE UNSECURED LOANS TAKEN BY THE ASSESSEE. THE LD. CIT (A) DELETED THE SAID ADDITION ON THE IDENTICAL REASONING AS GIVEN FOR DELETION OF ADDITION ON ACCO UNT OF UNSECURED LOANS TAKEN FROM THE THREE COMPANIES, NAMELY, M/S. BIRLA ARTS PVT. L TD., M/S. TEAC CONSULTANT PVT. LTD AND M/S. SANGAM DISTRIBUTORS PVT. LTD. THUS THE L D. CIT (A) HAS CONSIDERED THE RELEVANT FACTS AS WELL AS THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE AND FOUND THAT ON THE ONE HAND THE ASSESSEE HAS PRODUCE D ALL THE SUPPORTING DOCUMENTARY EVIDENCE AND FURTHER THE NOTICES ISSUED TO THE FOUR COMPANIES UNDER SECTION 131/133(6) OF THE ACT WERE DULY COMPLIED WI TH ALONG WITH THE COPIES OF THE RELEVANT DOCUMENTS. THE AFFIDAVITS OF THE DIRECTOR S OF ALL THE COMPANIES WERE 103 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. SUBMITTED WHEREIN THE INFUSION OF THE PARTNERS CAP ITAL WAS CONFIRMED. SINCE THERE WAS NO STATEMENT IN THE POSSESSION OF THE A.O AND E VEN THE REPORT/INSPECTION REPORT WAS ALSO NOT SHARED WITH THE ASSESSEE DURING THE AS SESSMENT PROCEEDINGS, THEREFORE, THE LD. CIT (A) DELETED THE ADDITION. 17. BEFORE US, THE LD. CIT D/R HAS REITERATED HIS C ONTENTION AS MADE IN RESPECT OF THE OTHER ISSUES RAISED IN THE ASSESSEES APPEAL AS WELL AS IN THE DEPARTMENTS APPEAL. HE HAS RELIED UPON THE ORDER OF THE AO. 18. ON THE OTHER HAND, THE LD. A/R OF THE ASSESSEE HAS ALSO SUBMITTED THAT THE CONTENTIONS AND SUBMISSIONS MADE IN RESPECT OF THE ASSESSEES APPEAL AS WELL AS IN RESPECT OF THE GROUND NOS. 1 TO 6 OF THE REVENUES APPEAL MAY BE TREATED AS THE SUBMISSIONS FOR THESE GROUNDS OF THE REVENUES APPE AL. 19. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, WE NOTE THAT THE AO HAS MADE THE ADDITION O F THE AMOUNT OF PARTNERS CAPITAL FROM THESE FOUR CORPORATE ENTITIES ON IDENT ICAL REASONING AS THE ADDITION WAS MADE ON ACCOUNT OF UNSECURED LOANS. DURING THE YEA R UNDER CONSIDERATION, THE ASSESSEE FIRM RECEIVED RS. 42,47,25,000/- ON ACCOUN T OF PARTNERS CAPITAL FROM THE CORPORATE PARTNERS AS UNDER :- S. NO. NAME OF THE PARTNER ADDITION OF CAPITAL DURING AY UNDER APPEAL 1 M/S BANSIDHAR ADVISORY PRIVATE LIMITED RS. 13,22,20,000/- 2 M/S VASUNDHARA ADVISORY PRIVATE LIMITED RS. 8,96,45,000/- 3 M/S PRITHVI VINIMAY PRIVATE LIMITED RS. 13,93,45,000/- 104 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 4 M/S MACRO SOFT TECHNOLOGY PRIVATE LIMITED RS. 6,35,15,000/- TOTAL RS. 42,47,25,000/- WE FIND THAT THE ASSESSEE PRODUCED ALL THE RELEVAN T DOCUMENTARY EVIDENCE IN SUPPORT OF THE TRANSACTIONS BEFORE THE AO. THE SUM MARY OF THESE DOCUMENTS ARE AS UNDER :- S.NO PARTICULARS PAPER BOOK PAGE NO. M/S VASUNDHARA ADVISORY PVT. LTD. 1 COPY OF LEDGER A/C OF PARTNER FROM BOOKS OF ACCOUNT S OF ASSESSEE. 843-845 2 COPY OF ACK. OF ITR OF AY 2010-11 AND COMPUTATION O F TOTAL INCOME. 846-847 3 COPY OF BALANCE SHEET OF AY 2010-11 848-855 4 CONFIRMATION OF A/C OF THE ASSESSEE FROM BOOKS OF A CCOUNTS OF PARTNER. 856-859 5 COPIES OF RELEVANT BANK A/C OF PARTNER SHOWING THE ENTRIES OF PAYMENT MADE TO ASSESSEE AGAINST CAPITAL INTRODUCE. 860-872 6 COPY OF AFFIDAVIT EXECUTED BY MR. RAVI MUNDRA DIREC TOR OF DOSHI MANAGEMENT PVT. LTD ON BEHALF OF AMALGAMATED COMPAN Y M/S VASUNDHARA ADVISORY PVT LTD, 873-875 7 COPY OF ORDER OF CALCUTTA HIGH COURT REGARDING AMAL GAMATION OF COMPANY IN DOSHI MANAGEMENT PVT. LTD 876-900 8 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31. 03.2011, 31.03.2012 AND 31.03.2013. 901-904 9 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOV E NAMED COMPANY FOR AY 2014-15. 905-908 10 COPY OF ROC MASTER DATA. 909 11 COPY OF CERTIFICATE DATED 06.11.2011 ISSUED BY REGI STRAR OF COMPANIES REGARDING MODIFICATION OF CHARGES/MORTGAGE. 910 12 COPY OF PAN CARD. 911 13 COPY OF SUMMON NO. 1439 DATED 13.10.2017 AND REMIND ER NOTICE NO. 1579 DATED 31.10.2017 ISSUED BY DDIT (INVESTIGATION ), UNIT-1(3), KOLKATA U/S 131 OF INCOME TAX ACT, 1961. 912-915 14 COPY OF REPLY SUBMITTED BY THE COMPANY IN RESPONSE TO SUMMON/NOTICE ISSUED TO IT ALONG WITH DISPATCHED PR OOF 916-918 105 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. M/S. PRITHIVI VINIMAY PVT. LTD. 15 COPY OF LEDGER A/C OF PARTNER FROM BOOKS OF ACCOUNT S OF ASSESSEE. 919-921 16 COPY OF ACK. OF ITR OF AY 2010-11 AND COMPUTATION O F TOTAL INCOME. 922-923 17 COPY OF BALANCE SHEET OF AY 2010-11 924-942 18 CONFIRMATION OF A/C OF THE ASSESSEE FROM BOOKS OF A CCOUNTS OF PARTNER. 943-946 19 COPIES OF RELEVANT BANK A/C OF PARTNER SHOWING THE ENTRIES OF PAYMENT MADE TO ASSESSEE AGAINST CAPITAL INTRODUCE 947-958 20 COPY OF AFFIDAVIT EXECUTED BY MR. RAVI MUNDRA DIREC TOR OF DOSHI MANAGEMENT PVT. LTD ON BEHALF OF AMALGAMATED COMPAN Y M/S PRITHVI VINIMAY PVT LTD, 959-962 21 COPY OF ORDER OF CALCUTTA HIGH COURT REGARDING AMAL GAMATION OF COMPANY IN DOSHI MANAGEMENT PVT. LTD 963-987 22 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31. 03.2011, 31.03.2012 AND 31.03.2013. 988-991 23 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOV E NAMED COMPANY FOR AY 2006-07 AND 2014-15. 992-1000 24 COPY OF ROC MASTER DATA. 1001-1002 25 COPY OF CERTIFICATE DATED 08.02.2013 ISSUED BY REGI STRAR OF COMPANIES REGARDING MODIFICATION OF CHARGES/MORTGAGE. 1003 26 COPY OF PAN CARD. 1004 27 COPY OF SUMMON NO. 1440 DATED 13.10.2017 AND REMIND ER NOTICE NO. 1578 DATED 31.10.2017 ISSUED BY DDIT (INVESTIGATIO N), UNIT-1(3), KOLKATA U/S 131 OF INCOME TAX ACT, 1961. 1005-1008 28 COPY OF REPLY SUBMITTED BY THE COMPANY IN RESPONSE TO SUMMON/NOTICE ISSUED TO IT ALONG WITH DISPLACED PRO OF 1009-1011 M/S MACRO SOFT TECHNOLOGY PVT. LTD. 29 COPY OF LEDGER A/C OF PARTNER FROM BOOKS OF ACCOUNT S OF ASSESSEE. 1012-1013 30 COPY OF ACK. OF ITR OF AY 2010 AND COMPUTATION OF T OTAL INCOME. 1014-1015 31 COPY OF BALANCE SHEET OF AY 2010-11 1016-1024 32 CONFIRMATION OF A/C OF THE ASSESSEE FROM BOOKS OF A CCOUNTS OF PARTNER. 1025-1027 33 COPIES OF RELEVANT BANK A/C OF PARTNER SHOWING THE ENTRIES OF PAYMENT MADE TO ASSESSEE AGAINST CAPITAL INTRODUCE. 1028-1033 34 COPY OF AFFIDAVIT OF DEEPA KRIPLANI DIRECTOR OF COM PANY. 1034-1037 35 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31. 03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 AND 31.03.2016. 1038-1044 36 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOV E NAMED COMPANY FOR AY 2009-10, 2011-12, AY 2012-13 AND 2014-15. 1045-1064 37 COPY OF ROC MASTER DATA. 1065-1066 38 COPY OF CERTIFICATE DATED 06.11.2011 ISSUED BY REGI STRAR OF COMPANIES REGARDING MODIFICATION OF CHARGES/MORTGAGE. 1067 106 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 39 COPY OF PAN CARD. 1068 40 COPY OF NOTICE NO. 1604 DATED 21.09.2017 ISSUED BY DCIT, CC, KOTA U/S 131 OF INCOME TAX ACT, 1961. 1069 41 COPY OF REPLY OF NOTICE SUBMITTED BY THE COMPANY 1070 42 COPY OF SUMMON NO. 2115 DATED 31.10.2017 ISSUED BY DCIT, CC, KOTA U/S 131 OF INCOME TAX ACT, 1961. 1071 43 COPY OF REPLY OF NOTICE SUBMITTED BY THE COMPANY ON 13.11.2017 AND 23.11.2017. 1072-1074 M/S BANSHIDHAR ADVISORY PVT. LTD 44 COPY OF LEDGER A/C OF PARTNER FROM BOOKS OF ACCOUNT S OF ASSESSEE. 1075-1077 45 COPY OF ACK. OF ITR OF AY 2010-11 AND COMPUTATION O F TOTAL INCOME. 1078-1079 46 COPY OF BALANCE SHEET OF AY 2010-11 1080-1089 47 CONFIRMATION OF A/C OF THE ASSESSEE FROM BOOKS OF A CCOUNTS OF PARTNER. 1090-1093 48 COPIES OF RELEVANT BANK A/C OF PARTNER SHOWING THE ENTRIES OF PAYMENT MADE TO ASSESSEE AGAINST CAPITAL INTRODUCE. 1094-1100 49 COPY OF AFFIDAVIT EXECUTED BY MR. RAVI MUNDRA DIREC TOR OF DOSHI MANAGEMENT PVT. LTD ON BEHALF OF AMALGAMATED COMPAN Y M/S BANSHIDHAR ADVISORY PVT LTD, 1101-1103 50 COPY OF ORDER OF CALCUTTA HIGH COURT REGARDING AMAL GAMATION OF COMPANY IN DOSHI MANAGEMENT PVT. LTD 1104-1128 51 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31. 