TaxTMI 
TaxTMI 
2019 (1) TMI 1591
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....53B(1)(b) of the Act. 2. All the appeals as well as the cross objections are being heard together and for the sake of convenience, a composite order is being passed. 3. The assessee is a group concern of Kota Dall Mill (KDM) group and subjected to the search and seizure action U/s 132 of the Act carried out on 02/5/2017. The Assessing Officer initiated the proceedings U/s 153A of the Act in pursuant to the search for the A.Y. 2010-11 to 2013-14 and 2015-16 and made various additions U/s 68 of the Act on account of unsecured loans, special deposits against the issue of preferential equity shares treating the same as accommodation entries availed by the assessee from the entry providers. The assessee challenged the orders passed by the Assessing Officer before the ld. CIT(A) and contended that the Assessing Officer has made the addition merely on the basis of the statements recorded by the Investigation Wing, Kolkata and without any incriminating material found or seized during the search and seizure action in the case of the assessee. The assessee also raised objection against the additions made by the Assessing Officer on the ground that the assessee was not given an opportunit....
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....s, therefore the assessment order ought to held as bad in law and deserves to be annulled. 3. That the order of the Id CIT (A), confirming the addition made by the AO is arbitrary, whimsical, capricious, perverse, based on no evidence or irrelevant material or irrelevant evidence, and against the law and facts of the case. The addition confirmed by Id. CIT (A) deserves to be deleted. 4. On the facts and in the circumstances of the case and in law the Id. CIT (A) erred in confirming the additions made u/s 68 of the Income Tax Act, 1961 by: - (a) solely relying on the statements of some alleged accommodation entry providers recorded by some other authorities in some other cases/actions and the opportunity to cross examination was also not provided to assessee. (b) giving a contradictory finding that a doubt is raised on the identity and genuineness of the company whose name is mentioned in the statement of accommodation entry providers as well as reports of DDIT (Inv.)-Kolkatta. (c) holding that the assessee has not adduced any evidence to rebut the adverse factual finding made by the AO in the assessment order though detailed paper book for relevant AY and common pape....
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....elhi High Court in the case of CIT Vs. Kabul Chawla 380 ITR 573 is pending before the Hon'ble Supreme Court. 7. Before us, the ld AR of the assessee has submitted that in compliance to the notice U/s 153A of the Act, the assessee submitted its return of income and declared the total income as it was declared in the original return of income. The Assessing Officer has made the addition U/s 68 of the Act on the basis of the statement of Shri Anand Sharma and in some cases on the basis of statement of Shri Ankit Bagri without any incriminating material found or seized during the course of search and seizure action. Thus, the ld AR has contended that the Assessing Officer is not empowered to make any addition in the total income of the assessee which was assessed while passing the assessment order U/s 143(3) of the Act. He has contended that it is settled principles of law that there cannot be a review under the garb of reassessment proceedings U/s 153A of the Act and therefore, the proposed reassessment proceedings are absolutely in abuse of process of law, illegal and invalid. The provisions of Section 153A of the Act cannot be applied in respect of assessment which has already....
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..... (2016) 380 ITR 571 (Delhi) SLP filed before the Hon'ble Supreme Court was dismissed vide order dated 07.12.2015. 2. Principal CIT vs. Meeta Gutgutia (2017) 395 ITR 526 (Delhi) SLP filed before the Hon'ble Supreme Court was dismissed vide order dated 2nd July, 2018. 3. Jai Steel (India) vs. ACIT (2013) 219 Taxman 223 (Raj.) Thus the ld. A/R has submitted that the Hon'ble Jurisdictional High Court has held that the requirement of assessment or reassessment under section 153A has to be read in the context of section 132 or 132A of the IT Act, in as much as in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of concluded assessment does not arise, which would require mere reiteration and it is only in the context of abated assessment under second proviso which is required to be assessed. The underlined purpose of making assessment of total income under section 153A of the Act is, therefore, to assess income which was not disclosed or would not have been disclosed. The assessment or reassessment proceedings which have already been completed and assessment orders have been passed determining the assessee's tot....
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.... these circumstances it cannot be a case of addition made without any incriminating material but the Assessing Officer was having sufficient material disclosing the undisclosed and unexplained cash credit introduced by the assessee in the garb of unsecured loans and partners' capital. Once the insurmountable evidences unearthed by the Investigation Wing Kolkata which is the basis of the additions made by the Assessing Officer, the assessee was required to discharge its onus by producing the contrary evidence or by producing alleged creditors for verification. The ld. CIT D/R has further submitted that the information received from the Investigation Wing Kolkata is also the incriminating material found during the search and pertains to the assessee disclosing undisclosed income. Therefore, it is not a case of reassessment framed by the Assessing Officer under section 153A without any incriminating material. The Assessing Officer even conducted further investigation during the course of assessment proceedings through the Investigation Wing Kolkata and, therefore, the addition is fully based on the evidence in the possession of the Assessing Officer. As per the provisions of section 1....
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....f some other assessments. Thus, undisputedly the Assessing Officer has made the addition while completing the assessment U/s 153A of the Act for all the assessment years on the basis of the information received from the Investigation Wing, Kolkata and not on the basis of any material or information gathered during the course of search and seizure action in the case of the assessee. We find that the assessment framed by the Assessing Officer as well as the orders passed by the ld. CIT(A) in the case of the assessee are identical and based on similar facts and circumstances as in the case of M/s Kola Dall Mill pursuant to the same search and seizure action carried out on 02/7/2015. This Tribunal in the case of Kota Dall Mill Vs DCIT vide order dated 31/12/2018 in ITA Nos. 997 to 1002/JP/2018, 1119/JP/2018, 1057 to 1062/JP/2018 and 1210/JP/2018 has considered and decided this issue in para 6 as under: "6. We have considered the rival submissions as well as the relevant material on record. Undisputedly, the assessments for the assessment years 2010- 11 to 13-14 were not pending on the date of search on 2nd July, 2015. Even in some of the assessment years orders under section 143(3) ....
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....ct, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any r....
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.... "1. The Revenue has filed the appeal against an order dated 14.11.2014 passed by the Income Tax Appellate Tribunal (ITAT) in 3761/Del/2011 pertaining to the Assessment Year 2002-03. The question was whether the learned CIT (Appeals) had erred in law and on the facts in deleting the addition of Rs. 89 lacs made by the Assessing Officer under Section 68 of the Income Tax Act, 1961 ('ACT') on bogus share capital. But, the issue was whether there was any incriminating material whatsoever found during the search to justify initiation of proceedings under Section 153A of the Act. 2. The Court finds that the order of the CIT(Appeals) reveals that there is a factual finding that "no incriminating evidence related to share capital issued was found during the course of search as is manifest from the order of the AO." Consequently, it was held that the AO was not justified in invoking Section 68 of the Act for the purposes of making additions on account of share capital. 3. As far as the above facts are concerned, there is nothing shown to the court to persuade and hold that the above factual determination is perverse. Consequently, after considering all the facts and circum....
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.... or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found in the course of the search or other post-search material or Information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." 58. In Kabul Chawla (supra), the Court discussed the decision in Filatex India Ltd. (supra) as well as the above two decisions and observed as under: "31. What distinguishes the decisions both in CIT v. Chetan Das Lachman Das (supra), and Filatex India Ltd. v. CIT-IV (supra) in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of t....
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.... free to disturb income de hors the incriminating material while making assessment under Section 153A of the Act was specifically rejected by the Court on the ground that it was "not borne out from the scheme of the said provision" which was in the context of search and/or requisition. The Court also explained the purport of the words "assess" and "reassess", which have been found at more than one place in Section 153A of the Act as under: "26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess'-have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition ....
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....material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 61. It appears that a number of High Courts have concurred with the decision of this Court in Kabul Chawla (supra) beginning with the Gujarat High Court in Saumya Construction (....
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....ion (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding. 16. Section 153A bears the heading "Assessment in case of search or requisition". It is "well settled as held by the Supreme Court in a catena of decisions that the heading or the Section can be regarded as a key to the interpretation of the operative portion of the section and if th....
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.... ** 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of an the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as. the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted....
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....istinguishing features in that case which makes its ratio inapplicable to the facts of the present case. In the first place, the Assessees there were engaged in the business of Pan Masala and Gutkha etc. The answers given to questions posed to the Assessee in the course of search and survey proceedings in that case bring out the points of distinction. In the first place, it was stated that the statement recorded was under Section 132(4) and not under Section 133A. It was a statement by the Assessee himself. In response to question no. 7 whether all the purchases made by the family firms, were entered in the regular books of account, the answer was: "We and our family firms namely M/s. Assam Supari Traders and M/s. Balaji Perfumes generally try to record the transactions made in respect of purchase, manufacturing and sales in our regular books of accounts but it is also fact that some time due to some factors like inability of accountant, our busy schedule and some family problems, various purchases and sales of Supari, Gutka and other items dealt by our firms is not entered and shown in the regular books of accounts maintained by our firms." 65. Therefore, there was a clear a....
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.... cases have to draw inferences, because of the nature of the materials - since they could be scanty (as one habitually concealing income or indulging in clandestine operations can hardly be expected to maintain meticulous books or records for long and in all probability be anxious to do away with such evidence at the shortest possibility) the element of guess work is to have some reasonable nexus with the statements recorded and documents seized. In tills case, the differences of opinion between the CIT (A) on the one hand and the AO and ITAT on the other cannot be the sole basis for disagreeing with what is essentially a factual surmise that is logical and plausible. These findings do not call for interference. The second question of law is answered again in favour of the revenue and against the assessee." 69. What weighed with the Court in the above decision was the "habitual concealing of income and indulging in clandestine operations" and that a person indulging in such activities "can hardly be accepted to maintain meticulous books or records for long." These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and esti....
