TMI Blog2019 (3) TMI 1806X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the ld. CIT(A) for the year under consideration is based on the identical grounds as in the case of M/s Kota Dall Mill while deleting the addition made by the A.O. in respect of all these five companies. Thus having regard to the facts and circumstances of the case as well as the documentary evidence produced by the assessee in respect of the claim, the addition made by the A.O. based on merely allegations in the report of DDIT (Inv.), Kolkata without any supporting cogent material or documentary evidence is not sustainable. Therefore, in view of the earlier order as well as evidence produced by the assessee, we do not find any error or illegality in the order of the ld. CIT(A) in deleting the addition. Hence, we uphold the same. - Decided in favour of assessee. Disallowance u/s 14A - as per AO expenditure directly incurred in respect of investment in shares and income from such investment does not form part of the total income - CIT(A) has deleted the addition on the ground that the A.O. has even not recorded any satisfaction that the alleged expenditure has any direct nexus with the investment when the assessee was having sufficient interest free funds - HELD THAT:- Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any incriminating material as well as the order of the A.O. is not sustainable when the assessee was not given the opportunity of cross examination - HELD THAT:- As decided in case of M/s Multimetals Limited [ 2019 (1) TMI 1591 - ITAT JAIPUR ] either in the assessment order, the Assessing Officer has referred or relied upon any incriminating material found during the course of search and seizure action in the case of assessee nor the CIT(A) has disputed this fact that the AO was not having any incriminating material in his possession found and seized during the course of search and seizure action in the case of the assessee which has disclosed any unaccounted or undisclosed income of the assessee. Information received from the Investigation Wing, Kolkata as well as the statement of Shri Anand Sharma and Shri Ankit Bagri cannot be regarded as incriminating material unearthed during the course of search and seizure U/s 132 in the case of the assessee. As regards the order passed by the A.O. without giving the opportunity of cross examination, we find that the facts on this issue are identical as in the case of other group concerns of Kota Dall Mill. In the case of M/s M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case and in law, the C1T(A) was justified in deleting the addition of unsecured loans allegedly obtained from M/s Prithvi Vinimay Pvt. Ltd. and M/s Birla Arts Pvt. Ltd., M/s Macro Soft Technology' Pvt. Ltd., M/s Teac Consultants Pvt. Ltd., M/s Sangam Distributors Pvt. Ltd., despite the fact that the directors or Principal Officers of these companies were never produced before the AO for examination despite number of opportunities provided by the AO for producing and also ignoring the fact that the assessee neither expressed its inability in producing the lenders nor produced them either. 4. Whether on the facts and circumstances of the case and in law, the C1T(A) was justified in deleting the addition of unsecured loans allegedly obtained from M/s Prithvi Vinimay Pvt. Ltd. and M/s Birla Arts P\4. Ltd., M/s Macro Soft Technology Pvt. Ltd., M/s Sangam Distributors Pvt. Ltd., M/s Teac Consultants Pvt. Ltd., merely by observing that the assessee has cooperated in assessment by showing his willingness to produce the Directors of lender companies and some Directors/Officers were also produced before the AO despite the fact that even the Directors which were produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found or seized during the search and seizure action in the case of the assessee. The assessee also raised objection against the additions made by the A.O. on the ground that the assessee was not given an opportunity of cross examination of the witnesses whose statement was relied upon by the A.O. while passing the assessments. The ld. CIT(A) did not accept these objections raised by the assessee, however, on merits of the addition, the ld. CIT(A) has deleted the major part of the addition for which the A.O. was not having any material in his possession but confirmed the addition in respect of which the statement of the alleged entry provider was with the A.O.. Thus, both the assessee as well as the revenue are aggrieved by the impugned order of the ld. CIT(A) and filed appeal as well as the cross objection for the respective assessment year. 3. The A.O. has observed that the assessee received share capital and unsecured loan from various companies. The A.O. issued show cause notice to the assessee as to why unsecured loan and share capital received from five companies should not be treated as unexplained U/s 68 of the Act. After considering the explanation of the assessee, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash credit introduced by the assessee in the garb of share capital. Once the A.O. has brought on record the report of the Investigation Wing, Kolkata to prove that the said company is a shell company and engaged in providing bogus accommodation entries then the assessee was duty bound to discharge its onus of proving the genuineness of the transactions. The assessee has failed to produce the Principal Officer or the Director of the loan creditor before the A.O. for examination despite various opportunities given by the Assessing Officer. He has relied upon the decision of Hon ble Delhi High Court in the case of CIT Vs. Navodaya Castles Pvt. Ltd. 226 Taxman 190 and the SLP filed by the assessee was dismissed by the Hon'ble Supreme Court reported in 230 Taxman 268 (S.C.) 5. On the other hand, the ld AR of the assessee has submitted