TaxTMI 
TaxTMI 
2019 (1) TMI 1591
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....7 was passed U/s 143(3) read with Section 153B(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 ....
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....oss 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 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 ....
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....A) has rejected the objection of the assessee on the ground that the SLP filed by the revenue against the decision of Hon'ble Delhi 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 ....
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....lready assessed. The ld. A/R has also relied upon the following decisions :- 1. Principal CIT vs. Kurele Paper Mills Pvt. Ltd. (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 bee....
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....rs' capital, special deposits etc. The assessee was duly confronted with the results of all these enquiries and information shared by the Investigation Wing. In 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 Inves....
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....olkata Investigation Wing which contains the statement of one Shri Anand Sharma in respect of some assessments and the statement of Shri Ankit Bagri in respect of 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....
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....eto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, 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....
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....ch were not produced or not already disclosed or made known in the course of original assessment. The Hon'ble Delhi High Court has reiterated its view in case of Principal CIT vs. Kurele Paper Mills (supra) in para 1 to 3 as under :- "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 addi....
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.... opinion as to whether Section 153A can be invoked even under such situation". That question was, therefore, left open. As far as Chetan Das Lachman Das (supra) is concerned, in para 11 of the decision it was observed: "11. Section 153A (1) (b) provides for the assessment 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 Da....
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....the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material; and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made." 34. The argument of the Revenue that the AO was 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....
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....e 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 relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating 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....
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....ome in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (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....
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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 sear....
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....wla (supra). The decision of this Court in Kurele Paper Mills (P.) Ltd. (supra) which was referred to in Kabul Chawla (supra) has been affirmed by the Supreme Court by the dismissal of the Revenue's SLP on 7th December, 2015. The decision in Dayawanti Gupta 64. That brings us to the decision in Smt. Dayawanti Gupta (supra). As rightly pointed out by Mr. Kaushik, learned counsel appearing for the Respondent, that there are several distinguishing 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 Per....
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....of such deletions in ITA No. 306/2017. 68. In para 23 of the decision in Smt. Dayawanti Gupta (supra), it was observed as under: "23. This court is of opinion that the ITAT's findings do not reveal any fundamental error, calling for correction. The inferences drawn in respect of undeclared income were premised on the materials found as well as the statements recorded by the assessees. These additions therefore were not baseless. Given that the assessing authorities in such 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 ca....
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....isclosed. This has been noticed by the CIT (A) in para 7.2.1 of his order for AY 2004-05. As regards non-refundable security deposit, the CIT (A) accepted the AO's findings that treating the sum as 'goodwill written off on deferred basis' was not correct, hence the addition of Rs. 5,09,343 was held to be justified and correct. It was duly accounted for under 'liabilities' and transferred to income in a phased manner. This was not done by manipulating the account books of the Assessee as alleged by the Revenue. 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 avail....
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....reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub-section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment 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....
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....the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made." (Emphasis supplied) 24. The said judgment also in no uncertain terms holds that the reassessment 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.....
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....pretation of taxing statutes do not permit the Court to interpret the Second Proviso to Section 153A in a manner that where the assessment or reassessment proceedings are complete, and the matter is pending in appeal in the Tribunal, the entire proceedings will abate. 20. There is another aspect to the matter, namely that the abatement of any proceedings has serious causes and effect in as much as the abatement of the proceedings, takes away all the consequences that arise thereafter. In the present case after deducting bogus gifts in the regular assessment proceedings, the proceedings 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....
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....y material to indicate that the unsecured loans shown in the books of accounts as well as partners' capital received by the assessee are nothing but assessee's own unaccounted and undisclosed income routed back in the garb of unsecured loans and partners' capital. There is no dispute that these transactions of unsecured loans and partners' capital contribution are duly recorded in the books of accounts and disclosed in the return of income which were already completed as the assessments for these four assessment years were not pending on the date of search, therefore, it is manifest from the record that during the course of 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 surrendere....
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.... CIT (1963) 50 ITR 1 (SC), Roshan Di Hatti v CIT (1977) 107 ITR (SC) it has been held that the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee, is on him. Where the nature and source thereof cannot be explained satisfactorily, it is open to the revenue to hold that it is the income of the assessee and no further burden is on the revenue to show that the income is from any particular source. It may also be pointed out that the burden of proof is fluid for the purposes of Section 68. Once assessee has submitted basic documents relating to identity, genuineness of transaction 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 assesse....
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....|68 of the Act in the form of |unsecured loan and partner's |capital Rs. 67,20,14,999/- Assessed income Rs. 70,02,98,459/- R/o Rs. 70,02,98,459/- The total income of the assessee in the status of Firm for Assessment Year 2010-11 relevant to Previous Year 2009-10 is assessed at Rs. 70,02,98,459/- u/s 153A read with section 143(3) of I.T. Act, 1961. The form ITNS-150 showing calculation of tax and interest chargeable, if any, is attached herewith and forms a part of this Order. A notice of demand u/s 156 of the Act and challan for payment of tax, if payable, is hereby issued. Penalty notice u/s 274 rws 271(1)(c) is issued separately." The entire finding of the 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. C....
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....re, neither in the assessment order nor in the order of the ld. CIT (A) there is any mention or finding that the additions have been made by the AO on the basis of any incriminating material found during the course of search and seizure in the case of the assessee. The AO has solely relied upon the report of the Investigation Wing Kolkata and statement of one Shri Anand Sharma recorded by the Investigation Wing during the survey under section 133A of the Act. Therefore, even if the information/report of the Investigation Wing Kolkata is considered as a relevant evidence, the same cannot be regarded as incriminating material unearthed during the course of search and seizure under section 132 of the IT Act in case of the 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. Accordin....
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....ing Officer while passing the assessment orders for the A.Y. 2010-11 to 2012-13 U/s 153A of the Act are not sustainable and liable to be deleted. Hence, this ground of the assessee's appeal is allowed. 10. Ground No. 2 of the appeal is regarding the addition made by the Assessing Officer without giving the opportunity of cross examination of the witnesses and consequently there is a violation of principles of natural justice. 11. The ld AR of the assessee has submitted that the sole basis of the addition is the statement of Shri Anand Sharma in some of the assessment years and the statement of Shri Ankit Bagri in some other assessment years whereas the assessee was not given the opportunity of cross examination despite 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, howev....
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....see was finally not granted the opportunity of cross examination, therefore, there is a violation of principles of natural justice. 14. We have considered the rival submissions as well as relevant material on record. There is no dispute that the assessee demanded the cross examination of the witnesses, therefore, statements have been relied upon by the Assessing Officer while framing the assessments under consideration. The ld. CIT(A) though while calling the remand report of the Assessing Officer directed to allow the cross examination to the assessee, however, when the Assessing Officer has expressed his inability to produce the witnesses for cross examination, the ld. CIT(A) has finally rejected the objection raised by 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 thes....
