TaxTMI 
TaxTMI 
2012 (9) TMI 593
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.... was right in deleting the addition of Rs.28,50,000/- made in the block assessment order dated 08.05.2009 on account of peak credits in the account of M/s Madhepuri Finance Ltd, M/s Madhopuri Metal Industries Pvt. Ltd., M/s Fenil Information System Pvt. Ltd. and M/s Merchant & Co. as income from undisclosed sources ? 2. Whether the order of Tribunal is perverse? " 2. The appeal arises out of block assessment made on the assessee, which is a private limited company, under Section 158 BD read with Section 158BC of the Act, pursuant to a search carried out under Section 132 of one Mahendra H. Shah and one Hemant C. Shah, both belonging to the Madhupuri Group of Jamnagar, Gujarat on 7th December, 1999. In the course of the search, ....
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....ld them to represent the undisclosed income of the assesssee. However, he did not add the entire amount of the loans but calculated the peak credit by combining all the loans from the different companies belonging to the Madhupuri Group and arrived at the peak credit of Rs.28,50,000/- which was added as the undisclosed income. The assessment was completed accordingly. 4. The assessee appealed to the CIT(Appeals) and reiterated its contentions against the addition. The CIT(Appeals) obtained the comments of the Assessing Officer, vis-à-vis, the submissions of the assessee. In the letter dated 31st May, 2004 addressed to the CIT(Appeals), the Assessing Officer does not appear to have made any specific comments on the seized material ....
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....of the loan and establish a link between the directors of those companies and the assessee-company, the Assessing Officer was unable to provide any such information till 15th September, 2004, the last hearing date before the CIT(Appeals). He also found that the assessee has paid interest on the loans at the normal rates and has also deducted tax at source from the same. He accordingly held as under:- "Therefore, it is very clear that there „was absolutely no material in possession of the AO to arrive at the conclusion that the loans received by the appellant were in the nature of accommodation entry. The only reliance placed by the AO was on the statement of Sh. Shah which is not reliable in view of discussion in Para 5.2 above." 6....
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.... statement. The Assessing Officer has placed reliance on the question Nos. 9 to 11 and 13 and the answers thereto. A perusal of these questions and answers shows the following position:- In answer to question No.10, Shah agreed that in his business he issued cheques after deducting commission to those who give cash. When he was asked whether he had "done purchase business with any ship-breaker or given any loan to them" he answered as follows:- "A.11 I do not deal for scrap with any Ship Breaker. I have given only loan or if they give cash, I brought and given entry cheque to them for example any person need loan entry he give Rs. 500000/- in cash and after deducting commission issue cheque of Rs. 500000/-." In answer to question No.1....
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....book of M/s M.Sagar Corporation was also found. Except this, all the other papers were destroyed by him. He also stated that the ledgers and vouchers were not necessary and, therefore, he had destroyed them. 9. The above is the gist of the statement of Hemant Shah. It is is seen therefrom that the assessee's name was not mentioned by him at all as beneficiary of the accommodation entry business carried by him. Question No.11, on which strong reliance was placed on behalf of the Revenue, does not help them since despite being obliquely prompted, Shah did not mention the assessee's name and merely stated that he did not deal with any ship-breaker and he had given only loan after taking cash and deducting commission. This is too gene....