TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 1594
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....nsecured loan and on account of commission thereon without appreciating the facts brought on record by the Assessing Officer during the course of assessment proceedings and the fact that the assessee has himself in his statement recorded during the course of survey admitted that the unsecured loan raised was bogus and was arranged by payment commission thereon. 3. The order of CIT(A)-IV, Kanpur is erroneous, unjust and bad in law be vacated and the order passed u/s 143(3) of the Act by the Assessing Officer be restored. 4. That the appellant craves leave to modify any of the grounds of appeal mentioned above and/or to add any fresh grounds as and when it is required to do so." 2. Learned counsel for the assessee, at the outset, invited our attention to the fact that the issue raised in this appeal by the Revenue is duly covered in favour of the assessee by the order of the Tribunal in assessee's own case vide order dated 06/04/2022 in I.T.A. No.701 to 703 and 582 for assessment year 2013-14 to 2016-17. Learned counsel for the assessee, explaining the facts of the case, submitted that on 22/09/2017, during a survey conducted on the assessee, the assessee surrend....
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....-14 to 2016-17. The Tribunal, vide order dated 06/04/2022, has dismissed the appeals of the Revenue filed against the order of learned CIT(A). In the present year also, the addition was made by Assessing Officer on the basis of same statement of surrender which the learned CIT(A) has again deleted and again Revenue is in appeal before us. The Assessing Officer has made two additions in this year. The first relates to disallowance of sales commission and second issue relates to surrender on account of unsecured loans. 4.1 As regards the first issue of commission paid on sales pertaining to previous year, we find that similar issue arose in the case of the assessee itself in I.T.A. No.582/Lkw/2018 and the Tribunal has dealt this issue in para 7 and 8, which for the sake of completeness are reproduced below: "7. Now coming to ground No. 1 in assessment year 2015-16 regarding issue of commission, we find that the Assessing Officer has made the disallowance by holding that the sales, on which commission was debited to the profit & loss account, did not relate to the year under consideration. However, the learned CIT(A), on the basis of his order for assessment year 2012-13, ....
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...., however in the year under consideration the same was paid, as the dispute with the' said party was finally settled. The submission of the assessee was not found acceptable by AO without any reason or evidence brought on record by AO, Secondly, AO further disbelieved that the assessee had dispute with so many commission agents because no evidence regarding dispute has been submitted before him. There can be many forms of disputes between two contracting parties for which there may or may not be documentary evidences available. I have perused the copies of bills raised by the commission agents and- the agreements placed on record by appellant at page no. 11-27 of the paper book. It is seen from the impugned bills and agreements on account of commission that they were raised by commission agent, during the year under consideration, against the export done by appellant earlier. Commission related to those bills was raised subsequently by the commission agents as per the terms of the agreement between the appellant and various commission agents. It is clear from the same that the expenditure on account of commission paid is correctly debited in the profit & loss account o....
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....mained to be done by him. But clause (6) of the present agreement goes to show that irrespective of time of rendering the services, the commission will be payable to the agent only upon full realization of the sale proceeds of the exported materials. Apparently the implication is that if by chance the sale proceeds do not come in full, the commission would not become payable to the agent even though he had rendered his services and even when he had no role to play in the realisation of the bill made out by the assesses for the exported goods. The contention of the learned counsel for the assessee that the liability has accrued and arisen during the previous year and that only payment has been deferred till the full realisation of the sale proceeds of the exported materials, does not appear to me to be correct interpretation of clause (6) of the agreement. The said clause clearly makes the right of the agent to claim commission contingent on the realisation in full of the sale proceeds of the exported materials. This is not merely the condition of the payability but also affects the accrual of the liability. The argument of the learned counsel for the assessee in the presen....
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.... not only necessary that the assessee must have contributed to its accruing or arising by rendering services or otherwise but he must have created a debt in his favour. A debt must have come into existence and he must have acquired a right to receive the payment. Unless and until his contribution or parenthood is effective in bringing into existence a debt or a right to receive the payment. it cannot be said that any income has accrued to him. The mere expression earned' in the sense of rendering the services, etc., by itself is of no avail." 6. From the aforesaid observations of their Lordships, it is clear that the test for determining as to whether an income has accrued or arisen or whether the corresponding expenditure has been incurred, is not merely the rendering of the services but one has also to find out as to whether the payee had acquired the right to enforce the payment of the said, amount. Till this right crystallise, it would not be possible to say that the expenditure in question has been incurred or that the liability to pay it has accrued and arisen. Vide terms of clause (6) of the agreement referred to above, it is clear that the agent in question cou....
