TaxTMI 
TaxTMI 
2017 (4) TMI 1008
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.... ld CIT(A) has erred in deleting the addition of Rs. 23265000/- made by the AO u/s 68 of the Act, 1961. 2. On the facts and in the circumstances of the case, the ld CIT(A) has erred in holding that no addition can be made in the search assessment under the provisions of section 153C/ 153A when on incriminating material relating to the issue is found. 3. The order of the ld CIT(A) is erroneous and in not tenable on facts and in law." 3. For AY 2007-08 the following grounds are raised:- "1. On the facts and in the circumstances of the case, the ld CIT(A) has erred in deleting the addition of Rs. 32126000/- made by the AO u/s 68 of the Act, 1961. 2. On the facts and in the circumstances of the case, the ld CIT(A) has erred in holding that no addition can be made in the search assessment under the provisions of section 153C/ 153A when on incriminating material relating to the issue is found. 3. The order of the ld CIT(A) is erroneous and in not tenable on facts and in law." 4. Briefly stated the facts are that assessee is engaged in the business of providing medical transcription services and remote accounting business for its overseas customers. During the A Y 200....
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....lish beyond doubt that these are just entry level papers/shell companies of Today group who are/were not doing any business; have no books of account and have just been floated and controlled by Sambhirs for infusion of their unaccounted money is the key/flagship companies of Today group. 4. Existence of paper/shell companies which are controlled by Gambhirs: 4.1 The various paper/shell companies which have been floated by Gambhirs and have been used as a conduit to transfer their unaccounted money into the assessee company are as under: s. No Name Address Date of incorporation Status as per ROC website Directors 1. Affluence Construction Pvt Ltd 373, 2"' Floor, East of Kailash, New Delhi-110065 29.11.2006 Strike off Defaulter in filing form 32 as per ROC site 2. Chintapurni Prop. Build Pvt Ltd BG-6/237D, Paschim Vihar, New Deli-110063 20.05.2006 Strike off JagtarSingh Ashok Chopra 3- Mega Business Centre Pvt Ltd 373, 2nd Floor, East of Kailash, New Delhi-110065 21.06.1995 Strike off SanjayJatwani Ashok Chopra 4, S. M. Infotel Pvt Ltd BG-6/237D, Paschim Vihar, New Deli-110063 30.06.2004 ....
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....ell as the details of business activities of these concerns/companies of Today group, survey u/s 133A was conducted on 26.11.2009 at all the registered offices of these companies. The persons available at these 3 registered offices have categorically stated that neither books of accounts are maintained nor any business activities are carried out by these companies from those premises. It has been stated that all these companies are controlled by Today 6roup of companies having office at Statesman House, Connaught Place, New Delhi. 4.3.1 During the course of surveys, no company was found to be running from the aforesaid premises and no records in terms of books of account/secretarial records of these companies like shareholder register, minutes register, share transfer register, cash book, bank book. Journal book etc were found. Persons present there have deposed on oath that they were directly or indirectly acting at the behest of Today 6roup. The relevant portions of these statements indicating the above are reproduced as understatement of Sh. Jagdish Prasad Vohra aged 58 years 5/o Late Sh. Kanhaiya Lal Vohra R/o 1878, S.fi.M. Nagar, Faridabad recorded on oath/ solemn affirmati....
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....nd from your premise:- (i) Arushi Steels & Alloys Pvt. Ltd. (ii) Jeet Build Cap Pvt. Ltd. (iii) Arjit Steels & Alloys Pvt. Ltd, (iv) Goodwill Merchants Pvt. Ltd (v) Novelty Exports Pvt. Ltd. (vi) Vikram Casting Pvt. Ltd. (vii) Sagar Promoters Pvt. Ltd. Please explain why the rubber stamps of these companies are lying here. Who are the employees of above stated companies and -what business activity is being done by the above companies? Ans. I have joined here about two years back I don 't know since when these rubber stamps are lying here. There is no employee working in this office in respect of above stated companies. No business activity is done by the above companies at this premise. Q.8. Where are the books of accounts of the above stated companies mentioned at serial no. 6 and 7? Ans. I don 't know where the books of accounts of these companies are maintained. Hwever 1 confirm that the books of accounts of there companies are not maintained here. Q-9 Who pay the salary and rent? Whether it is paid in cash or cheque? Ans. Salary and rent is sent bv the office at statesman (Today Homes and Infrastructure Pvt. Ltd.) in ca....
