M/S. SWAN PETROCHEMICALS PVT. LTD., Mumbai V. THE DCIT (CENTRAL), Indore

ITSSA 97/IND/2015

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1528 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 29-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA; RAJIV VARSHNEY
• Keywords: Unexplained cash credit; Search and seizure; Principle of natural justice; Peak credit; Source of fund; Accommodation entries; Retraction; Revised return; Documents seized
• Section: 143(3); 153A

Judgement Text

M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER IT(SS)A NOS. 96, 97 & 392/IND/2015 A.YS. 2010-11,2011-12 & 2012-13 M/S SWAN PETROCHEMICALS PVT. LTD. MUMBAI PAN AABCR 9592C ::: APPELLANT VS DY. COMMR. OF INCOME TAX (CENTRAL) INDORE ::: RESPONDENT APPELLANT BY SHRI GIRDHAR GARG RESPONDENT BY SHRI RAJIV VARSHNEY AND SHRI R.A. VERMA DATE OF HEARING 29.12.2015 DATE OF PRONOUNCEMENT 1 2 .1.2016 O R D E R PER SHRI B.C. MEENA, AM THESE APPEALS FILED BY THE ASSESSEE EMANATE FROM THE ORDERS OF THE LEARNED CIT(A)-3, BHOPAL, DATED 29.4.2015. M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 2 2. BRIEFLY STATED, THE FACTS IN THE CASE ARE THAT THE ASSESSEE IS A CLOSELY-HELD COMPANY BELONGING TO SIGNET GROUP OF INDORE. IT IS ENGAGED IN THE BUSINESS OF TR ADING AND INVESTMENT. A SEARCH AND SEIZURE OPERATION U/S.132 WAS CARRIED OUT AT THE BUSINESS PREMISES OF VARIOUS COMPANIES BELONGING TO SIGNET GROUP INCLUDING PREMIS ES OF THE ASSESSEE ON 03.11.2011. CONSEQUENTLY, A NOTICE U/S.153A WAS ISSUED. THE STATUS REGARDING RETURN OF INCOME FURNISHED BY THE ASSESSEE U/S.139(1) AND 153A OF THE INCOME-TAX ACT, 1961 AND ASSESSMENTS COMPLETED AS PER ORIGINAL ASSESSMENT U/S.143(3) / 143(1) AS WELL AS U/S.153A ARE AS UNDER : A.Y. DATE OF ORIGINAL RETURN FILED RETURNED INCOME U/S.139 (RS.) DATE OF FILING RETURN U/S.153A RETURNED INCOME U/S.153A (RS.) ASSESSED INCOME U/S.153A/ 143(3) RS. 2006-07 28.11.2006 1,66,840 01.03.2013 1,66,840 1,66,840 2007-08 28.09.2007 1,95,775 01.03.2013 1,95,775 1,95,780 2008-09 26.09.2008 1,74,121 01.03.2013 1,74,171 1,74,170 2009-10 25.09.2009 3,79,300 01.03.2013 3,91,630 3,91,630 2010-11 08.09.2010 10,31,610 01.03.2013 10,31,610 5,97,01,610 2011-12 29.09.2011 93,60,420 01.03.2013 96,34,910 3,40,56,900 2012-13 30.09.2012 (ORIGINAL) 01.03.2013 (REVISED) 2,54,022 2,56,230 - - 2,48,75,020 M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 3 3. THE ASSESSEE FILED APPEALS BEFORE THE LEARNED C.I.T. (A) CENTRAL, INDORE AGAINST THE ASSESSMENTS COMPLETED U/S.153A. THESE APPEALS WERE DISMISSED BY THE LEARNED CIT(A) VIDE ORDER DATED 29.4.2015. AGAINST THIS ORDER OF LEARNED CIT(A), THE ASSESSEE PREFERRED APPEAL BEFORE TH E INCOME-TAX APPELLATE TRIBUNAL. 4. GROUND NOS. 3 AND 4 IN ALL THESE APPEALS ARE GENERAL I N NATURE. THESE WERE ALSO NOT PRESSED AT THE TIME OF HEA RING OF APPEALS. THE SAME ARE DISMISSED. GROUND NO.1.0 & 1.1 (A.Y.: 2010-11) AND 1.0 (A.Y.: 2011-12 & 2012-13) OF THE ASSESSEES APPEAL : GROUND NO. 1.0 & 1.1 (A.Y.: 2010-11) AND 1.0 (A.Y.: 2011- 12 & 2012-13) OF ASSESSEES APPEAL READS AS UNDER : ASSESSMENT YEAR : 2010-11 1.0 THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-3, BHOPAL, CONFIRMING THE ASSESSMENT ORDER PASSED U/S.153A R.W. SEC.143(3) OF THE INCOME-TAX ACT, 1961, BY THE DEPUTY COMMISSIONER OF INCOME-TAX IS BOTH BAD-IN-LAW AND BAD-IN-FACTS. 1.1 IN DOING SO, HE DID NOT APPRECIATE THAT NO ADDITION COULD HAVE BEEN MADE WHILE COMPLETING ASSESSMENT M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 4 U/S.153A OF THE INCOME-TAX ACT, 1961 IN CASE OF COMPLETED ASSESSMENTS IF NO UNDISCLOSED INCOME WAS DETERMINABLE FROM THE MATERIAL FOUND AS A RESULT OF SEARCH. ASSESSMENT YEAR : 2011-12 & 2012-13 1.0 THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-3, BHOPAL, CONFIRMING THE ASSESSMENT ORDER PASSED U/S.153A R.W. SEC.143(3) OF THE INCOME-TAX ACT, 1961, BY THE DEPUTY COMMISSIONER OF INCOME-TAX IS BOTH BAD-IN-LAW AND BAD-IN-FACTS. IN THESE ASSESSMENT YEARS THE ASSESSMENTS WERE ABATED. DURING THE HEARING OF THESE APPEALS, THE LEARNED COUNSE L FOR THE ASSESSEE DID NOT PRESS THESE GROUNDS, HENCE, THE SAME ARE DISMISSED. GROUND NO.2.0 (A.Y.: 2010-11 TO 2012-13) OF THE ASSESSEES APPEAL : 3.0 GROUND NO.2.0 (A.Y.: 2010-11 TO 2012-13) OF ASSESSEE S APPEALS READS AS UNDER: M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 5 ASSESSMENT YEAR : 2010-11 ADDITION OF UNSECURED LOAN FROM LUCKY COMMOTRADE PVT. LTD. AS UNEXPLAINED CASH CREDIT U/S.68 : RS.5,86,70,000/- 2.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN LAW AS WELL AS IN FACTS IN CONFIRMING THE ADDITION OF RS.5,86,70,000/- MADE BY THE ASSESSING OFFICER IN RESPECT OF UNSECURED LOAN FROM LUCKY COMMOTRADE PVT. LTD. BY TREATING IT AS UNEXPLAINED CASH CREDIT U/S.68. ASSESSMENT YEAR : 2011-12 ADDITION OF UNSECURED LOAN FROM LUCKY COMMOTRADE PVT. LTD. AS UNEXPLAINED CASH CREDIT U/S.68 : RS.2,44,21,994/- 2.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN LAW AS WELL AS IN FACTS IN CONFIRMING THE ADDITION OF RS.2,44,21,994/- MADE BY THE ASSESSING OFFICER IN RESPECT OF UNSECURED LOAN FROM LUCKY COMMOTRADE PVT. LTD. BY TREATING IT AS UNEXPLAINED CASH CREDIT U/S.68. ASSESSMENT YEAR : 2012-13 ADDITION OF UNSECURED LOAN FROM LUCKY COMMOTRADE PVT. LTD. AS UNEXPLAINED CASH CREDIT U/S.68 : RS.2,46,21,000/- 2.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN LAW AS WELL AS IN FACTS IN CONFIRMING THE M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 6 ADDITION OF RS.2,46,21,000/- MADE BY THE ASSESSING OFFICER IN RESPECT OF UNSECURED LOAN FROM LUCKY COMMOTRADE PVT. LTD. BY TREATING IT AS UNEXPLAINED CASH CREDIT U/S.68. 5. THE BRIEF FACTS OF THIS ISSUE ARE AS UNDER :-THE ASSESSEE RECEIVED UNSECURED LOANS AMOUNTING TO RS.5,86,70,000/- IN A.Y 2010-11, OF RS.2,44,21,994/ - IN A.Y 2011-12 AND OF RS.2,46,21,000/- IN A.Y 2012-13 FROM LUCKY COMMOTRADE PVT. LTD. TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS, THE ASSESSEE SUBMI TTED THE CONFIRMED COPIES OF ACCOUNT OF UNSECURED LOAN CREDITORS, COPIES OF RELEVANT BANK STATEMENT AND AUDITED ANNUAL ACCOUNTS OF CREDITORS. THE UNSECURED LOAN CREDI TOR LUCKY COMMOTRADE PVT. LTD. IS REGULARLY ASSESSED TO TA X AND THE LOAN TRANSACTIONS HAVE TAKEN PLACE THROUGH NORMAL BANKING CHANNELS. THE ASSESSING OFFICER WAS NOT SATISFI ED WITH THE SUBMISSION MADE BY THE ASSESSEE. IN HIS OPI NION, THE EVIDENCES PROVIDED IN SUPPORT OF ESTABLISHING ID ENTITY, GENUINENESS AND CREDITWORTHINESS OF UNSECURED LOANS W ERE M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 7 NOT SUFFICIENT AND HE HELD THAT THE IMPUGNED UNSECURE D LOAN WAS UNEXPLAINED CASH CREDIT AND MADE ADDITION U/S.68 OF THE INCOME-TAX ACT, 1961. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FULL DETAILS OF LOAN AND SOURCE OF THE SAME WITH DATES W ERE FILED WHICH ARE AS UNDER :- ASSESSMENT YEAR : 2010-11 DATE LOAN FROM LUCKY COMMOTRADEPVT LTD (RS.) DATE SOURCE OF FUND AMOUNT (RS.) 07.05.2009 1,44,70,000 06.05.2009 CONSIDERATION REC EIVED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM DOLDRUM INVESTMENT & FINANCE PVT LTD &GYANESHWAR TRADING & FINANCE LTD 1,44,99,300 11.05.2009 25,00,000 11.05.2009 CONSIDERATION RECEI VED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM CLIFTON SECURITIES PVT LTD 25,00,000 19.05.2009 25,00,000 18.05.2009 CONSIDERATION RECEI VED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM M/S SIDH HOUSING & DEVELOPMENT CO. PRIVATE LIMITED 44,52,990 03.06.2009 19,50,000 01.06.2009 CONSIDERATION RECEI VED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM M/S SIDH HOUSING & DEVELOPMENT CO. PRIVATE LIMITED 19,50,000 12.06.2009 25,00,000 11.06.2009 CONSIDERATION RECEI VED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM M/S GYANESHWAR TRADING & FINANCE LIMITED 25,00,000 14.09.2009 50,00,000 12.09.2009 CONSIDERATION RECEI VED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM M/S CLIFTON SECURITIES PRIVATE LIMITED AND OLYMPUS VISION INDIA PVT. LTD. 50,00,000 17.09.2009 57,00,000 16.09.2009 CONSIDERATION RECEI VED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM M/S CLIFTON SECURITIES PRIVATE LIMITED AND OLYMPUS VISION INDIA PVT. LTD. 55,00,000 18.09.2009 60,00,000 17.09.2009 CONSIDERATION RECEI VED AGAINST 60,00,000 M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 8 SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM M/S CLIFTON SECURITIES PRIVATE LIMITED AND OLYMPUS VISION INDIA PVT. LTD. 05.10.2009 1,00,00,000 03.10.2009 CONSIDERATION REC EIVED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM M/S CLIFTON SECURITIES PRIVATE LIMITED, OLYMPUS VISION INDIA PVT. LTD. AND ISPAT SHEETS LIMITED 1,00,00,517 07.10.2009 30,00,000 05.10.2009 CONSIDERATION RECEI VED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM M/S NOVELTY TRADERS LIMITED 30,00,000 07.11.2009 8,50,000 07.11.2009 CONSIDERATION RECEIV ED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED FROM M/S NOVELTY TRADERS LIMITED 8,50,000 26.12.2009 42,00,000 26.12.2009 RECOVERY OF ADVANCE GIVEN TO M/S HARYANA TEA SUPPLIERS AND BALANCE OUT OF BANK BALANCE. 41,75,500 5,86,70,000 6,04,28,307 ASSESSMENT YEAR : 2011-12 DATE LOAN FROM LUCKY COMMOTRADEPVT LTD (RS.) DATE SOURCE OF FUND AMOUNT (RS.) 03.06.10 1,95,00,000 02.06.10 03.06.10 CONSIDERATION RECEIVED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED TO M/S NOVELTY TRADERS LIMITED AND M/S ISPAT SHEETS LIMITED 1,40,00,000 BANK BALANCE 55,00,000 28.06.10 47,50,000 24.06.10 CONSIDERATION RECEIVED AGAINST SALE OF SHARES OF ADROIT INDUSTRIES (INDIA) LIMITED TO M/S NOVELTY TRADERS LIMITED AND M/S ISPAT SHEETS LIMITED 47,00,000 BANK BALANCE 50,000 11.10.10 -12,00,000 11.10.10 CASH WITHDRAWN BY LUCK Y 12,00,000 31.03.11 15,47,943 31.03.11 INTEREST ON ADVANCE ASSESSMENT YEAR : 2012-13 DATE LOAN FROM LUCKY COMMOTRADEPVT LTD AMOUNT (RS.) DATE SOURCE OF FUND AMOUNT (RS.) 26.03.12 1,000 26.03.12 OWN FUNDS 1,000 26.03.12 1,25,00,000 26.03.12 RECOVERY OF ADVANCE G IVEN TO M/S SIGNET INDUSTRIES LIMITED 1,25,00,000 26.03.12 1,25,00,000 26.03.12 RECOVERY OF ADVANCE G IVEN TO M/S SIGNET INDUSTRIES LIMITED 1,25,00,000 7. THE CONTENTION OF THE A.O. CAN BE SUMMARISED AS UNDER : M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 9 SHRI PANKAJ KALANI, WHO WAS DIRECTOR OF THE SIGNET INDUSTRIES LIMITED AT THAT TIME, ADMITTED BEFORE CENTRAL EXCISE AUTHORITIES THAT CASH RECEIVED FROM SHRI MUKESH SANGLA WERE UTILIZED FOR ARRANGING ACCOMMODATION ENTRIES FROM LUCKY COMMOTRADE PVT. LTD., KOLKATA. THE RETRACTION OF HIS STATEMENT GIVEN BEFORE THE CENTRAL EXCISE AUTHORITIES BY WAY OF AN AFFIDAVIT WAS OF NO CONSEQUENCE AS HE AGAIN ADMITTED THE ABOVE FACTS IN HIS STATEMENT RECORDED U/S.132(4) DURING SEARCH CONDUCTED BY THE INCOME-TAX DEPARTMENT ON 03.11.2011. AS SHRI PANKAJ KALANI WAS DIRECTOR OF THE SIGNET INDUSTRIES LIMITED, HIS CROS S EXAMINATION WAS NOT REQUIRED. THE A.O. IS NOT REQUIRED TO PROVE THAT THE ASSESSEE HAS PAID CASH IN LIEU OF CHEQUES RECEIVED. THE ONUS IS UPON THE ASSESSEE TO EXPLAIN THESE TRANSACTIONS TO A.O.S SATISFACTION. THE ASSESSEE CANNOT ESCAPE FROM THIS M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 10 RESPONSIBILITY BY FAILURE OF THE A.O. TO ESTABLISH CAS H TRAIL. MOREOVER, THE CASH TRAIL WAS ESTABLISHED BY THE A.O. THE ASSESSEE CLAIMS THAT THIS FINDING OF THE A.O. WAS ABSOLUTELY FALSE AND NO MATERIAL OR EVIDENCE WA S BROUGHT ON RECORD TO SHOW THAT CASH WAS DEPOSITED A T ANY STAGE BY LUCKY COMMOTRADE PVT. LTD. PRIOR TO IS SUE OF CHEQUES . THE LOAN THROUGH BANKING CHANNELS DO NOT ESTABLISH GENUINENESS OF THE TRANSACTIONS AND ACTUAL BUSINESS ACTIVITY OF THE CREDITOR. THE LOAN CREDITOR DID NOT HAVE ITS OWN PROFIT MAKING APPARATUS AND MERELY ROTATED MONEY FOR ISSUE OF CHEQUES. THE IDENTITY OF T HE CREDITOR IS NOT ESTABLISHED BY MERELY FURNISHING DET AILS OF INCORPORATION, P.A. NO., BANK STATEMENTS, RETURN O F INCOME, CONFIRMATION LETTERS, ETC. BUT IS ESTABLISHED THROUGH EXISTENCE IN THE EYES OF PUBLIC, GENUINE BUSINESS ACTIVITIES AND PROPER PLACE OF BUSINESS. THE VARIATION IN DATE OF CASH PAYMENT AND RECEIPT OF M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 11 CHEQUES FROM LUCKY COMMOTRADE PVT. LTD. WAS DUE TO PHYSICAL TRANSFER OF CASH FROM INDORE TO KOLKATA BY EMPLOYEES OF THE ASSESSEE COMPANY. THE ASSESSEE ALSO CLAIMS THAT THIS FINDING OF THE A.O. WAS ALSO ABSOLUTELY FALSE AND NO MATERIAL OR EVIDENCE WAS BROUGHT ON RECORD IN THIS REGARD . THE ASSESSEE FAILED TO ESTABLISH ITS IDENTITY AND CREDITWORTHINESS OF LUCKY COMMOTRAD E PVT. LTD. AS WELL AS GENUINENESS OF TRANSACTION. LUCKY COMMOTRADE WAS A BOGUS PAPER COMPANY AND THE UNSECURED LOANS RECEIVED FROM IT WERE ACCOMMODATION ENTRIES A FACT WHICH WAS ESTABLISHED FROM THE STATEMENT OF SHRI PANKAJ KALANI AND MATERIAL SEIZED FROM OFFICE PREMISES OF SHRI DEEPAK KALANI AND SHRI PANKAJ KALANI DURING SEARCH BY INCOME-TAX DEPARTMENT. THE EXTRACT OF SEIZED MATERIAL WAS REPRODUCED IN THE ASSESSMENT ORDER. THE UNSECURED LOANS RECEIVED FROM LUCKY COMMOTRADE PVT. LTD.AND M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 12 TREATED AS UNEXPLAINED CASH CREDIT U/S.68 OF THE INCOME-TAX ACT, 1961 IS TABULATED AS BELOW: ASSTT. YEAR AMOUNT (RS.) 2010-11 5,86,70,000 2011-12 2,44,21,994 2012-13 2,46,21,000 10,77,12,994 THE C.I.T.