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....: In the reference that is before us there is no doubt that the Assessee had incurred the expenditure. The only dispute is regarding the date on which the liability had crystallized. It appears that there was no change in -the rate of tax for the assessment year 1983-84 with which we are concerned. The question, therefore, is only with regard to\ the year of deduction and it is a pity that all of us have to expand so much time and energy only to determine the year of taxability of the amount. In view of the above facts and legal position, addition made by AO is deleted." 8. We find that learned CIT(A) has correctly appreciated the factual position. The learned CIT(A) has correctly appreciated the agreement between the assessee and foreign agents wherein vide clause (6) of the agreement, it has been agreed between the parties that irrespective of time of rendering the services, the commission will be payable to the agents only on full realization of sale proceeds. The learned CIT(A) held that by implication of this sub clause, if by chance the sale proceeds do not come in full, the commission would not have become payable to the agents even though the agen....
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....1 of the IT Act, 1961 on 6.09.2017. In relation to the present assessment year the assessee, during survey proceeding had offered to tax unsecured loans received by him from M/s Cooper Commercial Pvt. Ltd. for Assessment year 2017-18 of Rs.8,18,00,000/-. However, soon thereafter within a week of date of survey, on 28.09.2017 appellant retracted from the statement given on oath for the reason that the assessee was not in sound health therefore he could not apply his mind and made the surrender without consulting regular books of account and other relevant records and on advise of the survey team. However as soon as records were examined, assessee realized his mistake and accordingly retracted from his statement by filing an affidavit dated 28.09.2017 before the Assessing Officer. This fact of appellant retracting from the surrender by filing affidavits is disputed now by the Assessing Officer before the Lucknow Bench in the appellate proceedings though in the preceding appellate proceeding before the then Assessing Officer for assessment year 2015-16 the appellant has submitted evidence on record establishing that the retraction was made and the Assessing Officer was also in complet....
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....the assessment proceeding alongwith status of the preceding assessment years in the appellate forum which is self-apparent from the assessment record and its proceeding conducted by the Assessing Officer and established by the appellant during the appellate proceeding. 7.6 The appellant has discharged the primary onus casted upon by section 68 by sufficient documentary evidence as discussed above which has neither been controverted nor disproved by the Assessing Officer. The decisions relied upon by the appellant are squarely applicable and covered in the present facts of the case where the courts have quashed the assessment framed without discharging the onus shifted by the appellant upon the Assessing Officer as following: * Hon'ble I.T.A.T. Kolkata in ITO Vs M/s Megasun Merchants Pvt. Ltd. (I.T.A.T. Kolkata) I.T.A. No. 1038/Kol/2015 dated 29/03/2019 * Hon'ble High Court order in CIT vs. Gangeshwari Metal P. Ltd. in I.T.A. No. 597/2012 judgement dated 21.1.2013 * Commissioner Of Income Tax, Kolkata-lll Versus Dataware Private Limited, I.T.A. No. 263 of 2011 Date: 21 st September, 2011 * Hon'ble Apex Court in the case of Ori....
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....ad already been considered in the appellate proceeding for AY 2016-17 by my predecessor and that there is no change in the facts whereas in the present assessment year and its assessment proceeding it is apparent form the record that the Assessing Officer was aware of the consequential finding of the appellate order in the appellant own case for AY 2016-17 but nevertheless in the assessment order, it is seen that the Assessing Officer, while making these two additions, has relied solely upon the report submitted by DDIT (lnv) Kolkata and upon the statement given by the appellant on 23.09.2017 and during post survey proceedings u/s 131 on 26.09.2017 admitting that the Unsecured Loan from M/s Cooper Commercial Pvt. Ltd. being bogus and arranged by Shri Manish Agarwal, CA for a commission charged. It is also a fact, as is evident from the assessment order that the appellant did file copies of return of income of M/s Cooper Commercial Pvt. Ltd. along with their bank account statements and confirmation of accounts in response to the queries raised by Assessing Officer. However, Assessing Officer held in the assessment order that since appellant has not retracted from his statement recor....
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....oceeding. The subject of retraction is pending before the appellate authorities in appeal, therefore, it is not further dealt with in the present appellate proceeding as already dealt in the preceding appellate proceedings and moreover, implied retraction is already on record which is undisputed fact that the appellant had replied to the show cause notice explaining the transaction in question and fulfilling the requirement of section 68, meaning thereby discharging his onus to proof and shifting the same upon the Assessing Officer. 7.12 The Assessing Officer cannot take shelter of the statement and ITI report when the appellant has discharged his onus before the Assessing Officer against the show cause notice during each assessment proceedings from Assessing Officer 2013-14 to Assessment year 2017-18 especially in the case of survey u/s 133A of the Act where the statement has no evidentiary value and the ITI report is on the old address which was not confronted in the preceding years and was in complete knowledge of the Assessing Officer in the present assessment proceeding as it is apparent that the appellate order for the Assessment year 2016-17 was passed on 27.09.2018....
