TaxTMI 
TaxTMI 
2015 (4) TMI 181
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....so 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 case, the ratio of case laws relied upon by the first ap....
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.... 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 Metal Pvt. Ltd. (ITA No.567 of 2012); 2. CIT vs. Fair Finvest Ltd. ( I....
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....aded 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-operators themselves. No details of the sources from which the said paper companies....
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....ee 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 proceedings for the basis to justify any addition in these companies. 3. As regards the su....
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.... 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 disclosed before the Income-tax Department. Similarly, while recording statements during the course of sea....
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....er 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 opinion of AO the sum so credited may be charged to income tax as the income of assessee of that previo....
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....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 consequential to the addition of Rs. 3,85,00,000/- being the accommodation entry, same is directed to be de....
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....asis 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 shareholders. Thereafter the Learned CIT(Appeals) at page Nos.44 to 46 of the First Appellate Order has noted a....