(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. THE CONTRACTOR CAN BE SUMMARISED AS UNDER : A) THE RELIANCE WAS PLACED UPON THE FINDINGS OF THE A. O., STATEMENT OF SHRI PANKAJ KALANI BEFORE CENTRAL EXCI SE DEPARTMENT AS WELL AS INCOME-TAX DEPARTMENT, MATERI AL SEIZED FROM THE OFFICE PREMISES OF SHRI PANKAJ KALA NI AND SHRI DEEPAK KALANI AND LPS 2/14 SEIZED FROM THE OFF ICE PREMISES OF THE ASSESSEE COMPANY. THE STATEMENT OF SHRI PANKAJ KALANI PROVED BEYOND DOUBT THAT UNSECURED LO AN FROM LUCKY COMMOTRADE PVT. LTD. WERE IN LIEU OF CAS H AND THEREFORE ACCOMMODATION ENTRY. IT WAS A PAPER COMPA NY PROVIDING ACCOMMODATION ENTRIES. LUCKY COMMOTRADE P VT. LTD. HAD BANK ACCOUNT WITH UCO BANK, INDORE WHEREIN THE ASSESSEE COMPANY ALSO HAD BANK ACCOUNT. ALSO ITS BA NK PASSBOOK AND CHEQUE BOOK WERE FOUND AT THE PREMISES OF THE SIGNET GROUP. THESE FACTS SHOWED THAT IT WAS A CONDUIT FOR TRANSFERRING FUNDS TO VARIOUS SIGNET GROUP COMP ANIES. THE STATEMENT OF SHRI PANKAJ KALANI WAS CORROBORATE D BY DOCUMENTS SEIZED FROM THE RESIDENCE OF SHRI KIRTI K ALA, THE M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 13 DIRECTOR OF THE ASSESSEE COMPANY DURING SEARCH BY C ENTRAL EXCISE DEPARTMENT. THE LEARNED COUNSEL FOR THE ASSE SSEE CONTENDED THAT NO EVIDENCE WHATSOEVER, INCLUDING REFERENCE TO THE PAGES OF THE MATERIAL SEIZED BY TH E CENTRAL EXCISE DEPARTMENT, WAS PRODUCED BY THE REVENUE IN SUPPORT OF THIS SERIOUS ALLEGATION. ON THE BASIS OF THE ABOVE FACT THE UNSECURED LOAN WAS TREATED AS UNEXPL AINED CASH CREDIT U/S.68 SINCE THE ASSESSE FAILED TO PROV E THE CREDITWORTHINESS OF M/SLUCKY COMMOTRADEPVT LTD. THE DETAILS OF ADDITIONS CONFIRMED ARE AS FOLLOWS: ASSTT. YEAR AMOUNT (RS.) 2010-11 5,86,70,000 2011-12 2,44,21,994 2012-13 2,46,21,000 10,77,12,994 8. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS COMPLETE VIOLATION OF PRINCIPLES OF NATURAL J USTICE ON THE PART OF A.O. IN MAKING ADDITION ON THE BASIS OF DOCUMENTS SEIZED FROM THE PREMISES OF SHRI DEEPAK KAL ANI AND SHRI PANKAJ KALANI DURING SEARCH BY INCOME-TAX DEPARTMENT ON 03.11.2011, THE STATEMENT OF SHRI PANKAJ KALANI RECORDED U/S.132(4) BY INCOME-TAX DEPARTMENT DURING SEARCH AND THE STATEMENT OF SHRI PANKAJ KALANI M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 14 RECORDED BY THE CENTRAL EXCISE AUTHORITIES ON 07.12. 2007 AND 17.12.2007 FOR REASON THAT THE COPIES OF MATERIAL SEIZED FROM THE PREMISES OF SHRI PANKAJ KALANI AND SHRI DEEPAK KALANI AND STATEMENT OF SHRI PANKAJ KALANI RECORDED U/S.132(4) DURING SEARCH, WHICH WERE USED AGAINST THE ASSESSEE, WERE NOT PROVIDED TO THE ASSESSEE DESPITE SPECIFIC REQUEST TO THE A.O. THE STATEMENTS O F SHRI PANKAJ KALANI, RECORDED BY CENTRAL EXCISE AUTHORITIES O N 06.12.2007 AND SUBSEQUENTLY ON 17.12.2007 IN THE COUR SE OF SEARCH IN THE CASE OF SIGNET INDUSTRIES LTD., WHIC H WERE USED AGAINST THE ASSESSEE, WERE ALSO NOT PROVIDED TO TH E ASSESSEE. SHRI MUKESH SANGLA WAS NEVER CONFRONTED WITH THE MATERIAL SEIZED FROM THE PREMISES OF SHRI PANKAJ K ALANI AND SHRI DEEPAK KALANI. PAGE NOS. 129 TO 130, 132 TO 137 AND 254 OF LPS 2/14 SEIZED FROM THE OFFICE PREMISES OF SIGNET INDUSTRIES LTD. AND THE STATEMENT OF SHRI PANKA J KALANI RECORDED DURING INCOME-TAX SEARCH AS WELL AS M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 15 CENTRAL EXCISE SEARCH WERE NEITHER PROVIDED NOR ASKED TO EXPLAIN. THE CONTENTS OF MATERIAL SEIZED FROM THE PREM ISES OF SHRI DEEPAK KALANI AND SHRI PANKAJ KALANI AND NEVER CONFRONTED WITH THE CONTENTS OF STATEMENT MADE BY HIM . THE A.O. RELIED UPON THE STATEMENT OF A PERSON WHICH WAS RETRACTED BY WAY OF AN AFFIDAVIT AND THE EXAMINATION OF MATERIAL SEIZED FROM HIS OFFICE PREMISES BY THE A.O. SHOWED CASH RECEIVED FROM SIGNET, SOL - MUMBAI, SOL BU T DID NOT REVEAL EVEN A SINGLE ENTRY SHOWING CASH PAYMENT T O LUCKY COMMOTRADE PVT. LTD. OUT OF CASH RECEIVED FROM SIGNET INDUSTRIES LTD. 9. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBM ITTED THAT IT IS A SETTLED POSITION OF LAW THAT THE ADMISSION MADE BY A THIRD PARTY IN HIS STATEMENT RECORDED BEFORE AN AUTHORITY APPOINTED UNDER PROVISIONS OF ANY ACT AND MATERIAL FOUND FROM HIS POSSESSION ARE BINDING UPON HI M IN HIS CASE ONLY AND THE SAME CANNOT BE FOISTED UPON OT HER M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 16 PARTIES UNLESS THE OTHER PARTY IS CONFRONTED WITH THE STATEMENT, PROVIDED WITH THE COPIES OF MATERIAL RELIED UPON, GIVEN LEGALLY AVAILABLE OPPORTUNITIES TO REBUT THE SAME WITH EVIDENCE AND THERE IS CORROBORATORY MATERIAL TO SUPPORT THE TRUTHFULNESS OF THE ADMISSION. THE UN-CONFRONTED MATE RIAL AND STATEMENTS ARE NOT ADMISSIBLE EVIDENCE FOR THE PURP OSE OF MAKING ADDITIONS. MOREOVER, THE EVIDENCES OR INFORMATION COLLECTED BY AN ASSESSING OFFICER IN THE C OURSE OF ANY ENQUIRY OR OTHERWISE, CANNOT BE USED AGAINST THE ASSESSEE UNLESS SUCH EVIDENCES OR INFORMATION, WHICH ARE SOUGHT TO BE USED AGAINST THE ASSESSEE, ARE SUPPLIED TO HIM AND HE IS ALLOWED ADEQUATE OPPORTUNITY TO REBUT THE SAME. IF SUCH EVIDENCES CONSIST OF ORAL EVIDENCES, THE ASSE SSEE SHOULD BE GIVEN AN OPPORTUNITY TO CROSS-EXAMINE THE PERSON CONCERNED. IT WOULD BE THAT TESTIMONY WHICH H AS BEEN SUBJECTED TO CROSS-EXAMINATION, WHICH COULD BE U SED AGAINST THE ASSESSEE. IN SUPPORT OF THE ABOVE CONTENTIO N, M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 17 THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING JUDGEMENTS : A) C.I.T. VS. M. K. BROTHERS [163 ITR 249 (GUJ)] B) A.C.I.T. VS. PRABHAT OIL MILLS [52 TTJ 533 (AHD)] C) KISHINCHANDCHELLARAM VS. C.I.T. [125 ITR 713 (SC)] D) ADDL. I.T.O VS. PONKUNNAM TRADERS [102 ITR 366 (KE R)] E) ADDL. C.I.T. VS. MS. LATAMANGESHKAR [97 ITR 696 (BO M)] F) MOLABUX VS. I.T.O. [51 TTJ 1 (JP)] G) VIRENDRAKUMARSAKLECHAVS. D.C.I.T. [59 TTJ 785 (IND )] H) I.T.O. VS. BALA PRASAD R. LOKMANYAWAR [18 TTJ 167 ( PUNE)] I) I.T.O. VS. BAJRANG OIL INDUSTRIES [12 ITD 631 (NAG) ] J) AMAR SINGH VS. I.T.O. [54 ITD 375 (DEL)] K) UDEYRAJGOLIYA (HUF) VS. A.C.I.T. [64 ITD 21 (MUM) ( TM)] L) SILVER & ARTS PALACE VS. A.C.I.T. [52 ITD 493 (JP) ] THE LEARNED COUNSEL FOR THE ASSESSEE ALSO EXPLAINED PAG E NO. 254 OF LPS-2/14(FOUND AND SEIZED FROM OFFICE PRE MISES OF SIGNET INDUSTRIES LTD. AND PAGE 86 TO 88 OF LPS-10 (FOUND AND SEIZED FROM OFFICE PREMISES OF SHRI DEEPAK KALANI) HE PLEADED THAT ON THE PERUSAL OF PAGE NO. 