TaxTMI 
TaxTMI 
2015 (4) TMI 181
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....ants were not known to him personally & he also showed his inability to produce them. The Director was also not able to explain the reasons why these applicants would invest money in their concerns which were not listed in the stock exchange nor had they floated any public issue. b) the statement on oath of entry operators namely Mr. Mukesh Gupta, Surinder Pal Singh & Rajan Lasal who have categorically admitted on oath that they had floated the impugned entities from whom the said amount of Rs. 3.85 crores was shown to be received by assessee only for giving accommodation entries & no real business was done by these entities. c) that the assessee failed to produce the alleged share applicant for verification. Mere submission of documents & material is held to be insufficient in the case of Hindustan Tea Trading Co. vs. CIT 263 ITR 289. d) the dictum given by the Hon'ble Supreme Court in CIT vs. Durga Prasad More 82 ITR 540 & Sumati Dayal vs. CIT 214 ITR 801 in which Apex Court has laid down the proposition that the Courts & Tribunals should see the preponderance of probabilities while considering the evidence furnished by the assessee. e) that in respect of this cas....
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.... Sr. DR had reiterated the contents of the grounds and has placed reliance on the assessment order. He submitted that the assessee could not discharge its onus to establish the genuineness of the claimed share capital , the Assessing Officer was justified in making the addition of the claimed share capital investment under sec. 68 of the Income-tax Act, 1961. 6. The Learned AR on the other hand tried to justify the First Appellate Order with this submission that all the necessary evidence to establish the genuineness of the claimed investment of share capital by the parties were furnished and in absence of rebuttal thereof by the Assessing Officer, the Learned CIT(Appeals) was justified in deleting the addition by passing a detailed order and discussing the objections raised by the Assessing Officer and submissions of the assessee meeting those objections. He contended that issue is covered by the judgment of Hon'ble jurisdictional Delhi High Court in the following cases whereby it has been held that in case the Assessing Officer does not carry out independent investigation after the assessee has submitted the evidences, additions cannot be made: 1. CIT vs. Gangashwari Me....
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.... received from various outside parties about which the director of the assessee pleaded ignorance in the statement recorded at the time of the survey. The Assessing Officer had noted further that the survey action was based on the statements of various entry operators, namely, Mr. Mukesh Gupta, Surender Pal Singh and Rajan Jassal, wherein such entry operators categorically admitted operating various concerns as dummy/fake enterprises using name to give accommodation entries against cash received from the recipient of such accommodation entries. They also admitted to have charged a commission of 25 paise per hundred rupees of such conversion of undisclosed income by the recipient of the relevant accommodation entries. The Assessing Officer discussing the explanation of the assessee on the issue hold that the onus is on the assessee and not on the department to establish that the entries routed through such companies were not bogus entries as the entry-operator had categorically admitted the fact to the prejudice of the assessee. The Assessing Officer noted further that the assessee had provided evidences of mere existence of such paper companies which fact was admitted by the entry-....
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....d the appellant company as hawala operator and have not denied the investment in the assessee company. The statements are definitely evidence but evidence befitting to take up the assessment or reassessment or initiate investigation however these statements cannot be the basis to make the additions in assessment specifically when assessee has shown that contents of the said statements are doubtful and distinguished from the facts of assessee company and that all the sixteen shareholder companies I have confirmed the transactions with assessee company vide latest confirmations. copies available at page number 256 to 271 of paper book and all confirmations are after the date of three deponents statements. and the same remained undisputed by any finding or material brought on record during the assessment. It is also seen that as regards the 5 investors M/s. Harpal Associates P. Ltd. M/s. Chitragandha Investment & Consultants p. Ltd. Mrs. Parvantra Capital and Fin Services P. Ltd, M/s. Vimka Impex P. Ltd and SGC Publishing P. Ltd these don't find any mention in the statement of Mukesh Gupta, Surender Pal Singh, Rajjan Jassal and no material in available on record during assessment ....
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....the absence of any supporting material has no evidentiary value and could be said to be useful or relevant to assessment proceedings only when there was material on record to prove the basis on which disclosure was stated to be made. Thus, it could not be said solely on the basis of statement during survey and without any supporting material any income was assessable as lawful income. The aforesaid trite law is also reiterated by CBDT at CBDT circular no. F.No.286/2/2003-IT (Inv.II) Dated 10th March 2003 in the following words "Instances have come to the notice of the board where assessee have claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income, which leads to information on what has not been disclosed or is not likely to be disclos....
