TMI Blog2019 (4) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 5-4-2019 - Sh. H.S. Sidhu, Judicial Member For the Assessee : Sh. R.S. Singhvi, CA For the Department : Sh. S.L. Anuragi, Sr. DR. ORDER The assessee has filed the appeal against the order dated 19.1.2018 passed by Ld. CIT(A)-33, New Delhi relevant to assessment year 2011-12 by raising as many as 07 grounds, but at the time of hearing, Ld. counsel for the assessee has only argued the ground no. 5 which is reproduced as under:- 5. The Assessing Officer has erred on facts and in law forming a negative inference solely on the basis of extracts of statement by third parties without confronting the same to the assessee company and in total disregard to the provisions of law. 2. Brief facts of the case are that assessee has not filed its return of income for the assessment year 2011-12. The case of the assessee was selected under section 147 of the Income Tax Act, 1961 (in short Act ). Statutory notices u/s. 148/143(2)/142(1) of the Act were issued. In response thereto, the assessee filed its return of income on 18.5.2016 declaring NIL income for the AY 2011-12 and the AR of the assessee attended the assessment proceedings from time to time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entries are usually for long period and the same gets reversed as and when such parties make payments through banking channels and take back the cash. The issue involved in this case is that M/s Bhatia Diamonds Pvt. Ltd. has made bogus purchases during the financial year 2010-11 relevant AY 2011-12 from the following concerns managed and controlled by Rajendra Jain Group: S.No. Name of concern operated by Rajendra Jain Group which engaged in business of providing accommodation entry Name of the beneficiary company Amount (Rs.) 1 Arihant Exports (AFLPP5405N) M/s Bhatia Diamonds Pvt. Ltd. ₹ 4,80,001/- 2 Kriya Impex Pvt. Ltd. (AADCK1926b) M/s Bhatia Diamonds Pvt. Ltd. ₹ 2,67,430/- Total ₹ 7,47,431/- 2.2 During the assessment proceedings notices u/s 133(6) was issued on 15.06.2016 for the verification of transaction made by the assessee company for accommodation entries during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the search proceedings, have categorically admitted that they were operating the business of providing accommodation entries through various companies. M/s Kriya Impex Pvt. Ltd. is one of the companies in which Rajendra Jain has done accommodation entries. As per the statement of Sh. Rajendra Jain dated 03.10.2013 during the search and seizure action u/s 132 of I.T.Act, 1961 has been carried out on the Sh. Rajendra Jain Group at C-805, Oberoi Splendor Building, JVL Road, Andheri (E), Mumbai M/s Arihant Exports, M/s AVI Exports 3nd M/s Karnawat Impex Pvt. Ltd. are also bogus companies and providing bogus accommodation entries only. The statement which are recorded by administering oath are presumed to be carrying truth in view of provisions of section 181 and section 193 of the Indian Penal Code which provides for imprisonment if the false statement is given. When it is so, no one like to be punished knowingly and hence, it is but logical to accept a sworn statement or the statement taken on oath as revealing the truth. Burden to prove the statement as incorrect is on the deponent and in case of failure of the deponent to prove that earlier stated facts were wrong, his earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther hand proceedings u/s 132, collection of evidence and information's during the course of such proceedings as well as corroborative verification with parties, transactions undertaken by this assessee prove that no real business was being carried out by this assessee. Such findings of the department is past the event of any verification of issuance of VAT/sales tax numbers, registration etc. by State Government or any other Authorities. During the course of search and seizure action, statements of Shri Sachin Pareek (Prop, of Arihant Exports, Director of Karnawatlmpex Pvt. Ltd. Moulimanilmpex Pvt. Ltd.), Shri Manish Sushil Jain (Prop. of Kalash Enterprises, Director of M/s Kriya Impex Pvt. Ltd, Karnawatimpex Pvt. Ltd.) and Shri Anoop Y. Jain (Prop, of Aadilmpex and Prop, of M/s AVI Exports) have also been recorded. All the above person in their statement admitted that they were acting as per the directions of their bosses namely Shri Rajendra Jain and Shri Surendra Jain, for which they were getting salary. Hence, it is clear that concerns listed at all the concern are totally controlled and managed by Sh. Rajendra Jain and Sh. Surendra Jain and other directors/partners/prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount 1. M/s Arihant Exports ₹ 4,80,001/- 2. M/s Kriya Impex Pvt. Ltd. ₹ 2,67,430/- Hence, he added back the amount ₹ 7,47,431/- to the income of the assessee as unexplained cash credits u/s. 68 of the I.T. Act vide order dated 30.12.2016 passed u/s. 143(3)/147 of the Act by assessing the income of the assessee on the same amount. Against the above addition, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 19.01.2018 has dismissed the appeal of the assessee. Aggrieved with the impugned order dated 19.1.2018, assessee is in appeal before the Tribunal. 3. During the hearing, Ld. counsel for the assessee has submitted that the AO has erred on facts and in law forming a negative inference solely on the basis of extracts of statement by third parties without confronting the same to the assessee company and in total disregard to the provisions of law. He further stated assessee vide ground no. 3 which is at page no. 2 of the impugned order of the Ld. CIT(A), has raised the issue that The AO made additions without givin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the copy of Company Master Data from MCA; copy of balance sheet for AY 2011- 12; copy of bank statement for AY 2011-12; copy of income tax return form and computation for AY 2011-12; copy of reasons recorded by the AO; letter of objections filed during the assessment proceedings; copy of retraction affidavit given by Sh. Rajendra Jain and copy of replied u/s. 133(6) by M/s Arihand Exports and M/s Kriya Impex. I find that assessee has raised ground no. 3 which is at page no. 2 of the impugned order of the Ld. CIT(A), stating therein that The AO made additions without giving opportunity of cross examination of the person on the basis of whose alleged statement, the additions was made . I find that the same issue was not adjudicated by the ld. CIT(A). However, he has mentioned vide para no. 8.7 at page no. 15 that the AO has given sufficient opportunity to the assessee to present is contention and the appellant has no where mentioned in its submission that the AO was ever asked to provide opportunity to it to cross examine the persons whose statements were recorded, which is not tenable. I further find that at page no. 8 of the impugned order of the Ld. CIT(A), the Ld. CIT(A) has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of convenience, I am reproducing the relevant portion of the ITAT, SMC, Delhi Bench vide its order dated 06.11.2018 passed in ITA No. 3510/Del/2018 (AY 2014-15) in the case of Smt. Jyoti Gupta vs. ITO as under:- 13. Merely on the strength of statement of third party i.e. Shri Vikrant Kayan cannot justify the impugned additions. Moreso, when specific request was made by the assessee for al lowing cross examination was denied by the Assessing Of ficer. The first appel late authority also did not consider it fit to al low cross-examination. This is in gross violation of the principles of natural justice and against the ratio laid down by the Hon'ble Supreme Court in the case of Andaman Timber Vs. CIT Civil Appeal No. 4228 OF 2006 wherein it has been held as under: 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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