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....o violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection 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". ....
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.... justice in itself is not fatal enough so as to jeopardize the entire proceedings. In the interest of justice, the Tribunal could have set aside the assessment order with the limited purpose of offering assessee an opportunity to crossexamine Shri Manoj Aggarwal before completing the proceedings." [Emphasis supplied] 6. A reading of the said paragraph (g) makes it clear that the revenue had accepted the findings of the Tribunal on facts as also the position that there had been a violation of principles of natural justice. However, the revenue's plea was that the violation of principles of natural justice was not fatal so as to jeopardize the entire proceedings. The said miscellaneous application was also rejected by the Tribunal by its order dated 28-11- 2008. 7. 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 ....
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.... in Nemi Chand Kothari (supra) observed that in order to establish the receipt of a cash credit, the assessee must satisfy three conditions i.e. identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. In the instant case by virtue of the fact that the transaction was completed by cheque payments, the appellant has contended that it had satisfied all the three tests. 13. In Kishanchand Chellaram (supra) wherein the Supreme Court observed that the revenue authorities had not recorded the statement of the Manager of the bank and it was difficult to appreciate as to why it was not done and why the matter was not probed further by the revenue. 14. The Delhi High Court in Ashwani Gupta (supra)held that once there is a violation of the principles of natural justice 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 sin....
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....ery foundation of the reassessment and therefore renders the orders passed by the CIT (A) and the Tribunal vulnerable. In our view the assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents. Despite the request dated 15th February, 1996 seeking an opportunity to cross examine the deponent and furnish the assessee with copies of statement and disclose material, these were denied to him. In this view of the matter we are inclined to allow the appeal on this very issue." Thus the denial of opportunity to cross examine was considered by the Hon'ble High Court which goes to the root of the matter and strikes at the very foundation of the assessment and, therefore, renders the assessment order passed by the AO not sustainable. The ld. A/R has submitted that Coordinate 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 t....
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....that they are indulged in providing accommodation entries of bogus unsecured loans and advances through various Benami concerns (70) operated and managed by them. This admission automatically makes all the transactions done by them as mere paper transactions and in these circumstances, further as per the information name and address of assessee and the Benami Concern through which accommodation entry of unsecured loans was provided is appearing in the list of beneficiaries to whom the said Group has provided. This admission is sufficient to reject the contentions of the assessee." Further, regarding cross examination, the AO stated that "the right of cross examination is not an absolute right and it depends upon the circumstances of each case and also on the statute concerned. In the present case, no such circumstances are warranted as in the 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....
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.... It was held in that case that "In this case we are of the opinion that the Tribunal violated certain fundamental rules of justice in reaching its conclusions. Firstly, it did not disclose to the assessee what information had been supplied to it by the departmental representative. Next, it did not give any opportunity to the company to rebut the material furnished to it by him, and lastly, it declined to take all the material that the assessee wanted to produce in support of its case. The result is that the assessee had not had a fair hearing." The Hon'ble Supreme Court in case of C. Vasantlal & Co. Vs. CIT 45 ITR 206 (SC) has held that "the ITO is not bound by any technical rules of the law of evidence. It is open to him to collect material to facilitate assessment even by private enquiry. But, if he desires to use the material so collected, the assessee 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 Supre....
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.... 2.11 In light of above proposition in law and especially taking into consideration the decision of the Hon'ble Supreme Court in case of C. Vasantlal & Co. (supra) relied upon by the Revenue and which actually supports the case of the assessee, in the instant case, the assessment was completed by the AO relying solely on the information received from the investigation wing, statement recorded u/s 132(4) of Shri Bhanwarlal Jain and others, and various incriminating documentary evidence found from the search and seizure carried out by Investigation Wing, Mumbai on the Shri Bhanwarlal Jain group on 03.10.2013. It remains undisputed that the assessee was never provided copies of such incriminating documents and statements of Shri Bhanwarlal Jain and various persons and an opportunity to cross examine such persons though he specifically asked for such documents and cross examination. 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 ....
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.... Officer made the addition of the entire loan amount of Rs. 27,73,75,000/- by treating the same as accommodation entries received by the assessee and consequently unexplained cash credits U/s 68 of the Act. The assessee challenged the action of the Assessing Officer before the ld. CIT(A). The ld. CIT(A) confirmed the addition in respect of M/s Jalsagar Commerce Pvt. Ltd. but deleted the addition in respect of M/s Teac Consultants Pvt. Ltd. on the ground that the Assessing Officer was not having any material or even statement of the alleged enter operator in respect of M/s Teac Consultants Pvt. Ltd.. 16. Before us, the ld AR of the assessee has submitted that the Assessing Officer has relied upon the statement of Shri Anand Sharma for making the addition of these loans, however, Shri Anand Sharma has not stated that he either controlled M/s Jalsagar Commerce Pvt. Ltd. or has given 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 compan....
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....then in absence of any contrary material, the addition made by the Assessing Officer merely on the basis of statement and report of Investigation Wing, Kolkata is not sustainable. He has pointed out that the Assessing Officer had already passed the assessment order U/s 143(3) of the Act for the A.Y. 2010-11 to 2012-13 and accepted these transactions as genuine, therefore, in the proceedings U/s 153A, the same cannot be treated as unexplained cash credit in absence of any material or evidence to justify the review of his own decision. The assessee has duly discharged its burden cast U/s 68 of the Act by proving the identity, creditworthiness and genuineness of the transaction. All the loan creditors complied with the notices/summons issued by the Assessing Officer/department and also replied to the queries raised by the department. The existence of these companies was established when 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 ....
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....lowed by the Assessing Officer as genuine claim in the assessments framed U/s 143(3) as well as in the assessments framed U/s 153A of the Act. Therefore, the finding of the Assessing Officer treating the loan as accommodation entry is without any basis, material evidence but the same is based purely on surmises, conjectures and irrelevant material. No positive material was brought on record by the A.O to show that the loan creditor company is a shell company whereas the assessee produced all the relevant documents to establish the identity, creditworthiness and genuineness of the transaction as well as loan creditors. He has also submitted that an identical issue has also been considered by this Tribunal in the case of Kota Dall Mill (supra). 17. On the other hand, the ld. CIT D/R has submitted that the Assessing Officer has received the information from Investigation Directorate, 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 ....