03.2011, 31.03.2012 AND 31.03.2013. 1129-1132 52 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOV E NAMED COMPANY FOR AY 2014-15. 1133-1137 53 COPY OF ROC MASTER DATA. 1138-1139 54 COPY OF CERTIFICATE DATED 06.11.2011 ISSUED BY REGI STRAR OF COMPANIES REGARDING MODIFICATION OF CHARGES/MORTGAGE. 1140 55 COPY OF PAN CARD. 1141 56 COPY OF SUMMON NO. 1438 DATED 13.10.2017 AND REMIND ER NOTICE NO. 1580 DATED 31.10.2017 ISSUED BY DDIT (INVESTIGATIO N), UNIT-1(3), KOLKATA U/S 131 OF INCOME TAX ACT, 1961. 1142-1145 57 COPY OF REPLY SUBMITTED BY THE COMPANY IN RESPONSE TO SUMMON/NOTICE ISSUED TO IT ALONG WITH DISPATCHED PR OOF 1146-1148 THUS IT IS APPARENT THAT IN SUPPORT OF THE CLAIM OF IDENTITY OF THE CORPORATE PARTNERS, THEIR CAPACITY AND GENUINENESS OF THE TRANSACTIONS, RELEVANT DOCUMENTARY EVIDENCES WERE ALREADY FILED BEFORE THE AO. THE ASSESSEE HAS ALSO PRODUCED THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) FOR VARIOUS ASSE SSMENT YEARS IN CASE OF THESE FOUR CORPORATE PARTNERS WHO HAVE INTRODUCED THE PAR TNERS CAPITAL IN THE ASSESSEE FIRM. THE DETAILS OF THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) ARE AS UNDER :- 107 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ASSESSMENT U/S 143(3) NAME OF COMPANY ASSESSMENT YEAR PAPER BOOK PAGE NO. M/S VASUNDHARA ADVISORY PVT. LTD. 2014-15 905 M/S PRITHIVI VINIMAY PVT. LTD. 2006-07 992 M/S PRITHIVI VINIMAY PVT. LTD. 2014-15 998 M/S MACRO SOFT TECHNOLOGY PVT. LTD. 2009-10 1048-1050 M/S MACRO SOFT TECHNOLOGY PVT. LTD. 2011-12 1052-1053 M/S MACRO SOFT TECHNOLOGY PVT. LTD. 2012-13 1059-1060 M/S MACRO SOFT TECHNOLOGY PVT. LTD. 2014-15 1061-1062 M/S BANSHIDHAR ADVISORY PVT. LTD 2014-15 1133-1134 ALL THESE FOUR COMPANIES STATUS HAS BEEN SHOWN IN T HE MASTER DATA OF ROC AS ACTIVE AND THREE OF WHICH, NAMELY, M/S. BANSHIDHA R ADVISORY PVT. LTD., M/S.PRITHVI VINIMAY PVT. LTD. AND M/S. VASUNDHARA ADVISORY PVT. LTD. STATUS WAS SHOWN AS AMALGAMATED. THEREFORE, THESE COMPANIES HAVE ALR EADY UNDER GONE PROCESS OF AMALGAMATION THROUGH THE APPROVAL OF THE HONBLE HI GH COURT. HENCE, THERE CANNOT BE ANY DISPUTE ABOUT THE IDENTITY AND THE AFFAIRS O F THESE COMPANIES AS GENUINE. THE ASSESSEE ALSO PRODUCED THE RECORDS ABOUT THE AV AILABILITY OF THE FUNDS WITH THESE FOUR COMPANIES WHICH WERE SUFFICIENT TO INTRO DUCE THE PARTNERS CAPITAL. THE DETAILS OF THE SOURCE OF FUNDS OF THESE FOUR COMPAN IES AS SUBMITTED BY THE ASSESSEE ARE AS UNDER :- 108 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. M/S VASUNDHRA ADVISORY PVT. LTD. ASSESSMENT YEAR FINANCIAL YEAR SHARE CAPITAL RAISED 2006-07 2005-06 5,76,00,000 2010-11 2009-10 6,61,50,000 2011-12 2010-11 5,43,50,000 2014-15 2013-14 10,82,35,000 M/S PRITHVI VINIMAY PVT. LTD ASSESSMENT YEAR FINANCIAL YEAR SHARE CAPITAL RAISED 2005-06 2004-05 1,51,00,000 2006-07 2005-06 4,68,20,000 2007-08 2006-07 2,72,20,000 2010-11 2009-10 7,84,00,000 2011-12 2010-11 1,96,00,000 2014-15 2013-14 12,87,50,000 M/S MACRO SOFT TECHNOLOGY PVT.LTD ASSESSMENT YEAR FINANCIAL YEAR SHARE CAPITAL RAISED 2002-03 2001-02 9,98,000 2004-05 2003-04 9,75,00,000 M/S BANSIDHAR ADVISORY PVT. LTD ASSESSMENT YEAR FINANCIAL YEAR SHARE CAPITAL RAISED 2006-07 2005-06 5,76,00,000 2010-11 2009-10 10,64,00,000 2011-12 2010-11 1,61,00,000 2014-15 2013-14 15,00,00,000 THE ASSESSEE HAS ALSO SUBMITTED THE RECORDS REGARDI NG THE CORPORATE GUARANTEE OF RS. 73.60 CRORES GIVEN BY THE SBBJ IN FAVOUR OF M/S . BANSIDHAR ADVISORY PVT. LTD. AND, THEREFORE, IT WAS BROUGHT ON RECORD THE FACT T HAT THE BANK HAS ISSUED THE CORPORATE GUARANTEE ONLY AFTER VERIFICATION OF THE FINANCIAL CONDITION OF THE SAID COMPANY. WE FIND THAT THE BANK GUARANTEE TO THE CO MPANY OF RS. 73.60 CRORES 109 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ISSUED BY THE BANK IS ALWAYS SECURED BY THE LIQUID- ABLE ASSETS OF THE COMPANY WHICH SHOWS THAT THE COMPANY WAS HAVING UNDERLINED ASSETS TO SECURE THE SAID BANK GUARANTEE AND CONSEQUENTLY THE CREDITWORTHINESS OF THE SAID COMPANY WAS DULY EXAMINED BY THE BANK. THE LD. CIT (A) HAS CONSIDER ED ALL THESE FACTS WHILE DECIDING THIS ISSUE IN PARA 7.3 TO 7.3.9 AS UNDER :- 7.3 IT MAY BE MENTIONED THAT SAME PROCEDURE OF REM AND REPORT HAVE BEEN DONE AS DISCUSSED IN PARA 4.3 ABOVE AND THE SA ME IS NOT REPEATED HERE. SIMILARLY, AS DISCUSSED IN PARA 4.4.3 THIS MA TTER TOO WAS REFERRED BY THE AO FOR VERIFICATION BY ISSUING COMMISSION U/S 131(1)(D) TO THE DEPUTY DIRECTOR OF INCOME TAX (INV), UNIT-1(3), KOLKATA VIDE SAME LETTERS AND SAME REPORTS AS DISCUSSED IN PARA 4.4. 4 WERE RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME TAX (INV), UNIT-1(3), KOLKATA. AS OBSERVED IN PARA 4.4.5 & 4.4.6, THE TWO REPORTS DAT ED 28.11.2017 AND 06.12.2017 FROM THE DEPUTY DIRECTOR OF INCOME TAX ( INV), UNIT-1(3), KOLKATA ARE CAPABLE TO FINDOUT WHERE THE APPELLANT HAS EMPLOYED FOUL MEANS AND WHERE THE TRANSACTION ARE OF RUTINE BUSIN ESS REQUIREMENTS. FROM THE CAREFUL PERUSAL OF THESE THE TWO REPORTS D ATED 28.11.2017 AND 06.12.2017 FROM THE DEPUTY DIRECTOR OF INCOME TAX ( INV), UNIT-1(3), KOLKATA. I DONT FIND ADVERSE FINDINGS ALONGWITH EL OQUENT EVIDENCES IN THE FORM OF STATEMENT ON OATH OF RELEVANT ENTRY OPE RATORS IN RESPECT OF CAPITAL CONTRIBUTIONS BY FOUR COMPANIES, NAMELY, M/ S BANSIDHAR ADVISORY PRIVATE LIMITED, M/S VASUNDHARA ADVISORY P RIVATE LIMITED, M/S PRITHVI VINIMAY PRIVATE LIMITED AND M/S MACRO S OFT TECHNOLOGY PRIVATE LIMITED. THE SAME IS EVIDENT FROM THE RESPE CTIVE DETAILS FOR ABOVE LENDERS IN THE ABOVE REPORTS DATED 28.11.2017 AND 06.12.2017 AS UNDER:- 110 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. WITH REFERENCE TO YOUR ABOVE QUOTED LETTER, THIS O FFICE HAS ISSUED SUMMON NOTICES U/S 131 OF THE INCOME TAX ACT, 1961 DATED 13.10.2017 TO THE FOLLOWING SIXTEEN (16) COMPANIES BASED IN KOLKATA AS MENTIONED IN YOUR ABOVE QUOTED LETTER RE QUESTING TO FURNISH THE REQUISITE DETAILS RELATED TO SHARE APPL ICATION MONEY/SHARE PREMIUM/SPECIAL DEPOSITS/UNSECURED LOAN /CAPITAL INTRODUCED BY PARTNERS OR ANY TRANSACTIONS MADE WIT H GROUP CONCERNS OF THE KDM GROUP FOR THE PERIOD FROM F.Y. 2009-10 TO 2015-16 WITHIN 05 (FIVE) DAYS OF RECEIPT OF SUMMON NOTICES. AS REGARDS 5 (FIVE) ASSESSES, SUMMONS NOTICES U/S 131 OF THE INCOME TAX ACT, 1961 HAS NOT BEEN ISSUED SINCE IT IS OBSER VED THAT THE PRESENT ADDRESS OF FIVE (5) COMPANIES IS LOCATED EI THER IN RAJASTHAN OR PATIALA. ............. IN RESPONSE TO SAID BOTH NOTICES DATE D 13.10.2017 & 31.10.2017, NONE OF THE DIRECTORS APPEARED PERSONAL LY BUT THE FOLLOWING COMPANIES HAVE SUBMITTED THEIR REPLY CONT AINING VARIOUS DETAILS BY POST ON DIFFERENT DATES, THE DET AILS OF WHICH IS MENTIONED UNDER AND THE SAME IS BEING FORWARDED HER EWITH IN ORIGINAL FOR YOUR FURTHER NECESSARY ACTION AT YOUR END: S. NO. NAME OF CONCERNS PARTICULARS OF SUBMISSION DATE OF SUBMISSION RECEIVED BY POST 12. BANSHIDHAR ADVISORY PVT LTD (AMALGAMATED WITH DOSHI MANAGEMENT PVT LTD) TRANSACTIONS DETAILS WITH KDM GROUP CONCERN, COPY OF LEDGER, COPY OF CERTIFICATE OF INCORPORATION & PAN CARD, COPY OF ASSESSMENT ORDER U/S 143(3) FOR A.Y. 14-15, AUDITED ACCOUNTS FOR F.Y. 09-10 TO 12-13, SOURCE OF FUND, BANK STATEMENT SHOWING THE 07.11.2017 111 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. TRANSACTIONS WITH KDM GROUP CONCERNS, NATURE OF BUSINESS & COPY OF HONBLE HIGH COURT ORDER IN RESPECT OF AMALGAMATION. 13. VASUNDHARA ADVISORY PVT LTD (AMALGAMATED WITH DOSHI MANAGEMENT PVT LTD) NATURE OF BUSINESS, COPY OF HONBLE HIGH COURT ORDER IN RESPECT OF AMALGAMATION, TRANSACTIONS RELATED TO INVESTMENT IN EQUITY SHARES AND CAPITAL CONTRIBUTION WITH KDM GROUP CONCERN, BANK STATEMENT DEPICTING THE TRANSACTIONS WITH KDM GROUP CONCERNS, AUDITED ACCOUNTS FOR F.Y. 09-10 TO 12-13, SOURCE OF FUND, COPY OF CERTIFICATE OF INCORPORATION & PAN CARD, COPY OF LEDGER & COPY OF ASSESSMENT ORDER U/S 143(3) FOR THE A.Y. 14-15. 