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....oath u/s 132(4) of the Income Tax Act, 1961 are re-produced as under:- 4.4.1 STATEMENT OF SHRI ASHOK CHOPRA (DIRECTOR) RECORDED ON 27.11.2009 AT 8(tm) FLOOR. STATESMAN HOUSE, CP. NEW DELHI Q-2 Please give details of the companies/firms/concerns in which your are directors/partners etc. Ans. I am director in the following companies of Today Hotels Group'- (]) M/s Truthful Developers Pvt, Lid. (2) M/s Cosmo Realtech Pvt. Ltd. (3) M/s Khushboo Properties Pvt. Ltd. (4) M/s Gay Developers Pvt. Ltd. (5) M/s Megha Business Centre Pvt. Ltd. (6) M/s Singh Bwldtech Pvt. Ltd. (7) M/s Sangrah Build Tech Pvt. Ltd. (8) M/s Bravo Compect Systems Pvt. Ltd. (9) M/s Adhir Buildwell Pvt. Ltd. (10} M/s Vijay Rath Properties Pvt. Ltd. (I I) M/s Goldy Developers Pvt. Lid. (12) M/s Ambika Buildcon Pvt. Ltd. (13) M/s VKPK Properties Pvt. Ltd. (14) M/s High Time Properties Pvt. Ltd. (I5) M/s Ayush Portfolio Pvt. Lid. 16) M/s Pure Gold Properties Pvt. Ltd. (17) M/s Aerial Estates Pvt. Ltd. Q-$. . Please state since when you are director in M/s Today Hotels Pvt. Ltd, and also provide your job profile in this concern? Ans. 1 am ....
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....are involved the companies mentioned in Q. No. 15 above? Please specify the directors. Please also state where the books of A/cs are kept on maintained? Ans All the above companies are involved in real estate business and books of A/cs are maintained at 16th Floor, Statesmen House. Barakhamba Road, New Delhi. Beside are the other director are: (i) Sh Gurmeet Singh : Singh Buildtech Pvt Ltd (ii) Sh Gurmeet Stngh : Adhsr Buildwill Pvt Ltd (Hi) Sh Jagtar Singh : Ambika Buildcon Pvt Ltd f fv) Sh Jagtar Singh : VKPK Properties Pvt Ltd Q.I 7. You have stated in reply to Q. No. 13 & 15 that office address of the following companies is BG-6/237D. Janata Hats, Paschim Vihar, New Delhi: (I) M/s Cosmo Realtech Pvt Ltd (2) M/s Singh Baildtech Pvt Ltd (3) M/s Adhir Buildweil Pvt Ltd (4) M/s Ambika Buildcon Pvt Ltd (5) M/s VK PK Properties Pvt Ltd Please state, what type of activities are to be held at the above office address? Please also state whether the books ofA/c are kept or maintained at the above address Ans. We are usin% the above office address for onlv name Sake We have avoointed onlv one man namelv Sh Harsh Tahvar to receive daks and correspondence and /....
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....day Hotels (Maharashtra) Pvt Ltd (4) Today Hotels (New Delhi) Pvt Ltd (5) Today Hotels (Noida) Pvt Ltd (6) Today Hotels (Punjab) Pvt Lid (7) Today Hotels Pvi Ltd. Q.11 Please give the details of coys Gambhirjamih? Ans Apart from Today Hotels Croup, to the best my knowledge following are Ihe Group coys of Gmabhir Group (1) Today Homes d Infrastructure Pvt Ltd (Regd office S"' Floor, Statesmen House) (2) Nova Iron &^Steels^.t4 (Corporateoffice Nehru Place New Q12. In response to Q. No-11 you have stated two more coys of Gambhir family apart from today hotel group however in this premises several documents pertaining to other coys have been found, please consider your thought and give the detail of company's Directly & Indirectly control by Gambhir family? As evident from documents A-1. Following are other group coy (Today Hotels Pvt. Ltd Group and Gambhir family also) as under: 1) Paragon Travels & Tours Pvt Lid 2) Paragon Overseas Pvt Ltd 3) Samanh Crafts Pvt Ltd 4) Horizon Distributors Pvt Ltd 5) Citron Traders Pvt Ltd 6) Savoy consultant Pvt Ltd 7) Epson Systems Pvt Ltd 8) Jasmine Systems Pvt Ltd 9) Novelty Consultan....