that prior to the search U/s 132 of the Act, the assessment of the assessee was completed U/s 143(3) of the Act wherein the share application money received by the assessee from this company was treated as genuine by the A.O.. Even the said transaction was also examined by the A.O. in the assessment of the share applicant U/s 143(3) of the Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neness of the transaction, which were not disturbed by the department in the assessment in the case of the share applicant then the said transaction cannot be treated as the bogus in the hand of the assessee. He has supported the order of the ld. CIT(A). The ld AR has also relied upon the series of decisions on this point and submitted that once the assessee has discharged its onus by producing the documentary evidence then in absence of any contrary material brought by the Assessing Officer, the addition made by the Assessing Officer is not sustainable. He has also referred to the report of the Kolkata Investigation Wing and submitted that even the notice issued U/s 133(6) of the Act was duly responded by the said company and hence no adverse report has been given by the DDIT (Inv), Kolkata. The only objection is non-production of the Director of the said company, however, the assessee has duly produced the affidavit of the Director of the share applicant. As regards the unsecured loan taken from three companies namely Birla Art Pvt. Ltd., Prithvi Vinimay Pvt. Ltd. and Macro Soft Pvt. Ltd. The ld. AR has submitted that during the year itself, the assessee has repaid the entire loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on the closing of previous year i.e. 31/3/2010 nothing was outstanding in respect of unsecured loans. Once the receipt as well as repayment of the loan in question are through banking channel then even if the A.O. has doubted the transaction of receipt of loan as an accommodation entry if the assessee has repaid the same during the year under consideration then it has neutralized the effect of accommodation entry. Even otherwise we note that the A.O. has made the addition based on the report of the DDIT (Inv.), Kolkata and was not having any other documentary evidence in his possession to support the decision of treating the transaction of unsecured loan as bogus transaction being accommodation entries. The said report of the DDIT(Inv.), Kolkata was also not based on any documentary evidence but the narration of the statements of the alleged entry operators, however, the A.O. was not having even the statement of the alleged entry operators. On the contrary, the assessee produced all the supporting documentary evidence which includes the ITR of the loan creditors and shareholders, their financial statements including the balance sheet, bank statement showing the entry of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 485 4 Copy of share application form of equity share 486-487 5 Copy of ledger showing the transaction with share applicant 488-489 6 Share Allotment advice 490 7 Copy of affidavit of Mr Jitendra Sharma director of company. 491-494 8 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. 495-501 9 Copy of assessment order passed in the case of above named company for AY 2005-06, AY 2006-07, AY 2012-13 and 2014-15. 502-521 10 Copy of ROC master data. 522-523 11 Copy of PAN card. 524 12 Certificate of Incorporation. 525 13 Copy of Certificate of NBFC Registration. 526 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with computation sheet 598-599 2 Copy of Balance sheet of AY 2010-11 along with enclosures 600-606 3 Copy of relevant page of bank statement showing the entry of payment made to assessee. 607-613 4 Copy of account confirmation from books of unsecured loan creditor 614-615 5 Copy of ledger showing the transaction with unsecured loan creditor 616-617 6 Copy of affidavit of Mrs Neelam Gautam director of company. 618-621 7 Copy of Calcutta High Court order regarding the amalgamation of another companies with assessee company 622-648 8 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. 649-655 9 Copy of assessment order passed in the case of above named company for AY 2006-07, AY 2012-13, AY 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ummon no. 2116 dated 31.10.2017 issued by DCIT (CC), Kota u/s 131(1) of the Income Tax Act 1961. 732-733 15 Copy of notice no. 1612 dated 21.09.2017 issued by DCIT (CC), Kota u/s 133(6) of the Income Tax Act 1961. 734 16 Copy of reply in response to notice no. 1612 dated 21.09.2017 issued by DCIT (CC), Kota u/s 133(6) of the Income Tax Act 1961 along with dispatch proof. 735-736 M/s Prithvi Vinimay Private Limited (AY 2010-11) S. No. Particulars of Documents S. No. of PB where documents annexed AY 2010-11/VOL- III 1 Copy of Ack. of ITR of AY 2010-11 along with computation sheet 737-738 2 Copy of Balance sheet of AY 2010-11 along with enclosures 739-744 3 Copy of relevant page of bank statement showing the entry of payment made to assessee. 745-768 4 Copy of account confirmation from books of unsecured lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share applicant and loan creditor company. Even the assessee has produced the details of the availability of the funds with all these companies and those financial statements showing the funds with these companies were accepted by the A.O. while passing the assessment order U/s 143(3) of the Act. At the outset, we note that in the case of group concern M/s Kota Dall Mill Vs DCIT in ITA Nos. 997 to 1002/JP/2018, 1119/JP/2018, 1057 to 1062/JP/2018 and 1210/JP/2018, the Tribunal while deciding the identical issues vide order dated 31/12/2018 has considered the transactions of unsecured loan taken from these companies namely Birla Art Pvt. Ltd., M/s. Teac Consultant Pvt. Ltd and M/s. Sangam Distributors Pvt. Ltd. in para 15 as under: 15. We have considered the rival submissions as well 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 Consultant Pvt. Ltd and M/s. Sangam Distributors Pvt. Ltd. and confirmed the addition made on account of loan taken from M/s. Jalsagar Commerce Pvt. Ltd. The is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled Entry Operators. 