254 O F LPS 2/14 SEIZED FROM THE OFFICE PREMISES OF SIGNET M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 18 INDUSTRIES LTD., REVEALS THAT IT IS A LEDGER ACCOUNT O F SHRI PANKAJ KALANI FOR THE PERIOD 01.06.2005 TO 05.12.2007. IT CONTAINS COLUMNS LIKE DATE, PARTICULARS, VOUCHER TYPE, FINANCIAL YEAR, DEBIT AMOUNTS, CREDIT AMOUNTS AND DATE- WISE BALANCE. WHILE DATE-WISE AMOUNT APPEARING ON DEBIT SIDE SHOWS CASH PAID TO SHRI PANKAJ KALANI, THE CREDIT S IDE SHOWS CASH RECEIVED FROM SHRI PANKAJ KALANI BY SIGNET INDUSTRIES LIMITED. THE PAGE SHOWS CASH BALANCE OF RS.2,14,24,043/- ON 07.07.2007 LYING WITH SHRI PANKA J KALANI WHO WAS THE DIRECTOR OF THE SIGNET INDUSTRIES LIMITED. A PERUSAL OF PAGE NO. 86 TO 88 OF LPS-10 (AS PER A.O. SAME TRANSACTION APPEAR ON PAGE NO. 89-97 OF LPS-10 ) SEIZED FROM THE OFFICE PREMISES OF SHRI DEEPAK KALANI ON 09.12.2011 SHOWS THAT IT IS AN EXCEL SHEET WHICH HAS BEEN SORTED FOR CASH RECEIVED ON THE FIELD NAMED SIGNET, SOL MUMBAI AND SOL . IT CONTAINS THE COLUMNS SUCH AS DATE , SIGNET, AMOUNT, PK / DK, BHARAT AND TOTAL. AS THE M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 19 TRANSACTIONS APPEARS TO BE SORTED FOR RECEIPT FROM SIG NET, THE IMPUGNED SHEET DOES NOT CONTAIN ANY TRANSACTION FOR CASH PAYMENT TO SIGNET. A COMPARISON OF TRANSACTIONS FO R THE RELEVANT PERIOD BETWEEN THE PAGE NO. 254 OF LPS-2 /14 SEIZED FROM THE OFFICE PREMISES OF SIGNET INDUSTRIE S LIMITED AND PAGE NO. 86 TO 88 OF LPS-10 FOUND FROM THE PREMIS ES OF SHRI DEEPAK KALANI SHOWS THAT MOST OF THE TRANSACTIONS SHOWING CASH SENT BY SIGNET INDUSTRIES LTD. AND RECE IVED BY SHRI PANKAJ KALANI WERE MATCHING EXCEPT IN THE FOLLOWING CASES: CASH PAID APPEARING ON PAGE NO. 254 OF LPS-2/14 BUT NOT APPEARING ON PAGE NO.8688 OF LPS-10 DATE AMOUNT (RS.) 09.02.07 15,00,000 15.02.07 50,00,000 19.02.07 20,00,000 06.04.07 74,043 06.07.07 6,00,000 91,74,043 CASH PAID APPEARING ON PAGE NO. 8688 OF LPS-10 BUT NOT APPEARING ON PAGE NO. 254 OF LPS-2/14 DATE AMOUNT (RS.) 05.02.07 5,00,000 09.02.07 10,00,000 09.02.07 25,00,000 12.03.07 30,00,000 M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 20 06.07.07 60,00,000 1,30,00,000 CASH PAID APPEARING ON PAGE NO. 8688 OF LPS-10 BUT NO CORRESPONDING DOCUMENT WAS FOUND IN THE ASSESSEES CASE DATE AMOUNT (RS.) 18.08.07 5,00,000 07.09.07 10,00,000 08.09.07 15,00,000 03.10.07 15,00,000 03.10.07 10,00,000 04.10.07 5,00,000 12.12.07 3,75,000 07.02.08 17,50,000 13.02.08 40,00,000 03.03.08 1,09,000 1,22,34,000 THERE ARE NO ENTRIES OF CASH SENT BY SHRI PANKAJ KALANI TO THE ASSESSEE PRESUMABLY AND LOGICALLY BECAUSE OF SORTING OF DATA OF RECEIPT SIDE ONLY BY THE FIELD SIGNET. AS P ER PAGE NO. 254 OF LPS 2/14, THE TOTAL PAYMENT RELEVANT TO ASSESSMENT YEARS 2006-07 & 2007-08 MADE TO SHRI DEEP AK KALANI AND SHRI PANKAJ KALANI WAS RS.6,05,00,000/- FOR ASSESSMENT YEAR 2007-08 AND RS.1,61,74,043/- IN THE ASSESSMENT YEAR 2008-09. AS AGAINST IT, THE TOTAL PAYM ENT AS PER SHRI DEEPAK KALANI AND SHRI PANKAJ KALANI WAS RS.5,90,00,000/- IN THE ASSESSMENT YEAR 2007-08 AND M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 21 RS.3,37,34,000/- IN THE ASSESSMENT YEAR 2008-09. HOWEVER, THE ASSESSING OFFICER MADE ADDITION OF RS.2,95,00,000/- FOR THE REASONS BEST KNOWN TO HIM. LEARNED COUNSEL FOR THE ASSESSEE FURTHER PLEADED THAT I T APPEARS THAT THE ASSESSING OFFICER CONSIDERED ONLY THE CASH PAID TO SHRI DEEPAK KALANI AND SHRI PANKAJ KALANI BUT NO COGNIZANCE WAS TAKEN IN RESPECT OF CASH RECEIVED FROM THEM BECAUSE THE SIGNET INDUSTRIES LIMITED RECALLED RS.4,93,00,000/- FROM SHRI DEEPAK KALANI AND SHRI PANKAJ KALANI IN THE ASSESSMENT YEAR 2007-08 AND RS.59,50,000 /- IN ASSESSMENT YEAR 2008-09. IN FACT, REGULAR RECEIPT FR OM AND PAYMENT OF CASH TO SHRI DEEPAK KALANI AND SHRI PANKAJ KALANI, IF CONSIDERED IN THE LIGHT OF AFFIDAVIT O F SHRI PANKAJ KALANI, SUPPORTS THE ASSESSEES EXPLANATION THAT THEY USED TO KEEP CASH OF SHRI MUKESH SANGLA FOR TEMPORARY SAFE CUSTODY. THE IMPUGNED ARRANGEMENT CONTINUED TILL 06.12.2007 I.E. TILL THE SEARCH BY CE NTRAL M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 22 EXCISE AUTHORITIES. HOWEVER, AFTER THE AFORESAID SEARCH , SHRI PANKAJ KALANI AND SHRI DEEPAK KALANI REFUSED TO ACCEPT ANY CASH FROM SHRI MUKESH SANGLA. THE RESULTANT PEAK OF CASH PAID AND CASH RECEIVED FROM SHRI DEEPAK KALANI AND SHRI PANKAJ KALANI WAS OFFERED FOR TAXATION BY SHRI MUKESH SANGLA IN HIS REVISED RETURN OF INCOME AND THE SAME WERE ACCEPTED BY INCOME-TAX DEPARTMENT. LEARNED COUNSEL FOR THE ASSESSEE PLEADED THAT IT WAS INTERESTING TO NOTE THE PECULIAR FACTS IN RELATION TO PAGE NO 254 OF LPS-2/14 FOUND AND SEIZED FROM THE PREMISES O F THE SIGNET INDUSTRIES LIMITED AND PAGE 86 TO 88 OF LPS 10 SEIZED FROM THE OFFICE OF SHRI DEEPAK KALANI VIS--VIS THE ADMISSION SHRI PANKAJ KALANI ON THE BASIS OF WHICH THE A.O. TREATED GENUINE LOANS FROM LUCKY COMMOTRADE PVT. LTD. AS UNEXPLAINED CASH CREDIT U/S.68 AND TREATED CASH PAID TO SHRI PANKAJ KALANI AS UNDISCLOSED INCOME OF THE M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 23 ASSESSEE IN COMPLETE IGNORANCE OF RECOVERY/RECALL OF C ASH FROM HIM: 10. ALTHOUGH SHRI PANKAJ KALANI ADMITTED IN HIS STATEMENT U/S.132(4) THAT CASH RECEIVED FROM SIGNET INDUSTRIES LTD. WAS USED FOR ARRANGING ACCOMMODATION ENTRIES FROM LUCKY COMMOTRADE PVT. LTD. AND THE A.O. ALSO REPRODUCED THE RELEVANT PAGES SHOWING RECEIPT OF CASH FROM SIGNET INDUSTRIES LTD., THE A.O. COULDNOT POINT OU T EVEN A SINGLE ENTRY IN THE MATERIAL SEIZED FROM THE OFFICE P REMISES OF SHRI DEEPAK KALANI SHOWING CASH PAYMENT TO LUCKY COMMOTRADE PVT. LTD. OR ITS REPRESENTATIVE FOR ARRANGIN G CHEQUES. THE ABSENCE OF ANY ENTRY SHOWING PAYMENT OF CASH FOR ARRANGING ACCOMMODATION ENTRY IN THE GARB OF UNSECURED LOANS FROM LUCKY COMMOTRADE PVT. LTD. FROM THE MATERIAL SEIZED FROM THE OFFICE PREMISES OF SHRI DEEPAK KALANI CLEARLY ESTABLISHED THE UNTRUTHFULNESS OF THE STATEMENTS GIVEN BY SHRI PANKAJ KALANI. M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 24 11. THE RETRACTION OF HIS STATEMENTS GIVEN ON 07.12.2 007 AND 17.12.2007 BEFORE CENTRAL EXCISE AUTHORITY BY SHRI PANKAJ KALANI ON ACCOUNT OF THREAT OF ARREST BY FILING AFFIDAVIT DATED 19.12.2007 AND SUBSEQUENT RE-ADMISSION OF THE SAME ON 03.11.2011 IN HIS STATEMENT RECORDED U/S.132(4) DURING THE SEARCH IN HIS CASE BEFORE THE I NCOME- TAX AUTHORITIES WITHOUT ANY DOCUMENTARY EVIDENCE IN TH E FORM OF ANY SEIZED MATERIAL SHOWS THAT HIS STATEMENT WAS NOT RELIABLE AND SELF-SERVING, PRESUMABLY TO AVOID TAX LIABILITIES IN HIS