M/S. N.D. Diamonds, Kolkata V. Deputy Commissioner of Income Tax, Central Circle-01, Kanpur

ITSSA 325/LKW/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3878 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-10-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 23-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 153A; 68; 132

Judgement Text

I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 2012-13 M/S N. D. DIAMONDS, 18, HANSPUKUR FIRST LANE, KOLKATA. PAN:AAFFN 9110 R VS. DCIT, CC-1, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE SEPARATE ORDERS OF LEARNED CIT(A)-IV, KANPUR BOTH DATED 28/0 2/2014 PERTAINING TO ASSESSMENT YEARS 2010-11 AND 2012-13. 2. IN THESE APPEALS THE ASSESSEE HAS RAISED VARIOUS GROUNDS INCLUDING LEGAL GROUNDS HOWEVER, THE CRUX OF THE GROUNDS OF A PPEALS IS THE GRIEVANCE OF THE ASSESSEE FOR THE ACTION OF LEARNED CIT(A) BY WHICH HE HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOU NT OF UNSECURED LOANS. BOTH THE APPEALS WERE HEARD TOGETHER AND THEREFORE, FOR THE SAKE OF CONVENIENCE, A COMMON AND CONSOLIDATED ORDER IS BEI NG PASSED. 3. AT THE OUTSET, LEARNED A. R. SUBMITTED THAT ASSE SSMENTS IN THESE YEARS WERE MADE U/S 153A OF THE ACT IN VIEW OF A SE ARCH CONDUCTED ON THE APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY SHRI J. S. MINHAS, CIT, D.R. DATE OF HEARING 29/08/2018 DATE OF PRONOUNCEMENT 31 / 08 /201 8 I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 2 PREMISES OF THE ASSESSEE. IT WAS SUBMITTED THAT TH E SEARCH TOOK PLACE ON 25/10/2013 THEREFORE, FOR THE ASSESSMENT YEAR 2010- 2011 THE ADDITION COULD HAVE BEEN MADE ONLY ON THE BASIS OF INCRIMINA TING MATERIAL AS THE ASSESSMENT STOOD COMPLETED. IN THIS RESPECT LEARNE D A. R. FILED A BRIEF SYNOPSIS WHEREIN THE CHRONOLOGICAL ORDER OF DATES O F FILING OF RETURN AND LIMITATION DATES WERE MENTIONED. LEARNED A. R. INV ITED OUR ATTENTION TO THE COPY OF PANCHNAMA PREPARED AT THE TIME OF SEARCH PL ACED AT PAGES 44 TO 49 OF THE PAPER BOOK. OUR SPECIFIC ATTENTION WAS INVI TED TO PAGE 48 OF THE PAPER BOOK WHERE INVENTORY OF THE MATERIAL IMPOUNDE D DURING SEARCH WAS MENTIONED. IT WAS POINTED OUT THAT THE ASSESSING O FFICER HAS MADE ADDITION ON ACCOUNT OF AN UNSECURED LOAN FROM SUPERFAST META L LINKS PVT. LTD. WHEREAS IN THE PANCHNAMA NO MATERIAL HAS BEEN IMPOU NDED REGARDING THIS LOAN AND THEREFORE, ADDITION ON ACCOUNT OF THIS LOA N WAS UNSUSTAINABLE IN LAW. IN THIS RESPECT RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [201 6] 380 ITR 573 (DEL) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT IN CAS E OF COMPLETED ASSESSMENT, THE ADDITION CAN ONLY BE MADE ON THE BA SIS OF INCRIMINATING MATERIAL, IF ANY, FOUND DURING SEARCH. IN VIEW OF THIS IT WAS ARGUED THAT ADDITION SUSTAINED BY LEARNED CIT(A) NEEDS TO BE DE LETED AS THERE WAS NO MATERIAL IMPOUNDED DURING SEARCH. 