6.4 For these three creditors namely, M/s Birla Arts 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 documents along with assessment orders in case of lender companies, which 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 and genuineness of the cash credits. In the case of Addl. CIT v. Bahri Bros. (P) Ltd. [1985] 154 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 conducted by the department in relation to these c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re concerned, these have duly replied to the notices issued by DCIT/DDIT(Inv.), Kolkata in respect of commission, these facts remain uncontroverted by the AO. 6.6 The AO during assessment proceedings took negative inference from the statement of Shri Rajendra Agarwal recorded during search u/s 132(4) wherein he made disclosure in respect of Long Term Capital Gain in his individual hands. I have gone through the statement of Shri Rajendra Agarwal and his disclosure made in his statement, Notably, the disclosure made was in his personal capacity only and with respect to LTCG only and not in respect of any other transactions be it be receipt of unsecured loans. Further, Rajendra Agarwal is not a partner in the Appellant Firm. Therefore, I find that in the absence of any nexus of the Statement of Shri Rajendra Agarwal with the appellant 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 record by the Appellant. The AO has observed that on the date of debit in the account statement of creditor, there is correspond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rajasthan), CIT v/s. Creative World Telefilms Ltd (2011) 333 ITR 100 (Bom), Commissioner of Income-tax-I v. Patel RamniklalHirji [2014] 222 Taxman 15 (Gujarat)(MAG.), Principal Commissioner of Income-tax-4 v. G G Pharma India Ltd. [2016] 384 ITR 147 (Delhi) referred above which have been also been followed recently by Hon ble Delhi Tribunal in case of ITO vs. Softline Creations (P) Ltd. in ITA No. 744/Del/2012 vide its order dated 10.02.2016. Further, Hon ble Apex Court as well as High Court has held that once the identity of creditor is established, the department is free to reopen the assessment 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 Minerals Ltd. [2011] 198 TAXMAN 497 (Delhi), Divine Leasing Finance Limited [2008] 299 ITR 268 (Delhi) CIT v. Orissa Corporation (P.) Ltd. [1986) 159 ITR 78/25 Taxman 80F (SC) and others on this question of law. 6.11 Further, power to call for information/production of evidences or enforcing attendance under the law is given to the income tax authorities only and therefore, in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court (supra). 6.13 It is noted that no clinching evidences has been brought on record that any unaccounted income was routed through unsecured loans by the Appellant Firm as no evidences as to receipt/payment of cash for receipt of unsecured loans were found during search in case of the Appellant. Mere suspicion howsoever strong cannot take place of evidence. Thus, in the absence of any incriminating material found during search to rebut the evidences filed by the Appellant, the impugned addition made in respect of unsecured loan u/s 68 of the Act is legally untenable and unjustified. 6.14 In view of the above discussion of relevant facts and following the several ratios on the subject from Hon ble Apex Court, High Courts including jurisdictional High Courts, Tribunals including jurisdictional Tribunals, the impugned addition 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 ₹ 12,36,40,000/- is not sustainable 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 Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011-2012 2010-2011 20,00,000 2014-2015 2013-2014 67,57,37,000 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 13,93,45,000/- 4 M/s Macro Soft Technology Private Limited ₹ 6,35,15,000/- Total ₹ 42,47,25,000/- We find that the assessee produced all the relevant documentary evidence in support of the transactions before the AO. The summary 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 accounts of assessee. 843-845 2 Copy of Ack. of ITR of AY 2010-11 and computation of 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 accounts of partner. 856-859 5 Copies of relevant bank a/c of partner showing the entries of payment made to ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany M/s Prithvi Vinimay Pvt Ltd, 959-962 21 Copy of order of Calcutta High Court regarding amalgamation 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 above 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 registrar 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 reminder notice No. 1578 dated 31.10.2017 issued by DDIT (Investigation), Unit-1(3), Kolkata u/s 131 of Income Tax Act, 1961. 1005-1008 28 Copy of reply submitted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 Copy of ledger a/c of partner from books of accounts of assessee. 1075-1077 45 Copy of Ack. of ITR of AY 2010-11 and computation of 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 accounts 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 director of Doshi Management Pvt. Ltd on behalf of amalgamated Company M/s Banshidhar Advisory Pvt Ltd, 1101-1103 50 Copy of order of Calcutta High Court regarding amalgamation 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 31.03.