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....venue. This would have been evident had the return been picked up for scrutiny under Section 143(3) of the Act. This, therefore, was not material which was subsequently unearthed during the search which was not already available to the AO. Consequently, the additions sought to be made by the AO on account of security deposits were rightly deleted by the CIT (A)." Thus the essential corollary of these decisions is that no addition can be made in the proceedings under section 153A in respect of the assessments which were completed prior to the date of search except based on some incriminating material unearthed during the search which was not already available to the AO. It is pertinent to note that the SLP filed by the revenue against the decision of Hon'ble Delhi High Court in case of Principal CIT vs. Meeta Gutgutia was dismissed vide order dated 2nd July, 2018. There are series of decisions on this issue including the decision of Hon'ble Jurisdictional High Court in case of M/s. Jai Steel India vs. ACIT (supra) wherein the Hon'ble High Court has held in para 23 to 30 as under:- "23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra....
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....ment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub-section (1) of Section 153A says that such proceedings "shall abate". The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year dete....
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....essment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. The further observations made in the context of de novo assessment proceedings also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken. 25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under Section 153A of the Act is also not borne out from the scheme of the said provision which ....
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....edings for penalty were drawn under Section 271(1)(c) of the Act. The material found in the search may be a ground for notice and assessment under Section 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty." (Emphasis supplied) The said judgment which essentially deals with second proviso to Section 153A of the Act also supports the conclusion, which we have reached hereinbefore. 28. It has been observed by the Hon'ble Supreme Court in K.P. Varghese v. ITO [1981] 131 ITR 597/7 Taxman 13 that "it is well recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided." 29. The argument of the counsel for the appellant if taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued under Section 153A of the Act, the AO would have power to undo what has been concluded up to the High Court. Any interpretation which leads to such conclusion ....
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.... search and seizure under section 132 of the Act in the case of the assessee no material much less the incriminating material was unearthed or any undisclosed income which was not disclosed in the books of accounts was detected or found. The only incriminating material which was referred by the AO is pages 21 to 26 of Annexure AS-1 in respect of long term capital gain earned by Shri Rajendra Agarwal and his family members. The said long term capital gain was disclosed by Shri Rajendra Agarwal in his statement under section 132(4) and, therefore, it was surrendered and offered to tax by Shri Rajendra Agarwal and his family members in the year of search. The AO himself has not made any addition in the hand of the assessee on account of long term capital gain which was found during the course of search and seizure. Thus, except the material disclosing the long term capital gain in the hand of Shri Rajendra Agarwal, no other incriminating material either found or referred or is the basis of the addition made by the AO while framing the assessment under section 153A of the Act for the assessment years 2010-11 to 13-14. It is appropriate to refer relevant part of the assessment order in ....
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....and creditworthiness then AO must do some inquiry to call for more details to invoke Section 68. b. The assessee firm has filed confirmation letters and this office has carried out further enquiry to examine the reality of the transactions. An enquiry was sent to the Investigation Directorate Kolkata and it has been established that these investor or lender Companies are controlled by the entry operators. The statements of various entry operators are sufficient evide4nces to show that the unsecured loan and partner's capital are assessee's own undisclosed income brought into the books of the assessee under the garb of unsecured loan and partner's capital. c. The department has carried out search over the assessee group and during the course of search action u/s 132 of the I.T. Act, 1961, the incriminating documents seized during search proceedings vide pg no. 21 to 26 of Annexure AS-1 of Party B-1, wherein the details of year- wise LTCG earned by Shri Rajendra Agrawal and his family members, is maintained, which during search action has been accepted to be bogus by all family members in their respective statements." "19. In view of above facts of the case and in the light ....
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.... AO is based on the information received from the Investigation Wing Kolkata and statement of Shri Anand Sharma. The ld. CIT (A) though has not disputed the legal proposition on this issue, however, the contention of the assessee was turned down merely on the ground that the SLPs filed by the revenue in the cases of Kabul Chawla (supra) and M/s. All Cargo Global Logistics (supra) etc. have been admitted for decision by the Hon'ble Supreme Court. The relevant part of the finding of the ld. CIT (A) in para 3.2.2 and 3.2.4 at pages 35 and 36 are as under :- "3.2.2 As per the provisions of this section where a search is initiated u/s 132 of the Act, the A.O shall issue a notice requiring the person searched to furnish his return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Once such returns are filed, the AO has to assess or reassess the total income of such six assessment years.(emphasis supplied by me). (The decisive words used in the provisions are to 'assessee or reassess the total income'). The A.O. is thus....
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....assessee. The requirement for making the addition under section 153A in the assessment years where the assessment was not pending on the date of search and the proceedings are in the nature of reassessment is essentially the incriminating material disclosing undisclosed income which was not disclosed by the assessee. In the case in hand, the AO himself has not claimed any incriminating material found during the search and seizure in the case of the assessee. Accordingly, in the facts and circumstances of the case and in view of the binding precedents on this issue in which the SLP filed by the revenue was also dismissed by the Hon'ble Supreme Court, the additions made by the AO while passing the assessment orders under section 153A for the assessment years 2010-11 to 13-14 are not sustainable and accordingly the same are liable to be deleted. We order accordingly." The foundation of the assessment order is the information received from the Investigation Wing, Kolkata and statement of Shri Anand Sharma and Shri Ankit Bagri in respect of the different transactions of unsecured loan/special deposits for issuing special preferential equity shares. The ld. CIT(A) though has not disput....
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....te repeated requests and demands. The Assessing Officer has violated the principles of natural justice by not providing the copies of material used against the assessee at the assessment stage and further not providing the opportunity of cross examination of the witness during the remand proceedings at appellate stage. Though the ld. CIT(A) called for a remand report and asked the Assessing Officer to provide opportunity of cross examination to the assessee, however, after the remand proceedings the Assessing Officer did not afford an opportunity of cross examination rather the Assessing Officer has asked the assessee to produce the witness instead of allowing the assessee to cross examine the witness. In support of his contention, the ld. A/R has relied upon the decision of Hon'ble Supreme Court in case of Andaman Timber Industries vs. Commissioner of Central Excise (2016) 15 SCC 785 (SC). He has also relied on the decision of Hon'ble Delhi High Court in the case of CIT vs. Ashwani Gupta, 322 ITR 396 (Delhi) and submitted that the Hon'ble High Court has held that once there is a violation of principles of natural justice inasmuch as seized material is not provided to the assessee ....
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....the Assessing Officer. An identical issue has been considered by us in the case of Kota Dall Mill (supra) vide order dated 31/12/2018 in para 11.1 as under: "11.1. Even otherwise, the assessment order is solely based on the report of the Investigation Wing Kolkata which in turn is nothing but the narration of the statements recorded during the investigation and the AO was having in possession the statement of only Shri Anand Sharma. Therefore, all these proceedings conducted by the Investigation Wing Kolkata were at the back of the assessee and hence the statement which is the foundation of the report of the Investigation Wing Kolkata as well as the assessment order cannot be accepted in the absence of giving an opportunity of cross examination to the assessee. We find that the assessee has insisted for cross examination during the assessment proceedings and further during the appellate proceedings. The ld.CIT(A) even called for a remand report and directed the AO to allow cross examination to the assessee. However, the AO has expressed his inability to allow the assessee for cross examination of the witnesses due to the reason that the witnesses belong to Kolkata and it is not ....
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....ction of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them". 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of crossexamination. That apart, the adjudicating authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers witnesses at the price which is mentioned in the price list itself could be the subject-matter of cross-examination. Therefore, it was not for the adjudicating authority to presuppose as to what could be the subjectmatter of the cross-examination and make the remarks as mentioned above. We may also p....
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.... In view of the foregoing circumstances, we feel that no interference with the impugned order is called for. The Tribunal has correctly understood the law and applied it to the facts of the case. Once there is a violation of the principles of natural justice inasmuch as seized material is not provided to an assessee nor is cross-examination of the person on whose statement the Assessing Officer relies upon, granted, then, such deficiencies would amount to a denial of opportunity and, consequently, would be fatal to the proceedings. Following approach adopted by us in SMC Share Brokers Ltd.'s case (supra), we see no reason to interfere with the impugned order. No substantial question of law arises for our consideration." Thus the Hon'ble High Court has held that once there is a violation of principles of natural justice inasmuch as seized material is not provided to the assessee nor is cross examination of the person on whose statement the AO relied upon, granted, then, such deficiencies would amount to denial of opportunity and consequently would be fatal to the proceedings. The Hon'ble Bombay High Court in the case of H.R. Mehta vs. ACIT, 387 ITR 561 (Bombay) has also consi....
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.... inasmuch as when its seized material was not provided to an assessee nor was he permitted to cross examine a person on whose statement the Assessing Officer relied, it would amount to deficiency, amounting to a denial of opportunity and therefore violation of principles of natural justice. In that case CIT (A) had deleted addition made by the Assessing Officer neither since the Assessing Officer had failed to provide copies of seized material to the assessee nor had he allowed the assessee to cross-examine the party concerned. The Division Bench held that once there is violation of the principles of natural justice inasmuch as seized material was not provided to the assessee nor was given opportunity of cross examining the person whose statement was being used against the assessee the order could not be sustained. 15. In Andaman Timber Industries (supra) the Supreme Court found that the Adjudicating Authority had not granted an opportunity to the assessee to cross examine the witnesses and the tribunal merely observed that the cross examination of the dealers in that case, could not have brought out any material which would not otherwise be in possession of the appellantassesse....
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....oordinate Bench of this Tribunal in the case of DCIT vs. Shri Prateek Kothari vide order dated 16th December, 2012 in ITA No. 159/JP/2016 has considered this issue in para 2.8 to 2.11 as under :- "2.8 We have heard the rival contentions and perused the material available on record. The transaction under question relates to unsecured loans taken by the assessee amounting to Rs. 1 Crores from M/s Mehul Gems Pvt Ltd during the impugned assessment year and not accepting the said loan transaction as a genuine transaction by the Assessing officer and the resultant addition made under section 68 of the Act. Undisputedly, the primary onus to establish genuineness of the loan transaction is on the assessee. In the instant case, the assessee has provided the necessary explanation, furnished documentary evidence in terms of tax filings, affidavits and confirmation of the Directors, bank statements of the lender, balance sheet of the lender company, and an independent confirmation has also been obtained by the Assessing officer to satisfy the cardinal test of identity, creditworthiness and genuineness of the loan transaction. However, the Assessing officer has not given any finding in respe....
