TaxTMI 
TaxTMI 
2016 (7) TMI 1618
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....led with the Income Tax Appellate Tribunal, Mumbai (hereinafter called "the Tribunal") read as under:- "(I) ON ADDITION OF Rs. 20,00,000/- ON A/C. OF UNEXPLAINED CASH CREDIT- (1) On the facts and circumstances, the learned CIT(A) erred in confirming the alleged addition of Rs. 20,00,000/- u/s. 68 without appreciating that- (i) the learned A.O. had totally ignored the relevant details, documents/ confirmations and the bonafide explanation, AND (ii) that the learned A.O. had clearly violated the principles of natural justice by not affording any opportunity to cross-examine Mr. Surendra Khandar [Mr. Khandar]. (2) The learned CIT(A) erred in confirming the erroneous finding that no confirmations were filed which was contrary to the facts available on record as Your Appellant has submitted all the confirmations along with the other details in the original assessment proceedings vide the letter dated: 23/2/05 and also in the set-aside assessment proceedings as pointed out vide letter dated 1-12-2010. (3) The learned CIT(A) failed to appreciate that the learned A.O. was duty bound to provide an opportunity to cross-examine Mr. Khandar....
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.... of appeal are raised by the assessee in ITA No. 5851/Mum/2011 for the assessment year 1998-99 in the memo of appeal filed with the Tribunal which reads as under:- "(I) (1) On the facts and circumstances, the learned CIT(A) erred in confirming the alleged addition of Rs. 30,00,000/- u/s. 68 without appreciating that- (i) the learned A.O. had totally ignored the relevant details, documents/ confirmations and the bonafide explanation, AND (ii) that the learned A.O. had clearly violated the principles of natural justice by not affording any opportunity to cross-examine Mr. Surendra Khandar [Mr. Khandar]. (2) The learned CIT(A) erred in confirming the erroneous finding that no confirmations were filed which was contrary to the facts available on record as Your Appellant has submitted all the confirmations along with the other details in the original assessment proceedings vide the letter dated: 23/2/05 and also in the set-aside assessment proceedings as pointed out vide letter dated 1-12-2010. (3) The learned CIT(A) failed to appreciate that the learned A.O. was duty bound to provide an opportunity to cross-examine Mr. Khandar as his stateme....
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....l set aside the matter and restored the same to the file of A.O. with specific direction that cross-examination of Shri Surendra Mansukhlal Khandar be allowed to the assessee. In the earlier set aside proceedings, the A.O. could not service the notice on Shri Surendra Mansukhlal Khandar or trace him for allowing cross examination to the assessee. The A.O. asked the assessee to file the details on merits and produce Mr. Surendra Mansukhlal Khandar . The AO was not satisfied with the explanations given by the assessee. In view of this, all the additions made u/s 68 of the Act was retained while passing the assessment order dated 20th December, 2007 passed by the in set aside proceedings. The assessee carried the matter before the ld. CIT(A) in second round of litigation and the ld. CIT(A) dismissed the appeal of the assessee. Aggrieved by the appellate order of the ld. CIT(A), the assessee preferred appeal before the Tribunal in second round of litigation vide ITA No. 6270/Mum/2008 whereby the Tribunal observed that without confronting the statement of witness or allowing cross examination no adverse inference can be drawn against a person, against which statement of the third ....
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....to verify the above and do the needful. Further, the additions made is on account of the statement of Shri Surendra Khandhar who is a witness of the Department. The assessee firm reserves the right to cross-examine Shri Surendra Khandhar to know the truth behind the allegation by the Income Tax Department that the loans are accommodated loans". The A.O. observed that the assessee failed to furnish any additional evidence other than those filed earlier and the assessee also did not file any loan confirmation in support of its claim that the loans were genuine. The assessee was asked by the AO to produce said Shri Surendra Mansukhlal Khandar but the assessee failed to produce Shri Surendra Mansukhlal Khandar before the AO for cross examination. The assessee had earlier submitted that the assessee does not know said Shri Surendra Mansukhlal Khandar. The assessee had borrowed money from various parties against which the Hundi documents were submitted which carried the details such as name and address of loan creditor, GIR/PAN etc. but no loan confirmations were submitted by the assessee nor said Shri Surendra Mansukhlal Khandar was produced by the assessee before the Revenu....