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....on the assessee has been effected. This is so even if a third post. The onus of proving otherwise is on the assessee. If the notice comes back with the postal remark "refused", it will still have the effect of a valid service. However, if the assessee denies such refusal on oath, the postman must be examined. But if the notice is returned with the postal remarks "Left", "Not found" or "Not known", then valid service cannot be presumed. It is more than established that the presumption under Section 27 of General Clauses Act is rebuttable. If postal notice is not served to the addressee then the presumption that the usual course of the post was followed through evidence of the postman would not be available, until it specifically highlights the reasons for the non-service of the notice, why it was returned, what were the remarks of the postman - "door locked", "Left", "No Such Person on this address" or any other reason. In absence of these specific reasons made available to appellant and taking cognizance of the facts against appellant is sheer breach of principles of natural justice. In the present case exact reasons for non-service by postal authorities is not known hence it is he....
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....t should be verified by an affidavit. In the absence of such an affidavit the Assessing Officer must examine the Inspector on oath. All these steps are prescribed just to safeguard all assessee from any misuse of these provisions relating to service of a notice or reporting nonexistence of a particular person on any given address. 7.19 Report of the Inspector in the instant case lacks details of the efforts made and specific source and reasons for his observations, his report does not mention the names and addresses of the persons who identified the place of business of the lender, nor any affidavit is filed by him that he personally knew the place of business of the lender. In this background, this report filed by the Inspector cannot be relied upon as the valid material for coming to a conclusion that loan creditor is non-existent and for making this addition. 7.20 In Assessing Officer VS. Ramendra Nath Ghosh, 82 ITR 888 (SC), the Inspector of Income-tax, who was the service officer, claimed to have served the notice by affixing it on the assessee's place of business, but in his report did not mention the names and addresses of the persons who identified the pla....
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....has brought on record and which they consider for the purpose of the case. Many persons may be interrogated, many materials may be looked into or considered, much of it may be irrelevant, and the Assessing Officer ultimately decides what is relevant material, which should be brought on the record. It is only at that stage that the materials become evidence and the assessee has a right to urge that with regard to those materials, which have been brought on the record, his explanation should be taken and those materials should be brought on the record in a manner consistent with the rules of natural justice. Assessing Officer has made the addition solely for the reason that assessee has admitted in his statement given during and after the course of survey that this loan transaction is bogus. Soon thereafter within a week of date of survey, appellant allegedly retracted from the statement given on Oath on 28.09.2017 by filing an affidavit dated 28.09.2017 by filing the notarized affidavit. Though, this fact is disputed now by the Assessing Officer and is subjudice before Lucknow Bench Assessing Officer in the appeal proceedings for Assessment year 2015-16. As is evident from record of....
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....made by appellant and CA Mr. Manish Agarwal. 7.23 Hon'ble CBDT on 13/03/2003 vide Instruction No. 2862/2003/IT(lnv) held that while recording the statement in survey operation, no attempt should be made to obtain confession as to tax the undisclosed income. Assessing Officer should rely upon the evidence and material gathered in the course of survey operation. The object of Survey proceedings under the Income Tax Act, is to unearth unaccounted income, which has escaped tax liability and not to obtain admission or confession from the Assesses. Admission made by a person cannot be used as evidence against himself in absence of corroborative evidence to admission. Admission of Income cannot be said to be conclusive to tax an amount. It is always open for the assessee to retract from the same. Since it is the Income of the Assessee that is being taxed, it is only the Assessee who knows his correct state of Affairs. 7.24 The Assessing Officer can act upon Confession of Assessee. The same becomes an evidence but it does not partake the role of Proof. The confession is only one element in the consideration of all the facts proved in the case. It can be put into the s....