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....list of beneficiaries to whom accommodation entries were provided by the said group categorically contains the name and address of the assessee. Further the group has categorically admitted to providing of accommodation entries of unsecured loans through various benami concerns." The AO further relied upon the decision of Hon'ble Supreme Court in the case of C. Vasantlal & Co. Vs. CIT 45 ITR 206(SC) and Hon'ble Rajasthan High Court in case of Rameshwarlal Mali vs. CIT 256 ITR 536(Raj.) among others. In this regard, it was submitted by the assessee that if the entries and material are gathered behind the back of the assessee and if the AO proposes to act on such material as he might have gathered as a result of his private enquiries, he must disclose all such material to the assessee and also allow the cross examination and if this is not done, the principles of natural justice stand violated. 2.9 In light of above discussions, in our view, the crux of the issue at hand is that whether the principle of natural justice stand violated in the instant case. In other words, where the AO doesn't want to accept the explanation of the assessee and the documentation furnished regarding th....
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....see must be informed about the material and given adequate opportunity to explain it. The statements made by Praveen Jain and group were material on which the IT authorities could act provided the material was disclosed and the assessee had an opportunity to render their explanation in that regard." The Hon'ble Supreme Court in case of Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC) (Copy at Case Law PB 585-591) has held that "whether there was any material evidence to justify the findings of the Tribunal that the amount of Rs. 1,07,350 said to have been remitted by Tilokchand from Madras represented the undisclosed income of the assessee. The only evidence on which the Tribunal could rely for the purpose of arriving at this finding was the letter, dated 18-2-1955 said to have been addressed by the manager of the bank to the ITO. Now it is difficult to see how this letter could at all be relied upon by the Tribunal as a material piece of evidence supportive of its finding. In the first place, this letter was not disclosed to the assessee by the ITO and even though the AAC reproduced an extract from it in his order, he did not care to produce it before the assessee or give a....
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....amination. On the other hand, the burden was sought to be shifted on the ITA No. 159/JP/16 The ACIT, Central -2, Jaipur vs. M/s Prateek Kothari, Jaipur 21 assessee by the A.O. It is clear case where the principle of natural justice stand violated and the additions made under section 68 therefore are unsustainable in the eye of law and we hereby delete the same. The order of the ld CIT(A) is accordingly confirmed and the ground of the Revenue is dismissed." Thus when the assessee has specifically asked for cross examination of the witnesses whose statements were relied upon by the AO, then the denial of the opportunity to cross examine would certainly in violation of principles of natural justice and consequently renders the assessment order based on such statement as not sustainable in law. Hence in view of the facts and circumstances of the case where the assessee has repeatedly requested and demanded the cross examination of the witnesses whose statements were relied upon by the AO in the assessment order and further the report of the DDIT Investigation Kolkata is also based on the statement of such person then the denial of cross examination by the AO as well as ld. CIT (A) d....
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....n any accommodation entry to the assessee. The statement of Shri Anand Sharma nowhere disclosed any accommodation entry in respect of the loan taken by the assessee from M/s Jalsagar Commerce Pvt. Ltd.. As regards M/s Teac Consultants Pvt. Ltd., it is also not the case of the assessee that the said company was owned or controlled by Shri Anand Sharma, therefore, in absence of any material in the possession of the Assessing Officer, the addition made by the Assessing Officer is not sustainable. He has referred to the show cause notice issued by the Assessing Officer wherein the list of entry operators is given but the name of M/s Jalsagar Commerce Pvt. Ltd. is not mentioned in the said list, therefore, when the Assessing Officer himself has not given the name of M/s Jalsagar Commerce Pvt. Ltd. as a company/entity owned by Shri Anand Sharma then the addition sustained by the ld. CIT(A) is not justified. The ld AR has then referred to the four reports of the Investigation Wing, Kolkata dated 30/3/2016 and 24/3/2017 and so on but none of the report of the Investigation Wing shows that the transaction of loan from M/s Jalsagar Commerce Pvt. Ltd.. is part of any accommodation entry. All ....
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....en they have responded to the notices issued by the department. Even otherwise once all the creditors were subjected to scrutiny assessment then the identity and creditworthiness of them cannot be disputed. The ld AR has referred to the ROC record kept in master data and submitted that the company status is shown as active and therefore it cannot be treated as a shell company. The assessee produced all the documents pertaining to the creditors which includes ITR, copies of balance sheet and annexure of loan and advances, copy of bank statement showing the entry of payment made to the assessee, confirmation of the loan given to the assessee from the books of account of the parties, confirmation of the loan account in the books of account of the creditor, affidavit of the Director of the company, balance sheet as on 31/3/2010 to 31/3/2016, assessment orders passed U/s 143(3) etc.. All the loans were received trough bank account and verifiable from the bank statement of the assessee as well as loan creditors. The onus U/s 68 of the Act is to prove the identity, capacity and genuineness of the transaction which has been discharged by the assessee by producing the documentary evidence a....
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...., Kolkata regarding involvement of the assessee group in obtaining entries of bogus unsecured loans, share capital, special deposits etc. detected in the investigation carried out by the DIT Kolkata. Such information was received even prior to initiation of proceedings under section 153A and also during the pendency of proceedings under section 153A. Once the Assessing Officer has confronted the assessee with the report of the Investigation Wing, Kolkata as well as the statement of Shri Anand Sharma and other persons who have admitted to have provided accommodation entries of bogus unsecured loans, share capital, special deposits etc. to the various parties through their companies and concerns and assessee has shown the unsecured loans as well as deposits from those concerns, then onus was shifted on the assessee to establish the genuineness of the transactions of unsecured loans. During the course of assessment proceedings, the Assessing Officer again conducted enquiries through Investigation Wing Kolkata regarding the genuineness of the transaction and the assessee was duly confronted with the results of all these enquiries and information shared by the Investigation Wing, Kolkat....
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....aya Castles Pvt. Ltd., 226 Taxman 190 (Mag.) and submitted that the SLP filed by the assessee was dismissed by the Hon'ble Supreme Court reported in 230 Taxman 268 (SC). Thus it is evident that the assessee has failed to discharge its onus to rebut the evidence unearthed by the Investigation Wing, Kolkata which shows that the transactions of unsecured loans are nothing but bogus accommodation entries wherein the assessee's own undisclosed income has been routed in the garb of unsecured loan. As regards cross examination of the witnesses, since the witnesses belong to Kolkata and statements were also recorded at Kolkata by the Investigation Wing, therefore, it was not possible for the Assessing Officer to issue summon to the witnesses for cross examination at the office of the Assessing Officer at Kota. The ld. CIT D/R has relied upon the order of the Assessing Officer. 18. We have considered the rival submissions as well as relevant material on record. The Assessing Officer has made the additions in respect of the unsecured loan from M/s Jalsagar Commerce Pvt. Ltd. as well as M/s Teac Consultants Pvt. Ltd. by treating the same as accommodation entries. The Assessing Officer for t....
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....t the beneficiary party such i.e. M/s Jalsagar Commerce Pvt. Ltd. gave him cash in lieu of which cheques was given by him for some commission income. He also admitted that some paper companies have sold to beneficiary parties. Though, in the initial report dated 28.11.2017, M/s Jalsagar Commerce Pvt. Ltd. was treated a party in Rajasthan, in later report dated 06.12.2017 the entry operator Shri Anand Sharma was linked with M/s Jalsagar Commerce Pvt. Ltd. as per the data base prepared by Directorate of InvestigationKolkata The relevant part of the said statement as reproduced on page no.57 of the assessment order is as under: - 5.2 However, it is the submission of the Appellant that no notice under Section 131 or 133(6) of the Act was issued to this company, either by the Ld. AO or by the concerned AO or by the DDIT (Inv.) Kolkata. Also, on bare perusal of the assessment order, it is evident that the name of the said companies does not appear in the statement of any of the entry operators as reproduced by the AO in the Assessment Order. However, the relevant documents including the Ledger a/c showing the transactions with appellant company, Source sheet of funds of transactions m....
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....wever, to fortify the finding of the AO and to highlight the guiding principle on adjudicating non-genuine unsecured loans raised through accommodation entry proviers, I place further reliance on few more case laws with underlining the similarity of adverse facts prevailing in the present case as follows:- 5.5 In case of Suman Gupta V/s. Income Tax Officer ITAT, Agra Bench (2012) 138 ITD 0153 held as under:- The AO discussed each and every creditor in the assessment order and the crux of the findings of the AO had been that there were very small bank balances in the bank accounts of the creditors and they were having meager income and as such, they were not men of means to advance any loan to the assessee. It is well settled law that burden is upon the assessee to prove ingredients of section 68 of the Act by proving identity and creditworthiness of the creditors and genuineness of the transactions. The assessee has, however, failed to prove the creditworthiness of the creditors who were having only meager income. No details of their savings have been filed. The assessee has never shown his willingness to produce the remaining creditors for examination before the AO. Therefor....
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.... dismissed before the Hon'ble Apex Court as reported in 2013-LL-0122-69 5.6 Hon'ble High Court of Delhi in case of Commissioner of Income Tax V/s. Navodaya Castles Pvt. Ltd. reported at (2014) 367 ITR 0306 involving exactly similar facts observed in Para 2, 3 then Para 2 as under:- 2. The appeal arises out of the impugned order dated 31st October, 2011, passed by the Income Tax Appellate Tribunal, upholding the order passed by the Commissioner of Income Tax (Appeals) deleting addition of Rs. 54,00,000/- made under Section 68 of the Income Tax Act, 1961 (Act, for short), by the Assessing Officer on account of share application. 3. The assessee, a company, had filed their return of income for the assessment year 2002-03 declaring loss of Rs. 1,58,035/- on 20th October, 2002, which was processed under Section 143(1) of the Act. Subsequently, on the basis of a report submitted by the Investigation Wing that the assessee was a recipient of accommodation entries in form of share application money/share capital/share premium, notice under Section 147 read with Section 148 of the Act was issued and served on 25th March, 2009.............................................................
