TaxTMI 
TaxTMI 
2023 (7) TMI 1199
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....e Act was issued on 31.10.2014 to the assessee and a return of income was also filed in response thereto followed by statutory notices being duly issued and served on the assessee. During the course of assessment proceedings, AO observed that the documents found and seized during search namely page 2 of CCIL/1 revealed that the assessee has given cash on various dates to Gopal Agarwal aggregating to Rs. 2,80,00,000/-. The AO extracted the details of the said amount in para 6 of assessment order. The assessee explained before the AO that the cash was handed over to Shri Gopal Agarwal for safe keeping when the assessee happened to be out of station and also submitted that the said cash was as per and duly appeared in the books of accounts of the assessee. In order to corroborate the said arguments , the ld AR also filed an auditor certificate to prove that cash was available on all the above dates. The AO also noted from the statement of Shri Gopal Agarwal recorded on 13.03.2014 in he stated that stated that cash was handed over to Mr. Mahendra Sethia at the instruction of Shri Satish Sharma director of company and in the statement of Shri Satish Sharma recorded on 14.03.2014 , to qu....
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....r the cash balance in the books and these were handed over to Shri Gopal Agarwal for safe keeping when director was out of town. However, this explanation does not appear to be genuine. A.O. has pointed out that assessee had much higher cash balances on the dates which have been mentioned in the seized document. Under the circumstances, it does not make any sense that assessee would think about safety of only a part of total cash available. Further, it is worthwhile to take note that the job of tax consultant (Gopal Agarwal) would not be safe keeping of the assessee's cash/assets. Further, in the explanation, assessee has failed to elaborate as to how cash kept at the premises of Shri Gopal Agarwal would be more safer than when it is kept at its own premises. Whether Shri Gopal Agarwal's locality and building was more secure than that of the assessee. On the date of search, the director Shri Satish Sharma had mentioned in his statement that these cash were given for Jama Kharchi transaction. On the date of search, statement of Shri Gopal Agarwal was also taken and Shri Gopal Agarwal had stated that transaction reflected on the seized paper were meant for Shri Mahendra Sethia. Thu....
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....essee would be concerned for safe keeping of only a part of its cash balance. Secondly, assessee has failed to explain as to how cash at the premises of Mr. Gopal Agarwal would be safer than when kept at its own premises. Third, if the cash was, really given for safe keeping, then only single transaction would be mentioned on a piece of paper and a prudent person is expected to get the signature of the person whom valuable are being handed over. Further, the manner in which these transactions have been recorded, it shows that these are part of same running transaction in which benefit in lieu of giving cash are periodically received andat the end of the complete transaction, both the parties need to sit down and tally their accounts to ensure that the transactions are squared off. The notings on the seized document further shows that a transfer of cash has taken place regularly and the gap between two transactions are just two or three dates on average and sometimes it is on consecutives dates also, for example, on 19- 04-2013 and 20-04-2013. If the assessee's theory of safe keeping is true, then why would the assessee bring back its cash when on the same date the director has to g....
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.... that no where in those statements it has been admitted that the cash was given for issuing accommodation entries. The AR stated that the addition has been made to the tune of Rs. 2,80,00,000/- to the income of the assessee on the ground that Mr. Mahendra Sethia is engaged in the business of accommodation entry provider in the form of share capital and share investment through Shri Gopal Agarwal which is not proved and is devoid of any substantive basis. The Ld. A.R, while referring to audited balance sheet as filed at page no. 80 to 100 of PB, pointed out that there has been no increase in share capital and share premium during the year which stood at Rs. 2,15,83,750/- and Rs. 43,11,41,250/- as on 31.3.2013 and 31.3.2014 respectively. The Ld. A.R also referred to audited balance sheet at page 88 of the PB and submitted that loans taken by way of long term borrowings were Rs . 50,00,000/- and Rs. 88,27,89/- as on 31.3.2013 and as on 31.3.2014 respectively and these loans were taken from the related parties. Thereafter the Ld. A.R, while referring to schedule no. 4 of long term borrowings at page 44, submitted that only increase in loans and advances is in respect of Shri Sunil Kuma....
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.... be given by the assessee to Shri Gopal Agarwal who is a CA of the assessee for safe keeping. We also note that the cash was available in its books of account on all the dates whenever the same was given a copy of which has been produced before the authorities below as well as before us. We note that statements were recorded by Shri Gopal Agarwal and Shri Satish Sharma. Mr. Satish Sharma stated that these payments were made basically Jamakharchi transactions which were reflected at different places and he is not in a position to explain right now. Mr Gopal Sharma in his statement stated that these payments were handed over to Mr. Mahendra Sethiaat the instructions of Shri Satish Sharma. Therefore the AO noted that Mr. Mahendra Sethia is engaged in the business of supply of bogus entries as is apparent from the admissions in a statements recorded of Shri Gopal Agarwal and Satish Sharma. We note that the AO added the amount to the income of the assessee on the basis that it was given to Mahendra Sethia who is an entry operator providing accommodation entries in the form of share capital or sale of investments etc. We also note that document found during the course of search was not s....