3.1 ARGUING APPEAL IN I.T.A. NO.326 LEARNED A. R. S UBMITTED THAT IN THIS YEAR THE ASSESSING OFFICER HAD MADE ADDITION OF RS. 79 LAKH WHICH THE ASSESSEE HAD RECEIVED ON ACCOUNT OF UNSECURED LOAN FROM A. K. JEWELLERS, KOLKATA. IT WAS SUBMITTED THAT ASSESSMENT IN THIS YEAR WAS PENDING THEREFORE, THE ASSESSING OFFICER WAS EMPOWERED TO M AKE ADDITION OTHER THAN ON THE BASIS OF INCRIMINATING MATERIAL ALSO. LEARNED A. R. SUBMITTED THAT THE SAID UNSECURED LOAN WAS REPAID DURING THE YEAR ITSELF AND THERE WAS NIL OUTSTANDING BALANCE AS ON THE CLOSE OF THE YEAR . LEARNED A. R. SUBMITTED I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 3 THAT THE AMOUNTS WERE RECEIVED AND REPAID THROUGH B ANKING CHANNELS. IT WAS FURTHER SUBMITTED THAT INTEREST WAS ALSO PAID T O A. K. JEWELLERS ON WHICH TDS WAS ALSO DEDUCTED. THE LEARNED A. R. SUBMITTED THAT PAN NUMBER AND ADDRESS OF THE CREDITOR WAS ALSO SUBMITTED TO ASSES SING OFFICER. IN THIS RESPECT OUR ATTENTION WAS INVITED TO PAGE 35 OF THE PAPER BOOK WHERE A COPY OF LETTER WRITTEN BY ASSESSEE AND ADDRESSED TO THE ASSESSING OFFICER NARRATING THESE FACTS WAS PLACED. LEARNED A. R. FU RTHER SUBMITTED THAT AT THAT POINT OF TIME THE COPY OF ITR AND BANK STATEME NT WAS NOT AVAILABLE AND ASSESSING OFFICER WAS REQUESTED TO GIVE SOME TIME T O FILE THE SAME AND ASSESSING OFFICER WAS ALSO REQUESTED TO DIRECTLY CO NFIRM FROM THE CREDITOR BUT THE ASSESSING OFFICER MADE THE ADDITION AND THE REFORE, IN THE FORM OF ADDITIONAL EVIDENCE COPY OF RETURN, COPY OF BANK ST ATEMENT AND CONFIRMATION FROM CREDITOR WERE FILED UNDER RULE 46A AND LEARNED CIT(A) FORWARDED THE DOCUMENTS TO ASSESSING OFFICER FOR HIS REMAND REPOR T. IT WAS SUBMITTED THAT THE ASSESSING OFFICER DID NOT COMMENT ON THE M ERITS OF THE DOCUMENTS AND ONLY REQUESTED THE LEARNED CIT(A) NOT TO CONSID ER THE SAME AS THE ASSESSEE WAS PROVIDED SUFFICIENT OPPORTUNITY. OUR ATTENTION WAS INVITED TO PAGE 4 OF THE PAPER BOOK WHERE A COPY OF REMAND REP ORT WAS PLACED. IT WAS SUBMITTED THAT LEARNED CIT(A) DISMISSED THE APP EAL OF THE ASSESSEE BY HOLDING THAT THE ADDITIONAL EVIDENCE WAS NOT ACCEPT ABLE. LEARNED A. R. FURTHER STATED THAT NONE OF THE AUTHORITIES BELOW H AVE CARED TO EXAMINE THE MERITS OF THE CASE AND THEREFORE, IT WAS PRAYED THA T THE APPEAL FILED BY THE ASSESSEE MAY BE ALLOWED AS THE ASSESSEE HAD DULY SU BMITTED COPY OF BANK ACCOUNT OF THE ASSESSEE AND HAD ALSO FURNISHED PAN ALONG WITH THE ADDRESS AND HAD ALSO DEDUCTED TDS ON THE INTEREST PAID TO I T AND ALL THE DOCUMENTS WERE AVAILABLE