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........................................................... 11. We have heard the Senior Standing counsel for the Revenue, who has relied upon decisions of the Delhi High Court in Commissioner of Income Tax Vs. Nova Promoters and Finlease (P) Ltd. [2012] 342 ITR 169 (Delhi), Commissioner of Income Tax Vs. N.R. Portfolio Pvt. Ltd., 206 (2014) DLT 97 (DB) (Del) and Commissioner of Income Tax-II Vs. MAF Academy P. Ltd., 206 (2014) DLT 277 (DB) (Del). The aforesaid decisions mentioned above refer to the earlier decisions of Delhi High Court in Commissioner of Income Tax Vs. Sophia Finance Ltd., [1994] 205 ITR 98 (FB)(Delhi), CIT Vs. Divine Leasing and Finance Limited [2008] 299 ITR 268 (Delhi) and observations of the Supreme Court in CIT Vs. Lovely Exports P. Ltd. [2008] 319 ITR (St.) 5 (SC). 12. The main submission of the learned counsel for the assessee is that once the assessee had been able to show that the share holder companies were duly incorporated by the Registrar of Companies, their identity stood established, genuineness of the transactions stood established as payments were made through accounts payee cheques/bank account; and mere deposit of cash in the bank accounts pri....
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.... evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents." 15. Summarizing the legal position in Nova Promoters and Finlease (P) Ltd.(supra), and highlighting the legal effect of section 68 of the Act, the Division Bench has held as under:- "32. The tribunal also erred in law in holding Assessing Officer ought to have proved that the monies emanated from the coffers of the assesseecompany and came back as share capital. Section 68 permits the Assessing Officer to add the credit appearing in the books of account of the assessee if the latter offers no explanation regarding the nature and source of the credit or the explanation offered is not satisfactory. It places no duty upon him to point to the source from which the money was received by the assesse....
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.... out by the Assessing Officer. The statements of Mukesh Gupta and RajanJassal, the entry providers, explaining their modus operandi to help assessee's having unaccounted monies convert the same into accounted monies affords sufficient material on the basis of which the Assessing Officer can be said to have discharged the duty. The statements refer to the practice of taking cash and issuing cheques in the guise of subscription to share capital, for a consideration in the form of commission. As already pointed out, names of several companies which figured in the statements given by the above persons to the investigation wing also figured as shareapplicants subscribing to the shares of the assessee-company. These constitute materials upon which one could reasonably come to the conclusion that the monies emanated from the coffers of the assessee-company. The Tribunal, apart from adopting an erroneous legal approach, also failed to keep in view the material that was relied upon by the Assessing Officer. The CIT (Appeals) also fell into the same error. If such material had been kept in view, the Tribunal could not have failed to draw the appropriate inference. 16. In the said case, th....
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.... (supra) observed as under:- "...............So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holders' register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec.68 and the remedy open to the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed "accommodation entry providers", whose business it is to help assessees bring into their books of account their unaccounted monies through the medium of share subscription, and the assessee. The ratio is inapplicable to a case, again such as the present ....
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....the fact that the shareholders were missing and not available. Their reluctance and hiding may reflect on the genuineness of the transaction and creditworthiness of the creditor. It would be also incorrect to universally state that an Inspector must be sent to verify the shareholders/subscribers at the available addresses, though this might be required in some cases. Similarly, it would be incorrect to state that the Assessing Officer should ascertain and get addresses from the Registrar of Companies' website or search for the addresses of shareholders themselves. Creditworthiness is not proved by showing issue and receipt of a cheque or by furnishing a copy of statement of bank account, when circumstances requires that there should be some more evidence of positive nature to show that the subscribers had made genuine investment or had, acted as angel investors after due diligence or for personal reasons. The final conclusion must be pragmatic and practical, which takes into account holistic view of the entire evidence including the difficulties, which the assessee may face to unimpeachably establish creditworthiness of the shareholders. 19. In N.R. Portfolio Pvt. Ltd. (supra), ....
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.... as correct position of law is that the court or tribunal should be convinced about the identity, creditworthiness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within the assessee's knowledge. Mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details incase of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take the decisions, controls and manage them." 20. Now, when we go to the order of the tribunal in the present case, we notice that the tribunal has merely reproduced the order of the Commissioner of Income Tax (Appeals) and upheld the deletion of the addition. In fact, they substantially relied upon and quoted the decision of its coordinate bench in the c....
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....etely unrelated either to the Assessee or to any of its Directors. In a private limited company, normally the investment of shares is from parties or persons who are friends or relatives of Promoters/Directors. 34. It is noticed that the shares had face value of Rs. 100 /- and were allotted at a premium of Rs. 100 /- to Rs. 200/- and were then subsequently purchased by the Promoters/Directors, who had originally transferred these shares at Rs. 35 /- per share. 35. It is really surprising that a person who had purchased shares at a premium of Rs. 100 /- to Rs. 200/- per share i.e. at a price of Rs. 200 /- to Rs. 300/- per share, sold the shares at Rs. 35 /- per share i.e at a substantial loss. Another surprising factor is that the entire investment happened during a short span of time and retransfer of the shares to the four Promoters/Directors of the company at Rs. 35 /- per share by different parties also happened during a short span of few days. The modus operandi and the manner in which cash is deposited in a bank and then utilized by way of an account payee cheque for purchase of shares for a premium of Rs. 100 /- to Rs. 200/- per share and then the sale of shares at a lo....
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....ssessee respondent, are applicable in the facts of the present case and in view of the findings recorded by us hereinabove. 54. In view of the above, we are of the view that the Assessee has not discharged the onus satisfactorily and the additions made by the Assessing Officer were justified and sustainable. 5.9 Hon'ble Income Tax Appellate Tribunal Delhi Bench: 'B' in case of M/s. Amtrac Automotive India Pvt. Ltd. Versus ACIT, Circle 1(1), involving exactly similar facts in their appellate order ITA No.2920/Del/09 for A.Y. 2005-06 dated 31.12.2009 observed in Para 3 & then Para 2 as under:- 3. The assessee company is engaged in share trading in the year under consideration. In the course of scrutiny, the assessing officer noted that the appellant has introduced fresh share capital to the tune of Rs. 15,00,000/- at a share premium of Rs. 1,35,00,000/-......... ....................................................................................... 2.1 The AO asked the appellant to furnish details of such share holders mentioning their identity, genuineness of transaction and credit-worthiness. Appellant produced confirmation of deposit from directors of the respec....
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.... 208 ITR 465 (Cal.). Even income -tax file particulars, where the share holder is assessed to tax is not sufficient as found in CIT vs. Korlay Trading Co. Ltd. 232 ITR 820 (Cal.) 2.1.2 The AO also referred the enquiry initiated by investigation wing of the Department in August 2003 which culminated into detection of many entry operators who are operating number of accounts in the same bank/branch or in different branches, in the names of companies, firms, proprietary concerns and individuals. For the operations of these bank accounts, filing income tax returns etc. persons are hired. Like any other business it does requires manpower according to the scale of operation. Except for two or three persons who are required regularly to visit banks and do other spade work like collection of cash etc., most of the other persons involved are on part time basis. The part time employees are called as and when required to sign documents, cheque books etc. Some of the entry operators have also roped in their own relatives for operation of entry accounts and filing the income tax returns. Interestingly most of these concerns / individuals have obtained PAN from the department and are filing r....
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....her in fact they have applied for allotment of shares, the existence itself is not proved. The existence of a person is not merely on paper. Particularly when the AO required the assessee to produce the share applicants and particularly when at the stated address the share applicants do not found to be existing, it cannot be said that the amount received by assessee is proved to be towards share capital. The transaction cannot be proved merely on paper. Neither before AO nor before Ld. CIT (A) the assessee could make the share applicants available. Therefore when the identity of the person itself is not proved, the amount received by assessee cannot be considered to be genuinely received. 6.1. It is also to be noted that the assessee company is stated to have issued shares at premium 9 times its face value. The assessee is a private limited company. It has not issued prospectus for issue of shares nor under the Companies Act 1956, it can invite the public to apply for and allot the shares. The company is prohibited from making any invitation for allotment of shares. How the premium was fixed is not forth coming. Looking to the balance sheet or past history of assessee, the asses....
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....see. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the AO take such repudiation at face value and construe it, without more, against the assessee. (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor /subscriber the genuineness of the transaction and the veracity of the repudiation...." 26. In Divine Leasing (supra), on the question of burden of proof, the Court relied upon CIT v. Musaddilal Ram Bharose, (1987) 165 ITR 14, to hold that the initial burden is upon the Assessee to show the absence of fraud and this is not discharged by the Assessee tendering an incredible and fantastic explanation. The Court also held that every explanation given by the Assessee need not be accepted. 27. In Kamdhenu (supra), this Court categorically held that the initial burden lies on the Assessee to establish the identity of the shareholders, the genuineness of the transaction and the creditworthiness of the sha....
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.... accommodation entries and the appellant happened to be one of such beneficiary of such concern. It is also admitted fact that Shri Anand Sharma had been running the affair of the said company. v. The statement of Shri Anand Sharma in which name of M/s Jalsagar Commerce Pvt. Ltd. cannot be completely ignored solely on the legal grounds raised by the Appellant. 5.12 In view of above discussion, it is clear that the incriminating material had been found during the course of search of accommodation entry provider. Further incriminating material had been gathered by issuing commission to DDIT (Inv.) Kolkata, during the assessment proceedings and all such material have been shared with the appellant at least during the remand report proceeding. In view of nation-wide known scam by the accommodation entry providers of Kolkata and elsewhere burst by the Income Tax Department, there was no need to provide opportunity for cross-examination of same accommodation entry providers. Any way in the rejoinder submission to remand report the appellant is absolutely silient on cross-examination and by such conduct he has forgone his right to cross-examine. Therefore, the principles of natural ....