HANDS BY CREATING STORY OF ARRANGING ACCOMMODATION ENTRIES FROM LUCKY COMMOTRADE PVT. LTD. FOR THE ASSESSEE GROUP. IF THE A.O. BELIEVED THE ENT RIES OF PAYMENT TO SHRI PANKAJ KALANI ON THE BASIS OF PAGE NO. 2 54 OF LPS-2/14, WHICH SUBSTANTIALLY MATCHED WITH PAGE 86 T O 88 OF LPS-10 FOUND FROM THE PREMISES OF SHRI DEEPAK KALANI, HE SHOULD HAVE ALSO BELIEVED THE OTHER ENTRIES OF RECEIPTS RECORDED ON THE SAME SEIZED MATERIAL SHOWING M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 25 RECOVERY / RECALL OF THE CASH FROM HIM. FOR DETERMIN ATION OF UNDISCLOSED INCOME IN A HOLISTIC AND JUDICIOUS MANNER AND NOT TO THE DETRIMENT OF THE ASSESSEE, THE A.O. SHOUL D HAVE CONSIDERED ALL THE ENTRIES IN THE SEIZED MATERIAL. THE A.O. CANNOT ADOPT A PICK AND CHOOSE POLICY BY CONSIDERIN G ONLY THE DEBIT ENTRIES BECAUSE THEY STRENGTHEN HIS CASE AND IGNORE THE CREDIT ENTRIES BECAUSE THEY SUPPORT THE ASSESSEES CASE. AS THE ENTIRE CASE OF THE A.O. WAS BAS ED UPON THE STATEMENT OF SHRI PANKAJ KALANI WHO ADMITTED CASH RECEIPT FROM THE ASSESSE GROUP FOR ARRANGING ACCOMMODATION ENTRIES FROM LUCKY COMMOTRADE PVT. LTD., HE SHOULD HAVE BROUGHT EVIDENCE ON RECORD TO SHOW R ECEIPT OF CASH FROM THE ASSESSE GROUP AND ITS PAYMENT EITHER TO LUCKY COMMOTRADE PVT. LTD. OR ITS REPRESENTATIVE IN T HIS REGARD. HE SHOULD HAVE ALSO ENQUIRED ABOUT MOVEMENT OF FUNDS FROM INDORE TO KOLKATA AND BROUGHT EVIDENCE ON RECORD INSTEAD OF UNQUESTIONINGLY AND BLINDLY BELIEVI NG THE M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 26 STATEMENT OF SHRI PANKAJ KALANI. IT IS IMPOSSIBLE TO BE LIEVE THAT THE SOME REPRESENTATIVE OF THE ASSESSEE WOULD CARR Y CASH RUNNING INTO CRORES OF RUPEES VIA TRAIN OR ROAD T O KOLKATA CONTINUOUSLY FOR SEVERAL YEARS. 12. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITT ED THAT ON ANALYSIS OF LPS-11, THE FOLLOWING FACTS EMERGES :- 13. AS PER A.O., LPS-11 SEIZED DURING THE SEARCH, IS A CASH BOOK FOR THE PERIOD 24.01.2007 TO 07.06.2011. HOWEV ER, ON ANALYSIS OF EXTRACT OF LPS-11 GIVEN IN ASSESSMENT ORDER , IT APPEARS THAT IT IS AN EXCEL SHEET WHICH HAS BEEN SORTED FOR RECEIPTS ON THE FIELD SIGNET, SOL AND SOL MUMBAI . HOWEVER THE DATE-WISE DETAILS OF THE TRANSACTIONS REPRODUCED IN THE ASSESSMENT ORDER REVEALS THAT TRANSACTIONS HAVE BEEN PICKED UP SELECTIVELY FOR THE P ERIOD 29.07.2008 TO 30.09.2009. THEREFORE MANY RECEIPTS AND PAYMENTS APPEARS TO HAVE BEEN ELIMINATED IN THE PROCESS OF EXCLUSION OF PERIOD AND SELECTIVE SORTING OF DATA. M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 27 14. THE IMPUGNED CASH BOOK CONTAINS 12 COLUMNS. AS THE A.O. DID NOT EXPLAIN ANYTHING IN RELATION TO THE IMPUGNED CASH BOOK IN ASSESSMENT ORDER AND SIMPLY TREATED ENTRIES IN THE NAME SIGNET, SOL AND SOL MUMBAI AS RECEIPTS FROM SIGNET INDUSTRIES LTD., THE SAME HAS TO BE ANALYZED ON THE BASIS OF ITS LOGICAL INTERPRET ATION. ON COMING TO LOGICAL CONCLUSION IT APPEARS THAT, COLUMN NO. 1 TO 5 SHOWS RECEIPTS ON VARIOUS DATES FROM SIGNE T AND CONTAINS COLUMNS LIKE DATE, SIGNET, AMOUNT, PK / DK AND BHARAT/PK/OFFICE. COLUMN NO 6 TO 9 APPEARS TO BE PAYMENTS MADE TO VARIOUS PARTIES ON DIFFERENT DATES. COLUMN NO. 10 APPEARS TO BE CASH BALANCE IN THE OFFICE. COLUMN 11 SHOWS PAYMENT MADE TO SIGNET AND COLUMN 12 SHOWS BALANCE HELD ON ACCOUNT OF SIGNET. 15. THE IMPUGNED INFERENCE HAS BEEN DERIVED FROM THE FACT THAT IN COLUMN NO. 1, ON 29.07.2008, 33.75 WERE RECE IVED BY PK FROM SIGNET, REPAID 33.75 TO SIGNET WITH NO DAT E M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 28 MENTIONED THEREIN AND BALANCE WAS 0.00 (NIL). SIMILARLY , ON 28.08.2008, 11.00 WERE RECEIVED BY PK FROM SIGNET, REPAID 11.00 TO SIGNET WITH NO DATE MENTIONED THEREIN AND BALANCE WAS 0.00 (NIL). SIMILARLY, ON 26.03.2009 7.60 W ERE RECEIVED BY PK FROM SIGNET, REPAID 7.60 TO SIGNET WI TH NO DATE MENTIONED THEREIN AND BALANCE WAS 0.00 (NIL). AGAIN ON 22.01.2009, 7.00 WERE RECEIVED BY DK, REPAID 7.00 TO SIGNET WITH NO DATE MENTIONED THEREIN AND BALANCE WAS 0.00 (NIL). 16. ALSO UPON FURTHER ANALYSIS, IT WAS OBSERVED THAT DURING THE INTERVENING PERIOD THE DAILY BALANCES WERE NOT MATCHING BECAUSE THE EXCEL SHEET WAS NOT COMPLETE IN AL L RESPECT BECAUSE ENTIRE PERIOD WAS NOT COVERED AND SORT ING WAS DONE SELECTIVELY DUE TO WHICH IMPORTANT ENTRIES G OT ELIMINATED. THIS FACT IS EVIDENT FROM THE TRANSACTIONS ON 10.09.2008, 15.09.2008 AND 06.10.2008, 10.00, 5.00 AN D 10.00 WERE RECEIVED BY PK AND 23.50 WAS PAID TO SIGNET M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 29 AND BALANCE REMAINED 15.00. IT WAS SO BECAUSE CERTAIN INTERVENING ENTRIES OF RECEIPTS AND PAYMENTS GOT OMI TTED DURING THE INTERVENING PERIOD IN THE PROCESSING OF SORTING. 17. CONSIDERING THE INCOMPLETENESS OF THE DATA REPRODUCED IN THE ASSESSMENT ORDER, THE ASSESSEE RECONSTRUCTED THE ENTIRE SO CALLED CASH BOOK BY PRESU MING INFORMATION PROVIDED IN THE EXCEL SHEET REPRODUCED I N ASSESSMENT ORDER AS CORRECT. 18. FROM THE ABOVE CASH BOOK IT IS QUITE CLEAR THAT THE SIGNET INDUSTRIES LIMITED HAD CASH IN HAND OF RS.2,14,24,063/- RECALLED FROM SHRI PANKAJ KALANI, WHIC H WAS UTILIZED FOR SENDING HIM FUNDS PERIODICALLY AND RECALLING THE SAME FROM TIME TO TIME FOR HIS BUSINESS PURPOSES. IF THE PEAK CREDIT ON THE BASIS OF VARIOUS PAYMENTS AND RECEIPTS IS WORKED OUT, IT IS ALWAYS LES S THAN AVAILABLE CASH-IN-HAND RS.2,14,24,063/-. THE IMPUGNED CASH WAS ULTIMATELY UTILIZED FOR PAYMENT OF INCOME-TAX M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 30 LIABILITY OF SHRI MUKESH SANGLA ARISING FROM THE REVISE D RETURNS OF INCOME VOLUNTARILY FILED FOR ASSESSMENT YE AR 2006-07 AND ASSESSMENT YEAR 2007-08 AND RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2008-09. THE DETAILS THEREOF ARE AS UNDER: ASSTT. YEAR UNDISCLOSED INCOME (RS.) TAXES (RS.) 2006-07 45,00,000 20,86,755 2007-08 1,95,00,000 86,88,340 2008-09 1,60,00,000 65,49,450 4,00,00,000 1,73,24,545 19. LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT EVERY BUSINESS IS RUN ON CERTAIN CUSTOMARY PRACTICES AN D TRADITIONS. IN THE BUSINESS OF ACCOMMODATION ENTRIES, THE ACCOMMODATION ENTRY PROVIDER GIVES CHEQUE AND RECEIVES CASH OF EQUIVALENT AMOUNT FROM THE BENEFICIARY. THE EXCHANGE OF CHEQUE AND CASH TAKES PLACE SIMULTANEOUSLY. IT NEVER HAPPENS THAT THERE IS A TIME GAP OF SEVERAL MON THS IN SUCH EXCHANGE OF CASH AND CHEQUE. IF THE CONTENTION OF THE ASSESSING OFFICER IS ACCEPTED, THEN THE PAYMENT O F CASH TO SHRI PANKAJ KALANI AND SHRI DEEPAK KALANI AND RECEIPT M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 31 OF