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TMI Blog2021 (11) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... acts in confirming the disallowance of interest paid on old loan taken from M/s Success Vyapar Ltd. and M/s Neil Industries Ltd.: Sl. No. Name of Lenders Amount of loan Amount of interest Total addition 1. M/s Success Vyapar Ltd. 00 10,11,696.00 10,11,696.00 2. M/s Neil Industries Ltd. 00 1,40,31,248.00 1,40,31,248.00 Total 1,50,42,944.00 1,50,42,944.00 without appreciating the supporting documentary evidences & explanation of the appellant placed on record and ignoring the information obtained u/s 133(6) of the Act from the loan creditors. 5. Because the learned CIT(A) failed to appreciate that the assessee had duly discharged the onus of proving, all the three ingredients of section 68 of the Act namely identity of the lenders of unsecured loan, genuineness of the transactions and credit worthiness of the lenders and that such loans in the case of appellant, various family members and their business associates had been accepted in the orders passed earlier u/s 143(3)/153C of the Act of the group of cases and such loan amounts with interest were paid to the respective parties before the date of search. 6. BECAUSE the learned CIT (A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors, had obtained the information directly from such loan creditors and no discrepancy was found between the replies filed by the assessee and in those filed by the loan creditors directly. It was submitted that during the assessment proceedings when the Assessing Officer show caused the assessee as to why the interest paid on such loans be not disallowed, the assessee filed various replies vide letter dated 08/07/2017 and 27/09/2017 and it was submitted that the assessee had paid interest on genuine unsecured loans and moreover, the loans already stood repaid and proper tax at source has been deducted from such interest payments. Learned counsel for the assessee submitted that during assessment proceedings before the Assessing Officer it was requested that the persons on whose statements the Department was relying, should be made available to the assessee for cross examination but those were not made available for their cross examination. Learned counsel for the assessee submitted that when this issue was taken before learned CIT(A), he held that cross examination was not required and it was sufficient that assessee was confronted with the statements. Learned counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are placed in paper book pages 45,46,108 and 236 respectively. We further find that in the assessment orders of these companies, interest paid by the assessee has been accepted to be their income, a copy of such assessment order in the case of loan creditor, is placed at pages 60 to 101 of the paper book. The various documents filed by the assessee to support its claim have been summarized in form of a chart, which for the sake of completeness has been made part of the order and is reproduced below: 4.1 We find that the only reason for disallowing the interest is that the authorities below have held the loan creditors to be bogus and being engaged in the business of providing accommodation entries, but no material was found during the search indicating therein that such transactions were not genuine. Moreover, we find that the assessee had already repaid the whole of the loan amount during the earlier year and present year. At the time of search i.e. on 31/08/2015, both accounts stood squared up as the assessee had already repaid the loans along with interest after deduction of tax at source. The assessee, during the assessment proceedings, specifically asked the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the issue of cross examination, undersigned is of the view that, statements of share brokers, operators, promoters &. exit providers were shown and confronted to the appellant. Further, Hon'ble Supreme Court, in the well-known Dhakeswari Cotton Mills (26 ITR 775 at 782) case, ruled that the Evidence Act may have no application to tax assessment proceedings. However, the court also clarified later, in Chuharmal vs CTT (172 I7R 250 at 255 SC), that when the taxing authorities are desirous of invoking the principles of the Evidence Act in proceedings before them, they are not prevented from doing so. All that is required is that whatever material they collect will have to be placed before the taxpaying assessee if adverse inference is going to be drawn - audi alteram partem is a well-known principle of natural justice. This principle is established by the judgment of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. C.I.T. (26 I.T.R. 775,783), and applied by that court in Kishinchand Chellaram vs C.I.T. (125 I.T.R. 713), where an assessment based on the result of private inquiries conducted behind the back of the assessee was set aside because the evidence so gathered was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who has not challenged the content of the incriminating statement. Therefore it is concluded that, AO has followed the principal of natural justice by producing and confronting all the incriminating documents and statements recorded in favour of revenue to the appellant. 