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....er intermediary company M/s.Jalsagar Commerce Pvt. Ltd., it requires a definite link of the transactions from M/s.Royal Crystal Dealers Pvt. Ltd. to M/s.Jalsagar Commerce Pvt. Ltd. and then the loan to the assessee. Once the chain of transactions and flow of money from one entity to another entity and finally to the assessee has not been established, then the addition made merely on suspicion, how so strong it may be, is not sustainable. On the contrary, when the assessee produced all the relevant record which contains their financial statements, bank accounts statement of loan creditor, return of income, assessment orders framed under section 143(3), confirmation of the loan creditor, then a proper examination could have very well established the link, if any, in providing the accommodation entry from one entity to another and finally to the assessee. However, no such link was found in the documents and financial statements of these companies, rather in the bank account statement of loan creditor M/s. Jalsagar Commerce Pvt. Ltd. there was no suspicious transaction of receiving any entry or any deposit of an equal amount prior to giving the loan to the assessee. The assessee has pa....
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....rculars that during the course of investigation, the department should concentrate and focus on collecting documentary evidence disclosing undisclosed income instead of obtaining the statement and then support of their claim merely on the basis of the statement. Therefore, the statements recorded by the DDIT Kolkata are also not based on any documentary evidence so as to have an evidentiary value for sustaining the additions made by the AO. The entire report of the Investigation Wing is based on statements recorded during survey and search. Once the assessee has produced the documentary evidence and particularly the financial statements of the loan creditors, their bank account statement, then in the absence of any discrepancy or fault in these financial statements or in the bank account statement to reflect that the transactions in question are nothing but bogus accommodation entries, the addition made by the AO is not sustainable as it is merely on the basis of surmises and conjectures and not on any tangible material disclosing the non-genuineness of the transactions. The AO has not disputed the transactions routed through banking channel having sufficient funds which is also su....
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....was also subjected to TDS. This shows the genuineness of the transactions and all these transactions have taken place prior to the date of search and duly recorded in the books of accounts and also subjected to assessment under section 143(3) for some of the assessment years. Therefore, even as per the evidence produced by the assessee, the alleged suspicion of the AO was got dispelled and in the absence of any contrary evidence except the statement which is not even a conclusive proof of transaction of bogus entry to the assessee, the additions made by the AO are not sustainable." Thus, the Tribunal has considered the fact that the assessee produced all the relevant documentary evidence in support of the claim to establish the identity, creditworthiness and genuineness of unsecured loan. We further note that in support of its claim, the assessee produced following documents: S. No. Particulars of Documents 1 Copy of Ack. of ITR of AY 2010-11 2 Copy of balance sheet and annexure of loans & advance of AY 2010-11 3 Copy of relevant page of bank statement showing the entry of payment made to assessee. 4 Confirmation of loan given to assessee from books of accounts of pa....
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.... addition of unsecured loans claimed to have obtained from M/s Teac Consultant Pvt. Ltd merely for the reason that evidences in the form of statement on oath of the relevant entry operators were not available on record. 4. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of unsecured loans claimed to have obtained from M/s Teac Consultant Pvt. Ltd despite the fact that the directors or Principal Officers of these companies were never produced before the Assessing Officer for examination despite number of opportunities provided by the AO for producing and also ignoring the fact that the assessee neither expressed its inability in producing the lenders nor produced them either. 5. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of unsecured loan claimed to have obtained from M/s Teac consultant Pvt. Ltd merely by observing that the assessee has cooperated in assessment by showing his willingness to produce the Directors of lender companies and some Directors/Officers were also produced before the AO despite the fact that even the Directors which were ....
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....rties whereas the ld. CIT (A) has deleted the addition in respect of the loans taken from M/s. Birla Arts Pvt. Ltd., M/s. Teac Consultant Pvt. Ltd and M/s. Sangam Distributors Pvt. Ltd. and confirmed the addition made on account of loan taken from M/s. Jalsagar Commerce Pvt. Ltd. The issue of addition made in respect of the unsecured loans taken from M/s. Jalsagar Commerce Pvt. Ltd. was considered and decided by us in the assessee's appeal. The revenue is aggrieved by the order of the ld. CIT (A) as the unsecured loans taken from these three companies were deleted on the ground that the AO was not having any material to substantiate that these companies are controlled by so called entry operators. The relevant finding of the ld. CIT (A) in para 6.1 to 6.14 are as under : 6.1 As discussed in para 4.4.8 above, in respect of these three lenders namely M/s Birla Arts Private Limited, M/s Teac Consultants Private Limited and M/s Sangam Distributors Private Limited adverse findings alongwith eloquent evidences in the form of statement on oath of relevant entry operators are not visible in the reports dated 28.11.2017 and 06.12.2017 from Investigation Directorate, Kolkata and therefore....
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....ounts to identification of the parties and discharge of burden by the borrower." In view of the above, it is clear that Appellant discharged its burden u/s 68 of the Act. Even otherwise, there is no adverse finding of any investigation conducted by the department in relation to these companies. Therefore, in the absence of any independent inquiry and any adverse findings to rebut the evidences filed by the Appellant, I find that the addition in respect of unsecured loans from 03 companies namely, M/s Birla Arts Private Limited, M/s Teac Consultants Private Limited and M/s Sangam Distributors Private Limited totaling to Rs. 12,36,40,000/- is unjustified; firstly, on the ground that no inquiries were made to rebut the evidences filed by the Appellant and secondly, on the ground that Appellant duly discharged its burden casted upon u/s 68 of the Act to explain nature and source of the transactions by proving the identity, creditworthiness of creditor and genuineness of the transaction. In particular, none of the material or statements have been provided in the Assessment Order wherein names of the said companies are mentioned. Notably, the transactions with the said four companies are....
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....farfetched & cannot be concurred. 6.7 It is further seen that AO has not brought any specific defect / discrepancies in the direct evidence brought on record by the Appellant. The AO has observed that on the date of debit in the account statement of creditor, there is corresponding credit entry of equal amount, however, this observation of the AO is itself not sufficient to prove beyond doubt that Appellant routed its unaccounted income by these companies rather it proves the source in the hands of the Appellant. It is usual business practice, while making loans to party, funds are required to be arranged by the lender, therefore reflection of such entries in bank statement doesn't lead to draw any adverse inference against the Appellant. Needless to say that Appellant is not required to prove source of the source u/s 68 of the Act in view of the settled judicial precedents. 6.8 In my considered view, mere not believing an explanation cannot lead to a conclusion that the borrowed amount is the income of the assessee (borrower) from some undisclosed sources while in the present case, no evidences of any generation of undisclosed income or their utilization in the form of unsec....
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....Orissa Corporation (P.) Ltd. [1986) 159 ITR 78/25 Taxman 80F (SC) and others on this question of law. 6.11 Further, power to call for information/production of evidences or enforcing attendance under the law is given to the income tax authorities only and therefore, in view of the judgment CIT v/s Victor Electrodes Ltd. [2010] 329 ITR 271, the Appellant cannot be fastened upon the burden to produce the lenders before the assessing authorities though in the instance case, appellant has cooperated in assessment by showing his willingness to produce the directors of lender companies and some directors/officer were also produced before the AO. Thus, in view of the judicial precedents referred above, under the facts and circumstances of the present case it is untenable to make any addition for alleged non-appearance by the concerned person before the authorities though they complied with the notices/summon issued to them. 6.12 In the present case in hand, I find that AO asked Assessee to produce lender companies without verifying the facts of lending money from respective jurisdiction assessing officer and without verifying their returns of income and balance sheet wherein these t....
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....ts Private Limited, M/s Teac Consultants Private Limited and M/s Sangam Distributors Private Limited totaling to Rs. 12,36,40,000/- is not sustainable and hence the same stands deleted." Thus the ld. CIT (A) was of the view that so far as the loans taken from M/s. Jalsagar Commerce Pvt. Ltd., the AO was having the statement of Shri Anand Sharma to the effect that the said company was involved in providing accommodation entry and controlled by the entry operator whereas in respect of these three companies the AO was not having any document or even the statement of any person who are entry operators and controlling these companies so as to establish that the transactions are in the nature of bogus accommodation entries. We have already considered the issue on merits in respect of the addition made on account of unsecured loans taken from M/s. Jalsagar Commerce Pvt. Ltd. whereas the loans taken from these companies are even as per the revenue on better footings of genuineness than M/s. Jalsagar Commerce Pvt. Ltd. There is no dispute that the AO was not having any evidence or even any statement to impugn the transactions as bogus accommodation entries. Further, the assessee has prod....
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....there was deposit or introduction of the cash prior to giving the loan to the assessee, accordingly, in view of the facts and circumstances of the case as well as our finding on the issue of addition in case of M/s. Jalsagar Commerce Pvt. Ltd., we do not find any error or illegality in the order of ld. CIT (A) qua this issue. Ground Nos. 7 to 11 of the revenue are regarding the addition of Rs. 42,47,25,000/- made on account of partners' capital received from four parties was deleted by the ld. CIT (A) on the similar ground that the AO was not having any evidence or material to establish that the transactions are bogus accommodation entries." Thus, the Tribunal in the case of Kota Dall Mill (supra) has examined all the relevant details including the funds available with Teac Consultants Pvt. Ltd., which is sufficient for advancement of loan to the assessee. Further the ld. CIT(A) has deleted the addition on the basis that the Assessing Officer has not brought any material on record to controvert the documentary evidence filed by the assessee even the statement of alleged entry operator was not in possession of the Assessing Officer. The finding of the ld. CIT(A) in the case und....