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....dences in the possession of the Assessing Officer indicate bogus nature of transaction of loan and unsecured loan which has been extensively discussed in the assessment order. During the course of assessment proceedings, the assessee was provided a number of opportunities for producing the alleged creditors for verification and failure of the assessee in producing the creditors in the light of the evidences was enough to invoke the provisions of section 68 of the IT Act. The ld. D/R has further submitted that the repayment of loan for credit entries also does not in itself prove the transactions to be genuine. Shell companies are used to provide accommodation entries and even reversal of an entry does not ipso facto prove the genuineness of the initial credit entry. In support of his contention, he has relied upon the decision of Hon'ble Delhi High Court in the case of CIT vs. Navodaya 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, Kolkat....
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....fore, the revenue has challenged that part of the order in the cross appeal. The ld. A/R of the assessee has pointed out that for the assessment year 2010-11 there was no loan from the company controlled by Shri Anand Sharma, M/s. Royal Crystal Dealers Pvt. Ltd. but the assessee took the loan from M/s. Jalsagar Commerce Pvt. Ltd. which is not the company owned or controlled by Shri Anand Sharma. The ld. CIT (A) has sustained the addition in respect of loan from M/s. Jalsagar Commerce Pvt. Ltd. in para 5.1 to 5.12 as under :- "5.1 In this respect, I find that Shri Anand Sharma whose statement is reproduced at Page 56 of the Assessment Order has clearly accepted that M/s Jalsagar Commerce Pvt. Ltd. is beneficiary company like Kota Dal Mill and both of these were provided bogus loans/advances by Royal Crystal Dealer Pvt. Ltd which is a paper company controlled by him. He further stated that 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 Comm....
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....employing modusoperendi of resorting accommodation entry provider to build-up share capital / unsecured loans by foul means, what the AO is vehemently making the case for is the law on the issue-section 68 of Income-tax Act has to be applied by evolving perceptions for the law on the issue and not on the basis of routine perceptions on the law on the issue that is losing their relevance. 5.4 With all due respect to authorities cited by the appellant for canvassing his stand point, I am not able to persuade my conscience to agree with appellants arguments. In my considered opinion, under the adverse background of appellant employing modus-operendi of resorting accommodation entry provider to buildITA up unsecured loans as established in the assessment order as briefly highlighted in Para 4.1 above, and armed with several authorities on the issue cited by the AO, I fully agree with the view taken by AO. However, 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....
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....lance, which was even not sufficient to meet out their household expenses or day-to-day requirements. Therefore, it is unbelievable to accept the contention of the assessee that said persons were having creditworthiness to advance any loan to the assessee. CIT(A) was justified in confirming the addition u/s. 68 of the IT Act. In the present case, the assessee has not adduced any sufficient evidence before the authorities below to prove the creditworthiness of the creditors and genuineness of the transactions in the matter. Therefore, the assessee has not satisfied the essential ingredients of section 68 of the IT Act. Conclusion: Merely because the loans have been received through banking channel, is not sacrosanct to make a non-genuine transaction as genuine transaction. The above decision is confirmed by Hon'ble Allahabad High Court vide their judgment in ITA No.680/12 vide judgment dated 07.08.2012 and SLP of assessee was 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 fac....
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...., 2009, authorized representative appeared and stated that the assessee was unable to produce directors or principal officers of the six shareholder companies pleading that they were not shareholders now and seven years had passed since the transactions took place. The assessment order records and mentions about the transactions recorded in the bank accounts of the shareholder/entry operator companies to show and establish that there was immediate deposit of cash and then issue of cheques. It was further mentioned that these companies were under control of one Mahesh Garg and his group, who were operating various accounts. The Assessing Officer made addition of Rs. 54,00,000/- under Section 68 of the Act and Rs. 1,08,000/- as commission paid for procuring the said shares being 2% of Rs. 54,00,000/-. .................................................................................................................... ........................................................................................................... 11. We have heard the Senior Standing counsel for the Revenue, who has relied upon decisions of the Delhi High Court in Commissioner of I....
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....irements have to be tested not superficially but in depth having regard to the human probabilities and normal course of human conduct. 14. Certificate of incorporation, PAN number etc. are relevant for purchase of identification, but have their limitation when there is evidence and material to show that the subscriber was a paper company and not a genuine investor. It is in this context, the Supreme Court in CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC) had observed:- "Now we shall proceed to examine the validity of those grounds that appealed to the learned judges. It is true that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to 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 ....
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....y for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Incometax Officer is entitled to draw the inference that the receipt are of an assessable nature. The conclusion to which the Appellate Tribunal came appears to us to be amply warranted by the facts of the case. There is no ground for interfering with that finding, and these appeals are accordingly dismissed with costs."(emphasis supplied) Section 68 recognizes the aforesaid legal position. The view taken by the Tribunal on the duty cast on the Assessing Officer by section 68 is contrary to the law laid down by the Supreme Court in the judgment cited above. Even if one were to hold, albeit erroneously and without being aware of the legal position adumbrated above, that the Assessing Officer is bound to show that the source of the unaccounted monies was the coffers of the assessee, we are inclined to think that in the facts of the present case such proof has been brought out by the Assessing Officer. The statements of Mukesh Gupta and RajanJassal, the entry providers, explaining their modus operandi to help assessee....
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.... (3) the credit worthiness or financial strength of the creditor/subscriber. (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable Explanation by the assessed. (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 assessed nor should the AO take such repudiation at face value and construe it, without more, against the assessed. (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." 17. Nova Promoters and Finlease (P) Ltd. (supra) after referring to the dismissal of SLP against Divine Leasing case (supra) observed as under:- "...............So understood, it will be seen that where the complete particulars of the share ap....
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....io Pvt. Ltd. (supra) and it was held that the entire evidence available on record has to be considered, after relying upon CIT Vs. Nipun Builders and Developers, [2013] 350 ITR 407 (Delhi), wherein it has been held that a reasonable approach has to be adopted and whether initial onus stands discharged would depend upon facts and circumstances of each case. In case of private limited companies, generally persons known to directors or shareholders, directly or indirectly, buy or subscribe to shares. Upon receipt of money, the share subscribers do not lose touch and become incommunicado. Call money, dividends, warrants, etc. have to be sent and the relationship remains a continuing one. Therefore, an assessee cannot simply furnish some details and remain quiet when summons issued to shareholders remain un-served and uncomplied. As a general proposition, it would be improper to universally hold that the assessee cannot plead that they had received money, but could do nothing more and it was for the Assessing Officer to enforce shareholders' attendance in spite of the fact that the shareholders were missing and not available. Their reluctance and hiding may reflect on the genuineness of....