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.... "14. Before proceeding further, let us refresh ourselves as to the principles of burden of proof and whom it lies in the case of share capital which has been introduced into the tilt of the assessee by investors as claimed by the assessee. We would like to look at the concept of burden of proof. Though the Income-tax Officer is not fettered by the technical rules of evidence as known to the civil and criminal law, any issue has to be determined on the basis of proof of facts and production of evidence. When there are two parties to a dispute either the court or legislature has laid down, to whom the burden of proof so that each of the parties should be aware about who has the role assigned to it to prove a particular fact that is the discharge of the burden in order to prove his point or to defend it itself. The burden of proof in any ordinary parlance means the duty of proving a fact affirmative of any issue. Burden of proof under the Indian Evidence Act, 1872 (hereinafter 'the Evidence Act,) can be seen from a perusal of sections 101 to 110 of the Evidence Act, 1872. The said sections broadly give the drift of the Rules, which are employed under the Act while settling the dispu....
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....ay go up and down with different and conflicting items of evidence pressed into service. However, though the distinction between the two senses is subtle, it is real. The second sense, which is of a shining and ambulatory nature, may be called "onus of proof" white the "burden of proof as it is understood in the first sensemay be called as such. Though the words "burden" and "onus" have to be understood and have been interpreted as discussed above, they are often loosely used as inter-changeable words. But then, the burden of proof, as explained earlier, remains unchanged under all circumstances (emphasis given by us). On the other hand, the onus of proof or onus probandi is shifting and ambulatory. Burden of proof is fixed by statute or contract or agreement or pleadings. Onus probandi is concerned with the weight of evidence on each side and pertains to the region of production of evidence. In the case of Sumati Dayal vs. Assessing Officer, 214 ]TR 801 (SC), the Hon'ble Apex Court has held that, "It is not doubt true that in all cases in which a receipt is sought to be taxed as income, the burden lies upon the Department to prove that it is within the taxing provision and if ....
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....ate placement the legal regime would not be the same. A elicate balance must be maintained while walking the tightrope of sections 68 and 69 of the Income-tax Act. The burden of proof can seldom be discharged to the hilt by the assessee; if the Assessing Officer harbors' doubts of the legitimacy of any subscription he is empowered, nay duty bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company. " 7.28 As held in the case of R. B. Mittal v. CIT 246 ITR 283 (AP) in an enquiry u/s 68, the rule of audi alteram partem has to be observed and the assessee must be given a fair and reasonable hearing to discharge the burden cast on him u/s 68 of the Act. Further, it is settled law that in the matter of cash credit, the initial onus lies on the assessee to prove the genuineness of the transaction along with the identity of the lender/investor and his creditworthiness. Having .done so, the appellant in the instant case has discharged the onus cast upon it. Beyond this, for the charge of unexplained ....
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....s cast upon him. Thereafter, it is for the Assessing Officer to scrutinize the same and in case he nurtures any doubt about the veracity of these documents, to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the Assessing Officer and he cannot go into the realm of suspicion. Thus element of credit worthiness and satisfaction of Assessing Officer thereafter is subjective and requires more efforts/inquiry on the part of the Assessing Officer to give a finding in the order that lender is not genuine or is not creditworthy. 7.30 Assessing Officer has not dealt with any of the submissions of appellant as to why Assessing Officer does not believe the confirmations and other documents filed from loan creditors. No further enquiries or cross-examination of the Income Tax Inspector who visited the address of the lender company was done so that full and correct facts could be ascertained as to why the appellant was not traceable at these addresses, DDIT(lnv), Unit-2, Kolkata submitted its report vide letter dated 17.04,2018 and the assessment order for the Assessmen....
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....uring the present assessment year and further without any supporting material found at the time of survey cannot be sustained. Assessing Officer has not brought on record any such evidence to prove that admission was voluntary. If Assessing Officer has any evidence against in the name of M/s Cooper Commercial Pvt. Ltd. then those evidence must be passed to the concerned Assessing Officer of these companies in order to examine the facts given by appellant in the statement recorded so that proper action can be taken in correct hands to protect interest of revenue. 7.32 In Assessment year 2016-17 also the Commissioner (Appeal) made detailed observations in the matter of unsecured loan received from this creditor i.e. M/s. Cooper Commercial Pvt. Ltd. but no new facts could be brought by the Assessing Officer in the assessment proceedings conducted in Assessment year 2017-18 i.e. in the year under consideration. In this regard it is noteworthy that the department has filed appeal against the order of Commissioner (Appeal) in Assessment year 2016-17 before Hon'ble I.T.A.T. and the order of Hon'ble I.T.A.T. is awaited. However following the judicial discipline, the appeal....