6.9 In view of the above detailed discussion of the factual matrix of the case and considering the enumerated judicial pronouncements, it is concluded that appellant company has miserably failed to prove the vital ingredients of creditworthiness of the creditors and genuineness of the transaction. Therefore, undersigned find no reason to interfere with the addition made by Assessing Officer, u/s 68 of the Act. The same is therefore, confirmed and grounds of appeal of the appellant are dismissed for each assessment year i.e. A.Y. 2010-11 to A.Y. 2015-16. However, ld. A.R. pointed out thorough his written submission that in the assessment for A.Y. 2010-11, A.O. took wrong figure of unsecured loan at Rs. 2,04,80,000/-, whereas, actual figures of unsecured loans from M/s. Success Vyapar Ltd. and M/s. Neil Industries Ltd. is Rs. 2,03,80,000/-. In this regard, A.O. is directed to verify the facts and to take correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the confirmed copy of account, copy of ITR of lenders and final accounts of the lenders. Such confirmations and evidences have been taken on record by the Assessing Officer and a copy of such confirmations and evidences is placed at pages 61 to 65, 73, and 45 to 53 relating to first assessee and at paper book pages 19 to 22 in respect of second assessee and at paper book pages 74 to 77, 60 to 62 and 64 and 55 of the paper book in the case of third assessee. The Assessing Officer, during the course of assessment proceedings, also issued notices u/s 133(6) of the Act to the above lenders and in response to the notices, the Assessing Officer received replies from the lenders with evidences of having advanced the loans to the assessees. Along with the reply, the lender companies also filed their copy of ITRs and final accounts etc. with the Assessing Officer and the Assessing Officer did not find any difference between the documents filed by the assessees and those filed by the lenders directly. Learned counsel for the assessee has also filed before us in paper book the certified copies (certified by the Assessing Officer) of such evidences which had been filed by the lender companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pages of paper books are mentioned: 5.2 Therefore, the findings of the Assessing Officer that assessees have not filed complete information is contrary to the facts on record. The Assessing Officer noted that despite giving notices u/s 131, nobody had appeared for cross examination and therefore, he held that assessees was also responsible for bringing them before him for cross examination and therefore, he shifted the onus to assessees for bringing the Departmental witnesses for their cross examination. The Assessing Officer started the assessment proceedings at the fag end of time barring date as the first query letter was issued in September, 2017. These assessees were required to explain the unsecured loans from these creditors for the first time in December only by issuing show cause notice dated 14/12/2017 and through this notice dated 14/12/2017, the Assessing Officer sent to the assessees the statement of its witnesses. The assessment orders have been passed on 31/12/2017. In this brief period of sixteen days, the assessments have been completed and that too without putting full efforts to make available the witnesses for cross examination by assessees. 5.3 From t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the addition. 4. Apropos ground No.2.2, the ld. A.R. of the assessee has contended that the ld. CIT(A)/Assessing Officer erred on facts and in law in making the aforesaid addition on the basis of ex-parte material, in gross violation of the principles of natural justice. 5. The ld. D.R., on the other hand, has placed strong reliance on the impugned order, whereby the ld. CIT(A) has held that it cannot be said that the assessee was not provided any opportunity of cross-examination of Shri Anoop Asthana. 