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....s highlighted that the money no doubt was received through banking channels, but did not reflect actual genuine business activity. The share subscribers did not have their own profit making apparatus and were not involved in business activity. They merely rotated money, which was coming through the bank accounts, which means deposits by way of cash and issue of cheques. The bank accounts, therefore, did not reflect their creditworthiness or even genuineness of the transaction. The beneficiaries, including the respondent-assessee, did not give any share-dividend or interest to the said entry operators/subscribers. The profit motive normal in case of investment was entirely absent. In the present case, no profit or dividend was declared on the shares. Any person, who would invest money or give loan, would certainly seek return or income as consideration. These facts are not adverted to and as noticed below are true and correct. They are undoubtedly relevant and material facts for ascertaining creditworthiness and genuineness of the transactions. 30. What we perceive and regard as correct position of law is that the court or tribunal should be convinced about the identity, cr....
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.... pay orders, the same would raise suspicion and addition can be made on such account' 5.7 It may be mentioned that as reported at 2016-TIOL-207-SC-IT, the Hon'ble Supreme Court dismissed SLP by Rick Lunsford Trade & Investment Ltd in case of Rick Lunsford Trade & Investment Ltd Vs CIT 'upholding that it is open to the Revenue Department to make addition on account of alleged share capital u/s 68, where the assessee company has failed to show genuineness of its shareholders.' 5.8 Hon'ble Delhi High Court in case of Commissioner of Income Tax-II V/s MAF Academy Pvt. Ltd. involving exactly similar facts in ITA 341/2012 dated 28th November, 2013 observed in Para 33 to 36 as under: 33. The Assessee company is a private limited company and had not come out with any public issue nor made any advertisement for issuance of share capital. However, in one year there is infusion of share capital including premium of Rs. 4,35,00,000/-, out of which only Rs. 92,00,000/- was infused from the Directors/family members of the Directors. The remaining share capital had been infused from parties which were completely unrelated either to the Assessee or to any of its Director....
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....vate limited company, it would not have been difficult on the part of the Assessee to produce persons who were investing substantial amount of money in the company towards share capital. 37. The Assessing Officer in his order has as a sample referred to the entries in the account of some of the share holders noticing that there are cash deposits of the exact amount for which cheque is subsequently issued to the Assessee. Perusal of the bank statements clearly establishes that these parties were depositing cash and immediately either on the same day or in the near future withdrawing the same through a cheque which was issued in favour of the Assessee. Then Hon'ble Delhi High Court held in Para 53 to 54 as under:- 53. In contrast to the above judgments, in the present case, the Assessee is a private limited company and in the factual matrix, we have held that the Assessee has not been able to discharge the initial onus and has not been able to establish the identity, creditworthiness of the share applicants and the genuineness of the transaction. Though, in our considered opinion, none of the above judgments, referred to by the Assessee respondent, are appl....
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....the Assessing Officer was not precluded from making enquiries in share application money, submitted that no addition can be made. 2.1.1 The AO however was not convinced with the submission of the appellant. He observed that that it was only in the course of enquiry that he tried to examine the above share applicants. Since the summons issued to such persons remained unserved, it became the duty of the appellant either to produce them for verification or to state their correct addresses. It appears to be highly improper that in a Private Ltd. Company, the assessee is not in a position to state the exact whereabouts or fail to produce the persons who collectively hold more than 25% of its total share holding. He also observed that mere filing of Asstt. year 2005-06 confirmation letters do not absolve the appellant from its onus to prove the credit entries reflected in its books of accounts as has been held by Hon'ble Calcutta High Court in the case of CIT vs. United Commercial & Industrial Co. (P) Ltd.[1991] 187 ITR 596. He further observed that the facts that the amount were paid by account payee cheques do not make it satisfactory as held in CIT vs. Precision finance P....
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.... of these facts and circumstances, the Assessing Officer concluded that the credit in the name of these shareholders are not genuine and represents unexplained cash credits. Accordingly he made addition of Rs. 1.50 lakhs to the returned income. Then Hon'ble Income Tax Appellate Tribunal Delhi Bench: 'B' held in Para 6 as under: 6. As regards ground No. 2, we find that the assessee has stated to have received fresh share capital to the tune of Rs. 15 lacs and share premium of Rs. 1,00,35,000/- i.e. a share of face value of Rs. 10/- each issued at a premium of Rs. 90/- totaling to Rs. 100/-. When the AO asked the appellant to furnish the details the assessee produced share application forms and other details like bank statement, copy of acknowledgment of return etc. However when the AO conducted inquiry at the stated address, summons were received back unserved with the postal remark "no such person in the above address". This fact was Asstt. year 2005-06 brought to the notice of assessee also. Thereafter the assessee except producing the papers could not prove existence or availability of the respective share applicants. When the identity of the person is requi....
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....hed and the amount is genuinely received towards share capital. 5.10 In a recent decision in case of Principal Commissioner Of Income vs Bikram Singh in ITA 55/2017, the Hon'ble High Court of Delhi held on 25 August, 2017 as under:- 25. The law applicable to transactions of this nature is well settled by this Court in Divine Leasing (supra). Both parties have referred to and relied upon this judgment. This Court, after analyzing the entire law on the subject in the context of Section 68 of the Act, held as under: "...16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of Section 68 of the IT Act. The assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber. (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Shared Application Forms, Share Transfer Register etc. it woul....
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....hiness and the transactions fail the test of genuineness. 5.11 In my considered view, the technical objections raised by the Appellant in respect of loan from M/s Jalsagar Commerce Pvt. Ltd. are of no avail to the appellant due to following undisputed facts:- i. It is undisputed fact that the Income Tax Department has made tremendous investigations in such shell companies of Kolkata, Mumbai and Delhi providing accommodation entry and statements made by several accommodation entry providers have become virtually in public domain. It is no argument that the AO did not provide such statement before the assessement or in any of the notices. These facts were well known to the appellant group and ignorance is mere pretence. ii. Moreover, such statements are so vocal and undeniable that as mentioned in some of the case laws above, cross-examination of such accommodation entry provides by thousands of beneficiaries across India is neither practicable nor viable and therefore uncalled for. iii. It is undisputed fact that in the statement dated 06.02.2014 Shri Anand Sharma had admitted to be one of such accommodation entry providers. The sum and substance ....