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....Singh s/o Sh.Chaturbhuj in cash by the aforesaid company. Please explain the source of cash paid. Ans: I do not know anything about this thing or deal, only Mr. G.K, Gambhir or Ashok Arora, G.M. can tell about this transaction Mr. GK Gambhir was director in this company since its inception i.e. 2004. Q.4 I am showing you page no. 159 of Annex A-1 found & seized from the office of the Today Homes & Infrastructure P. Ltd. wherein a payment of Rs. 1,36, 78,000/- have been paid in cash to Sh. Ram Narayan Singh S/o Sh. Chaturbuj. Please explain the source of cash paid or DD? Ans: I have no idea of this transaction only GK Gambhir and Ashok Arora can tell about this. Q. 10 Your reply to above queries suggest that you merely junction as paper/dummy director of M/s Today Homes & Infrastructure Pvt Ltd Q.12 Please state exact nature of working in THJPL? Ans. Ans: I am basically Iiaisoning with Govt. agencies like DDA, MCD, Environmental Ministries to get A'OCsfor the projects in Delhi. 4.4.4 STATEMENT OF SHR1 GVRMEET SINGH (DIRECTOR) RECORDED ON 26.11.2009 AT HIS RESIDENCE 221/255. GALI NO.7. yiSHNU GARDEN, NEW DELHI Q-2. In which company you are presently workin....
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.... Realtech Pvt. Ltd. 2. M/s Character Constructions Pvt. Lid 3. M/s Creative Prop-build Pvt. Ltd. 4. M/s Cheerful Developers Pvt. Ltd. 5. M/s N. Y. Dox Services Lid. If so in what capacity? Ans i am not aware of the above named companies. I sign the papers in hurry as directed by Mr. Vinay Kumar Subhikhi without know ing for which company I am signing the papers. STATEMENT OF SHRl GURMEET SJNGff (DIRECTOR) RECORDED ON 18.01.2010 AT BANK OF RAJASTHAN, JANPA TH. A T THE TIME OF OPERA TJON OF BANK LOCKER NEW DELHI Q-21. Are you a Director in any company? Ans. Yes, lama Director in the Pvt. Ltd. companies. However 1 do not remember name of the companies. Q.22. Please explain under what circumstances you are not disclosing name of the companies in which you claim to be one of the Directors? Ans. I do not remember the name of the companies in which I am one of the Directors. Q.23. Are you aware that you are giving this statement on oath & you will speak truth? I am once again explaining you provisions oflPC t4 /. Tax Acts & making you aware of the fact that any false or untrue statement given by you shall make you liable to pros....
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....bhir themselves, I dummy Erector In these companies. The corporate and registered office address is House No-48, Friends Colony, New Delhi of the above companies. These companies derive rental income from M/s. Today Homes & Infrastructure Pvt. Ltd. & M/s. Today Hotels^(P) Ltd. Q.23. You are director in M/s Balance Build Tech Pvt Ltd. Please state where the books of accounts are kept or maintained and where tht'.shareholders register in kept or maintained? Ans. Q.24. Also, you are director in M/s APJ Constructions (P) Ltd. Please state where the books of accounts are kept or maintained and where the shareholder register is kept or maintained Ans. Mr.G,K. Mr. GK Gambhir can only tell the details as asked for. STATEMENT OF SHRl YINAY SUBHIKHI (DIRECTOR) RECORDED ON 14/01/2010 AT HIS RESIDENCER-8. NEW PRASAD NAGAR, DELHI Q.15 Kindly state where are the books ofA/c ofaUthe^companiesinwhichyou are Director are kept. Ans. Mr. GulshanKurnat Gambhir, Owner of Today Group of companies about this. I do not know about the books of a/c of the companies which I am Director Q.17. Vide question no. 15 of this statement you had answered about the books of A/c of the compani....
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....ay Subhiki, Vice President for Corporate affairs in his statement recorded the as stated that these records are not being maintained Ans. I cannot comment what statement Sh Subhiki had given and in what context. I shall organize and produce the relevant records to your goodself, Q.13. During the course of search & Seizure operation carried out at the Regd. Office of these companies i.e. 8' Floor Statesmen House, B. K, Rood, New Delhi. On 26* & 27* Nov, 2009 No such records ar^ found. Please identity such records and Ans. It may not be possible lo identity Qndprodu.ce the said record right now. Howeve we shall produce the said record to your eoodself at the earliest Q.I 4. As the records are not found during the course of search. Please state where from you will provide such records at the earliest. Ans. It cannot comment why you could not find the record. Q.15 As per extract of the books of accounts taken from the accounting section, the share capital as on 29/0}/2008 at Today Homes infrastructure Pvt Ltd (THIPL)Stand at 23,69.47,000/- and the, share premier A/c as on 2J/01/2Q08 at Rs. 2,12,26,23,QQO/further, share, capital in M/s GPS Properties Pvt Ltd as on 28/....