6. The following grounds, in this regard, were raised by the assessee before the ld. CIT(A):- "2. That the assessing officer erred on facts and in law in making addition of Rs. 64 crores alleging the same to have been received by the appellant as on-money in cash, not accounted for in the regular books, against sale/ booking of flats in Emerald Garden Project. 2.1 That the assessing officer erred on facts and in law in making the aforesaid addition by merely relying upon ex-parte statement of one Mr. Anoop Asthana, a property broker and contents of diary purportedly impounded from his premises, without any reliable/ credible material/evidence to substantiate/corrobor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usal of the aforesaid, it will kindly be appreciated that the contents of the diary found at the premises of a third party are totally unreliable and unauthentic, which could not have been the basis of drawing any adverse inference against the appellant, much less for the purpose of making any addition. Re: Statement of Mr. Anoop Asthana recorded during the course of survey proceedings. Coming to the statement of Mr. Anoop Asthana, recorded during the course of survey proceedings at his premises, which has been heavily relied upon by the Assessing Officer to infer that the appellant took on money in cash from the customers on sale/booking of flats, it is respectfully submitted as under: It is submitted that the aforesaid statement could not have been relied upon by the Assessing Officer for the following reasons: (a) Copy of statement of Mr. Anoop Asthana to allege that the appellant had received cash on sale/booking of flats outside its regular books of account, was not even provided to the appellant during the course of assessment proceedings. Therefore, the appellant was denied any effective opportunity to rebut the contents of the statement so made. (b) Further, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement Shri SKJ accepted the statement of Shri Anoop Asthana that the entries are related to the appellant companies. However, he surrendered Rs. 9 crore as an unaccounted income for the F.Y. 2014-15 relating to A.Y. 2015-16 as the undisclosed income in his individual capacity. This is interesting to note that undisclosed income of Rs. 9 crore offered by Shri SKJ is on very flimsy ground that he earned the undisclosed income from commodity trading. It is also interesting to note that Shri SKJ has not disclosed any profits from the commodity trading in any of the immediate previous year or subsequent year. Thus, the contention of SKJ that surrendered amount of Rs. 9 crore is on account of commodity trading remains unsubstantiated obviously because it represents on money received in the Emerald project. 5.10. During this appeal proceedings ld. A.R. of the appellant has vehemently argued that the incriminating document found and impounded from the premises of the AAP does not belong to the appellant company and since no opportunity of cross examination of Shri Anoop Asthana was ever accorded to the appellant. The contention of the appellant is hollow and are not based on the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... que and cash; that it is also stated that the black amount, which is invariably in cash, is directly paid to the appellant company by the investor, to the Director of the appellant company; that Shri Anoop Asthana also states that he only gets the commission income at the time of registration of the property; that he continues to state in the same answer that this process has been followed in minimum 12 flats of Emerald Garden, which is booked through him; that thus, it is crystal clear that the appellant company is receiving 25% consideration in cash which is not reflecting in the regular books of account; that further, as per material LP-32, 33 and 51, impounded from the premises of AAP, it is noted that these documents are the receipts of payments made by Shri Arun Kumar (LP-32), Shri Saraj Katiyar (LP-3) and Shri Himanshu Chug (LP- 51); that when confronted with the fact that some of the receipts issued by the appellant company were found in the premises of (AAP), Shri SKJ has shown his ignorance; and that this is mainly due to the fact that incriminating material was found from the premises of AAP and SKJ wished to distance the appellant company from AAP. 10. Thus, the posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpounded from the premises of Shri Anoop Asthana cannot be used to draw any adverse inference against the appellant, in any manner. The assessee/appellant maintains as follows. Shri Anoop Asthana was one of the property brokers who dealt with in the project of the appellant and acted as broker for sale