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1133-1134 All these four companies status has been shown in the Master data of ROC as Active and three of which, namely, M/s. Banshidhar 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 already under gone process of amalgamation through the approval of the Hon ble High Court. Hence, there cannot be any dispute about the identity and the affairs of these companies as genuine. The assessee also produced the records about the availability of the funds with these four companies which were sufficient to introduce the partners capital. The details of the source of funds of these four companies as submitted by the assessee are as under:- 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 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilarly, as discussed in para 4.4.3 this matter 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 dated 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 business requirements. From the careful perusal of these the two reports dated 28.11.2017 and 06.12.2017 from the Deputy Director of Income Tax (Inv), Unit-1(3), Kolkata. I don t find adverse findings alongwith eloquent evidences in the form of statement on oath of relevant entry operators in respect of capital contributions by four companies, namely, M/s Bansidhar Advisory Private Limited, M/s Vasundhara Advisory Private Limited, M/s Prithvi Vinimay Private Limited and M/s Macro Soft Technology Private Limited. The same is evident from the respective details for above lenders in the above reports dated 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n PAN Card, copy of ledger copy of assessment order u/s 143(3) for the A.Y. 14-15. 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, Form2, 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 Hon ble High Court order in respect of Amalgamation. 07.11.2017 No summons were issued for M/s Macro soft Technology Pvt. Ltd by DDIT (Inv.) Unit 1(3) Kolkata .......this office has also verified the companies as per database of paper/shell companies/entities prepared by Directorate of Investigation Wing, Kolkata on the basis of statements of various entry operators at different occasions before the Income Tax Department. On verification, the following facts has been emerged out from the database which reveal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It may be mentioned here that amalgamation took place in July 2014 where as statement of Shri Anand Sharma are prior to March 2014. Further, the verification and investigation of past and present directors of following companies has been carried out with the help of Database of Entry Operators prepared by Directorate of Investigation Wing, Kolkata which reveal that the directors of these companies have been listed under the name of various entry operators who are engaged in the business of providing accommodation entries by appointing various dummy directors 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made by the appellant along with paper book for the year under consideration and all relevant material placed on record and could not find a single piece of evidence 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 partner s capital from four companies, namely, M/s Bansidhar Advisory Private Limited, M/s Vasundhara Advisory Private Limited, M/s Prithvi Vinimay Private Limited and M/s Macro Soft Technology Private Limited. The AO alleged that despite providing huge capital contribution, none of the newly introduced Partner is interested in the business activities of the Assessee Firm as there is no working Partner on their behalf and none of them have nominated any Director or other Officer of the Company to act as Working Partner in the Assessee Firm. 7.3.3 However, the A/R of the Appellant while representing the case has argued the matter in detail and has filed detailed submissions as reproduced above in response to the findings and allegations of the AO. A summarized form of the submissions and arguments put forth by the A/R is given hereunder: a) The Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to these companies which was duly complied with and relevant documents were filed. There 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 partner s capital. 7.3.5 The only allegation of the AO is that the Directors of these companies have not been nominated as working partners. In my view, such allegation is without any substance as there is no legal obligation on a partnership firm to appoint all the partners as working partners. There are various partners in firms which only do investment in the firm and do not participate in the regular business activities 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Vinimay Private Limited and M/s Macro Soft Technology Private Limited have duly replied to the notices issued by DCIT/DDIT(Inv.), Kolkata in respect of commission, these facts remain uncontroverted by the AO. 7.3.8 Further, it is evident from the Assessment Order that other findings and allegations of the AO with respect to the partner s capital are similar to the findings made by the AO with respect to the unsecured loans of the Appellant. As the said similar findings and allegations have already been dealt with in Ground No. 2 above, these are not again dealt with for the sake of brevity. However, my view regarding the findings and allegations as already discussed in Ground No. 2 above, shall mutatis mutandis apply to the findings and allegations of the AO with respect to partner s capital made in this ground of appeal. 7.3.9 In view of the above discussion of relevant facts and following the several ratios on the subject from Hon ble Apex Court, High Courts including jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... average investment. On appeal, the ld. CIT(A) has deleted the addition on the ground that the A.O. has even not recorded any satisfaction that the alleged expenditure has any direct nexus with the investment when the assessee was having sufficient interest free funds. 