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....e learned counsel for the assessee that the repayments of the loans have also been made through account payee cheques through banking channels. It is submitted that the Revenue has made no enquiries from the parties from whom the assessee borrowed the money despite the fact that the hundi documents were submitted before the A.O. which contained all details of loan creditors as set out above. No efforts have been made by the Revenue for verification and examination of the parties from whom the assessee borrowed the money. The Revenue merely relied upon the statement of Shri Surendra Mansukhlal Khandar who has not been offered for cross examination by the Revenue to the assessee and the statement of Shri Surendra Mansukhlal Khandar could not be relied upon unless cross examination is conducted by the assessee. 9. The ld. D.R. relied upon the orders of authorities below. 10. We have considered the rival contentions and also perused the material placed on record. We have observed that this case has a chequered history and it has already been set aside earlier by the Tribunal twice for allowing assessee to cross examine Shri Surendra Mansukhlal Khandar whose statement incriminatin....
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....creditors were furnished by the assessee instead of merely relying on statement of Shri Surendra Mansukhlal Khandar incriminating assessee, which incriminating statement of Shri Surendra Mansukhlal Khandar had not stood the test of cross examination by the assessee. In our considered view keeping in view the peculiar facts and circumstances of the case and its chequered history , this matter needs to be set aside and restored to the file of the A.O. and if the A.O. found on verification that the amounts of loan borrowed by the assessee have been repaid by the assessee to the said loan creditors by account payee cheques through banking channel, the additions will stand deleted. We order accordingly. With respect to additions made on account of interest of Rs. 31,250/- on these loans, we find that the AO has made additions based on notional interest being paid/payable by the assessee on these loans, we did not find any basis/justification for the same as per the facts emanating from the records. This issue is also set-aside to the file of the AO to be decided based on merits after bringing on record cogent material/basis for the said interest to be brought to tax as income of the ....
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....um/2011 for assessment year 1997-98 vide orders dated 6th September, 2013, the said directions of the Tribunal are reproduced below:- "We have considered the rival submissions and carefully perused the relevant material on record. In the earlier round of litigation this Tribunal has remanded the matter to the record of the Assessing Officer vide order dated 11-9-2009 in para 5 and 5.1 as under:- "5. We have "heard the rival submissions and considered them carefully. As mentioned above, the assessments were completed originally which were set aside by the Tribunal with a direction to allow cross examination of one Shri Khandhar on whose statement basis, the additions were made in the hands of the assessee. Shir Khandhar could not be traced out in spite of best efforts made by the AO; therefore, cross examination could not be allowed. It is well settled law that without confronting the statement of witness or allowing cross examination, no adverse inference can be made against a person, against which statement of a third party is used. Since cross examination could not be allowed; therefore, we hold that the statement of Shri Khandhar cannot be used against th....
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....t the assessee has introduced his undisclosed cash under the garb of accommodation loan. In the circumstances, the loan so received are unexplained cash credit u/s 68 of the I. T. Act 1961 and same are brought to tax. Accordingly, a sum of Rs. 55,25,000/- is assessed as undisclosed income of the assessee for the year. Penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961 are initiated separately." Subject to the above remarks, the the total income of the assessee is computed as under:- Business income Income as per order dtd. 31.3.2005 Rs. 2,35,505 Add: Disallowance of loan as per order Rs. 30,00,000 Dtd. 31.3.2005 Interest on loan Rs. 25,25,000 Total income Rs. 57,60,505 Rounded off Rs. 57,60,510 It is clear that the AO has not taken pain to examine the issue on merits on the basis of the details to be filed by the assessee as directed by the Tribunal. Now before us the assessee has claimed that the loans have been repaid therefore, the claim of the assessee based on the record showing the repayment of loan is required to be verified. If the claim of the assessee that loans have already been repaid is found co....