of certain plots in the Emerald Garden project, during preceding years. The appellant had not sold any flat through Shri Anoop Asthana during the year under consideration (i.e. F.Y. 2014-15). Pertinently, Shri Anoop Asthana, earlier in January 2014 (31/1/2014), had booked two flats with the appellant in his own wife's name in the Emerald Garden project, but since he could not make necessary payments as per the payment schedule, the appellant was constrained to cancel his booking on 8/12/2014. On account of the aforesaid, there had been differences/disputes between the appellant and Shri Anoop Asthana and accordingly, the appellant had not sold any flat through Shri Anoop Asthana during the relevant year and had not paid any commission to him during the relevant year. On account of the ongoing dispute between the appellant and Shri Anoop Asthana, any averment made by Shri Anoop Asthan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company vs. CIT, 152 ITR 507 (Del). 7. CIT vs. Eastern Commercial, 210 ITR 103, 110 (Cal). 8. P.S. Abdul Majeed vs. STO, 209 ITR 821, 823 (Ker). 9. CIT vs. Sham Lal, 127 ITR 816 (P&H). 10. Mukund Singh and Sons vs. Presiding Officer, 107 STC 300 (P&H). 11. Anupam Agencies vs. State of Punjab, 98 STC 338 (P&H). 12. Prakash Chand Mehta vs. CIT, 220 ITR 277, 279 (MP) 13. CIT vs. D.M. Doshi, 229 ITR 315 (Guj) 14. Amarjit Singh Bakshi (HUF) vs. ACIT, 263 ITR (AT) 75 (Del) (TM) 15. Mahes Gulabrai Joshi vs. CIT, 95 ITD 300 (Mum). 16. Monga Metals (O) Ltd., 67 TTJ 247 (All) 17. Verma Roadways vs. ACIT, 75 ITD 183 (All) 18. Sarita Devi Kajaria vs. ITO, 89 ITD 109 (Kol) (TM). 19. ITO vs. Pukhraj N. Jain, 95 ITD 281 (Mum) 20. Obulapuram Mining Company (P) Ltd. vs. DCIT, 160 ITD 224 (Bang.). 21. CIT vs. SMC Share Brokers Ltd., 288 ITR 345 (Del). 22. CIT vs. Dharam Pal Prem Chand Ltd., 295 ITR 105 (Del). 23. Andaman Timber Industries vs. CCE 281 CTR 241 (SC). 13. Some decisions in this regard are discussed thus. 14. In 'Kishinchand Chellaram vs. CIT' (supra), it has been held by the Hon'ble Supreme Court that the assessment made by r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty. Assessee filed Appeal against order of Adjudicating Authority that was dismissed by CESTAT. Assessee submitted that it was not allowed to cross-examine dealers whose statements were relied upon by Adjudicating Authority in passing impugned orders. Held, not allowing Assessee to cross-examine witnesses by Adjudicating Authority though statements of those witnesses were made as basis of impugned order, amounted in serious flaw which make impugned order nullity as it amounted to violation of principles of natural justice. It was to be borne in mind that order of Commissioner was based upon statements given by two witnesses. Even when Assessee disputed correctness of statements and wanted to crossexamine witnesses, Adjudicating Authority did not grant opportunity to Assessee. In impugned order passed by Adjudicating Authority it was specifically mentioned that such opportunity was sought by Assessee, however, no such opportunity was granted. Assessee contested truthfulness of statements of two witnesses and wanted to discredit their testimony for which purpose opportunity of cross-examination was sought. It was not for Adjudicating Authority to presuppose as to what could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.04.2014, the related sale deeds were executed and final registration in favour of the customers was executed on 19.06.2018 and 31.05.2018, respectively. The receipt no.1030 dated 31.05.2013 related to assessment year 2014-15, but no addition was made in the said assessment year. In relation to the said receipts, Shri Sanjeev Kumar Jhunjhunwala had been extensively examined by the Authorised Officer during the course of survey and he had given name-wise details of the persons to whom the receipts in question had been issued by the appellant company. His statement was recorded on 27.06.2014, in continuation to the statement recorded on 26.06.2014. In such statement, he had declared an income of Rs. 9 crores stated to have been earned by him from commodity trading till that date. During the course of regular assessment proceedings, he was extensively examined on 01.09.2016 by issue of summons under section 131(1). In response to Question Nos.14, 15 and 16, he stated that he had done trading in commodity, and looking to the market conditions prevailing at that time, it was not improbable to have earned income of this volume. Further, in response to Question No.18, he was required t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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