07.11.2017 14. PRITHVI VINIMAY PVT LTD (AMALGAMATED WITH DOSHI MANAGEMENT PVT LTD) TRANSACTIONS DETAILS, COPY OF LEDGER ALONG WITH SUPPORTING DOCUMENTS INCL. SHARE APPLICATIONS, SHARE ALLOTMENT, ACCOUNT CONFIRMATION FROM KOTA DALL MILL, FORM-2, AUDITED ACCOUNTS FOR F.Y. 09-10 TO 12-13, COPY OF ASSESSMENT ORDER U/S 143(3) FOR A.Y. 14-15, COPY OF CERTIFICATE OF INCORPORATION AND PAN CARD, DETAILS REGARDING SOURCE OF FUND, BANK STATEMENT DEPICTING THE TRANSACTIONS DETAILS & COPY OF HONBLE HIGH COURT ORDER IN RESPECT OF AMALGAMATION. 07.11.2017 NO SUMMONS WERE ISSUED FOR M/S MACRO SOFT TECHNOLOG Y PVT. LTD BY DDIT (INV.) UNIT 1(3) KOLKATA 112 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. .......THIS OFFICE HAS ALSO VERIFIED THE COMPANIES AS PER DATABASE OF PAPER/SHELL COMPANIES/ENTITIES PREPARED BY DIREC TORATE OF INVESTIGATION WING, KOLKATA ON THE BASIS OF STATEME NTS OF VARIOUS ENTRY OPERATORS AT DIFFERENT OCCASIONS BEFORE THE I NCOME TAX DEPARTMENT. ON VERIFICATION, THE FOLLOWING FACTS HA S BEEN EMERGED OUT FROM THE DATABASE WHICH REVEALS THAT SO ME COMPANIES ARE LISTED IN THE DATABASE OF PAPER/SHELL COMPANIES CONTROLLED & MANAGED BY ENTRY OPERATORS AND THE SAM E IS BEING PRODUCED AS UNDER IN THE TABULAR FORM: SL. NO. NAME OF CONCERNS PAN ADDRESS GIVEN IN COMMISSION NOTICE ISSUED ENTRY OPERATO R DUMMY DIRECTOR 12. BANSIDHAR ADVISORY PVT LTD (AMALGAMATED WITH DOSHI MANAGEMENT PVT LTD) AACCB7815M 11A ESPLANADE EAST 3 RD FLOOR, KOLKATA 700069 NOTICE ISSUED U/S 131 AT GIVEN ADDRESS THIS COMPANY IS AMALGAMATE DWITH M/S DOSHI MANAGEMEN T PVT LTD WHICH HAS BEEN IDENTIFIED AS PAPER/SHELL COMPANY CONTROLLED & MANAGED BY ENTRY OPERATOR ANAND SHARMA SHASHI KUMARI RAMANI- THE NAME OF THESE DUMMY DIRECTORS ARE LISTED IN DATABASE, WHO WORKED/WORKS UNDER DIFFERENT ENTRY OPERATORS FOR DIFFERENT PERIOD, THE DETAILS OF WHICH HAS BEEN GIVEN BELOW IN TABULAR FORM. 13. VASUNDHARA ADVISORY PVT LTD (AMALGAMATED WITH DOSHI MANAGEMENT PVT LTD) AACCV1837B 11A ESPLANADE EAST 3 RD FLOOR, KOLKATA 700069 NOTICE ISSUED U/S 131 AT GIVEN ADDRESS THIS COMPANY IS AMALGAMATE DWITH M/S DOSHI MANAGEMEN T PVT LTD WHICH HAS BEEN IDENTIFIED AS PAPER/SHELL COMPANY CONTROLLED & MANAGED BY ENTRY PUNAM RAMANI THE NAME OF THESE DUMMY DIRECTORS ARE LISTED IN DATABASE, WHO WORKED/WORKS UNDER DIFFERENT ENTRY OPERATORS FOR DIFFERENT PERIOD, THE DETAILS OF WHICH HAS BEEN GIVEN 113 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. OPERATOR ANAND SHARMA BELOW IN TABULAR FORM. 14. PRITHVI VINIMAY PVT LTD (AMALGAMATED WITH DOSHI MANAGEMENT PVT LTD) AADCP4531D 11A ESPLANADE EAST 3 RD FLOOR, KOLKATA 700069 NOTICE ISSUED U/S 131 AT GIVEN ADDRESS THIS COMPANY IS AMALGAMATE D WITH M/S DOSHI MANAGEMEN T PVT LTD WHICH HAS BEEN IDENTIFIED AS PAPER/SHELL COMPANY CONTROLLED & MANAGED BY ENTRY OPERATOR ANAND SHARMA DEEPAK TIBREWAL THE NAME OF THESE DUMMY DIRECTORS ARE LISTED IN DATABASE, WHO WORKED/WORKS UNDER DIFFERENT ENTRY OPERATORS FOR DIFFERENT PERIOD, THE DETAILS OF WHICH HAS BEEN GIVEN BELOW IN TABULAR FORM. IT MAY BE MENTIONED HERE THAT AMALGAMATION TOOK PLA CE IN JULY 2014 WHERE AS STATEMENT OF SHRI ANAND SHARMA ARE PRIOR TO MARCH 2014. FURTHER, THE VERIFICATION AND INVESTIGATION OF PAS T AND PRESENT DIRECTORS OF FOLLOWING COMPANIES HAS BEEN CARRIED O UT WITH THE HELP OF DATABASE OF ENTRY OPERATORS PREPARED BY DIR ECTORATE OF INVESTIGATION WING, KOLKATA WHICH REVEAL THAT THE D IRECTORS OF THESE COMPANIES HAVE BEEN LISTED UNDER THE NAME OF VARIOUS ENTRY OPERATORS WHO ARE ENGAGED IN THE BUSINESS OF PROVID ING ACCOMMODATION ENTRIES BY APPOINTING VARIOUS DUMMY D IRECTORS BY KNOWN ENTRY OPERATORS WHOSE NAMES HAS BEEN MENTIONED IN THE UNDER MENTIONED TABLE. S. NO. NAME OF COMPANY NAME OF DIRECTOR(S) PERIOD NAME OF ENTRY OPERATOR 1. VASUNDHARA ADVISORY PVT LTD PUNAM RAMANI 28.02.2011- TILL DATE NAWAL KISHORE JALAN 2. PRITHVI VINIMAY PVT LTD DEEPAK TIBREWAL 28.03.2014- TILL DATE PANKAJ AGARWAL 3. BANSIDHAR ADVISORY SHASHI KUMARI 09.01.2009- 16.03.2012 ANKIT BAGRI 114 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. PVT LTD RAMANI IT MAY BE MENTIONED HERE THAT THREE COMPANIES NAMEL Y; M/S BANSIDHAR ADVISORY PRIVATE LIMITED, M/S VASUNDHARA ADVISORY PRIVATE LIMITED, M/S PRITHVI VINIMAY PRIVATE LIMITED WERE A MALGAMATED WITH M/S DOSHI MANAGEMENT PVT LTD IN JULY 2014 IN ACCORD ANCE WITH PERMISSION FROM KOLKATA HIGH COURT, WHEREAS THE STA TEMENTS ENTRY OPERATOR ANAND SHARMA ARE DATED 02.07.2013 AND 06.0 2.2017 I.E. PRIOR TO MARCH 2014 BY WHICH M/S DOSHI MANAGEMENT PVT LTD . MIGHT HAVE BEEN IDENTIFIED AS PAPER/SHELL COMPANY. NEITHER STA TEMENT OF SHRI ANAND SHARMA NOT ANY LIST OR ANNEXURE OF SAID STATEMENTS INDENTIFYING M/S DOSHI MANAGEMENT PVT. LTD. IS AVAILABLE ON RECORD, THOUGH IT IS INCLUDED IN THE REPORT OF DDIT (INV.), UNIT 1(3), KOLKATTA. THEREFORE, THE LABLE OF PAPER/SHELL COMPANY CANNOT BE APPLIED TO M/S BANSID HAR ADVISORY PRIVATE LIMITED, M/S VASUNDHARA ADVISORY PRIVATE LI MITED, M/S PRITHVI VINIMAY PRIVATE LIMITED AS AT THE RELEVANT TIME THE Y WERE NOT PART OF M/S DOSHI MANAGEMENT PVT LTD. MOREOVER, IN DATA BAS E OF DIRECTORSHIPS FOR THESE COMPANIES; M/S BANSIDHAR ADVISORY PRIVATE LIMITED, M/S VASUNDHARA ADVISORY PRIVATE LIMITED, M/S PRITHVI VI NIMAY PRIVATE LIMITED AS REPRODUCE ABOVE ALSO CLEARLY SHOW NO DIR ECT CONTROLE OR INFLUENCE OF THE ALLEGED ENTRY OPERATOR ANAND SHAR MA. SIMILARLY, THE STATEMENT OF ANKIT BAGRI IS NOT IMPLICATING M/S BAN SIDHAR ADVISORY PVT. LTD. IN ANY MANNER AS SHELL COMPANY. THERE ARE NO S TATEMENTS FROM NAWAL KISHORE JALAN AND PANKAJ AGARWAL ON RECORD IM PLICATING M/S VASUNDHARA ADVISORY PRIVATE LIMITED, M/S PRITHVI VI NIMAY PRIVATE LIMITED AS SHELL COMPANIES. 7.3.1 IN VIEW OF ABOVE GROUND REALITY I AM TREATING M/S BANSIDHAR ADVISORY PRIVATE LIMITED, M/S VASUNDHARA ADVISORY P RIVATE LIMITED, M/S PRITHVI VINIMAY PRIVATE LIMITED NOT AS SHELL CO MPANY AS TREATED BY THE AO AS NOWHERE ADVERSE FACTS, DETAILS AND CORROB ORATORY EVIDENCES IN 115 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE FORM OF STATEMENTS OF THE ALLEGED ENTRY OPERATO R ANAND SHARMA OR ANKIT BAGRI IMPLICATING THEM ARE FOUND IN THE REPOR TS DATED 28.11.2017 AND 06.12.2017 FROM INVESTIGATION DIRECTORATE, KOLK ATA. I HAVE ALSO CONSIDERED THE ASSESSMENT ORDER, THE REMAND REPORT ALONG WITH ITS ALL ENCLOSURES, THE RELEVANT STATEMENTS REPRODUCED IN T HE ASSESSMENT ORDER BY THE AO, THE SUBMISSIONS MADE BY THE APPELLANT AL ONG WITH PAPER BOOK FOR THE YEAR UNDER CONSIDERATION AND ALL RELEV ANT MATERIAL PLACED ON RECORD AND COULD NOT FIND A SINGLE PIECE OF EVIDENC E TO SAY THAT ANY ONE OF ABOVE COULD BE SHELL COMPANY. 7.3.2 IT IS SEEN THAT DURING THIS YEAR, THE AO HAS MADE ADDITIONS IN THE HANDS OF ASSESSEE ON ACCOUNT OF PARTNERS CAPITAL F ROM FOUR COMPANIES, NAMELY, M/S BANSIDHAR ADVISORY PRIVATE LIMITED, M/S VASUNDHARA ADVISORY PRIVATE LIMITED, M/S PRITHVI VINIMAY PRIVA TE LIMITED AND M/S MACRO SOFT TECHNOLOGY PRIVATE LIMITED. THE AO ALLEG ED THAT DESPITE PROVIDING HUGE CAPITAL CONTRIBUTION, NONE OF THE NE WLY INTRODUCED PARTNER IS INTERESTED IN THE BUSINESS ACTIVITIES OF THE ASSESSEE FIRM AS THERE IS NO WORKING PARTNER ON THEIR BEHALF AND NON E OF THEM HAVE NOMINATED ANY DIRECTOR OR OTHER OFFICER OF THE COMP ANY TO ACT AS WORKING PARTNER IN THE ASSESSEE FIRM. 7.3.3 HOWEVER, THE A/R OF THE APPELLANT WHILE REPRE SENTING THE CASE HAS ARGUED THE MATTER IN DETAIL AND HAS FILED DETAILED SUBMISSIONS AS REPRODUCED ABOVE IN RESPONSE TO THE FINDINGS AND AL LEGATIONS OF THE AO. A SUMMARIZED FORM OF THE SUBMISSIONS AND ARGUMENTS PUT FORTH BY THE A/R IS GIVEN HEREUNDER: A) THE APPELLANT HAS DULY DISCHARGED THE INITIAL ONUS CAST UPON IT U/S 68 OF THE ACT BY FURNISHING THE NAME, ADDRESS, PAN, COPY OF ITR, COPY OF BANK STATEMENT AND CONFIRMATION FROM THE PARTNERS, BALAN CE SHEET ETC. THROUGH THE SAID DOCUMENTS, IDENTITY, CREDITWORTHINESS OF THE C ORPORATE PARTNERS ALONG WITH THE GENUINENESS OF THE TRANSACTIONS CARRIED OUT WIT H THEM WAS DULY ESTABLISHED. 