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....before the AO failed to substantiate the genuineness of the alleged transactions. 6. Whether on the facts and circumstances of the case and in law, the CTI(A) was justified in deleting the addition of unsecured loans by observing that the appellant cannot be fastened upon the burden to produce the lenders before the AO and in not considering the decision of the Hon'ble Supreme court in Navodaya Castle (P) Ltd Vs CIT (2015) 56 taxmann.com 18(SC) when there were genuine concerns of the genuineness of the transactions. The Appellant crave, leave or reserving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 26. The only issue involved in the revenue's appeal is the addition made by the Assessing Officer in respect of the unsecured loan from M/s Birla Arts Pvt. Ltd. and M/s Teac Consultants Pvt. Ltd., was deleted by the ld. CIT(A) on the identical reasoning that the Assessing Officer was not having any material or even the statement of alleged entry operator to substantiate the addition. 27. The ld. CIT-DR has submitted that the company was found to be a shell company and the assessee was asked by ....
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.... therefore, the assessment order ought to hold as bad in law and deserves to be annulled. The findings of the ld. CIT(A) in this regard are perverse and erroneous. 3. The appellant craves leave to add, alter, amend, any of the grounds of appeal at or before the time of hearing of appeal." 31. Ground No. 1 of the C.O. is regarding the addition made without any incriminating material as the assessment was not abated due to the search and seizure. This issue has been considered by us while deciding ground No. 1 of the assessee's appeal for the A.Y. 2010-11. Accordingly, in view of our finding on this issue for the A.Y. 2010-11, ground No. 1 of the assessee's C.O. is allowed. 32. Ground No. 2 of the assessee's C.O. is regarding non affording the opportunity of cross examination and consequently violation of principles of natural justice. We have heard the ld AR as well as the ld DR and considered the relevant material on record. An identical issue has been considered and decided by us in ground No. 2 of the assessee's appeal for the A.Y. 2010-11. In view of our finding on this issue for the A.Y. 2010-11, ground No. 2 of the C.O. of the assessee stands allowed. 33. In the appea....
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....burden to produce the lenders before the AO and in not considering the decision of the Hon'ble Supreme court in Navodaya Castle (P) Ltd Vs CIT (2015) 56 taxmann.com 18(SC) when there were genuine concerns of the genuineness of the transactions. The Appellant crave, leave or reserving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 34. The only issue involved in the revenue's appeal is the addition made by the Assessing Officer in respect of the unsecured loan from M/s Birla Arts Pvt. Ltd. and M/s Teac Consultants Pvt. Ltd., was deleted by the ld. CIT(A) on the identical reasoning that the Assessing Officer was not having any material or even the statement of alleged entry operator to substantiate the addition. 35. We have heard the ld. CIT-DR as well as the ld AR of the assessee and considered the relevant material on record. The issue of loan taken from M/s Birla Arts Pvt. Ltd. and M/s Teac Consultants Pvt. Ltd., was considered by us for the A.Y. 2010-11 as well as A.Y. 2011-12 and in view of our finding on this issue, we do not find any merit or substance in the appeal of the revenue. Hence, t....
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....dicated on merits as per relevant ground of appeal hence the issue remains for academic discussion only. 2. On the facts and in the circumstances of the case and in law the Id. CIT (A) erred in not declaring the assessment order as bad in law and void ab initio. The findings of Id CIT(A) in this regard are perverse and erroneous. It is contended that the Id. AO passed the assessment order against the doctrine of "audi alterm partem", violating the principle of natural justice and not giving the opportunity of cross examination of the alleged accommodation entry providers, therefore the assessment order ought to held as bad in law and deserves to be annulled. 3. That the order of the Id CIT (A), confirming the addition made by the AO is arbitrary, whimsical, capricious, perverse, based on no evidence or irrelevant material or irrelevant evidence, and against the law and facts of the case. The addition confirmed by ld.CIT (A) deserves to be deleted. 4. On the facts and in the circumstances of the case and in law the Id. CIT (A) erred in confirming the additions made u/s 68 of the Income Tax Act, 1961 by : - a) solely relying on the statements of some alleged accommodation....
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....t provided to the assessee. We have heard the ld AR as well as the ld. CIT-DR and considered the relevant material on record. This ground of appeal is common for the A.Y. 2010-11 to 2012-13, therefore, in view of our finding on this issue for the A.Y. 2010-11 as well as the C.O. of the assessee for the A.Y. 2011-12 and 2012-13, the same is decided in favour of the assessee and against the revenue. 41. Ground Nos. 3 to 5 of the appeal are regarding the addition of special deposits received from M/s Caplin Dealcom Pvt. Ltd. for allotment of equity shares on preferential basis, which was sustained by the ld. CIT(A). The Assessing Officer has made addition of unsecured loan taken from M/s Birla Art Pvt. Ltd. as well as various special deposits received from five parties by treating the same as bogus accommodation entries based on the report of the Investigation Wing, Kolkata as well as the statement of one Shri Ankit Bagri. The ld. CIT(A) has sustained the addition in respect of M/s Caplin Dealcom Pvt. Ltd. but deleted the rest of the additions on this ground that the Assessing Officer was not having any material or the statement of alleged entry providers except Shri Ankit Bagri. Th....
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....allegation of the Assessing Officer is baseless to say that these companies are shell companies when the assessee has produced all the relevant documents and even these companies are subjected to scrutiny assessment. He has further contended that the creditor/applicant is NBFC which is supervised and regulated by the RBI and therefore, the financial affairs of the NBFC cannot be doubted without any material. He has pointed out that this company M/s Caplin Dealcom Pvt. Ltd. was duly examined by this Tribunal in the case of Kota Dall Mill vide order dated 31/12/2018 (supra). 42. On the other hand, the ld CIT-DR has submitted that once the Investigation Wing, Kolkata has detected that these are shall companies and engaged in providing accommodation entries then it was the duty of the assessee to produce the Principal Officers/Directors of these companies. Further Shri Ankit Bagri has admitted in his statement as entry provider and controlling these companies, therefore, the assessee has failed to discharge its onus when the Assessing Officer asked to produce the Principal Officers/Directors of these companies. 43. We have considered the rival submissions as well as the relevant ma....
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....me remuneration which we provided them. Some of the names are as follows: 1. Shri Anand Kumar Khetan; 2. Shri Koushik Ghosh; 3. Shri Rajiv Maheswari; 4. Shri Anil Modi; 5. Shri Manish Kejriwal: Further, I would also like to mention that Shri Sumit Kejriwal was also himself a direction in few of the companies. Q.13. It has been observed from the attachments of Form 2s of Mahabir Group of companies that equity shares were allotted to you company in the following manner over the years: In the case of Mahabir Danwar Jewellers Pvt. Ltd. Sl.No. Name of the company Date of allotment F.Y. A.Y. Total No. of shares Amount including premium (Rs.) 1. Rajat Polypack Pvt. Ltd. 31.03.2010 2009-10 2010-11 4000 20,00,000/- 2. Caplin Dealcom Pvt. Ltd. 31.03.2010 2009-10 2010-11 4000 20,00,000/- 3. Pabla Leasing & Finance Pvt. Ltd. 31.03.2010 2009-10 2010-11 6000 30,00,000/- 4. Westport Export Pvt. Ltd. 31.03.2010 2009-10 2010-11 3000 15,00,000/- 5. Caplin Dealcom Pvt. Ltd. 31.03.2009 2008-09 2009-10 2000 10,00,000/- 6. Pabla Leasing & Finance Pvt. Ltd. 31.03.2009 2008-09 2009-10 ....
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....2013-14 along with Annexure 552-560 3 Copy of relevant page of bank statement showing the entry of payment made to assessee. 561-562 4 Confirmation of deposit given to assessee from books o f accounts of party. 563-567 5 Confirmation of deposit given to assessee from books of accounts of assessee. 568-574 6 Copy of memorandum of understanding executed between the assessee and M/s Caplin Dealcomm Pvt. Ltd for the transaction of finance in form of deposits 575-579 7 Copy of affidavit of Kavita Jain director of company. 580-583 8 Order passed by Calcutta High Court regarding amalgamation of other companies with this company. 584-605 9 Copy of balance sheet of company of 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 and 31.03.2016. 606-612 10 Copy of assessment order passed in the case of above named company for AY 2006-07, 2008-09, 2009-10, 2010-11 and 2014-15 613-636 11 Copy of ROC master data. 637-638 12 NBFC Registration Certificate 639 13 Copy of PAN card. 640 14 Copy of Certificate of Incorporation 641 15 Copy of summon no. 4560 dated 16.10.2017 and reminder notice no. 1583 dat....
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....erefore uncalled for. iii. It is undisputed fact that in the statement dated 03.07.2014 Shri Ankit Bagri and Shri Shankar BAnka had admitted to be one of such accommodation entry providers. The sum and substance of the said statement is that the concern M/s Caplin Dealcomm Private Limited, M/s VSG Leasing and Finance Co. Ltd. was engaged in the activities of providing accommodation entries and the appellant happened to be one of such beneficiary of such concern. It is also admitted fact that these operators had been running the affair of the said company. v. The statement of Shri Ankit Bagri and Shri Shankar Bank in which name of M/s Caplin Dealcomm Private Limited and M/s VSG Leasing and Finance Co. Ltd. respectively appeared, cannot be completely ignored solely on the legal grounds raised by the Appellant. 3.13 In view of above discussion, it is clear that the incriminating material had been found during the course of search of accommodation entry provider. Further incriminating material had been gathered by issuing commission to DDIT (Inv.) Kolkata, during the assessment proceedings and all such material have been shared with the appellant at least during the remand rep....