BEFORE THE AUTHORITIES BELOW. IT WA S FURTHER SUBMITTED THAT ONCE THE LEARNED CIT(A) HAD FORWARDED THE ADDITIONA L EVIDENCE TO ASSESSING OFFICER FOR HIS REMAND REPORT, IT WAS NOT APPROPRIA TE ON THE PART OF LEARNED CIT(A) TO REJECT THE ADDITIONAL EVIDENCE AFTER RECE IPT OF REMAND REPORT. ON I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 4 MERITS OF THE CASE THE LEARNED A.R. INVITED OUR ATT ENTION TO ADDITIONAL EVIDENCE AND SUBMITTED THAT THERE WERE CONFIRMATION OF STATEMENT, COPY OF BANK ACCOUNT OF CREDITOR AND COPY OF RETURN OF CRED ITOR WHICH WERE CRUCIAL FOR DECIDING THE APPEAL OF ASSESSEE AND OUR ATTENTI ON WAS INVITED TO PAPER BOOK PAGES 13 TO 18 WHERE COPIES OF THESE DOCUMENTS WERE PLACED. LEARNED A. R. SUBMITTED THAT EVEN IN THE ABSENCE OF ADDITIONAL EVIDENCES THE ADDITION WAS NOT CALLED FOR AS PER LAW AS THE A SSESSEE HAD FURNISHED ADDRESS, PAN NUMBER AND HAD ALSO FURNISHED COPY OF BANK ACCOUNT WHERE ALL THE TRANSACTIONS WERE REFLECTED. THE LEARNED A .R. PLACED HIS RELIANCE ON AN ORDER OF HON'BLE LUCKNOW BENCH OF THE TRIBUNAL I N THE CASE OF ANURADHA MASALA UDYOG IN I.T.A. NO.257/LKW/2002 WHERE THE HO N'BLE TRIBUNAL VIDE ORDER DATED 07/01/2014 HAD HELD THAT ADDITION UNDER THESE CIRCUMSTANCES WAS NOT MAINTAINABLE. FURTHER RELIANCE WAS PLACED ON AN ORDER OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RANCHHOD JIVABHAI NAKHAVA WHERE THE HON'BLE COURT HAD HELD THAT WHERE ASSESSEE HAD FURNISHED ADDRESS AND PAN NUMBER OF CREDITOR, THE ASSESSING OFFICER CANNO T MAKE ADDITION WITHOUT VERIFYING THE EXISTENCE OF TRANSACTIONS FROM THE AS SESSING OFFICER OF CREDITOR. 4. LEARNED D. R., ON THE OTHER HAND, IN RESPECT OF I.T.A. NO.325 STATED THAT THE ASSESSEE HAD NOT TAKEN THIS GROUND OF APPE AL BEFORE THE LEARNED CIT(A) AND HAS ALSO NOT TAKEN THIS GROUND OF APPEAL BEFORE HON'BLE TRIBUNAL. 5. ARGUING APPEAL IN I.T.A. NO.326 LEARNED D. R. IN VITED OUR ATTENTION TO THE ASSESSMENT ORDER AT PAGE 4 OF ORDER AND SUBMITT ED THAT THE ASSESSING OFFICER HAD SPECIFICALLY NOTED THAT THE ASSESSEE HA D FAILED TO FURNISH COPY OF ITR, BALANCE SHEET, COPY OF BANK STATEMENT ETC. AND THEREFORE, THE AUTHORITIES BELOW HAVE RIGHTLY MADE AND CONFIRMED T HE ADDITIONS. I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 5 5.1 IN HIS REJOINDER LEARNED A. R. SUBMITTED THAT V IDE GROUND NO. 4 THE ASSESSEE HAS TAKEN SPECIFIC GROUND THAT IN THE ABSE NCE OF INCRIMINATING MATERIAL, NO ADDITION COULD HAVE BEEN MADE. HE FUR THER STATED THAT BEFORE LEARNED CIT(A) ALSO THIS GROUND WAS RAISED AND IN T HIS RESPECT OUT ATTENTION WAS INVITED TO GROUND NO. 1 TAKEN BEFORE LEARNED CI T(A), REPRODUCED BY HIM IN HIS ORDER AT PAGE 2 AND THEREFORE, IT WAS ARGUED THAT