TaxTMI 
TaxTMI 
2010 (11) TMI 628
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....ny companies engaged in providing entries, recorded by the Investigation Wing who deposed that the companies were not doing any actual business other than giving accommodation entries. 2. On the fact and circumstances of the case, the Ld.CIT(A) has erred in deleting addition of Rs.1,36,21,250 received as share application money in the form of stock from different entities ignoring the fat that - (a) amount received by way of stock/cheques is unexplained as assessee failed to discharge the onus cast on it to prove identity and creditworthiness of the creditors/share applicant and the genuineness of the transaction. 3. The facts of the present case are distinguishable to that of M/s Lovely Exports (P) Ltd. 2. Ground no.1 pertains to deletion of addition of Rs.3,99,00,000 made u/s 68 of the I.T. Act on account of induction of fresh share capital and Rs.2,00,000 concerning commission from undisclosed sources. 3. In its return of income, the assessee declared total income of Rs.1,54,228. In the assessment proceedings, as per assessment order, the details called for were submitted by the assessee. The books of account, i.e., ledger and ca....
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....o allow opportunity of cross-examination in cases. It was observed from the statement of Mahesh Garg, entry operator as recorded by the Addl.DIT(Inv.), it was available that all the entities/companies in which he was a director were those whose sole nature of business was providing of entries in various forms. 5. Considering in view of the said statement, entries in the books of account of the assessee, the AO added the amount of Rs.3,99,00,000 to the total income of the assessee u/s 68 of the I.T. Act observing that the explanation regarding the source thereof was not satisfactory. The amount of Rs.2 lakhs was added towards commission allegedly paid in cash obtained in these entries. 6. By virtue of the impugned order, the CIT(A) deleted the addition. 7. Before us, the Ld.DR has argued that the CIT(A) has erred in deleting the addition of Rs.3,99,00,000; that this addition had rightly been made by the AO u/s 68 of the Act on account of the induction of fresh shares; that the CIT(A) has also erred in deleting the addition of Rs.2 lakhs on account of commission obtained from undisclosed sources; that the CIT(A) has failed to consider that the action tak....
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....sary details were called for and were submitted from time to time as per the order sheet entries. The books of account namely ledger and cash book were produced and test checked. Statements of all back accounts along with narration of all the entries therein and reconciliation statements have been obtained and are placed on record." 10. The AO, however, in making the addition, solely placed reliance on the statement of Mahesh Garg (supra), which too, was not confronted to the assessee. Interestingly, for doing so, the AO made the following observations: The statements given by 'Entry Operators' before the Addl. DIT (Inv.) are statements which have been recorded on oath. The Income Tax Act provides for recording of such statements and using the same for assessment purposes. Income Tax assessment proceeding are not criminal proceedings. These are civil proceedings. Hon'ble Appellate Courts and Authorities have held thus, 'In civil cases a matter is judged on the basis of the preponderant probabilities in the case while in criminal matters the guilt must be established beyond reasonable doubt'. The statements are neither concocted nor have been obtained by using th....
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....ests by the Assessing Officer concerned or deciding of appeals by Appellate Authorities in favour of the assessees, not maintainable? What is achieved by blindly following precedents of law without applying common sense? The statement of Sh. Mahesh Garg (Entry Operator) was recorded on oath by the Addl. DIT (Inv.), Unit-I, New Delhi on 3 dates. The pages on which the statement was recorded were scanned and were forwarded along with the Report on Accommodation Entries [ on computer readable compact disc. Drive]. Printouts of relevant pages of the statement are annexed as Annexure-I to this order and may be read as a part of this order. It is clearly seen that Sh. Mahesh Garg has stated that all Entries / Companies in which he was a Director were those sole nature of business was providing of Entries in various forms. 5. Another contention which was put forward in this case and in all other cases of identical nature was that how is it proved that the assessee company generated cash to pay to the 'Entry Operators' for taking cheques in lieu of that cash? Well, the answer to this is very much obvious. Immediately before the clearance of the respective cheques from the bank ac....
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....in the assessee company either in the form of dividends or capital gains from the date of investment till current date over a period of time? Why would Mr. Mahesh Garg's companies invest their own capital which they know for sure would be 'dead capital'? The great detective Sherlock Holmes used to solve mysteries which other could not? How? Simply by applying 'common sense'. How does one belive the truth in the report from Inv. Wing. Simple. By applying common sense logic. There is no other way by which the trust in the Inv. Wing Report can be appreciated. If the report is not appreciated then no Assessing Officer would find any reason to make addition u/s 68 in this regard and neither will any Appellate Authority find reasons for sustaining the additions made." 11. The CIT(A), by virtue of the impugned order, deleted the addition, observing that the assessee, by filing all the evidences called for, had duly discharged its onus of proving the identity and creditworthiness of its creditors and the genuineness of the transactions. 12. Pertinently, it was seen by the CIT(A) that as per the certificate issued by the independent firm of companies, M/s Sober Associate....
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....P) Ltd. - Rs.12,00,000 2. Smt. Dilip Kaur - Rs.10,000 3. Shri Inderjeet Singh Batra Rs.3,50,000 4. Shri Inderjeet Singh Batra (HUF) Rs.10,000 16. The assessee had taken over the business of three proprietary concerns of Shri Inderjeet Singh Batra, Inderjeet Singh (HUF) and Smt. Dilip Kaur. Smt. Dilip Kaur is the mother of Shri Inderjeet Singh Batra. 17. As per the AO, the assessee did not provide any information to prove that identities of the applicants of share application money; that it was not known as to which of the items constitute the closing stock stated to have been taken over by the assessee; that the assessee did not provide the complete inventory or the supporting bills representing the purchase of items taken in the stock. On this basis, the AO added to the income of the assessee company, an amount of Rs.13621250. The CIT(A) deleted this addition also. 18. Ld.DR has contended that in deleting the addition, the CIT(A) has failed to consider that the amount received by the assessee by way of stock/cheques remained unexplained; that the assessee was unable to discharge its onus of proving the identity and creditworthin....