DY.COMMISSIONER OF INCOME TAX,CC-2,, KANPUR vs. SHRI.MOHAMMAD ASFAND AKHTAR, KANPUR

PER ANADEE NATH MISSHRA, A.M.:

(A).
These cross appeals have been filed by the assessee and by Revenue against the impugned appellate order dated 18.04.2022
of the Ld. Commissioner of Income Tax (Appeals), Kanpur-4 [“Ld.
CIT(A)”, for short] for the A.Y. 2018-19. Grounds of appeal are as under: -
ITA. NO. 144/LKW/2022
1. The Ld. CIT(A), Kanpur has erred in law and facts in deleting the addition of Rs.4,51,00,000/- on account of bogus unsecured loan and ITA. No.139/LKW/2022
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commission paid thereof Rs.22,55,000/- without appreciating the facts brought on record by the AO during the course of assessment proceedings
& 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 paying commission thereon.
2. The Ld. CIT(A), Kanpur has erred in law and on facts of the case in deleting the addition of Rs.13,17,96,017/- of bogus sundry creditors surrendered u/s 41 of the Act without appreciating the facts brought on record and that the assessee has himself admitted that the sundry creditors were bogus liability as admitted in his statement recorded during the course of survey.
3. 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.”
1. That the assessment order is without juri iction and illegal as has been passed by the Joint Commissioner of Income Tax (West) without any charge consequent to transfer order of JCIT/ADDL. CIT vide CBDT order no. 303 of 2021 dated 12.08.2021 with immediate effect and without any further posting of JCIT by Pr. CCIT(CCA), Kanpur with specific charge as JCIT Assessing Officer of Central Circle-2, Kanpur at the time of completion/passing of assessment order. (This ground of appeal was not pressed by the assessee)
2. That the Ld. CIT(A) has erred in confirming addition/disallowance of Rs.2,96,50,131/- u/s 41(1) along with section 37 of the IT Act, 1961. 3. That the Ld. AO well as Ld. CIT(A) has erred in confirming addition of Rs.25,52,798/- on account of extra profit on the alleged shortage of stock.
(This ground of appeal was not pressed by the assessee).
4. That the order passed by Ld. AO is bad on facts as well as on law resulting in arbitrary and unlawful additions/disallowances.
5. That the appellant craves leave to introduce, without or modify any grounds of appeal with your honours kind permission.”
(A.1) At the time of hearing, Ld. Counsel for the assessee had submitted that ground no. 1 & 3 of the appeal were not being pressed in the assessee’s appeal. Thus, the only surviving grounds in the assessee’s appeal pertain to addition amounting to Rs.2,96,50,131/- made u/s 41(1) of IT Act, raised in ground no. 2 of appeal.
(B)
In this case, assessment order dated 30.09.2021 was passed by the Assessing Officer u/s 143(3) of the Act whereby the ITA. No.139/LKW/2022
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assessee’s total income was determined at Rs.26,22,77,702/-
(Rounded off to Rs.26,22,77,700/-). In the aforesaid assessment order, additions made included Rs.4,51,00,000/- made u/s 68 of the Act;
Rs.22,55,000/- made u/s 69C of the Act;
Rs.16,14,46,148/- made u/s 41(1) of the Act; Rs.25,52,798/- made by way of extra gross profit, Rs.1,13,096/- made u/s 36(1)(va) of the Act and Rs.2,60,000/- by way of disallowance of commission. The assessee’s appeal was partly allowed by the Ld.
CIT(A) in his aforesaid impugned appellate order dated
18.04.2022. In the cross appeals filed by the assessee and by Revenue, the surviving grounds pertain to issues regarding the aforesaid additions of Rs.4,51,00,000/- made u/s 68 of the Act;
Rs.22,55,000/- made u/s 69C of the Act (being commission paid) and Rs.16,14,46,148/- being addition made u/s 41(1) of the Act.
(B.1) In the course of appellate proceedings, paper book in four volumes were filed from the assessee’s side, containing the following particulars: -
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ITA. No.139/LKW/2022
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(B.1.1)
Moreover, a compilation of case laws was also furnished from the assessee’s side, consisting of the following precedents: -

(B.1.2)
Further, detailed written submissions were also filed from the assessee’s side during the appellate proceedings in Income Tax Appellate Tribunal (ITAT), reproduced below for the ease of reference: -
1. “That the assessee is an individual engaged in the business of manufacturing and export of finished leather under the name and style of proprietorship concern named M/s Omega International.
2. That the survey was conducted u/s 133A of the IT Act, 1961 on 22.09.2017 and the assessee was made to surrender of unsecured loans and sundry creditors vide statement recorded by the DCIT-1, Kanpur under coercion, consequent to survey, the assessee filed affidavit dated
28.09.2017 before the DCIT-1, Kanpur. Subsequently the case was transferred to JCIT, Special Range vide order u/s 127 of the IT Act, 1961
dated 24.10.2017 which further was centralized to DCIT, CC-2, Kanpur.
3. The appellant has filed his return of income at Rs.
Rs.5,05,50,660/- and the case was selected for scrutiny u/s 143(2) of the IT Act, 1961. 4. That the assessment has been completed u/s 143(3) of the Income
Tac Act 1961 on a total income of Rs.26,22,77,702/- by making addition on account of unsecured loan from M/s. Cooper Commercial Pvt. Ltd of Rs.
4,51,00,000/-, commission on unsecured loan of Rs. 22,50,000/-, addition
U/s 41(1) treating the sundry creditors as bogus liability of Rs.
16,14,46,148/, addition on account of extra profit on alleged shortage of stock of Rs. 25,52,798/-, disallowance u/s 36(1)(va) of Rs. 1,13,096/- and disallowance of foreign commission treating the same as prior period expenditure of Rs. 2,60,000/-.
5. That the appellant being aggrieved went in appeal before the ld.CIT(A) who deleted the above additions but confirmed the addition amounting of Rs.2,96,50,131/- to the extent of six sundry creditor which ITA. No.139/LKW/2022
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were not solely based on the admission of appellant made during survey before the survey party but based on the spot enquiry made by the ld.AO through inspector and also addition on account of extra profit on the shortage of stock of Rs. 25,52,798/-.
6. The appellant being aggrieved from the addition sustained by the ld.CIT(A) is in appeal before your honour for appropriate relief in the interest of justice and the department being aggrieved is also in appeal against the relief/ addition deleted by the ld.CIT(A) on account of unsecured loan and commission admitted during the survery alongwith addition deleted in account of sundry creditors admitted during survey u/s 41(1) of the Act .
7. Now, the appellant briefly humbly submits before your honour the issue/ ground wise as following:
The appellant and department ground of appeal can be categorized in two broad issues of addition as:
- Addition on account of Unsecured Loan from Cooper Commercial
Pvt Ltd and - Sundry Creditors u/s 41(1).
In Departmental Appeal both the additions are based on surrender/
admission during the survey which are covered by the preceding order of Hon’ble Tribunal in appellant own case for AY 2013-14 to AY 2017-18 vide ITA No.701, 702, 582, 703/Lkw/2018 dated
06.04.2022 and ITA No. 99/Lkw/2022 dated 05.08.2022. Whereas the appeal of the appellant i.e. assessee is on the six sundry creditor confirmed by the ld.CIT(A) on the basis of spot enquiry made by the ld.AO through inspector against which the appellant is in appeal.
DEPARTMENT APPEAL:
Addition on account of Unsecured Loan from Cooper Commercial
Pvt Ltd:
8. The assessee humbly submits and request before your honour that the first ground of appeal by the department on the issue of addition on account of admission of unsecured loan from Cooper Commercial Pvt Ltd has already been adjudicated by the Hon’ble Tribunal in the appellant case for AY 2013-14 to AY 2017-18 vide ITA No.701, 702, 582,
703/Lkw/2018 dated 06.04.2022 and ITA No. 99/Lkw/2022 dated
05.08.2022, therefore, the order of ld.CIT(A) to that extent may very kindly be confirmed by your honour as there is no difference on the issue and the facts of the case. The Hon’ble Tribunal has given finding at para 5 of page
10 of the order for the AY 2017-18 vide ITA No. 99/Lkw/2022 dated
05.08.2022. Sundry Creditors u/s 41(1):
9. The second ground of appeal of the department appeal is against the relief of 40 sundry creditors out of 46 creditors as made by the ld.AO in his order on account of admission made by the appellant during survey being without any merit or any corroborative evidence/ material, merely addition based on suspicion and conjectures.
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The issue of admission during survey has already been decided by the Hon’ble Tribunal in respondent case for AY 2013-14 to AY 2017-18 vide
ITA No.701, 702, 582, 703/Lkw/2018 dated 06.04.2022 and ITA No.
99/Lkw/2022 dated 05.08.2022. Moreover, the addition of sundry creditor as on 22.09.2017 being the trading liability has been duly recognized by the appellant as payable and has been paid in the earlier years, current year and subsequent years, therefore, there cannot said to be cessation of liability to be chargeable u/s 41(1) of the IT Act, 1961 when the same has been recognized by the assessee and payments are being made.
10. The assessee humbly submits before your honour that the ld.AO has accepted the Sales and has not disputed it in the current assessment year or in any preceding years which has arisen from the purchases/ manufacturing done by the appellant/respondent on account of which balance payable has become payable as Sundry
Creditors. The copy of questionnaire, reply and assessment order for AY
2016-17 and AY 2017-18 completed under scrutiny is enclosed in the paperbook page 304-401 of Volume II. The liability of sundry creditors has been recognized by the appellant and their payment has been made from year to year which is also appearing in the ledger accounts and bank statement of the appellant annexed in the form of paperbook page 1 -289
of Volume III part 1 and 290-591 of Volume III part 2. ASSESSEE’S APPEAL:
11. Now, the appeal filed by assessee on the issue of remaining six sundry creditors confirmed by the ld.CIT(A) on the basis of spot enquiry made by the ld.AO through inspector. The appellant humbly submits that these six creditors are not bogus and are genuine their bills and bank payments are annexed in the paperbook page 82-303 Volume II.
The spot enquiry made by ld.AO is general, vague and not in accordance with law, as also settled in appellant own case in earlier years.
12. The ld.CIT(A) has erred in confirming the addition of six creditors u/s 41(1) and their purchases made during the year u/s 37 of the Act. As regard to opening balances of these creditors, the balances does not pertain to the present financial year and are from the preceding year which has been duly recognized by the appellant and payments are made from year to year and are also enclosed in the paperbook page 82-303
Volume II, therefore, the addition of opening balance of preceding years purchases is erroneous and unlawful.
13. As regard to the addition pertaining to the purchases of the current the year made by the ld.CIT(A), the appellant has filed ledger account of creditors alongwith bills and bank payments made in preceding, present and subsequent years. The same are enclosed in the paperbook page 82-
303 Volume II, moreover, 5 creditors namely Hind Exims, Shahjahan
Leathers, N.H. Leathers, Dhruv Enterprises and M.K. Leathers out of six of whose details of commercial tax department registration were also provided to the AO appearing at page 7, 11, 22, 30 and 35 respectively of the Paperbook Volume II.
14. The ld.CIT(A) as well as ld.AO cannot make addition on account of sundry creditors arising from purchases which has been accepted in earlier years, moreover, when no defect or discrepancy has been found in Sales against purchases/manufacturing in any year of assessment completed as the same has been accepted.
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consultation of the record as above as well as on the advice of the officer present at the survey . However as soon as records were examined , assessee realised his mistake and accordingly retracted from his statement on 28.09.2017 by filing an affidavit dated 28.09.2017 before the AO as well as the higher authorities and this fact is undisputed . It is also seen from the records that during the course of assessment proceeding , appellant furnished copy of ITR , Bank Statement of the loan creditor before AO to shift the initial onus cast upon him u / s 68 of IT Act .
The AO also called for same information from this loan creditors u / s 133 ( 6 ) who confirmed these transactions . It was argued by the AR that statement recorded u /
s 131 consequent to survey cannot be sole basis for addition and heavily relied upon the judgement in the case of CIT v . S. Khader Khan Son ( 2008 ) 300 ITR 157
( Mad ) that has been upheld by apex court in CIT v . S. Khader Khan Son ( 2013 )
352 ITR 480 ( SC ) .
As regards, unsecured loan raised from M/s Cooper Commercial Pvt. Ltd., assessee has furnished confirmation, copy of ITR of A.Y.2016-17, Balance sheet for A.Y.2018-19 and copy of bank statement.
It is not out of place to mention that during the course of assessment proceedings for A.Y. 2016-17, a commission u/s 131 of the Act was issued on 27-02- 2018 to the Kolkata Investigation Wing to submit a report on the following points:-
1. Identity, genuineness of the transactions and creditworthiness of the companies in respect of unsecured loans.
2. Nature of business and modus operandi of the companies from whom assessee had received unsecured loans.
The DDIT(Inv), Unit-2, Kolkata vide his letter dated 17-04-2018 submitted that summons were issued to the companies mentioned in the commission but summons were returned un served by the postal authority. Further, Inspector was also deputed by the Investigation Wing, Kolkata to make enquiry for the existence of the company but no company was found at their given address as mentioned on MCA site. The scanned copy of report dated 17-04-2018 alongwith Inspector’s report is scanned below:-
-Scanned Copy of Report-
In view of the facts a show cause notice was issued on 16.09.2021, relevant part of the notice is reproduced as under :
During the course of survey carried out on 22-09-2017, your statement on oath was recorded, wherein unsecured loans taken from M/s Cooper Commercial Pvt.
Ltd of Rs.12,05,00,000/-,Rs.8,18,00,000/-and Rs.4,51,00,000/- were surrendered in A.Y.2016-17,2017-18 & 2018-19 respectively. During the course of assessment proceedings for A.Y.2016-17 confirmation of unsecured loans were furnished. To verify the identity , genuineness of transactions and creditworthiness of the lender a commission u/s 131(1)(d) was issued by the then Assessing Officer on 27-02-
2018 to the Investigation Wing, Kolkata. In response to the said commission, DDIT
Unit- 2, Kolkata submitted his report vide letter dated 17-04-2018 stating therein that the summons issued u/s 131 were returned un served by the postal authorities. Further, Inspector was also deputed to make enquiry for the existence of the company but no company was found on the given address. The copy of report is scanned below:-
Scanned Copy of Report
On perusal of your statement and report submitted by Kolkata, Investigation Wing, it is established that M/s Cooper Commercial Pvt. Ltd. is shell/ paper company and does not have any real/genuine business. As per Inspector’s report of DDIT(Inv) Kolkata, M/s Cooper Commercial Pvt. Ltd is not in existence and thus identity of loan provider is not established. The shell company is engaged in providing accommodation entries only. You are therefore required to show cause as to why so called unsecured loan of Rs.4,51,00,000/- be not added to your income
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u/s 68 of the I.T.Act,1961 and also show cause as to why commission paid @5%
for obtaining the accommodation entries in the garb of unsecured loan be not added to your income u/s 69C of the I.T.Act,1961. In compliance to show cause notice assessee vide reply dated 20.09.2021 stated that the content of show cause notice is not acceptable and the assessee has already filed reply and the same may be treated as compliance to show cause for the proposed addition. The assessee’s earlier reply has already been discussed.
As per the report of the Investigation wing, the lender company M/s Cooper
Commercial Pvt. Ltd was not found in existence at its address given on MCA site, as well as address as per PAN details / ITR details, thus identity &
creditworthiness of the lender as well as genuineness of the transaction is not established. The shell company M/s Cooper Commercial Pvt. Ltd is engaged in providing accommodation entries and is managed and controlled by the assessee with the support of Shri Manish Agarwal, CA as also admitted by the assessee during the course of survey proceedings as well as post survey proceedings.
Therefore, the so called unsecured loan of Rs.4,51,00,000/- is being added to the total income of the assessee u/s 68 of the Act to be taxed as per the provisions of section 115BBE of the Act. Penalty proceedings u/s 271AAC(1) of the Act are being initiated separately as the income computed includes income u/s 68 of the Act.
(Addition of Rs. 4,51,00,000/-)
Further, as the assessee himself has accepted in his statement on oath during the course of survey proceedings that unsecured loan was arranged by paying 5 to 7%
of commission in cash through his CA Shri Manish Agarwal for raising loan, therefore 5% commission on bogus loan which works out to Rs.22,55,000/- is being added to the total income of the assessee u/s 69C of the Act being unexplained expenditure to be taxed as per the provisions of section 115BBE of the Act, Penalty proceedings u/s 271AAC(1) of the Act are being initiated separately as the income computed includes income u/s 69C of the Act.
(Addition of Rs. 22,55,000/-)
21. That the appellant being aggrieved from the above additions went in appeal before the ld.CIT(A) who deleted the above addition made by the ld.AO.
22. The finding of the ld.CIT(A) is being reproduced as under:
“6.4 The undersigned finds that there is no difference in finding of the order of Assessing Officer for both the assessment years and the lender being same the addition of Rs. 4,51,00,000/- made u/s 68 on account of unsecured loan and addition of Rs. 22,55,000/- on account of commission estimated @5% on this unsecured loan, both are on similar facts and issue which has already been decided by me in the AY 2017-18. It is further noteworthy that the same lender i.e. M/s. Cooper Commercial Pvt Ltd.
gave unsecured loan of Rs. 12,05,00,000/- to the appellant in FY 2015-16
and the addition made by the AO in AY 2016-17 has also been deleted by my predecessor
Ld.
CIT
Appeal.
In appeal no.
CIT(A)-
III/10008/KNP/2018-19/08 dt. 27.09.2018. The appeal was filed by Department against this order of 2016-17 of Ld. CIT(A) in ITAT A Bench
Lucknow in ITA No. 703/LKW/2018 and Hon’ble ITAT passed combined order for AY 2013-14 to 2016-17 in ITA Nos. 701, 702, 582 and 703/LKW/2018 dt. 06.04.2022 and Hon’ble ITAT dismissed the appeal of the department and thus confirmed the order of Ld. CIT Appeal. The relevant part of the order of Hon’ble ITAT is produced as under:
“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 ITA. No.139/LKW/2022
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addition as held by various courts & Tribunals. We are in agreement with learned CIT(A) where he has clearly held that the addition can onlyjbe 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 Ld. CIT Appeal has very elaborately dealt with this aspect and has held the report to be vague and not obtained in accordance with law. The Ld. CIT Appeal has held that the Income-Tax Inspector has visited the old address of the lenders and the commission at Kolkata had also issued the notices u/s 131 at the old addresses. The Ld. CIT Appeal, in this report, has also held that the notices were not served in accordance with Rule 17 of Order V of the CPC.
He further held that if the assessing officer had received adverse report from the commission, he should have given one opportunity to the assessee to rebut the same, which he had failed to do. He further held that one of the creditor M/s. Silver Line Technologies had complied with notice u/s 133(6) for assessment year 2015-16 and assessing officer before holding the lender to be non existent in respect of other years, should have considered this aspect also. Therefore, in view of these facts and circumstances, the Ld. CIT Appeal has rightly held that report of the Inspector was vague and not in accordance with law.
10.2 The Ld. CIT Appeal on the other hand, has clearly held that assessee had discharged his onus and had filed all the necessary evidences. He has further held that such evidences were also filed before assessing officer during original assessment proceedings. In these years also the revenue has not raised any ground on merits of the additions not assessing officer found anything wrong in the evidences. The revenue has again raised the grounds that affidavit was an additional evidence which we have already held to be not as an additional evidence and we have already held that Ld. CIT Appeal has not relied on this affidavit while allowing relief to the assessee on merits. Therefore in view of the above facts and circumstances, we do not find any infirmity in the order of Ld.
CIT Appeal. Accordingly, appeal in ITA no. 701 and 702 are dismissed and ground nos. (ii) to (v) in ITA No. 703 are dismissed.
11. As regards ground no. (i) in ITA No. 703 for AY 2016-17, we find that ground no. (i) is similar to ground no. (i) in ITA no. 582 which we have already dismissed and therefore, following the same, ground no. (i) ITA No.
703 is also dismissed. Hence appeal in ITA No. 703 is also dismissed.
12. In the result, all the appeals of the revenue are dismissed and the cross objections of the assessee are also dismissed being in-fructuous. ”
6.5 Since in the appellant’s own case in AY 2016-17, Hon’ble ITAT has finally deleted the additions made on account of unsecured loan taken by the appellant from M/s. Cooper Commercial Pvt Ltd., respectfully following the same, in this year also the additions of Rs. 4,51,00,000/- made u/s 68
of IT Act and alleged commission of Rs. 22,55,000/- @5% of the unsecured loan made u/s 69C of IT Act are hereby deleted.
The grounds of appeal no. from (i) to (viii) are adjudicated accordingly and relief is allowed to the appellant.”
OUR SUBMISSION:
23. That the appellant humbly submit before your honour that the issue of surrender and unsecured loan from the same lender namely M/s
Cooper Commercial Pvt Ltd. has been decided in favour of the ITA. No.139/LKW/2022
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appellant by the Hon’ble Tribunal vide order dated 06.04.2022 ITA
701-703 & 582/Lkw/2018 for the AY 2013-14 to AY 2016-17 and ITA
No. 99/Lkw/2022 dated 05.08.2022 for the AY 2017-18. 24. The relevant finding of the Hon’ble Tribunal in ITA No. 99/Lkw/2022
dated 05.08.2022 for the AY 2017-18 is being reproduced as under:
“5. Now coming to ground No. 2, we find that the Revenue is aggrieved with the decision of learned CIT(A) by which he has deleted the addition on account of alleged bogus unsecured loans and on account of assumed commission paid thereon. The Assessing Officer has made this addition on the basis of a statement recorded by DCIT, Kanpur from the assessee. The learned CIT(A) has deleted such addition by recording detailed findings, as contained in para 7.3 onwards, which for the sake of completeness are reproduced below:

“7.3 The undersigned has 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 proceeding 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 of survey proceedings statement was recorded u/s 133A of the I. T. Act, 1961 on 22.09.2017 and subsequently again u/s 131 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 complete knowledge of the same for the preceding assessment and appellate proceedings for Assessment year 2013-14, Assessment year 2014-15 and Assessment year 2016-17 and at the time of present assessment proceeding. Further, it has also been submitted that Shri Manish Agarwal
CA has also denied the averment of the statement recorded during the survey of the assessee vide his own statement recorded by the Assessing
Officer on 11.12.2017 which finds place in the appellate order for Assessment year 2015-16. 7.4 It is seen from the records that during the course of assessment proceeding, appellant furnished before the Assessing Officer the following details of lender and placed in the paperbook filed by the appellant:
• Copy of Notice issued and served u/s 131 of the IT Act, 1961 dated
16.11.2018 on the lender company by one Assessing Officer in some other assessee’s case (Pg 22-23 of the Paper book)
• Copy of Confirmation (Pg 24-25 of the Paper book)
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• Copy of ITR (Pg 44-47 of the Paper book)
• Copy of Balance sheet (Pg 48-55 & 60-97 of the Paper book)
• Copy of Bank statement (Pg 56-59 of the Paper book)
• Copy of Company Master Data and director details at MCA (Pg 28-29 of the Paper book)
• Copy of Assessment Order for assessment year 2011-12 of the lender company (Pg 38-43 of the Paper book)
• Copy of Scrutiny notice u/s 143(2) for the assessment year 2017-18 in the case of lender company (Pg 34-37 of the Paper book)
• Copy of photograph of the office of lender company(Pg 30 of the Paper book
• Copy of affidavit containing the reasons for advance/investment to the assessee. (Pg 112-113 of the Paper book)

• Hon'ble Gujarat High Court, in the case of Dy. CIT v. Rohini Builders
[2002] 256 ITR 360 /[2003] 127 Taxman 523
• Nemi Chand Kothari 136 Taxman 213, (supra), the Hon'ble Guahati High
Court
• CIT v Real Time Marketing (P) Ltd reported in 306 ITR 35
• CIT v. S. Kamaljeet Singh [2005] 147 Taxman 18(AII.)
• S.K. Bothra & Sons, HUF vs. Income Tax Officer, Ward- 46(3), Kolkata
347 ITR 347
7.7 The appellant has further also contended in the written submission and emphasized during his oral argument that the Assessing Officer has failed to either controvert the documentary evidence filed by the appellant or establish the cash/money being flown from the coffer of the appellant in the form of generation of unaccounted undisclosed income or its application. The A.O. has not brought any material on record to prove and establish that the aforesaid sum were originated directly or indirectly from the coffers of the assessee company. In support of the same the appellant relied upon the decision of the High Court of Delhi in the case of GIT vs
Value capital Services (P) Ltd. reported in 307 ITR 334 and CIT v Real Time
Marketing (P) Ltd reported in 306 ITR 35. 7.8 That in the assessment proceeding for AY 2013-14, AY 2014-15 &
2016-17 the Assessing Officer commissioned the verification at old addresses in Kolkata by issuing a commission u/s 131(1)(d) to the Kolkata
Investigation Wing on 27.02.2018. The DDIT (Inv), Unit-2, Kolkata submitted its report vide letter dated 17.04.2018 stating therein that summons u/s 131 were issued to the above mentioned company but summons were returned unserved by the Postal Department and the Inspector 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 16/04/2018 in the said premise No mailbox naming the said concern was found on respective addresses. Inspector submitted that on local enquiry it was revealed that there is no existence of the said concern in the said premise.
7.9 I have considered the facts and circumstances of the case as above which had 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
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order that since appellant has not retracted from his statement recorded on oath during survey proceedings and post survey proceedings, the confirmation of unsecured loans and other documents submitted by assessee has no force and same cannot be relied upon for allowing the benefit to appellant of shifting the initial statutory onus that is cast u/s 68
of IT Act on the appellant.
7.10 Hence it is argued by the appellant that in the preceding year when the enquiries were conducted, the lender had shifted its place of business to its new address that was updated on the website of MCA on 30.04.2018
and the enquiries were conducted at the old address in April 2018 only when the business premises of the lender had already shifted. On the basis of this report submitted by Kolkata Investigation Wing, it was held by Assessing Officer that M/s Cooper Commercial Pvt. Ltd. is a shell/paper company, and is not in existence and since identity of the loan provider is not established, the unsecured loan received by the appellant from this concern has been treated as bogus and the additions were made on the basis of these facts.
7.11 It is a fact that that during the course of assessment proceeding appellant furnished before the Assessing Officer complete details as required u/s 68 of IT Act to satisfy the initial statutory requirement for shifting the initial onus that lies upon an assessee, like confirmations with new address along with Assessing Officer, PAN, Bank Statement and Balance Sheet of the loan creditor. By filing these evidences it is apparent that the appellant proved identity, genuineness and creditworthiness of the loan creditor. The Assessing Officer without taking cognizance of the details filed during the current assessment proceedings, and also the evidence that is available on record for AY 2015-16, simply relied on the report of the DDIT (Inv.) and on the Inspector report – both of which are vague and were not confronted to the appellant – for holding that the loan creditor is not existing and is not genuine. Moreover, on the corollary, the appellant has made compliance to show-cause notice in each assessment proceeding establishing the lender and thereby discharging his onus which would imply that even if it is to be said that the retraction is not there, the appellant has made an implied retraction by filing details of the lender to establish the requirement u/s 68 of the Act during the assessment proceeding. 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 considering the inquiry made on old address by the Assessing
Officer and the assessment for the current assessment proceeding has been completed on 21.05.2019. ITA. No.139/LKW/2022
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to decide the question of the identity of the Loan creditor as held by the Assessing Officer in his order.
7.16 Now coming to the Inspector’s report that has been relied upon by the Assessing Officer for making this addition. It is said in the assessment order that “Inspector was also deputed to make enquiry for their existence but no company was found at their respective addresses”. Assessing
Officer issued commission to Kolkata Wing giving old addresses and the new addresses i.e. 38/H/1 Canal East Road, P.S. Narkeldanga, Kolkata-
700011, were ignored by Assessing Officer while framing the assessment order.
7.17 There is a specified procedure to be followed by an Inspector for serving a summons 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 assessee in his residential or business premises within a reasonable time and second, when there is nobody else authorized to receive the notice. In the above Circumstances, the Income Tax Inspector can affect the service by affixture on his own initiative without waiting for an order from the Assessing Officer. The copy of the notice should be affixed on the outer door or on a conspicuous part of the business or residential premises & a panchnama should be drawn in the Presence of two witnesses & there identity proof should be taken.
7.18 A report is to be drawn up by the Income Tax Inspector, on the facts and circumstances of the service by affixture, specifying the date and time of service and the name of the identifier and independent witnesses, if any. It should conclude with an affidavit of the Income Tax Inspector solemnly affirming the facts and particulars of service as reported. The report is to be filed as an endorsement to the original notice after being docketed in the order sheet. The report 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.