THE ARGUMENT OF LEARNED D. R. IS NOT VALID. IN HIS REJOINDER IN I. T.A. NO.326 LEARNED A. R. FURTHER INVITED OUR ATTENTION TO THE FACT THAT COPY OF BANK STATEMENT AND COPY OF STATEMENT WERE FILED BEFORE THE ASSESSING O FFICER AND OUR ATTENTION WAS INVITED TO THE OBSERVATION MADE BY THE ASSESSIN G OFFICER AT PAGE 4 OF HIS ORDER. LEARNED A. R. FURTHER SUBMITTED THAT VI DE LETTER PLACED AT PAGE 35 THE ASSESSEE HAD STATED THAT IT HAD ENCLOSED COPY O F ACCOUNT AND HAD ALSO SUBMITTED THAT THE TRANSACTIONS WERE MADE THROUGH B ANKING CHANNEL AND IT WAS ALSO SUBMITTED THAT CREDITOR TO WHOM INTEREST W AS PAID WAS AN EXISTING ASSESSEE. OUR ATTENTION WAS AGAIN INVITED TO AN OR DER OF LUCKNOW BENCH OF THE TRIBUNAL WHEREIN VIDE ITS ORDER DATED 07/01/201 4 THE HON'BLE TRIBUNAL HAS HELD THAT MERELY ON THE BASIS OF NOT FILING THE CONFIRMATION, THE CASH CREDIT ENTRIES THROUGH ACCOUNT PAYEE CHEQUE, CANNOT BE SAID TO BE NON GENUINE. 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. AS REGARDS APPEAL IN I.T.A. NO. 325, WE FIND THAT RETURN IN THIS YEAR WAS FILED ON 14/10/2010 AND NOTICE U/S 14 3(2) COULD HAVE BEEN ISSUED TO THE ASSESSEE BY 30/09/2011. THE PROVISO TO SECTION 143(2) CLEARLY STATES THAT NO NOTICE UNDER THIS SUB SECTION SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. THEREFORE, FROM THE ANALYSIS OF ABOVE PROVISIONS RELATING TO ISSUE OF NOTICE U/S 143(2), WE FIND THA T THE ASSESSING OFFICER COULD HAVE ISSUED NOTICE U/S 143(2) BY 30/09/2011 W HICH HE DID NOT DO AND I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 6 THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. TH E DATE OF SEARCH IS 25/10/2013 AND THEREFORE, AT THE TIME OF SEARCH THE ASSESSMENT IN THIS YEAR STOOD COMPLETED AND THE ADDITION, IF ANY, COULD HAV E BEEN MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL AS HAS BEEN HELD IN THE CASE OF KABUL CHAWLA. THE FINDINGS OF HON'BLE DELHI HIGH COURT ARE REPROD UCED BELOW: 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 T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAV E TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III.THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS I N RESPECT 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 THE RE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATIO N AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONL Y ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESS MENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, TH E JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 7 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 ON THE R ECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE CO URSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME O R PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL 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 COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED . 39. THE QUESTION FRAMED BY THE COURT IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 40. THE APPEALS ARE ACCORDINGLY DISMISSED BUT IN TH E CIRCUMSTANCES NO ORDERS AS TO COSTS. THEREFORE, FOLLOWING THE ABOVE JUDGMENT OF HON'BLE DELHI HIGH COURT, WE FIND THAT THE ASSESSMENT IN THIS YEAR STOOD COMPLET ED AT THE TIME OF SEARCH THEREFORE, ADDITION IF ANY, COULD HAVE BEEN MADE ON LY ON THE BASIS OF SEARCH MATERIAL. THE SEARCH MATERIAL, AS PLACED IN PAGE 4 5 OF THE PAPER BOOK, DO NOT INDICATE ANY INCRIMINATING DOCUMENTS RELATING T O THE ADDITION MADE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS MA DE THE ADDITION ON ACCOUNT OF UNSECURED LOAN FROM SUPERFAST METAL LINK S PVT. LTD. WHICH DID NOT FIND MENTION IN THE PANCHNAMA AS PLACED IN PAGE 46 OF THE PAPER BOOK. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFIC ER IS NOT SUSTAINABLE IN LAW AND THE APPEAL OF THE ASSESSEE IN I.T.A. NO.325 IS ALLOWED. 6.1 NOW COMING TO APPEAL IN I.T.A. NO.326. IN THIS YEAR THE ASSESSMENT WAS PENDING AND THEREFORE, THE ASSESSING OFFICER WA S EMPOWERED TO MAKE ADDITION EVEN IN THE ABSENCE OF INCRIMINATING MATER IAL. THEREFORE, LEGAL GROUND TAKEN BY ASSESSEE VIDE GROUND NO. 4 IS DISMI SSED. THE ASSESSING I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 8 OFFICER IN THIS YEAR MADE THE ADDITION ON ACCOUNT O F UNSECURED LOAN OF RS.79 LAKH RECEIVED FROM M/S A. K. JEWELLERS, KOLKATA. T HE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS SUBMITTED THAT THE LOANS WERE RECEIVED THROUGH RTGS AND NEFT AND THE SAME WERE AL SO REPAID DURING THE YEAR. THE ASSESSEE WAS ASKED BY THE ASSESSING OFFI CER TO FILE COPY OF ITR, BALANCE SHEET, COPY OF BANK STATEMENT ETC. OF CREDI TOR FOR WHICH THE ASSESSEE HAD STATED VIDE LETTER DATED NIL PLACED AT PAGE 35 OF THE PAPER BOOK THAT THEY ARE NOT IN TOUCH WITH THE COMPANY AN D ASSESSING OFFICER COULD MAKE ANY INQUIRY DIRECTLY FROM THE COMPANY. VIDE SAME LETTER, THE ASSESSEE HAD ALSO SUBMITTED THAT IT HAD PAID INTERE ST ALSO AND HAD DEDUCTED TDS ON THE INTEREST AMOUNT AND HAD ALSO SUBMITTED C OMPLETE ADDRESS ALONG WITH PAN WHICH IS APPARENT FROM PAGE 35 OF THE PAPE R BOOK. THE ASSESSEE DUING THE APPELLATE PROCEEDINGS BEFORE LEARNED CIT( A) FILED THE DOCUMENTS AS REQUIRED BY THE ASSESSING OFFICER IN THE FORM OF ADDITIONAL EVIDENCE AND LEARNED CIT(A) DULY FORWARDED THE SAME TO THE ASSES SING OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER, WITHOUT COMMENTIN G ON THE MERITS OF THE DOCUMENTS, SIMPLY