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....ce Pvt. Ltd. was engaged in the activity of providing accommodation entry. However, we find that M/s. Jalsagar Commerce Pvt. Ltd is not managed or controlled by Shri Anand Sharma, rather the company M/s. Royal Crystal Dealers Pvt. Ltd. was stated to have been owned by Shri Anand Sharma and in his statement dated 6th February, 2014 Shri Anand Sharma has stated to have been providing entries from M/s. Royal Crystal Dealers Pvt. Ltd. to M/s. Jalsagar Commerce Pvt. Ltd. Therefore, there is no allegation or any admission in the statement of Shri Anand Sharma that he has provided bogus loan entry to the assessee or any group concerns of the assessee. Since the name of M/s. Jalsagar Commerce was crepted in his statement, the AO has presumed that the loan provided by M/s. Jalsagar Commerce Pvt Ltd is nothing but the bogus accommodation entry provided by Shri Anand Sharma through M/s. Royal Crystal Dealers Pvt. Ltd. The AO has tried to establish the nexus of the loan received by the assessee through the statement of Shri Anand Sharma where he has purported to have provided the alleged entry. Since there is no direct allegation or admission of providing loan by Shri Anand Sharma to the asses....
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....assessee. From the financial statements of the loan creditor it is apparent that the loan creditor was having sufficient funds to advance the loan amount to the assessee and once the said financial statements were not disturbed, then the creditworthiness of the loan creditor cannot be doubted when it was accepted in the assessment order passed under section 143(3) of the IT Act. We further note that the AO insisted the assessee to produce the directors of the loan provider company. The assessee produced the affidavit, and the notices issued by the AO under section 131 and 133(6) of the Act were duly complied with by the creditor. The statement of the Director of M/s. Royal Crystal Dealers Pvt. Ltd. was also recorded by the AO wherein the Director has confirmed the transaction of loan. There are various reports of the DDIT Kolkata which are placed at pages 406 to 422 of the paper book. We find that all these reports are based on the statements recorded during the investigation but no documentary evidence was either gathered or has been referred in these reports. Therefore, even if these reports are to be taken into consideration, these are nothing but narration of the statements of ....
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....erce Private Ltd 13-14 47,85,95,188 2,76,31,50,000 0 0 2,97,53,40,000 26,64,05,188 Jalsagar Commerce Private Ltd 14-15 26,64,05,188 97,34,50,000 0 0 1,24,03,55,188 (5,00,000) Jalsagar Commerce Private Ltd 15-16 0 1,34,89,00,000 49,00,600 44,10,540 1,34,93,90,060 0 Jalsagar Commerce Private Ltd 16-17 0 87,11,00,000 1,67,23,178 1,50,50,860 87,27,72,318 0 All these details were before the AO as all these assessment years were passed by the AO pursuant to the search and seizure action under section 132 of the IT Act. Thus it is clear that for the assessment year 2015-16 there was Nil balance on account of loan taken from M/s. Jalsagar Commerce Pvt. Ltd. and the entire loan was already repaid by the assessee. We further note that it is not the case of repayment of loan after the search action on 2nd July, 2015 but there is a regular repayment of loan for each year as it is evident from the details reproduced above. Therefore, the transactions of taking loan and repayment cannot be treated as bogus once the assessee has been regularly repaying the loan....
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....the hand of the assessee. Hence, by following the earlier order of this Tribunal in the case of Kota Dall Mill (supra) wherein the issue of loan taken from M/s Jalsagar Commerce Pvt. Ltd. was examined and decided in favour of the assessee, we delete the addition made by the Assessing Officer in this regard. 19. Ground No. 6 of the assessee's appeal is regarding denial of benefit of telescoping, recycling and rotation of funds by rejecting the peak credit theory. 20. We have considered the ld AR of the assessee as well as the ld CIT- DR and considered the relevant material on record. Since the additions made by the Assessing Officer have been finally deleted by us, therefore, this ground of the assessee's appeal is become infructuous. 21. In the cross appeal for the A.Y. 2010-11, the revenue has taken following grounds of appeal: "1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of Rs. 2,02,50,000/- made by the AO u/s 68 of the IT Act on account of unexplained unsecured loans claimed to have obtained by the assessee from M/s Teac Consultant Pvt. Ltd. 2. Whether on the facts and circumstance....
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....d. was deleted by the ld. CIT(A). The ld. CIT-DR has submitted that as per the report of the Investigation Wing, Kolkata, this company was found to be shell company. Once the Assessing Officer has brought on record the report of the Investigation Wing, Kolkata to prove that the said company is a shell company and engaged in providing bogus accommodation entry then the assessee was duty bound to discharge its onus of proving the genuineness of the transactions. The assessee has failed to produce the Principal Officer or the Director of the loan creditor before the Assessing Officer for examination despite various opportunities given by the Assessing Officer. He has relied upon the decision of Hon'ble Delhi High Court in the case of CIT Vs. Navodaya Castles Pvt. Ltd. 226 Taxman 190 and the SLP filed by the assessee was dismissed by the Hon'ble Supreme Court reported in 230 Taxman 268 (Hon'ble Supreme Court) 23. On the other hand, the ld AR of the assessee has submitted that an identical issue has been considered and decided in favour of the assessee and against the revenue by this Tribunal in the case of Kota Dall Mill (supra). He has supported the order of the ld. CIT(A).....
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....ributors Pvt. Ltd. are concerned, it is evident from the documents placed on record that Notice was issued by DDIT, Kolkata u/s 131 to these companies which was duly complied with and relevant documents were filed. There is no fact on record that the notices remained unserved or these companies were not found existent on the given addresses. Furthermore, Affidavit of the directors were also submitted wherein the Directors confirmed providing unsecured loan to the Appellant and source of providing the said loan. Also, it is evident from the assessment Order that no statement/evidence has been relied upon or provided by the AO for substantiating that these companies are controlled by the so-called Entry Operators. 6.4 For these three creditors namely, M/s Birla Arts Private Limited, M/s Teac Consultants Private Limited and M/s Sangam Distributors Private Limited, the Appellant in discharge of its onus u/s 68 of the Act has filed confirmation of accounts as well as bank statement reflecting the transactions with other substantiating documents along with assessment orders in case of lender companies, which are available at page no.443 to 644 of PB. From these documentary evide....
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.... of issuing cheques/RTGS in favour of the Assessee. Therefore, in view of the settled judicial precedent in case of CIT V. VARINDER RAWLLEY [2014] 366 ITR 232 (PUNJAB & HARYANA), CIT V. VIJAY KUMAR JAIN [2014] 221 TAXMAN 180, CIT v. Victor Electrodes Ltd. [2010] 329 ITR 271, Addl. CIT v. Bahri Bros. (P) Ltd. [1985] 154 ITR 244 (Pat) and others as referred by the Appellant, I am of the considered view that Appellant duly discharged its burden casted upon it u/s 68 of the Act. It is further seen that no notice u/s 131 or 133(6) of the IT Act were issued to M/s Birla Arts Private Limited, however as far as the companies M/s Teac Consultants Private Limited and M/s Sangam Distributors Private Limited are concerned, these have duly replied to the notices issued by DCIT/DDIT(Inv.), Kolkata in respect of commission, these facts remain uncontroverted by the AO. 6.6 The AO during assessment proceedings took negative inference from the statement of Shri Rajendra Agarwal recorded during search u/s 132(4) wherein he made disclosure in respect of Long Term Capital Gain in his individual hands. I have gone through the statement of Shri Rajendra Agarwal and his disclosure made in his sta....