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.
7.21 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 assessment proceedings.
7.22 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 sustainable in the eyes of law –
is a well settled legal proposition requiring no citations. To act on evidence fairly, reasonably and without prejudice is inherent in action of an Assessing Officer where he has to make an order or direct some action to be taken against any person. For example, section 143(3) of the Income-tax
Act, 1961 specifically provides that the officer has to make an order after hearing such evidence as the assessee may produce and such other evidence as the officer may require on specified points, after taking into account all relevant materials which he has gathered. The officer can collect the material behind the back of the assessee, but before he makes use of it, he has to make it available to the assessee with an opportunity to him to show cause as to why he should not proceed to pass an order on the basis of such material? He is bound to confront the assessee with the material. It is only when materials gathered by the Assessing Officer or by an authorized official are brought on record that they become evidence in the case, and the rules of natural justice can only apply to those materials which the Assessing Officer 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 Assessment year 2015-16, Shri Manish Agarwal Chartered Accountant has also denied these facts pertaining to arrangement 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 Assessing Officer on 11.12.2017 during the assessment proceedings for Assessment year 2015-16. In view of these facts, I am of the opinion that if the statement of both these persons –
appellant and his Assessing Officer – are now under dispute and are discredited, then there is no other material available on record with the Assessing Officer, found either during the survey proceedings or gathered during the assessment proceedings on the basis of which it could justify
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the addition made. Statement recorded u/s 133A or 131 cannot be the sole basis for addition and appellant has heavily relied upon the judgment in the case of Assessing Officer v. S. KhaderKhan Son (2008) 300 ITR 157
(Mad) that has been upheld by apex court in Assessing Officer v. S.
KhaderKhan Son (2013) 352 ITR 480 (SC). After carefully considering the argument of the Assessing Officer. Counsel for the appellant and the judgments in the case of Assessing Officer v. S. Khader Khan Son, I find that facts in the case under consideration are squarely covered by the facts of Assessing Officer v. S. KhaderKhan Son’s (SC) case. In the case under question the department has not been able to find out any direct or indirect evidence that lead to assumption that loan taken by appellant is bogus.
There is no evidence brought on record by Assessing Officer during or after the survey to prove that M/s Cooper Commercial Pvt. Ltd. is a shell company and does not have any genuine business and/or the loan transaction with the appellant is bogus. Appellant has furnished copy of its ITRs, Bank Statement and confirmation of account. Against this evidence placed on record no specific finding has been brought on record by the Assessing Officer to dispute the veracity of documents submitted in respect to the loan taken of the appellant company. It is clear that addition made by Assessing Officer is based purely on the basis of statement recorded during the survey proceedings that has lost its evidentiary value in light of the law laid down by Hon'ble Apex Court in the case of S. Khader Khan
Son(SC) and retraction 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 scale and weighed with the other evidence.
To act upon the retracted Confession for taxing an amount, the onus is on the department to prove that the statements made were voluntary and there was no coercion on Assessee. So for the taxation of unexplained loan credit to stick, the onus lies on the Assessing Officer 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 Assessing Officer, 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.
7.25 Vinod Solanki vs. VOI Civil Appeal No. 7407 of 2008 arising out of SLP (C) No. 35370f 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
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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, the Court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors. Law does not say that the accused has to prove that retraction of confession made by him was because of threat, coercion, etc. but the requirement is that it may appear to the court as such.
7.26 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.
7.27 In the case of “Prem Castings (P) Ltd vs. Department Of Income Tax,
Income Tax Appellate Tribunal, Delhi Bench ‘F’ – New Delhi on 11
September, 2015 in IT A No. 3401/Del/2011, held:
“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 disputes between the parties, (i.e. in the Income-tax cases, the assessee arid the Department).
Section 101 of the Evidence Act states that whoever desires any Court to give judgment 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 owner thereof unless the burden of proving that he is not the owner thereof is discharged by the assessee. Whether certain sums of money were claimed by the assessee to have been received from certain persons, it was for the assessee to prove by cogent and proper evidence that these
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were genuine transactions as these facts were within the exclusive knowledge of the assessee and it should be kept in mind that the assessee cannot discharge this burden of merely proving the identity of the share applicant/shareholder, he has to prove all about the transaction, namely, identity, capacity of the shareholder to invest money and genuineness of the transaction.
“15. What is burden of proof? As painted out by Sarkar in his book Indian
Evidence Act, the phrase “burden of proof has two distinct and frequently confused meanings. As a matter of law and pleading, the “burden of proof”
is in the nature of establishing a case. This burden rests upon the party, whether plaintiff or defendant, who substantially asserts the affirmative of the issue. It is fixed at the beginning of the trial and remains unchanged and, in this respect, reference may be made to section 101 of the Indian
Evidence Act (emphasis given by us). In the second sense, the “burden of proof” relates to the region of production of evidence. In this sense, the “burden of proof” is ambulatory and shining throughout the trial and the scale of evidence may 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 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 Pafimisetti
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 prime 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 assesses 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 Assessing Officer that documents furnished cast serious doubt about the veracity of the same, and then the materials of the scrutiny are to be communicated to the assessee, thereafter the onus shifts from the revenue to the assessee. Then, the assessee has to take appropriate steps for proving his case. Unless, there are sufficient materials after such communication, produced by the assessee, the Income-tax officer can do no further. It should be kept in mind that the transactions which had occurred are things of which assessee is aware of and it has to come before the Assessing Officer.
“17. Dealing with share capital their Lordship of the Apex court has held that there cannot be two opinions on the aspect that the pernicious practice
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of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the Revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue’s insistence that it should prove the negative. In the case of a public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private 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 cash credit to stick, the onus lies on the Assessing
Officer 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 primafacie 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 Assessing Officer is the basis for invocation of the powers u/s 68, such satisfaction must be derived from relevant factors on the basis of proper inquiry by the Assessing Officer and such inquiry must be reasonable and just.
7.29 According to Section 68 of Income Tax Act 1961, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of the same or the explanation offered by him is not satisfactory in the opinion of A.O., the sum so credited may be charged to income tax as the income of the assessee of that previous year. The basic precondition for the Section 68 is that the assessee should file a valid confirmation. Valid confirmation has no specific format but it must contain name, complete address of the lender and PAN of the lender. The confirmation so filed must indicate complete details of transactions (like mode cash or cheque, with number date of cheque with bank details). The Assessing Officer have right to demand the copy of bank account of the lender evidencing such transactions and the same needs to be filed. As far as the creditworthiness or financial strength of the creditor/subscriber is concerned, that can be ITA. No.139/LKW/2022
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proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharged the onus 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 Assessment year 2016-17 was passed on 18.05.2018 in undue haste without confronting the report of the investigation wing to the appellant. Assessing Officer 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 Assessing Officer but no such efforts were done apparently by the Assessing Officer and assessment was completed in undue haste for the Assessment year 2016-
17 which has been fully relied upon by the Assessing Officer in the present assessment year and though there was time this year yet no inquiries have been conducted to reach to the truth. Where the assessee does not furnish the new or current correct addresses, then there is no duty on Assessing Officer to bring any facts on record to show that conditions required u/s 68 are not satisfied but where appellant does, then Assessing
Officer needs to bring more facts on record to show that conditions required u/s 68 are not satisfied. It is therefore held that Assessing Officer has failed to shift back the onus on appellant as required by law.
7.31 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 nongenuine. 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 Assessing Officer filed when the assessment under question was being finalized. All these evidences cannot be brushed aside without any further adverse material being placed on record by Assessing Officer. Genuineness of Transactions undertaken through banking channel through account payee payment modes may be doubted.
But the evidence placed on record before Assessing Officer by the appellant can be treated as full discharge of onus on the part of appellant with regard to the genuineness and creditworthiness as required u/s 68 of the Act. In view of the fact the Assessing Officer has failed to establish through evidences that either the loan creditor is non-existent or the loan transaction is an accommodation entry taken in lieu of cash paid
Therefore, addition made simply on the basis of admission during the survey and on the basis of the general and vague report received from the DDIT (Inv) Kolkata office without confronting or taking any enquiry during 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 ITA. No.139/LKW/2022
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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 of this year is decided on the same lines in which my predecessor Commissioner (Appeal) has decided the appeal in Assessment year 2016-17 since the creditor is same and no new facts have been brought on record by the Assessing Officer.
7.33 Further, the addition on account of commission on unsecured loan of Rs.40,90,000/- estimated @5% on the alleged bogus unsecured loan is consequential addition made by the Assessing Officer. The appellant has categorically denied such incurrence and has contended that no addition can be made without giving any cogent evidence or material to corroborate the allegation that such commission had been made. The appellant has further relied upon the order of Commissioner(Appeal) which has been considered during the appellate proceeding for the Assessment year 2015-
16 where Shri Manish Agarwal Chartered Accountant who was alleged to have received commission on the transaction has also denied the averment of the appellant statement recorded during the survey which has also been taken in due consideration by the then Commissioner (Appeals) in appellants own case and finds reference in the finding of the Commissioner
(Appeals) for Assessment year 2015-16. In Assessment year 2016-17 also the Commissioner (Appeal) made detailed observations in the matter of this unsecured loan and the alleged commission estimated on the unsecured loan, these observations are followed in this year too. The undersigned finds that the addition of commission on unsecured loan made by the Assessing Officer is consequential to the addition of unsecured loan.
Therefore, in consequence to above finding the addition becomes unwarranted and is to be deleted.
7.34 In the light of above observations, the addition of Rs.8,18,00,000/- made u/s 68 of IT Act on account of unsecured loan and addition of Rs.40,90,000/- on account of commission estimated @5% on this unsecured loan, both are hereby deleted and relief is allowed to the appellant.”
5.1 We find that learned CIT(A), while granting relief to the assessee, has heavily relied on the evidences filed by the assessee before the Assessing
Officer and has held that additions, only on the basis of surrender (which is later on retracted), is not sustainable. The learned CIT(A) has further noted that the issue of retraction was pending before the Tribunal for adjudication. We find from the order of 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
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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 28th 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 also submitted that since the assessee was not well with his health and further he could not verify the actual position from the books of account therefore, such surrender was made without consultation with the factual position and when he verified the same within a period of six days, he filed this affidavit wherein he submitted that the additions, if any, should be restricted to unverifiable amounts only. We find that the Revenue has raised a ground that this affidavit was not filed with the Assessing Officer and Learned counsel for the assessee also fairly agreed that though this affidavit was filed with the Assessing Officer but it is not on the record for which the assessee cannot be held liable. We find that through this affidavit, though the assessee has partly retracted from the statement recorded u/s 133A. However, learned CIT(A) has not allowed relief to the assessee on the basis of such affidavit but learned
CIT(A) has gone through the merits of the additions and has allowed relief to the assessee by holding that the assessee had discharged his onus u/s 68 of the Act. We further find from the contents of this affidavit that it does not contain any material evidence on which learned CIT(A) had placed reliance while allowing relief to the assessee. Such affidavit does not contain any figure or certificate in support of the fact that the unsecured loans were explainable. Therefore, in our opinion, such affidavit did not constitute additional evidence which required examination by the Assessing Officer. We further find that the addition was made by the Assessing Officer relying solely on the statement recorded during survey u/s 133A and he disregarded all the documentary evidences including the reply to the notice u/s 133(6) by loan creditor and without having any corroborative material to make the addition. The CBDT itself vide
Instruction No.286/2/2003(Inv) has directed the Assessing Officers not to make addition only on the basis of statements and has directed that Assessing Officer should make additions, if any, after examination of the corroborated evidences. The learned CIT(A), in his order, has thoroughly discussed this aspect and has also relied on such CBDT Circular and on various judgments to allow relief to the assessee.
5.2 We further find that Assessing Officer had requested for recall of learned CIT(A)’s order on the basis that 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
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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, Kanpur on the basis of forged document, ii)
Ld. CIT (A) failed to confront the Assessing Officer with the affidavit filed?
even though the same was nowhere mention in the assessment order and is also not part of our records.
iii)
Ld. CIT (A) also did not give any opportunity to the undersigned to rebut/
counter the same.
Facts of this case are that that appeal was filed against the order u/s.
143(3) of the.I.T. Act, 1961,. for the assessment year 2015-16 passed on 28-12-2017 by the Joint Commissioner of Income Tax, Special Range,
Kanpur with the following grounds of appeal.
Grounds of Appeal;
1. That the Ld. AO has erred in making disallowance on account of commission paid on export sales of Rs. 87,34,231/-.
2. That the Ld. AO has erred in making ad-hoc disallowance on account of Telephone expenses of Rs. 6,738/-,
3. That the Ld, AO has erred in making ad-hoc disallowance on account of Vehicle running & maintenance along with depreciation of Rs. 3,14,204/-.
4. That the Learned AO has erred in making disallowance on account of unsecured loan of Rs. 2,57,00,000/-
5. That the Ld. AO has erred in making disallowance on account of Commission of Rs, 12,85,000/-.
6. That the Ld. AO has erred in making disallowance on account of Charity
& donation of Rs. 36,100/-.
7. That the Ld. AO has erred in making disallowance on account of interest on TDS of Rs. 2,812/-
8. That the Ld. AO has erred in making disallowance on account of land registry expenses of Rs. 4,89,000/-.
9. That the Ld. AO has erred in making additions/disallowances arbitrarily without any basis.
10.That the assessee craves leave to introduce, modify or withdraw any ground of appeal with kind permission of your honour.
Ground No. 1 pertains to disallowance of Rs. 87,34,231/- of Commission
Paid that was decided in favour of appellant on the basis of decision taken in assessee's own appeal for the A.Y 2012-13 & 2014-15 in appeal number
CIT(A)-IKnp/10048/2017- 18 dt 05-12-2017; CIT(A)-I Knp/10271/2016-17
dated 07.12.2017 respectively. Similarly ground No. 2, 3 pertaining to ITA. No.139/LKW/2022
Page 27 of 158

adhoc disallowance of Rs.6,738/- of Telephone expenses; of Rs.3,14,204/- of Vehicle Running & Maintenance was decided against the appellant on the basis of decision taken in assessee's own appeal for the 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 proceedings that the surrender made was retracted on 28.09.2017 by filing affidavits and letters with all the three relevant authorities holding juri iction over the appellant. Appellant filed detailed legal and written submissions during the appellate proceedings with regards to additions made by the AO.
During the course of appellate proceeding, appellant also submitted the evidence that had been allegedly furnished before the AO in support of Rs.
2,57,00,000/- taken as Unsecured Loan u/s 68 of IT Act, like confirmation of account, copy of ITR, Bank Statement from where amount was remitted to the appellant. It is also a fact that information u/s 133(6) was also called from the depositor by the AO and these transactions were confirmed by the alleged depositors by furnishing same information that was filed by the appellant during assessment proceedings. These facts are still not disturbed by the AO. In the appellate order it was accordingly held that appellant had successfully discharged the initial onus that lay upon him with regards to three ingredients application in section 68 i.e. identity, creditworthiness and genuineness of the transactions. Though now AO is trying to place on record report of DDIT(Inv), Unit-2, Kolkata who submitted its report vide letter dated 17.04.2018 in support of this request. This report was received on 17.04.2018 whereas the impugned assessment order was passed on 28.12.2017. Therefore this report was not a part of the record for the AY 2015-16 while the assessment order was framed and therefore cannot be used to invoke the provisions of S. 154 of IT Act now.
This report can be considered only while deciding the appeals for the relevant assessment years. AO is at liberty to file these evidences before the Hon'ble ITAT in the second appeal stage.
In view of the above facts, the conclusion of the AO that the finding of my order, pertaining to ground no. 4 & 5 are only based upon the retraction of the surrender made is not correct. The finding of the order is based upon the merit of the case related to filing of documents by appellant in support of shifting the initial onus that lie u/s 68 of IT Act upon him, results of the proceedings u/s 133(6) of IT Act conducted by AO and the law laid down by Hon'ble Apex
Court in the case of S. Khader Khan Son (Supra) rather based upon retraction from surrender made. It is therefore clear that apart from the retraction statements and affidavits, there are two more
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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 with receipt stamp from the office of DCIT-1, Kanpur. Now once there is evidence that is filed during the appellate proceedings, recalling of the appellate order on the charges of fraud, which is not proved, is not possible. Copy of retraction affidavit bearing the "receiving stamp of the office of DCIT-I,
Kanpur is accepted as a part of the record as it was taken to be filed at Bar. AO is at liberty to enquire into this aspect for any internal lapses on the part of any official. If this evidence is proved to be not filed in the office of DCIT-1, Kanpur then the appellant can be subject to further proceedings as per law. If appellant is found to be misrepresenting the facts during the appellate proceedings and found to have taken advantage of the legal proposition related to timely retraction from an incorrect admission made during any legal proceedings then AO shall be at complete liberty to a relief as per the law laid down by Hon'ble Apex Court down in the case of A. V.
Papayya Sastry and others v. Government of A.P. and others AIR (2007)
SC1546 and (2010) 8 SCC 383 where it was held that - fraud nullifies all and persons who played fraud ought not to be allowed to bear the fruit or benefit thereof. Therefore if the impugned order is found to be obtained by misrepresentation of facts, then it will not be entitled to any relief, interim or final.
In view of these facts it is held that there is no mistake apparent from record as the order has been passed on basis of all the documents submitted by appellant AR 'At Bar' during appellant proceedings. CIT (A) does not have the power u/s 251 of the Income-tax Act, 1961 to recall the appeal order and review the decision taken on the merits of the case.
Lastly AO has not raised any statutory 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 undersigned but has requested Pr.CIT-1, Kanpur to raise it before this office and in turn Pr. CIT-1 Kanpur has not requested for recalling the impugned order but only requested to give fresh opportunity to AO on admission of additional evidence and to review of the impugned order. Since, no specific statutory request for invoking S. 154 of IT Act has been made -by AO, who alone can be the aggrieved party before this office and at this stage fresh additional evidence cannot be examined as the appeal 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. ITA. No.139/LKW/2022
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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 find that learned CIT(A) has affirmed that he has allowed relief to the assessee on the basis of evidences filed before Assessing Officer and for which Revenue has not raised any ground before us and neither Assessing Officer made any adverse comments on such evidences. In fact learned CIT(A), on the basis of records of other commissioner, has recorded a finding of fact that such affidavit dated 28/09/2017 was executed indeed. Furthermore, we find that there is no application of assessee for admission of additional evidence under Rule 46A of the I.T. Rules.”
5.2 We find that the Tribunal has recorded a finding of fact that learned
CIT(A) has not allowed relief to the assessee on the basis of retraction only but has allowed relief to the assessee on the basis of merits of the cases.
The Tribunal has further noted that the contents of the affidavit to not contain any material evidence on which learned CIT(A) had placed reliance while allowing relief to the assessee. The Tribunal has also reproduced the order of learned CIT(A) wherein on an application filed by the Assessing
Officer u/s 154 of the Act, the learned CIT(A) has again reiterated that he had allowed relief to the assessee on the basis of the merits of the cases.
The Hon'ble Tribunal had noted that the primary onus cast upon it u/s 68
of the Act was discharged by the assessee by filing sufficient documentary evidences.
5.3 In the present year, the learned CIT(A) has again deleted the addition by holding that assessee had discharged his onus of providing primary evidences in support of unsecured loans. Before us also, the assessee has filed a paper book wherein at pages 148 to 162 are placed the copies of confirmations by the loan creditor along with the copy of income tax return of the loan creditor and also the copies of financial statements of the loan creditor wherein such investments made into the assessee company has been reflected. The paper book at page 158 onwards also contains copy of bank accounts from where the money flowed into the bank account of the assessee. Though the income tax return filed by lender M/s Cooper
Commercial (P) Ltd. i.e. the lender, do not disclose any significant amount of income but the examination of balance sheet reveals that lender had huge reserves which was invested in equity shares and unsecured loans including loan to the assessee. Moreover, similar 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 ITA. No.139/LKW/2022
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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 that no addition can be made on the basis of material gathered at the back of the assessee and without confronting the same to the assessee. He held that assessee was not allowed any opportunity to rebut the evidences collected at his back as it was never confronted to the assessee during assessment proceedings. We find that in the order dated 06/04/2022, in the case of the assessee itself for earlier years, similar findings of learned CIT(A) were upheld and the appeals filed by the Revenue were dismissed. For the sake of completeness, the detailed findings of the Tribunal contained in para 9 and 10 are reproduced below:
9. Now coming to assessment year 2013-14, 2014-15 and 2016- 17, we find that out of these three years, two years i.e. 2013-14 and 2014-15
were reopened u/s 148 of the Act on the basis of survey carried out on assessee. In these two years, there is no issue of commission on sales and the only issue involved in these two years, the addition made by the Assessing Officer on the basis of same statement, which has been recorded u/s 133A of the Act. During assessment year 2013-14, the addition has been made to the extent of Rs.4,70,50,000/- by treating the unsecured loan from M/s Wise Financial Advisor Services Pvt. Ltd. as bogus and in assessment year 2014-15, the amount involved is Rs.4,56,00,000/- which is from M/s Silver Agencies Pvt. Ltd. During these years also, the assessee had filed the necessary evidences in support of the genuineness of the receipt of unsecured loans. During assessment year
2013-14, the Assessing Officer, vide notice dated 19/02/2018, placed at pages 46 to 47 of the paper book, required the assessee to explain as to why the amount of unsecured loan, received from M/s Wise Financial
Advisor Services Pvt. Ltd. along with 5% expenses incurred for arranging such entry may not be added back to the income of the assessee. The assessee replied to this notice vide letter dated 21/02/2018, a copy of which is placed at page 51 of paper book and submitted that assessee had taken unsecured loan and copy of confirmation of account, ITR, bank statement and audited balance sheet were attached. Such documents in the form of confirmation of account, ITR of the lender along with the audited financial account and copy of bank statement are placed at pages
52 to 76 of the paper book. The copy of assessment order of the unsecured loan 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:
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“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 of survey proceedings in his statement recorded u/s 133A of the I. T. Act, 1961 on 22.09.2017 and subsequently again u/s 131 of the I T Act, 1961 on 26.09.2017, assessee offered amount of Rs. 36,73,00,000/- for tax on account of bogus unsecured loans received by him from three Kolkata based companies namely M/s Cooper
Commercial Pvt. Ltd., M/s Silver Agencies Pvt. Ltd. and M/s Wise Financial
Advisor Services Pvt. Ltd. through entry accommodation i.e. cash was paid and cheques were received in lieu of commission paid through his CA Mr.
Manish Agarwal, The details of bogus unsecured loans received by assessee is given as under-
……………………….
……………………………
In assessment year under consideration an amount of Rs.4,70,50,000/- arranged through M/s Wise Financial Advisor Services Pvt. Ltd. on a commission of Rs. 23,52,500/- was received as unsecured loan by appellant. 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 realised his mistake and accordingly retracted from his statement by filing an affidavit dated 28.09.2017 before the AO as well as before the higher authorities.
This fact of appellant retracting from the surrender by filing affidavits is disputed now by the AO before the Hon'ble ITAT Lucknow Bench in the appellate proceedings for the AY 2015-16. It has also been submitted that Shri Manish Agarwal CA has also denied the averment of the statement recorded during the survey of the assessee vide his own statement recorded by the AO on 11.12.2017. It is seen from the records that during the course of assessment proceeding, 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 said premise No ITA. No.139/LKW/2022
Page 32 of 158

mailbox naming the said concern was found on respective addresses.
Inspector submitted that on local enquiry it was revealed that there is no existence of the said concern in the said premise.
It is also a fact that the AO had issued a notice earlier u/s 133(6) during the assessment proceedings for AY 2015-16 on the old address of M/s.
Silver Agencies Pvt. Ltd. and the said queries were satisfied by the loan creditor by filing its copy of ITR, Bank Statement and confirmation of the transactions before AO. Lastly, AO did not confront the findings of the inquiry report of the DDIT(Inv) unit Kolkata to the appellant and passed the order in undue haste.
I have considered the facts and circumstances of the case. In the assessment order, it is seen that the AO, while making these two additions, has relied solely upon the report submitted by DDIT(Inv)
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 Wise Financial Advisor Services Pvt.
Ltd. are bogus and arranged by Shri Manish Agarwal CA for a commission charged. It is also a fact, as evident from the assessment order that the appellant did file copies of return of income of M/s Wise
Financial Advisor Services Pvt. Ltd. along with their bank account statements and confirmation of accounts in response to the queries raised by AO. However, AO held in the assessment order that since appellant has not retracted from his statement recorded on oath during survey proceedings and post survey proceedings, the confirmation of unsecured loans and other documents submitted by assessee has no force and same cannot be relied upon for allowing the benefit to appellant of shifting the initial statutory onus that is cast u/s 68 of IT Act on the appellant.
Hence it is argued by the appellant that during the period under consideration when the enquiries were being conducted, the lender had shifted its place of business to its new address that was updated on the website of MCA on 30.04.2018 and the enquiries were conducted at the old address in April 2018 only when the business premises of the lender had already shifted. On the basis of this report submitted by Kolkata
Investigation Wing, it was held by AO that M/s Wise Financial Advisor
Services Pvt. Ltd. is a shell/paper company 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 the initial statutory requirement for shifting the initial onus that lies upon an assessee, like confirmations along with ITR, PAN, Bank
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Statement and Balance Sheet of the loan creditors. By filing these evidence it is apparent that the appellant proved identity, genuineness and creditworthiness of the loan creditor. The AO without taking cognizance of the details filed during the current assessment proceedings, and also the evidence that is available on record for AY 2015-16, simply relied on the report of the DDIT (Inv.) and on the Inspector report - both of which were are vague and were not confronted to the appellant - for holding that the loan creditors are not existing and are not genuine.
It is not clear from the report of DDIT(Inv) as to why the summons issued could not be served. As per the report received from the DDIT (Inv.), Unit-2,
Kolkata the notice sent by post were returned back un-served. No reasons for nonservice like - 'Left without address'; 'no such person/left' or 'Left without address' has been communicated to the AO. Comment from Postal department -'No Such Person' - raises many doubts about the genuineness or whereabouts of the person to whom the letter has been sent but comment of 'Left without address' shows that the postal department official found that the person to whom the letter was addressed to, was present on this place but has left without further intimation to the post office about its new address. Therefore a specific response from postal department is essential to understand the evidence being gathered and lack of the specific reason for non-service vitiates the process and lack of valid service does not prove that the Lender is a bogus entity or its identity is not established.
The procedure for service by post is given in section 27 of the General
Clauses Act, 1897 which is mentioned as under:

"Meaning of service by post": Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expressions give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the 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
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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 is 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 nonservice by postal authorities is not known hence it is held that in such circumstances it cannot be said that there was a valid service of notice by DDIT (Inv), Kolkata on the address of the loan creditor. Hence this fact cannot be used to decide the question of the identity of the Loan creditor as held by the AO in his order.
Now coming to the Inspector's report that has been relied upon by the AO for making this addition. It is said in the assessment order that "Inspector was also deputed to make enquiry for their existence but no company was found at their respective addresses". AO issued commission to Kolkata
Wing giving old addresses and the new addresses i.e. 38/H/l Canal East
Road, P.S. Narkeldanga, Kolkata- 700011, were ignored by AO while framing the assessment order.
Address of M/s Wise Financial Advisory Services Pvt. Ltd. on which commission u/s 131(1)(d) was issued by AO was 79B, Dilkusha Street,
Kolkata- 700017 and the enquiry was conducted by Inspector of DDIT,
Kolkata at MCA data address was 7A Bentick Street, Kolkata-700001
whereas the address of the party at the time of summon/enquiry stood changed to 38/H/1 Canal East Road, P.S. Narkeldanga, Kolkata-
700011. Address of M/s Grandura Agencies Pvt. Ltd. (earlier known as Silver
Agencies Pvt. Ltd.) on which commission u/s 131(l)(d) was issued by AO was 2nd Floor, 53-B, Illiat Road, Kolkata- 700016 and the enquiry was conducted by Inspector of DDIT, Kolkata at MCA data address was 7A
Bentick Street, Kolkata- 700001 whereas the address of the party at the time of summon/enquiry stood changed to 38/H/1 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 assessee in his residential or business premises within a reasonable time and second, when there is nobody else authorized to receive the notice. In the above circumstances, the Income Tax Inspector can affect the service by affixture on his own initiative without waiting for an order from the AO. The copy of the notice should be affixed on the outer door or on a conspicuous part of the ITA. No.139/LKW/2022
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business or residential premises & a panchnama should be drawn in the presence of two witnesses & there identity proof should be taken.
A report is to be drawn up by the Income Tax Inspector, on the facts and circumstances of the service by affixture, specifying the date and time of service and the name of the identifier and independent witnesses, if any.
It should conclude with an affidavit of the Income Tax Inspector solemnly affirming the facts and particulars of service as reported. The report is to be filed as an endorsement to the original notice after being docketed in the order sheet. The report 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.
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's, nor any affidavit is filed by him that he personally knew the place of business of the lender's. In this background, this report filed by the Inspector cannot be relied upon as the valid material for coming to a conclusion that loan creditors are non-existent and for making this addition.
In CIT vs. Ramendra Nath Chosh, 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 place of business of the assessee's, nor did he mentioned in his report or in the affidavit filed by him that he personally knew the place of business of the assessee's. In this background, it was held by the 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 sustainable in the eye of law is a well settled legal proposition requiring no citations. To act on evidence fairly, reasonably and without prejudice is inherent in action of an AO where he has to make an order or direct some action to be taken against any person. For example, section 143(3) of the Income-tax Act, 1961
specifically provides that the officer has to make an order after hearing such evidence as the assessee may produce and such other evidence as the officer may require on specified points, after taking into account all relevant materials which he has gathered. The officer can collect the ITA. No.139/LKW/2022
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material behind the back of the assessee, but before he makes use of it, he has to make it available to the assessee with an opportunity to him to show cause as to why he should not proceed to pass an order on the basis of such material? He is bound to confront the assessee with the material. It is only when materials gathered by the AO or by an authorized official are brought on record that they become evidence in the case, and the rules of natural justice can only apply to these materials which the AO 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 AO 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.
AO has made the addition solely for the reason that assessee has admitted in his statement given during and after the course of survey that these loan transactions are 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 before the AO as well as the higher authorities by filing the notarised affidavit. Though, this fact is disputed now by the AO and is subjudice before Lucknow Bench
ITAT in the appeal proceedings for AY 2015-16. As evident from record of AY 2015-16, Shri Manish Agarwal Chartered Accountant has also denied these facts pertaining to arrangement 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 the case under question the department has not been able to find out any direct or indirect evidence that lead to assumption that loans taken by appellant are bogus. There is no evidence brought on record by AO during or after the survey to prove that M/s Wise
Financial Advisor Services Pvt. Ltd. is a shell company and does not have any genuine business and/or the loan transaction with the appellant is bogus. Appellant has furnished copy of their ITRs, Bank Statement and confirmation of account. Against this evidence placed on record no specific finding has been brought on record by the AO to dispute the veracity of documents submitted in respect to the loan taken of the appellant company. It is clear that addition made by AO is based purely on the basis of statement recorded during the survey proceedings that has lost its evidentiary value in light of the law laid down by Hon'ble Apex Court in the case of S. Khader Khan Son(Supra) and retraction made by appellant and CA Mr. Manish Agarwal.
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CBDT on 13/03/2003 vide Instruction No. 2862/2003/IT(Inv) held that while recording the statement in survey operation, no attempt should be made to obtained confession as to tax the undisclosed income. AO should rely upon the evidence and material gathered in the course of survey operation. The object of Survey proceedings under the Income Tax Act, are to unearth unaccounted income, which has escaped tax liability and not to obtain admission or confession from the Assessee. 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.
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 scale and weighed with the other evidence. To act upon the retracted Confession for taxing an amount, the onus is on the department to prove that the statements made were voluntary and there was no coercion on Assessee. So for the taxation of unexplained loan credit to stick, 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.
Held :-
2009-TIOL-272-HC-DEL-FEMA, ABID MALIK Vs UNION OF INDIA
Retracted confession can be a piece of corroborative evidence and not as the sole evidence on the basis which conviction can be ordered. Once confessional statement is retracted, burden is on the prosecution to prove that the statement was voluntary.
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
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done so, the appellant in the instant case has discharged the onus cast upon it.

In the case of "Prem Castings (P) Ltd. vs. Department Of Income Tax,
Income Tax Appellate Tribunal, Delhi Bench T' - New Delhi on 11
September, 2015 in UA No.3401/Del/2011, held:
"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 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 owner thereof unless the burden of proving that he is not the owner thereof is discharged by the assessee. Whether certain sums of money were claimed by the assessee to have been received from certain persons, it was for the assessee to prove by cogent and proper evidence that these were genuine transactions as these facts were within the exclusive knowledge of the assessee and it should be kept in mind that the assessee cannot discharge this burden of merely proving the identity of the share applicant/shareholder, he has to prove all about the transaction, namely, identity, capacity of the shareholder to invest money and genuineness of the transaction.
"15. What is burden of proof? As pointed out by Sarkar in his book Indian
Evidence Act, the phrase "burden of proof has two distinct and frequently confused meanings. As a matter of law and pleading, the "burden of proof" is in the nature of establishing a case. This burden rests upon the party, whether plaintiff or defendant, who substantially asserts the affirmative of the issue. It is fixed at the beginning of the trial and remains unchanged and, in this respect, reference may be made to section 101 of ITA. No.139/LKW/2022
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the Indian Evidence Act (emphasis given by us). In the second sense, the "burden of proof" relates to the region of production of evidence. In this sense, the "burden of proof" is ambulatory and shifting throughout the trial and the scale of evidence may 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 shifting and ambulatory nature, may be called "onus of proof" while the "burden of proof as it is understood in the first sense may 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. CIT, 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 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 veracity of the same, then the materials of the scrutiny are to be communicated to the assessee, thereafter the onus shifts from the revenue to the assessee.
Then, the assessee has to take appropriate steps for proving his case.
Unless, there are sufficient materials after such communication, produced by the assessee, the Income-tax officer can do no further. It should be kept in mind that the transactions which had occurred are things of which assessee is aware of and it has to come clean before the AO.
"17. Dealing with share capital their Lordship of the Apex court has held that there cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the Revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents.
In the case of private placement the legal regime would not be the same. A delicate 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'
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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.
" 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 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 of proper inquiry by the AO and such inquiry must be reasonable and Just.
According to Section 68 of Income Tax Act 1961, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of the same or the explanation offered by him is not satisfactory in the opinion of A.O., the sum so credited may be charged to income tax as the income of the assessee of that previous year. The basic precondition for the Section 68 is that the assessee should file a valid confirmation. Valid confirmation has no specific format but it must contain name, complete address of the lender and PAN of the lender. The confirmation so filed must indicate complete details of transactions (like mode-cash or cheque, with number date of cheque with bank details). The AO have right to demand the copy of bank account of the lender evidencing such transactions and the same needs to be filed. As far as the creditworthiness or financial strength of the creditor/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that It had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharged the onus 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 AO thereafter is subjective and requires more efforts/inquiry on the part of the AO to give a finding in the order that lender is not genuine or is not credit worthy.
AO has not dealt with any of the submissions of appellant as to why AO does not believe the confirmations and other documents filed from loan
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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 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 assessment under question was being finalized. All these evidences cannot be brushed aside without any further adverse material being placed on record by AO.
Genuineness of Transactions undertaken through banking channel through account payee payment modes may be doubted. But the evidence placed on record before AO by the appellant can be treated as full discharge of onus on the part of appellant with regard to the genuineness and creditworthiness as required u/s 68 of the Act. In view of the fact the AO has failed to establish through evidences that either the loan creditor is non-existent or the loan transaction is an accommodation entry taken in lieu of cash paid. Therefore addition made simply on the basis of admission during the survey and on the basis of the general and vague report received from the DDIT (Inv) Kolkata office, without any supporting material found at the time of survey, cannot be sustained. AO has not brought on record any such evidence to prove that admission was voluntary. If AO has any evidence against in the name of M/s Wise
Financial Advisor Services Pvt. Ltd., then those evidence must be passed to ire concerned AO 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. In view of the above both the additions made are deleted.”
10. Learned CIT(A), in his detailed order, has clearly held that the assessee had fulfilled his part of onus and had filed all the necessary evidences in support of his claim. We also find that necessary evidences are there in respective paper books as detailed below:
Assessment year:2013-14

Page No.
1. Copy of ITR of lender

53
(Wise Financial Advisory Services (P) Ltd.
2.Copy of bank account of lender

65 to 67
3.Copy of bank account of assessee

70 to 76
4.Copy of master data of lender

78
5.Copy of assessment order for assessment year

79 to 81
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2014-15 of lender
Confirmed Copy of Account by lender

52
Copy of audited balance sheet,

54 to 64
profit & loss account with Annexures

Assessment year: 2014-15
1. Copy of ITR of lender

45
M/s Silver Agencies (P) Ltd.
2. Confirmed copy of account of lender

44
3. Copy of audited accounts

46 to 56
4. Copy of bank account of lender

57-61
5. Copy of master data of lender

63
6. Copy of assessment order of lender

64 & 65
for assessment year 2011-12

Assessment year:2016-17
1. Copy of ITR of lender

44
(Cooper Commercial (P) Ltd.)
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 the commission at Kolkata had also issued the notices u/s 131 at the old addresses. The learned CIT(A), in this respect, has also held that the notices were not served in accordance with Rule 17 of Order V of the CPC.
He further held that if the Assessing Officer had received adverse report from the commission, he should have given one opportunity to the assessee to rebut the same which he had failed to do. He further held that one of the creditor M/s Silverline Technologies had complied with notice u/s 133(6) for assessment year 2015-16 and Assessing Officer before holding the lender to be non existent in respect of other years should have considered this aspect also. Therefore, in view of these facts and ITA. No.139/LKW/2022
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circumstances the learned CIT(A) has rightly held that report of the Inspector was vague and not in accordance with law.
10.2 The learned CIT(A), on the other hand, has clearly held that assessee had discharged his onus and had filed all the necessary evidences. He has further held that such evidences were also filed before Assessing
Officer during original assessment proceedings. In these years also the Revenue has not raised any ground on merits of the additions and nor
Assessing Officer found anything wrong in the evidences. The Revenue has again raised the grounds that affidavit was an additional evidence which we have already held to be not as an additional evidence and we have already held that learned CIT(A) has not relied on this affidavit while allowing relief to the assessee on merits. Therefore, in view of the above facts and circumstances, we do not find any infirmity in the order of learned CIT(A). Accordingly, appeal in I.T.A. No.701 & 702 are dismissed and ground nos. 2 to 5 in I.T.A. No.703 are dismissed.”
6. In the year under consideration also the assessee has filed complete documentary evidences before the Assessing Officer which we have noted in earlier part of the order but for the sake of completeness we again refer to the paper book pages where such evidences are placed and where no adverse comments have been made either by Assessing Officer nor the Revenue has challenged such documentary evidences in the grounds of appeal:
1. Copy of confirmed copy of loan account

148
2. Copy of ITR of the lender

149
3. Copy of bank account of the lender

158 to 162
4. Copy of financial statements of lender

150 to 157
5. Copy of assessment order of lender

165 to 167
for assessment year 2017-18

Pg No.
1. Confirmed copy of account of lender

159
2. Copy of ITR of Lender

160
3. Audited Financial Statement

161-168
4. Copy of Bank Account of lender

169-172
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173-174
by the department (Identity)

175-177

for the AY 2017-18
7. Copy of Assessment Order of the Lender

178-180

for the AY 2011-12
26. The appellant further humbly submit before your honour that during the course of assessment proceeding the appellant filed reply before the ld.AO complying with requirement of section 68 of the Act by filing details of the lender in the form of Confirmation, ITR, Audited
Financial
Statement and Bank
Statement alongwith other documentary evidence as above discharging the onus to prove casted upon the appellant. The ld.AO in the assessment order has only relied upon the admission made by the appellant during survey and the report of ITI as already relied in the preceding assessment order for the AY 2013-14 to AY 2016-17 which have already been considered by the Hon’ble Tribunal.
27. Even though the burden of proof casted upon the appellant was discharged by the appellant and requisition u/s 133(6) of the Act was also confirmed by the lender in the one of the case which was also neither confronted to the appellant nor taken part of the assessment order before making addition in one of the lender in earlier year, similarly the statement of Manish Agarwal recorded by the ld.AO was also neither confronted to the appellant nor taken part of assessment order before making any addition. The requisition by ld.AO us/ 133(6) in one of the lender being confirmed by the lender and also the averment of the department being denied by Manish Agarwal, the addition made by the ld.AO on the basis of surrender made during survey u/s 133A of the Income Tax Act, 1961 is erroneous and has no evidentiary value as held by Apex Court in the case of CIT v. S. Khader Khan Son (2013)
352 ITR 480 (SC). The appellant humbly submits that the while making assessment the ld.AO has failed to confront the requisition u/s 133(6) of the IT Act, 1961 and statement recorded of Manish Agarwal to the appellant and despite of compliance to section 68 requirement and confirmation to requisition u/s 133(6) along with denial of any averment of the department by Manish Agarwal, the ld.AO made addition of unsecured loan on the basis of statement recorded u/s 133A of the Act having no evidentiary value as settled by the Apex Court in the case of CIT v. S. Khader Khan Son (2013) 352 ITR 480 (SC) and CBDT
Instruction No. 2862/2003(Inv) wherein it has been stated/instructed that while recording statement in survey operation, no attempt should be made to obtained confession as to tax the undisclosed income and AO should rely upon the evidence and material gathered in the course of survey operation.
28. The appellant further humbly submits before your honour that as to why the affidavit is not available in the record is not known to the appellant and is subject matter of the office of the then AO, DCIT-1,
Kanpur whereas as to the allegation of the ld.AO who has completed assessment being JCIT, Special Range consequent to order u/s 127
dated 24.10.2017 that the affidavit is not available in the record is again not known to the appellant as appellant has no control over the office
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and record of the office of the then DCIT-1, Kanpur and JCIT Special
Range, Kanpur and the appellant within his capacity to establish and explain the same has filed confirmation from the oath commissioner before the ld.CIT(A) that the alleged document i.e.
Affidavit was executed in his presence and very well existed, the appellant cannot establish or prove beyond this fact.
29. The appellant humbly places reliance upon the decision of Hon’ble
Mumbai Tribunal in the case of Jain Trading Co. v. Income Tax
Officer, ITA 5935/Mum/2002 dated 30.10.2006 where the the Hon’ble Tribunal held that an assessee who makes an offer of additional income during course of survey before the income-tax authorities is not bound by his offer of additional income for all time to come, and can retract from his offer by furnishing complete details of his trading activity and his income in course of assessment proceedings and discharge his burden and in such circumstances additional income cannot be added to income of assessee.
30. The relevant finding of the Hon’ble Tribunal is as under:
An assessee who makes an offer of additional income during course of an enquiry by income-tax authorities is not bound by his offer of additional income for all time to come. But at the same time, the burden cast upon an assessee, who chooses to retract his earlier statement, is very heavy. In the instant case, during the course of assessment proceedings, the assessee had completely explained entire business transactions leading up to the date of survey and had given the details of its trading activity.
Thus, the assessee had demonstrated that the rate of gross profit varied from item to item and transaction to transaction and by no means any particular rate of gross profit could be correctly applied so as to work out the value of closing stock at any given date. Further, in the account statements, the assessee had collated each item of purchase with corresponding item of sale. Once every purchase was collated with the sale thereof in terms of quantum as well as value, no further burden remained to be discharged by the assessee, unless any discrepancy or falsity was pointed out in such collation. The Assessing Officer had not raised even a finger of doubt at the account statement furnished by the assessee during the course of assessment proceedings. That being so, the only course open to the Assessing Officer was to accept the disclosed trading results. Therefore, the assessee had been able to discharge the heavy burden that rested upon him while retracting from offer of additional income at the time of survey. Even at that stage, the case of the assessee was that the offer was made to buy peace and not because of any concealment of income or discrepancy in accounts detected by survey party. [Para 8]
Therefore, the addition in question made to the income of the assessee was not justified and was to be deleted. [Para 9]

can be made by the Assessing Officer merely on the basis of the admission in the statement recorded in survey proceeding.
Relevant finding is reproduced as under:
“Therefore, in the facts and circumstances of the case, the addition of Rs.14,00,000/- could not be made against the assessee on the basis of mere admission. The authorities below were, therefore, not justified in making and confirming the addition of Rs.14 lacs. Orders of the authorities below are accordingly set aside and addition of Rs.14,00,000/- is deleted.
The appeal of the assessee is accordingly allowed.”
33. It is further humbly submitted that It was held in the case of Paul
Mathews & Sons v. CIT reported in 263 ITR 101 (Ker) apex court judgment reported in 91 ITR 18 (SC) and CIT v. S. Khader Khan Son reported in 300 ITR 157 (Mad) that no addition is called for also in view of CBDT Instruction. Section 133A of the Act empower any authority to examine any person on oath, and such statement has an evidentiary value and any admission made during the search such statement cannot be itself be made the basis for addition, unless, the A.O have corroborative material in the hand to make such addition. If there is unaccounted investment the same should be taxed as undisclosed and not on the basis of un substantiated statement recorded either from the assessee or from the third party. It is therefore requested that no addition has been made against surrendered income.
34. That the surrender cannot be forced upon the assessee by the department as the Hon’ble Kerala High Court in Paul Mathew & Sons vs. CIT has held that statement recorded u/s 133A has no evidentiary value. The same view has been registered by the Hon’ble Madras High
Court in the case of CIT vs. Kadar Khan & Sons and upheld by the Supreme Court in the same vary case holding that section 133A does not empower any I.T Authority to examine any person on oath and hence such statement has no evidentiary value and any admission made in such statement cannot, by itself, be made the basis for addition. The department is also not oblivious of the practice by which the revenue authorities obtain undue confession from the assessee during the course of search and survey proceeding. Vide circular dt. 10-03-2003 has been made clear by the CBDT that no attempt should be made to obtain confession as to the undisclosed income and the additions should be made only on the basis of material gathered during the course of search and survey.
Reliance is also placed upon:
35. Hon'ble Madras High Court in the case of CIT Vs. S. Khader Khan
Son reported in 300 ITR 157 upheld by the Apex Court where it has been held that the statement recorded u/s 133A of the Act having no evidentiary value as not recorded under oath.
“From the foregoing discussion, the following principles can be culled out:
(i) An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of account do not correctly disclose the correct state of facts, vide decision of the apex court in Pulkngode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 ;
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(ii) In contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law, vide Paul
Mathews and Sons v. CIT [2003] 263 ITR 101 (Ker.);
(iii) The expression "such other materials or Information as are available with the Assessing Officer" contained in section 158BB of the Income-tax
Act, 1961, would include the materials gathered during the survey operation under section 133A, vide CIT v. G. K. Senniappan [2006] 284 ITR
220 (Mad.) ;
(iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this court in T. C (A) No. 2620 of 2006 (between CIT v. S. Ajit
Kumar [2008] 300 ITR 152 (Mad.);
(v) Finally, the word "may" used in section 133A(3)(iii) of the Act, viz.,
"record the statement of any person which may be useful for, or relevant to, any proceeding under this Act", as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under section 133A are not conclusive piece of evidence by itself.
For all these reasons, particularly, when the Commissioner and the Tribunal followed the circular of the Central Board of Direct Taxes dated
March 10, 2003, extracted above, for arriving at the conclusion that the materials collected and the statement, obtained under section 133A would not automatically bind upon the assesses we do not see any reason to interfere with the order of the Tribunal.”
36. Hon’be Kerala High Court in Paul Mathews & Sons v. CIT[2003] 263
ITR 101 and Madras High Court in CIT v. S. Khader Khan Son[2008]
300 ITR 157 have also taken a similar view.
The relevant portion of the Kerala High Court judgment in the case of Paul Mathews & Sons (supra) is reproduced hereinbelow :—
"The provision also enables the income-tax authority to impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him, provided the authority records his reasons for doing so and also shall not retain the books of account for a period not exceeding 15 days. Section 133A(3)(iii) enables the authority to record the statement of any person which may be useful for, or relevant to, any proceeding under the Act. Section 133A, however, enables the income- tax authority only to record any statement of any person which may be useful, but does not authorize taking any sworn statement. On the other hand, we find that such a power to examine a person on oath is specifically conferred on the authorised officer only under section 132(4) of the Income-tax Act in the course of any search or seizure. Thus, the Income-tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas section 133A does not empower any Income-tax Officer to examine any person on oath. Thus, in contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such ITA. No.139/LKW/2022
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person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law.
Therefore, there is much force in the argument of learned counsel for the appellant that the statement elicited during the survey operation has no evidentiary value and the Income-tax Officer was well aware of this."
37. Hon’ble Delhi High Court in the case of Commissioner of Income-tax v. Dhingra Metal Works [2010] 328 ITR 384 (Delhi) dated 04-10-2010
held that the statement recorded u/s 133A of the Act having no evidentiary value as not recorded under oath and admission is extremely important piece of evidence but cannot said to be conclusive and it is open to the person to show that it is incorrect. Since in the instant case the assessee has been able to explain the discrepancy in stock, the AO could not have made the aforesaid addition solely on the basis of statement made by the assessee during the course of survey.
“From a reading of section 133A, it is apparent that it does not mandate that any statement recorded under section 133A would have an evidentiary value. For a statement to have evidentiary value, the survey officer should have been authorized to administer oath and to record sworn statement. This would also be apparent from section 132(4). [Para
11]
It is apparent that while section 132(4) specifically authorizes an officer to examine a person on oath, section 133A does not permit the same. [Para
12]
Moreover, the word 'may' used in section 133A(iii) clarifies beyond doubt that the material collected and the statement recorded during the survey are not conclusive piece of evidence by themselves. [Para 14]
In any event, it is a settled law that though an admission is extremely important piece of evidence, it cannot be said to be conclusive and it is open to the person, who has made the admission, to show that it is incorrect. [Para 15]
Since in the instant case, the assessee had been able to explain the discrepancy in the stock found during the course of survey by production of relevant record including the excise register of its associate company, the Assessing Officer could not have made the aforesaid addition solely on the basis of the statement made on behalf of the assessee during the course of survey. [Para 16]
In view of the aforesaid, instant appeal being bereft of merit, was to be dismissed. [Para 17]”
38. Hon'ble ITAT Agra Bench in the case of ACIT vs. Maya Trading Co.
ITA No. 31 (AGRA) OF 2012 & C.O. NO. 20 (AGRA) OF 2012 dated
OCTOBER 5, 2012 held that-
It is well settled law that admission are not conclusive proof of the matter.
They may be shown to be untrue or having been made under mistake of fact or law. Circumstances have to be seen under which same are made. It can be withdrawn unless it is estoppel and conclusive. The Supreme Court
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in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973]
91 ITR 18, held that the assessee should be given opportunity to show that admission is incorrect or does not show correct state of facts. The Punjab &
Haryana High Court in the case of Kishan Lal Shiv Chand Rai v. CIT
[1973] 88 ITR 293, held that it is an established principle of law that a party is entitled to show and prove that admission made by him was in fact not correct and true. Considering the facts of the case in the light of the legal proposition above, the Commissioner (Appeals) has committed no error in reducing substantial addition. [Para 4]
39. Hon'ble Allahabad High Court in the case of Abdul Qayuam Vs. CIT reported in 184 ITR 404 has held" An admission or acquiescence cannot be a foundation for an assessment. It is always open to an assessee to demonstrate and satisfy the authority concern that a particular income is not taxable in this hands".
40. Hon'ble Punjab & Haryana High Court in the case of Kishan Lal Shiv
41. The appellant furthermore very humbly submits before your honour that without prejudice to above, even if one considers that the retraction has not been made in the form of affidavit before the then AO being DCIT-1 Kanpur then also it is humbly submitted that the appeal of the appellant has not been solely decided upon by the ld.CIT(A) on retraction in the form of affidavit but also by considering the merit of the case and legal position of surrender in statement made during survey u/s 133A of the Act as held by the Apex Court in the case of CIT v. S. Khader Khan Son (2013) 352 ITR
480 (SC) and CBDT Instruction No. 2862/2003(Inv) wherein it has been stated that while recording statement in survey operation, no attempt should be made to obtained confession as to tax the undisclosed income . AO should rely upon the evidence and material gathered in the course of survey operation. The same is apparent from the ld.CIT(A) order.
42. Moreover, appellant very humbly submits before your honour that the appellant has not only discharged the onus and burden of proof required u/s 68 in the case of unsecured loan, but the same was also confirmed vide requisition made by u/s 133(6) of the IT Act, 1961 in one of the lender in FY 2015-16 and denial of any averment of the department by Manish Agarwal which the ld.AO has neither confronted to the appellant nor considered in the assessment order passed u/s 143(3) of the Act for the AY 2015-16. 43. In view of the above, the appellant humbly submit before your honour that the ld. CIT(A) has correctly allowed the appeal of the appellant on the basis of merit of the case and legal position as settled by judicial precedents and not only on the basis of retraction by affidavit which has been disputed by the ld.AO even though the same has been considered by the judicial authorities in above cases relied upon that the assessee is not bound by his offer of additional income for all time to come and can retract from his offer by furnishing details during the assessment proceeding.
44. That the appellant very humbly submits before your honour that during the survey and also during the assessment proceeding the department has not found out any incriminating material or any ITA. No.139/LKW/2022
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corroborative evidence to relate such allegation or any other material to dishonest the appellant. It is well settled law that any addition, in order to sustainable in law, must have some concrete material evidence as its basis. Moreover, the statement recorded in consequence to survey and report of ITI (being factually erroneous, vague and unlawful as carried on old address without confrontation to the appellant) cannot be sole basis for addition and are also of no evidentiary value as settled by Apex Court in the case of CIT v. S. Khader Khan Son (2013) 352 ITR 480 (SC),
CBDT Instruction No. 2862/2003(Inv) and CIT vs. Ramendra Nath
Ghosh, 82 ITR 888 (SC) respectively. It is very humbly submitted before your honour that the appellant during the course of assessment proceeding discharged the onus casted upon the appellant by furnishing requirement to section 68 but the ld.AO has still made addition for the reason that the assessee has made admission in his statement recorded during the course of survey proceeding as bogus and arranged through
Chartered Account Manish Agarwal in lieu of cash provided to him and on the basis of enquiry vide report dated 17.04.2018 from the DDIT
(Inv), Unit-2, Kolkata without confronting the same to the appellant leading to violation the principle of natural justice and also on the old address.
ADDITION BASED ON DDIT(INV),KOLKATA REPORT ON THE BASIS
OF ITI REPORT IS VAGUE, INVALID AND UNLWAFUL AS NOT CONFORNTED TO THE ASSESSEE, NOT IN ACCORDANCE WITH LAW
AND CONDUCTED ON THE OLD ADDRESS:
45. Firstly, It is humbly submitted before your honour that any enquiry to be conducted or already conducted by the Income Tax Inspector to be valid and lawful, it is mandatory that the same is carried or obtained in accordance with law otherwise it will have no evidentiary value. Such procedure in accordance with law are in place to safeguard all assessee from any misuse of these provisions relating to service of a notice or reporting non-existence of a particular person on any given address.
46. In CIT 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 place of business of the assessee's, nor did he mentioned in his report or in the affidavit filed by him that he personally knew the place of business of the assessee's. In this background, it was held by the 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 had come to be conclusion that the service made was not proper in accordance with law.
47. Similarly in the present case the ld.AO who carried enquiry through
Inspector of the DDIT(Inv), Kolkata did not follow the procedure in accordance with law, moreover, the same has been carried on the old address.
48. That the enquiry report of IT Inspector of Kolkata DDIT (Inv) conducted behind the assessee without confronting the same to the appellant during the assessment proceeding on 16.04.2108 alleging the non existence of the lender at the old address has no relevance at all. That the enquiry has been made by the ITI at the old address and without following proper procedure which has been specifically prescribed by the law. The Inspector was supposed to first serve a summon on the last
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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 assessee in his residential or business premises within a reasonable time and second, when there is nobody else authorized to receive the notice. In the above circumstances, the Income Tax Inspector can affect the service by affixture on his own initiative without waiting for an order from the AO. The copy of the notice should be affixed on the outer door or on a conspicuous part of the business or residential premises & a panchnama should be drawn in the presence of two witnesses & there identity proof should be taken.
49. Then a report is to be drawn up by the Income Tax Inspector, on the facts and circumstances of the service by affixture, specifying the date and time of service and the name of the identifier and independent witnesses, if any. It should conclude with an affidavit of the Income Tax Inspector solemnly affirming the facts and particulars of service as reported. The report is to be filed as an endorsement to the original notice after being docketed in the order sheet. The report 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 non-existence of a particular person on any given address.
50. 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's, nor any affidavit is filed by him that he personally knew the place of business of the lender's. In this background, this report filed by the Inspector cannot be relied upon as the valid material for coming to a conclusion that loan creditors are non-existent and for making this addition.
51. Enquiry was made by the inspector at the old corresponding address and that too without following the due process of law as discussed above which has been made just to safeguard all assessee from any misuse of these provisions relating to service of a notice or reporting non-existence of a particular person on any given address.
Whereas the new correspondence address has been in use which can also be seen in the form copy of master data at MCA and notice issued and served by the some other AO u/s 133(6) of the Act to the lender.
ADDITION MADE ON THE BASIS OF MATERIAL/ EVIDENCE
COLLECTED AT THE BACK OF THE ASSESSEE IS INVALID AND UNLAWFUL AS OF NO EVIDENTIARY VALUE AND CANNOT BE USED
AGAINST THE ASSESSEE WHILE MAKING ADDITION AS IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE:
52. 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
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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 for AY 2013-14 & AY 2014-15. 53. Your honour may appreciate that the ld.AO has made addition without confronting the report of the DDIT(Inv.) which was based on the Inspector report and enquiry carried on the old address at the back of the appellant. It is further very humbly and important to submit that the ld.AO in the earlier assessment proceeding for AY 2015-16, the AO had carried requisition vide notice u/s 133(6) of the I.T Act which was confirmed by the lender but not confronted to the appellant and on the same address now stating on the basis of Inspector Report that the it does not exist again without confronting the same to the appellant. The report of the DDIT/Inspector is of no evidentiary value as not confronted and collected at the back of the appellant, not in accordance with law and also conducted at old address.
54. It is settled principle of law that no addition can be made on the basis of information or report gathered behind the back of assessee without confronting the assessee. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of Krishinchand Chellaram vs. CIT,
125 IT, 713 (SC) and that of the Hon'ble Allahabad High court in the case of CIT vs. Raj Pal Singh Ram Avtar, 149 Taxman 32 (Alld).
55. That the appellant humbly submits that the ld.AO has not doubted the occurrence of the transaction but has been solely led to make addition on the basis of admission in the statement and ITI report which is vague, illegal and without process of law as held in Apex Court in the case of CIT vs. Ramendra Nath Ghosh, 82 ITR 888 (SC), moreover carried on the old address at the back of the appellant without confrontation to the appellant.
56. That the surrender cannot be forced upon the assessee, reliance is placed upon the Hon’ble Kerala High Court in Paul Mathew & Sons vs. CIT where the court has held that the statement recorded u/s 133A has no evidentiary value. The same view has been registered by the Hon’ble Madras High Court in the case of CIT vs. Kadar Khan
& Sons and upheld by the Supreme Court in the same very case holding that section 133A does not empower any I.T Authority to examine any person on oath and hence such statement has no evidentiary value and any admission made in such statement cannot, by itself, be made the basis for addition. The department is also not oblivious of the practice by which the revenue authorities obtain undue confession from the assessee during the course of search and survey proceeding. Vide circular dt. 10-03-2003 has been made clear by the CBDT that no attempt should be made to obtain confession as to the undisclosed income and the additions should be made only on the basis of material gathered during the course of search and survey.
57. Furthermore, the ld.AO recorded statement of CA Manish Agarwal auditor of the appellant who was alleged to have provided bogus accommodation entry by taking commission between
5-7%, appearing on page 245-247 of the paperbook volume I where he has denied of any averment of the department of providing any accommodation entry or receiving any commission for the providing the accommodation entry to the appellant.
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that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination.
Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216
of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal.”
62. Also in Addl.
ITO v. Ponkunnam
Traders [1976]
102
ITR
366
(Ker.); International
Forest
Co.
v. CIT [1975]
101
ITR
721
(J&K) ; STO v. Uttareswari Rice Mills [1973] 89 ITR 6 (SC); Motipur
Zamindari Co. (P.) Ltd. v. Agrl ITO [1972] 83 ITR 778 (Pat.); CIT v. East
Coast Commercial Co. Ltd. [1967] 63 ITR 449 (SC); Harmukhrai
Dulichand v. CIT [1928] 3 ITC 198 (Cal.)
63. Thus it is well settled that the Assessing Officer has to confront the assessee with the material collected behind the back of the assessee, if he chooses to use the material against the assessee and that he should provide the assessee an opportunity of cross- examination. Not having done so makes the evidence in question is bad in law.
ON MERIT
64. The following details of the lender company i.e. Cooper Commercial Pvt
Ltd have been filed during the assessment proceeding which are also appearing in the paperbook volume I filed before your honour as under :
Documentary Evidences

Pg No.
1. Confirmed copy of account of lender

159
2. Copy of ITR of Lender

160
3. Audited Financial Statement

161-168
4. Copy of Bank Account of lender

169-172
5. Copy of Notice u/s 131 issued to Lender

173-174
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by the department (Identity)

175-177

for the AY 2017-18
7. Copy of Assessment Order of the Lender

178-180

for the AY 2011-12
65. The appellant humbly submit before your honour that the appellant has discharged his onus before the Assessing Officer as submitted above and the same is also not disputed by the lender or the Assessing Officer of the Lender. The appellant has discharged his obligation u/s 68 i.e.
the three basic ingredient of identity, genuineness and creditworthiness by means of PAN, ITR, Confirmation, Financial
Statement and Bank Statement as submitted above alongwith
Assessment Order of the Lender and Notice u/s 131 to lender by other Assessing Officer . Further, the ld.AO has not been able to establish that the appellants own money has been routed back to the appellant by means of cash deposit. All the transaction have been through banking channels are of nature of unsecured loan paid by the lenders having sufficient fund to advance loans to the appellant.
66. Availability Of Sufficient Fund thorugh which Loan Advance to the Assessee as per Financial Statements of the Lenders:

Name
Cooper Commercial
Pvt Ltd
Particulars
AY 2017-18
Share
Capital
25,75,695
Reserve and Surplus
48,47,03,158
Loan
Advanced
4,51,00,000
Furthermore, the Assessment
Order has been passed by Department itself in the case of lenders, for instance, in Cooper
Commercial Pvt Ltd for AY 2017-18 dated 03.12.2019, for AY 2011-
12 dated 18.03.2014. The department i.e. AO of the lender has passed assessment in lenders case and accepted the Financial
Transaction and Financial Statement of the Lenders.
67. It is humbly submitted that the juri iction of the appellant (Assessing
Officer and Officers) has changed from time to time in completing independent assessment. The ld.AO of the appellant has been originally
DCIT-1, Kanpur who had conducted survey who was later transferred to JCIT, Special Range (Sita Srivastava) who concluded Assessment for AY
2015-16 dated 28.12.2017 and subsequently AY 2013-14 & AY 2014-15
dated 19.04.2018 alongwith AY 2016-17 dated 18.05.2018. Later the officer of office of JCIT Special Range was changed in transfer-posting and the assessment for AY 2017-18 was completed dated 21.05.2019 by the then JCIT Special Range (Ambresh Tiwari) and once again the case was transferred from JCIT Special Range to Central Charge with AO,
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Central Circle due to faceless scheme. Finally, the AY 2018-19 being the last year is which survey issues were involved was completed by JCIT(O ), Centre Circle-2, Kanpur dated 30.09.2021. 68. Thus, It can be seen that the Assessing Officer has been changing from time to time and the survey and assessment involving issue of survey i.e. unsecured loan has been completed by four(4) independent officer of the Income Tax Department and the subject matter of survey and unsecured loan has been common in all the assessment but the department who not brought on record any material/ evidence which could said to be corroborative or establish the allegation beyond doubt other than admission made by the appellant in the survey proceeding and ITI report which was not confronted and also not in accordance with law carried on old address.
69. Moreover, it is also important to humbly submit and place emphasis upon this fact that the ld.AO i.e. JCIT, Special Range and JCIT(O ),
Central Circle- 2 who completed AY 2017-18 & AY 2018-19 respectively subsequent to earlier AO (JCIT Special Range) who was in charge at the time of completing assessment for AY 2015-16 and AY 2013-14, AY
2014-15 & AY 2016-17 had not brought any material on record during the assessment proceeding AY 2017-18 and AY 2018-19 to establish alleged accommodation entry even though they were in complete knowledge that the ITI report had not been confronted and was made on the old address which has been one of the basis if finding of ld.CIT(A) on which the addition on unsecured loan has been deleted apart from merit of the case vide appellate order dated 25.09.2018 for AY 2013-14, AY
2014-15 and 27.09.2018 for AY 2016-17 being decided in favour of the appellant. Meaning, thereby that the department has no material beyond the above reliance which has no evidentiary value as submitted above.
70. Reliance is placed upon the Hon’ble High Court order in CIT vs.
Gangeshwari Metal P.Ltd. in ITA no. 597/2012 judgement dated
21.1.2013, held that there are two types of cases one in which the Assessing Officer carries out the exercise which is required in law and the other in which the Assessing Officer ‘sits back with folded hands’
till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions.
The present case falls in the latter category. There was a clear lack of inquiry on the part of the Assessing Officer once the assessee had furnished all the material which we have already referred to above. In such an eventuality no addition can be made under Section 68 of the Income Tax Act 1961. 71. That the ingredient of section 68 as required under the law has been established as required in cases of unsecured loan stated in the Act and memorandum brought by the legislature alongwith judicial precedent from time to time.
SECTION 68 of the IT Act, 1961 and UNSECURED LOAN:
72. The phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this case the legislative mandate is not in terms of the words ‘shall’ be charged to income-tax as the income of the assessee of that previous year”. The Supreme Court while interpreting similar phraseology used in section 69 has held that in creating the legal fiction
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the phraseology employs the word “may” and not “shall”. Thus the un- satisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the Supreme Court in the case of CIT v. Smt. P. K.
Noorjahan [1999] 237 ITR 570. 73. Section 68 of the Act provides that where any sum is found to be credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing
Officer, satisfactory, the sum so credited may be charged to income-tax as the income of that previous year.
Amendment made by the Finance Act 2012 to section 68
74. Finance Act, 2012 inserted two provisos to section 68, with effect from 1-
4-2013 (assessment year 2013-14). First proviso was introduced to enlarge the onus of a closely held company and provides that if a closely held company receives any share application money or share capital or share premium or the like, it should also establish the source of source
(that is, the resident from whom such money is received). Second proviso provides that the first proviso will not apply if the receipt of sum
(representing share application money or share capital or share premium etc.) is from a VCC or VCF [referred in section 10(23FB)].
75. The purpose for which such amendment was made necessary was explained thus in Memorandum accompanying the Finance Bill 2012—
"Certain judicial pronouncements have created doubts about the onus of proof and the requirements of this section, particularly, in cases where the sum which is credited as share capital, share premium etc. Judicial pronouncements, while recognizing that the pernicious practice of conversion of unaccounted money through masquerade of investment in the share capital of a company needs to be prevented, have advised a balance to be maintained regarding onus of proof to be placed on the company. The Courts have drawn a distinction and emphasized that in case of private placement of shares the legal regime should be different from that which is followed in case of a company seeking share capital from the public at large.
76. In the case of closely held companies, investments are made by known persons. Therefore, a higher onus is required to be placed on such companies besides the general onus to establish identity and creditworthiness of creditor and genuineness of transaction. This additional onus, needs to be placed on such companies to also prove the source of money in the hands of such shareholder or persons making payment towards issue of shares before such sum is accepted as genuine credit. If the company fails to discharge the additional onus, the sum shall be treated as income of the company and added to its income".
77. The judicial pronouncements referred in the Memorandum, inter alia, include
♦ CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 (SC)
The onus cast upon the assessee company was discharged upon disclosure of the names and particulars of the alleged bogus shareholders. It was for the Department to conduct its own enquiry
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thereafter and additions if any may be made in the hands of the shareholders.
♦ CIT v. Steller Investment Ltd. [2001] 115 Taxman 99 (SC)
78. Even if subscribers to the capital are not genuine, the amount received by the company as share capital could not be assessed in the hands of the company itself. Such amounts should be considered for assessment in the hands of persons who are alleged to have really advanced the money.
Amendment now proposed:
79. As the desired result was not achieved by the Revenue it has been stated in the Memorandum explaining the provisions in the Finance Bill, 2022
that "the onus of satisfactorily explaining such credits remains on the person in whose books such sum is credited. If such person fails to offer an explanation or the explanation is not found to be satisfactory then the sum is added to the total income of the person. Certain judicial pronouncements have created doubts about the onus of proof and the requirements of this section, particularly, in cases where the sum which is credited as loan or borrowing. It is noticed that there is a pernicious practice of conversion of unaccounted money by crediting it to the books of assesses through a masquerade of loan or borrowing."
80. Thus clause 17 explained at para.5 the purpose for which the amendment is required—
"5. It is proposed to amend the provisions of section 68 of the Act so as to provide that the nature and source of any sum, whether in form of loan or borrowing, or any other liability credited in the books of an assessee shall be treated as explained only if the source of funds is also explained in the hands of the creditor or entry provider. However, this additional onus of proof of satisfactorily explaining the source in the hands of the creditor, would not apply if the creditor is a well-regulated entity, i.e., it is a Venture Capital Fund, Venture Capital Company registered with SEBI."
81. The amendments proposed are—
In section 68 of the Income-tax Act, with effect from the 1st day of April,
2023—
(i) in the first proviso, for the words "Provided that", the following shall be substituted, namely: --
"Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless—
(a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:
Provided further that";
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(ii) in the second proviso, -—
(a) for the words "Provided further" the words "Provided also" shall be substituted.
(b) for the words "first proviso" the words "first proviso or second proviso"
shall be substituted.
82. The legislature has explicitly provided in it Memorandum to Amendment under Clause 17 being reproduced as under:

Cash credits under section 68 of the Act
Section 68 of the Act provides that where any sum is found to be credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.
2. The onus of satisfactorily explaining such credits remains on the person in whose books such sum is credited. If such person fails to offer an explanation or the explanation is not found to be satisfactory then the sum is added to the total income of the person. Certain judicial pronouncements have created doubts about the onus of proof and the requirements of this section, particularly, in cases where the sum which is credited as loan or borrowing.
3. It is noticed that there is a pernicious practice of conversion of unaccounted money by crediting it to the books ofassesses through a masquerade of loan or borrowing.
4. Vide Finance Act, 2012, it was provided that the nature and source of any sum, in the nature of share application money, share capital, share premium or any such amount by whatever name called, credited in the books of a closely held company shall be treated as explained only if the source of funds is also explained in the hands of the shareholder.
However, in case of loan or borrowing, the judicial decisions have held that only identity and creditworthiness of creditor and genuineness of transactionsfor explaining the credit in the books of accountis sufficient, and the onus does not extend to explaining the source of funds in the hands of the creditor.
5. It is proposed to amend the provisions of section 68 of the Act so as to provide that the nature and source of any sum, whether in form of loan or borrowing, or any other liability credited in the books of an assessee shall be treated as explained only if the source of funds is also explained in the hands of the creditor or entry provider. However, this additional onus of proof of satisfactorily explaining the source in the hands of the creditor, would not apply if the creditor is a well regulated entity, i.e., it is a Venture Capital Fund, Venture Capital Company registered with SEBI.
6. This amendment will take effectfrom 1st April, 2023 andwill accordingly applying relation to the assessment year 2023-24 and subsequent assessment years.
CLAUSE 17
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The ratio of said decision has subsequently been followed by various judicial authorities in catena of judicial pronouncements. The said decision has been followed by Hon'ble Bombay High Court in the case of Gagandeep Infrastructure (P.) Ltd. case (supra) & subsequently in CIT v. Orchid Industries (P.) Ltd. [2017] 88 taxmann.com 502/397 ITR
136 (Bom.). The Hon'ble Delhi High Court followed the said decision in Pr.
CIT v. Adamine Construction (P.) Ltd. [2019] 107 taxmann.com 84 against which revenue's Special Leave petition was dismissed by Hon'ble Supreme
Court which is reported at 107 Taxmann.com 85. Similar is the position of decision of Hon'ble Delhi High Court rendered in Pr. CIT v. Himachal Fibers
Ltd. [2018] 98 taxmann.com 172/259 Taxman 4 against which revenue's
Special Leave Petition was dismissed by Hon'ble Supreme Court which is reported at 98 Taxmann.com 173. Similar is the decision of Hon'ble High
Court of Madhya Pradesh in Pr. CIT v. Chain House International (P.)
Ltd. [2018] 98 taxmann.com 47/[2019] 408 ITR 561 against which revenue's Special Leave Petition has been dismissed by Hon'ble Supreme
Court on 18/02/2019 which is reported at 103 Taxmann.com 435. Similar is the recent decision of Hon'ble Bombay High Court in Pr. CIT v. Ami
Industries (India) (P.) Ltd. [2020] 116 taxmann.com 34/271 Taxman
75/424 ITR 219 (Bom.) which has been rendered after considering the principles laid down by Hon'ble Supreme Court in its recent decision titled as Pr. CIT v. NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.com 48/262
Taxman 74/412 ITR 161. 1.3 Proceeding further, it is trite law that no additions could be made on the basis of mere doubts, conjectures or surmises. Once the primary onus to substantiate the transactions is discharged by the assessee, it would be incumbent upon revenue to dislodge the assessee's claim and substantiate the allegations with corroborative evidences. Until & unless this exercise is undertaken, the additions would not be sustainable in the eyes of law.
Lastly, as a principle of natural justice, the adverse material being used against the assessee must be confronted to the assessee and an opportunity to rebut the same was to be provided to the assessee. The failure to do so would result into violation of assessee's substantive rights to defend his stand in the matter.”

“5. We have carefully considered the rival submissions and perused relevant material on record including documents placed in the paper book.
After going through the documentary evidences as submitted by the assessee before lower authorities to substantiate these transactions, we find that the assessee had furnished following documents with respect to all the investor/lender entities: —
i)
Copy of confirmation of Accounts by lender/investor ii)
Copy of PAN Card of each of the lender/investor iii)
Copy of Bank Statement of lender/investor iv)
Copy of ITR Acknowledgement of each of lender/investor v)
Copy of financial statements of all investor/lender entities
Upon perusal of documents pertaining to M/s Asan Investment & Finance
Services Private Limited, we find that this entity is assessed to Income- tax vide PAN AAGCA6526N and has filed return of income for the year under consideration after paying taxes of Rs. 0.46 Lacs. It has duly
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confirmed the transactions carried out with the assessee. The perusal of its bank statement would show that all the funds have been transferred to the assessee through banking channels and there was no immediate cash deposit before transfer of funds to the assessee. The financial accounts of this entity have duly been audited as per The Companies Act. The transactions carried out with the assessee have duly been reflected in its financial statements. This entity has Reserves & Surplus of Rs. 632.39
Lacs which have been used to make further investments.
Similar are the documents in the case of M/s Khushi Industries Limited.
This entity has also filed confirmation of account and it holds valid PAN which is evident from its return of income. The transactions carried out with the assessee are through banking channels and there is no immediate cash deposit before transfer of funds to the assessee. This entity has paid taxes of Rs. 2.08 Lacs during the year. Its financial statements have duly been audited and this entity has Reserves &
Surplus of more than Rs. 2281.70 Lacs.
Another entity i.e. M/s Kings Mercantile Private Limited has also filed confirmation of account. This entity has paid taxes of Rs. 0.34 Lacs. Its financial statements have duly been audited and it has Reserves &
Surplus of Rs. 710 Lacs besides short-term borrowings. These funds have been used to advance loans and advances.
M/s Rishi Automation Limited has also filed confirmation of accounts and it has paid taxes of Rs. 0.34 Lacs which is evident from its Income-tax
Return for the year under consideration. The perusal of bank statement would reveal that the funds have been transferred to the assessee through banking channel, there being no immediate cash deposit before transfer of funds to the assessee. Its financial statements are likewise audited and it has Reserves of more than Rs. 159.37 Lacs.
M/s Nirvana Clothing Private Limited has also filed confirmation of accounts and it has paid taxes of Rs. 0.55 Lacs which is evident from its Income-tax Return for the year under consideration. The perusal of bank statement would reveal that the funds have been transferred to the assessee through banking channel, there being no immediate cash deposit before transfer of funds to the assessee. Its financial statements are likewise audited and it has sufficient reserves to make further investments.

The last entity i.e. M/s Kurmi Developers Private Limited has also filed confirmation of accounts and it has paid taxes of Rs. 12.42 Lacs which is evident from its Income-tax Return for the year under consideration. The perusal of bank statement would reveal that the funds have been transferred to the assessee through banking channel, there being no immediate cash deposit before transfer of funds to the assessee. Its financial statements are likewise audited and it has sufficient reserves of more than Rs. 579.50 Lacs to make further investments.
Upon perusal of above documents, we find that the primary onus of establishing the identity of the investor entities, proving their respective creditworthiness and to establish the genuineness of the transactions was duly been discharged by the assessee. The assessee was not required to prove the source of source for this year. Therefore, the onus was on revenue to rebut these evidences by bringing on record cogent material to dislodge assessee's evidences.
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However, except for the fact that summons remained un-served, there is nothing in the armory of revenue to unsettle the assessee's claim. The allegations are not supported by any corroborative evidences. Once the initial onus was discharged by the assessee, it was incumbent upon revenue to carry out further investigation to support the allegation that the credits were unexplained. However, nothing of that sort has been shown to have been carried out. So far as the information of DGIT (Inv.) is concerned, we find that these were merely third party statements which were never confronted to the assessee and those statements on standalone basis could not form the basis of making additions in the hands of the assessee.
It is trite law that no additions could be based merely on doubts, conjectures or surmises. Therefore, the additions as made by Ld. AO, in our considered opinion, are not sustainable in the eyes of law. The settled legal position as enumerated by us in the opening paragraphs duly support the said conclusion. Therefore, we delete the impugned additions as sustained by Ld. CIT(A). The grounds, thus raised, stand allowed.”
88. In Gaurav Triyugi Singh v. Income Tax Officer, ITA No. 1759 of 2017
dated 22.01.2020 [2020] 423 ITR 531 (Bombay), the Hon’ble Bombay
High Court held that where assessee had received unsecured loan of certain amount from an individual, since loan amount was received by assessee through cheque and there was no dispute as to identity of creditor and genuineness of transaction and revenue could not prove or bring any material to impeach source of credit, no addition under section 68 could be made on account of this loan amount.
The relevant finding of the Hon’ble Court is as under:
12. At this stage, it would be apposite to advert to section 68 of the Act, relevant portion of which reads as under :
"68. Where any sum is found credited in the books of an assessee maintained from any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income -tax as the income of the assessee of that previous year. …...…...."
12.1 From a reading of section 68, as extracted above, it is seen that if an amount is credited in the books of an assessee maintained from any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax, as the income of the assessee of the relevant previous year.
13. Section 68 of the Act has received considerable attention of the courts.
It has been held that it is necessary for an assessee to prove prima facie the transaction which results in a cash credit in his books of account.
Such proof would include proof of identity of the creditor, capacity of such creditor to advance the money and lastly, genuineness of the transaction.
Thus, in order to establish receipt of credit in cash, as per requirement of section 68, the assessee has to explain or satisfy three conditions, namely
: (i) identity of the creditor; (ii) genuineness of the transaction; and (iii) credit-worthiness of the creditor.
14. In Pr. CIT v. Veedhata Towers (P.) Ltd. [2018] 403 ITR 415 (Bom), this court has held that assessee is only required to explain the source of the credit. There is no requirement under the law to explain the source of the source. In the instant case, there is no dispute as to the identity of the ITA. No.139/LKW/2022
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creditor. There is also no dispute about the genuineness of the transaction.
That apart, the creditor has explained as to how the credit was given to the assessee. Thus assessee had discharged the onus which was on him as per the requirement of section 68 of the Act. What the Assessing
Officer held was that sources of the source were suspect i.e., he suspected the two sources Shri Rajendra Bahadur Singh and Smt.
Sarojini Thakur of the source Smt. Savitri Thakur.
15. In view of discharge of burden by the assessee, burden shifted to the revenue; but revenue could not prove or bring any material to impeach the source of the credit. Though Mr. Walve, learned standing counsel, has pointed out that the creditor had no regular source of income to justify the advancement of the credit to the assessee, we are of the view that the assessee had discharged the onus which was on him to explain the three requirements, as noted above. It was not required for the assessee to explain the sources of the source. In other words, he was not required to explain the sources of the money provided by the creditor Smt. Savitri Thakur i.e. Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur.
16. Considering the above, we are of the view that the Tribunal was not justified in sustaining the addition of Rs. 14 lakhs to the total income of the assessee as undisclosed cash credit under section 68 of the Act.
17. Consequently, finding of the Tribunal to the above extent is set aside.
The question framed is answered in favour of the assessee and against the Revenue.
There are further following various authorities on which reliance has been placed:
89. The Hon’ble ITAT Kolkata in ITO Vs M/s Megasun Merchants Pvt.
Ltd. (ITAT Kolkata) ITA No. 1038/Kol/2015 dated 29/03/2019 held that since assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants by filing sufficient evidences and accordingly, the onus shifted to AO to disprove the materials placed before him and as AO failed to do so, addition of share application money based on conjectures and surmises was to be deleted.
90. The Hon’ble High Court order in CIT vs. Gangeshwari Metal P.Ltd. in ITA no. 597/2012 judgement dated 21.1.2013, held that there are two types of cases one in which the Assessing Officer carries out the exercise which is required in law and the other in which the Assessing Officer ‘sits back with folded hands’ till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The present case falls in the latter category.
There was a clear lack of inquiry on the part of the Assessing Officer once the assessee had furnished all the material which we have already referred to above. In such an eventuality no addition can be made under Section 68 of the Income Tax Act 1961. 91. The Hon’ble Apex Court in the case of Orissa Corpn. (P) Ltd. (supra)
159 ITR 78 has held that assessee discharged the burden which cast upon it once he has provided the, names and addresses of the alleged creditors. It was in the knowledge of the Revenue that they were Income
Tax assessees. Their index numbers were in the file of the Department.
The AO cannot make addition once the onus of the assessee has been discharged.
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statute itself or by some other law connected therewith or relevant thereto.
Keeping in view these fundamentals of interpretation of statutes, when we read carefully the provisions of section 68, we notice nothing in section 68
to show that the scope of the inquiry under section 68 by the Revenue
Department shall remain confined to the transactions, which have taken place between the assessee and the creditor nor does the wording of section 68
indicate that section 68
does not authorize the Revenue Department to make inquiry into the source(s) of the credit and/or sub-creditor. The language employed by section 68 cannot be read to impose such limitations on the powers of the Assessing Officer. The logical conclusion, therefore, has to be, and we hold that an inquiry under section 68 need not necessarily be kept confined by the Assessing Officer within the transactions, which took place between the assessee and his creditor, but that the same may be extended to the transactions, which have taken place between the creditor and his sub-creditor. Thus, while the Assessing Officer is under section 68, free to look into the source(s) of the creditor and/or of the sub-creditor, the burden on the assessee under section 68 is definitely limited. This limit has been imposed by section 106
of the Evidence Act which reads as follows:
“Burden of proving fact especially within knowledge.-When any fact is especially within the knowledge of any person, the burden) of proving that fact is upon him. “
********
What, thus, transpires from the above discussion is that white section 106 of the Evidence Act limits the onus of the assessee to the extent of his proving the source from which he has received the cash credit, section 68 gives ample freedom to the Assessing Officer to make inquiry not only into the source(s)of the creditor but also of his (creditor’s) sub-creditors and prove, as a result, of such inquiry, that the money received by the assessee, in the form of loan from the creditor, though routed through the sub-creditors, actually belongs to, or was of, the assessee himself. In other words, while section 68 gives the liberty to the Assessing Officer to enquire into the source/source from where the creditor has received the money, section 106 makes the assessee liable to disclose only the source(s) from where he has himself received the credit and IT is not the burden of the assessee to prove the creditworthiness of the source(s) of the sub-creditors. If section 106 and section 68 are to stand together, which they must, then, the interpretation of section 68 are to stand together, which they must, then the interpretation of section 68 has to be in such a way that it does not make section 106 redundant. Hence, the harmonious construction of section 106 of the Evidence Act and section 68 of the Income- tax Act will be that though apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. What follows, as a corollary, is that it is not the burden of the assessee to prove the genuineness of the transactions between his creditor and sub-creditors nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been. eventually, received by the assessee. It, therefore, further logically follows that the creditor’s creditworthiness has to be Judged vis-a-vis the ITA. No.139/LKW/2022
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transactions, which have taken place between the assessee and the creditor, and it is not the business of the assessee to find out the source of money of his creditor or of the genuineness of the transactions, which took between the creditor and sub-creditor and/or creditworthiness of the sub- creditors, for, these aspects may not be within the special knowledge of the assessee. “
**********
” … If a creditor has, by any undisclosed source, a particular amount of money in the bank, there is no limitation under the law on the part of the assessee to obtain such amount of money or part thereof from the creditor, by way of cheque in the form of loan and in such a case, if the creditor fails to satisfy as to how he had actually received the said amount and happened to keep the same in the bank, the said amount cannot be treated as income of the assessee from undisclosed source. In other words, the genuineness as well as the creditworthiness of a creditor have to be adjudged vis-a-vis the transactions, which he has with the assessee.
The reason why we have formed the opinion that it is not the business of the assessee to find out the actual source or sources from where the creditor has accumulated the amount, which he advances, as loan, to the assessee is that so far as an assessee is concerned, he has to prove the genuineness of the transaction and the creditworthiness of the creditor vis- a-vis the transactions which had taken place between the assessee and the creditor and not between the creditor and the sub-creditors, for, it is not even required under the law for the assessee to try to find out as to what sources from where the creditor had received the amount, his special knowledge under section 106 of the Evidence Act may very well remain confined only to the transactions, which he had’ with the creditor and he may not know what transaction(s) had taken place between his creditor and the sub-creditor… “
**********
“In other words, though under section 68 an Assessing Officer is free to show, with the help of the inquiry conducted by him into the transactions, which have taken place between the creditor and the sub- creditor, that the transaction between the two were not genuine and that the sub-creditor had no creditworthiness, it will not necessarily mean that the loan advanced by the sub-creditor to the creditor was income of the assessee from undisclosed source unless there is evidence, direct or circumstantial, to show that the amount which has been advanced by the sub-creditor to the creditor, had actually been received by the sub-creditor from the assessee ….”
**********
“Keeping in view the above position of law, when we turn to the factual matrix of the present case, we find that so far as the appellant is concerned, he has established the identity of the creditors, namely, Nemichand Nahata and Sons (HUF) and Pawan Kumar
Agarwalla. The appellant had also shown, in accordance with the burden, which rested on him under section 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors aforementioned. In fact the fact that the assessee had received the said amounts by way of cheques was not in dispute. Once the assessee had established that he had received the said amounts from the creditors aforementioned by way of cheques, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans.
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Thereafter the burden had shifted to the Assessing Officer to prove the contrary. On mere failure on the part of the creditors to show that their sub-creditors had creditworthiness to advance the said loan amounts to the assessee, such failure, as a corollary, could not have been and ought not to have been, under the law, treated as the income from the undisclosed sources of the assessee himself, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. Viewed from this angle, we have no hesitation in holding that in the case at hand, the Assessing Officer had failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assessee. In the absence of any such evidence on record, the Assessing Officer could not have treated the said amounts as income derived by the appellant from undisclosed sources. The learned Tribunal seriously fell into error in treating the said amounts as income derived by the appellant from.
undisclosed sources merely on the failure of the sub-creditors to prove their creditworthiness.”
95. Further, in the case of CIT v. S. Kamaljeet Singh [2005] 147 Taxman
18(All.) their lordships, on the issue of discharge of assessee’s onus in relation to a cash credit appearing in his books of account, has observed and held as under:-
“4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The assessee discharged the onus by placing (i) confirmation letters of the cash creditors; (ii) their affidavits; (iii) their full addresses and GIR numbers and permanent account numbers. It has found that the assessee ‘s burden stood discharged and so, no addition to his total income on account of cash credit was called for. In view of this finding, we find that the Tribunal was right in reversing the order of the AA C, setting aside the assessment order.”
96. That the appellant humbly makes further submission that in the depositors accounts, it could also been seen that there is no cash deposit in accounts and the ld.AO has failed to establish that money has flown from the coffer of the appellant. The A.O. has not brought any material on record to prove and establish that the aforesaid sum were originated directly or indirectly from the coffers of the assessee company, the addition is to be deleted. In support of the aforesaid, the appellant seeks to place reliance on the judgment of the High Court of Delhi in the case of CIT vs Value capital Services (P) Ltd.
reported in 307 ITR 334, wherein their lordship’s have held as under:
“Learned counsel for the Revenue submits that the creditworthiness of the applicants can nevertheless be examined by the Assessing Officer. It is quite obvious that is very difficult for the Assessee to show the creditworthiness of strangers. If the Revenue has any doubt with regard to their ability to make the investment, their returns may be reopened by the department. In any case, what is clinching is the additional burden on the Revenue. It must show that even if the applicant does not have the means to make the investment, the investment made by the applicant actually emanated from the coffers of the Assessee so as to enable it to be treated as the undisclosed income of the Assessee. This has not been shown insofar as the present case is concerned and that has been noted by the Tribunal also.”
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summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw an adverse inference against the assessee..”
99. It was thus submitted before your honour that, since the no money has originated from the account of appellant and the appellant has discharged his onus, no addition can be made u/s 68 in the hands of the appellant. It is submitted that, the learned officer has failed to appreciate that, entire monies originated from the bank account of parties who are income tax assessee’s and therefore no adverse inference can be drawn.
100. That it is humbly submitted that the appellant has discharged his onus as submitted above by providing all requisite documents and details to the extent possible which are sufficient evidence to establish the identity, genuineness and creditworthiness of the lender as required under the existing provision of Section 68 and the same has also been confirmed by the lender. Therefore, no question of reliance upon the statement made by the appellant and invalid ITI report without due process of law comes as humbly submitted above.
101. In such case where the AO has failed to bring any new material or evidence to corroborate the allegation apart from presumption, conjecture and surmises formed on the basis of admission in the statement of the appellant and vague ITI report, rather relying upon the finding of the earlier assessment order wherein nothing has proved or established otherwise the addition is requested to be deleted.
NO ADDITION CAN BE MADE ON THE BASIS OF SURMISES,
SUSPICION AND CONJECTURES:
102. It is settled law that no addition can be made on the basis of surmises, suspicion and conjectures. Reliance for this proposition is placed on 37 ITR 271 (SC) Uma Charan Shaw & Bros. Co. v. CIT. It has been further held in the following cases that suspicion howsoever strong cannot take the place of proof:
i) 37 ITR 151(SC) Omar Salay Mohammad Sait v CIT
The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicious, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, its findings, even though on questions of fact, will be liable to be set aside by this Court.
ii) 26 ITR 736 (SC) Dhirajlal Girdharilal v CIT, Bombay
When a Court of fact acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the Court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material iii) 26 ITR 775 (SC) Dhakeshwari Cotton Mills ltd. v CIT
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The estimate of the gross rate of profit on sales, both by the Income-tax
Officer and the Tribunal, seems to be based on surmises, suspicions and conjectures. It is somewhat surprising that the Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills without showing that statement to the assessee and without giving him an opportunity to show that that statement had no relevancy whatsoever to the case of the mill in question. Both the Income-tax Officer and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion.
iv) 37 ITR 288 (SC) Lai Chand Bhagat Ambica Ram v CIT
The Tribunal in arriving at the conclusion it did in the present case indulged in suspicions, conjectures and surmises and acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, or the finding was, in other words, perverse and the Court is entitled to interfere.
103. Therefore there cannot be any addition in law in the hands of assessee and is very humbly requested your honour that the ld.CIT(A) has rightly deleted the addition on the basis of merit and legal position as settled in the judicial precedents.
ADDITION ON ACCOUNT OF COMMISSION PAID ON UNSECURED
LOAN :
104. Without prejudice to the above submission on the issue of alleged addition on account of unsecured loan. The addition on account of commission cannot be charged without establishing the fact by way of evidence that such expenditure in the form of commission has been made by the appellant. Section 69C specifically mention the expenditure which has been incurred but the source of which is satisfactorily explained. The appellant has categorically denied such incurrence, therefore, until unless the AO established the expenditure being made and confront such expenditure being made, no addition can be made on this count, the AO has simply brush aside the facts of the case and arbitrarily made addition without giving any cogent evidence or material to corroborate the allegation. The appellant further humbly request your honour to delete the addition made arbitrary and unlawfully without following the prescribed requirement of section 69C.
105. Further reliance is placed upon the the order of Commissioner(Appeal) which has been considered by him during the appellate proceeding for the AY 2015-16 that Shri Manish Agarwal
Chartered Account who was alleged to have received commission on the transaction has also denied the averment of the appellant statement recorded during the survey which has also been taken in due consideration by the Hon’ble Commissioner(Appeals) in appellants own case and finds reference in the finding of the Hon’ble
Commissioner(Appeals). The copy of statement recorded is appearing at page no. 259-261. Moreover, the estimation made is arbitrary and highly excessive without any cogent material to corroborate the estimation.
106. In view of above submissions when it is beyond doubts that the estimate by ld. AO was not based on any evidence and merely based on surmises, conjuncture and suspicion without any positive evidence or observation what so ever, your honour is humbly requested to kindly provide appropriate relief to the appellant.
ITA. No.139/LKW/2022
Page 73 of 158

----NOTICE---- refer to Assessment Order

In compliance to above notice, assessee furnished the requisite present postal addresses of the creditors, which is scanned

-----Reply----- refer to Assessment Order

On random basis enquiry was conducted in respect of following 6 creditors:-

SI
No Name & Address of the sundry creditors
ITA. No.139/LKW/2022
Page 74 of 158

1
Dhruv Enterprises, 9/79, Arya Nagar, Kanpur
2
Gupta & Associates, B-15, Sarvodya Nagar, Kanpur
3
Hind Exims, 93/27, Nai Sadak, Kanpur
4
MK Leather 92/12, Pech Bagh Kanpur
5
NH Leathers, 97/155A, Talaq Mohal, Kanpur
6
Shahjahan Leathers, 89/2A, Dalel Purwa, Kanpur
The Inspectors of this office were deputed to make spot enquiry. They have submitted their reports in which it has been reported that none of the above six creditors were found at their address. The report of the Inspectors is scanned below:-
------- Report of ITI------ Refer to Assessment Order Page

The assessee has neither furnished any confirmation from the sundry creditors nor the sundry creditors which were randomly picked up for verification were found at the address provided by the assessee himself. In view of the facts a show cause notice was issued on 16.09.2021, relevant part of the notice is reproduced as under :
During the course of survey carried out on 22-09-2017 your statement on oath was recorded. In your statement it was admitted by you that the sundry creditors amounting to Rs.16,14,46,148/- out of total sundry creditors of Rs.24,65,34,827/-are bogus and the same were surrendered. However, in the return of income filed by you for A.Y.2018-19 no such income has been disclosed. During the course of assessment proceedings, you were required to furnish the present postal address of the creditors as per the Annexure-C.
The address of the creditors were provided by you vide letter dated 22-02-
2021. Further, on random basis enquires were made in respect of six sundry creditors and it has been found that the creditors are not available on the addresses provided by you. A copy of Inspectors’ report is scanned below:-
------- Report of ITI------ Refer to Assessment Order Page

Inspectors’ report strengthens that the sundry creditors amounting to Rs.16,14,46,148/- are bogus, which have already been surrendered by you during the course of survey as bogus creditors. You are therefore required to show cause as to why sundry creditors of Rs.16,14,46,148/- be not added to your total income u/s 41(1) of the I.T.Act,1961 being bogus liability.

The assessee vide reply dated 20-09-2021 has stated that the sundry creditors of Rs.16,14,46,148/- proposed to be added in the income of the assessee u/s 41(1) of the Act being bogus liability is not acceptable and the assessee has already filed reply and the same may be treated as reply filed in compliance to show cause notice dated 16-09-2021. The earlier reply dated 25.03.2021 has already been discussed in preceding paragraph.

In view of above facts and circumstances of the case, admission of the assessee during the course of survey, the bogus liability in the form of sundry creditors as mentioned in Annexure-
C amounting to Rs.16,14,46,148/- is being added to the total income of the assessee. Penalty proceedings u/s 270A of the Act are being initiated separately for under reporting of income.”

offered such disclosed income in the return of income filed by him in any of the assessment years. In the assessment proceedings, the AO has made addition on the basis of admission in statement and on the basis of enquiry conducted by ITI on six creditors where it has been commented by the Inspector that no such creditors are residing at the given addresses. Except the above, there was no corroborative evidence on which the AO has placed reliance while making addition on account of all the 46 creditors as per Annexure- C.

static, however in rest of the cases these credit balances are changing. Therefore it can be safely concluded that 31 parties are very much having running accounts. Further the AR submits that in all the preceding years from AY 2011- 12 onwords assessments have been made in all the assessment years and the details of these parties have been provided in the assessment proceedings and in none of the years, additions could be made by treating the purchases as Bogus.

“Therefore, in the facts and circumstances of the case, the addition of Rs.14,00,000/- could not be made against the assessee on the basis of mere admission. The authorities below were, therefore, not justified in making and confirming the addition of Rs.14 lacs. Orders of the authorities below are accordingly set aside and addition of Rs.14,00,000/- is deleted. The appeal of the assessee is accordingly allowed. ”

"It is well se ttled law that adm ission are no t conclusive p ro o f o f the matter. They m ay be shown to be untrue o r having been m ade under m istake o f fact o r law. C ircum stances have to be seen unde r which same are made. It can be w ithdrawn unless it is estoppel and conclusive. The Suprem e Court in the case o f Pullangode R ubber Produce Co. Ltd. v. State o f
Kerala [1973 ] 91 ITR 18, he ld that the assessee should be given opportunity to show that adm ission is incorrect o r does no t show correct state o f facts. The Punjab & Haryana H igh
C ourt in the case o f K ishan La i Shiv C hand R ai v. C IT [1973 ] 88 ITR 293, he ld tha t it is an estab lished princip le o f law that a pa rty is entitled to show and prove that adm ission m ade by him was in fact no t correct and true. Considering the facts o f the case in the ligh t o f the lega l proposition above, the C om m issioner (Appeals) has com m itted no e rro r in reducing substantia l addition. [Para 4 ]”
ITA. No.139/LKW/2022
Page 77 of 158

• Suresh Chand Agarwal v. ACIT, ITA 191/Agra/2013 dated 31/07/2017
• Paul Mathew & Sons vs. CIT, (2003) 263 ITR 101 (Kerala)
• CIT vs. S. Kadar Khan & Sons, (2013) 352 ITR 480 (SC)
• CIT vs. S. Kadar Khan & Sons, (2008) 300 ITR 157 (Madras)
• ACIT vs. Maya Trading Co. ITA No. 31 (AGRA) OF 2012 & C.O. NO. 20 (AGRA)
OF 2012 dated OCTOBER 5, 2012
• Kishan Lai Shiv Chand Rai Vs. CIT reported in 88 ITR 293
• Jain Trading Co. v. Income Tax Officer, ITA 5935/Mum/2002 dated 30.10.2006
• Commissioner of Income-tax v. Dhingra Metal Works [2010] 328 ITR 384 (Delhi) dated 04-10-2010
• Abdul Qayuam Vs. CIT reported in 184 ITR 4
• CBDT Instruction No. 286/2/2003(lnv)

"The assessee has obtained, w hether in cash o r in any o the r m anner whatsoever, any am ount in respect o f such loss o r expenditure o r some benefit in respect o f such liab ility by way o f rem ission o r cessation thereof, the am ount obtained by him ”.

Thus, the section contemplates the obtaining by the assessee of an amount either in cash or in any other manner whatsoever or a benefit by way of remission or cessation and it should be a particular amount obtained by him. Thus, the obtaining by the assessee of a benefit by virtue of remission or cessation is sine qua non for the application of this section.
ITA. No.139/LKW/2022
Page 78 of 158

In the course of the assessment for an earlier year, allowance or deduction has been made in respect of any loss, expenditure, or trading liability incurred by the assessee;
Subsequently, a benefit is obtained in respect of such trading liability by the way of remission or essation thereof during the year in which such event occurred;
The value of benefit accruing to the assessee is deemed to be the profit and gains of business which otherwise would not be his income;
The value of benefit is made chargeable to tax as the income of the year wherein such benefit was obtained.
In the instant case, it is clear that appellant has not received any benefit by way of remission or cessation of liabilities during the relevant year as the creditors are existing in books and neither at the time of survey nor post survey proceedings, any evidence was found that assessee has received any benefit against existing liabilities and therefore it is concluded that the assessee has fulfilled none of the above prescribed conditions and thereby applying the ratio laid down by the Hon’ble Supreme Court, it may be stated that section 41(1) would have no legs to stand.

Remark
Dhruv Enterprises
21,246
For last many years the balance is same, since the party is found
Bogus addition is made u/s 41(1) of IT Act . in this year payment is also shown to be made, which is held Boqus.
Gupta And Associates
34,200
For last many years the balance is same, since the party is found
Bogus addition is made u/s 41(1) of IT Act. In this year payment is also shown to be made, which is ITA. No.139/LKW/2022
Page 79 of 158

From the above ledger account, it is clear that the opening balance of Rs.94,94,423 is bogus, hence the liability of same stands rescinded, therefore benefit regarding to the same is added u/s 41(1) of IT Act. The purchase of this year of Rs. 43,20,261/- (32,78031+6,55830+3,86,400) is disallowed u/s 37 of IT Act. The payment of Rs. 90,24,400/- is held as bogus since the same is made to bogus party, however this has no impact in income. Considering these additions/disallowances together, the total disallowance/addition of Rs. 1,38,14,684/- is made with regard to this Bogus concern.

From the above ledger account, it is clear that the opening balance of Rs.60,96,470/- is bogus, hence the liability of same stands rescinded, therefore benefit regarding to the same is added u/s 41(1) of IT Act. The receipt of Rs.8,00,000/- is added as income u/s.68 of I.T. Act. The payment of Rs.
42,00,000/- is held as Bogus, however this shall have no impact in income.
Considering these together, the total addition of Rs. 68,96,470/- is made with regard to this Bogus concern.

From the above ledger account, it is clear that the opening balance of Rs.80,84,421/- is bogus, hence the liability of same stands rescinded, hence the benefit regarding to the same is added u/s 41(1) of IT Act. The purchase of this year of Rs. 6,30,630/- is disallowed u/s 37 of IT Act.
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Page 81 of 158

The payment of Rs. 36,90,160/- is held as Bogus, however this shall have no impact in the income. Considering these disallowances/additions together, the total disallowance/addition of Rs. 87,15,051/- is made with regard to this Bogus concern.

OUR SUBMISSION: Sundry Creditors:

Then a report is to be drawn up by the Income Tax Inspector, on the facts and circumstances of the service by affixture, specifying the date and time of service and the name of the identifier and independent witnesses, if any. It should conclude with an affidavit of the Income Tax
Inspector solemnly affirming the facts and particulars of service as reported. The report is to be filed as an endorsement to the original notice after being docketed in the order sheet. The report 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 non-existence of a particular person on any given address.

for coming to a conclusion that creditors are non-existent and for making this addition.

From the total 46 creditor the outstanding balance of six creditors_on the date of survey was Rs. 1,17,85,470/- whereas on 31.03.2021 i.e. the financial year which also completed during the instant assessment proceeding the outstanding balance of the list marked as Annexure C was Rs. 705450.5/- and that as on 31.03.2022 before the ld.CIT(A) the outstanding balance was NIL as well as before the Hon’ble Bench.

Page-26 last Para-

The analysis of balances for preceding 3 years of the creditors (as per Annexure-C) itself reflects that in most of the cases balances were static.

Page-29 last Para-

Since assessee himself has surrendered bogus sundry creditors amounting to Rs.16,14,46,148/- as per annexure-C forming part of the statement recorded during survey, there was no requirement of further verification/ enquiry of these bogus creditors. However, assessee wide notice u/s 142(1) of the Act dated 18-02-2021 was required to furnish present postal address of the creditors mentioned in Annexure-C

Page-35 last Para-

On random basis enquiry was conducted in respect of fallowing 6 creditors:-

Name & Address of the Sundry Creditors
Amount
Dhruv Enterprises, 9/79, Arya Nagar, Kanpur
21245.00
Gupta & Associates, B-15, Sarvodya Nagar, Kanpur
34200.00
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Page 84 of 158

Hind Exims, 93/27, Nai Sadak, Kanpur
4790284.00
MK Leather 92/12, Pech Bagh Kanpur
2696474.00
NH Leathers, 97/155A, Talaq Mohal, Kanpur
5024891.00
Shahjahan Leathers, 89/2A, Dalel Purwa, Kanpur
168480.00
Total
12735574.00

The Inspectors of this office were deputed to make spot enquiry. They have submitted their report in which it have been reported that non of the above six creditors were found at their address.
125. That Ld. AO has made addition solely influenced with the statement of appellant recorded during survey in which amount in question was surrendered.
126. On the basis of Inspector report stating No signboard/ Mail Box of the creditors were found at the given address. The enquiry was made in 6
creditors of Rs. 1,27,35,574/- out of total creditors Rs.16,14,46,148/- being added u/s 41(1) of the Income Tax Act.
127. The addition has been made solely on the basis of statement of appellant which has no evidentiary value as submitted in forgoing paragraphs on the basis of CBDT circular as well as judicial decisions of the various courts including apex court. A statement of the searched party recorded u/s 132(4) constitutes evidence in a proceeding. However, such a statement cannot be the sole material based on which an assessment can be framed particularly when the assessee withdraws or alters the statement by producing material in support of retraction. While deciding the issue thus, in the case of M. Narayanan & Bros. v. CIT [2011] 13 taxmann.com 49/201
Taxman 207 (Mag.)(Mad.), reliance was placed on the decision of the Supreme
Court in Pullangode Rubber Produce Co. Ltd. V. State of Kerala [1973] 91 ITR
18 for the proposition that an admission should not be treated as conclusive nor could it form the some basis of assessment. Reference was also made to the Board’s Circular in F.No.286/2/2003-IT(Inv.) dated 10.03.2003 (Appendix
4) wherein the CBDT has given categorical directions to the departmental officers that undue emphasis should not be placed on obtaining confessions in the statements recorded in the course of search or survey and, instead, emphasis should be placed on collection of evidence. In the case of CIT v.
Dilbagh Rai Arora [2019] 104 taxmann.com 371 (Allahabad) it has been held that where the assessee is in a position to explain the true state of affairs with supporting evidence/material to the effect that what he had admitted in the statement u/s 132(4) is difference from the true state of affairs, the correct position should be ascertained from the books and records.
128. Your honour may please very kindly be appreciate that the appellant, during the course of assessment proceeding, has submitted details of sundry creditors and same sundry creditors have been accepted by the AO in the earlier till A.Y 2017-18 without any dispute.
129. It is further submitted that up to the financial year relevant to assessment year 2017-18 the assessee has filed confirmations of such creditors. It is further submitted that most of the cases except few one creditors, their balance reduced/ changed because of extended transactions during the year. Sundry creditors are against purchase of goods/ services, which is stock in trade used in business of assessee, wherein every year profit are being offered subject to payment of income tax.
ITA. No.139/LKW/2022
Page 85 of 158

Explanation 1: For the purposes of this sub-section, the expression "loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof" shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts.
131. Your good self may appreciate that it is necessary that the following conditions are satisfied before s.41(l) can be attracted:
a)
An allowance or deduction should have been made in the assessment of an assessee in respect of any loss, expenditure or a trading liability incurred by him.
b)
Any amount, whether in cash or in any other manner, should have been obtained in respect of such loss or expenditure or any benefit should have been obtained in respect of such trading liability by way of remission or cessation thereof.
132. It is submitted that these are liabilities which are still existing and accounted as payable in the book of the appellant and has not be written off.
That the survey party as well as AO has wrongly interpreted the provisions of section 41 of the Income Tax Act, 1961. Out of sundry creditors as on 31-03-
2018 and 1-4-2017, there was opening balance at the beginning of financial year, which cannot be added in the hands of the assessee in the year under consideration as this amount is brought forward from the previous financial year as opening balance in the sundry creditors.
133. That all the creditors are not old. Most of creditors have transactions.
Even there was opening balance from the previous year which was brought
ITA. No.139/LKW/2022
Page 86 of 158

forward to the present financial year and the amount of sundry creditors is pertaining to expenditure incurred by the assessee towards purchase and expenditure incurred towards business activities at the end of present financial year 2017-18 as well as earlier years. In earlier years, the same had been accepted by the AO without any disturbance and therefore, this amount cannot be disturbed.
134. That your honour may please be very kindly appreciate that the assessee has also retracted transaction of sundry creditors, as surrendered by him during the course of survey proceeding on 22-09-
2017, as in the case of surrender of unsecured loan and this has been considered by the Hon’ble ITAT in preceding orders of appeal for A.Y
2013-14 to 2017-18 and the issue of surrendered and retraction is now set at rest. On merit of the case it is humbly submitted that the assessee is individual carrying on the business of manufacturing and export of finished leather. Regular books of account maintained and they are compulsory audit. In preceding year assessment has been completed u/s 143(3) and also u/s 147 read with section 143(3), after survey for A.Y
2013-14 to 2018-19. Financial affairs of the assessee including purchase and sales has been accepted and no adverse inference were drawn. The transaction of sundry creditors are in the nature of purchase of leather are falling in above assessment years.
135. That during the course of assessment proceeding the assessee was asked to furnish the details of the sundry creditors. Assessee inter alia submitted that the creditors arise out of the genuine business transactions of purchase and these are the normal trade creditors. It was further submitted that since the sales arising out the same purchases are accepted to be genuine, the trade creditors cannot be considered to be non-genuine.
136. That the transactions of capital goods were not debited to Profit &
Loss account. That if a trading liability is shown by the assessee in the books as payable then merely because assessee could not provide the confirmations, the liability cannot be said to have ceased. That the sundry creditors were in respect of normal business transactions and are not in the nature of cash credit or losses and the complete details was provided by the assessee during the course of assessment proceedings. That no notice u/s 133(6) of the Act was issued to the creditors by the AO except enquiry by ITI in six cases on 06-04-2021 and the assessment was completed on 30-09-2021. 137. That the sundry creditors were on account of purchase and were in respect of normal business transactions. That there has been reduction in the sundry creditors in subsequent years (from A.Y 2013-14 to 2020-21) as compared to the earlier years and the sundry creditors reflected in the books of the assessee and are shown as payable.
That the assessee also placed reliance on the decision of the Hon’ble Apex
518, CIT vs. Kesaria Tea Co. Ltd., reported in 254 ITR 434. 138. That the assessee had not written back to income the sundry creditors payable in its books, hence, the liability payable to these sundry creditors had not ceased to exist. That from the ledger account of the sundry creditors produced by the assessee, it could be seen that the sundry creditors are related to the new / old purchases, made in the preceding previous year and the same have been duly discharged by the assessee in the subsequent assessment years.
ITA. No.139/LKW/2022
Page 87 of 158

In fact the assessee had duly furnished the complete ledger accounts of the six sundry creditors with identity proof of existence of such creditor before the A.O. The assessee has filed copy of ledger account of all the parties where in the amount of outstanding has been squared off but for few by making payment through proper banking channel. The bank statements highlighting the payments made to the above parties through account payee cheque as well as indicating the outstanding balance of each 21 parties was also provided by the Assessee before the Assessing Officer. The said documentary evidences submitted by the assessee were totally ignored by the Assessing
Officer in the assessment order. That the Assessing Officer has never rejected books of accounts and has not pointed out any discrepancy in the books of account. The assessee relied upon the following decisions:-
(a) DCIT Vs. Norma India Ltd.2016 TMI 645 ITAT, Delhi
(b) M/s Hind Globe Link Vs. ITO
139. In fact, the Assessing Officer accepted the purchases made from these parties in whose names, balances were outstanding but only doubted the genuineness. When the purchases from the parties were accepted and the sales made out of those purchases were not doubted, the payments outstanding in the name of those parties were accepted in the subsequent year, then there was no reason to doubt the genuineness of the outstanding balance.
140. The order of ld. A.O is against law, facts and equity in respect of creditors as per annexure-C in respect of which details were found at the time of survey. In another words if for the sake of arguments it is accepted that above six sundry creditors are not found existed as on date of enquiry on 06-
04-2021 whereas transaction relates to 31-03-2013 & 31-03-14 (after more than 9 years) how he can draw conclusion with regard to other sundry creditors without any adverse materials in the form of corroborative evidence contrary to evidences filed as mentioned hereinabove whereas payment to them have been clear in succeeding years.
141. That your honour may please appreciate that the cessation of the liability is a matter of assessee’s policies and prudence and they are better judge to take decision on cessation of liability. In fact the onus is on the A.O is establish and shows that the liability to pay the sundry creditors has seized or has been limited by the creditors. In fact without confirming from the creditors, the cessation of liability u/s 41(1) will not be possible. The ld. A.O ought to have appreciated the fact that a statement given at the time of survey u/s 133A cannot be basis for making an addition as held by hon’ble
Madras High Court in the case of CIT vs. Kadar Khan Sons which was affirmed by Supreme Court. The ld. A.O ought to have understood that purchases made from these creditors from A.Y 2013-14 on words has been treated as genuine duly recorded in the audited books of accounts. Other government agencies like GST/VAT have also accepted the genuineness of purchases of sundry creditors. Similarly the ld. A.O ought to have appreciate against this purchase export sale is there which have been accepted year after year. The ld. A.O ought to appreciate that income tax department had accepted books of account and trading results from A.Y 2014-15 to 2017-18
wherein parties appearing as per annexure-C are appearing on account of purchase from them and payment thereof. In the instant case except only very few parties, there are either NIL or variation in party’s balances because of fresh purchase or payment thereof. The ld. A.O has not prove that in earlier years purchase have been inflated and since the inflated purchase were not paid by the assessee it lead to accumulation into large outstanding under the head sundry creditors for leather purchase. The ld. A.O ought to ITA. No.139/LKW/2022
Page 88 of 158

have appreciated there only few sundry creditors wherein there is opening /
closing balances are same. The ld. A.O has ought to prove that there was a corroborative evidence found during the course of survey to prove that either the assessee have paid these creditor outside unaccounted funds or else. The liability was extinguished which attracted provision of section 41(1)
142. That the appellant has admitted during survey u/s 133A that the sundry creditor as per ‘Annexure C’ are bogus for want of verification at the time of survey but has not shown in the return of income filed. The ld.AO has made addition on the basis of admission in statement and on the basis of enquiry conducted by ITI on six creditors where it has been commented by the Inspector that no such creditors are residing at the given address. Except the above there has no corroborative evidence on which the ld.AO has placed reliance while making addition of on account all the creditors as on 22/09/2017 as Annexure C.
143. It is important to mention that the ld.AO while doubting the sundry creditors on account of admission made in the statement during survey as per list marked as Annexure C, the ld.AO during the assessment proceeding has issued questionnaire vide notice u/s 142(1) of the IT Act, 1961 dated 16.02.2021 point no. 16 asking to explain as how and where the surrendered amount has been shown in your return of income; notice us 142(1) dated 18.02.2021 asking to furnish present postal address of the sundry creditors given in the annexure C and show cause notice u/s 142(1) dated 16.09.2021 on random enquiries of six creditors through ITI. The appellant has accordingly responded to the notices issued from time to time in response to such query and has filed details of creditors alongwith addresses and outstanding balance as on the date. On which the ld.AO consequently made enquiry on six creditors through Inspector to examine the genuineness of six creditors, although the addition of the complete list of sundry creditors as appearing in Annexure C admitted during survey has been made by the ld.AO merely on the basis of statement without any basis or corroborative evidence. It is settled principle of law that statement recorded in survey proceeding is not same statement u/s 132(4) and has no evidentiary value, whereas the appellant as noted by the ld.AO has also not accepted the same in his return of income, therefore, the admission cannot be fastened upon the appellant and the appellant can furnish the details and the issue can be examined during the assessment proceeding, which the ld.AO has examined and after verification has conducted enquiry on six creditors. The scope of enquiry on six creditors cannot extend or applied on the rest of creditors.
The Hon’ble Co-ordinate Bench in the case of Suresh Chand Agarwal v. ACIT,
ITA 191/Agra/2013 dated 31/07/2017 held that no addition can be made by the Assessing Officer merely on the basis of the admission in the statement recorded in survey proceeding.
Relevant finding is reproduced as under:
“Therefore, in the facts and circumstances of the case, the addition of Rs.14,00,000/- could not be made against the assessee on the basis of mere admission. The authorities below were, therefore, not justified in making and confirming the addition of Rs.14 lacs. Orders of the authorities below are accordingly set aside and addition of Rs.14,00,000/- is deleted. The appeal of the assessee is accordingly allowed.”
It is further submitted by the appellant that it was held in the case of Paul
Mathews & Sons v. CIT reported in 263 ITR 101 (Ker) apex court judgment
ITA. No.139/LKW/2022
Page 89 of 158

reported in 91 ITR 18 (SC) and CIT v. S. Khader Khan Son reported in 300
ITR 157 (Mad) that no addition is called for also in view of CBDT Instruction.
Section 133A of the Act empower any authority to examine any person on oath, and such statement has an evidentiary value and any admission made during the search such statement cannot be itself be made the basis for addition, unless, the A.O have corroborative material in the hand to make such addition. If there is unaccounted investment the same should be taxed as undisclosed and not on the basis of un substantiated statement recorded either from the assessee or from the third party. It is therefore requested that no addition has been made against surrendered income. That the surrender cannot be forced upon the assessee by the department as the Hon’ble Kerala
High Court in Paul Mathew & Sons vs. CIT has held that statement recorded u/s 133A has no evidentiary value. The same view has been registered by the Hon’ble Madras High Court in the case of CIT vs. Kadar Khan & Sons and upheld by the Supreme Court in the same vary case holding that section 133A does not empower any I.T Authority to examine any person on oath and hence such statement has no evidentiary value and any admission made in such statement cannot, by itself, be made the basis for addition. The department is also not oblivious of the practice by which the revenue authorities obtain undue confession from the assessee during the course of search and survey proceeding. Vide circular dt. 10-03-2003 has been made clear by the CBDT that no attempt should be made to obtain confession as to the undisclosed income and the additions should be made only on the basis of material gathered during the course of search and survey.
Reliance has also been placed upon:
Hon'ble ITAT Agra Bench in the case of ACIT vs. Maya Trading Co. ITA No. 31
(AGRA) OF 2012 & C.O. NO. 20 (AGRA) OF 2012 dated OCTOBER 5, 2012
held that-
It is well settled law that admission are not conclusive proof of the matter. They may be shown to be untrue or having been made under mistake of fact or law.
Circumstances have to be seen under which same are made. It can be withdrawn unless it is estoppel and conclusive. The Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18, held that the assessee should be given opportunity to show that admission is incorrect or does not show correct state of facts. The Punjab & Haryana High
Court in the case of Kishan Lal Shiv Chand Rai v. CIT [1973] 88 ITR 293, held that it is an established principle of law that a party is entitled to show and prove that admission made by him was in fact not correct and true.
Considering the facts of the case in the light of the legal proposition above, the Commissioner (Appeals) has committed no error in reducing substantial addition. [Para 4]
Hon'ble Allahabad High Court in the case of Abdul Qayuam Vs. CIT reported in 184 ITR 404 has held" An admission or acquiescence cannot be a foundation for an assessment. It is always open to an assessee to demonstrate and satisfy the authority concern that a particular income is not taxable in this hands".
Hon'ble Punjab & Haryana High Court in the case of Kishan Lal Shiv Chand
•
Suresh Chand Agarwal v. ACIT, ITA 191/Agra/2013 dated 31/07/2017
•
Paul Mathew & Sons vs. CIT, (2003) 263 ITR 101 (Kerala)
•
CIT vs. S. Kadar Khan & Sons, (2013) 352 ITR 480 (SC)
•
CIT vs. S. Kadar Khan & Sons, (2008) 300 ITR 157 (Madras)
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•
ACIT vs. Maya Trading Co. ITA No. 31 (AGRA) OF 2012 & C.O. NO. 20 (AGRA)
OF 2012 dated OCTOBER 5, 2012
•
•
Jain Trading Co. v. Income Tax Officer, ITA 5935/Mum/2002 dated
30.10.2006
•
Commissioner of Income-tax v. Dhingra Metal Works [2010] 328 ITR 384
(Delhi) dated 04-10-2010
•
•
CBDT Instruction No. 286/2/2003(Inv)
144. Furthermore, no addition can be sustainable in law as well as on fact merely on the basis of admission in the statement during the survey proceeding u/s 133A which has been upheld by the Apex Court in the case of S. Kader Khan & Sons that statement made in survey has no evidentiary value and also by the Hon’ble Tribunal in assessee’s own case. That on merit of the case, observation and finding of the ld.AO, the whole list of sundry creditors cannot be sustained in as discussed above on the basis of facts of the case and provision of law u/s 41(1) of the IT Act, 1961
as there is nothing on record to the support the contention of ld.AO for making addition except general and vague spot inquiry of six creditors not in accordance with law.
145. The appellant further submits before your honour that the sundry creditor are liabilities which are still existing and accounted as payable in the book of the appellant and has not be written off. Even there was opening balance from the previous year which was brought forward to the present financial year and the amount of sundry creditors is pertaining to expenditure incurred by the assessee towards purchase and expenditure incurred towards business activities at the end of present financial year
2017-18 as well as earlier years. In earlier years, the same had been accepted by the AO without any disturbance and therefore, this amount cannot be disturbed. The appellant cases has been assessed to scurtiny wherein all purchases and sales of the sundry creditors accounts, which are also party to annexure –C of notice dt. 18-02-2021 are enclosed has been accepted by the ld.AO. It may further appreciated that these are liabilities which are still existing and accounted as payable in the book of the appellant and has not be written off. The provisions of section 41 are deeming provisions. That appellant has not charged the liability in the profit and loss account rather showing these as liability meaning thereby assessee is owning these liabilities and therefore provisions of section 41(1) could not be applied.
146. That there can be cessation only on the bilateral acts by both the creditors and debtors or by refusal of the debtors to honour his liability when pressed for the dues or by the discharge of the debt by making the payment of dues. In no case a debtors can bring the liability to an end on his own volition. The reliance is also placed on the case law reported in 62 ITR
34(Bom) in the case J.K. Chemicals Ltd Vs CIT.
147. The appellant submits that Ld. AO has made addition invoking provisions of section 41(1). Provision of section 41(1) has been re-produced for ready reference:
(1)Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee
(hereinafter referred to as the first-mentioned person) and subsequently during any previous year,-
(a) The first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some
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benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or (b)The successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to the successor in business shall be deemed to be profits and gains of the business or profession, and accordingly chargeable to income-tax as the income of that previous year.
Explanation 1: For the purposes of this sub-section, the expression "loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof" shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts.
148. It is necessary that the following conditions are satisfied before s.41(l) can be attracted:
c)
An allowance or deduction should have been made in the assessment of an assessee in respect of any loss, expenditure or a trading liability incurred by him.
d)
Any amount, whether in cash or in any other manner, should have been obtained in respect of such loss or expenditure or any benefit should have been obtained in respect of such trading liability by way of remission or cessation thereof.
It has been observed by the Supreme Court in the case of Sugauli Sugar
Works that the following words in section 41(1) are important:
"The assessee has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such liability by way of remission or cessation thereof, the amount obtained by him”.
Thus, the section contemplates the obtaining by the assessee of an amount either in cash or in any other manner whatsoever or a benefit by way of remission or cessation and it should be a particular amount obtained by him.
Thus, the obtaining by the assessee of a benefit by virtue of remission or cessation is since qua-non for the application of this section.
The aforesaid provision of the Act came up for further consideration before the Constitutional Bench of three learned Judges of the Hon’ble Apex
Court in the case of Chief CIT -vs.- Kesaria Tea Co. Ltd. (2002) 254 ITR 434
(SC) wherein in the context of the similar facts, it was held that section 41(1) of the Act could arise only if the liability of the assessee has ceased without the possibility of reviving it and if there has been no cessation during the year then section 41(1) of the Act has no application. The Hon’ble Apex Court reiterated the views taken in the case of Sugauli Sugar(supra.) and had laid the following points for the application of section 41(1):
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In the course of the assessment for an earlier year, allowance or deduction has been made in respect of any loss, expenditure, or trading liability incurred by the assessee;
Subsequently, a benefit is obtained in respect of such trading liability by the way of remission or cessation thereof during the year in which such event occurred;
The value of benefit accruing to the assessee is deemed to be the profit and gains of business which otherwise would not be his income;
The value of benefit is made chargeable to tax as the income of the year wherein such benefit was obtained.
149. In the appellant case, it is clear that appellant has not received any benefit by way of remission or cessation of liabilities during the relevant year as the creditors are existing in books and neither at the time of survey nor post survey proceeding, any evidence was found that assessee has received any benefit against existing liabilities and therefore it may be safely concluded that the assessee has fulfilled none of the above prescribed conditions and thereby applying the ratio laid down by the Hon’ble Supreme of section 41 has no applicability as held by Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. Auto Kashyap India Private Limited-
ITA 418/2010 dated 12.04.2010. That since amount has not been written off by the assessee in its books of account, it cannot be said that the liabilities has ceased to exists and therefore provision of section 41(1) cannot be applied. Reliance is placed on the decision of Hon'ble Mumbai ITAT in the case of Asia Business Ventures
(P.) Ltd. vs. Income Tax Officer -6 (3)(4) reported in [2014] 41 taximann.com
84 (Mumbai - Trib.). The observation of the Hon'ble ITAT is being re-produced as under:-
The assessee had not made export against the said advance. The amount is not returned till date. Moreover, the assessee has admittedly stopped export business and is in the business of advisory as well as in share dealing. It is not in dispute that the said amount is shown as advance in the balance sheet of the assessee. The said liability is also shown as on 31-3- 2007. Therefore, the liability has been acknowledged by the assessee. Since amount has not been written off by the assessee in its books of account, it cannot be said that the liability has ceased to exists. The Commissioner (Appeals) and Assessing
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Officer are not justified to apply provisions of section 41(1). It is also observed that the Assessing Officer has doubted the genuineness of the transaction as well as creditworthiness of the lender/payee. Since the said amount received by the assessee in January, 1997 and the same was appearing in the books of account of the assessee, genuineness of the transaction as well as creditworthiness of the party could not be considered in the assessment year under consideration for making the said addition under section 41(1) read with section 28(iv) [Para 7]
Be that as it may, it is the fact that the assessee has not written back the said amount to its profit and loss account, the provisions of section 28(iv) which provides value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession shall be chargeable to Income Tax under the head "profit and gains of business or profession" could not be applied as the said benefit has not arisen to the assessee because the assessee is showing the said amount as its liability in the balance-sheet year after year. Therefore, the said amount cannot be added as income of the assessee under section 28(iv). [Para 8]
150. In earlier years, assessment, purchases as well as creditors arising on account of purchases of goods and services have been accepted. Reliance is placed on the decision of Hon'ble High Court of Delhi in the case
Commissioner of Income-tax, Delhi - II vs. Jain Exports (P.) Ltd. reported in [2013] 35 taxmann.com 540 (Delhi). The issue as to the genuineness of a credit entry, thus does not arise in the current year and this issue could only be examined in the year when the liability was recorded as having arisen. The department has accepted the balances outstanding over last several years, and therefore, the addition made in the year is not justified.
That even if If, in the opinion of AO, the liabilities was bogus, the expenses claimed in that year has to be disallowed instead of invoking provision of section 41(1) in the year under assessment.
During the course of survey or post survey enquiries, no contrary evidences were collected indicating bogus liabilities. The LD. AO has further observed that liabilities are old more than three years and therefore liable to be added back as income under section 41(1). In this your good self kind attention it invited to the decision of Hon’ble Apex Court in case of CIT vs. Sugauli Sugar
Works Pvt. Ltd. [1999]102 Taxman 713(SC) where it was held that the principle that expiry of period of limitation prescribed under the Limitation
Act cannot extinguish the debt but it will only prevent the creditor from enforcing the debt is well-settled.
Reliance in this regard, is placed upon the decision in the case of Mahabir
Cold Storage -vs.- CIT (1991) 188 ITR 91 (SC), wherein the Hon’ble Supreme
Court held that the entries in the books of accounts of the assessee would amount to an acknowledgement of the liability as debt.
To the same effect, in the case of Ambica Mills Ltd. -vs.- CIT (1964) 54 ITR
167 (Guj.), wherein it was further held that a debt shown in a balance sheet of a company amounts to an acknowledgement of debt and further the balance sheet in which such acknowledgement is made need not be addressed to the creditors.
Similarly, after a detailed analysis of the legal matter and after consideration of various judicial pronouncements, the Hon’ble Delhi High Court in the case of CIT -vs.- Shri Vardhman Overseas Ltd. (2011) 343 ITR 408 (Delhi) held that the acknowledgement made by a company in its balance sheet amounts to acknowledgement of debt. The assessee’s liability to the creditors thus,
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subsisted and did not cease nor was it remitted by the creditors and thereby section 41(1) was not applicable. The Hon’ble High Court held,
“17…In an early case, in England, in Jones v. Bellgrove Properties [1949] 2KB
700, it was held that a statement in a balance sheet of a company presented to a creditor-share holder of the company and duly signed by the directors constitutes an acknowledgement of the debt. In Mahabir Cold Storage v. CIT
[1991] 188 ITR 91, the Supreme Court held:
“The entries in the books of accounts of the assessee would amount to an acknowledgement of the liability to Messrs. Prayagchand Hanumanmal within the meaning of Section 18 of the Limitation Act, 1963, and extend the period of limitation for the discharge of the liability as debt.”
In Larsen & Tubro Ltd. v. Commercial Electric Works [1997] 67 DLT 387 a Single Judge of this Court observed that it is well settled that a balance sheet of a company, where the defendants had shown a particular amount as due to the plaintiff, would constitute an acknowledgement within the meaning of Section 18 of the Limitation Act.
In Rishi Pal Gupta v. S.J. Knitting & Finishing Mills (P.) Ltd. [1998] 73 DLT 593, the same view was taken. The last two decisions were cited by Geeta Mittal, J.
in S.C. Gupta v. Allied Beverages Co. (P.) Ltd. (I.A. No. 7987/2004, decided on 30/4/2007) and it was held that the acknowledgement made by a company in its balance sheet has the effect of extending the period of limitation for the purposes of Section 18 of the Limitation Act.
In Ambica Mills Ltd. v. CIT [1964] 54 ITR 167 (Guj.), it was further held that a debt shown in a balance sheet of a company amounts to an acknowledgement for the purpose of Section 19 of the Limitation Act and in order to be so, the balance sheet in which such acknowledgement is made need not be addressed to the creditors. In light of these authorities, it must be held that in the present case, the disclosure by the assessee company in its balance sheet as on 31st March, 2002 of the accounts of the sundry creditors amounts to an acknowledgement of the debts in their favour for the purposes of Section 18 of the Limitation Act. The assessee’s liability to the creditors, thus, subsisted and did not cease nor was it remitted by the creditors. The liability was enforceable in a court of law.”
Reliance is also placed on the decision of Hon’ble Gujarat High Court in the case of The Principal Commissioner Of Income Tax-1 Vs. M/S Adani Agro Pvt.
Ltd. R/TAX APPEAL NO. 886 of 2019 date 10/02/2020. The Honble high court observed that” As per the aforesaid provisions of Section 41(1) of the Act, 1961, there has to be remission or cessation of trading liability. Merely because the liability has remained outstanding for more than three years and the same is not written back in profit and loss account, application of provisions of Section 41(1) of the Act, 1961 cannot be made to consider such liability as income of the year under consideration without there being any remission or cessation of liability. In view of the foregoing, this appeal fails and dismissed so far as the second question as proposed by the Revenue is concerned.
Reliance is also placed on the decision of Hon’ble Kolkata ITAT in the case of M/S Green Star Corporation, ... vs Acit, Circle - 45, Kolkata, ITA
No.2463/Kol/2017 dated 9 April, 2021. The Hon’ble ITAT has held as under:
Applying the proposition of law laid down in the above case to the facts of this case, we hold that no addition can be made to the income of the assessee in this asst. years, as in the view of the AO the outstanding liability in question is ITA. No.139/LKW/2022
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bogus and non-existent. The question of cessation of such non-existent as bogus liability does not arise. Hence, Sec.41(1) cannot be applied. Only when there is a genuine liability and there is cessation of such liability or it is written off in the books of account, then Sec. 41(1) of the Act can be applied. Law permits the Ld. AO to re-open the assessment for the earlier year and consider whether the expenditure incurred are to be allowable or not and in such cases additions can be made of bogus expenditure. Thus, in view of the above discussion, we delete all these additions of outstanding liabilities/expenses as appearing in the balance sheet as made by the Ld. AO and confirmed by the Ld. CIT(A) and allow the grounds of the assessee.
Thus, it can safely be held that when the liability continues to appear in the balance sheet and the same has been carried forward to the subsequent year, the liability was legally enforceable and thereby there arises no question of remission or cessation of liability and accordingly, section 41(1) is not applicable, moreover, in subsequent years the creditors has also been paid.
151. Your honour may further appreciate that these are liabilities which are still existing and accounted as payable in the book of the appellant and has not be written off. The provisions of section 41 are deeming provisions.

case of Asia Business Ventures (P.) Ltd. vs. Income Tax Officer -6 (3)(4) reported in [2014] 41 taximann.com 84 (Mumbai - Trib.). The observation of the Hon'ble ITAT is being re-produced as under:-
The assessee had not made export against the said advance. The amount is not returned till date. Moreover, the assessee has admittedly stopped export business and is in the business of advisory as well as in share dealing. It is not in dispute that the said amount is shown as advance in the balance sheet of the assessee. The said liability is also shown as on 31-3- 2007. Therefore, the liability has been acknowledged by the assessee. Since amount has not been written off by the assessee in its books of account, it cannot be said that the liability has ceased to exists. The Commissioner (Appeals) and Assessing
Officer are not justified to apply provisions of section 41(1). It is also observed that the Assessing Officer has doubted the genuineness of the transaction as well as creditworthiness of the lender/payee. Since the said amount received by the assessee in January, 1997 and the same was appearing in the books of account of the assessee, genuineness of the transaction as well as creditworthiness of the party could not be considered in the assessment year under consideration for making the said addition under section 41(1) read with section 28(iv) [Para 7]
Be that as it may, it is the fact that the assessee has not written back the said amount to its profit and loss account, the provisions of section 28(iv) which provides value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession shall be chargeable to Income Tax under the head "profit and gains of business or profession" could not be applied as the said benefit has not arisen to the assessee because the assessee is showing the said amount as its liability in the balance-sheet year after year. Therefore, the said amount cannot be added as income of the assessee under section 28(iv). [Para 8]
166. In the appellant case, the decision in the case of Suguali Sugar Works
(P.) Ltd. (supra) is applicable to the facts of the case more so when the liability has not been written off in the accounts. It is an undisputed fact that the assessee has not written off the amount to the credit of the profit and loss account. Thus, it has not treated the money as its own money. Accordingly, it has not become richer by the alleged amount as it continues to hold out that it is indebted to the aforesaid creditors.
167. In earlier years, assessment, purchases as well as creditors arising on account of purchases of goods and services have been accepted. Reliance is placed on the decision of Hon'ble High Court of Delhi in the case
Commissioner of Income-tax, Delhi - II vs. Jain Exports (P.) Ltd. reported in [2013] 35 taxmann.com 540 (Delhi). The issue as to the genuineness of a credit entry, thus does not arise in the current year and this issue could only be examined in the year when the liability was recorded as having arisen. The department has accepted the balances outstanding over last several years, and therefore, the addition made in the year is not justified.
168. Your honour may please very kindly be appreciate that even if If, in the opinion of AO, the liabilities was bogus, the expenses claimed in that year has to be disallowed instead of invoking provision of section 41(1) in the year under assessment.
169. During the course of survey or post survey enquiries, no contrary evidences were collected indicating bogus liabilities. The LD. AO has further observed that liabilities are old more than three years and therefore liable to be added back as income under section 41(1). In this your good self kind attention it invited to the decision of Hon’ble Apex Court in case of CIT vs.
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Sugauli Sugar Works Pvt. Ltd. [1999]102 Taxman 713(SC) where it was held that the principle that expiry of period of limitation prescribed under the Limitation Act cannot extinguish the debt but it will only prevent the creditor from enforcing the debt is well-settled.
170. No addition u/s 41(1) can be made unless liability is written off in accounts. AO has to bring evidence on record to show that liability has ceased.
171. Reliance is also placed on the decision in the case of CIT v. Bhogilal
Ramjibhai Atara [2014] 43 taxmann.com55/222. In the instant appeal, the sole grievance of the assessee was that the CIT(A) had erred in confirming the addition made by the Assessing Officer (AO) with the aid of section 41 of the Income Tax Act, 1961 (the Act) towards remission of the trade liability. The AO had found that there were few creditors whose credit balance was outstanding from many years. According to the AO, there was no change in the opening balance, and closing balance of these creditors, hence, he harboured a belief that liability to pay was ceased and credit balances appearing against names of those entities deserved to be added to the income of the assessee. Appeal to the CIT(A) did not bring any relief to the assessee.
The Tribunal observed that the section 41(1) applies where a trading liability was allowed as a deduction in an earlier year in computing the business income of the assessee and the assessee has obtained a benefit in respect of such trading liability in a later year by way of remission or cessation of the liability. In such a case the section says that whatever benefit has arisen to the assessee in the later year by way of remission or cessation of the liability will be brought to tax in that year. The Tribunal opined that the principle behind the section was that to ensure that the assessee does not get away with a double benefit – once by way of deduction in an earlier assessment year and again by not being taxed on the benefit received by him in a later year with reference to the liability earlier allowed as a deduction. The Tribunal also took note of the findings recorded by the Hon’ble High Court on the scope of section 41 of the Act. It was observed that the AO had not brought any evidence on the record to show that liability had ceased, neither the assessee had written off the liability in the accounts. The Tribunal held that under the above circumstance, there would not be any addition under section 41(1) of the Act. The Tribunal observed that the Hon’ble High Court had considered this aspect and observed that even if debt itself is found to be non-genuine from the very inception that also in terms of section 41(1) of the Act, there is no solution for that. In other words, addition cannot be made unless liability in the accounts has been written off.
172. Reliance in this regard, is placed upon the decision in the case of Mahabir Cold Storage -vs.- CIT (1991) 188 ITR 91 (SC), wherein the Hon’ble Supreme Court held that the entries in the books of accounts of the assessee would amount to an acknowledgement of the liability as debt.
173. To the same effect, in the case of Ambica Mills Ltd. -vs.- CIT (1964)
54 ITR 167 (Guj.), wherein it was further held that a debt shown in a balance sheet of a company amounts to an acknowledgement of debt and further the balance sheet in which such acknowledgement is made need not be addressed to the creditors.
174. Similarly, after a detailed analysis of the legal matter and after consideration of various judicial pronouncements, the Hon’ble Delhi High
Court in the case of CIT -vs.- Shri Vardhman Overseas Ltd. (2011) 343 ITR
408 (Delhi) held that the acknowledgement made by a company in its balance sheet amounts to acknowledgement of debt. The assessee’s liability to the creditors thus, subsisted and did not cease nor was it remitted by the ITA. No.139/LKW/2022
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creditors and thereby section 41(1) was not applicable. The Hon’ble High
Court held,
“17…In an early case, in England, in Jones v. Bellgrove Properties [1949]
2KB 700, it was held that a statement in a balance sheet of a company presented to a creditor-share holder of the company and duly signed by the directors constitutes an acknowledgement of the debt. In Mahabir Cold
Storage v. CIT [1991] 188 ITR 91, the Supreme Court held:
“The entries in the books of accounts of the assessee would amount to an acknowledgement of the liability to Messrs. Prayagchand Hanumanmal within the meaning of Section 18 of the Limitation Act, 1963, and extend the period of limitation for the discharge of the liability as debt.”
175. In several judgments of this Court, this legal position has been accepted. In Daya Chand Uttam Prakash Jain v. Santosh Devi Sharma
[1997] 67 DLT 13, S.N. Kapoor J. applied the principle in a case where the primary question was whether a suit under Order 37 CPC could be filed on the basis of an acknowledgement.
176. In Larsen & Tubro Ltd. v. Commercial Electric Works [1997] 67
DLT 387 a Single Judge of this Court observed that it is well settled that a balance sheet of a company, where the defendants had shown a particular amount as due to the plaintiff, would constitute an acknowledgement within the meaning of Section 18 of the Limitation Act.
177. In Rishi Pal Gupta v. S.J. Knitting & Finishing Mills (P.) Ltd.
[1998] 73 DLT 593, the same view was taken. The last two decisions were cited by Geeta Mittal, J. in S.C. Gupta v. Allied Beverages Co. (P.) Ltd. (I.A.
No. 7987/2004, decided on 30/4/2007) and it was held that the acknowledgement made by a company in its balance sheet has the effect of extending the period of limitation for the purposes of Section 18 of the Limitation Act.
178. In Ambica Mills Ltd. v. CIT [1964] 54 ITR 167 (Guj.), it was further held that a debt shown in a balance sheet of a company amounts to an acknowledgement for the purpose of Section 19 of the Limitation Act and in order to be so, the balance sheet in which such acknowledgement is made need not be addressed to the creditors. In light of these authorities, it must be held that in the present case, the disclosure by the assessee company in its balance sheet as on 31st March, 2002 of the accounts of the sundry creditors amounts to an acknowledgement of the debts in their favour for the purposes of Section 18 of the Limitation Act. The assessee’s liability to the creditors, thus, subsisted and did not cease nor was it remitted by the creditors. The liability was enforceable in a court of law.”
179. In the said case of Shri Vardhman Overseas Ltd. (2011) 343 ITR
408 (Delhi) , the AO had asked the assessee to submit confirmation letter from the sundry creditors but the assessee did not submit the confirmation letters. The AO rejected the assessee’s explanation and added the sum as income. On appeal before the the Hon’ble Delhi High Court, it was held that the amounts payable to the sundry credits were not credited to its profit and loss account for the year and were still shown as outstanding and therefore the provisions of section 41(1) were not attracted. The Court categorically held that though the liability to creditors were outstanding for more than four years, since there was no cessation of liability, section 41(1) has no application and after analyzing various decisions, it was held that the disclosure of liability by the assessee company in its balance sheet amounts to an acknowledgement of the debts and the liability was enforceable in a ITA. No.139/LKW/2022
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court of law. The assessee’s liability to the creditors, thus, subsisted and did not cease. The Hon’ble High Court inter alia held that,
“16. In our opinion, the judgment of the Supreme Court in Sugauli Sugar Works
(P.) Ltd. (supra) is a complete answer to the contention of the learned standing counsel. In the case before the Supreme Court for a period of almost 20 years the liability remained unpaid and this fact formed the basis of the contention of the revenue before the Supreme Court to the effect that having regard to the long lapse of time and in the absence of any steps taken by the creditors to recover the amount, it must be held that there was a cessation of the debts bringing the case within the scope of Section 41(1). In the case before us, the identical contention has been taken on behalf of the revenue, though the period for which the amount remained unpaid to the creditors is much less…”
180. The said case is squarely applicable in the appellant case. The appellant has disclosure the liability in its balance sheet and therefore the same amounts to an acknowledgement of the debt and thus in case where the debt exists there lies no question of remission/cessation and thereby there arises no question of application of section 41(1) of the Act.
181. Similarly, in the case of CIT vs. Sita Devi Juneja (2010) 325 ITR
593 (P&H) assessee’s balance sheet showed the amount as the liability of Rs.
1.47 crore payable to the creditors. The Hon’ble Punjab & Haryana High
Court held that such liability shown in the balance sheet indicated the acknowledgement of the debt payable by the assessee. Merely because such liability was outstanding for the last six years, it could not be presumed that the said liability had ceased to exist in following words.
“4…It is the conceded position that in the assessee’s balance sheet, the aforesaid liabilities have been shown, which are payable to the sundry creditors. Such liabilities, shown in the balance sheet, indicate the acknowledgement of the debts payable by the assessee. Merely because, such liability is outstanding for the last six years, it cannot be presumed that the said liabilities have ceased to exist…In view of these facts, the CIT(A) as well as the ITAT have rightly come to the conclusion that the Assessing Officer has wrongly invoked the Explanation I of section 41(1) of the Act and made the aforesaid addition on the basis of presumption, conjectures and surmises. It has been further found that the Assessing Officer failed to show that in any earlier year, allowance of deduction had been in respect of any trading liability incurred by the assessee. It was also not proved that any benefit was obtained by the assessee concerning such trading liability by way of remission or cessation thereof during the concerned year. Thus, there did not accrue any benefit to the assessee which could be deemed to be the profit or gain of the assessee’s business, which would otherwise not be the assessee’s income”
182. Reliance is also placed on the decision of Hon’ble Gujarat High Court in the case of The Principal Commissioner Of Income Tax-1 Vs. M/S
Adani Agro Pvt. Ltd. R/TAX APPEAL NO. 886 of 2019 date 10/02/2020. The Honble high court observed that” As per the aforesaid provisions of Section 41(1) of the Act, 1961, there has to be remission or cessation of trading liability. Merely because the liability has remained outstanding for more than three years and the same is not written back in profit and loss account, application of provisions of Section 41(1) of the Act, 1961 cannot be made to consider such liability as income of the year under consideration without there being any remission or cessation of liability. In view of the foregoing, this appeal fails and dismissed so far as the second question as proposed by the Revenue is concerned.
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restricted by the Ld. CIT(A) is on the lower side. Hence, we modify the order of the Ld. CIT(A) and restrict the addition of the disputed purchases to the extent of 6% instead of 5% and direct the A.O. to re-compute the disallowances accordingly.
c. The Hon’ble Bombay High Court in the case of PCIT vs. Rishabhdev
Tachnocable Ltd (Bombay High Court) dated February 15, 2020 held as under:
Having found that the purchases corresponded to sales which were reflected in the returns of the assessee in sales tax proceedings and in addition, were also recorded in the books of accounts with payments made through account payee cheques, the purchases were accepted by the two appellate authorities and following judicial dictum decided to add the profit percentage on such purchases to the income of the assessee. While the CIT (A) had assessed profit at 2% which was added to the income of the assessee, Tribunal made further addition of 3% profit, thereby protecting the interest of the Revenue.
d. The Hon’ble Bombay High Court in the case of PCIT vs. Pinaki D. Panani vide order dated January 18, 2020 has held that even if the purchases made by the assessee are to be treated as bogus, it does not mean that entire amount can be disallowed. As the AO did not dispute the consumption of the raw materials and completion of work, only a percentage of net profit on total turnover can be estimated.
e. The Hon’ble Bombay High Court in the case of Usha Exports vs. ACIT vide order dated December 21, 2019 has held that in case of bogus purchases where sales are accepted, the addition can be made only to the extent of difference between the GP declared by the assessee on normal purchases vis a vis bogus purchases. The AO is directed to restrict the addition to the extent of lower GP declared by the assessee in respect of bogus purchases as compared to G.P. on normal purchases.
f.
The Hon’ble Mumbai ITAT in the case of Hemant M Mehta HUF vs. ACIT vide order dated December 6, 2019 has held that in case of bogus purchases where sales are accepted, the addition can be made only to the extent of difference between the GP declared by the assessee on normal purchases vis a vis bogus purchases. The AO is directed to restrict the addition to the extent of lower GP declared by the assessee in respect of bogus purchases as compared to G.P. on normal purchases.
g. Reliance is placed on the decision of Hon’ble Ahmadabad ITAT in the case of ACIT,Cir.6(1) vs. Armee Infotech ITA No.1778/Ahd/2016 dated
11.01.2022 has observed as under:-
Taking into consideration all these facts, we estimate disallowance out of these bogus purchase at 7%. In other words, 7% of the alleged bogus purchase of Rs.1,56,78,802/- will be disallowed. This ground taken by the Revenue is rejected; whereas the ground of appeal taken by the assessee is partly allowed.
h. The Hon’ble Gujarat High Court in the case of Bholanath Poly Fab Pvt.
Ltd. 355 ITR 290 (Guj) was battling with the finding of Hon’ble ITAT that purchases were made from bogus parties. The Hon’ble Gujarat High Court held that whether purchases themselves were bogus or whether parties from whom such purchases were made were bogus, is essentially a question of fact and the Tribunal having examined the evidence on record and concluded that the assessee did procure cloth and sell finished goods, the entire amount covered under such purchase cannot be subjected to tax and only the profit
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element embedded therein was to be taxed, no interference is called for in the order of the Tribunal.
i.
Reliance is placed on the decision of Hon’ble Delhi ITAT in the case of BECON CONSTRUCTIONS PVT. LTD., vs. ACIT, NEW DELHI, ITA NO.
5034/DEL/2016 dated 24.12.2020. The Hon’ble ITAT has held as under:-
The assessee has shown that in the year ending March, 2012, the gross profit ratio of the assessee is 9.25%. In view of this, we direct the Ld. Assessing
Officer to retain the addition @9.25% of Rs. 2.44 crores of Rs. 22,57,000/- deserve to be retained and the balance addition of Rs. 2,21,43,000/- deserve to be deleted. The reasons being that once the bogus purchases have gone into the profit and loss account, and necessary sales have not been doubted, only option left with the revenue is to make the addition of the gross profit embedded in the bogus purchases. Accordingly, the ground no. 1 of the appeal is partly allowed.
j.
Reliance is placed on the decision of Hon’ble Mumbai ITAT in the case of DCIT-Central Circle-4(2) vs. Shri Ilesh Amrutlal Gadhia ITA No-
541/Mum / 2019 dated 13.07.2020. The Hon’ble ITAT has held as under:-
Facts are pari-materia the same in cross-appeals for AY 2010-11. An assessment was framed u/s 143(3) on same date i.e. 30/11/2016 wherein the purchases made by the assessee from M/s RTIPL were disallowed in its entirety. The Ld. CIT(A) estimated the same @12.5% with benefit of set-off of declared GP. Aggrieved, the assessee as well as revenue is under further appeal before us with similar grounds of appeal. Facts being pari-materia the same, our findings as well as adjudication as for AY 2009-10 shall mutatis- mutandis apply to this year also. Accordingly, the net additions as sustained by us would be 1% (net) of suspicious / unverified purchased made by the assessee from M/s RTIPL. Accordingly, the revenue’s appeal stands dismissed whereas the assessee’s appeal stands partly allowed.
k. Reliance is placed on the decision of Hon’ble Ahmadabad High Court in the case of PRINCIPAL COMMISSIONER OF INCOME TAX, GANDHINAGAR
Appellant(s) Versus JAGDISH H PATEL TAX APPEAL NO. 410 of 2017
dated 01.08.2017. The Hon’ble High Court has held as under:-
The Commissioner of Income Tax (Appeals) as well as Tribunal both have accepted the assessee's contention that adding the entire amount of bogus purchases would give a completely distorted figure and the gross profit would be higher than the total turnover. Such bogus purchases were for offsetting the purchases from producers and agriculturists directly who would not have the billing facility. Only question seriously paused before us was, was the Tribunal justified in adopting the gross profit rate of 8% as against 25% adopted by the Commissioner of Income Tax (Appeals)?
When additions are made on the basis of gross profit rates, a limited amount of estimation and gross work is always inbuilt. The assessee had pointed out that without the additions; the gross profit for the year under consideration was approximately 7%. The Tribunal therefore, did not commit any error in accepting the gross profit rate of 8% on the purchases which was otherwise found not genuine.
l.
Reliance is placed on the decision of Hon’ble Mumbai ITAT in the case of Suresh Mehta HUF vs. The Income Tax Officer Ward 19(3)(4) ITA No.
408/Mum/2019 dated 01.06.2020. The Hon’ble ITAT has held as under:-
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I have heard the rival contentions and gone through the facts and circumstances of the case. I noted that neither the AO nor CIT(A) has doubted the sales made by assessee out of these bogus purchase. Further, the assessee has produced all the necessary documents in support of purchased transactions such as purchase invoices, purchase register, sales register, stock register, bank statement evidencing payment made by account payee cheque etc. But it is a fact that the assessee could not produce the transportation evidences or expenditure incurred on account of transportation in regard to these purchases. Hence, I am of the view that a reasonable profit can be estimated because the estimation of profit is on higher side. I noted from the assessment order and the order of CIT(A) that both the authorities lower had admitted assessee have made sales which is not denied out of these purchases. It means that the assessee might have purchases from grey market and also saved VAT. Hence, a reasonable profit on these bogus bills can be estimated. Hence, I estimate the profit on these bogus bills at the rate of 5%
and direct the AO to re-compute the income accordingly.
m. Reliance is placed on the decision of Hon’ble Delhi ITAT in the case of Surana Enterprises vs. ITO ITA No. 5414 /Del/2018 dated 06.05.2020. The Hon’ble ITAT has held as under:-
Now we come to the appeal of M/s Suarana Jwellers for assessment year
2008 -2009 in ITA number 5416/del/2018 wherein the assessee of has obtained the accommodation entry of ₹ 1 718500 from Mrs Mohit and to international. As the facts of the case are identical to the facts of the case of the assessee for assessment year 2007 – 08 wherein we have deleted the addition of 2% of the bogus purchases obtained by the assessee, similarly, we confirming the action of the learned assessing officer for reopening of the assessment, direct the AO to retain the addition of 2% of the bogus purchases and 5 % of the investment and delete the balance addition n. The Hon’ble Gujarat High Court in the case of Commissioner of Income- tax v. President Industries reported in [2002] 124 TAXMAN 654 (GUJ.) has held that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represent the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realization of excess over the cost incurred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that the investment by way of incurring cost in acquiring goods which have been sold has been made by the assessee and that has also not been disclosed, the question whether entire sum of undisclosed sales proceeds can be treated as income, answers by itself in the negative.
o. Reliance is also placed on the decision in the case of Madhukant B.
Gandhi v. ITO [IT Appeal No. 1950 (Mum.) of 2009, dated 23-2-2010In cases where on the basis of statements of alleged suppliers it was found that no supplies were made to the assessee, it was held that purchases were bogus but on the presentation of quantitative tally of the opening stock, purchases, sales and closing stock, it was further held that "unless some purchases are made there cannot be corresponding sale" and, therefore, application of higher net profit rate of 5%, in a manner similar to section 44AF, could be justified.
p. Reliance is also placed on the decision in the case of CIT v. Leader Valves
(P.) Ltd. [2006] 285 ITR 435 (Punj. & Har.)Where Revenue took contradictory stand in as much as on one hand it rejected the books and further, it made addition for alleged bogus purchases recorded in those books
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on the basis of sale figures, the addition for bogus purchases was deleted by the Tribunal and the Hon'ble High Court held that no substantial question of law arose.
PRAYER
It is humbly prayed before your honour that the addition made by the ld. A.O are arbitrary and unlawful as being without any basis or material having any evidentiary value, further no effort or material has been brought on record and confronted to the appellant which could allege to establish otherwise. The appellant/respondent humbly relies upon the Hon’ble Tribunal’s decision in the appellants own case where the issue in question has been adjudicated by the Hon’ble Tribunal against the department in appeal for the AY 2013-14 to AY
2017-18 vide ITA No.701, 702, 582, 703/Lkw/2018 dated 06.04.2022 and ITA
No. 99/Lkw/2022 dated 05.08.2022. Moreover, the appellant has fulfilled the requirement of section 68 on unsecured loan as the legislature had framed the law before the amendment proposed by finance bill 2022 and also as required by the judicial precedent relied upon in the submission made. Moreover, the department has solely relied upon the admission made by the appellant which has already submitted above before your honour and relied upon various judicial precedent that the same has no evidentiary value and cannot become an estoppel and the assessee who makes an offer of additional income during course of survey before income-tax authorities is not bound by his offer of additional income for all time to come and can retract from his offer by furnishing details which in the present case has been done in assessment framed for the assessment year involved in survey i.e. AY 2015-16, AY 2016-
17, AY 2013-14 & AY 2014-15 and later AY 2017-18 and AY 2018-19. Thus, it is humbly prayed and requested the order of ld.CIT(A) may very kindly be sustained to the extent relief allowed and the addition of six creditors on the basis of vague and invalid spot enquiry may also kindly be deleted or profit element on the six creditors may kindly be taxed or your honour may provide any other appropriate relief as your honour may deem fit in the interest of justice.”
(C)
At the time of hearing, regarding the addition of Rs.4,51,00,000/- u/s 68 of the Act on account of unsecured loan and addition of Rs.22,55,000/- u/s 69C of the Act on account of alleged commission paid for unsecured loan; the Ld. Counsel for the assessee, at the outset, drew our attention to order dated
05.08.2022 of the Co-ordinate Bench of Income Tax Appellate
Tribunal (ITAT), Lucknow in assessee’s own case for immediately preceding assessment year
(i.e.
A.Y.
2017-18) in ITA.
No.99/Lkw/2022. He submitted that the issue regarding addition of unsecured loan had arises in A.Y. 2017-18 also and Revenue’s appeal against the order of the Ld. CIT(A) deleting the addition was dismissed by ITAT vide aforesaid order dated 05.08.2022. ITA. No.139/LKW/2022
Page 107 of 158

For the ease of reference, the aforesaid order dated 05.08.2022 of ITAT is reproduced as under: -
“This is an appeal filed by the Revenue against the order of learned CIT(A), dated 07/02/2022 pertaining to assessment year 2017-2018. In this appeal the Revenue has raised the following grounds:

“1. The learned CIT(A)-IV, Kanpur has erred in law and on facts in giving relief of Rs.4,22,395/- out of commission paid on sales pertaining to previous year relating to financial year under consideration without appreciating the facts that as per section 145
of the Act, commission of exports sales is not an allowable expenditure on payments basis as the assessee is regularly following mercantile system of accounting.

“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, allowed relief to the assessee wherein similar disallowance was deleted by him by holding as under:

“I have perused the facts of the case, order of the Hon'ble ITAT, contention of AO and submissions made by the appellant. In this case facts are not disputed either by appellant or by AO. Appellant claimed an expenditure of Rs.1,58,73,821/- under the head ‘commission paid on export sales' for procurement of export orders by the foreign agents.
It is a fact that the assessee is following mercantile system of accounting. It is admitted that the above mentioned export bills against which commission has been paid to the foreign agents do not pertain to F.Y. 2011-12 i.e. AY 2012-13 under consideration. Export involves against which the commission has been paid, pertains to the period September 2010 till March 2011 and date of payment of commission is from April 2011 till December 2011. In this connection the assessee vide his reply dt. 27.3.2015 had submitted before the AO that some shipments were sailed from the custom port after 31.03.2011 but the 'invoicing of this shipment was done before 31.03.2011 it is happened because of the backlog of the containers at the custom port. As Kanpur is a dry port of customs and the containers are railed out from this dry port to Nhava sheva for export. During that period there was a huge backlog of containers at the customs port due to this the export of these containers got delayed.
Appellant also submitted that they did not claim the export commission as expense pertaining to these invoice in the last year, a finding not rebutted by AO in his order. Hence it is clear that there is no double
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benefit being claimed by the appellant in this regard. Regarding the commission paid in the year under consideration for the invoice raised in the month of September and other months of FY 2010-11 appellant submitted that the commission paid to foreign agents has been debited during the year under consideration on the basis of agreement between the appellant and foreign agents. The clause 4 of the agreement between the commission agent and appellant is reproduced as under:

"That the second party shall be entitled to payment of commission only on realization of the sale bills and issuance of commission bill."

Further, due to some dispute with the agent the commission was not paid in last year, 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 on accrual basis as and when these commission bills were raised by foreign agents after the sales were realized by the appellant and not when the export ‘invoice for orders procured by commission agents, was raised by appellant on its buyer. Assessing
Officer’s observation - There are very few export bills which were raised in March, 2012 and shipments were made after March, 2012 - is factually misplaced in the order). The case does not revolve around the invoices or shipments pertaining to March or later of 2012 but pertains to invoices and shipments made in March 2011. So the very basis of the addition made by AO is factually incorrect.

In Shalimar Impex Ltd. V. ITO (1982) 1 ITD 799 (Cal), similar issue came before the bench in which the Hon'ble Bench held that u/s 37(1) of the Income-Tax Act, 1961 business expenditure in the nature of commission to foreign agent under agreement, the assessee was liable to pay them commission on export sales on actual realisation of sale proceeds of goods exported during the year.

The finding of the decision is reproduced as under:

accrue and arise, the principle of rendering services would not avail. The question as to whether or not liability in question has arisen would in such a case be determined with reference to the terms of the contract between the parties irrespective of whenever the services in question might have been rendered. In the present case there is no doubt that services were rendered during the previous .year and, therefore, If there was nothing in the contract to the contrary, it could be said that the liability for paying the commission had accrued and arisen as soon as the services were rendered by the agent and nothing further remained 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 present case has the familiar ring of the argument which was advanced before their
Lordships of the Supreme Court in the case of F. D. Sassoon & Co. Ltd. v,
CIT [1954] 26 ITR 27. There too it was urged that the managing agency commission was relatable to the services rendered as managing agent and, therefore, for the period during which the transferor-managing agent rendered services as managing agent to the managed company, it became entitled to the managing agency commission for the aforementioned period and for the remaining period the transferee-managing agent became entitled to the managing agency commission on the principle of rendering of services respectively by them to the managed company. This argument had in fact been accepted by the Bombay High Court, who adopting the test, of the services rendered by the Sassoons as well as the transferee during the whole of the years, considered the proportions of the service rendered by the Sassoons and the transferee as the managing agents of the companies as decisive of the portions of the managing agency commission earned respectively by each. The parenthood of the income received by the transferee was considered to be the real test, i.e., whoever rendered the services earned the income arising from those services. This argument was, however, negativated by their Lordships of the Supreme
Court who said that one had to look not merely at the services rendered but at the fact whether as a result of the said services a right to sue in a court of law for the income resulting from such services had vested in the claimant. The accrual could result only at that point of time when the right to enforce the claim in a court of law had arisen. The relevant observations of their Lordships appearing at page 51 may be extracted here for ready reference as follows:

"The word 'earned' even though it does not appear in section 4 of the Act has been very often used in the course of the judgments by learned Judges both in the High Courts as well as the Supreme
Court. The concept however cannot be divorced from that of income accruing to the assessee. If income has accrued to the assessee it is certainly earned by him in the sense that he has contributed to ITA. No.139/LKW/2022
Page 111 of 158

its production or the parent-hood of the income can be traced to him. But in order that the income can be said to have accrued to or earned by the assessee, it is 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."

From the above decision, it can be inferred that though mercantile system of accounting is on accrual basis but there is an agreement, which indicates the point of time when the liability would accrue and arise, the principle of rendering* services would not avail.

In CIT v. Nagri Mills Co. Ltd. [1958] 33 ITR 681 (Bom.), which reads as under;

We have often wondered why the IT authorities, in a matter such as this where the deduction is obviously a permissible deduction under the IT Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the asst. yr. 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the asst. yr. 1953-54, should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other.

The aforesaid observations of the Bombay High Court were reiterated by this Court in the case of CIT vs. Shri Ram Pistons & Rings Ltd. [20081 174
Taxman 147, as under :
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"Finally, we may only mention what has been articulated by the Bombay High Court in Commissioner of Income Tax, Delhi, Ajmer,
Rajasthan and Madhya Pradesh v. Nagri Mills Co. Ltd. [1958] 33
ITR 68las follows:

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.”

“7.3 The undersigned has 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 proceeding u/s 133A of the IT Act, 1961
was conducted in business premises of Mohammad Asfand Akhtar, Prop-
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M/s Omega International. During the course of survey proceedings statement was recorded u/s 133A of the I. T. Act, 1961 on 22.09.2017 and subsequently again u/s 131 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 complete knowledge of the same for the preceding assessment and appellate proceedings for Assessment year 2013-14, Assessment year
2014-15 and Assessment year 2016-17 and at the time of present assessment proceeding. Further, it has also been submitted that Shri
Manish Agarwal CA has also denied the averment of the statement recorded during the survey of the assessee vide his own statement recorded by the Assessing Officer on 11.12.2017 which finds place in the appellate order for Assessment year 2015-16. 7.4
It is seen from the records that during the course of assessment proceeding, appellant furnished before the Assessing Officer the following details of lender and placed in the paperbook filed by the appellant:
• Copy of Notice issued and served u/s 131 of the IT Act, 1961
dated 16.11.2018 on the lender company by one Assessing Officer in some other assessee’s case (Pg 22-23 of the Paper book)
• Copy of Confirmation (Pg 24-25 of the Paper book)
• Copy of ITR (Pg 44-47 of the Paper book)
• Copy of Balance sheet (Pg 48-55 & 60-97 of the Paper book)
• Copy of Bank statement (Pg 56-59 of the Paper book)
• Copy of Company Master Data and director details at MCA (Pg
28-29 of the Paper book)
• Copy of Assessment Order for assessment year 2011-12 of the lender company (Pg 38-43 of the Paper book)
• Copy of Scrutiny notice u/s 143(2) for the assessment year
2017-18 in the case of lender company (Pg 34-37 of the Paper book)
• Copy of photograph of the office of lender company(Pg 30 of the Paper book)
• Copy of affidavit containing the reasons for advance/investment to the assessee. (Pg 112-113 of the Paper book)

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.

• 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: 21st September, 2011
• Hon'ble Apex Court in the case of Orissa Corpn. (P) Ltd. (supra)
159 ITR 78
• Hon'ble juri ictional High Court in the case of CIT vs. Jagdish
Prasad Tewari reported in 220 Taxman 141 (Allahabad)
• Hon'ble Gujarat High Court, in the case of Dy. CIT v. Rohini
Builders [2002] 256 ITR 360 /[2003] 127 Taxman 523
• Nemi Chand Kothari 136 Taxman 213, (supra), the Hon'ble
Guahati High Court
• CIT v Real Time Marketing (P) Ltd reported in 306 ITR 35
• CIT v. S. Kamaljeet Singh [2005] 147 Taxman 18(AII.)
• S.K. Bothra & Sons, HUF vs. Income Tax Officer, Ward-46(3),
Kolkata 347 ITR 347

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.

“Meaning of service by post”: Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expressions give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the 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:

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 held that in such circumstances it cannot be said that there was a valid service of notice by DDIT (Inv) U-2, Kolkata on the address of the loan creditor. Hence this fact cannot be used to decide the question of the identity of the Loan creditor as held by the Assessing Officer in his order.

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.

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 Assessment year 2015-16, Shri Manish Agarwal
Chartered Accountant has also denied these facts pertaining to arrangement 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 Assessing Officer on 11.12.2017 during the assessment proceedings for Assessment year
2015-16. In view of these facts, I am of the opinion that if the statement of both these persons – appellant and his Assessing Officer – are now under dispute and are discredited, then there is no other material available on record with the Assessing Officer, 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 judgment in the case of Assessing Officer v. S. KhaderKhan
Son (2008) 300 ITR 157 (Mad) that has been upheld by apex court in Assessing Officer v. S. KhaderKhan Son (2013) 352 ITR 480 (SC). After carefully considering the argument of the Assessing Officer. Counsel for the appellant and the judgments in the case of Assessing Officer v. S.
Khader Khan Son, I find that facts in the case under consideration are squarely covered by the facts of Assessing Officer v. S. KhaderKhan Son’s
(SC) case. In the case under question the department has not been able to find out any direct or indirect evidence that lead to assumption that loan taken by appellant is bogus. There is no evidence brought on record by Assessing Officer during or after the survey to prove that M/s Cooper
Commercial Pvt. Ltd. is a shell company and does not have any genuine business and/or the loan transaction with the appellant is bogus.
Appellant has furnished copy of its ITRs, Bank Statement and confirmation of account. Against this evidence placed on record no specific finding has been brought on record by the Assessing Officer to dispute the veracity of documents submitted in respect to the loan taken of the appellant company. It is clear that addition made by Assessing Officer is based purely on the basis of statement recorded during the survey proceedings that has lost its evidentiary value in light of the law laid down by Hon'ble
Apex Court in the case of S. Khader Khan Son(SC) and retraction made by appellant and CA Mr. Manish Agarwal.

unexplained loan credit to stick, the onus lies on the Assessing Officer 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 Assessing Officer, Bank
(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, the Court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors.
Law does not say that the accused has to prove that retraction of confession made by him was because of threat, coercion, etc. but the requirement is that it may appear to the court as such.

“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 disputes between the parties, (i.e. in the Income-tax cases, the assessee arid the Department).
ITA. No.139/LKW/2022
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Section 101 of the Evidence Act states that whoever desires any Court to give judgment 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 owner thereof unless the burden of proving that he is not the owner thereof is discharged by the assessee. Whether certain sums of money were claimed by the assessee to have been received from certain persons, it was for the assessee to prove by cogent and proper evidence that these were genuine transactions as these facts were within the exclusive knowledge of the assessee and it should be kept in mind that the assessee cannot discharge this burden of merely proving the identity of the share applicant/shareholder, he has to prove all about the transaction, namely, identity, capacity of the shareholder to invest money and genuineness of the transaction.

“15. What is burden of proof? As painted out by Sarkar in his book
Indian Evidence Act, the phrase “burden of proof has two distinct and frequently confused meanings. As a matter of law and pleading, the “burden of proof” is in the nature of establishing a case. This burden rests upon the party, whether plaintiff or defendant, who substantially asserts the affirmative of the issue. It is fixed at the beginning of the trial and remains unchanged and, in this respect, reference may be made to section 101 of the Indian
Evidence Act (emphasis given by us). In the second sense, the “burden of proof” relates to the region of production of evidence. In this sense, the “burden of proof” is ambulatory and shining throughout the trial and the scale of evidence may 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 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 ITA. No.139/LKW/2022
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the assessee (See Pafimisetti 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 prime 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 assesses 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 Assessing Officer that documents furnished cast serious doubt about the veracity of the same, and then the materials of the scrutiny are to be communicated to the assessee, thereafter the onus shifts from the revenue to the assessee. Then, the assessee has to take appropriate steps for proving his case. Unless, there are sufficient materials after such communication, produced by the assessee, the Income-tax officer can do no further. It should be kept in mind that the transactions which had occurred are things of which assessee is aware of and it has to come before the Assessing Officer.

“17. Dealing with share capital their Lordship of the Apex court has held that there cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the Revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue’s insistence that it should prove the negative. In the case of a public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private 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. “

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 Assessing Officer is the basis for invocation of the powers u/s 68, such satisfaction must be derived from relevant factors on the basis of proper inquiry by the Assessing Officer and such inquiry must be reasonable and just.

furnish the new or current correct addresses, then there is no duty on Assessing Officer to bring any facts on record to show that conditions required u/s 68 are not satisfied but where appellant does, then
Assessing Officer needs to bring more facts on record to show that conditions required u/s 68 are not satisfied. It is therefore held that Assessing Officer has failed to shift back the onus on appellant as required by law.

taken in due consideration by the then Commissioner (Appeals) in appellants own case and finds reference in the finding of the Commissioner (Appeals) for Assessment year 2015-16. In Assessment year 2016-17 also the Commissioner (Appeal) made detailed observations in the matter of this unsecured loan and the alleged commission estimated on the unsecured loan, these observations are followed in this year too.
The undersigned finds that the addition of commission on unsecured loan made by the Assessing Officer is consequential to the addition of unsecured loan. Therefore, in consequence to above finding the addition becomes unwarranted and is to be deleted.

explainable. Therefore, in our opinion, such affidavit did not constitute additional evidence which required examination by the Assessing Officer.
We further find that the addition was made by the Assessing Officer relying solely on the statement recorded during survey u/s 133A and he disregarded all the documentary evidences including the reply to the notice u/s 133(6) by loan creditor and without having any corroborative material to make the addition. The CBDT itself vide Instruction No.286/2/2003(Inv) has directed the Assessing Officers not to make addition only on the basis of statements and has directed that Assessing Officer should make additions, if any, after examination of the corroborated evidences. The learned CIT(A), in his order, has thoroughly discussed this aspect and has also relied on such CBDT Circular and on various judgments to allow relief to the assessee.

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, Kanpur on the basis of forged document, ii)
Ld. CIT (A) failed to confront the Assessing Officer with the affidavit filed? even though the same was nowhere mention in the assessment order and is also not part of our records.
ii)
Ld. CIT (A) also did not give any opportunity to the undersigned to rebut/ counter the same.

Facts of this case are that that appeal was filed against the order u/s. 143(3) of the.I.T. Act, 1961,. for the assessment year 2015-16
passed on 28-12-2017 by the Joint Commissioner of Income Tax,
Special Range, Kanpur with the following grounds of appeal.

Grounds of Appeal;

Ground No. 1 pertains to disallowance of Rs. 87,34,231/- of Commission Paid that was decided in favour of appellant on the basis of decision taken in assessee's own appeal for the A.Y 2012-
13 & 2014-15 in appeal number CIT(A)-IKnp/10048/2017-18 dt
05-12-2017; CIT(A)-I Knp/10271/2016-17 dated 07.12.2017
respectively. Similarly ground No. 2, 3 pertaining to adhoc disallowance of Rs.6,738/- of Telephone expenses; of Rs.3,14,204/- of Vehicle Running & Maintenance was decided against the appellant on the basis of decision taken in assessee's own appeal for the 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 proceedings that the surrender made was retracted on 28.09.2017 by filing affidavits and letters with all the three relevant authorities holding juri iction over the appellant. Appellant filed detailed legal and written submissions during the appellate proceedings with regards to additions made by the AO. During the course of appellate proceeding, appellant also submitted the evidence that had been allegedly furnished before the AO in support of Rs. 2,57,00,000/- taken as Unsecured Loan u/s 68 of IT Act, like confirmation of account, copy of ITR, Bank Statement from where amount was remitted to the appellant. It is also a fact that information u/s ITA. No.139/LKW/2022
Page 128 of 158

133(6) was also called from the depositor by the AO and these transactions were confirmed by the alleged depositors by furnishing same information that was filed by the appellant during assessment proceedings. These facts are still not disturbed by the AO. In the appellate order it was accordingly held that appellant had successfully discharged the initial onus that lay upon him with regards to three ingredients application in section 68 i.e. identity, creditworthiness and genuineness of the transactions. Though now
AO is trying to place on record report of DDIT(Inv), Unit-2, Kolkata who submitted its report vide letter dated 17.04.2018 in support of this request. This report was received on 17.04.2018 whereas the impugned assessment order was passed on 28.12.2017. Therefore this report was not a part of the record for the AY 2015-16 while the assessment order was framed and therefore cannot be used to invoke the provisions of S. 154 of IT Act now. This report can be considered only while deciding the appeals for the relevant assessment years. AO is at liberty to file these evidences before the Hon'ble ITAT in the second appeal stage.

In view of the above facts, the conclusion of the AO that the finding of my order, pertaining to ground no. 4 & 5 are only based upon the retraction of the surrender made is not correct. The finding of the order is based upon the merit of the case related to filing of documents by appellant in support of shifting the initial onus that lie u/s 68 of IT Act upon him, results of the proceedings u/s 133(6) of IT Act conducted by AO and the law laid down by Hon'ble Apex
Court in the case of S. Khader Khan Son (Supra) rather based upon retraction from surrender made. It is therefore 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 with receipt stamp from the office of DCIT-1,
Kanpur. Now once there is evidence that is filed during the appellate proceedings, recalling of the appellate order on the charges of fraud, which is not proved, is not possible. Copy of retraction affidavit bearing the "receiving stamp of the office of DCIT-I, Kanpur is accepted as a part of the record as it was taken to be filed at Bar. AO is at liberty to enquire into this aspect for any internal lapses on the part of any official. If this evidence is proved
ITA. No.139/LKW/2022
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to be not filed in the office of DCIT-1, Kanpur then the appellant can be subject to further proceedings as per law. If appellant is found to be misrepresenting the facts during the appellate proceedings and found to have taken advantage of the legal proposition related to timely retraction from an incorrect admission made during any legal proceedings then AO shall be at complete liberty to a relief as per the law laid down by Hon'ble Apex Court down in the case of A. V. Papayya Sastry and others v. Government of A.P. and others
AIR (2007) SC1546 and (2010) 8 SCC 383 where it was held that - fraud nullifies all and persons who played fraud ought not to be allowed to bear the fruit or benefit thereof. Therefore if the impugned order is found to be obtained by misrepresentation of facts, then it will not be entitled to any relief, interim or final.

In view of these facts it is held that there is no mistake apparent from record as the order has been passed on the basis of all the documents submitted by appellant AR 'At Bar' during appellant proceedings. CIT (A) does not have the power u/s 251 of the Income-tax Act, 1961 to recall the appeal order and review the decision taken on the merits of the case. Lastly AO has not raised any statutory 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 undersigned but has requested Pr.CIT-1, Kanpur to raise it before this office and in turn Pr. CIT-1 Kanpur has not requested for recalling the impugned order but only requested to give fresh opportunity to AO on admission of additional evidence and to review of the impugned order. Since, no specific statutory request for invoking S. 154 of IT Act has been made -by AO, who alone can be the aggrieved party before this office and at this stage fresh additional evidence cannot be examined as the appeal 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.”

that there is no application of assessee for admission of additional evidence under Rule 46A of the I.T. Rules.”

addition has been made to the extent of Rs.4,70,50,000/- by treating the unsecured loan from M/s Wise Financial Advisor Services Pvt. Ltd. as bogus and in assessment year 2014-15, the amount involved is Rs.4,56,00,000/- which is from M/s Silver Agencies Pvt. Ltd. During these years also, the assessee had filed the necessary evidences in support of the genuineness of the receipt of unsecured loans. During assessment year 2013-14, the Assessing Officer, vide notice dated 19/02/2018, placed at pages 46 to 47 of the paper book, required the assessee to explain as to why the amount of unsecured loan, received from M/s Wise
Financial Advisor Services Pvt. Ltd. along with 5% expenses incurred for arranging such entry may not be added back to the income of the assessee. The assessee replied to this notice vide letter dated
21/02/2018, a copy of which is placed at page 51 of paper book and submitted that assessee had taken unsecured loan and copy of confirmation of account, ITR, bank statement and audited balance sheet were attached. Such documents in the form of confirmation of account, ITR of the lender along with the audited financial account and copy of bank statement are placed at pages 52 to 76 of the paper book. The copy of assessment order of the unsecured loan 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 of survey proceedings in his statement recorded u/s 133A of the I. T.
Act, 1961 on 22.09.2017 and subsequently again u/s 131 of the I
T Act, 1961 on 26.09.2017, assessee offered amount of Rs.
36,73,00,000/- for tax on account of bogus unsecured loans received by him from three Kolkata based companies namely M/s
Cooper Commercial Pvt. Ltd., M/s Silver Agencies Pvt. Ltd. and M/s
Wise
Financial
Advisor
Services
Pvt.
Ltd.
through entry accommodation i.e. cash was paid and cheques were received in lieu of commission paid through his CA Mr. Manish Agarwal, The details of bogus unsecured loans received by assessee is given as under-

Name of Companies

Unsecured loan taken in F.Y.
2012-13

Unsecured loan taken in F.Y.
2013-14

Unsecured loan taken in F.Y.
2014-15

Unsecured loan taken in F.Y. 2015-
16

Unsecured loan taken in F.Y.
2016-17
ITA. No.139/LKW/2022
Page 132 of 158

M/s Cooper
Commercial Pvt.
Ltd.

12,05,00,000

8,18,00,000

M/s Silver
Agencies Pvt. Ltd.

4,56,00,000

2,57,00,000

15,50,000

M/s Wise Financial
Advisor Services
Pvt. Ltd.

4,70,50,000

In assessment year under consideration an amount of Rs.4,70,50,000/- arranged through M/s Wise Financial Advisor
Services Pvt. Ltd. on a commission of Rs. 23,52,500/- was received as unsecured loan by appellant. 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 realised his mistake and accordingly retracted from his statement by filing an affidavit dated
28.09.2017 before the AO as well as before the higher authorities.
This fact of appellant retracting from the surrender by filing affidavits is disputed now by the AO before the Hon'ble ITAT
Lucknow Bench in the appellate proceedings for the AY 2015-16. It has also been submitted that Shri Manish Agarwal CA has also denied the averment of the statement recorded during the survey of the assessee vide his own statement recorded by the AO on 11.12.2017. It is seen from the records that during the course of assessment proceeding, 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:

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
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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 said premise No mailbox naming the said concern was found on respective addresses. Inspector submitted that on local enquiry it was revealed that there is no existence of the said concern in the said premise.

It is also a fact that the AO had issued a notice earlier u/s 133(6) during the assessment proceedings for AY 2015-16 on the old address of M/s. Silver Agencies Pvt. Ltd. and the said queries were satisfied by the loan creditor by filing its copy of ITR, Bank
Statement and confirmation of the transactions before AO. Lastly,
AO did not confront the findings of the inquiry report of the DDIT(Inv) unit Kolkata to the appellant and passed the order in undue haste.

I have considered the facts and circumstances of the case. In the assessment order, it is seen that the AO, while making these two additions, has relied solely upon the report submitted by DDIT(Inv)
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 Wise
Financial Advisor Services Pvt. Ltd. are bogus and arranged by Shri
Manish Agarwal CA for a commission charged. It is also a fact, as evident from the assessment order that the appellant did file copies of return of income of M/s Wise Financial Advisor Services Pvt. Ltd.
along with their bank account statements and confirmation of accounts in response to the queries raised by AO. However, AO held in the assessment order that since appellant has not retracted from his statement recorded on oath during survey proceedings and post survey proceedings, the confirmation of unsecured loans and other documents submitted by assessee has no force and same cannot be relied upon for allowing the benefit to appellant of shifting the initial statutory onus that is cast u/s 68 of IT Act on the appellant.

Hence it is argued by the appellant that during the period under consideration when the enquiries were being conducted, the lender had shifted its place of business to its new address that was updated on the website of MCA on 30.04.2018 and the enquiries were conducted at the old address in April 2018 only when the business premises of the lender had already shifted. On the basis of this report submitted by Kolkata Investigation Wing, it was held by AO that M/s Wise Financial Advisor Services Pvt. Ltd. is a shell/paper company 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 ITA. No.139/LKW/2022
Page 134 of 158

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 the initial statutory requirement for shifting the initial onus that lies upon an assessee, like confirmations along with ITR, PAN, Bank Statement and Balance Sheet of the loan creditors. By filing these evidence it is apparent that the appellant proved identity, genuineness and creditworthiness of the loan creditor. The AO without taking cognizance of the details filed during the current assessment proceedings, and also the evidence that is available on record for AY 2015-16, simply relied on the report of the DDIT (Inv.) and on the Inspector report - both of which were are vague and were not confronted to the appellant - for holding that the loan creditors are not existing and are not genuine.

It is not clear from the report of DDIT(Inv) as to why the summons issued could not be served. As per the report received from the DDIT
(Inv.), Unit-2, Kolkata the notice sent by post were returned back un- served. No reasons for non-service like - 'Left without address'; 'no such person/left' or 'Left without address' has been communicated to the AO. Comment from Postal department -'No Such Person' - raises many doubts about the genuineness or whereabouts of the person to whom the letter has been sent but comment of 'Left without address' shows that the postal department official found that the person to whom the letter was addressed to, was present on this place but has left without further intimation to the post office about its new address. Therefore a specific response from postal department is essential to understand the evidence being gathered and lack of the specific reason for non-service vitiates the process and lack of valid service does not prove that the Lender is a bogus entity or its identity is not established.

The procedure for service by post is given in section 27 of the General Clauses Act, 1897 which is mentioned as under:

"Meaning of service by post": Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expressions give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the 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
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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 is 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 held that in such circumstances it cannot be said that there was a valid service of notice by DDIT (Inv), Kolkata on the address of the loan creditor. Hence this fact cannot be used to decide the question of the identity of the Loan creditor as held by the AO in his order.

Now coming to the Inspector's report that has been relied upon by the AO for making this addition. It is said in the assessment order that "Inspector was also deputed to make enquiry for their existence but no company was found at their respective addresses". AO issued commission to Kolkata Wing giving old addresses and the new addresses i.e. 38/H/l Canal East Road, P.S. Narkeldanga,
Kolkata- 700011, were ignored by AO while framing the assessment order.

Address of M/s Wise Financial Advisory Services Pvt. Ltd. on which commission u/s 131(1)(d) was issued by AO was 79B, Dilkusha
Street, Kolkata- 700017 and the enquiry was conducted by Inspector of DDIT, Kolkata at MCA data address was 7A Bentick
Street, Kolkata-700001 whereas the address of the party at the time of summon/enquiry stood changed to 38/H/1 Canal East
Road, P.S. Narkeldanga, Kolkata- 700011. Address of M/s Grandura Agencies Pvt. Ltd. (earlier known as Silver Agencies Pvt. Ltd.) on which commission u/s 131(l)(d) was issued by AO was 2nd Floor, 53-B, Illiat Road, Kolkata- 700016 and the enquiry was conducted by Inspector of DDIT, Kolkata at MCA data address was 7A Bentick Street, Kolkata-700001 whereas the address of the party at the time of summon/enquiry stood changed to 38/H/1 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 ITA. No.139/LKW/2022
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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 assessee in his residential or business premises within a reasonable time and second, when there is nobody else authorized to receive the notice. In the above circumstances, the Income Tax
Inspector can affect the service by affixture on his own initiative without waiting for an order from the AO. The copy of the notice should be affixed on the outer door or on a conspicuous part of the business or residential premises & a panchnama should be drawn in the presence of two witnesses & there identity proof should be taken.

A report is to be drawn up by the Income Tax Inspector, on the facts and circumstances of the service by affixture, specifying the date and time of service and the name of the identifier and independent witnesses, if any. It should conclude with an affidavit of the Income
Tax Inspector solemnly affirming the facts and particulars of service as reported. The report is to be filed as an endorsement to the original notice after being docketed in the order sheet. The report 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 non-existence of a particular person on any given address.
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's, nor any affidavit is filed by him that he personally knew the place of business of the lender's. In this background, this report filed by the Inspector cannot be relied upon as the valid material for coming to a conclusion that loan creditors are non-existent and for making this addition.

In CIT vs. Ramendra Nath Chosh, 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 place of business of the assessee's, nor did he mentioned in his report or in the affidavit filed by him that he personally knew the place of business of the assessee's. In this background, it was held by the 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 ITA. No.139/LKW/2022
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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 sustainable in the eye of law is a well settled legal proposition requiring no citations. To act on evidence fairly, reasonably and without prejudice is inherent in action of an AO where he has to make an order or direct some action to be taken against any person.
For example, section 143(3) of the Income-tax Act, 1961 specifically provides that the officer has to make an order after hearing such evidence as the assessee may produce and such other evidence as the officer may require on specified points, after taking into account all relevant materials which he has gathered. The officer can collect the material behind the back of the assessee, but before he makes use of it, he has to make it available to the assessee with an opportunity to him to show cause as to why he should not proceed to pass an order on the basis of such material? He is bound to confront the assessee with the material. It is only when materials gathered by the AO or by an authorized official are brought on record that they become evidence in the case, and the rules of natural justice can only apply to these materials which the AO 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 AO 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.

AO has made the addition solely for the reason that assessee has admitted in his statement given during and after the course of survey that these loan transactions are 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 before the AO as well as the higher authorities by filing the notarised affidavit. Though, this fact is disputed now by the AO and is subjudice before Lucknow Bench ITAT in the appeal proceedings for AY 2015-16. As evident from record of AY 2015-16,
Shri Manish Agarwal Chartered Accountant has also denied these facts pertaining to arrangement 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 ITA. No.139/LKW/2022
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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 the case under question the department has not been able to find out any direct or indirect evidence that lead to assumption that loans taken by appellant are bogus. There is no evidence brought on record by AO during or after the survey to prove that M/s Wise Financial Advisor Services Pvt. Ltd. is a shell company and does not have any genuine business and/or the loan transaction with the appellant is bogus. Appellant has furnished copy of their ITRs, Bank Statement and confirmation of account.
Against this evidence placed on record no specific finding has been brought on record by the AO to dispute the veracity of documents submitted in respect to the loan taken of the appellant company. It is clear that addition made by AO is based purely on the basis of statement recorded during the survey proceedings that has lost its evidentiary value in light of the law laid down by Hon'ble Apex
Court in the case of S. Khader Khan Son(Supra) and retraction made by appellant and CA Mr. Manish Agarwal.

CBDT on 13/03/2003 vide Instruction No. 2862/2003/IT(Inv) held that while recording the statement in survey operation, no attempt should be made to obtained confession as to tax the undisclosed income. AO should rely upon the evidence and material gathered in the course of survey operation. The object of Survey proceedings under the Income Tax Act, are to unearth unaccounted income, which has escaped tax liability and not to obtain admission or confession from the Assessee. 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.

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 scale and weighed with the other evidence. To act upon the retracted Confession for taxing an amount, the onus is on the department to prove that the statements made were voluntary and there was no coercion on Assessee. So for the taxation of unexplained loan credit to stick, 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.
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
ITA. No.139/LKW/2022
No 634 of 2009, it was held the retracted confession can be relied only if there is independent and cogent evidence to corroborate the statement. 2009-TIOL-272-HC-DEL-FEMA, ABID MALIK Vs UNION
OF INDIA Retracted confession can be a piece of corroborative evidence and not as the sole evidence on the basis which conviction can be ordered. Once confessional statement is retracted, burden is on the prosecution to prove that the statement was voluntary.

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.

In the case of "Prem Castings (P) Ltd. vs. Department Of Income Tax,
Income Tax Appellate Tribunal, Delhi Bench T' - New Delhi on 11
September, 2015 in UA No.3401/Del/2011, held:

"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 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
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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 owner thereof unless the burden of proving that he is not the owner thereof is discharged by the assessee. Whether certain sums of money were claimed by the assessee to have been received from certain persons, it was for the assessee to prove by cogent and proper evidence that these were genuine transactions as these facts were within the exclusive knowledge of the assessee and it should be kept in mind that the assessee cannot discharge this burden of merely proving the identity of the share applicant/shareholder, he has to prove all about the transaction, namely, identity, capacity of the shareholder to invest money and genuineness of the transaction.

"15. What is burden of proof? As pointed out by Sarkar in his book
Indian Evidence Act, the phrase "burden of proof has two distinct and frequently confused meanings. As a matter of law and pleading, the "burden of proof" is in the nature of establishing a case. This burden rests upon the party, whether plaintiff or defendant, who substantially asserts the affirmative of the issue. It is fixed at the beginning of the trial and remains unchanged and, in this respect, reference may be made to section 101 of the Indian
Evidence Act (emphasis given by us). In the second sense, the "burden of proof" relates to the region of production of evidence. In this sense, the "burden of proof" is ambulatory and shifting throughout the trial and the scale of evidence may 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 shifting and ambulatory nature, may be called "onus of proof" while the "burden of proof as it is understood in the first sense may 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. CIT, 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 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.
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"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 veracity of the same, then the materials of the scrutiny are to be communicated to the assessee, thereafter the onus shifts from the revenue to the assessee. Then, the assessee has to take appropriate steps for proving his case. Unless, there are sufficient materials after such communication, produced by the assessee, the Income-tax officer can do no further. It should be kept in mind that the transactions which had occurred are things of which assessee is aware of and it has to come clean before the AO.

"17. Dealing with share capital their Lordship of the Apex court has held that there cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the Revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents.
In the case of private placement the legal regime would not be the same. A delicate 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. "

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 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 ITA. No.139/LKW/2022
Page 142 of 158

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 of proper inquiry by the AO and such inquiry must be reasonable and Just.

According to Section 68 of Income Tax Act 1961, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of the same or the explanation offered by him is not satisfactory in the opinion of A.O., the sum so credited may be charged to income tax as the income of the assessee of that previous year. The basic precondition for the Section 68 is that the assessee should file a valid confirmation. Valid confirmation has no specific format but it must contain name, complete address of the lender and PAN of the lender. The confirmation so filed must indicate complete details of transactions (like mode-cash or cheque, with number date of cheque with bank details). The AO have right to demand the copy of bank account of the lender evidencing such transactions and the same needs to be filed. As far as the creditworthiness or financial strength of the creditor/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that It had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharged the onus 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 AO thereafter is subjective and requires more efforts/inquiry on the part of the AO to give a finding in the order that lender is not genuine or is not credit worthy.

AO has not dealt with any of the submissions of appellant as to why AO 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 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.
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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 assessment under question was being finalized. All these evidences cannot be brushed aside without any further adverse material being placed on record by AO. Genuineness of Transactions undertaken through banking channel through account payee payment modes may be doubted. But the evidence placed on record before AO by the appellant can be treated as full discharge of onus on the part of appellant with regard to the genuineness and creditworthiness as required u/s 68 of the Act. In view of the fact the AO has failed to establish through evidences that either the loan creditor is non-existent or the loan transaction is an accommodation entry taken in lieu of cash paid. Therefore addition made simply on the basis of admission during the survey and on the basis of the general and vague report received from the DDIT (Inv) Kolkata office, without any supporting material found at the time of survey, cannot be sustained. AO has not brought on record any such evidence to prove that admission was voluntary. If AO has any evidence against in the name of M/s Wise Financial Advisor Services Pvt.
Ltd., then those evidence must be passed to ire concerned AO 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. In view of the above both the additions made are deleted.”

Assessment year:2013-14

Page No.

53
(Wise Financial Advisory Services (P) Ltd.
2.Copy of bank account of lender

65 to 67
3.Copy of bank account of assessee

70 to 76
4.Copy of master data of lender

78
5.Copy of assessment order for assessment year
79 to 81
2014-15 of lender

Confirmed Copy of Account by lender

52
Copy of audited balance sheet,

54 to 64
profit & loss account with Annexures

Assessment year:2014-15

45
M/s Silver Agencies (P) Ltd.
2. Confirmed copy of account of lender

44
3. Copy of audited accounts

46 to 56
4. Copy of bank account of lender

57-61
5. Copy of master data of lender

63
6. Copy of assessment order of lender

64 & 65
for assessment year 2011-12
ITA. No.139/LKW/2022
Page 144 of 158

Assessment year:2016-17

44
(Cooper Commercial (P) Ltd.)
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

148
ITA. No.139/LKW/2022
Page 145 of 158

149
3. Copy of bank account of the lender

158 to 162
4. Copy of financial statements of lender

150 to 157
5. Copy of assessment order of lender

165 to 167
for assessment year 2017-18

(C.1.1)
Ld. Counsel for the assessee also placed reliance on written submissions [already reproduced in foregoing paragraph no. (C) of this order]. The Ld. Departmental Representative relied on the assessment order regarding the addition of Rs.4,51,00,000/- u/s 68 of the Act on account of unsecured loan; and aforesaid addition of Rs.22,55,000/-.
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(C.2). The learned Departmental Representative besides relying on the assessment order also submitted that Revenue has appealed against the aforesaid order dated 05.08.2022 of ITAT, u/s 260A of the Act.
(C.2.1)
We have heard both sides and perused materials on record. In para no. 6.5 of his order, relevant portion of which is reproduced in foregoing paragraph (C.1) of this order, the Ld.
CIT(A) observed that in the assessee’s own case in A.Y. 2016-17;
ITAT had deleted the additions made on account of unsecured loan taken by the appellant from M/s. Cooper Commercial Pvt
Ltd., vide order reproduced in para (C) of this order. In this year also, of Rs.4,51,00,000/- was taken by the assessee from the same party. The Ld. Departmental Representative could not differentiate the facts and circumstances of the case in A.Y.
2018-19 to which these appeals pertain from facts and circumstances in A.Y. 2017-18. We, therefore, respectfully follow the order of the Co-ordinate Bench of ITAT in assessee’s own case for A.Y. 2017-18 and accordingly, we decline to interfere with the impugned order of the Ld. CIT(A) regarding the aforesaid addition of Rs.4,51,00,000/-. Accordingly, ground no. 1 of the Revenue’s appeal vide ITA. No.141/LKW/2022 is dismissed.
(C.3) The addition of aforesaid amount of Rs.22,55,000/- has been made by the AO by way of alleged commission paid by the assessee for obtaining the aforesaid unsecured loan from M/s.
Cooper Commercial Pvt Ltd. Since we have upheld the order of Ld. CIT(A) deleting the aforesaid additions of Rs.4,51,00,000/-; there is no basis for addition of any commission allegedly paid by the assessee for obtaining the aforesaid loan of Rs.4,51,00,000/-.
Therefore, we uphold the order of Ld. CIT(A) deleting the ITA. No.139/LKW/2022
Page 148 of 158

aforesaid addition of Rs.22,55,000/-. Ground no. 2 in Revenue’s appeal is dismissed.
(D)
As regards the aforesaid addition of Rs.16,14,46,148/- made by the Assessing Officer u/s 41(1) of the Act, it is found that the Ld. CIT(A) sustained an addition of Rs.2,96,50,131/- and deleted the remaining amount of Rs.13,17,96,017/- in his impugned appellate order dated 18.04.2022. The relevant portion of the impugned order of the Ld. CIT(A) is reproduced below: -
7.2 In this regard the relevant part of the assessment order is produced as under:
…………….
……………
…………..
7.5 The undersigned has considered the facts of the case submitted above, that the appellant has admitted during survey conducted u/s 133A of IT Act that the sundry creditors as per ‘Annexure C’ are bogus. However later on, he retracted from the entire disclosure which was made on account of unsecured loan as well as Bogus sundry creditors. The appellant has not offered such disclosed income in the return of income filed by him in any of the assessment years. In the assessment proceedings, the AO has made addition on the basis of admission in statement and on the basis of enquiry conducted by ITI on six creditors where it has been commented by the Inspector that no such creditors are residing at the given addresses.
Except the above, there was no corroborative evidence on which the AO has placed reliance while making addition on account of all the 46
creditors as per Annexure C,

been held that an assessee who makes an offer of additional income during course of survey before the income-tax authorities, is not bound by his offer of additional income for all time to come, and can retract from his offer by furnishing his details in the course of assessment proceedings.
The Hon'ble Co-ordinate Bench in the case of Suresh Chand Agarwal v.
ACIT, ITA 191/Agra/2013 dated 31/07/2017 held that no addition can be made by the Assessing Officer merely on the basis of the admission in the statement recorded in survey proceedings. Relevant finding is reproduced as under:

‘Therefore, in the facts and circumstances of the case, the addition of Rs.14,00,000/could not be made against the assessee on the basis of mere admission. The authorities below were, therefore, not justified in making and confirming the addition of Rs.14 lacs. Orders of the authorities below are accordingly set aside and addition of Rs.14,00,000/is deleted.
The appeal of the assessee /s accordingly allowed.” .

CIT reported in 263 ITR 101 (Ker) and Hon'ble Apex court's judgment reported in 91 ITR 18 (SC) and in case of CIT vs. S. Khader Khan Son reported in 300 ITR 157 (Mad) in which it is observed that no addition is called for if the assessee retracts from his disclosure. Section 133A of the Act empowers the Income-Tax authority to examine any person, and such statement has an evidentiary value but any admission made during the search/survey cannot itself be made the basis for addition, unless, the A.O has corroborative material in the hand to make such addition. The department is also not oblivious of the practice by which the revenue authorities obtain undue confession from the assessee during the course of search and survey proceedings. Vide circular dt. 1003-2003, the CBDT has clarified that no attempt should be made to obtain confession as to the undisclosed income and the additions should be made only on the basis of Material gathered during the course of search and survey.
7.12 In this regard, the decision of Hon'ble ITAT Agra Bench in the case of ACIT vs. Maya Trading Co. ITA No. 31 (AGRA) OF 2012 & C.O. NO. 20
(AGRA) of 2012 dated 05.10.2012 is noteworthy in which the following observation is made:

‘It is well settled law that admission are not conclusive proof of the matter.
They may be shown to be untrue or having been made under mistake of fact or law. Circumstances have to be seen under which same are made. It can be withdrawn unless it is estoppel and conclusive. The Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973]
91 ITR 18, held that the assessee should be given opportunity to show that admission is incorrect or does not show correct state of facts. The Punjab &
Haryana High Court in the case of Kishan Lal Shiv Chand Rai v. CIT
[1973] 88 ITR 293, held that it is an established principle of law that a party is entitled to show and prove that admission made by him was in fact not correct and true. Considering the facts of the case in the light of the legal proposition above, the Commissioner (Appeals) has committed no error in reducing substantial addition. [Para 4]”

184 ITR 404 has observed that "An admission or acquiescence cannot be a foundation for an assessment. It is always open to an assessee to demonstrate and satisfy the authority concern that a particular income is not taxable in this hands". Further Hon'ble Punjab & Haryana High Court held that it is an established principle of law that a party is €ntitled to show and prove that admission made by him was in fact not correct and true. The appellant has drawn attention on the following decisions, in which the issue of Surrender has been discussed elaborately and the decisions are delivered in favour of the assessee:

* Suresh Chand Agarwal v. ACIT, ITA 191/Agra/2013 dated 31/07/2017
* Paul Mathew & Sons vs. CIT, (2003) 263 ITR 101 (Kerala)

CIT vs. S. Kadar Khan & Sons, (2013) 352 ITR 480 (SC)

CIT vs. S. Kadar Khan & Sons, (2008) 300 ITR 157 (Madras)
5935/Mum/2002 dated 30.10.2006

6 Commissioner of Income-tax v. phingra Metal Works [2010] 328 ITR 384
(Delhi) dated 04-10-2010 Abdul Qayuam Vs. CIT reported in 184 ITR 4

CBDT Instruction No. 286/2/2003(Inv) 7.14 The appellant has further submitted before the undersigned that the sundry creditors are liabilities which are still existing and accounted as payable in the books of the appellant and has not been written off. Even there was opening balance from the previous year which was brought forward to the present financial year and the amount of sundry creditors is pertaining to expenditure incurred by the assessee towards purchase and expenditure incurred towards business activities at the end of present financial year 2017-18 as well as earlier years. In earlier years, the same had been ccepted by the AO without any disturbance and therefore, this amount cannot be disturbed. The appellant has submitted the assessment orders passed u/s 143(3) for AY 2014-15 , 2015-16, 2016-17 & 2017-18 submitting that all purchases have been accepted and the sundry creditors, which are part of Annexure —C have been accepted by the AOs. It may further be appreciated that these are liabilities which are still existing and accounted as payable in the books of account of the appellant and has not been written off. The provisions of section 41 cannot be applied in case of running accounts Thus the AO cannot make addition unless it is proved that the party under Consideration is Bogus. In case of these 46 parties, which are part of AnnexureC and for which alleged disclosure was made by the appellant, except 6 parties, the AO could

Not prove that the same are Bogus. 7.15 The provisions of section 41(1) could be applied only when there is cessation of liability and in-fact the decision of cessation is a bilateral act, when both the parties Mutually agree or refusal is made by the debtor and accepted by the creditor that the lability is not required to be paid. In no case a debtor can bring the liability to an end on his own volition. The reliance in this regard is placed on the decision reported in 62 ITR 34 (Bom) in the case J.K. Chemicals Ltd vs CIT. It has been observed by the Supreme Court in the case of Sugauli
Sugar Works that the following words in section 41(1) are important:
…….
ITA. No.139/LKW/2022
Page 152 of 158

……
…..
"The assessee has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such liability by way of remission or cessation thereof, the amount obtained by him”.

Thus, the section contemplates the, obtaining by the assessee of an amount either in cash or in any other manner whatsoever or a benefit by way of remission or cessation and it should be a particular amount obtained by him. Thus, the obtaining by the assessee of a benefit by virtue of remission or cessation is sine qua non for the application of this section.

In the course of the assessment for an earlier year, allowance or deduction has been made in respect of any loss, expenditure, or trading liability incurred by the assessee;

Subsequently, a benefit is obtained in respect of such trading liability by the way of ‘emission or cessation thereof during the year in which such event occurred;

The value of benefit accruing to the assesses is deemed to be the profit and gains of business which otherwise would not be his income; The value of benefit is made chargeable to tax as the income of the year wherein such benefit was obtained.

In the instant case, it is clear that appellant has not received any benefit by way of remission or cessation of liabilities during the relevant year as the creditors are existing in books and neither at the time of survey nor post survey proceedings, any evidence was found that assessee has received any benefit against existing liabilities and therefore it is concluded that the assessee has fulfilled none of the above prescribed conditions and thereby applying the ratio laid down by the Hon'ble Supreme Court, it may be stated that section 41(1) would have no legs to stand.

essential enquiries, cannot be sustained, However, in the light of enquiries conducted by the AO through ITI in 6 cases, the disallowances/ additions are confirmed. The entire purchases are disallowed, in case of those parties from which purchases are made this year, u/s 37 of [T Act.
However the Credit balances are added u/s 41(1) of IT Act, in case of those parties in which Purchases are not made this year and the credit balances are shown as outstanding.

The payments, which are shown to be made to these 6 parties in this year are held as bogus and are confirmed to be added u/s.69C of IT Act.

(D.1) At the time of hearing, the Ld. Counsel for the assessee placed heavy reliance on the written submissions [reproduced already in foregoing paragraph no.(B.1.1) of this order]. He also placed strong reliance on the case laws as under: -
ITA. No.139/LKW/2022
Tiwari (2014) Taxman 141 (All-HC) dated 30.09.2013, for the proposition that no addition can be made where assessee had made payments to creditors through cheques, merely because some creditors had not confirmed receipts. He also placed reliance on PCIT vs Adani Agro (P) Ltd 92020) 273 Taxman 430
(Guj- HC) dated 10.02.2020 and CIT vs Saugauli Sugal Works (P)
Ltd. (1999) 236 ITR 518 (SC) dated 04.02.1999, for the proposition that merely because liability had remained outstanding for more than three years and same was not written back in profit and loss account, application of provisions of section 41(1) could not have been made to consider such liability as income for year under consideration without there actually being any remission or cessation of liability. Without prejudice to these submissions, the Ld. Counsel for the assessee also pleaded that only profit element embedded in purchases would be subjected to tax and not entire amount where purchasers were not traceable; relying on PCIT vs Jakharia Fabric (P) Ltd.(2020)
42( ITR 323 (Bom-HC) dated 10.02.2020, PCIT vs Rishabhdev
Technocable Ltd (2020) 424 ITR 338 (Bom-HC) dated 10.02.2020
and CIT vs Bholanath Poly Fab (P) Ltd (2013) 355 ITR 290 (Guj-
HC) dated 23.10.2012. Ld. Counsel for the assessee further submitted that addition was made by the Assessing Officer merely based on statement recorded at the time of survey u/s ITA. No.139/LKW/2022
Page 155 of 158

133A of the Act and alleged spot enquiry by Inspector of Income
Tax Department at the premises of six sundry creditors out of the total 46 sundry creditors. He further submitted that the statement made at the time of survey u/s 133A of the Act was immediately retracted within a week and should be given no credence as statement was extracted by the team of Income Tax
Department under duress through extreme pressure and mental torture at the time of survey. Ld. Counsel for the assessee also submitted that the addition was made by the Assessing Officer with a pre-meditated mind and was guided merely by malice and prejudice arising from the fact that the assessee had retracted the income surrendered in the statement recorded by the Income
Tax Department, at the time of survey u/s 133A of the Act. He drew our attention to the fact that although the Assessing Officer claimed to have made spot inquiry in the case of (only) six parties; the addition has been made in respect of all the 46
sundry creditors; which showed the biased, prejudiced, malicious and premeditated thinking on the part of the Assessing Officer.
He further submitted that all the sundry creditors had opening balance. Furthermore, he submitted that the accounts of the sundry creditors in the books of the assessee were running accounts in which regular payments were being made from time to time. He contended that all the payments were made by the assessee to the creditors by cheque except petty amounts for which payments were made by cash. Moreover, he also submitted that the spot verification through Inspector of Income Tax
Department was not done in accordance with procedure prescribed by Hon’ble Supreme Court in Commissioner of Income-
Tax, West Bengal v. Ramendra Nath Ghosh [1971] 82 ITR 888
(SC). He also contended that the action of the Assessing Officer in ITA. No.139/LKW/2022
Page 156 of 158

making the aforesaid addition of Rs.16,14,46,148/- was unsustainable because neither the purchases nor the sales of the assessee were doubted and also the books of accounts of the assessee were not rejected.
(D.2) The Ld. Departmental Representative placed reliance on the assessment order. In particular, he contended that the addition of the whole amount of Rs.16,14,46,148/-should be confirmed on the basis of statement recorded at the time of survey u/s 133A of the Act and spot verification made by the Income Tax
Department.
(D.2.1)
We have heard both sides. We have perused the materials on record. As regards the statement recorded by team of Income Tax Department at the time of survey u/s 133A of the Act; the statement was retracted within the short time i.e. within the week. The aforesaid statement was also the basis of addition of unsecured loan of the aforesaid amount of Rs.4,51,00,000 and Rs.22,55,000/- which we have deleted in foregoing paragraphs
(C.2.1) and (C.3) of this order. Additions were also made in the assessee’s case in other assessment years on the basis of the aforesaid statement. However, the Co-ordinate Bench of ITAT in the aforesaid order dated 05.08.2022 reproduced in the assessee own case for the A.Y. 2017-18 had deleted the additions. Thus, the retraction of statement stands already upheld by the aforesaid order dated 05.08.2022 of the Co-ordinate Bench of ITAT in the assessee’s own case for the A.Y. 2017-18. The aforesaid order dated 05.08.2022 of the Co-ordinate Bench of ITAT also refers to the earlier order dated 06.04.2022 in assessee’s own case in ITA. No.582/Lkw/2022 in which also the additions were deleted by Co-ordinate Bench of ITAT, Lucknow in ITA. No.139/LKW/2022
Page 157 of 158

the assessee’s own case. Thus, in multiple orders of Co-ordinate
Bench of ITAT, the retraction of the statement recorded at the time of survey u/s 133A of the Act has been upheld. As regards the field enquiry conducted by the Inspector of Income Tax
Department, the procedure prescribed by the Hon’ble Supreme
Court in Commissioner of Income-Tax, West Bengal v. Ramendra
Nath Ghosh (supra) has not been followed by the Inspector.
Although this decision was in the context of service of notice, the ratio is applicable for spot inquiry also. The Hon’ble Supreme
Court held in this case [CIT vs Ramendra Nath Ghosh, 82 ITR
888 (SC)] that 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, he did not mention the names and addresses of the persons who identified the place of business of the assessee, nor did he mention in his report or in the affidavit filed by him that he personally knew the place of business of the assessee. In this background, it was held by the Hon’ble Supreme Court, on the basis of Rule 17 of Order V of the CPC that the service of notice was not in accordance with law. The Supreme Court had come to the conclusion that the service made was not proper in accordance with law. In the present case before us too; there is no independent witness to confirm that spot enquiry was indeed made by the Inspector and that report submitted by the Inspector to the Assessing Officer was factually correct. In view of the foregoing, the submissions made by the Ld. Counsel for the assessee and the precedents relied upon by Ld. Counsel for the assessee, in foregoing paragraph (D.1) of this order, support the case of the assesse.
Therefore, accordingly, we direct the Assessing Officer to delete the entire addition of the aforesaid amount of Rs.16,14,46,148/-
ITA. No.139/LKW/2022
Page 158 of 158

made by the Assessing Officer u/s 41(1) of the Act. Thus, ground no. 2 in the Revenue’s appeal in ITA No.144/LKW/2022 is dismissed and ground no. 2 of the assessee’s appeal in ITA.
No.139/LKW/2022 is allowed.
(E)
As mentioned earlier in paragraph (A.1) of this order; ground nos. 1 and 3 of appeal filed by the assessee were not pressed. Therefore, these grounds in the assessee’s appeal in ITA.
No.139/LKW/2022 are dismissed being not pressed.
(F)
In the result, the appeal of Revenue in ITA.
No.144/LKW/2022 is dismissed and appeal of the assessee in ITA. No.139/LKW/2022 is partly allowed statistical purposes.

Order pronounced in the open Court on 26/09/2025. [SUDHANSHU SRIVASTAVA]
[ANADEE NATH MISSHRA]
JUDICIAL MEMBER
ACCOUNTANT MEMBER

DATED: 26/09/2025
Vijay Pal Singh, (Sr. PS)