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....f the Tribunal dated 06/04/2022 that the issue of retraction has now been examined by the Tribunal vide its order dated 06/04/2022 and wherein the Tribunal has dealt with this issue as under: 5.1 The only objection raised by the Revenue through its grounds of appeal is that learned CIT(A) has accepted additional evidence without confronting it to the Assessing Officer and has thus violated the provisions of Rule 46A of the Rules. In this respect we find that there is no fresh evidence filed by assessee before learned CIT(A) other than a copy of affidavit dated 28/09/2017 which the assessee had claimed to have filed before the Assessing Officer and which the Revenue has denied of it being on record. We find that before the learned CIT(A) the assessee filed a copy of affidavit dated 28 th September 2017 placed at pages 101 to 104 of the paper book for his claim that the assessee had retracted from his statement within a period of six days. In the affidavit the assessee admitted that on an advice by the officer present at the time of survey, the assessee had surrendered unsecured loans and sundry creditors falling in assessment year 2013-14 to 2018-19. In the affidavit it is ....
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....learned CIT(A) had allowed relief to the assessee on the basis of such affidavit which was not confronted to Assessing Officer and had filed an application u/s 154 of the Act for rectification of the mistake and learned CIT(A) has again reiterated that he has allowed relief to the assessee on merits and has rejected the application filed by the assessee u/s 154 of the Act. For the sake of completeness, such findings of learned CIT(A) have been made part of this order as below: Decision: I have considered the above application of the Assessing Officer and the letter received from P-r. CIT-1, Kanpur, reply filed by the assessee and judicial authorities relied upon by the assessee. It is clear from the above that AO has raised a request for recalling the order passed u/s 250 DT. 28.05.2018 in appeal no. CIT (A)-III/10079/KNP/17-18 before the Pr. CIT- 1, Kanpur and not before the undersigned. Pr. CIT-1, Kanpur in turn has requested this office to give fresh opportunity to AO on admission of additional evidence and requested to review of the impugned order in light of above facts, on following three grounds: i) Assessee has got relief from the CIT (A)-III, Kan....
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....AY 2011-12 and appeal no. CIT (A) - I, Knp/10048/2017-18 for AY 2012-13. This application moved by AO pertains to ground no. 4 & 5 of the impugned order. Ground No. 4 & 5 pertaining to addition of Rs.2,57,00,000/- of Unsecured Loan u/s 68 of IT. Act and Commission of Rs.12,85,000/- paid for arrangement of unsecured loan were decided in favour of the appellant on the basis of appellant's timely retraction from the statement given on oath during survey, on the basis of documents filed during the course of assessment proceeding like copy of ITR, Bank Statement of the loan creditor before AO, and on the basis of the result of the information called from the loan creditors u/s 133(6) by the AO, who confirmed these transactions before AO and finally following the law laid down by the apex court in CIT v. 5, Khader Khan Son (2013) 352 ITR 480 (SC). During the course of impugned appellate proceeding, AR had submitted written submissions made during the course of assessment proceeding as well as the copies of evidences produced before AO, as reproduced in the appellate order in relevance to ground no. 4 & 5. Appellant had submitted during the appellate proceed....
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....ore clear that apart from the retraction statements and affidavits, there are two more factual and legal basis in support of appellant's contention, which led to the decision taken in the impugned order. All these three aspects go to the root of the matter. Now these very three basis cannot be reexamined in light of absence of any new facts coming on record. The fact that appellant did file the copy of retraction affidavit bearing the receiving stamp of the office of DCIT-1, Kanpur is not disputed and is a part of the record before me. This submission was taken to be filed at Bar by the appellant with a certificate that the same was filed before the appropriate authorities. In order to know the veracity of the affidavit the appellant was asked to prove that the affidavit filed is not a forged one. In support of his submission now the Oath Commissioner has further confirmed that this affidavit is not forged. Copy of the confirmation is placed on record. A perusal of the submissions made by the appellant, shows that this affidavit was admittedly executed before the Oath Commissioner. During the appellate proceedings appellant did file a copy of the affidavit wit....
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....ppeal proceedings are closed and review of decision taken on the basis of complete analysis of all facts available on record cannot be done as per law, therefore now both these requests are dismissed as there is no proceedings pending in this office related to AY 2015-16. If the Assessing Officer has any grievance then the proper forum is to approach /higher appellate authorities highlighting all these facts along with necessary evidence. It is seen from the records that AO has already moved an appeal on 02.08.2018 before Hon'ble ITAT Lucknow Bench taking all these specific grounds that are taken in this application. This second appeal has been approved by Pr. CIT-1, Kanpur vide letter no. 10/PrCIT-l/Judl./KNP/l 7-18/225 dated 02.08.2018. The matter is now sub-judice before higher appellate authority now. AO is directed to ensure that all the evidence and records are produced before the Hon'ble ITAT who is the final fact finding authority for deciding all the issues raised in this application. With these observations this petition is dismissed." 5.3 From the order passed by learned CIT(A) in view of rectification application filed by Assessing Officer, we ....