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..... 6.10 It is settled judicial precedents that under the income tax law primary burden u/s 68 of the Act is on the Appellant and once this burden is discharged u/s 68 of the Act, no addition u/s 68 of the Act is justifiable in the hands of the Assessee in view of the judgments in case of Shree Barkha Synthetics Ltd. V/s Assistant Commissioner of Income-tax (2006) 155 TAXMAN 289 (RAJ.), COMMISSIONER OF INCOME-TAX, JAIPUR -II V. MORANI AUTOMOTIVES (P.) LTD. [2014] 264 CTR 86 (RAJASTHAN-HC), CIT v. Orissa Corpn. (P.) Ltd. [1986) 159 ITR 78/25 Taxman 80F (SC), Commissioner of Income-tax v/s Mark Hospitals (P.) Ltd. [2015] 373 ITR 115 (Madras)(MAG.), Commissioner of Income-tax, Ajmer v. Jai Kumar Bakliwal [2014] 366 ITR 217 (Rajasthan), CIT v/s. Creative World Telefilms Ltd (2011) 333 ITR 100 (Bom), Commissioner of Income-tax-I v. Patel Ramniklal Hirji [2014] 222 Taxman 15 (Gujarat)(MAG.), Principal Commissioner of Income-tax-4 v. G & G Pharma India Ltd. [2016] 384 ITR 147 (Delhi) referred above which have been also been followed recently by Hon'ble Delhi Tribunal in case of ITO vs. Softline Creations (P) Ltd. in ITA No. 744/Del/2012 vide its order dated 10.02.2016. Further, Hon....
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....cer of those lenders, whether in their respective returns they had shown existence of such amount of money and had further shown that those amount of money had been lent to the assessee. If before verifying of such fact from the Assessing Officer of the lenders of the assessee, the Assessing Officer decides to examine the lenders and asks the assessee to further prove the genuineness and creditworthiness of the transaction, the Assessing Officer does not follow the principle laid down under section 68. [Para 16] In the instance case before me , the AO has not followed the due procedure of law u/s 68 of the Act. Therefore, requiring the Assessee to produce the directors of the lender company was not legally tenable in view of the judgment of Gujrat High Court (supra). 6.13 It is noted that no clinching evidences has been brought on record that any unaccounted income was routed through unsecured loans by the Appellant Firm as no evidences as to receipt/payment of cash for receipt of unsecured loans were found during search in case of the Appellant. Mere suspicion howsoever strong cannot take place of evidence. Thus, in the absence of any incriminating material found....
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.... of the share capitals of these companies are as under :- M/s Birla Arts Pvt. Ltd Assessment Year Financial Year Share capital raised 1998-1999 1997-1998 12,90,000 1999-2000 1998-1999 16,82,000 2003-2004 2002-2003 50,00,000 2004-2005 2003-2004 2,74,40,000 2005-2006 2004-2005 3,69,50,000 2007-2008 2006-2007 3,26,00,000 2010-2011 2009-2010 250,00,000 2011-2012 2010-2011 20,00,000 2014-2015 2013-2014 67,57,37,000 M/s Teac Consultants Pvt. Ltd Assessment Yea r Financial Year Share capital raised 1996-1997 1995-1996 26,00,000 2001-2002 2000-2001 73,98,000 2003-2004 2002-2003 1,00,00,000 2005-2006 2004-2005 4,85,50,000 2007-2008 2005-2006 3,35,00,000 2010-2011 2009-2010 2,76,00,000 2011-2012 2010-2011 94,00,000 M/s Sangam Distributors Pvt. Ltd. Assessment Year Financial Year Share capital raised 2005-2006 2004-2005 2,47,50,000 2006-2007 2005-2006 10,50,00,000 2007-2008 2006-2007 7,93,50,000 2011-2012 2010-2011 2,50,00,000 2013-2014 2012-2013 13,00,0....
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.... u/s 68 of the IT Act on account of unexplained unsecured loans claimed to have obtained by the assessee from M/s Birla Arts Pvt. Ltd. and Teac Consultant Pvt. Ltd. 2. 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 alleged lender M/s Birla Arts Pvt. Ltd. and M/s Teac Consultant Pvt. Ltd are not shell company without considering the financial statements of these companies. 3. Whether on the facts and circumstances of the case and in law, the CTI(A) was justified in deleting the addition of unsecured loans claimed to have obtained from M/s Birla Arts Pvt. Ltd and 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 Birla Arts Pvt. Ltd and M/s Teac Consultant Pvt. Ltd. despite the fact that the directors or Principal Officers of these companies were never produced before the Assess....
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....h has not been controverted by the Assessing Officer. He has supported the order of the ld. CIT(A). 29. We have considered the rival submissions as well as the relevant material on record. The facts and circumstances relevant to the issue of loan taken from M/s Birla Arms Pvt. Ltd., which was treated as bogus accommodation entry by the Assessing Officer but was deleted by the ld. CIT(A) are identical as in the case of M/s Teac Consultants Pvt. Ltd. for the A.Y. 2010-11. We have already reproduced our finding in the case of Kota Dall Mill (supra) wherein M/s Birla Arts Pvt. Ltd. was one of the loan creditor, accordingly in view of our finding as reproduced (supra), we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Hence, the revenue's appeal is dismissed. 30. In the cross objection of the assessee for the A.Y. 2011-12, following grounds have been taken by the assessee: "1. On the facts and in the circumstances of the case and in law the order passed U/s 153A read with Section 143(3) of the Income Tax Act, 1961 is bad in law, void-ab-initio, and deserves to be annulled as the assessment for the year under consideration was not abated....
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....ces of the case and in law, the CTI(A) was justified in deleting the addition of unsecured loans by observing that the alleged lender M/s Birla Arts Pvt. Ltd. and M/s Teac Consultant Pvt. Ltd are not shell company without considering the financial statements of these companies. 3. Whether on the facts and circumstances of the case and in law, the CTI(A) was justified in deleting the addition of unsecured loans claimed to have obtained from M/s Birla Arts Pvt. Ltd and 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 Birla Arts Pvt. Ltd and 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....