9. We have heard the ld. CIT-DR as well as the ld AR of the assessee and considered the relevant material on record. The assessee is in the business of finance and therefore, the interest expenditure is essentially connected with the business of the assessee if except the borrowed fund is directly used by the assessee for the purpose of investment in shares. We further note that there is no fresh investment made by the assessee during the year but all these investments were old investments, therefore, in absence of any finding that the assessee has used the borrowed fund at the time of making the investment, the disallowance on the ground of interest expenditure is not warranted. As regards the indirect expenditure, the ld. CIT(A) has noted that the A.O. has applied amended provisions of Rule 8D(2)(ii) of the Rules, however, that the amendment is w.e.f. 02/6/2016 and not applicable for the year under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted and these grounds of appeals are allowed. The revenue has not brought any fact or material to controvert the finding of the ld. CIT(A) or to point out that the finding of the ld. CIT(A) is perverse. Accordingly, we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue. Hence, we uphold the same. 10. Ground No. 8 of the revenue s appeal is regarding the addition on account of retention charges. The assessee has claimed retention charges of ₹ 7,50,385/-.The A.O. without discussing any reason for making the addition or disallowance has added the said amount to the total income of the assessee. The assessee challenged the addition made by the A.O. before the ld. CIT(A) and submitted that this amount was paid as fee to the RIICO for not supporting the commercial activity at the industrial site allotted by the RIICO to the assessee. Thus, it was contended that this is a business expenditure incurred by the assessee. The ld. CIT(A) has allowed the claim of assessee and deleted the addition made by the A.O. 11. We have heard the ld. CIT-DR as well as the ld. AR of the assessee, we find that this amount was paid by the assessee being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the relevant material on record. We find that this issue is common as raised in all the group concerns of Kota Dall Mill which are subjected to the search and seizure action on 02/7/2015. We have considered these two issues in the case of M/s Multimetals Limited Vs. DCIT in ITA Nos. 1024 to 1026, 1100 to 1104 1230/JP/2018 and C.O. 38 39/JP/2018 vide order dated 29/01/2019 in para 9 and 14 as under: 9. We have considered the rival submissions as well as relevant material on record. Undisputedly the assessment for the A.Y. 2010-11 to 201213 were not pending on the date of search on 02/7/2015 as the original assessment U/s 143(3) of the Act were also completed prior to the date of search. Thus, the assessment for these three assessment years were not got abated by virtue of search U/s 132 of the Act on 02/7/2015 and therefore the Assessing Officer would assess the total income of the assessee as per the provisions of Section 153A of the Act in respect of these three assessment years having regard to the fact that whether any incriminating material was found or came to the knowledge of the Assessing Officer during the search and seizure proceedings. Since these assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 2nd July, 2015. It is a settled proposition of law that the assessment or reassessment under section 153A in respect of the assessment years which have already been completed and assessment orders have been passed determining the assessee s 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 material the completed assessment can only be reiterated. The provisions of section 132 read with section 153A of the Act stipulate two types of situations one where the 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 section 132A of the Act. Therefore, the assessment under section 153A in respect of those assessment years which stand abated due to the reason of pending on the date of initiation of search or requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 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 record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of 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 completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. Thus the Hon ble High Court has held that in the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n para 55 to 71 as under :- 55. On the legal aspect of invocation of Section 153A in relation to AYs 200001 to 2003-04, the central plank of the Revenue's submission is the decision of this Court in Smt. Dayawanti Gupta (supra). Before beginning to examine the said decision, it is necessary to revisit the legal landscape in light of the elaborate arguments advanced by the Revenue. 56. Section 153A of the Act is titled Assessment in case of search or requisition . It is connected to Section 132 which deals with 'search and seizure'. Both these provisions, therefore, have to be read together. Section 153A is indeed an extremely potent power which enables the Revenue to re-open at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It is only if during the course of search under Section 132 incriminating material justifying the re-opening of the assessments for six previous years is found that the invocation of Section 153A qua each of the AYs would be justified. 