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....* Copy of relevant page of bank statement showing the entry of payment made to assessee. 989-1008 * Confirmation of loan given to assessee from books of accounts of party. 1009-1011 * Confirmation of loan given to assessee from books of accounts of assessee. 1012-1013 * Copy of affidavit of Kavita Jain director of company. 1014-1017 * Order passed by Calcutta High Court regarding amalgamation of other companies in this company 1018-1039 * Copy of balance sheet of company of 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 and 31.03.2016. 1040-1046 * Copy of assessment order passed in the case of above named company for AY 2006-07, 200809, 2009-10, 2010-11 and 2014-15. 1047-1070 * Copy of ROC master data. 1071-1072 * Copy of NBFC Certificate. 1073 * Copy of PAN card. 1074 * Copy of summon no. 4560 dated 16.10.2017 and reminder notice no. 1583 dated 31.10.2017 issued by DDIT (Investigation), Unit-1(3), Kolkata u/s 131 of Income Tax Act, 1961 1075-1077 * Copy of reply submitted by company in response to notice/summon issued to it Along with dispatched proof 1078-1080 2. M/s VSG Leasing and Finance Co. Ltd. ....
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.... documentary evidences as well as the assessment framed U/s 143(3) of the Act in case of M/s Caplin Dealcom Pvt. Ltd.. We further note that the assessee was persuading with the Kolkata Stock Exchange as well as the SEBI for delisting of this company and thereafter preferential shares to be issued to these parties. The ld AR has produced before us the letters of Kolkata Stock Exchange dated 01/8/2014 as well as SEBI dated 03/9/2014 whereby the approval was granted for voluntary delisting of the equity shares of the assessee. However, the SEBI has regretted the request by citing the reason that there is no provision under SEBI Act for delisting or waiver sought by the company. Hence, the explanation of the assessee that the special deposits were received as per the memorandum of understanding to issue the shares on preferential basis to these parties after delisting of the shares of the company in the stock exchange is found to be correct as the assessee has already applied to the Kolkata Stock Exchange as well as SEBI for delisting of its equity shares. Even otherwise when the creditworthiness of the party as well as genuineness of the transaction through the banking channel was est....
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....lossom Dealers Pvt. Ltd and M/s Bajnath Commosales Pvt. Ltd despite the fact that the directors or Principal Officers of these companies were never produced before the Assessing Officers for examination despite number of opportunities provided by the AO for producing and also ignoring the fact that the assessee neither expressed its inability in producing the lenders nor produced them either. 5. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of unsecured loan claimed to have obtained from M/s Birla Arts Pvt. Ltd., M/s Magnate Capital Market Ltd., M/s Competent Securities Pvt. Ltd., M/s Blossom Dealers Pvt. Ltd. and M/s Bajnath Commosales Pvt. Ltd. merely by observing that the assessee has cooperated in assessment by showing his willingness to produce the Directors of lender companies and some Directors/Officers were also produced before the AO despite the fact that even the Directors which were produced before the AO failed to substantiate the genuineness of the alleged transactions. 6. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of unsecured ....
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....t in providing accommodation entries. He has referred to the assessment order and submitted that the Assessing Officer has conducted enquiry during the assessment proceedings through the Kolkata Investigation Wing and based on the report of Kolkata Investigation Wing as well as the statement of Shri Ankit Bagri, the Assessing Officer has reached to a reasonable conclusion to hold that the transactions are nothing but bogus accommodation transaction as these companies are shell companies. 48. On the other hand, the ld AR of the assessee has submitted that the entire order of the Assessing Officer is based on the statement of Shri Ankit Bagri as well as the report of Investigation Wing, Kolkata, however, neither in the statement nor in the reports any allegation has made in respect of these transactions of loan as well as special deposits received by the assessee from these parties. The Assessing Officer has extrapolated the statement of Shri Ankit Bagri and applied the same to the other cases whereas there is no whisper about the accommodation entries from these parties. The ld. CIT(A) has deleted the addition by considering the fact that the Assessing Officer was not having any m....
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....0-11. Even the parties are same for these years and, therefore, once the identity, creditworthiness and genuineness of the transaction in respect of one party is decided, then the same is applicable for all the subsequent years subject to condition that a sufficient fund was available with the creditor. We note that except M/s. Royal Crystal Dealers Pvt. Ltd. and M/s. Doshi Management Pvt. Ltd., additions for which were confirmed by the ld. CIT (A) for all these years on the reasoning that these companies are managed and controlled by Shri Anand Sharma, the alleged entry operator, the other creditors are common as in the preceding years. This finding of the ld. CIT (A) is identical to the finding in respect of M/s. Jalsagar Commerce Pvt. Ltd. for the assessment year 2010-11. Accordingly, in view of our finding on this issue, the addition sustained by the ld. CIT (A) is deleted. Rest of the parties for which the additions were deleted by the ld. CIT (A) are same for which the AO was not having any material or document to substantiate the finding of bogus accommodation entries as in the case of other parties, namely, M/s. Birla Arts Pvt. Ltd., M/s. Tech Consultants Pvt. Ltd., M/s. Sa....
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.... M/s Blossom Dealer Pvt Ltd for the transaction of finance in form of deposits. 726-730/Vol - III 7 Copy of statement received from M/s Blossom Dealers Pvt Ltd. Certifying and evidencing the source of fund invested in assessee company. 731/Vol -III 8 Copy of affidavit of Priyanka Singh director of company. 732-735/Vol - III 9 Copy of balance sheet of company of 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 and 31.03.2016. 736-741/Vol - III 10 Copy of assessment order passed in the case of above named company for AY 2013-14 and 2014-15. 742-755/Vol - III 11 Copy of ROC master data. 756/Vol -III 12 Certificate of Incorporation. 757/Vol -III 13 Copy of Pan Card. 758/Vol -III 14 Copy of summon no. 1446 dated 13.10.2017 and reminder notice no. 1582 dated 31.10.2017 issued by DDIT (Investigation), Unit-1(3), Kolkata u/s 131 of Income Tax Act, 1961 759-762/Vol - III 15 Copy of reply submitted by company in response to notice/summon issued to it Along with dispatched proof 763-765/Vol - III M/s Baijnath Commosales Pvt Ltd 1 Copy of Ack. of ITR of AY 2013-14 766/Vol -III 2 Copy of Balance sheet of AY 2013-14 along with Annexur....
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....917/Vol - III 11 Certificate of Incorporation. 918/Vol -III 12 NBFC Registration Certificate. 919/Vol -III 13 Copy of PAN card. 920/Vol -III M/s Magnate Capital Market Limited 1 Copy of Ack. of ITR of AY 2013-14. 472/Vol -II 2 Copy of Balance sheet of assessment year 13-14 along with annexure. 473-480/Vol - II 3 Copy of relevant page of bank statement showing the entry of payment made to assessee. 481-489/Vol - II 4 Confirmation of deposit given to assessee from books of accounts of party. 490-491/Vol - II 5 Confirmation of deposit given to assessee from books of accounts of assessee. 492-494/Vol - II 6 Copy of memorandum of understanding executed between the assessee and M/s Magnate Capital Markets Ltd for the transaction of finance in form of deposits 495-499/Vol - II 7 Copy of affidavit of Babita Kriplani director of company. 500-503/Vol - II 8 Order passed by Calcutta High Court regarding amalgamation of other companies with this company. 504-526/Vol - II 9 Copy of balance sheet of company of 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 and 31.03.2016. 527-533/Vol - II ....
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....rs Pvt. Ltd. 2014-15 14,958 749-752/Vol-III M/s Baijnath Commosales Pvt. Ltd 2013-14 95,745 811-813/Vol-III M/s Baijnath Commosales Pvt. Ltd 2014-15 Nil 816A-816B/Vol-III M/s Magnate Capital Market Ltd. 2014-15 68,330 534-535/Vol-II M/s Competent Securities Pvt. Ltd 2009-10 94,600 684-685/Vol-II M/s Competent Securities Pvt. Ltd 2010-11 2,08,099 690-691/Vol-II M/s Competent Securities Pvt. Ltd 2014-15 9,06,648 693-696/Vol-II M/s Birla Arts Pvt Ltd The assessment history of M/s Birla Arts Pvt Ltd has already been explained in para 7 above for departmental appeal ITA No. 1101/JPR/2018 A.Y 2011-12 b) Copy of Master Data of ROC Name of Company Status of Company A.Y 2013-14 PB pg M/s Birla Arts Pvt. Ltd Active 939/Vol-III/ M/s Blossom Dealers Pvt. Ltd. Active 756/Vol-III M/s Magnate Capital Market Ltd. Active 539//Vol-II M/s Competent Securities Pvt. Ltd Active 700-701/Vol-II M/s Baijnath Commosales Pvt. Ltd Amalgamated From the details of the documents produced by the assessee, it is clear that the assessee has established its claim by documentary evidence as well as the asses....
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....e and consequently the addition made merely on the basis of statement is not sustainable. Even otherwise the ld. CIT(A) has deleted the addition on the ground that the Assessing Officer was not having in his possession the statement of the alleged entry providers in respect these five parties except in the case of M/s Caplin Dealcom Pvt. Ltd. Hence, in view of the above facts and circumstances as discussed above, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. 50. Ground No. 9 of the appeal is regarding disallowance of depreciation on guest house building. The Assessing Officer has disallowed the depreciation on guest house on the ground that the assessee has failed to establish that the guest house was used exclusively for the business purposes. On appeal, the ld CIT(A) has allowed the claim of depreciation. 51. The ld. CIT-DR has relied upon the order of the Assessing Officer and submitted that when the assessee has failed to establish that the guest house is used exclusively for business purposes, the claim was not allowable and rightly disallowed. 52. On the other hand, the ld AR of the assessee has submitted that the guest house is s....
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...., the claim of depreciation on guest house building is allowed to the Appellant. Accordingly, this addition of Rs. 1,66,360/- is deleted." Accordingly, in view of the facts and circumstances of the case, where the guest house is situated in the factory premises and being used for the purpose of business of the assessee, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. 54. Ground No. 10 of the appeal is regarding restriction of depreciation on UPS from 60% to 15%. We have heard the ld. CIT-DR as well as the ld AR of the assessee and considered the relevant material on record. At the outset we note that this Tribunal has been taking a consistent view that the UPS is an integral part of computer and therefore, eligible for depreciation @ 60%. The ld. CIT(A) after considering the various decisions has decided this issue in para 13.2 and 13.3 as under: "13.2 The A/R of the Appellant attended the proceedings and made submissions as follows:- The UPS is an integral part of the computer and it is entirely used for computers as its peripherals / accessories. There is no other use of UPS separately. As per many tribunal judgements including judg....