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....are money transactions, which were filed before AO and are also available at page number 256-271 of paper book. The assessee's retraction and above submissions and documentary evidences have remained uncontroverted from AO and there is nothing on record from AO to disbelieve the IT assessment status or the bank account statements or the ROC certificate or share application forms or the latest confirmations of transactions of the shareholders. In the facts and circumstances I concur with the decision of Gujrat High Court at Kailashben Manharlal Chokshi 174 Taxman 466 (Guj) though rendered in context of admission u/s, 132(4) and which has greater legal sanctity than admission u/s. 133A which is not on oath that assessee could not be subjected to addition merely on the basis of admission which is retracted and where revenue could not furnish any corroborative evidence in support of such admission. Now, I proceed to check material facts w.r.t section 68 which provides 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 or explanation offered by him is not satisfactory in the ....
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....ils of the subscribing share applicants. In case the Department alleged that applicants were bogus, it was free to proceed against the applicants. The share application money received could not be regarded as undisclosed income of the assessee company. After considering the material facts and following pronouncements of courts in similar facts and circumstances, I am of the view that assessee has established the identity of the 16 share subscriber's, their creditworthiness and the genuineness of the share transaction with documentary evidence and as per law. Also, the assessee explained and substantiated the nature and source of credits found credited in the books of accounts during the relevant financial year as per requirements of section 68 of the IT Act,1961. I therefore hold that addition ofRs. 3.85 crores as unexplained cash credits is not maintainable as per law and facts of the case. Accordingly, the said addition of Rs. 3,85,00,000/- is directed to be deleted. 51. Ground Nos.6 & 7 are in respect of addition of Rs. 96,250/- as unexplained expenditure being commission @ 25 paise per 100 rupees paid for arranging entries of Rs. 3,85,00,000/-. Since this addition is ....
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....ns of Rs. 3.85 crores and survey material that could support the addition. The addition was made not on the basis of any evidence found during the course of survey but on the basis of statements of Shri Arvind Kumar Gupta recorded during the survey. Shri Arvind Kumar Gupta on the basis of whose statements, the addition is made has specifically admitted in question Nos. 18 & 21 of the statements that details and genuineness of share capital is as per the shareholders register and there is no incriminating material found during survey. Also that the very basis of question No. 22 that cheques are accommodation entries in lieu of cash deposit with them in any of their accounts is not supported by material or bank statement of any account produced on record either during survey or assessment to justify that question No.22 was factual and bona fide. The Learned CIT(Appeals) has noted further that as per material produced by assessee (page Nos. 253 to 255 of the paper book ), the subsource of share capital of Rs. 3.85 crores, except an insignificant amount of Rs. 84,858 that too is sum total of miscellaneous small amounts have been made through cheques duly credited in bank accounts of sh....
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....x Share (CIN) of Shareholder ROC Assessing Applied Money Amount No., Bank Name & Record Officer (Rs.) Cheq Address No. Cheq Date 1. M V Marketing Pvt. Ltd. A-24, Tagore Market, Kirti Nagar, New Delhi CIN: U51109DL1992PTC051334 11/12/92 Active Ward 6(1) Delhi 250,000 2,500,000 07CA1106624 Bank of 276327 Punjab Ltd. Sector-8, 19/01/2000 Rohini, Delhi Document 2 2. FNS Consultancy Pvt. Ltd. 27/02/89 Active Ward 100,000 1,000,000 2296 70/5391, Reghar Pura, Karol 11(3) Bagh, New Delhi Delhi 799694 Vijaya Bank Ram Nagar, CIN: Paharganj, U74140DL1989PTC035249 30/03/2000 New Delhi 3. Ethnic Creations Pvt. Ltd. WZ- 06/04/95 Active Ward 250,000 2,500,000 2834 134, Plot No.-170, Vishnu 11(2) Vijaya Bank Garden New Delhi Delhi 280103 Ram Nagar, CIN Paharganj, :151493DL1995PTC067204 17/02/2000 New Delhi 4. SGC Publishing Pvt. Ltd. A- 04/12/96 Active 2/46C, MIG Flats, Paschim Ward 8(1) Delhi 250,000 2,500,000 2840 Vijaya Bank Vihar, New Delhi CIN :U22110DL1996P....