116 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. B) THE AO HAS NOT OBSERVED ANYTHING IN THE ASSESSMENT ORDER REGARDING ANY DEFECT OR FLAW IN THE DOCUMENTS SUBMITTED. C) THE CAPITAL CONTRIBUTIONS OF THE COMPANIES THAT HAV E BEEN TREATED AS UNEXPLAINED BY THE AO WERE INTRODUCED IN AY 2012-13 . IN THE ASSESSMENT PROCEEDINGS OF AY 2012-13 WHICH WAS COMPLETED U/S 1 43(3) OF THE ACT, SUCH CAPITAL CONTRIBUTIONS WERE TREATED AS GENUINE. THUS , ONCE IN THE COMPLETED ASSESSMENT PROCEEDINGS THE CAPITAL CONTRIBUTION OF THOSE COMPANIES HAS BEEN CONSIDERED AS GENUINE THAN THERE IS NO REASON TO TR EAT THE CAPITAL RECEIVED FROM SUCH COMPANIES DURING THE YEAR AS NON GENUINE WITHO UT HAVING ANY MATERIAL AND ONLY ON PRESUMPTION, ASSUMPTION AND SURMISES. D) SUBMISSION MADE IN GROUND NO. 2 IN RESPECT OF UNSEC URED LOANS MAY ALSO BE TREATED AS A SUBMISSIONS FOR THE PURPOSE OF THIS GROUND OF APPEAL. E) ALL THE PARTNERS MUST BE WORKING PARTNERS IS NOT MA NDATORY UNDER ANY OF THE LAWS IN FORCE. F) ALL THE TRANSACTIONS WERE DONE THROUGH PROPER BANKI NG CHANNELS. G) THE NOTICES ISSUED TO THE FOUR COMPANIES U/S 131/13 3(6) OF THE ACT WERE DULY COMPLIED WITH ALONG WITH THE COPY OF THE RELEV ANT DOCUMENTS. H) AFFIDAVITS OF THE DIRECTORS OF ALL COMPANIES WERE S UBMITTED WHEREIN THE DIRECTORS CONFIRMED THEIR INVESTMENT AS PARTNERS C APITAL IN THE APPELLANT FIRM. I) NO RELIANCE CAN BE PLACED ON REJECTED BOOKS OF ACCO UNT FOR WORKING OUT PEAK CREDIT FOR THE PURPOSE OF MAKING ADDITIONS IN THE HANDS OF THE APPELLANT. J) THE REPORTS/INSPECTION REPORT AND STATEMENTS RELIED UPON BY THE AO WERE NOT PROVIDED TO THE APPELLANT DURING ASSESSMENT PRO CEEDINGS AND DIRECTLY REPRODUCED IN THE ASSESSMENT ORDER. 7.3.4 IN MY CONSIDERED VIEW, AS FAR AS THE PARTNER S CAPITAL FROM THE COMPANIES NAMELY, M/S BANSIDHAR ADVISORY PRIVATE LI MITED, M/S VASUNDHARA ADVISORY PRIVATE LIMITED, M/S PRITHVI VI NIMAY PRIVATE LIMITED AND M/S MACRO SOFT TECHNOLOGY PRIVATE LIMIT ED IS CONCERNED, IT IS EVIDENT FROM THE DOCUMENTS PLACED ON RECORD T HAT NOTICE WAS ISSUED 117 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. BY DDIT, KOLKATA U/S 131/133(6) TO THESE COMPANIES WHICH WAS DULY COMPLIED WITH AND RELEVANT DOCUMENTS WERE FILED. TH ERE IS NO FACT ON RECORD THAT THE NOTICES REMAINED UNSERVED OR THESE COMPANIES WERE NOT FOUND EXISTENT ON THE GIVEN ADDRESSES. FURTHERMORE, AFFIDAVIT OF THE DIRECTORS WERE ALSO SUBMITTED WHEREIN THE DIRECTORS CONFIRMED INVESTMENT IN THE APPELLANT FIRM IN THE FORM OF PAR TNERS CAPITAL. 7.3.5 THE ONLY ALLEGATION OF THE AO IS THAT THE DIR ECTORS OF THESE COMPANIES HAVE NOT BEEN NOMINATED AS WORKING PARTNE RS. IN MY VIEW, SUCH ALLEGATION IS WITHOUT ANY SUBSTANCE AS THERE I S NO LEGAL OBLIGATION ON A PARTNERSHIP FIRM TO APPOINT ALL THE PARTNERS A S WORKING PARTNERS. THERE ARE VARIOUS PARTNERS IN FIRMS WHICH ONLY DO I NVESTMENT IN THE FIRM AND DO NOT PARTICIPATE IN THE REGULAR BUSINESS ACTI VITIES OF THE FIRM. SUCH PARTNERS ARE CALLED SLEEPING PARTNERS AND THE SAID PARTNERS DO EXIST IN THE NORMAL BUSINESS PARLANCE. 7.3.6 THE APPELLANT IN DISCHARGE OF ITS ONUS U/S 68 OF THE ACT HAS FILED CONFIRMATION OF ACCOUNTS AS WELL AS BANK STATEMENT REFLECTING THE TRANSACTIONS WITH OTHER SUBSTANTIATING DOCUMENTS AS WELL AS THE RELEVANT ASSESSMENT ORDERS, WHICH ARE AVAILABLE AT PAGE NO. 645 TO 867 OF PB . FROM THESE DOCUMENTARY EVIDENCES PLACED ON RECORD, IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS IS ESTABLISHED. THERE IS NO GAIN SAYING THAT THE ONUS SQUARELY LIES ON THE A PPELLANT TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE C ASH CREDITS. IN THE CASE OF ADDL. CIT V. BAHRI BROS. (P) LTD. [1985] 15 4 ITR 244 (PAT), THE HON'BLE PATNA HIGH COURT HAS HELD ' IF THE LOANS ARE GIVEN BY AN ACCOUNT PAYING CHEQUE, IT AMOUNTS TO IDENTIFICATION OF THE PARTIES AND DISCHARGE OF BURDEN BY THE BORROWER .' IN VIEW OF THE ABOVE, IT IS CLEAR THAT APPELLANT DISCHARGED ITS BURDEN U/S 68 OF THE ACT. EVEN OTHERWISE, THERE IS NO ADVERSE FINDING OF ANY INVESTIGATION CONDUCTE D BY THE DEPARTMENT IN RELATION TO THE SAID COMPANIES. THEREFORE, IN TH E ABSENCE OF ANY INDEPENDENT INQUIRY AND ANY ADVERSE FINDINGS TO REB UT THE EVIDENCES 118 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. FILED BY THE APPELLANT, I FIND THAT THE ADDITION IN RESPECT OF THE PARTNERS CAPITAL FROM THE AFORESAID 04 COMPANIES TOTALING TO RS. 42,47,25,000/- IS UNJUSTIFIED; FIRSTLY, ON THE GROUND THAT NO INQU IRIES WERE MADE TO REBUT THE EVIDENCES FILED BY THE APPELLANT AND SECONDLY, ON THE GROUND THAT APPELLANT DULY DISCHARGED ITS BURDEN CASTED UPON U/ S 68 OF THE ACT TO EXPLAIN NATURE AND SOURCE OF THE TRANSACTIONS BY PR OVING THE IDENTITY, CREDITWORTHINESS OF THE CORPORATE PARTNERS AND GENU INENESS OF THE TRANSACTION. NOTABLY, THE TRANSACTIONS WITH THE SAI D FOUR COMPANIES ARE DULY VERIFIABLE FROM CONFIRMATION OF ACCOUNTS FILED AT PAGE 650 TO 653, 708 TO711, 763 TO 766 & 830 TO 832 OF PB WITH SUPPORTING BANK STATEMENTS PLACED AT PAGE 654 TO 660, 712 TO716, 76 7 TO 778 & 833 TO 838 OF PB AND HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS ONLY AND THUS, APPELLANT HAS DULY PROVED THE IDENTITY, CREDI TWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. 7.3.7 FURTHERMORE, FROM THE PERUSAL OF DOCUMENTARY EVIDENCES SUBMITTED BY THE APPELLANT, IT IS SEEN THAT TRANSAC TIONS HAVE BEEN DONE THROUGH BANKING CHANNELS AND ON THE DATE OF MAKING OF LOANS, THERE IS BALANCE AVAILABLE IN THE ACCOUNTS OF THE BORROWERS, WHICH PROVES THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. THERE IS NO CASE OF ANY CASH DEPOSITION IN THE ACCOUNT OF ANY OF THE INVESTOR COMPANIES AT THE TIME OF ISSUING CHEQUES/RTGS IN FAVOUR OF THE A SSESSEE. THEREFORE, IN VIEW OF THE SETTLED JUDICIAL PRECEDENTS AS ALREA DY RELIED UPON AND MENTIONED IN GROUND NO. 2 ABOVE, I AM OF THE CONSID ERED VIEW THAT APPELLANT DULY DISCHARGED ITS BURDEN CASTED UPON IT U/S 68 OF THE ACT. IT IS FURTHER SEEN THAT M/S BANSIDHAR ADVISORY PRIVATE LIMITED, M/S VASUNDHARA ADVISORY PRIVATE LIMITED, M/S PRITHVI VI NIMAY PRIVATE LIMITED AND M/S MACRO SOFT TECHNOLOGY PRIVATE LIMIT ED HAVE DULY REPLIED TO THE NOTICES ISSUED BY DCIT/DDIT(INV.), K OLKATA IN RESPECT OF COMMISSION, THESE FACTS REMAIN UNCONTROVERTED BY TH E AO. 119 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 7.3.8 FURTHER, IT IS EVIDENT FROM THE ASSESSMENT OR DER THAT OTHER FINDINGS AND ALLEGATIONS OF THE AO WITH RESPECT TO THE PARTNERS CAPITAL ARE SIMILAR TO THE FINDINGS MADE BY THE AO WITH RES PECT TO THE UNSECURED LOANS OF THE APPELLANT. AS THE SAID SIMILAR FINDING S AND ALLEGATIONS HAVE ALREADY BEEN DEALT WITH IN GROUND NO. 2 ABOVE, THES E ARE NOT AGAIN DEALT WITH FOR THE SAKE OF BREVITY. HOWEVER, MY VIEW REGA RDING THE FINDINGS AND ALLEGATIONS AS ALREADY DISCUSSED IN GROUND NO. 2 ABOVE, SHALL MUTATIS MUTANDIS APPLY TO THE FINDINGS AND ALLEGATI ONS OF THE AO WITH RESPECT TO PARTNERS CAPITAL MADE IN THIS GROUND OF APPEAL. 