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TMI Blog2019 (9) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... th the above parties were only paper transactions and only accommodation entries. There is no evidence which was brought on record to directly show that these transactions are accommodation entries. Therefore, no addition could be made on account of these alleged transactions in the hands of the assessee by treating them as unexplained credits u/s. 68 - Transaction shall be accepted to be real as there is no evidence showing otherwise. The surrounding circumstances apart from the direct evidence in the instant case did not contain anything which belied the claim of the assessee. In view of this we are of the opinion that the addition made by the AO cannot be sustained. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the reopening was against the directions. of the CBDT vide circular No. 40 of 2016 dtd 09/12/2016. 5. Based on the above objection of the Appellant, the order should have been quashed by the CIT Appeals on the ratio of the Supreme Court decision in the case of GKN Drive Shafts (India) Ltd Vs. ITO & Ors 259 ITR 19 and of the Madras High Court decision in Jayant Natrajan Vs ACIT 300 CTR (Mad) 225. 6. The Appellant craves leave to adduce additional grounds at the time of hearing." 4. There was a short delay in filing these cross objections, as follows:- (i) M/s.Sabari Switch Gear Pvt. Ltd. for Asst.Years 2010-2011 & 2011-2012 - 8 days. (ii) M/s.Sabari Millennium Impex Pvt. Ltd. for Asst.Years 2010-2011 & 2011-2012 - 8 days. 5. However, at the time of hearing before us, the learned Counsel for the assessee has not pressed the cross objections filed by the assessee. Accordingly, the same are dismissed as not pressed. 6. Coming to the Revenue's appeals, the facts are identical in the case of both the assessees and for both the assessment years, except for variance in figures, hence, we reproduce the facts relating to M/s.Sabari Switch Gear Pvt. Ltd. for assessment year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd. Turnover with Sabari Switchgear Pvt. Ltd. 2009-10 410006631 386596312 8594439 0 14815880 2010-11 244490336 194527698 34520537 0 15442101 2011-12 938148418 175959088 287770321 4656465876 8953133 2012-13 256142048 98954776 29957586 116784990 10444696 2013-14 167547824 27370525 13802840 124601709 1772750 2014-15 106509871 16065781 25116634 64952906 374550 Total 899474180 399762357 771805481 51803110 ii. Shyam International Asst.Year Total Turnover Turnover with SQF Turnover with Sabari Millennium Exports Pvt. Ltd. Turnover with Sabari Enterprises Ltd. Turnover with Sabari Switchgear Pvt. Ltd. 2009-10 500617946 443543973 53660593 0 3413380 2010-11 523243688 514163516 4718097 0 4362075 2011-12 0 0 0 0 0 2012-13 0 0 0 0 0 2013-14 0 0 0 0 0 2014-15 371758345 156528239 47586619 167643487 0 2015-16 341213767 164791823 176521944 0 0 Total 0 1279027551 28487253 167643487 7775455 iii. M/s.Ajay Iron and Steel P Ltd. Asst.Year Total Turnover Turnover with SQF Turnover with Sabari Millennium Exports Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72908 0 2013-14 0 331001 0 2014-15 3963751 449359 3.05 2014-15 69970609 2896310 3.43 Mayur Impex Asst.Year Total Turnover Total Income Returned Gross profit ratio declared 2009-10 652200365 143400 0.086 2010-11 139942304 167910 0.399 2011-12 433860902 179160 0.988 2012-13 965138557 214270 0.47 2013-14 6567873213 125770 0.62 2014-15 242906501 292310 2.49 2015-16 3594855 9830 57.76 Vani Exports Asst.Year Total Turnover Total Income Returned Gross profit ratio declared 2009-10 2863662066 990900 0.60 2010-11 3031108532 760114 0.34 2011-12 845673545 211683 3.00 2012-13 2184183988 982890 0.42 2013-14 658241184 374514 0.60 2014-15 444409756 525030 1.06 2015-16 220741120 408150 2.92 Shyam International Asst.Year Total Turnover Total Income Returned Gross profit ratio declared 2009-10 142628764 188960 0.60 2010-11 1862136442 211590 0.16 2011-12 607109343 94480 0.37 2012-13 403987517 206970 0.46 2013-14 -- -- IT not filed 2014-15 1651106916 265480 0.22 2015-16 2991294481 103420 0.28 It is evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Mayur Impex. 9. Old, China Bazar Street, Kolkott"a-700001. Further the name of the concerns of SI 1 & 2 in which his father late Gourii Shankar Khetan was the propeietor of the firm, (i) M/s.Chao Impex, 9, Old Bazar, Street Kolkatta-700 001. (ii) M/s.Basanth Impex, 9, Old Bazar, Street, Kolkatta- 700 001. 2. That all the business transactions were made by his father 3. That he was forced to sign on the statement perpetuated to have been given by him and that there was criminal intimidation. He was also forced to sign a certificate at the end of the statement whose meaning he did not understand 4. That he was not allowed to go through the statement and he was just following the direction of the officer taking deposition. 5. That he was retreating his earlier statement which was recorded under threat correction and pressure. 8. The affidavit filed before the Judicial First Class Magistrate, Alipur has been carefully studied. Shri Manish Khetan has alleged criminal intimidation while recording the statement by the Income tax Authority and that the same was being "retreated" since it was done under "correction and pressure". The averments made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a after thought by Ravi Bayala or due to the influence made by the assessee. This retraction without an opportunity to cross examine the assesses witness cannot be accepted. Still. certainfacts like Shri Viswajith Menon being one of the directors of Mis Ajay Iron and Steel P Ltd and the company having bank accounts in Kollam ING Vysalya Bank. which came to light on account of the Statement cannot be denied. 