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....loan was taiken from the same lender M/s Cooper Commercial (P) Ltd. in assessment year 2016-17 wherein the Tribunal has already dismissed the appeal of Revenue vide order dated 06/04/2022. We further find that at page 165 of the paper book is the copy of assessment order of the lender where, vide assessment order u/s 143(3) for assessment year 2017-18, the Assessing Officer vide order dated 03/12/2019, has accepted the return of the lender and has not made any addition towards any loan advanced to the assessee. The Revenue, before us, in the grounds of appeal, has also not challenged such evidences. The contention of the Assessing Officer that summons issued to lender remained unserved and Income Tax Inspector had stated that no such lender existed has also been dealt by learned CIT(A) and he has held that summons issued at the wrong address cannot be said to have been served on the assessee. The learned CIT(A) has exhaustively discussed the manner of service by affixture and has held that there is a specified procedure to be followed by Income Tax Inspector for serving summons on the last given address by the assessee which he has not followed. The learned CIT(A) has further held ....
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....an creditor for assessment year 2014-15 is placed at pages 79 to 83 of the paper book. The Assessing Officer, during these three years, appointed commission u/s 131 of the Act and obtained his report wherein the Income Tax Inspector submitted that there were no such persons at the addresses and accordingly, the Assessing Officer made the addition. The learned CIT(A) however, has deleted the addition by appreciating the entire factual matrix whereby he held that the report of the Income Tax Inspector was vague and was not obtained in accordance with law and further held that the necessary evidences were duly filed before the Assessing Officer. The findings of learned CIT(A) in these three years are similar except difference in the amounts. For the sake of completeness, the findings of learned CIT(A) for assessment year 2013-14 have been made part of this order as below: "I have gone through the facts and the written submission filed along with the details filed enclosed therein. The brief facts of the case are that a survey proceedings u/s 133A of the IT Act, 1961 was conducted in business premises of Mohammad Asfand Akhtar, Prop- M/s Omega International. During the course ....
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....oceeding, appellant furnished before the AO confirmation of copy of account from the lender, their copy of UR, Bank Statement and shifted the initial onus cast upon him u/s 68 of IT Act. On these confirmations filed appellant provided the current and latest address of the lender to the AO whereas AO got the verification done at old addresses in Kolkata by issuing a commission u/s 131(l)(d) to the Kolkata Investigation Wing on 27.02.2018 to submit a report on following points: 1. Identity, genuineness of the transactions and creditworthiness of these compares in aspect of said unsecured loans. 2. Nature of business and modus operendi of the companies from whom assesses had received unsecured loans. DDIT (Inv). Unit-2, Kolkata submitted its report vide letter dated 17.04.2018 stating threin that summons u/s 131 were issued to the above mentioned company but summons were returned unserved by the Postal Department. Further Inspector was also deputed to make enquiry for their existence but no company found at their respective addresses. Inspector submitted that no nameplate or banner or poster in the name of the said concerns was found on 15/34/2018 in the sai....
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....any and does not have any real/ genuine business and M/s Wise Financial Advisor Services Pvt. Ltd. is not in existence and since identity of the loan provider is not established the unsecured loans received by the appellant from M/s Wise Financial Advisor Services Pvt. Ltd. has been treated as bogus and both additions were made on the basis of these facts. It is strange to see that when the AO is same and within a span of 4 months from December 2017 till April 2018 if a lender M/s. Silver Agencies Pvt. Ltd. who complied with the notice issued u/s 133(6) for AY 2015-16 before the same AO, changed its address then AO before reaching a different conclusion that the same lender is bogus and non-existent, should have given an opportunity to the appellant to submit the current address of the lender on receiving the report of the DDIT(Inv) Kolkata before making the addition, in light of the positive evidence available on record of the appellant, for AY 2015-16. It is also a fact that that during the course of original assessment proceeding as well as during the re-assessment proceedings, appellant furnished, before the AO complete details as required u/s 68 of IT Act to satisfy t....
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....he contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. Requirements for valid service by post as per aforesaid section 27 of the General Clauses Act, 1897 are: i. Proper addressing ii. Prepaying iii. Sending by registered post with acknowledgment due The service of notice is effected when the letter is delivered in the ordinary course by post (with registered AD or through Speed post). The presumption is that the delivery on the assessee has been effected. This is so even if a third person receives the post. The onus of proving otherwise is on the assessee. If the notice comes back with the postal remark "refused", it will still have the effect of a valid service. However, if the assessee denies such refusal on oath, the postman must be examined. But if the notice is returned with the postal remarks "Left", "Not found" or "Not known", then valid service cannot be presumed. It is more than established that the presumption under Section 27 of General Clauses Act is rebuttable. If postal notice is not served to the addressee then the presumption that the usual course o....