STATED THAT THE ADDITIONAL EVIDEN CE SHOULD NOT BE ACCEPTED. THE REMAND REPORT AS PLACED AT PAGE 4 OF THE PAPER BOOK IS REPRODUCED BELOW: F.NO.DCIT/CC-I/KNP/REMAND REPORT/2017-18 DATED: 18.01.2018 TO, THE COMMISSIONER OF INCOME TAX (A)-IV, KANPUR THROUGH: ADDL. COMMISSIONER OF INCOME TAX (CR). KAN PUR SIR, SUB:REMAND REPORT IN THE CASE OF M/S N.D.DIAMONDS, 18, HANSPURKUR, FIRST LANE, KOLKATA FOR A.Y. 2012-13 - REGARDING- KINDLY REFER TO YOUR LETTER F. NO. CIT (A)-IV/KNP/R EMAND REPORT/2017- 18/166 & 324 DATED 12.09.2017 AND 19.12.2017 ENCLOS ING THERE WITH SUBMISSION FILED BY THE APPELLANT DATED NIL ON THE SUBJECT MEN TIONED ABOVE. I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 9 THE ASSESSEE FIRM FILED ITS RETURN OF INCOME ON 07. 12.2015 DECLARING TOTAL INCOME OF RS.23,52,900/- AND THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICE U/S 143(2) OF THE I.T. ACT DATED 08/08/2013 W AS ISSUED. THE ASSESSMENT U/S 153A OF THE I.T.A.T. WAS COMPLETED IN THIS CASE ON 30/03/2016 AT TOTAL INCOME OF RS.1,04,52,280/- AFTER MAKING ADDITION OR RS.79, 00,000/- ON ACCOUNT OF UNSECURED LOAN. SINCE THE ASSESSEE FAILED TO FURNIS H CONFIRMATION, COPY OF ITR, BALANCE SHEET AND COPY OF BANK STATEMENTS, THE CRED ITWORTHINESS AND GENUINENESS OF THE TRANSACTION COULD NOT BE ESTABLISHED BY THE ASSESSEE COMPANY AND THE AMOUNT OF RS.79,00,000/- WAS ADDED BACK TO THE RETU RNED INCOME OF THE ASSESSEE. IN THIS REGARD, I HAVE GONE THROUGH THE CONTENTS OF T HE SAID SUBMISSION AND FOUND THAT THE ABOVE ADDITION WAS MADE AS PER PROVI SIONS OF THE I.T. ACT AFTER GIVING HIM SUFFICIENT OPPORTUNITIES VIDE SEVERAL NO TICES/QUESTIONNAIRE U/S.142(1) OF THE I.T.ACT TO PRODUCE COPY OF CONFIRMATION OF M/S. SUPER FAST METAL LINKS PVT. LTD. FROM WHOM UNSECURED LOAN WAS TAKEN. IN VIEW OF THE ABOVE, IT IS VERY CLEAR THAT THE ASSE SSEE WAS GIVEN PROPER AND ADEQUATE OPPORTUNITY TO SUBMIT/FILE THE REQUIRED DO CUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE ADDITIONAL E VIDENCES FILED BY THE ASSESSES MAY NOT BE ADMITTED UNDER RULE 46A OF THE I.T. RULES , 1962. SUBMITTED FOR YOUR KIND PERUSAL. SD/. JT. C.I.T. (OSD) DCIT, CC-KANPUR FROM THE ABOVE REMAND REPORT WE FIND THAT ASSESSING OFFICER HAS NOT COMMENTED UPON THE MERITS WHEREAS HE SHOULD HAVE CO MMENTED ON THE MERITS OF THE DOCUMENTS AS THESE WERE THE ONLY DOCU MENTS WHICH THE ASSESSING OFFICER WANTED FROM THE ASSESSEE. FROM THE FACTS OF THE CASE WE FIND THAT ASSESSEE HA D RAISED THIS AMOUNT OF LOAN VIDE THREE ENTRIES OF RS.40 LAKH, RS.4 LAKH AN D RS.25 LAKH WHICH WERE RECEIVED ON 10 TH MAY 2011, 11 TH JULY 2011 AND 27 TH JANUARY 2012 RESPECTIVELY. THESE ENTRIES ARE VERIFIABLE FROM TH E COPY OF BANK ACCOUNT