7.3.9 IN VIEW OF THE ABOVE DISCUSSION OF RELEVANT F ACTS AND FOLLOWING THE SEVERAL RATIOS ON THE SUBJECT FROM HONBLE APEX COURT, HIGH COURTS INCLUDING JURISDICTIONAL HIGH COURTS, TRIBUNALS INC LUDING JURISDICTIONAL TRIBUNALS, THE IMPUGNED ADDITION OF RS. 42,47,25,00 0/- ON ACCOUNT OF PARTNERS CAPITAL FROM M/S BANSIDHAR ADVISORY PRIVA TE LIMITED, M/S VASUNDHARA ADVISORY PRIVATE LIMITED, M/S PRITHVI VI NIMAY PRIVATE LIMITED AND M/S MACRO SOFT TECHNOLOGY PRIVATE LIMIT ED IS NOT SUSTAINABLE AND HENCE THE SAME STANDS DELETED. THUS THE FINDING OF THE LD. CIT (A) ARE BASED ON TH E FACTS AS WELL AS THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE WHERE AS THE AO HAS NOT BROUGHT ON RECORD ANY CONTRARY EVIDENCE EXCEPT THE ALLEGATI ON MADE IN THE REPORT OF THE INVESTIGATION WING KOLKATA. THEREFORE, THE DOCUMEN TARY EVIDENCES BROUGHT BY THE ASSESSEE CANNOT BE NEGATED MERELY ON THE BASIS OR A LLEGATION MADE IN THE REPORT WHICH IS NOTHING BUT NARRATION OF THE STATEMENTS RE CORDED OF CERTAIN PERSONS. THE REPORT OF THE DDIT INVESTIGATION CANNOT SUBSTITUTE THE DOCUMENTARY EVIDENCE. 120 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ACCORDINGLY, IN VIEW OF THE FACTS AND CIRCUMSTANCES , WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE LD. CIT (A) QUA THIS ISSUE. 20. SINCE WE HAVE DELETED THE ADDITION MADE BY THE AO, THEREFORE, GROUND NO. 6 RAISED BY THE ASSESSEE BECOMES INFRUCTUOUS AND DOES NOT REQUIRE ANY ADJUDICATION. 21. FOR THE ASSESSMENT YEARS 2011-12 TO 14-15, EXCE PT THE QUANTUM OF UNSECURED LOANS AND CAPITAL INTRODUCED BY THE CORPO RATE PARTNERS, ALL FACTS REMAIN SAME ON THE MERITS OF THE ISSUES. EVEN THE PARTIES WHO HAVE GIVEN THE UNSECURED LOANS ARE ALSO IDENTICAL. THE LD. CIT (A) HAS ALSO DECIDED THE ISSUES BY CONFIRMING THE PART ADDITION AND DELETING THE PART ON THE BASI S OF BIFURCATION OF THESE PARTIES ON IDENTICAL LINES AS FOR THE ASSESSMENT YEAR 2010-11. THE LD. A/R AS WELL AS THE LD. CIT D/R HAVE FAIRLY AGREED THAT THE ISSUES ARE IDENTICA L AS THE BASIS AND GROUNDS OF ADDITION MADE BY THE AO AS WELL AS ORDERS PASSED BY THE LD. CIT (A) IN ALL THESE APPEALS ARE IDENTICAL AND SAME, EXCEPT THE MINOR VA RIATION OF THE AMOUNTS. THEREFORE, NO SEPARATE ARGUMENT OR FINDING IS NEEDE D FOR ADJUDICATION OF THE APPEALS FOR THE ASSESSMENT YEARS 2011-12 TO 14-15. 22. WE HAVE CAREFULLY PERUSED THE IMPUGNED ORDERS O F THE AO AS WELL AS THE LD. CIT (A) AND ALSO GONE THROUGH THE DOCUMENTS FILED B Y THE ASSESSEE IN SUPPORT OF THE CLAIM AND FOUND THAT THE ASSESSEE PRODUCED THE IDEN TICAL DOCUMENTARY EVIDENCE AS IN THE CASE OF ASSESSMENT YEAR 2010-11. EVEN THE P ARTIES ARE SAME FOR THESE YEARS AND, THEREFORE, ONCE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN RESPECT OF ONE PARTY IS DECIDED, THE N THE SAME IS APPLICABLE FOR ALL THE SUBSEQUENT YEARS SUBJECT TO CONDITION THAT A SUFFIC IENT FUND WAS AVAILABLE WITH THE 121 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. CREDITOR. WE NOTE THAT EXCEPT M/S. ROYAL CRYSTAL D EALERS PVT. LTD. AND M/S. DOSHI MANAGEMENT PVT. LTD., ADDITIONS FOR WHICH WERE CONF IRMED BY THE LD. CIT (A) FOR ALL THESE YEARS ON THE REASONING THAT THESE COMPANIES A RE MANAGED AND CONTROLLED BY SHRI ANAND SHARMA, THE ALLEGED ENTRY OPERATOR, THE OTHER CREDITORS ARE COMMON AS IN THE PRECEDING YEARS. THIS FINDING OF THE LD. CIT (A) IS IDENTICAL TO THE FINDING IN RESPECT OF M/S. JALSAGAR COMMERCE PVT. LTD. FOR THE ASSESSMENT YEAR 2010-11. ACCORDINGLY, IN VIEW OF OUR FINDING ON THIS ISSUE, THE ADDITION SUSTAINED BY THE LD. CIT (A) IS DELETED. REST OF THE PARTIES FOR WHICH THE ADDITIONS WERE DELETED BY THE LD. CIT (A) ARE SAME FOR WHICH THE AO WAS NOT HAVING AN Y MATERIAL OR DOCUMENT TO SUBSTANTIATE THE FINDING OF BOGUS ACCOMMODATION ENT RIES AS IN THE CASE OF OTHER PARTIES, NAMELY, M/S. BIRLA ARTS PVT. LTD., M/S. TE CH CONSULTANTS PVT. LTD., M/S. SANGAM DISTRIBUTORS PVT. LTD. AS REGARDS THE CORPO RATE PARTNERS WHO HAVE INTRODUCED THE CAPITAL, THEY REMAIN THE SAME FOR AL L THE YEARS AND, THEREFORE, THE ISSUE IS COMMON FOR ALL THESE YEARS EXCEPT THE FACT THAT FOR THE ASSESSMENT YEAR 2014-15 ONLY ONE PARTNER, NAMELY, M/S. BANSIDHAR AD VISORY PVT. LTD. INTRODUCED SOME CAPITAL OF RS. 13.00 LACS AND FOR THE ASSESSME NT YEAR 2013-14 ONLY THREE PARTNERS INTRODUCED THE CAPITAL. THEREFORE, IN VIEW OF OUR FINDING ON ALL THESE ISSUES WHILE DECIDING THE CROSS APPEALS FOR THE ASSESSMENT YEAR 2010-11, THE GROUNDS RAISED BY THE ASSESSEE AND REVENUE FOR THE ASSESSME NT YEARS 2011-12 AND 14-15 STAND DISPOSED OFF ON THE SAME TERMS AND FINDING OF THE ASSESSMENT YEAR 2011-12 IS MUTATIS-MUTANDIS APPLICABLE FOR THESE ASSESSMENT YE ARS. 23. FOR THE ASSESSMENT YEAR 2015-16 ONLY, THE LD. C IT (A) HAS SUSTAINED THE ADDITION IN RESPECT OF ONLY ONE PARTY I.E. M/S. CAP LINE DEALCOME PVT. LTD. WHEREAS FOR 122 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. THE ASSESSMENT YEAR 2016-17, THE LD. CIT (A) HAS CO NFIRMED THE ADDITION ON ACCOUNT OF UNSECURED LOANS IN RESPECT OF TWO PARTIES, NAMEL Y, M/S. KAPLINE DEALCOME PVT. LTD. AND M/S. VSG LEASING & FINANCE CO. PVT. LTD. THE ASSESSEE HAS SHOWN UNSECURED LOANS FROM M/S. CAPLINE DEALCOME PVT. LTD . OF RS. 1.50 CRORES AND M/S. VSG LEASING & FINANCE CO. PVT. LTD. OF RS. 10,88,45 ,000/-. THE AO HAS SUPPORTED HIS FINDING IN THE ASSESSMENT ORDER BY THE STATEMEN TS OF SHRI ANKIT BAGRI AND SHRI SHIV SHANKAR BANKA. ON APPEAL, THE LD. CIT (A) HAS CONFIRMED THE ADDITIONS ON ACCOUNT OF UNSECURED LOANS FROM THESE PARTIES BY RE JECTING THE CONTENTION OF THE ASSESSEE OF CROSS EXAMINATION. 24. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBM ITTED THAT THE ASSESSEE SPECIFICALLY DEMANDED THE CROSS EXAMINATION OF THES E WITNESSES WHOSE STATEMENTS HAVE BEEN RELIED UPON BY THE AO AND THOSE STATEMENT S WERE RECORDED BY THE INVESTIGATION WING KOLKATA AT THE BACK OF THE ASSES SEE. DESPITE THE REPEATED REQUESTS BEFORE THE AO AS WELL AS BEFORE THE LD. CI T (A), THE ASSESSEE WAS NOT GIVEN THE OPPORTUNITY OF CROSS EXAMINATION. FURTHER, WHE N THE ASSESSEE PRODUCED ALL THE RELEVANT DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLA IM AS IN THE CASE OF THE OTHER PARTIES WHICH HAVE BEEN ACCEPTED BY THE LD. CIT (A) , THE MERE STATEMENT OF THE THIRD PERSON CANNOT OVER TURN THE DOCUMENTARY EVIDENCE PR ODUCED BY THE ASSESSEE. THE LD. A/R HAS RELIED UPON ALL THE DECISIONS WE HAVE A LREADY CITED WHILE DECIDING THE ISSUE FOR THE ASSESSMENT YEAR 2010-11. HE HAS REIT ERATED HIS CONTENTIONS AS RAISED FOR THE ASSESSMENT YEAR 2010-11. THUS THE LD. A/R HAS SUBMITTED THAT THE ADDITION BASED ON THE STATEMENT OF THIRD PARTY WITHOUT PROVI DING OPPORTUNITY OF CROSS EXAMINATION CANNOT BE A BASIS OF ADDITION. THE AS SESSEE SPECIFICALLY DEMANDED THE 123 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. CROSS EXAMINATION AND ALSO GIVEN THE UNDERTAKING TO BEAR THE COST OF CROSS EXAMINATION. HOWEVER, THE LD. CIT (A) HAS TURNED D OWN THE DEMAND OF THE ASSESSEE ON THE IDENTICAL REASONING AS FOR THE ASSESSMENT YE AR 2010-11. 25. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND REITERATED HIS CONTENTION AS RAISED FOR T HE ASSESSMENT YEAR 2010-11. 26. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE AO HAS GIVEN THE IDENTICAL FINDING FOR ALL THE ASSESSMENT YEARS WHICH IS BASED ON THE REPORT OF THE INVESTIGATION WING KOLKA TA AS WELL AS THE STATEMENT RECORDED BY THE DDIT KOLKATA. WE NOTE THAT THE SUR ROUNDING CIRCUMSTANCES AND THE FACTS ARE IDENTICAL AS FOR THE A.Y. 2010-11 AS RECO RDED BY THE AO AS WELL AS THE LD. CIT (A). THE LD. CIT (A) HAS TURNED DOWN THE REQUES T OF CROSS EXAMINATION IN PARA 3.12 TO 3.13 AT PAGES 188 TO 190 AS UNDER :- 3.12 IN MY CONSIDERED VIEW, THE TECHNICAL OBJECTION S RAISED BY THE APPELLANT IN RESPECT OF LOAN FROM CAPLIN DEALCOMM P RIVATE LIMITED AND M/S VSG LEASING AND FINANCE CO. LTD. AS ABOVE, ARE OF NO AVAIL TO THE APPELLANT DUE TO FOLLOWING UNDISPUTED FACTS: I. IT IS UNDISPUTED FACT THAT THE INCOME TAX DEPART MENT HAS MADE TREMENDOUS INVESTIGATIONS IN SUCH SHELL COMPAN IES OF KOLKATA, MUMBAI AND DELHI PROVIDING ACCOMMODATION E NTRY AND STATEMENTS MADE BY SEVERAL ACCOMMODATION ENTRY PROV IDERS HAVE BECOME VIRTUALLY IN PUBLIC DOMAIN. IT IS NO ARGUME NT THAT THE AO DID NOT PROVIDE SUCH STATEMENT BEFORE THE ASSESSEME NT OR IN ANY OF THE NOTICES. THESE FACTS WERE WELL KNOWN TO THE APPELLANT GROUP AND IGNORANCE IS MERE PRETENCE. 124 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. II. MOREOVER, SUCH STATEMENTS ARE SO VOCAL AND UNDE NIABLE THAT AS MENTIONED IN SOME OF THE CASE LAWS ABOVE, C ROSS- EXAMINATION OF SUCH ACCOMMODATION ENTRY PROVIDES BY THOUSANDS OF BENEFICIARIES ACROSS INDIA IS NEITHER PRACTICABL E NOR VIABLE AND THEREFORE UNCALLED FOR. III. IT IS UNDISPUTED FACT THAT IN THE STATEMENT DA TED 03.07.2014 SHRI ANKIT BAGRI AND SHRI SHANKAR BANKA HAD ADMITTE D TO BE ONE OF SUCH ACCOMMODATION ENTRY PROVIDERS. THE SUM AND SUBSTANCE OF THE SAID STATEMENT IS THAT THE CONCERN M/S CAPLI N DEALCOMM PRIVATE LIMITED, M/S VSG LEASING AND FINANCE CO. LT D. WAS ENGAGED IN THE ACTIVITIES OF PROVIDING ACCOMMODATIO N ENTRIES AND THE APPELLANT HAPPENED TO BE ONE OF SUCH BENEFICIAR Y OF SUCH CONCERN. IT IS ALSO ADMITTED FACT THAT THESE OPERAT ORS HAD BEEN RUNNING THE AFFAIR OF THE SAID COMPANY. V. THE STATEMENT OF SHRI ANKIT BAGRI AND SHRI SHAN KAR BANK IN WHICH NAME OF M/S CAPLIN DEALCOMM PRIVATE LIMITE D AND M/S VSG LEASING AND FINANCE CO. LTD. RESPECTIVELY APPEA RED, CANNOT BE COMPLETELY IGNORED SOLELY ON THE LEGAL GROUNDS R AISED BY THE APPELLANT. 3.13 IN VIEW OF ABOVE DISCUSSION, IT IS CLEAR THAT THE INCRIMINATING MATERIAL HAD BEEN FOUND DURING THE COURSE OF SEARCH OF ACCOMMODATION ENTRY PROVIDER. FURTHER INCRIMINATING MATERIAL HAD BEEN GATHERED BY ISSUING COMMISSION TO DDIT (INV.) KOLKATA, DURING T HE ASSESSMENT PROCEEDINGS AND ALL SUCH MATERIAL HAVE BEEN SHARED WITH THE APPELLANT AT LEAST DURING THE REMAND REPORT PROCEEDING. IN VI EW OF NATION-WIDE KNOWN SCAM BY THE ACCOMMODATION ENTRY PROVIDERS OF KOLKATA AND ELSEWHERE BURST BY THE INCOME TAX DEPARTMENT, THERE WAS NO NEED TO PROVIDE OPPORTUNITY FOR CROSS-EXAMINATION OF SAME A CCOMMODATION ENTRY PROVIDERS. ANYWAY, IN THE REJOINDER SUBMISSI ON TO REMAND REPORT THE APPELLANT IS ABSOLUTELY SILENT ON CROSS-EXAMINA TION AND BY SUCH 125 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. CONDUCT HE HAS FORGONE HIS RIGHT TO CROSS-EXAMINE. THEREFORE, THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN FOLLOWED. A S DISCUSSED IN PRECEDING PARAS, UNDER THE FACTS AND CIRCUMSTANCE O F THE CASE, IT COULD NOT BE SAID THAT AO DID NOT FOLLOWED THE BINDING DE CISION OF THE HONBLE SUPREME COURT AND THE HONBLE JURISDICTION COURT. I N VIEW OF ABOVE DISCUSSION, THE SEVERAL OTHER GROUNDS RAISED FOR TH E ISSUE ARE TREATED AS DISMISSED. THEREFORE, IN VIEW OF ABOVE FACTS DISCUS SED IN PARA 2.1, 2.4.3 TO 2.4.7 AND 3.1 TO 3.4 & 3.12 AND LEGAL POSITION A PPRISED IN PARA 3.6 TO 3.11 ABOVE, IT IS HELD THAT THE ADDITION MADE BY TH E AO ON ACCOUNT OF UNSECURED LOANS AMOUNTING TO RS. 1,50,00,000/- AND RS. 10,88,45,000/- FROM M/S CAPLIN DEALCOMM PRIVATE LIMITED AND M/S VS G LEASING AND FINANCE CO. LTD. RESPECTIVELY, IS SUSTAINABLE AND THE SAME IS CONFIRMED. THUS THE LD. CIT (A) HAS DECIDED THE ISSUE ON IDENT ICAL TERMS AS FOR THE ASSESSMENT YEAR 2010-11. WE HAVE ALREADY GIVEN OUR FINDING ON THIS ISSUE AND REFERRED VARIOUS DECISIONS OF HONBLE SUPREME COURT, HONBLE HIGH CO URTS AS WELL AS THIS TRIBUNAL. THEREFORE, OUR FINDING ON THE ISSUE FOR THE ASSESSM ENT YEAR 2010-11 IS SQUARELY APPLICABLE AS THE FACTS AND ISSUES ARE IDENTICAL FO R THESE YEARS. ACCORDINGLY, WE HOLD THAT THE ADDITION BASED ON THE STATEMENT OF THIRD P ARTY RECORDED AT THE BACK OF THE ASSESSEE WITHOUT AFFORDING OPPORTUNITY OF CROSS EXA MINATION IS NOT SUSTAINABLE IN LAW. 27. APART FROM THE ISSUE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, WE FIND THAT ON MERITS THE ASSESSEE PRODUCED ALL RELEVANT DOCUME NTARY EVIDENCES IN SUPPORT OF THE CLAIM WHICH IS IDENTICAL TO ALL THE OTHER PARTI ES IN RESPECT OF WHICH THE LD. CIT (A) HAS DELETED THE ADDITION. EVEN FOR SAKE OF COMPLETE NESS, WE REFER TO THE 126 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE IN RE SPECT OF THESE TWO COMPANIES AS UNDER :- S. NO. PARTICULARS PB PAGE NO. 1. M/S CAPLIN DEALCOMM PVT. LTD. COPY OF ACK. OF ITR OF AY 2016-17 987 COPY OF BALANCE SHEET OF AY 2016-17 988 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. 989-1008 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS O F ACCOUNTS OF PARTY. 1009-1011 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS O F ACCOUNTS OF ASSESSEE. 1012-1013 COPY OF AFFIDAVIT OF KAVITA JAIN DIRECTOR OF COMPAN Y. 1014-1017 ORDER PASSED BY CALCUTTA HIGH COURT REGARDING AMALGAMATION OF OTHER COMPANIES IN THIS COMPANY 1018-1039 COPY OF BALANCE SHEET OF COMPANY OF 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 AND 31.03.2016. 1040-1046 COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF ABOV E NAMED COMPANY FOR AY 2006-07, 2008-09, 2009-10, 2010-11 AND 2014-15. 1047-1070 COPY OF ROC MASTER DATA. 1071-1072 COPY OF NBFC CERTIFICATE. 1073 COPY OF PAN CARD. 1074 COPY OF SUMMON NO. 4560 DATED 16.10.2017 AND REMINDER NOTICE NO. 1583 DATED 31.10.2017 ISSUED BY DDIT (INVESTIGATION), UNIT-1(3), KOLKATA U/S 131 OF INCOME TAX ACT, 1961 1075-1077 COPY OF REPLY SUBMITTED BY COMPANY IN RESPONSE TO NOTICE/SUMMON ISSUED TO IT ALONG WITH DISPATCHED PROOF 1078-1080 2. M/S VSG LEASING AND FINANCE CO. LTD. COPY OF ACK. OF ITR OF AY 2016-17 1144 COPY OF BALANCE SHEET OF AY 2016-17 ALONG WITH ANNEXURE OF LOAN & ADVANCES 1145 COPY OF RELEVANT PAGE OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. 1146-1152 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS O F ACCOUNTS OF PARTY. 1153-1154 CONFIRMATION OF LOAN GIVEN TO ASSESSEE FROM BOOKS O F ACCOUNTS OF ASSESSEE. 1155 127 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. WHEN ALL THE RELEVANT DETAILS AND DOCUMENTARY EVIDE NCES PRODUCED BY THE ASSESSEE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GEN UINENESS OF THE TRANSACTIONS, THEN THE SAID EVIDENCES CANNOT BE REJECTED ON THE BASIS OF THE STATEMENT WITHOUT ANY CONTRARY DOCUMENTARY EVIDENCE. WE FURTHER NOTE THA T THE ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) OF M/S. CAPLIN DEALC OMM PVT. LTD. AND THE DETAILS OF WHICH ARE AS UNDER :- NAME OF COMPANY ASSESSMENT YEAR INCOME ASSESSED ASSESSMENT ORDER U/S 143(3) AT PB PG OF VOL.-III M/S CAPLIN DEALCOMM PVT. LTD 2008-09 1,40,710 1053-1054 M/S CAPLIN DEALCOMM PVT. LTD 2009-10 1,65,600 1059-1060 M/S CAPLIN DEALCOMM PVT. LTD 2010-11 1,20,000 1063-1064 M/S CAPLIN DEALCOMM PVT. LTD 2014-15 2,85,945 1066-1068 ONCE THE PARTY IS REGULARLY ASSESSED TO TAX AND ORD ERS UNDER SECTION 143(3) WERE PASSED BY THE AO, THEN THE TRANSACTIONS CANNOT BE T REATED AS BOGUS ONCE. IT IS MANIFEST FROM THE FINANCIAL STATEMENTS OF THESE COM PANIES THAT THE SHARE CAPITAL AND RESERVE OF M/S. CAPLIN DEALCOMM PVT. LTD. AND M/S. VSG LEASING & FINANCE CO. PVT. LTD. AS ON 31 ST MARCH, 2016 WERE RS. 136,63,90,504/- AND RS. 97,11 ,26,758/- WHEREAS THE AMOUNTS GIVEN TO THE ASSESSEE BY THESE TWO COMPANIES WAS 128 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. RS. 16.10 CRORES AND RS. 10.88 CRORES RESPECTIVELY. THUS THE CREDITWORTHINESS OF THESE COMPANIES AS EVIDENT FROM THEIR FINANCIAL STA TEMENTS WAS UNDISPUTEDLY SUFFICIENT TO GIVE THE AMOUNTS IN QUESTION TO THE A SSESSEE. ACCORDINGLY, HAVING REGARD TO THE DOCUMENTARY EVIDENCE FILED BY THE ASS ESSEE AND OUR FINDINGS ON THIS ISSUE FOR THE ASSESSMENT YEAR 2010-11, THE ADDITIO NS MADE BY THE AO ARE NOT SUSTAINABLE AND THE SAME ARE DELETED. THIS ISSUE C OVERS BOTH THE ASSESSMENT YEARS 2015-16 AND 16-17. THE ASSESSEE HAS ALSO RAISED GROUND NO. 5 REGARDIN G TYPOGRAPHICAL ERROR IN THE FINDING OF THE AO/CIT (A) ON ACCOUNT O F LATE DELIVERY CHARGES OF RS. 12 LACS. 28. THE ASSESSEE IS CARRYING ON THE BUSINESS OF SUP PLY OF ENERGY FOOD TO GOVERNMENT DEPARTMENTS UNDER THE CONTRACT. THE ASSE SSEE WAS TO SUPPLY SUPPLEMENTARY NUTRITION FOOD UNDER ICDS SCHEME TO W OMEN AND CHILD DEVELOPMENT OF GOVERNMENT OF RAJASTHAN AND GOVERNMENT OF GUJARA T. THE GOVERNMENT DEPARTMENTS MADE CERTAIN DEDUCTIONS FROM THE PAYMEN TS ON ACCOUNT OF LATE DELIVERY OF PRODUCTS AS PROVIDED UNDER THE TERMS AND CONDITI ONS OF THE CONTRACT. THE ASSESSEE CLAIMED DEDUCTION OF DISALLOWANCE MADE BY THE GOVERNMENT UNDER SECTION 37 OF THE ACT. THE AO DISALLOWED THE CLAIM OF DEDU CTION BY TREATING THE SAME AS PENAL IN NATURE. ON APPEAL, THE LD. CIT (A) HAS AL LOWED THE CLAIM OF THE ASSESSEE. HOWEVER, THE AMOUNT OF DISALLOWANCE MADE BY THE AO WHICH WAS DELETED BY THE LD. CIT (A) WAS MISTAKENLY MENTIONED AS RS. 4,11,08,334 /- AS AGAINST THE TOTAL DISALLOWANCE MADE BY THE AO OF RS. RS. 4,23,19,238/ -. THEREFORE, BOTH THE 129 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL AGAIN ST THE SAID ISSUE. THE REVENUE HAS RAISED THIS ISSUE IN GROUND NO. 7 OF THE CROSS APPEAL. 29. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/ R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT AN IDENTICAL ISSUE WAS CONSIDERED AND DECIDED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008- 09 AND 09-10 AND THE LD. CIT (A) HAS DECIDED THIS I SSUE BY FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL IN PARA 7.3.1 TO 7.3.3 AT PAGES 18 9 AND 190 AS UNDER :- 7.3.1. IN MY CONSIDERED VIEW, THE LATE DELIVERY CHA RGES ARE ON ACCOUNT OF CONTRACTUAL OBLIGATIONS OF THE APPELLANT WITH TH E GOVERNMENT DEPARTMENTS. AS PER THE TERMS AND CONDITIONS OF THE CONTRACT THE ASSESSEE IS REQUIRED TO COMPENSATE TO ICDS GOVERNME NT OF JHARKHAND OR ICDS GOVERNMENT OF GUJARAT ON ACCOUNT OF LATE SUPPL Y MAKE TO THEM. A COPY OF CONTRACT OF THE GOVERNMENT DEPARTMENT HAS A LSO BEEN SUBMITTED DURING THE APPELLATE PROCEEDINGS. THEREFORE, AS THE SAID EXPENDITURE OF THE ASSESSEE IS ON ACCOUNT OF CONTRACTUAL OBLIGATIO NS, IT CANNOT BE REGARDED AS ANY EXPENDITURE INCURRED BY THE ASSESSE E FOR INFRACTION OF LAW OR FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW. 7.3.2 FURTHER, IT IS AN UNDISPUTED FACT THAT IN THE EARLIER ASSESSMENT FOR A.Y. 2008-09 AND A.Y. 2009-10 THIS MATTER WAS RAISE D BY THE ASSESSING OFFICER BY DISALLOWING THE SAID EXPENDITURE. BUT TH E LEARNED CIT APPEALS, AJMER VIDE ORDER DATED 18/03/2013 FOR A.Y. 2008-09 AND LEARNED CIT APPEAL, KOTA VIDE ORDER DATED 27.03.201 4 FOR A.Y. 2009- 10 HAS ALLOWED THESE EXPENDITURE TO THE APPELLANT. ALSO, ON SUBSEQUENT 130 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. APPEAL BY THE DEPARTMENT IN THE APPELLATE TRIBUNAL, THE SAME WAS DISMISSED AS NON MAINTAINABLE. 7.3.3 THEREFORE, BY CONCURRING WITH THE VIEW OF THE PREDECESSOR CIT (A), I ALLOW THIS GROUND OF APPEAL RAISED BY THE AP PELLANT AND THUS, THE ADDITION OF RS. 4,11,08,334/- IS DELETED. THEREFORE, THE ISSUE ON PRINCIPLE IS ALREADY DECIDE D BY THIS TRIBUNAL AND HENCE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT (A) SO FAR AS THE ALLOWABILITY OF THE CLAIM IS CONCERNED. HOWEVE R, AS REGARDS THE TYPOGRAPHICAL ERROR OF THE AMOUNT, WE FIND THAT THE LD. CIT (A) I N PARA 7.1 HAS MENTIONED THE DISALLOWANCE MADE BY THE AO ON THIS ACCOUNT OF RS., 4,23,19,238/-. THE SAME IS REPRODUCED AS UNDER :- 7.1. AS DISCUSSED IN THE ASSESSMENT ORDER AT PAGE NO. 2-3, AO DISALLOWED THE EXPENDITURE OF RS. 4,23,19,238/- HOL DING THAT THESE CHARGES ARE IN VIOLATION OF THE LAW AND THUS PENALT Y IN NATURE. ACCORDINGLY, HE DISALLOWED LATE DELIVERY CHARGES OF RS. 5,90,515/- DEDUCTED BY THE WCD DEPARTMENT, RAJASTHAN, LATE DEL IVERY CHARGES OF RS. 4,47,877/- DEDUCTED BY THE WCD DEPARTMENT, JHAR KHAND AND LATE DELIVERY CHARGES OF RS. 4,12,80,846/- DEDUCTED BY T HE WCD DEPARTMENT. THEREFORE, IT IS APPARENT THAT THERE IS A MISTAKE IN THE AMOUNT RECORDED BY THE LD. CIT (A) WHILE GIVING THE FINDING IN PARA 7.3.3. AC CORDINGLY, WE MODIFY THE SAID PART OF THE ORDER OF THE LD. CIT (A) AND DISALLOWANCE MA DE BY THE AO OF RS. 4,23,19,238/- IS DELETED. 131 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 30. IN THE REVENUES CROSS APPEAL THE ISSUE ON ACCO UNT OF UNSECURED LOANS FROM TWO PARTNERS, NAMELY, M/S. COMPETENT SECURITIES AND M/S. INTELLECTUAL BUILDERS FOR THE ASSESSMENT YEARS 2015-16 AND 16-17 WERE DELETED BY THE LD. CIT (A) ON THE GROUND THAT THE AO HAS NOT BROUGHT ANY MATERIAL OR DOCUMENTARY EVIDENCE TO ESTABLISH THAT THE TRANSACTIONS ARE BOGUS ACCOMMODA TION ENTRIES AS THERE WAS NO STATEMENT OF ANY PERSON OF ALLEGED ENTRY OPERATOR H AVING CONTROL OVER THESE COMPANIES OR MANAGING THESE COMPANIES. 31. AN IDENTICAL ISSUE WAS INVOLVED IN ALL THE ASSE SSMENT YEARS OF THE REVENUE WHEREIN THE LD. CIT (A) HAS DELETED THE ADDITIONS F OR WANT OF ANY DOCUMENTARY EVIDENCE OR ANY OTHER MATERIAL IN SUPPORT OF THE FI NDING OF THE AO. THEREFORE, IN VIEW OF OUR FINDING ON THIS ISSUE IN ASSESSMENT YEA R 2010-11, THE FINDING OF THE LD. CIT (A) IS UPHELD. 32. THE REVENUE HAS ALSO RAISED A GROUND REGARDING TRADING ADDITION AFTER REJECTION OF BOOKS OF ACCOUNT WHICH IS COMMON FOR T HE ASSESSMENT YEAR 2011-12, 13-14 TO 16-17. 33. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO REJECTED THE BOOKS OF ACCOUNT ON THE GROUND OF NON MAINTENANCE OF QUANTIT ATIVE DETAILS AND THEN MADE A LUMPSUM ADDITION OF RS. 20 LACS. ON APPEAL, THE LD . CIT (A) HAS REVERSED THE FINDING OF THE AO AND DELETED THE ADHOC ADDITION MADE BY TH E AO. 34. WE HAVE HEARD THE LD. D/R AS WELL AS THE LD. A/ R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. D/R HAS RELIED UPON TH E ORDER OF THE AO. ON THE OTHER HAND, THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THA T THE ASSESSEE IS MAINTAINING PROPER BILLS AND VOUCHERS FOR PURCHASES, SALES AND EXPENSES AND ENTERED ALL THE 132 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. TRANSACTIONS IN THE BOOKS OF ACCOUNTS ON DAY TO DAY BASIS. THE ASSESSEE HAS GIVEN THE VALUATION SHEETS OF OPENING AND CLOSING STOCK, THE COMPLETED AUDITED BOOKS OF ACCOUNTS ALONG WITH THE SUPPORTING VOUCHERS WERE PR ODUCED BEFORE THE AO WHEREIN HE COULD NOT POINT OUT ANY SPECIFIC DEFECT. THUS T HE LD. A/R HAS SUBMITTED THAT NON MAINTENANCE OF DAY TO DAY QUANTITATIVE DETAILS IS N OT AFFECTING CORRECTNESS AND COMPLETENESS OF RECORD. THE VOLUME AND QUANTUM OF TRANSACTIONS MADE IT IMPOSSIBLE TO MAINTAIN SEPARATE QUANTITATIVE ACCOUN TS OF LARGE AND NUMEROUS ENTRIES OF RAW MATERIAL AND FINISHED GOODS ON DAY TO DAY BA SIS. HE HAS FURTHER SUBMITTED THAT FOR THE ASSESSMENT YEAR 2011-12, THE GP DECLAR ED BY THE ASSESSEE IS BETTER THAN THE EARLIER YEAR AND, THEREFORE, EVEN IF THE A O HAS REJECTED THE BOOKS OF ACCOUNTS, IT WOULD NOT AUTOMATICALLY RESULT IN ADDI TION. HE HAS REFERRED TO THE COMPARATIVE DETAILS OF GP OF THE EARLIER ASSESSMENT YEARS AND SUBMITTED THAT FOR THE ASSESSMENT YEAR 2010-11 THE AO WHILE PASSING THE AS SESSMENT ORDER UNDER SECTION 153A, HAS ACCEPTED THE BOOK RESULTS WHEREIN THE ASS ESSEE DECLARED GP AT 3.79% WHEREAS GROSS PROFIT FOR THE YEAR UNDER CONSIDERATI ON DECLARED AT 4.29% AND THAT TOO WHEN THERE IS A 242% INCREASE IN THE TURNOVER F OR THE YEAR UNDER CONSIDERATION IN COMPARISON TO THE EARLIER YEAR. FURTHER, THE AO HAS MADE A LUMP SUM ADDITION WITHOUT ANY BASIS OR ANY PROPER AND REASONABLE CRIT ERIA. IN SUPPORT OF HIS CONTENTION, THE LD. A/R HAS RELIED UPON THE DECISIO N OF HONBLE SUPREME COURT IN CASE OF DHAKESWARI COTTON MILLS LTD. VS. CIT, 26 IT R 775 (SC) AS WELL AS DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF MALANI RAMJIVAN JAGANNATH VS. ACIT, 316 ITR 120 (RAJ.). THE LD. A/R HAS ALSO REFERRED A SE RIES OF DECISIONS ON THE POINT. 133 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. 35. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE AO HAS REJECTED THE BOOKS OF ACCOUNTS FOR THE ASSESSMENT YEAR 2011-12 ON THE GROUND THAT THE ASSESSEE HAS NOT MAINTAINED THE QUANTITATIVE DETAILS OF DAY TO DAY STOCK. THE AO, THEREAFTER, MADE A LUMP SUM ADDITION OF RS. 20 LACS. IT IS PERTINENT TO NOTE THAT EVEN IF THE BOOKS OF ACCOUNT S ARE REJECTED BY INVOKING THE PROVISIONS OF SECTION 145(3), IT WOULD NOT IPSO FAC TO RESULT IN ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. AFTER REJECTION OF BOOKS O F ACCOUNTS, THE AO IS BOUND TO ESTIMATE THE INCOME OF THE ASSESSEE ON THE BASIS OF SOME PROPER AND REASONABLE CRITERIA. IT IS SETTLED PROPOSITION OF LAW THAT TH E PAST HISTORY OF GP DECLARED BY THE ASSESSEE CAN BE A PROPER AND REASONABLE GUIDANCE FO R ESTIMATION OF THE INCOME OF THE ASSESSEE AFTER REJECTION OF BOOKS OF ACCOUNTS. WE NOTE THAT THE ASSESSEE HAS DECLARED GP FOR THE YEAR UNDER CONSIDERATION WHICH IS BETTER THAN THE EARLIER ASSESSMENT YEAR. THE DETAILS OF THE COMPARATIVE SA LES AND THE GP OF THE ASSESSEE ARE AS UNDER :- ASSESSMENT YEAR SALES GROSS PROFIT G.P. RATIO 2009 - 10 91,73,52,630 5,15,69,065 5.62% 1010 - 11 145,59,46,303 5,52,49,358 3.79% 2011 - 12 499,23,48,131 21,40,87,419 4.29% IT IS ALSO NOT IN DISPUTE THAT FOR THE ASSESSMENT Y EAR 2010-11 THAT THE AO HAS ACCEPTED THE GP DECLARED BY THE ASSESSEE AT 3.79% A ND NO ADDITION WAS MADE. THEREFORE, COMPARING THE EARLIER YEARS GP AS WELL AS MORE THAN 200% OR PRECISELY 242% INCREASE IN THE TURNOVER FOR THE YEAR UNDER CO NSIDERATION, NO ADDITION IS 134 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. REQUIRED TO BE MADE EVEN AFTER REJECTION OF BOOKS O F ACCOUNT. ACCORDINGLY THE LUMP SUM ADDITION MADE BY THE AO IS WITHOUT ANY BASIS AN D IS HIGHLY ARBITRARY. THE LD. CIT (A) HAS DECIDED THIS ISSUE IN PARA 9.3.1 TO 9.3 .6 AT PAGE 243 AS UNDER :- 9.3.1 I FIND THAT THE IMPUGNED ADDITION IS ON ESTIM ATE BASIS SOLEY ON THE GROUND OF NON-MAINTAINING QUANTITATIVE DETAILS OF R AW MATERIAL OF DIFFERENT GRADE. 9.3.2 IT IS UNDISPUTED FACT THAT THE AO HAS NOT SPE CIFICALLY WORKEDOUT THE POSSIBLE LEAKAGE ON ACCOUNT OF SHORTCOMINGS OF NON-MAINTAINING QUANTITATIVE DETAILS OF RAW MATERIAL AS POINTED OUT BY HIM. IN FACT THE TRADING RESULTS ARE BETTER THAN PREVIOUR AY. 9.3.3 IN MY CONDIDERED VIEW, IT IS NOT JUSTIFIED FO R REJECTING THE BOOKS OF ACCOUNT ON THE SOLE GROUND OF NOT MAINTAINING QUANT ITATIVE DETAILS WHEN THERE IS COMPLETE RECORD FOR VOLUME OF TRANSACTION AND PURCHASE THEREOF. 9.3.4 FOLLOWING THE RATIOS OF DECISIONS CITED BY TH E APPELLANT IN PARA 11 I) TO III) OF HIS SUBMISSION REPRODUCED ABOVE, T HUS, ACTION OF AO IN REJECTION OF BOOKS OF ACCOUNTS IS NOT SUSTAINABLE. 9.3.5 MOREOVER, THE AO HAS MADE SPECIFIC ADDITIONS ON ACCOUNT OF UNSECURED LOAN AND CONTRIBUTIONS BY PARTNERS AND A PART OF THE SAME IS ALREADY CONFIRMED. 9.3.6 IN VIEW OF ABOVE DISCUSSION, THE IMPUGNED ADD ITION OF RS. 20,00,000/- IS DELETED. THEREFORE, WHEN THE AO HAS NOT FOUND ANY DISCREPANC Y IN THE OPENING STOCK, PURCHASES AND CLOSING STOCK OF THE ASSESSEE, THEN M ERELY BECAUSE THE ASSESSEE HAS NOT MAINTAINED THE DAY TO DAY DETAILS OF THE MOVEME NT OF THE STOCK DUE TO THE LARGE 135 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. QUANTITY AND NUMEROUS ENTRIES OF RAW MATERIAL AND F INISHED GOODS CANNOT BE A BASIS FOR REJECTION OF BOOKS OF ACCOUNTS. THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF MALANI RAMJIVAN JAGANNATH VS. ACIT (SUPRA) HAS H ELD IN PARA 10 & 11 AS UNDER :- 10. IN THE FACE OF THESE UNDISPUTED FACTS AND CIRCUMST ANCES, THE TRIBUNAL IN OUR OPINION COULD NOT HAVE INTERFERED WITH THE ORDE R OF CIT(A). IN DOING SO, IT HAD IGNORED ALL ADMITTED FACTS NOTICED BY US ABOVE, IN THE FACE OF WHICH THERE WAS NO OCCASION FOR THE ASSESSING OFFICER TO HAVE R ESORTED TO ESTIMATE METHOD. THE GP IS PRIMARILY RESULT OF EXCESS OF SALES OVER PURCHASES, OPENING STOCK, CLOSING STOCK, THE UNSOLD STOCK AT TWO TERMINALS IS ONLY BALANCING FACTOR. ADMITTEDLY OUT OF THIS FOUR COMPONENTS OF TRADING R ESULT, THERE COULD NOT HAVE BEEN ANY GROUND FOR THE REVENUE TO ARRIVE AT DIFFER ENT RESULT. SO FAR AS CLOSING STOCK IS CONCERNED, INVENTORIES OF EXISTING STOCK W ERE NOT FOUND TO BE INCORRECT BY THE ASSESSING OFFICER I.E.THAT POSITION OF STOCK AS SHOWN IN THE ACCOUNT BOOKS WAS NOT INCORRECT. THERE BEING NO DISPUTE ABO UT THE SALES AND PURCHASES, NON-MAINTENANCE OF STOCK REGISTER LOST I TS SIGNIFICANCE SO FAR AS ARRIVING AT GP IS CONCERNED. THEREFORE, THE CIT(A) WAS RIGHT IN HIS REASONING ABOUT ADMITTED STATE OF AFFAIRS. RESORTING TO ESTIM ATE OF GP RATE WAS FOUNDED ON NO MATERIAL. IT WAS MERELY A CASE OF MAKING CERT AIN ADDITIONS ON THE BASIS OF CERTAIN DEFECTS POINTED OUT BY THE ASSESSING OFF ICER AND WHICH HE HAS SHOWN IN DIFFERENT ACCOUNT BY GIVING MARGIN OF UNVOUCHED EXPENSES. HE HAS DISALLOWED CERTAIN EXPENSES. 11. THE TRIBUNAL COMMITTED BASIC ERROR IN NOT APPRECIA TING THE REASONING GIVEN, BY THE CIT(A). IT IS TRITE TO SAY THAT IN TH E FACTS AND CIRCUMSTANCES OF PRESENT CASE, ACCOUNT BOOKS ARE MAINTAINED AS THEY WERE ORDINARILY MAINTAINED YEARS AFTER YEARS AND WHICH WERE FOUND T O YIELD A FAIR RESULT. MERE DEVIATION IN GP RATE CANNOT BE A GROUND FOR REJECTI NG BOOKS OF ACCOUNT, AND ENTERING REALM OF ESTIMATE AND GUESSWORK. LOWER GP RATE SHOWN IN THE BOOKS OF ACCOUNT DURING CURRENT YEAR AND FALL IN GP RATE WAS JUSTIFIED AND ALSO ADMITTED BY THE ASSESSING OFFICER AS WELL AS CIT(A) AS WELL AS THE TRIBUNAL. THEREFORE, FALL IN GP RATE LOST ITS SIGNIFICANCE. H AVING ACCEPTED THE REASON FOR FALL IN GP RATE, NAMELY, STIFF COMPETITION IN MARKE T AND ALSO THAT HUGE LOSS CAUSED IN PARTICULAR TRANSACTION, NEITHER THE REJEC TION OF BOOKS OF ACCOUNT WAS JUSTIFIED NOR RESORT TO SUBSTITUTION OF ESTIMATED G P BY RULE OF THUMB MERELY FOR MAKING CERTAIN ADDITIONS. WE ARE, THEREFORE, OF THE OPINION THAT THE FINDINGS ARRIVED AT BY THE TRIBUNAL SUFFERS FROM BASIC DEFEC T OF NOT APPLYING ITS MIND TO THE EXISTING MATERIAL WHICH WERE RELEVANT AND WENT TO THE ROOT OF THE MATTER. WHEN ALL THE DATA AND ENTRIES MADE IN THE TRADING A CCOUNT WERE NOT FOUND TO BE INCORRECT IN ANY MANNER, THERE COULD NOT HAVE BE EN ANY OTHER RESULT EXCEPT WHAT HAS BEEN SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. WE ARE, THEREFORE, UNABLE TO SUSTAIN THE ORDER OF THE TRIBU NAL. 136 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF LD. CIT (A) QUA THIS ISSUE. 36 THIS ISSUE IS IDENTICAL FOR THE ASSESSMENT YEAR 2011-12, 13-14, 14-15, 15-16 AND 16-17. SINCE THE AO HAS GIVEN AN IDENTICAL FIN DING AND THE LD. CIT (A) HAS DELETED THE ADDITION BY CONSIDERING THE SAME FACTS, THEREFORE, OUR FINDING FOR THE ASSESSMENT YEAR 2011-12 IS APPLICABLE ON THIS ISSUE FOR THE ASSESSMENT YEARS 2013- 14 TO 16-17 ALSO. 37. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED AND APPEALS OF THE REVENUE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 31/12/2 018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 31/12/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. KOTA DAL MILLS, KOTA. 2. THE RESPONDENT THE DCIT, CENTRAL CIRCLE, KOTA. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 997(14)/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 137 ITA NOS. 997 TO 1002 & 1119/JP/2018 AND ITA NOS. 1057 TO 1062 & 1210/JP/2018. M/S. KOTA DALL MILL, KOTA.
Other Referred Cases
-
Laws Referred To
-
1:1 Consultation on Legal Requirements
₹1
1:1 Consultation on Business Valuations
₹1
Guide to Charitable Trusts: Formation, Benefits, and Compliance
₹0
Assignment of Registered Trademark
Mehul₹500
Contractor Indemnity Agreement
₹0
SEBI Resets Mutual Fund Rules: A Structural Shift for Investors
Team Counselvise - March 13, 2026
Why Meesho got ₹1,500 Crore Tax Demand ?
Team Counselvise - March 09, 2026
Finance Bill, 2026: Key Direct Tax Amendments on Assessments and Appeals
Team Counselvise - February 06, 2026