UNSECURED LOAN FROM LUCKY COMMOTRADE PVT. LTD SHOU LD HAVE BEEN AT THE SAME POINT OF TIME. IN OTHER WORDS, THERE SHOULD HAVE BEEN ONE TO ONE RELATION BETWEEN CASH PAID TO SHRI PANKAJ KALANI AND SHRI DEEPAK KALANI AND CHEQUE RECEIVED FROM LUCKY COMMOTRADE PVT. LTD. HOWEVER, TH ERE IS NO SUCH RELATIONSHIP AS EVIDENT FROM THE FOLLOWING TABLE, WHICH PRIMA FACIE ESTABLISHED THAT THE UNSECURED LOANS FROM LUCKY COMMOTRADE PVT. LTD. WERE GENUINE LOANS AN D NOT ACCOMMODATION ENTRIES AS ALLEGED BY THE ASSESSING OFFICER : ASSESSMENT YEAR : 2007-08 DATE CASH PAID TO KALANI BROTHERS (RS.) DATE CHEQUE RECEIVED FROM LUCKY COMMOTRADE PVT. LTD. (RS.) 06.02.2007 17,00,000 05.03.2007 60,00,000 06.02.2007 3,00,000 06.03.2007 26,50,000 07.02.2007 10,00,000 09.03.2007 31,50,000 07.02.2007 10,00,000 14.03.2007 30,00,000 09.02.2007 15,00,000 19.03.2007 40,00,000 12.02.2007 35,00,000 20.03.2007 30,00,000 13.02.2007 15,00,000 21.03.2007 20,00,000 13.02.2007 15,00,000 23.03.2007 15,00,000 15.02.2007 10,00,000 15.02.2007 50,00,000 17.02.2007 27,00,000 17.02.2007 23,00,000 19.02.2007 20,00,000 M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 32 19.02.2007 15,00,000 20.02.2007 40,00,000 23.02.2007 25,00,000 08.03.2007 10,00,000 10.03.2007 40,00,000 13.03.2007 75,00,000 15.03.2007 1,00,00,000 16.03.2007 20,00,000 21.03.2007 30,00,000 6,05,00,000 2,53,00,000 ASSESSMENT YEAR : 2008-09 DATE CASH PAID TO KALANI BROTHERS (RS.) DATE CHEQUE RECEIVED FROM LUCKY COMMOTRADE PVT. LTD. (RS.) 05.04.2007 74,043 29.03.2008 4,20,99,000 17.04.2007 10,00,000 18.04.2007 12,00,000 21.04.2007 25,00,000 25.04.2007 25,00,000 02.07.2007 60,00,000 03.07.2007 13,00,000 06.07.2007 6,00,000 07.07.2007 10,00,000 1,61,74,043 4,20,99,000 ASSESSMENT YEAR : 2009-10 DATE CASH PAID TO KALANI BROTHERS (RS.) DATE CHEQUE RECEIVED FROM LUCKY COMMOTRADE PVT. LTD. (RS.) 04.04.2008 12,00,000 02.05.2008 1,10,00,000 07.05.2008 25,00,000 29.07.2008 20,00,000 02.08.2008 20,00,000 11.08.2008 6,40,000 19.09.2008 23,25,000 06.10.2008 5,20,000 07.10.2008 1,78,000 07.11.2008 53,05,000 21.11.2008 17,80,000 12.12.2008 5,30,000 26.12.2008 15,00,000 M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 33 3,14,78,000 ASSESSMENT YEAR : 2012-13 DATE CASH PAID TO KALANI BROTHERS (RS.) DATE CHEQUE RECEIVED FROM LUCKY COMMOTRADE PVT. LTD. (RS.) 08.02.2012 50,00,000 14.02.2012 50,00,000 22.02.2012 50,00,000 02.03.2012 50,00,000 21.03.2012 50,00,000 2,50,00,000 20. ON PERUSAL OF LPS -11 (PERIOD AUGUST 2008 TO 30 TH MAY 2009) SEIZED IN THE CASE OF SHRI PANKAJ KALANI AND SHRI DEEPAK KALANI AND REPRODUCED AT PAGE 41 OF THE ASSESSMENT ORDER OF SIGNET INDUSTRIES LTD, IT IS SEE N THAT WHILE THE AMOUNTS ARE SHOWN TO HAVE BEEN RECEIVED FROM SIGNET INDUSTRIES LTD., NONE OF THE PAYMENTS ARE MADE TO LUCKY COMMODTRADE PVT. LTD. RATHER IT IS PAID TO GUDDU , SHARMA, CHORASIAJI, VISHAL, CHORASIA BOMBAY, HIMANSHU PIONEER, A.K.PORWAL ETC. FIRSTLY , THERE IS NOTHING IN THE SEIZED MATERIAL FOUND EITHER FROM ASSESSEES PREMISES OR FROM THE OFFICE PREMISES OF SHRI DEEPAK KALANI SUGGEST ING M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 34 ANY PAYMENT TO SHRI DEEPAK KALANI AND SHRI PANKAJ KALANI DURING THE PERIOD AUGUST 2008 TO MAY 2009 FOR ARRANGI NG ACCOMMODATION ENTRIES. SECONDLY , HOW THE PAYMENTS SHOWN TO HAVE BEEN MADE TO GUDDU, SHARMA, CHORASIAJI, VISHAL, CHORASIA BOMBAY, HIMANSHU PIONEER, A.K.PORWAL, ETC. WERE RELATED TO THE ASSESSEE AND THE ALLEGED ACCOMMODATION ENTRIES FROM LUCKY COMMOTRADE PVT. LTD. WAS NOT BROUGHT OUT BY THE A.O. OR C.I.T.(A). 21. AS SUBMITTED EARLIER, THE MATERIAL SEIZED DURING S EARCH IN THE CASE OF SHRI DEEPAK KALANI AND SHRI PANKAJ KALANI AS WELL AS THEIR STATEMENTS RECORDED DURING SEARCH WERE NOT PROVIDED TO THE ASSESSEE AND THEREFORE, THE ASSESS EE WAS DEPRIVED OF THE OPPORTUNITIES TO EXAMINE AND EXPLAI N THESE DOCUMENTS AND EXAMINE SHRI DEEPAK KALANI AND SHRI PANKAJ KALANI ABOUT THEIR CONTENTS. SUCH UN- CONFRONTED MATERIAL AND STATEMENTS ARE NOT BINDING IN TH E ASSESSEES CASE AS HELD BY VARIOUS JUDGEMENTS. M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 35 22. THE CONTENTION OF THE C.I.T.(A). THAT EVEN IN TH E BUSINESS OF ACCOMMODATION ENTRY, THE TRANSACTION OF PAYING CASH AND RECEIVING CHEQUES DO NOT TAKE PLACE AT T HE SAME POINT OF TIME AND GENERALLY CASH IS PAID IN ADVANCE T O ENABLE THE ENTRY PROVIDERS TO ROTATE FUNDS IN VARIOUS LAYERS BEFORE THE RECEIPT OF CHEQUES FROM THEM, IS CONTRARY TO THE BUSINESS PRACTICES. THERE MAY BE DELAY OF FEW DAYS I N PAYMENT OF CASH AND RECEIPT OF CHEQUES BUT THE DELAY CANNOT RUN INTO SEVERAL MONTHS AND YEARS AS IN THE ASSESSEES CASE APPARENT FROM THE TABLE GIVEN ABOVE. AS REGARDS ALLEGED REGULARITY OF CASH AND CHEQUES TRANSACTIONS BETWEEN SHRI PANKAJ KALANI AND LUCKY COMMOTRADE PVT. LTD., THE REVENUE AUTHORITIES COULD NOT BRING AN IOTA OF EVIDENCE ON RECORD FROM THE MATERIAL SEIZED FROM THE OFFICE PREMISES OF SHRI DEEPAK KALANI WHICH SHOWED PAYMENT OF CASH TO LUCKY COMMOTRADE PVT. LTD. OUT OF CASH RECEIVE D M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 36 FROM SIGNET INDUSTRIES LTD. FOR THE PURPOSE OF MANAGI NG ACCOMMODATION ENTRIES. 23. ON THE ISSUE WHETHER IS LUCKY COMMOTRADE PVT. LT D. IS A PAPER COMPANY AND PROVIDING ACCOMMODATION ENTRIES, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT A COMPANY IS AN ARTIFICIAL JUDICIAL PERSON. IT CARRIES ON I TS ACTIVITY THROUGH ITS SHAREHOLDERS, ITS BOARD OF DIRECT ORS AND ITS EMPLOYEES. IT HAS A PERPETUAL EXISTENCE UNLESS DIS SOLVED OR WOUND UP UNDER APPROPRIATE LAW. ALTHOUGH, IT DOES NOT HAVE ANY PHYSICAL EXISTENCE, IT EXISTS DUE TO OPERATION OF LAW. THEREFORE, ITS EXISTENCE CAN BE ESTABLISHED ONLY THROUGH THE IDENTIFICATION ISSUED TO IT UNDER THE ST ATUTE UNDER WHICH IT WAS INCORPORATED. THE CERTIFICATE OF INCORPORATION ISSUED BY COMPETENT STATUTORY AUTHORITY, PERMANENT ACCOUNT NUMBER AND OTHER CERTIFICATES ISSUE D UNDER VARIOUS OTHER APPLICABLE LAWS ARE EVIDENCE OF IT S IDENTIFICATION AND EXISTENCE AND THEY CANNOT BE IGNORE D OR M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 37 BRUSHED ASIDE. LUCKY COMMOTRADE PVT. LTD. IS A KOLKATA BASED CLOSELY HELD NON-BANKING FINANCIAL COMPANY INCORPORATED ON 16.03.1994 HAVING P.A. NUMBERS AAACL 4501 E. IT HAS AN INDEPENDENT BOARD OF DIRECTORS INDEPENDENTLY MANAGING ITS BUSINESS AFFAIRS. THE INVESTMENT AND FINANCING BUSINESS IS ITS PROFIT MAKIN G APPARATUS WHICH IS BEING CARRIED OUT FROM ITS REGISTERE D OFFICE. ITS SHARE CAPITAL AND FREE RESERVES AS ON 31.03. 