OF A. K. JEWELLERS PLACED AT PAGES 8, 11 AND 12 OF THE PAPER BOOK. THE ASSESSEE CREDITED INTEREST OF RS.4,59,485/- AND ALS O DEDUCTED TDS AMOUNTING TO RS.45,948/-. DURING THE YEAR UNDER CO NSIDERATION ITSELF THE ASSESSEE REPAID THESE LOANS ALONG WITH INTEREST WHI CH IS ALSO APPARENT FROM I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 10 THE COPIES OF BANK STATEMENT PLACED AS ABOVE. MORE OVER, WE FIND THAT ASSESSEE HAD SUBMITTED BEFORE THE ASSESSING OFFICER VIDE LETTER PLACED AT PAGE 35 OF THE PAPER BOOK THAT IT WAS NOT IN BUSINE SS DEALINGS WITH THIS COMPANY AND ASSESSING OFFICER WAS REQUESTED TO MAKE ANY INQUIRY DIRECTLY FROM THE COMPANY. THE ASSESSING OFFICER DID NOT MA KE ANY INQUIRY NOR THE ASSESSING OFFICER DURING REMAND PROCEEDINGS CARRIED OUT ANY EXAMINATION OF THE DOCUMENTS. IF THE AUTHORITIES BELOW HAD EXAMIN ED THESE DOCUMENTS WHICH CERTAINLY PROVE THE IDENTITY, CREDITWORTHINES S AND GENUINENESS OF TRANSACTIONS, THEY WOULD NOT HAVE MADE THE ADDITION . EVEN IF THE ADDITIONAL EVIDENCES WERE NOT CONSIDERED THE ADDITION WAS NOT WARRANTED AS HELD BY HON'BLE LUCKNOW TRIBUNAL. IN THE CASE OF ANURADHA M ASALA UDYOG (P) LTD. VS. ACIT IN I.T.A. NO.257/LKW/202, ORDER DATED 07/0 1/2014 WHEREIN IT HAS BEEN HELD THAT SIMPLY BECAUSE THE ASSESSEE COULD NO T FILE THE CONFIRMATION LETTER THE LOANS CANNOT BE TREATED AS NON GENUINE W HEN THE PAYMENTS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE AND PAN WAS A LSO FURNISHED. THE FINDINGS OF THE HON'BLE TRIBUNAL, AS CONTAINED IN P ARA 14, IS REPRODUCED BELOW: 14. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM THE CAREFUL PERUSAL OF THE REC ORD, WE FIND THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS FILED THE COMPLETE DETAILS OF THE CASH CREDITORS ALONG WITH T HEIR PAN. SIMPLY BECAUSE THE ASSESSEE COULD NOT FILE CONFIRMA TION LETTERS, THE ASSESSING OFFICER HAS TREATED THESE AS NON GENU INE DESPITE THE FACT THAT THE COMPLETE DETAILS WERE AVAILABLE B EFORE HIM. THE COPY OF THE ACCOUNT IS ALSO PLACED ON RECORD FR OM WHICH IT IS EVIDENT THAT THE CASH CREDITS WERE INTRODUCED TH ROUGH ACCOUNT PAYEE CHEQUES, THEREFORE, THE FINANCIAL POS ITION OF THE CREDITORS COULD VERY WELL BE EXAMINED BY THE ASSESS ING OFFICER FROM THE BANKERS OF THE CREDITORS. THE PAN WAS ALS O WITH THE ASSESSING OFFICER, THEREFORE, NECESSARY ENQUIRY COU LD HAVE BEEN MADE BY HIM DURING THE COURSE OF ASSESSMENT PROCEED INGS WHEN THE MATTER WAS REFERRED TO THE ASSESSING OFFIC ER. BUT THE ASSESSING OFFICER DID NOT MAKE ANY EFFORT TO VERIFY THE GENUINENESS OF THE TRANSACTIONS, MADE THE IMPUGNED ADDITION. I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 11 WE HAVE ALSO EXAMINED THE FACTS OF