57. The question whether unearthing of incriminating material relating to any one of the AYs could justify the re-opening of the assessment for all the earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings 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), affirmed by the ITAT, deleting the addition, was not interfered with. 59. In Kabul Chawla (supra), the Court referred to the decision of the Rajasthan 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 and other documents that had not been produced in the course of original assessment were found in the course of search. It was held where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration while computing the total income under Section 153A of the Act. The Court then explained as under: 22. In the firm opinion of this Court from a plain reading of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted the plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under Section 153A and 153C of the Act. The legal position 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 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 person searched 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 of 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 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 si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Court 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 search 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 in which such search is conducted or requisition is made and assess or reassess the same. Since the assessment under section 153A of the Act is linked with search and requisition 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, ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisition, in other words, the assessment should connected With something round during the search or requisition viz., incriminating material which reveals 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 income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition' or disallowance can be made only on the basis of material collected during the search or requisition, in case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT(supra), the earlier assessment would have to be reiterated, in case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the AYs in which additions were sought to be 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 finality for a particular year, i.e., it is not pending then the same cannot be subject to tax in proceedings under section 153A of the Act. This of course would not apply if incriminating 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 regular 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 the 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. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s already noticed, the books of accounts maintained by the Assessee in the present case have been accepted by the AO. In response to question No. 16 posed to Mr. Pawan Gadia, he stated that there was no possibility of manipulation of the accounts. In Smt. Dayawanti Gupta(supra), by contrast, there was a chart prepared confirming that there had been a yearwise non-recording 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 deleted by the CIT (A), which order was affirmed by the ITAT. Even the Revenue has 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 findings do not reveal any fundamental error, calling for correction. The inferences drawn in respect of undeclared income were premised on the materials found as well as the statements recorded by the assessees. These a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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 deleted by the ld. CIT (A). The relevant observations of the Hon ble High Court in case of Principal CIT vs. Meeta Gutgutia (supra) are in para 53 as under :- 53. At this stage, it is also to be noticed that an elaborate argument was made by Mr. Manchanda on the aspect of the security deposits accepted by the Assessee. These were of two kinds - one was of refundable security deposits and the other for non-refundable security deposits. As far as the refundable security deposits were concerned, the AO himself in his remand report accepted 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 ₹ 5,09,343 was held to be justified and correct. It was duly accounted for under 'liabilities' and transferred to income in a phased manner. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years, in which both the disclosed and the undisclosed income would be brought to tax. 20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note to the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub-section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee's total income and such orders 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 conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed 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 pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made. (Em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating 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-assessment proceedings. The word 'pending' does not operate any such interpretation, that wherever the appeal against such assessment or reassessment is pending, the same along with assessment or reassessment proceedings is liable to be abated. The principles of interpretation of taxing statutes do not permit the Court to interpret the Second Proviso to Section 153A in a manner that where the assessment or reassessment 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 that the abatement of any proceedings has serious causes and effect in as much as the abatement of the proceedings, takes away all the consequences that arise thereafter. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta. It is pertinent to note that the said information was available with the AO prior to the search conducted under section 132 of the Act in case of the assessee on 2nd July, 2015. Therefore, even the sole basis of assessments framed under section 153A of the Act is the information received from Investigation Wing Kolkata and statement of one Shri Anand Sharma, who is stated to be an entry operator and managed various concerns/companies including M/s.Royal 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 referred to or was having in possession of any material to indicate that the unsecured loans shown in the books of accounts as well as partners capital received by the assessee are nothing but assessee s own unaccounted and undisclosed income routed 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 which were already completed as the assessments for these four assessment years were not pending o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where the nature and source of a receipt, whether it be of money or other property, cannot be satisfactorily explained by the assessee, it is open for the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that the income is from any particular source as enumerated the Hon ble Supreme Court in the case of Roshan Di Hatti v. CIT (1977) 107 ITR 938 (SC) and Kale Khan Mohammad Hanif v. CIT (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 Mohammad Hanif v CIT (1963) 50 ITR 1 (SC), Roshan Di Hatti v CIT (1977) 107 ITR (SC) it has been held that the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee, is 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 further burden is on the revenue to show that the income is from any particular source. It may also be pointed out that the burden of proof is fluid for the purposes of Section 68. Once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances, I am left with no option than to tax the entire unexplained credits by way of partner s 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, chargeable to tax as income of the assessee firm for the respective assessment years. 22. After examination of the information and details 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. ₹ 2,82,83,460/- Additions| Unexplained cash credits u/s |68 of the Act in the form of |unsecured loan and partner s |capital ₹ 67,20,14,999/- Assessed income ₹ 70,02,98,459/- R/o ₹ 70,02,98,459/- The total income of the assessee in the status of Firm for Assessment Year 2010-11 relevant to Previous Year 2009-10 is assessed at ₹ 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 inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Continental Warehousing (Nhava Sheva) Ltd., and SLP has been filed before the 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. 3.2.4 In view of SLPs admitted in case of Kabul Chawla, M/s All Cargo Global Logistics as well as Continental Warehousing (Nhava Sheva) Ltd., (supra), assessee s 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 the order of the ld. CIT (A) there is any mention or finding that the additions have been made by the AO on the basis of any incriminating material found during the course of search and seizure in the case of the assessee. The AO has solely relied upon 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the assessee which has disclosed any unaccounted or undisclosed income of the assessee. The information received from the Investigation Wing, Kolkata as well as the statement of Shri Anand Sharma and Shri Ankit Bagri cannot be regarded as incriminating material unearthed during the course of search and seizure U/s 132 of the Act in the case of the assessee. Hence, in view of the decisions/binding precedents as relied upon by the ld AR and also considered by this Tribunal in the case of Kota Dall Mill (supra), we have no reason to take a different view on this issue. Accordingly, by following the earlier decision of this Tribunal in the case of group concern M/s Kota Dall Mill we hold that the addition made by the Assessing Officer while passing the assessment orders for the A.Y. 2010-11 to 2012-13 U/s 153A of the Act are not sustainable and liable to be deleted. Hence, this ground of the assessee s appeal is allowed. x x x x x x x x x x 14. We have considered the rival submissions as well as relevant material on record. There is no dispute that the assessee demanded the cross examination of the witnesses, therefore, statements have been relied upon by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven the proceedings by the Investigation were conducted at the back of the assessee, therefore, the said statement of Shri Anand Sharma cannot be the sole basis of assessment without giving an opportunity of cross examination to the assessee. The Hon ble Supreme Court in the case of Andaman Timber Industries vs. CCE (supra) while dealing with the issue of violation 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 flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not given by the AO as well as ld. CIT (A), then the orders passed based on such statement are not sustainable in law. The Hon ble Delhi High Court in case of CIT vs. Ashwani Gupta, 322 ITR 396 (Delhi) while dealing with the issue of not providing the opportunity to cross examine the witnesses has held in para 5 to 7 as under :- 5. Secondly, in fact, a rectification application being MA 264/Delhi/2008 under section 254(2) of the Income-tax Act, 1961 had been filed by the revenue before the said Tribunal. In that also, in paragraph (g) of the Miscellaneous Application, the revenue had submitted as under:- (g )Because, although findings of the Tribunal are factually correct but the decision of the Tribunal is not acceptable because violation of the canons of natural justice in itself is not fatal 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 cross-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 findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t observed that after a lapse of several years the assessee should not be placed upon the rack and called upon to explain not only merely, the origin and source of his capital contribution but the origin of origin and the source of source as well. 