TaxTMI 
TaxTMI 
2022 (3) TMI 301
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....group along with its close confidants Shri Rajan Jassal and Shri Surinder Pal Singh found that the group have operated multiple accounts in various branches to plough back unaccounted black money for the purpose of business or for personal needs such as purchase of assets etc. in the form of gifts, share application money loans etc. During the investigations it was seen that the Bank Accounts held by the assessee was used by the above person for providing accommodation entries. During the course, of investigations by the DIT(Inv.) it was discovered that the assessee who have unaccounted money (hereinafter called as entry takers or beneficiaries) and want to introduce the same in the books of accounts without paying tax approach another person (entry operator) and hand over cash (plus commission) and take cheques/DDs/Pos. The cash is deposited by the entry operator in a bank account either in his own name or in the name of relative/friends or other person hired by him, for the purpose of opening bank account. The entry operator thereafter issues cheque/DD/PO in the name of beneficiary from the same account (in which the cash is deposited) or another account in which funds are transf....
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....ked for. 4. The assessee filed objection to the reopening of the assessment which was disposed of by the AO by passing a speaking order. 5. During the course of assessment proceedings, the AO asked the assessee to substantiate the amount received from share applicants by proving their identity and credit worthiness and the genuineness of the transaction. The assessee filed the copy of the income-tax returns, their bank statements, share application forms, certificate of incorporation of new business, PANs, Board Resolutions for investments, etc. The AO asked the assessee to produce the principal officers of the above companies who have invested in the shares of the assessee company. However, the assessee failed to produce the said persons. Summons issued u/s 131 to the alleged share applicants were returned unserved in some cases and in certain other cases, the concerned persons did not comply to the summons. The AO, therefore, asked the assessee to produce the directors of the alleged share applicants. However, the assessee failed to produce them. 6. Similarly, the Inspector was deputed along with summons u/s 131 to make an inquiry at the latest address given by the asses....
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....n definite information / material as well as notice issued u/s 148 after taking proper Approval 2. Whether the Ld. CIT (A) was justified in upholding the reasons recorded by the Ld. A.O. ,after application of judicial mind , are according to the law, however it is not so, because at the time of recording the reasons, he has only piece of information and not a single evidence in any form/manner. 3. Whether the Ld. CIT (A) was justified in upholding that Approval u/s 151(2) was well as per law whereas the approval obtained in a hassled manner as appeared from the copy of Approval. 4. Whether the Ld. CIT (A) was justified in treating the disposal of objection raised by the appellant in a manner in which they were objected as a valid exercise. However, the disposal order is contrary to the settled law . 5. Whether the Ld. CIT (A) was justified by holding the actions of Ld. A.O. in not allowing an opportunity to cross examine the alleged witness of the Revenue nor made any efforts even to call the witness despite of the fact that statement does not make out any allegation against the company. 6. Whether the Ld. CIT (A) was justified in uphold....
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....t the AO has alleged that the assessee has received accommodation entry of Rs. 23.50 lakh from these concerns as per the reasons, namely, Rs. 5 lakhs from Dhamaka Trading Rs. 5 lakh from AGM Holdings Ltd. Rs. 4.5 lakh and Rs. 5 lakh respectively from Central Gums Regal and Rs. 1 lakh and Rs. 3 lakh respectively from Chanderprabhu. However, the ld. Counsel submitted that the assessee has not received any accommodation entry, but, share application money was received and subsequently shares were allotted which resulted in all the companies becoming shareholders of the assessee company. Therefore, it is clear that there is no occasion for application of independent judicial mind and the reasons were recorded based upon information obtained from the Investigation Wing. The ld. Counsel, referring to the reasons, submitted that the AO has mentioned that DIT (Inv.) during the investigation in the case of Mukesh Gupta group and Rajan Jassal and Sh. Surinder Pal Singh had found that they were operating multiple accounts in various branches to plough back unaccounted black money for the purpose of business or for personal needs. However, the statements were recorded during the survey of some....