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....AR has submitted that the foreign travels were made only for the business purposes which is also not disputed by the Assessing Officer but the Assessing Officer has made 15% disallowance only on the ground of personal nature of expenditure. The assessee being a company and artificial person, therefore, cannot be personal expenditure of the company. 57. Having considered the rival submissions as well as relevant material on record at the outset we note that once the Assessing Officer has not pointed out specific instance of possibility of personal nature of expenditure, the ad hoc disallowance of 15% on mere possible is not justified. The ld. CIT(A) has considered this issue in para 14.1 to 14.3 as under: "14.1 As mentioned in the assessment order at page no. 5-6, AO made disallowance of Rs. 3,72,253/- on estimate basis in respect of foreign travelling expenditure The AO disallowed 15% of these expense on account of personal use. According to AO, these expenses are not bifurcated into business and non-business use and personal use cannot be ruled out in respect of these expenses. Accordingly, he made disallowance of Rs. 3,72,253/-. 14.2 The A/R of the Appellant attended the ....
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....ara 15.3 as under: "15.3 I have considered the rival submissions and material placed on records. It is seen from the paper book page no. 114-117, that expenditure in consideration are in relation to personal appearance vide bill dated 08.01.2013. Therefore, merely on the ground that personal appearance pertained to earlier year's assessment/other proceedings, the expenditure cannot be termed as prior period expenditure. Further the bill for the said professional services were received during the year under consideration only, therefore, it cannot be treated as prior period expenses. In view of the reasons and findings as above, this additions of Rs. 24,720/- is deleted." Thus, the bill for professional service was raised by the professional on 08/1/2013 who has appeared on behalf of the assessee in the appeals pending. Though the appeals were pertaining to the earlier year, however, the expenditure is crystallized only when the matter was finalized and the bill was raised by the professional service provider. Hence, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. 60. In the appeal for A.Y. 2015-16, the assessee has raised following grounds....
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....nt were relied Caplin Dealcom Pvt. Ltd 14,40,00,000 Shri Ankit Bagri 5. On the facts and in the circumstances of the case and in law the Id. CIT(A) erred in rejecting the theory of peak credit and erred in not allowing the benefit of telescoping, recycling and rotation of funds. 6. The assessee prays for leave to Add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal. 61. Ground No. 1 of the appeal is regarding violating the principles of natural justice for not granting opportunity to cross examination. 62. We have heard the ld AR as well as the ld. CIT-DR and considered the relevant material on record. This ground of appeal is common to the appeals of assessee for the A.Y. 2010-11 to 2012-13 as well as the in the C.O. of the assessee, therefore, in view of our finding on this issue for the A.Y. 2010-11 as well as the C.O. of the assessee for the A.Y. 2011-12 and 2012-13, the same is decided in favour of the assessee and against the revenue. 63. Grounds No. 2 to 5 of the appeal are regarding the addition made by the Assessing Officer on account of unsecured loan from M/s Caplin Dealcom Pvt. Ltd. 64. We have heard....
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....) was justified in deleting the addition of unsecured loan claimed to have obtained from M/s Magnate Capital Market Ltd., merely by observing that the assessee has cooperated in assessment by showing his willingness to produce the Directors of lender companies and some Directors/Officers were also produced before the AO despite the fact that even the Directors which were produced before the AO failed to substantiate the genuineness of the alleged transactions. 6. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of unsecured loans by observing that the appellant cannot be fastened upon the burden to produce the lenders before the AO and in not considering the decision of the Hon'ble Supreme court in Navodaya Castle (P) Ltd. Vs CIT (2015) 56 taxmann.com 18(SC) when there were genuine concerns of the genuineness of the transactions. 7. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance of Rs. 1,34,751/- made by the AO on account of depreciation on guest house building. 8. Whether on the facts and circumstances of the case and in law, the CIT(A) was....
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.... disposed off in favour of the assessee and against the revenue. 70. Ground No. 9 of the appeal is regarding the disallowance on account of foreign travel expenses. This issue is common to the issue raised by the revenue for the A.Y. 2013-14. We have considered the decided this issue in favour of the assessee and against the revenue in the A.Y. 2013-14. Accordingly this ground of revenue's appeal stands disposed off in favour of the assessee and against the revenue. 71. Ground No. 10 of the appeal is regarding disallowance on account of professional service charges. This issue is common to the issue raised by the revenue for the A.Y. 2013-14. We have considered the decided this issue in favour of the assessee and against the revenue in the A.Y. 2013- 14. Accordingly this ground of revenue's appeal stands disposed off in favour of the assessee and against the revenue. 72. Ground No. 11 of the appeal is regarding the disallowance on account of prior period expenditure. 73. The Assessing Officer noted that the assessee company has claimed prior period expenses of Rs. 58,770/- which is not allowable for the assessment year under consideration. In response to the show cause noti....
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....s not been challenged by the revenue. Accordingly, we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue. Hence, this ground of revenue's appeal is dismissed. 77. In the appeal for the A.Y. 2016-17, the revenue has raised following grounds: "1. Whether on the facts and circumstances of the case and in law, the C1T(A) was justified in deleting the addition of Rs. 65,18,820/- made by the AO on account of ineligible claim of non-recoverable IEX charges made by the assessee when the conditions of section 36(2)(i) are not satisfied. 2. Whether on the facts and circumstances of the case and in law the CIT(A) was justified in deleting disallowance of Rs. 1,21,274/- made by the AO on account of depreciation on guest house building. 3. Whether on the facts and circumstances of the case and in law the CIT(A) was justified in deleting the disallowance of Rs. 1,074/- made by the AO on account of excess claim of depreciation on UPS. 4. Whether on the facts and circumstances of the case and in law the CIT(A) was justified in deleting the disallowance of Rs. 2,27,487/- made by the AO on account of foreign travel expenses. 5. Whether on the ....
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....not a bad debts but it is only an expenditure incurred by the assessee in the earlier years. Hence, the claim is not allowable for the year under consideration being the prior period expenditure. He has relied upon the order of the Assessing Officer. 80. On the other hand, the ld AR of the assessee has submitted that as per the process of buying energy from open access the intended buyer and seller shall have to go through an entity who has been admitted by the Power Exchange as a registered member. The assessee was a registered "Grid Connect Client" of Indian Energy Exchange" and its transaction were executed on exchange through exchange registered member M/s Parshavath Power Projects P Ltd. The power will flow through the existing STU/CTU network depending on the location of the entity's injection / drawl point. In the case of assessee, the existing STU as "Jaipur Vidyut Vitran Nigam Limited". The assessee used to inform its daily requirement for a day in advance to M/s Parshavath Power Projects P Ltd. who in turn was buying energy from IEX on assessee's behalf for the next day's requirement. The assessee has been paying advance money for the electricity purchased for t....
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.... under the believe that the payment towards the underutilized energy will be refunded but finally it was learnt by the assessee that the said amount would not be refunded to the assessee. Therefore, the assessee has finally written off the said amount during the year under consideration. We note that the payment made by the assessee for purchase of electricity from open access is otherwise an allowable expenditure being laid out for the purpose of business of the assessee. The only dispute is whether the excess payment made by the assessee over and above the consumption of electricity can be allowed for the year under consideration as written off amount. Once the said expenditure is an allowable claim for the respective years during which the payment was made for purchase of electricity then there is no bar for allowing the said excess amount paid by the assessee which could not be recovered due to the complications involved in the process of purchase of energy from open source and transmission of the same through various intermediaries and written off. Even otherwise the claim of the assessee is revenue neutral as the assessee has also paid maximum marginal rate of tax for the ass....
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....ny would have claimed it in relevant assessment year more so when in the relevant assessment year the applicant company was expecting the recovery or such advance. Further in the case of written off of debts/business advance the written off the same in books of accounts is sufficient and the same is treated as loss for the applicant company in the year in which the same is written off. In view of above the addition of Rs. 65,18,820/- made is hereby deleted. Therefore the ground No. 2 of appeal is allowed." The Kolkata Benches of the Tribunal in the case of Kesoram Industries Ltd. Vs. Addl.CIT (supra) while considering the issue of non-recoverable advance written off as held in paras 13 to 15 as under: "13. Now we take up revenue's appeal in ITA 1722/Kol/2012 preferred by the revenue. Ground No. 1 is against the action of the Ld. CIT(A) in deleting the disallowance of Rs. 1,65,748/- made on account of advances written off. Briefly stated the facts of the case are that the assessee company had written off certain debit balances from its balance sheet aggregating to Rs. 1,65,748/- and debited it to its profit and loss account being no longer recoverable. The advances written ....
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....wance made by the Assessing Officer on account of depreciation on guest house which was deleted by the ld. CIT(A). This issue is common to the issue raised by the revenue for the A.Y. 2013-14 and 2015-16. We have considered the decided this issue in favour of the assessee and against the revenue in the A.Y. 2013-14 and 2015-16. Accordingly this ground of revenue's appeal stands disposed off in favour of the assessee and against the revenue. 83. Ground No. 3 of the appeal is regarding the disallowance of higher depreciation on UPS. This issue is common to the issue raised by the revenue for the A.Y. 2013-14 and 2015-16. We have considered the decided this issue in favour of the assessee and against the revenue in the A.Y. 2013-14 and 2015-16. Accordingly this ground of revenue's appeal stands disposed off in favour of the assessee and against the revenue. 84. Ground No. 4 of the appeal is regarding the disallowance on account of foreign travel expenses. This issue is common to the issue raised by the revenue for the A.Y. 2013-14 and 2015-16. We have considered the decided this issue in favour of the assessee and against the revenue in the A.Y. 2013-14 and 2015-16. Accordingly th....