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.... Street, Kolkata-700013 whereas the address of the party on which confirmation filed before the AO and at the time of summon/enquiry made was 38/H/l Canal East Road, P.S. Narkeldanga, Kolkata- 700011. And Address of M/s Cooper Commercial Pvt. Ltd. on which commission u/s 131(1)(d) issued by AO was 10 Damzen Lane, Kolkata- 700073 and the enquiry was conducted by Inspector of DDIT, Kolkata at MCA data address was 71 Metcalfe Street, Kolkata-700013 whereas the address of the party on which confirmation filed before the AO and at the time of summon/enquiry made was 38/H/l Canal East Road, P.S. Narkeldanga, Kolkata- 700011. There is a specified procedure to be followed by an Inspector for serving a summon on the last given address by the assessee when no such person is found at that particular address. There is also a provision of service of notice by affixture, which is not done in this case, as per available documents on record. Service by affixture is resorted to in two circumstances: First, when the assessee or his agent refuses to sign the acknowledgement for service or when the serving official, after using all due and reasonable diligence, cannot find the assess....
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.... Supreme Court, on the basis of Rule 17 of Order V of the CPC that the service of notice was not in accordance with the law. The Supreme Court said that after going into the facts of the case very elaborately and after examining several witnesses, had come to be conclusion that the service made was not proper. It is settled principle of law that no addition can be made on the basis of material gathered at the back of assessee and without confronting the same to the assessee. In the instant case the appellant was not allowed any opportunity to rebut the evidence collected at his back as it was never confronted to the appellant during the reassessment proceedings. DDIT (Inv), Unit-2, Kolkata submitted its report on 17.04.2018 and the assessment order was passed on 19.04.2018 in undue haste, without conducting any further investigation. This is entirely in violation of the principles of natural justice and of audi alterem partem. Nobody can be condemned in hearing. Additions made at the back of the assessee without confronting the adverse material collected, if any, to the assessee, much less allowing the assessee any opportunity to rebut it, the addition is not sust....
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....ngement of accommodation entries and charging of commission and averment of the statement recorded during the survey of the assessee, vide question no. 5 & 8 of his statement recorded by the AO on 11.12.2017 during the assessment proceedings for AY 2015-16. In view of these facts, I am of the opinion that if the statement of both these persons - appellant and his CA - are now under dispute and are discredited, then there is no other material available on record with the AO, found either during the survey proceedings or gathered during the assessment proceedings on the basis of which it could justify the addition made. Statement recorded u/s 133A or 131 cannot be the sole basis for addition and appellant has heavily relied upon the judgement in the case of CIT v. S. Khader Khan Son (2008) 300 TTR 157 (Mad) that has been upheld by apex court in CIT v. S. Khader Khan Son (2013) 352 ITR 480 (SC). After carefully considering the argument of the Ld. Counsel for the appellant and the judgements in the case of CIT v. S. Khader Khan Son (Supra), I find that facts in the case under consideration are squarely covered by the facts of CIT v. S. Khader Khan Son's (Supra) case. In th....
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....ick, the onus lies on the AO to disprove the claim of the assessee by establishing that the retraction done though the affidavits filed by the assessee, were false and/or by bringing new material on record to prove that copy of ITR, Bank Statement of the loan creditor do not satisfy the requirements of S. 68 of IT Act and failure to do so would vitiate the addition made on this count. Vinod Solanki vs. UOI Civil Appeal No. 7407 of 2008 arising out of SLP (C) No. 3537of 2008 dated 18th December, 2008 ( UOI (233) ELT 157 (SC)) Held :- The retracted statement must be substantially corroborated by other independent and cogent evidences, which would lend adequate assurance to the court that it may seek to rely thereupon. The initial burden to prove that the confession was voluntary in nature would be on the Department. The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. if the same is to be relied upon solely for the purpose of securing a conviction. With a view to arrive at a finding as regards the voluntary nature of statement or otherwise of a confession which has since been retracted, th....