10. The balance sheets of M/s Basanth Impex, Shyam International. Shree Chao, Mayur Impex, M/s Ajay Iron and Steel P Ltd was obtained U/S 131 of the Act. As per the balance sheet schedules of Mis Basanth Impex. they have Sundry Creditors and Sundry Debtors. Where as the asseessee has grouped the receipts under loans and advances for A Y 2010-11. Similarly the facts narrated above makes the following abundantly clear: a. Shri P Sunil Kumar is the main person conducting the business of trading in export incentives either as proprietor or through his three other companies mentioned in para 2 of this order b. The Kolkotta based proprietorships namely Mis Basanth Impex, Shree Chao Impex, Mayur Impex, and Shyam International are having substantial transactions with businesses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anth : 13451136 (c/b 19400388, o/b 5949252) Syam International : 20927465 (c/b 22250,000, o/b 1322535) As the balances are in the company, the balances are added u/s 68. Addition on account of this ₹ 7,36,78,601/-." 7. Aggrieved by the order of assessment, the assessee preferred appeal to the first appellate authority. The CIT(A) observed as under:- 7.4. I have gone through the assessment order and submission of the appellant. The order passed by the AO is identical to the orders passed in the cases of Shri P. Sunil Kumar and M/s. Sabari Enterprises Pvt. Ltd. The AO has reached his conclusion in para 10 of the assessment order, which has been reproduced earlier in this order. However! even at the cost of repetition, contents of para 11 of the assessment order are reproduced as under: 11. On an examination of the books of accounts of the assessee and his companies it is noted that enormous funds have obtained under the head loans and advances from the Kolkotta businesses. These loans are non interest bearing and remained in the books for period ranging from one to three years. Such substantial amounts loaned by businesses with meager income lacks credibility even th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances are identical in A.Ys. 2010-11 and 2011-12, these grounds of appeal are allowed for both the assessment years." 8. After hearing both the parties, we are of the opinion that similar issue came for consideration before this Tribunal in assessee's group cases, in the case of Shri P.Sunil Kumar, Sabari Quality Foods in ITA Nos.347/Coch/2017 & Others. The Tribunal vide its order dated 13.12.2018 held as under:- "7. We have heard the rival submissions and perused the record. The seized material marked as SKP/KLM/DA 1 to 23 clearly showed a lot of trade activities between the assessee and these companies namely, M/s.Sabari Enterprises P Ltd, M/s. Sabari Millenium Exports P Ltd, M/s. Sabari Switchgear P Ltd , and Basanth Impex, Shyam International, Sree Chao Impex, Ajay Iron and Steel P Ltd, Vani Exports and Mayur Impex. The narrated facts in earlier pages of this order in the tabular form proved the trade activities carried on by the assessee with the alleged parties. The Assessing Officer has not denied these business transactions with the alleged parties. The assessee is a trader of DEPB import licences. The assessee purchases these licenses from exporters in K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Assessing Officer. As seen from the facts of the case, the Assessing Officer has not found any mistake in the books of account maintained by the assessee and he has not rejected the assessee's books of account. The addition made by the AO was mainly based on the statement recorded from Shri Manish Khetan who later retracted his statement and therefore, much credence cannot be given to the statement recorded from these persons as we do not know whether the statement is correct as they have not brought on record any corroborative evidence. Further, the Assessing Officer has not given opportunity of cross examination of these persons to the assessee. The books of accounts of these concerns were duly audited and they have filed the returns of income. The Department having accepted their returns of income, it is not possible to reject certain entries without bringing in any contra evidence against those entries. The main reason for making the addition in the hands of the assessee is that the other concerns were doing business with very low margin of profit. The Assessing Officer suspected extending such huge advances to the assessee. In our opinion, suspicion cannot be reason fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which the assesses were adversely affected. More so, the circumstances surrounding the case are not strong enough to justify rejection of the assessee's plea of providing opportunity of cross examination. In the present case, the entire evidence has to be appreciated in a wholesome manner and even when there is a documentary evidence, the same can be overlooked if there are surrounding circumstances to show that the claim of the assessee is opposed to the normal course of human thinking and conduct or human probabilities. There is difficulty in rejecting the assessee's plea as opposed to the normal course of human conduct. The evidence collected by the lower authorities was not enough to establish their stand that the main transactions carried out by the assessee with the above parties were only paper transactions and only accommodation entries. As discussed earlier, there is no evidence which was brought on record to directly show that these transactions are accommodation entries. Therefore, no addition could be made on account of these alleged transactions in the hands of the assessee by treating them as unexplained credits u/s. 68 of the Act. In our opinion, transaction ..... 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