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....ssment for the year under consideration was not abated as on the date of search and CIT(A) erred in holding that the contention of the assessee cannot be accepted in view of SLP's admitted in various cases. The ld. CIT(A) further erred in holding that the additions are to be adjudicated 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 ld. CIT(A) erred in not declaring the assessment order as bad in law and void an initio. It is contended that the A.O. 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 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." 37. Both the issues raised by the assessee in the C.O. are identical to the C.O. of the assessment year....
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....eports 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 paper books have been submitted, and d) holding that 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.) Kolkatta. 5. On the facts and in the circumstances of the case and in lawthe Id. CIT(A) erred in confirmation the addition of Rs. 25,00,00,000/- made by Id. AO u/s 68 of Income Tax Act, 1961 on account of special deposit received from following parties and erroneously held that the identity, creditworthiness and genuineness of the under mentioned company is doubtful: - Name of the company from whom loan received Amount Name of alleged entry operator whose statement were relied Caplin Dealcom Pvt. Ltd 25,00,00,000 Shri Ankit Bagri 6. 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....
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.... the statement of Shri Ankit Bagri wherein he stated that after the death of his partner on 07/4/2012, he has not done any transaction of accommodation entry. The ld AR has then submitted that the transaction in question as receipt from M/s Caplin Dealcom Pvt. Ltd. is subsequent to the said date i.e. 07/4/2012 and therefore, the statement itself does not make out a case of bogus entry in the garb of special deposits received by the assessee. The ld AR has also referred to question No. 13 and submitted that though there was no allegation against the assessee or the transaction of the assessee, however, the Assessing Officer has extrapolated the statement for making the addition of entire special receipts as well as unsecured loan creditor. He has also referred to the various reports of Investigation Wing, Kolkata and submitted that none of the report has made out any case of bogus accommodation entry between the assessee and the other parties. The reports are alleging some other creditors but not the creditors in question from whom the assessee has received the said deposits. Therefore, once the report itself does not make out any charge against the assessee then the addition made b....
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....cer in the assessment order in questions No. 6,8 and 13 are as under: "Q.6. Please explain the nature of business done by you. Ans. I along with Late Sumit Kejriwal, who was an accomplished accommodation entry operator of Kolkata, was engaged in the business of providing accommodation entries through 'jama kharchi/shell companies, exclusively created for the purpose of providing accommodation entries, to various beneficiaries in lieu of commission. Late Sumit Kejriwal who resided at Regent Court, Block-2, Flat No. 3D, V.I.P. Road, P.S. Baguiati, Dist.- North 24 Parganas, Kolkata-700059, has died on 07/04/2012. I am submitting herewith the photocopy of death certificate of Shri Sumit Kejriwal as enclosure. Although the companies formed by us have different addresses but they were being maintained from our office located at the following address: 9/12, N.S. Road, 3rd Floor, Block-C, Kolkata-700001. Although almost all of the companies controlled by me and Late Sumit Kejriwal have already been sold to various beneficiaries groups but still the office premise is being maintained. Q.8 Please state the name of the companies/proprietorship firm....
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.... 2007-08 2008-09 10000 20,00,000/- In the case of Mahabir Danwar Jewellers Pvt. Ltd. 9. Pabla Leasing & Finance Pvt. Ltd. 31.03.2010 2009-10 2010-11 5000 5,00,000/- 10. Pabla Leasing & Finance Pvt. Ltd. 31.03.2009 2008-09 2009-10 10000 10,00,000/- 11. Caplin Dealcom Pvt. Ltd. 31.03.2009 2008-09 2009-10 10000 10,00,000/- 12. Karni Syntex Pvt. Ltd. 28.03.2008 2006-07 2007-08 10000 5,00,000/- KIK Jewellers Pvt. Ltd. 13. Rajat Polypack Pvt. Ltd. 31.03.2010 2009-10 2010-11 20000 20,00,000/- Total 1,85,00,000/- Please explain the same. Ans. Over the years, accommodation entries in the form of share capital have been provided to Mahabir Group of Companies in lieu of commission to the tune of Rs. 0.10 per hundred. In reply to question No. 6, Shri Ankit Bagri has explained the nature of business and submitted that he alongwith Shri Sumit Kejriwal were providing accommodation entries against the cash. However, Shri Sumit Kejriwal died on 07/4/2012. In reply to question No. 8, he has given the specific answer that he does not cont....
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.... 1583 dated 31.10.2017 issued by DDIT (Investigation), Unit-1(3), Kolkata u/s 131 of Income Tax Act, 1961 642-644 16 Copy of reply submitted by company in response to notice/ summon issued to it Along with dispatched proof 645-647 Thus, the assessee has produced all the relevant supporting documentary evidence to establish the identity, creditworthiness of the creditors as well as the genuineness of the transaction which is through the banking channel. The Assessing Officer has not brought on record any discrepancy either in the books of account or in the details of bank accounts of the creditors or the assessee to show that the transaction is nothing but assessee's own unaccounted money has routed back in the garb of special deposit. We further note that an identical issue was considered by this Tribunal in the case of Kota Dall Mill (supra) at para 26 as under: "26. We have considered the rival submissions as well as the relevant material on record. The AO has given the identical finding for all the assessment years which is based on the report of the Investigation Wing Kolkata as well as the statement recorded by the DDIT Kolkata. We not....
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.... 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. Anyway, in the rejoinder submission to remand report the appellant is absolutely silent on cross-examination and by such conduct he has forgone his right to cross-examine. Therefore, the principles of natural justice have been followed. As discussed in preceding paras, under the facts and circumstance of the case, it could not be said that AO did not followed the binding decision of the Hon'ble Supreme Court and the Hon'ble jurisdiction Court. In view of above discussion, the several other grounds raised for the issue are treated as dismissed. Therefore, in view of above facts discussed in Para 2.1, 2.4.3 to 2.4.7 and 3.1 to 3.4 & 3.12 and legal position apprised in Para 3.6 to 3.11 above, it is held that the addition made by the AO on account of unsecured loans amounting to Rs. 1,50,00,000/- and Rs. 10,88,45,000/- from M/s Caplin Dealcomm Private Limited and M/s VSG Lea....
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....igation), 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. • Copy of Ack. of ITR of AY 2016-17 1144 • Copy of Balance sheet of AY 2016-17 along with annexure of Loan & Advances 1145 • Copy of relevant page of bank statement showing the entry of payment made to assessee. 1146-1152 • Confirmation of loan given to assessee from books of accounts of party. 1153-1154 • Confirmation of loan given to assessee from books of accounts of assessee. 1155 When all the relevant details and documentary evidences produced by the assessee to establish the identity, creditworthiness and genuineness of the transactions, then the said evidences cannot be rejected on the basis of the statement without any contrary documentary evidence. We further note that the assessments were completed under section 143(3) of M/s. Caplin Dealcomm Pvt. Ltd. and the details of which are as under :- Name of Company Assessment ....
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....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 established without pointing out any discrepancy either in the books of account or in the bank statement of the creditor or the assessee, the addition made merely on the basis of the statement is not sustainable. In view out finding on this issue in case of Kota Dall Mill (supra), the addition made by the Assessing Officer is deleted. 44. Ground No. 6 of the assessee's appeal is regarding denial of benefit of telescoping, recycling and rotation of funds by rejecting the peak credit theory. This issue has been considered by us while deciding ground No. 6 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. 6 of the assessee's appeal is infructuous. 45. In the cross appeal for the A.Y. 2013-14, the revenue has taken following g....
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....sessment 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 holding the special deposit from M/s Baijnath Commosales Pvt. Ltd as genuine whereas the CIT(A) on the basis of evidences available on record held unsecured loans obtained from M/s Caplin Dealcom Private Ltd, a company in which M/s Baijnath Commonsales Pvt. Ltd amalgamated, as bogus. 8. Whether on the facts and circumstances of the case and in law, th....
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....tement 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 material or any statement of the alleged entry provider or operator. The Tribunal has considered this issue in the case of Kota Dall Mill (supra) wherein all these parties including M/s Birla Arts Pvt. Ltd., Teac Consultants Pvt. Ltd., Ms/s Magnet Capital Market Ltd., M/s Competent Securities Pvt. Ltd. have been examined. As regards M/s Blossom Dealers Pvt. Ltd. and M/s Baijnath Commosales Pvt. Ltd., the ld AR has submitted that in case of M/s Baijnath Commosales Pvt. Ltd., the amount was repaid on 22/3/2013 and therefore, it was not outstanding as on 31/3/2013 relevant to the assessment year under consideration. Further the said company M/s Baijnath Commosales Pvt. Ltd., was subsequently merged with M/s Caplin Dealcom Pvt.....
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....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. Sangam Distributors Pvt. Ltd. As regards the corporate partners who have introduced the capital, they remain the same for all the years and, therefore, the issue is common for all these years except the fact that for the assessment year 2014-15 only one partner, namely, M/s. Bansidhar Advisory Pvt. Ltd. introduced some capital of Rs. 13.00 lacs and for the assessment year 2013-14 only three partners introduced the capital. Therefore, in view of our finding on all these issues while deciding the cross appeals for the assessment year 2010-11, the grounds raised by the assessee and revenue for the assessment years 2011-12 and 14-15 stand disposed off on the same terms and finding of the ass....
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....4-15. 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 Annexure 767-774/Vol - III 3 Copy of relevant page of bank statement showing the entry of payment made to assessee. 775/Vol -III 4 Confirmation of deposit given to assessee from books of accounts of party. 776/Vol -III 5 Confirmation of deposit given to assessee from books of accounts of assessee. 777/Vol -III 6 Copy of statement received from M/s Baijnath Commosales Pvt Ltd certifying resources of fund in assessee company. 778/Vol -III 7 Copy of affidavit of ....
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.... 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 10 Copy of assessment order passed in the case of above named company for AY 2014-15. 534-538/Vol - II 11 Copy of ROC master data. 539-540/Vol - II 12 Copy of PAN card. 541/Vol -II 13 Certificate of Incorporation 542/Vol -II 14 Copy of NBFC Certifi....
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....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 assessment orders ....
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....ently 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 situated in....
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....y the appellant, 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 tribu....
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.... has relied upon the order of the Assessing Officer whereas the ld. 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 dis....
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.... considered the relevant material on record. The ld. CIT(A) has considered the decided this issue in para 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....
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....ineness of the under mentioned company is doubtful: - Name of the company from whom loan received Amount Name of alleged entry operator whose statement 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 rev....
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....ucing 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 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 ....
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.... depreciation on UPS. 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. 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....
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....d herewith at Page no.148-161 of PB. Following the same reasoning and findings as above, this additions of Rs. 58,770/- is deleted." The ld. CIT(A) has relied upon the order for the A.Y. 2011-12 and the said order of the ld. CIT(A) allowing the claim for the A.Y. 2011-12 has 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 ....
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....ssessee. 79. Before us, the ld. CIT-DR has submitted that there is no dispute that these payments were made by the assessee in the earlier years for purchase of electricity and therefore the expenditure pertains to the earlier year and not for the year under consideration. Further this amount written off by the assessee is 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 S....
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..... 3,30,71,812/- was made against which the assessee has consumed the electricity of Rs. 2,65,52,993/- and the actual consumption in amounts were claimed in the P&L account for the A.Y. 2012-13 and 2013-14 respectively. There is under utilization of the electricity by the assessee for these two years to the extent of total amount of Rs. 65,18,819/-. The assessee was 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 t....
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....same some efforts are to be made, therefore generally the advance/debts cannot be written off in the same year. The same are written off in the year when the applicant after all its efforts feels that the same cannot be recovered. Therefore it is not justify to hold that since the advances were given in previous years, therefore the same pertain to earlier year and company 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 ....
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....mpugned order of Ld. CIT(A), in this regard. Accordingly Ground No.1 raised by the Revenue is dismissed." Accordingly, in view of the facts and circumstances of the case, we do not find any reason to interfere with the order of the ld. CIT(A) in allowing the claim of the assessee. Hence, this ground of the revenue's appeal is dismissed. 82. Ground No. 2 of the appeal is regarding the disallowance 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 s....
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.... assessment order regarding addition so made the impugned addition is not justifiable. Therefore the addition of Rs. 1,64,836/- is deleted. Therefore the ground No. 8 and 9 of appeal is allowed." Even otherwise in case of a company if any employee is enjoying the facility of telephone of the company, the same would be treated as perquisite which is subject to fringe benefit tax. Therefore, no disallowance can be made on account of personal element of expenditure. Hence, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. 90. In the result all the appeals of the assessee are partly allowed, cross objections of the assessee are allowed and all the appeal of the revenue are dismissed. Order pronounced in the open court on 29th January, 2019. ============= Document 1 provided to Aradhana Estate Pvt Ltd. In the entire process the beneficiary party gave me cash in lieu of which I gave them cheque for some commission income. Some paper companies have been sold to beneficiary parties. A total of Rs. 54.48 Crores respectively have been given as accommodation entry. Pages 72 and 73 consist of ledger copy of Rajgharana....