2005, STOOD AT RS.1,28,80,000/- AND RS.9,34,20,000/- RESPECTIVELY. IT IS NOT A GROUP COMPANY OF SIGNET GRO UP. THESE FACTS ESTABLISHED ITS IDENTITY. FOR THE ASSESSM ENT YEAR 2007-08, THE SHAREHOLDERS FUND STOOD AT RS.10,63,97,734/- AND THE ASSESSMENT WAS COMPLETED U/S.143(3) AND TOTAL INCOME ASSESSED WAS RS.1,23,92,580/-. A COPY OF ASSESSMENT ORDER WAS PLAC ED BEFORE THE LOWER AUTHORITIES. THE ASSESSMENT FOR ASSESSMENT YEAR 2005-06 WAS ALSO COMPLETED U/S.143(3) M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 38 AND A COPY OF ASSESSMENT ORDER WAS PLACED BEFORE THE LOW ER AUTHORITIES. THE FINANCIALS OF THE COMPANY AS PER ITS AUDITED ANNUAL ACCOUNTS AND RETURNS OF INCOME FILED BEFO RE THE INCOME-TAX DEPARTMENT ARE AS UNDER: ASSESSMENT YEARS PAID-UP SHARE CAPITAL FREE RESERVES PROFIT FOR THE YEAR TAXES PAID 2006-07 1,28,80,000 9,34,25,224 45,137 18,510 2007-08 1,28,80,000 9,34,26,358 19,408 18,274 2008-09 1,28,80,000 9,35,17,734 1,17,408 44,400 2009-10 1,28,80,000 9,40,46,001 6,04,107 75,840 2010-11 1,28,80,000 9,63,52,036 34,40,035 11,34,000 2011-12 1,28,80,000 9,78,27,075 22,03,439 7,28,400 2012-13 1,28,80,000 9,85,63,971 11,54,896 4,18,000 THESE FACTS ESTABLISHED CREDITWORTHINESS OF THE LOAN CREDITOR. 24. THE ASSESSEE FILED DULY CONFIRMED COPIES OF ACCOU NT, AUDITED ANNUAL ACCOUNTS, COPIES OF RETURN OF INCOME, ASSESSMENT ORDER, BANK STATEMENTS, ETC. BEFORE THE A.O . AS WELL AS C.I.T.(A). ON ANALYSIS OF THE BANK STATEMENTS, I T WAS QUITE CLEAR THAT NO CASH WAS EVER DEPOSITED BY IT AT ANY TIME DURING THE RELEVANT YEARS. THE ASSESSING OFFICER COULD NOT BRING A SINGLE INSTANCE ON RECORD WHERE LUCKY COMMOTRADE PVT. LTD. DEPOSITED CASH IN ITS BANK ACCOUNT M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 39 AND ISSUED CHEQUES FOR ADVANCING LOAN OR MAKING INVESTMENT. NO EVIDENCE WAS FOUND DURING SEARCH OR P OST SEARCH INQUIRIES OR ASSESSMENT PROCEEDINGS IN RELATION TO (A) PAYMENT OF UNACCOUNTED CASH TO LUCKY COMMOTRADE PVT. LTD. (B) TRANSFER OF UNACCOUNTED CASH BY ASSESSEE S EMPLOYEES. ALL THE LOAN TRANSACTIONS WERE THROUGH NORM AL BANKING CHANNELS AND THERE WAS NO EVIDENCE SHOWING DEPOSIT OF CASH PRIOR TO ISSUE OF CHEQUES WHICH COUL D HAVE RENDERED THE TRANSACTION SUSPICIOUS. IT PRIMA FACIE ESTABLISHED GENUINENESS OF TRANSACTIONS. IN RELATION TO THE LOAN RECEIVED BY THE ASSESSEE GROUP, INTEREST WAS PAID TO LUCKY COMMOTRADE PVT. LTD. AND TAX WAS DEDUCTED AT SOURCE. IT WAS QUITE NATURAL AND ESSENTIALLY A PART OF BUSINESS ACTIVITY OF A NON-BANKING FINANCE COMPANY THAT FOR ADVANCING NEW LOANS OR MAKING NEW INVESTMENTS, IT RECALLS THE LOANS ALREADY GIVEN OR LIQUIDATE A PART OF ITS EXISTING INVESTMENTS. THEREFORE, THERE WAS NOTHING W RONG M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 40 IN ADVANCING INTER-CORPORATE UNSECURED LOAN TO THE ASSESSEE GROUP OUT OF LOANS / INVESTMENTS REALIZED. ON CE THE INCOME-TAX DEPARTMENT, KOLKATA ASSESSED LUCKY COMMOTRADE PRIVATE LTD. U/S.143(3) FOR ASSESSMENT YEA R 2005-06 AND ASSESSMENT YEAR 2007-08, INCOME-TAX DEPARTMENT, INDORE HAS NO LOCUS STANDI TO TREAT IT AS A BOGUS PAPER COMPANY AND A KNOWN ENTRY PROVIDER PARTICULARLY WHEN NO INVESTIGATION WHAT SO EVER WAS CONDUCTED BY IT AND NOT AN IOTA OF EVIDENCE WAS BROUGHT ON RECORDS IN SUPPORT OF SUCH SERIOUS AND BASELESS ALLEGATIONS. IT MAY BE NOTED THAT DURING ENTIRE SEARCH, POST- SEARCH PROCEEDINGS AND ASSESSMENT PROCEEDINGS U/S.153A , THE REVENUE AUTHORITIES DID NOT ISSUE EVEN A SINGLE N OTICE TO IT U/S.133(6) TO COLLECT INFORMATION OR SUMMON U/S 1 31. IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AND SEIZE D EITHER DURING SEARCH OR POST SEARCH INQUIRIES OR ASSE SSMENT PROCEEDINGS U/S.153A, IT CANNOT BE AUTOMATICALLY INFER RED M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 41 THAT LUCKY COMMOTRADE PVT. LTD - A KOLKATA BASED NBFC COMPANY, WAS A BOGUS PAPER COMPANY ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AND THE LOAN TRANSACTION OF THE ASSESSEE WAS NOT GENUINE. THE SERIOUS CHARGES AGAINST LUCKY COMMOTRADE PVT. LTD. ARE BASELESS, HEARSAY AND MERE CONJECTURES AND SURMISES. IN CASE OF LAL CHAND BHAGAT AMBICA RAM VS. C.I.T. 37 ITR 288, HONOURABLE SUPREME COURT STRONGLY DISAPPROVED THE PRACTICE OF M AKING ADDITION IN THE ASSESSMENT ON MERE SUSPICION AND SURMISES OR TAKING NOTE OF SO CALLED NOTORIOUS PRACTIC E PREVAILING IN TRADE CIRCLES. 25. IT MAY BE NOTED THAT THE A.O. ACCEPTED THE LOANS G IVEN BY LUCKY COMMOTRADE PVT. LTD. TO VARIOUS MEMBERS OF SANGLA FAMILY AS GENUINE AND DID NOT MAKE ANY ADDITION IN RELATION TO SUCH LOANS. THE DETAILS OF SUCH LOANS ARE AS FOLLOWS: M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 42 ASSESSEES NAME ASSESSMENT YEAR LOAN (RS.) INTEREST (RS.) AVANTIKASANGLA 2009-10 7,15,000 47,484 MONICA SANGLA 2009-10 28,44,000 1,03,570 MUKESHSANGLA 2009-10 35,70,000 2,81,160 SAURABHSANGLA 2009-10 11,10,000 47,392 26. THE ASSESSING OFFICER CANNOT ADOPT DOUBLE STANDARDS I.E. ALLEGING ON THE ONE HAND THAT THE UNACCOUNTED MONE Y WAS INTRODUCED BY THE ASSESSEE IN THE GUISE OF UNSECU RED LOANS AND ABSOLVING HIMSELF ON THE OTHER HAND FROM BRINGING ANY EVIDENCE IN SUPPORT OF HIS ASSERTION. HE IS A QUASI JUDICIAL AUTHORITY. HE CANNOT ACT ARBITRARILY. HE HAS TO PERFORM THE ROLE OF A PROSECUTOR AS WELL AS A JUDGE. HE CANNOT ADOPT AN APPROACH WHICH SUITS THE INTEREST OF REVENUE BUT AT THE SAME TIME, DEPRIVE THE ASSESSEES O F NATURAL JUSTICE AT THEIR DETRIMENT. HE HAS TO CONSIDER THE INTEREST OF REVENUE JUDICIOUSLY AND NOT ARBITRARILY AND VINDICTIVELY. THE STATEMENT OF SHRI PANKAJ KALANI THAT CASH RECEIVED FROM SIGNET GROUP WAS UTILIZED FOR ARRANGING ACCOMMODATION ENTRIES FROM LUCKY COMMOTRADE PVT. LTD. HAD NO EVIDENTIAL VALUE INASMUCH AS NO EVIDENCE COULD BE M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 43 FOUND FROM THE MATERIAL SEIZED FROM HIS OFFICE PREMIS ES TO SHOW THAT CASH RECEIVED FROM SIGNET INDUSTRIES LTD. W AS PAID TO LUCKY COMMOTRADE PVT. LTD. BY PLACING RELIANCE ON A LARGE NUMBER OF EVIDENCE ON RECORD THE ASSESSEE COUL D ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF LUCKY COMMOTRADE PVT. LTD. AND GENUINENESS OF THE TRANSACTION S. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE FOLLOWING JUDGEMENTS: 1. C.I.T. VS. KAMDHENU STEELS AND ALLOYS LTD. 19 TAXMA NN.COM 26 DELHI 2. C.I.T VS. STELLAR INVESTMENT LTD. [192 ITR 287 (DEL )] 3. C.I.T VS. STELLER INVESTMENT LTD. [251 ITR 263 (SC) ] 4. C.I.T VS. ELECTRO POLYCHEM LTD. [294 ITR 661 (MAD)] . 