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 initial 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 department and the department cannot add the cash credits to his income from undisclosed 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, genuineness of the transaction and creditworthiness of the creditor. In the instant case by virtue of the fact that the transaction was completed by cheque payments, the appellant has contended that it had satisfied all the three tests. 13. In Kishanchand Chellaram (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts relied 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 which the department sought to conclude that the loan was a bogus transaction. 17. In our view in the light of the fact that the monies were advanced apparently by the account payee cheque and was repaid 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 providing the material sought to be used against assessee in arriving before passing the order of reassessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation 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 be provided with the material used against him apart from being permitting him to cross examine the deponents. Despite the request dated 15th February, 1996 seeking an opportunity to cross examine the deponent and furnish the assessee with copies of statement and disclose material, these were denied to him. In this vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee submitted that Shri Bhanwarlal Jain is not known to him and regarding various incriminating documentary evidences 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 documents and statement of all various persons recorded in this regard and provide an opportunity to the assessee to cross examine such persons. However, the AO didn t provide to the assessee copies of such incriminating documents and statements of various 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 bogus unsecured loans and advances through various Benami concerns (70) operated and managed by them. This admission automatically makes all the transactions done by them as mere paper transactions and in these circumstances, further as per the information name and address of assessee and the Benami Concern through which accommodation entry of unsecured loans was provided is appearing in the list of beneficiaries to who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (3) of section 23, the Income-tax Officer, though not bound to rely on evidence produced by the assessee as he considers to be false, yet if he proposes to make an estimate in disregard of that evidence, he should in fairness disclose to the assessee the material on which he is going to find that estimate; and that in case he proposes to use against the assessee the result of any private inquiries made by him, he must communicate to the assessee the substance of the information so proposed to be utilized to such an extent as to put the assessee in possession of full particulars of the case he is expected to meet and that he should further give him ample opportunity to meet it. 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 disclose to the assessee what information had been supplied to it by the departmental representative. Next, it did not give any opportunity to the company to rebut the material furnished to it by him, and lastly, it declined to take all the material that the assessee wanted to produce in support of its case. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and no opportunity to cross examine the manager of the bank could in the circumstances be sought or availed of by the assessee. It is true that the proceedings under the incometax law are not governed by the strict rules of evidence and, therefore, it might be said that even without calling the manager of the bank in evidence to prove this letter, it could be taken into account as evidence. But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him. 2.11 In light of above proposition in law and especially taking into consideration the decision of the Hon ble Supreme Court in case of C. Vasantlal Co. (supra) relied upon by the Revenue and which actually supports the case of the assessee, in the instant case, the assessment was completed by the AO relying solely on the information received from the investigation wing, statement recorded u/s 132(4) of Shri Bhanwarlal Jain and others, and various incriminating documentary evidence found from the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination is not sustainable as the addition is solely based on the statement and information which is nothing but summary of statements recorded by the DDIT(Inv), Kolkata. Hence, the addition made by the Assessing Officer is deleted. Ground No. 2 of the appeal is decided in favour of the assessee. We find that the A.O. has not referred any incriminating material found during the search and seizure proceedings but what is relied upon by the A.O. is the report of the Investigation Wing, Kolkata, which was preexisting the search and seizure action in the case of the assessee. Accordingly in view of the earlier orders of this Tribunal, the addition made by the A.O. are otherwise not sustainable in law. 11. As regards the order passed by the A.O. without giving the opportunity of cross examination, we find that the facts on this issue are identical as in the case of other group concerns of Kota Dall Mill. In the case of M/s Multimetals Limited Vs DCIT (supra), the Tribunal has again considered this issue and followed the decision of the Tribunal in the case of Kota Dall Mill (supra). The relevant findings of the Tribunal are reproduced in the foregoing paras of this order. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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