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....reported in 281 CTR 214 and the decision of the Delhi Coordinate Bench of the Tribunal in the case of Magan Behari Lal vs DCIT in ITA No.4558/Del/2019, order dated 16.09.2019, he submitted that it has been held in these decisions that the statement recorded in the back of the assessee cannot be relied upon against the assessee without giving opportunity of cross explanation. Referring to the decision of the Hon'ble Bombay High Court in the case of RW Promoters Pvt. Ltd. vide ITA No.1489/2013, order dated 13th July, 2015, he submitted that the Hon'ble High Court in the said decision has held that the right to cross-examination is a part of audi altrem partem principle and the same cannot be denied. He submitted that similar view has been taken by the Nagpur Bench of the Hon'ble Bombay High Court vide order dated 23.07.2019 in ITA No.30/2018, and the Hon'ble Gujarat High Court in Laxman Bhai S. Patel reported in 327 ITR 291 where it has been held by the Hon'ble Courts that in absence of giving an opportunity of cross-examination if the addition is made, the same is required to be deleted. He accordingly submitted that both legally and factually the addition made by the AO and sustain....
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.... addition of Rs. 55,85,000/- being the share application money/share capital received by the assessee by invoking the provisions of section 68 of the Act and made further addition of Rs. 83,775/- being 1.5% of the above amount which the assessee incurred as commission for arranging the accommodation entries. We find, the ld.CIT(A) dismissed the ground challenging the validity of the reassessment proceedings as well as the addition on merit. It is the submission of the ld. Counsel that the assessee during the assessment proceedings had categorically asked for the corss-examination of Shri S.K. Gupta, whose statement was the basis for making the addition of Rs. 55,85,000/- to the total income of the assessee. However, we find from the assessment order that the AO rejected the request for cross-examination by observing as under:- 4.1 On 11.3.2014, another Counsel, Sh. V.K. Tulsian, CA attended on behalf of the assessee company but filed no details. He was informed that the name of the assessee company is very much visible at page 5 of the statement given by S K Gupta mentioned above. On the next date of hearing on 18.3.2014, the Counsel of the assessee again reiterated his ob....
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....he name of Kapoor has not appeared except in the reason is factually wrong because this name has appeared as one of the intermediaries at page 8 of the sworn statement of S.K. Gupta, This trifle objection does not effect the nature of transactions , done by the assessee using the mode of accommodation entries to bring back its unaccounted income to its books. The assessee's has not discharged its onus cast u/s 68 as required. To say that the assessee has no control over the share applicants with whom it had many dealings is nothing but an admission of the fact that the entries taken by it are its own money shown in the garb of share application money and has no concern for those paper companies because his purpose has been served. Moreover, this office has already issued summons u/s 131 to the alleged share applicants on 15.10.2013 but some were returned back unserved and others did not comply with these summons. It is surprising to note that some confirmations were sent by post from the same address even in cases which were received back unserved from postal authorities. The fact is that in the course of assessment proceedings, the assessee's counsel was aware about non-se....
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.... of witnesses used against the assessee is not an absolute in nature. However, it is well settled Law that any material collected at the back of assessee or statement recorded at the back of assessee cannot be used in evidence against the assessee, unless the same is confronted to the assessee at assessment proceedings and right of cross-examination have been granted to assessee to such statements. We rely upon the Judgments of Hon'ble Supreme Court in the cases of Kishan Chand Chellaram (supra) and Andaman Timber Industries 281 CTR 214 (SC) and Judgment of Hon'ble Delhi High Court in the case of CIT vs., SMC Share Broker Ltd., (supra). In view of the above, it is clear that right of assessee have been denied by the authorities below in not allowing the assessee to cross-examine the statements of Shri Deepak Agarwal and Shri Mukesh Kumar. Thus, these statements recorded at the back of the assessee which were adverse in nature to the interest of assessee cannot be relied upon against the assessee and no addition could be made on that basis. The decisions relied upon by the Learned Counsel for the Assessee above also apply to the facts and circumstances of the case. Thus, there is no....