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....72 (hereinafter 'the Evidence Act,) can be seen from a perusal of sections 101 to 110 of the Evidence Act, 1872. The said sections broadly give the drift of the Rules, which are employed under the Act while settling the disputes between the parties, (i.e. in the Income-tax cases, the assesses and the Department). Section 101 of the Evidence Act states that whoever desires any Court to give judgement as to any legal rights or liability depending upon the existence of facts which he asserts, must prove that those facts exist. In other words, when a person is bound to prove the existence of a fact, the burden of proving it lies on that person. One who asserts affirmative of the issue is burdened with the duty of proving it. Section 110 of the Evidence Act states that when the question is whether any person is the owner of anything of which he has shown to be in possession, the burden of proving that he is not the owner is on the person who affirms that he is not the owner. In other words, if Income-tax Officer finds that the assessee is in possession of valuable items like bullion, jewelry, etc., he must draw a rebuttable presumption that the assessee is the owne....
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....'ble Apex Court has held that, "It is not doubt true that in all cases in which a receipt is sought to be taxed as income, the burden lies upon the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proof that it is not taxable because it falls within the exemption provided by the Act lies upon the assessee (See Parimisetti Seetharamamma [1965] 57 ITR 532 at page 536)". But sections 68 and 69 relating to cash credits throw the burden of proof on the assessee because in such a case, there is prima facie evidence against the assessee as to the receipt of money in the books of the assessee. The burden of proving that the cash credit is genuine or that receipt is genuine is on the assessee. "16. Though it may be kept in mind that the initial burden is on the assessee to prove the genuineness of the transaction, but when the assessee furnished the details of the shareholders, addresses, etc., this burden is to be taken as discharged, and then the onus will get shifted to the department. But once the materials are scrutinized and it is found by the AO that documents furnished cast serious doubt about the vera....
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....ong with the identity of the lender/investor and his creditworthiness. Having done so, the appellant in the instant case has discharged the onus cast upon it. Beyond this, for the charge of unexplained cash credit to stick, the onus lies on the AO to disprove the claim of the assessee by establishing that the evidence filed by the assessee was false and by bringing new material on record and failure to do so would vitiate the addition made on this count. Reference in this regard can be made the decisions in the case of CIT v. Orissa Corporation Pvt. Ltd. 158 ITR 78 ITA NO.1722/Del/2011 (SC) and CIT v. Rohini Builders 256 ITR 360 (Guj.). It was also held in the case of CIT v. Bedi & Co. P. Ltd. (1998) 230 ITR 580 (SC) that where prima-facie the inference on facts is that the assessee's explanation is probable, the onus will shift to the revenue to disprove it and the assessee's explanation in such case cannot be rejected on mere surmises. Further, it was held in Khandelwal Constructions v. CIT (1997) 227 ITR 900 (Gau.) that since the satisfaction of the AO is the basis for invocation of the powers u/s 68, such satisfaction must be derived from relevant factors on the basis o....
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....its report vide letter dated 17.04.2018 and the assessment order was passed on 18.05.2018 in undue haste without confronting the report of the investigation wing to the appellant. AO did not confront the full facts of this specific enquiry of the ITI to the appellant that would have enabled appellant to provide further details to the AO but no such efforts were done apparently by the AO and assessment was completed in undue haste. Where the assessee does not furnish the new or current correct addresses, then there is no duty on AO to bring any facts on record to show that conditions required u/s 68 are not satisfied but where appellant does, then AO need to bring more facts on record to show that conditions required u/s 68 are not satisfied. It is therefore held that AO has failed to shift back the onus on appellant as required by law. More so, now it is well settled legally that mere because lender failed to attend in response to summons issued, cannot be a ground to treat the receipt as non-genuine. In this case appellant has proved the identity of all the companies who are having a valid PAN, have an active Status at ROC and Acknowledgement of ITR filed when the assessm....
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....of lender 63 6. Copy of assessment order of lender for assessment year 2011-12 64 & 65 Assessment year:2016-17 1. Copy of ITR of lender (Cooper Commercial (P) Ltd.) 44 2. Confirmed copy of account of lender 42 & 43 3. Copy of audited accounts 45 to 52 4. Copy of bank account of assessee 76 to 99 10.1 The Assessing Officer has not made any adverse comments on such evidences. The only material with the Department is the statement recorded during survey which alone cannot be the basis for making an addition as held by various courts & Tribunals. We are in agreement with learned CIT(A) where he has clearly held that the addition can only be made on the basis of statement if that statement is corroborated by other material which in the present case is not there. Further the Assessing Officer in these years has relied on the report of Income Tax Inspector which he obtained from Kolkata. The learned CIT(A) has very elaborately dealt with this aspect and has held the report to be vague and not obtained in accordance with law. The learned CIT(A) has held that the Income Tax Inspector had visited the old address of the lenders and ....