5. C.I.T VS. DIVINE LEASING AND FINANCE LTD. [299 ITR 268 (DEL)] 6. C.I.T VS. DIVINE LEASING & FINANCE LTD. [CIVIL APPE AL NO. CC375/2008 (SC)] 7. C.I.T VS. SOPHIA FINANCE LTD. [205 ITR 98 (DEL.FB)] 8. C.I.T VS. LOVELY EXPORTS PVT. LTD. [216 CTR 195 (SC )] 9. C.I.T VS. FIRST POINT FINANCE LTD. [286 ITR 477] (R AJ)]. 10. SHREE BARKHA SYNTHETICS LTD. VS. A.C.I.T [283 ITR 3 77 (RAJ)] M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 44 11. C.I.T VS. DWARKADHISH INVESTMENT PVT. LTD. [ 194 TA XMAN 43 (DEL)] 12. C.I.T VS. ANTARCTICA INVESTMENT PVT. LTD. [262 ITR 493 (DEL)] 13. C.I.T VS. DOLPHINE CANPACK LTD. [283 ITR 190 (DEL)] 14. C.I.T VS. VALUE CAPITAL SERVICES PVT. LTD. [307 ITR 334 (DEL)] 15. C.I.T VS. PEOPLES GENERAL HOSPITAL LTD. [2013] 356 ITR 65 (MP) 16. C.I.T VS. EMPIRE BUILDTECH (P) LTD. [2014] 43 TAXMA NN.COM 269 (DEL) 17. MIDAS GOLDEN DISTILLERIES (P) LTD. VS. C.I.T [2009] 124 TTJ 25 (CHENNAI) 18. C.I.T VS. SHREE RAMA MULTI TECH LTD [2013] 34 TAXMA NN.COM 177 (GUJ.) 19. C.I.T VS. STL EXTRUSION (P) LTD [2011] 11 TAXMANN.C OM 125 (MP) 27. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE CONTENTION OF THE ASSESSING OFFICER THAT HE IS N OT REQUIRED TO PROVE PAYMENT OF CASH IN LIEU OF THE CHEQU ES RECEIVED, THE ONUS IS UPON THE ASSESSEE TO EXPLAIN TH ESE TRANSACTIONS TO A.O.S SATISFACTION; THE ASSESSEE CANNOT ESCAPE FROM THIS RESPONSIBILITY BY FAILURE OF THE A.O . TO ESTABLISH CASH TRAIL AND CASH TRAIL WAS ESTABLISHED BY THE M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 45 A.O., IT IS SUBMITTED THAT THE A.O. DID NOT CONSIDER ALL THE EVIDENCE PLACED BEFORE HIM. HE DID NOT GO THROUGH TH E BANK STATEMENTS OF LUCKY COMMOTRADE PVT. LTD. IN WHIC H TRANSACTIONS WITH THE ASSESSEE GROUP WERE PROPERLY REFLECTED. HE COULD NOT BRING A SINGLE IOTA OF EVIDEN CE TO PROVE THAT CASH WAS DEPOSITED IN THE BANK ACCOUNT OF LUCKY COMMOTRADE PVT. LTD. PRIOR TO THE ISSUE OF CHE QUES TO THE ASSESSEE COMPANY OR AT ANY POINT OF TIME. IN FACT , THE ASSESSEE PRODUCED NECESSARY DOCUMENTS/EVIDENCE TO ESTABLISH IDENTITY OF LUCKY COMMOTRADE PVT. LTD., FIL ED BANK ACCOUNTS FOR VERIFICATION OF TRANSACTION, DULY CONFIRMED COPIES OF ACCOUNT AND AUDITED ANNUAL ACCOUNTS TO ESTABLISH CREDITWORTHINESS OF THE SHAREHOLDER AND GENUINENESS OF TRANSACTION, BUT THE REVENUE DID NOT CONDUCT FURTHER ENQUIRIES AND SIMPLY REJECTED THE ASSESSEES EXPLANATION AND EVIDENCE FOR MAKING ADDITION O N M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 46 ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT TH E RELIANCE PLACED BY THE C.I.T.(A). ON FACTS LIKE LUCKY COMMOTRADE PVT. LTD. AS WELL AS THE ASSESSEE COMPANY HAD BANK ACCOUNT WITH THE SAME BANK I.E. UCO BANK, NEW PALASIA ROAD, INDORE; THE BANK PASSBOOK AND CHEQUES BOOK OF LUCKY COMMOTRADE PVT. LTD. WERE FOUND WITH THE ASSESSEE, TO HOLD THAT IT WAS A CONDUIT FOR TRANSFERRING FUNDS TO VARIOUS SIGNET GROUP COMPANIES, IS TOTALLY MISPLACED INASMUCH AS THE BANK ACCOUNT OF THE ASSESSEE AND LUCKY COMMOTRADE PVT. LTD. WERE KEPT IN THE SAME BANK ACCOUNT TO FACILITATE PROMPT TRANSFER OF FUNDS TO S AME BANK CHARGES AND INTEREST COST. SIMILARLY, THERE WAS NOTHING UNUSUAL IN THE CHEQUES BOOK OF LUCKY COMMOTRDEPVT LTD. FOUND WITH SHRI MUKESH SANGLA CONSIDERING CLOSE FRIENDSHIP, FAMILY RELATIONS AND MUT UAL M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 47 TRUST BETWEEN SANGLA FAMILY AND SHRI RAMCHAND KEDIA OF LUCKY COMMOTRADE PVT. LTD. THE CHEQUES BOOK WAS KEPT T O FACILITATE PROMPT TRANSFER OF FUNDS, SAVE BANK CHARGES AN D INTEREST COST AS PHYSICAL MOVEMENT OF CHEQUES BETWEEN KOLKATA AND INDORE WOULD HAVE ENTAILED. IT MAY BE IMPORTANT TO NOTE THAT NET BANKING AND ONLINE BANKING TRANSACTIONS OVER WORLDWIDE WEB (WWW) WAS AT A VERY NASCENT STAGE IN INDIA DURING THE IMPUGNED PERIOD AND PEOPLE WERE VERY SKEPTICAL TO PERUSE THE SAME IN VIEW OF THE E-COMMERCE FRAUD DURING THE PERIOD. THE LEARNED COUN SEL FOR THE ASSESSEE, THEREFORE SUBMITTED TO DELETE THE ADDITION IN QUESTION. 28. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 29. WE HAVE HEARD BOTH THE SIDES. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN ALL T HESE M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 48 ASSESSMENT YEARS THE ASSESSEE HAS RECEIVED UNSECURED LOAN FROM LUCKY COMMOTRADE PVT. LTD.AND TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS THE ASSESS EE HAS SUBMITTED CONFIRMED COPY OF ACCOUNTS OF UNSECURED LOAN CREDITOR, COPIES OF THE RELEVANT BANK STATEMENT AND AUDITED ANNUAL ACCOUNTS OF THE CREDITOR. LUCKY COMMOTRADE PVT. LTD.WAS ASSESSED TO TAX REGULARLY AND THESE LOANS WERE TAKEN THROUGH NORMAL BANKING CHANNELS. THE ASSESSEE HAS ALSO SUBMITTED DETAILS OF THE SOURCE O F THE SOURCE WHICH HAVE BEEN REPRODUCED AT PARA 6. THESE DETAILS SHOW THAT THE AMOUNT RECEIVED BY THE ASSESSEE F ROM LUCKY COMMOTRADE PVT. LTD. WAS IN TURN RECEIVED AS SALE PROCEEDS OF SHARES OF ADROIT IND. LTD. FROM OTHER CO MPANIES FOR THE ASSESSMENT YEAR 2010-11. THE ADVANCE RECEIVED BY THE ASSESSEE FROM LUCKY COMMOTRADE PVT. LTD. FOR THE ASSESSMENT YEAR 2011-12 WAS ALSO PART OUT OF THE SALE M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 49 CONSIDERATION OF SHARES OF ADROIT IND. LTD. BY THE OT HER COMPANIES WHO ADVANCED THE MONEY TO LUCKY COMMOTRADE PVT. LTD. AND INTEREST ON ADVANCES. THE ADVANCE RECEIVED FOR THE ASSESSMENT YEAR 2012-13 FROM LUCKY COMMOTRADE PVT. LTD. WAS OUT OF RECOVERY OF ADVANCE GIVEN TO SIGN ET IND. LTD. BY LUCKY COMMOTRADE PVT. LTD.. THUS, THERE WAS EXPLANATION PROVIDED TO EXPLAIN THE SOURCE ALSO. FURTHE R WE ALSO FIND THAT THE REVENUE HAS ACCEPTED THE LOANS GIVEN BY LUCKY COMMOTRADE PVT. LTD. AS GENUINE IN THE CASE OF VARIOUS MEMBERS OF THIS GROUP. THE DETAILS OF THE SAME ARE AS UNDER :- ASSESSEES NAME ASSESSMENT YEAR LOAN (RS.) INTEREST (RS.) AVANTIKASANGLA 2009-10 7,15,000 47,484 MONICA SANGLA 2009-10 28,44,000 1,03,570 MUKESHSANGLA 2009-10 35,70,000 2,81,160 SAURABHSANGLA 2009-10 11,10,000 47,392 M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 50 MOREOVER, IN THE SEIZED MATERIAL OR IN ANY STATEMENT NOTHING HAS BEEN FOUND ADVERSE IN RESPECT OF THE LOAN RECEIVED BY THE ASSESSEE FROM LUCKY COMMOTRADE PVT. L TD. FURTHER, THE ASSESSING OFFICER HAS NOT ISSUED SUMMON S TO LUCKY COMMOTRADE PVT. LTD.. CONSIDERING ALL THESE ASPE CTS OF THE CASE, WE FIND MERIT IN THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. 30. IN THE RESULT, ALL THE APPEALS ARE ALLOWED. PRONOUNCED IN OPEN COURT ON 12 TH JANUARY, 2016 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 12 TH JANUARY, 2016 DN/- M/S SWAN PETROCHEMICALS PVT. LTD IT(SS)A NOS. 96, 97 & 392/IND/2015 51