THE CASE AND NOT ICED THAT THE ASSESSMENT YEAR INVOLVED IS 1998-99 AND NO PURP OSE WILL BE SERVED IN SENDING THE MATTER BACK TO THE FILE OF TH E ASSESSING OFFICER SINCE THE ASSESSEE HAS ALREADY PLACED MATER IAL ON RECORD FOR NECESSARY VERIFICATION FOR THE GENUINENESS OF T HE TRANSACTION AND CREDITWORTHINESS AND IDENTITY OF THE CREDITORS BUT THE PROPER ENQUIRY COULD NOT BE MADE BY THE ASSESSING O FFICER, FOR WHICH, ACCORDING TO US, THE ASSESSEE SHOULD NOT BE PENALIZED. WE, THEREFORE, ARE OF THE VIEW THAT UNDER THE GIVEN FACTS & CIRCUMSTANCES THE ADDITION MADE BY THE CIT(A) IS NO T SUSTAINABLE IN THE EYES OF THE LAW. WE ACCORDINGLY DELETE THE SAME. FURTHER WE FIND THAT HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RANCHHOD JIVABHAI NAKHAVA [2012] 21 TAXMANN.COM 159 (GUJ) HAS HELD AS UNDER: SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CRED ITS - ASSESSMENT YEAR 2006-07 -WHETHER ONCE ASSESSEE HAS ESTABLISHED THAT HE HAS TAKEN MONEY BY WAY OF ACCOU NT PAYEE CHEQUES FROM LENDERS WHO ARE ALL INCOME TAX ASSESSE ES WHOSE PAN HAVE BEEN DISCLOSED, INITIAL BURDEN UNDER SECTI ON 68 IS DISCHARGED AND THEN, IT IS ASSESSING OFFICER'S DUTY TO ASCERTAIN FROM ASSESSING OFFICER OF THOSE LENDERS, WHETHER IN THEIR RESPECTIVE RETURNS THEY HAVE SHOWN EXISTENCE OF SUC H AMOUNT OF MONEY AND HAVE FURTHER SHOWN THAT THOSE AMOUNT O F MONEY HAD BEEN LENT TO ASSESSEE - HELD, YES - WHETHER IF ASSESSING OFFICERS OF THOSE CREDITORS ARE SATISFIED WITH EXPL ANATION GIVEN BY CREDITORS AS REGARDS THOSE TRANSACTIONS, ASSESSI NG OFFICER IN QUESTION HAS NO JUSTIFICATION TO DISBELIEVE TRANSAC TIONS REFLECTED IN ACCOUNT OF CREDITORS - HELD, YES - WHETHER IF BE FORE VERIFYING SUCH FACT FROM ASSESSING OFFICER OF LENDERS OF ASSE SSEE, ASSESSING OFFICER DECIDES TO EXAMINE LENDERS AND AS KS ASSESSEE TO FURTHER PROVE GENUINENESS AND CREDITWORTHINESS O F TRANSACTIONS, IT WOULD BE AGAINST PRINCIPLES LAID D OWN UNDER SECTION 68 - HELD, YES [IN FAVOUR OF ASSESSEE] 7. IN VIEW OF THE ABOVE GROUND NO. 1 TO 3 & 5 TO 7 OF APPEAL IN I.T.A. NO.326 RELATING TO MERITS OF THE ADDITION ARE ALLOW ED. GROUND NO. 8 HAS NOT BEEN ARGUED BY THE LEARNED A. R. THEREFORE, THIS GR OUND IS DISMISSED AS NOT I.T.A. NOS.325 & 326/LKW/2018 ASSESSMENT YEARS:2010-11 & 12-13 12 PRESSED. GROUN NO. 4 IS ALSO DISMISSED AS THE PROC EEDINGS IN THIS YEAR WERE PENDING. AS A RESULT, APPEAL IN I.T.A. NO.326 IS P ARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL IN I.T.A. NO.325 IS AL LOWED WHEREAS THE APPEAL IN I.T.A. NO.326 IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 31/08/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:31/08/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW