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Income Tax Appellate Tribunal, DELHI BENCH “SMC-1”, NEW DELHI
Before: SHRI S.V. MEHROTRA
O R D E R PER S.V. MEHROTRA, A.M :
This is an appeal filed by the assessee against the order dated 27.06.2016 passed by the Commissioner of Income Tax (Appeals)-12, New Delhi, u/s 143(3)/148 of the Income Tax Act, 1961 (in short “the Act”) relating to A.Y. 2007-08.
Brief facts of the case are that the Assessing Officer received information from ACIT, Central Circle-10, New Delhi that Shri Vaibhav Jain & Shri Navneet Jain had indulged in providing accommodation entries through their thirty seven paper entities and charging commission from the beneficiaries on the accommodation entries provided. He noted that assessee was one such beneficiary as per the information received.
Accordingly, notice u/s 148 was issued to assessee. The assessee vide letter dated 18.03.2014 stated that the return of income filed on 31.10.2007 declaring taxable income of Rs.2,60,782/- may be treated as return filed in response to notice u/s 148 of the Act. The Assessing Officer observed that during the course of search and seizure and assessment proceedings u/s 153A for the Assessment Years 2005-06 to 2011-12, Shri Vaibhav Jain & Shri Navneet Jain had given statement on oath u/s 131 that they had given accommodation entries through thirty seven paper entities. The list of firms giving accommodation entries and the accommodation entries recipients had been provided. Shri Vaibhav Jain & Shri Navneet Jain had admitted to be engaged in the business of providing paper/accommodation entry without any delivery of goods. It was also submitted on oath that the sale bills (accommodation/paper bills) were destroyed, no sooner the transaction related to the respective bills were over. No books of account were maintained for the accommodation transactions. He further noted that it was also admitted by him that the respective transaction of receipt of consideration in lieu of accommodation bills i.e. cheque by the beneficiary parties (to whom the cash was repaid before encashment of cheque) were duly credited in bank statement of paper concerns. The Assessing Officer observed that the assessee whose Proprietor is Pradeep Kumar Jain (HUF) was one of the beneficiary who had availed accommodation entries of Rs.2,35,868/- + Rs.1,44,940/- = Rs.3,80,808/- as per the details provided by Shri Vaibhav Jain. The Assessing Officer examined the details filed by the assessee and noted from details of ledger of purchase and purchase inward Branch transfer register that there was one purchase transaction for amount of Rs.2,36,412/- plus Rs.9,456/- input tax on it, totaling to Rs.2,45,868/- with M/s Ess Mart Enterprises, which was one of the paper entities of Shri Vaibhav Jain & Shri Navneet Jain. He therefore required the assessee to prove the genuineness of the purchase transaction and to produce the Proprietor of M/s Ess Mart Enterprises to arrive at the correct state of affairs. The assessee did not avail the opportunity and did not discharge the onus cast on him of providing the genuineness of the transaction. The Assessing Officer made addition of Rs.3,90,808/- inter-alia observing that addition of Rs.2,45,868/-, as per details filed by the assessee, and Rs.1,44,940/- not declared by the assessee in books of account was made.
He further made an addition of Rs.1,954/- on account of commission charged by Shri Vaibhav Jain as admitted by him. Ld. CIT(A) confirmed the addition (Rs.2,36,412/- + Rs.9,456/- and commission of Rs.1,954/-) inter-alia observing as under :-
“It is a fact that Appellant’s name was appearing in the list of persons who had taken such entry. Therefore, onus cast on the Appellant has not been discharged and, therefore, there is no basis in the claim of Appellant has cross examination has not been allowed to him.” 3. The Ld. counsel submitted that the addition has been confirmed solely on the basis of observations made by the Department and no independent enquiries were conducted for making the addition specially in case where the assessee has discharged his primary onus of showing books of account, payment by way of account payee cheque and producing vouchers for sale of goods. He further submitted that all the relevant documents viz. purchase/sales bills, banks, bank transactions, TIN Nos. in respect of Shri Rakesh Gupta, Shri Vishesh Gupta, Shri Navneet Jain and Shri Vaibhav Jain had not been provided to assessee, despite numerous requests. Moreover, assessee had not been given opportunity to cross-examine/physically meet the abovementioned persons. The Ld. DR relied upon the order of CIT(A).
I have considered the submissions of both the parties and perused the record of the case. The addition has been made solely on the basis of statement given by Shri Vaibhav Jain & Shri Navneet Jain in the course of search and seizure proceedings u/s 153A of the Act. This addition could be made only if it was established that the documents produced by assessee with regard to alleged purchases made from M/s Ess Mart Enterprises were not genuine. The adverse inference was withdrawn by Department merely on the basis of statement recorded in the course of search and seizure operation and under such circumstances, it was incumbent upon the Assessing Officer to provide reasonable opportunity for cross-examination of Shri Vaibhav Jain to assessee before arriving at any conclusion. I, therefore, restore this matter back to the file of the Assessing Officer to provide reasonable opportunity to assessee for cross-examination of Shri Vaibhav Jain.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on this 01st day of December, 2016.