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.... are also taken by you. Please go through the statement and substantiate your answer particularly in reference to status of the residence 48. friends Colony (East). New Delhi? Ans: 1 requested you for copy of all the statements including Sh. Vinay Subhiki. but the same cannot be given at this time by you. This reply with regards to the question about residents i.e. 48. Friends Colony (East), New Delhi has already been explained by me in the statement recorded at my residence on 26JL2009 4.5 Further, page No. 135 and 143 of Annexure A-l, Party H-2 seized from the office at 8th Floor, Statesman House, Barakhamba Road, New Delhi, which is the registered office of M/s Today Homes and Infrastructure Pvt Ltd, are with respect to DIN No. and digital signatures alongwith password of various persons through whom the assessee group has floated and controlled various paper/shell companies by appointing them as director etc. The scanned copy of page No. 135 of Annexure A-l, Party H-2 is as under: Sl NO. Digital signature Password 1. Mr. Vinay Subhikhi 12345678 2 Anil Narula 1234567 3 Sanjay Jatwani 12345678 4 Baljeet Sineh 12345678 5 Nan....
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....o show that the income is from any particular source 5.1 Now let us discuss the legal position and various judicial pronouncements of various courts, in respect of credits in the books of accounts of the assessee including in the form of share capital/share application money/share or securities premium etc, the shelter of which, the assessee might take during the appellate proceedings. 5.1.1 In the case of CIT Orissa vs. Orissa Corporation Ltd. 159 ITR 78 (SC) (1986), the books of account of the assessee contained three cash credits aggregating ? 1,50,OOOA allegedly received as loans from three individual creditors under Hundis. Letters of confirmation as well as the discharged hundis were produced by the assessee to the AO but notices/ summons sent to them remained unserved because they had reportedly 'left' that address and therefore the AO treated the amount as undisclosed income of the assessee u/s 68 of the Act. The view of the Tribunal was that merely because the Assessee could not produce these three parties, there was nevertheless no justification to draw an adverse inference. This approach as accorded approval by the Hon'ble Supreme Court in these words:"....
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....ntapurni Proprietor Build Pvt. Ltd, Mega Business Centre Pvt. Ltd, and SM Infotell are all companies belonging to that group. She therefore, submitted that there is an incriminating material unearth during the course of search. She further sub mitted that it is not necessary always that there has to be conclusive proof unearth during the course of search but the statements given by third parties based on which the investigation wing of the revenue prepares the report is also incriminating material. She relied upon the decision of the Hon'ble Delhi High Court in case of Dayawanti 390 ITR 496 (Del) wherein, the decision of the Hon'ble Delhi High Court in case of Kabul Chawla Vs. CIT and Anil Bhatia were considered. With respect to the cash credit she submitted that mere furnishing the address and PAN no cannot prove the identity and creditworthiness of the depositors. She further submitted that the copies of return of the depositors were furnished for AY 2008-09 and 2009-10 whereas the money is deposited in AY 2007-08. Therefore, the onus has not been discharged by the assessee. She vehemently supported the order of the ld Assessing Officer. 10. Despite notice none appeare....
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....s 68 with respect to above four companies amounting to Rs. 3.21 crores back to the file of the ld AO with a direction to grant one more opportunity to the assessee to prove the identity, creditworthiness and genuineness of the above transaction after granting assessee proper opportunity of hearing. In the result ground No. 1 of the appeal of the revenue is allowed with above direction. 13. Coming to the ground No. 2 of the appeal of the revenue wherein it has been held by the ld CIT(A) that no addition can be made when no incriminating material is found. There cannot be any quarrel on the legal proposition that any addition to be made in the course of assessment u/s 153A and 153C of the Act the addition has to be based on incriminating material unearth during the course of search. The above proposition has been laid down by the Hon'ble Delhi High Court in CIT Vs. Kabul Chawla at 380 ITR 573 wherein while summarizing the legal position in para No. 37 Hon'ble High Court held so. In para No. 37 (iv) Hon'ble High Court said that although section 153A does not say that addition should be strictly made on the basis of evidence found in the course of search or other post se....
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....puters have been also impounded and seized. Further, action taken on the same date u/s 133 of the Act all the investor companies resulted into statement recorded of several persons which itself shows that no business is carried on by this companies at the given addresses. Such documents have been enumerated by the ld Assessing Officer from page No. 4 to 17 of his order which have been reproduced above. All these evidences gathered during the course of search coupled with the availability of the books of accounts of the assessee along with other documents at the office of Today Group and corroborated by statement of several persons during the course of the survey at the address of the investor company were not at all appreciated by the ld CIT (A) , In fact these are the material which has shown a link to the ld Ao to make addition on account of issue of share capital u/s 68 of the act. Therefore we find that the order of the ld CIT (A) has not appreciated the evidences and their gravity and has held that the addition has been made without the evidences unearthed during the course of search in spite of the facts that ld AO has pointed out all these materials such as books of accounts....