TaxTMI 
TaxTMI 
2026 (9) TMI 373
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....n of Rs. 39,00,000/-without going into the merits of the addition solely on the basis of non-grant of opportunity of cross examination. 2. Whether on the facts of the case aid in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 1,95,000/- made by the A.O. on account of commission paid in lieu of accommodation entry received by the assessee during the year under consideration. 3. Whether on the facts and circumstances of the case, the Ld. CIT (A) has erred in ignoring the fact that it was evidently established by the investigation wing that Sh. Joginder pal Gupta was in the business of providing accommodation entries to various beneficiary companies/entities/persons through cheques through a number of paper & dummy companies entities in lieu of cash and the assessee company was one of the beneficiary company. Grounds raised in Cross Objections : 1. That the Ld. CIT(A) has erred in confirming the finding of the Assessing officer with regard to the reopening of the case u/s 148 as per finding given by him in para 6, pages 35 to 36 of the order of CIT(A). 2. That the Ld. CIT(A) while confirming the finding with regard to reopen....
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....y provider and provided accommodation entries to beneficiaries through various paper companies, wherein he is the director of various companies. IT was submitted before us that on the other hand, neither Shri Joginder Pal Gupta was a director in M/s. Saloni Buildtech Pvt. Ltd. During the year under consideration, it was also submitted that he has not expressly mentioned the name of the assessee that he has provided alleged accommodation entry to the assessee. 5. During the proceedings, Assessee was asked to submit its explanation regarding the credit entries by issue of statutory notices. Vide reply dated 16.02.2023, the Assessee filed objections against reopening of assessment and also stated that assessee company has received an amount of Rs. 39,00,000/- from M/s Saloni Buildtech Pvt. Ltd. in the form of short-term advance, and the same amount was repaid by the assessee company during the year. The assessee submitted bank statement and affidavit from Saloni Buildtech wherein it is stated that the assessee has repaid the loan of Rs. 39lacs to M/S Steel City on the instruction of M/s Saloni Buildtech Pvt. Following documents have been placed in the paper book: * Copy of....
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....pening, solely on the basis of some borrowed information and some borrowed satisfaction without conducting any independent enquiry by the assessing authority itself, is a complete nullity in the eyes of law and is void ab initio. 10. He further submitted that Assessing Officer cannot initiate the proceedings u/s 147 merely on suspicion and borrowed information. In the instant case as well, the AO has merely relied upon the information received from the Investigation Wing as written on the page no. 3 para no. 3 of the assessment order that, Sh. Joginder Pal Gupta stated in the statement recorded u/s 132(4) that he is an entry provider and provided accommodation entries to beneficiaries through various paper companies, wherein he is the director of companies 11. Further, he submitted that it is pertinent to mention here that any statement recorded during the course of search operation does not carry any evidentiary value. Statement recorded during search does not in itself constitute incriminating material. In support of our contention, the reliance is being placed on the following judgements: - * Dy. CIT vs. Partap Singh Rajendra Chamola & Co.' in IT (SS) A N....
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....Paramjit Kaur (2009) 311 ITR 38 * COMMISSIONER OF INCOME TAX vs. SMT. PARAMJIT KAUR as reported in 311 ITR 038 P&H-HC dated 06.08.2007 * Akbar Ali Vs JAO (ITAT Chandigarh) ITA No. 868/CHD/2025 ORDER DATED 27/11/2025 * M/s Holy Faith International vs. DCIT in ITA No. 181/Asr/2017 order dated 15.01.2019(Amritsar Bench) 15. Relying on the aforesaid decision, he submitted that it is undisputedly clear that the Assessing Officer issued re-assessment notice u/s 148 of the act without any independent verification and application of mind, but simply proceeded to initiate proceedings on the basis of information received from DDIT, Delhi which is nothing but a classic case of borrowed satisfaction and thus, in our considered view, the reopening of the assessment based on borrowed satisfaction is invalid and liable to be quashed. 16. Ld. AR submitted that the AO and CIT (A) had no tangible material on record to corroborate the allegations made by him against the assessee. The CIT (A) as well as the AO has relied upon the information of DDIT, Delhi. Mere fact that information has been received from Investigation Wing, cannot in itself be a basis for forming a r....
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...., and merely on the basis of conjectures and theories, the assessment order passed pursuant thereto deserves to be annulled in light of the principles of natural justice. 19. Ld. AR further submitted that the AO has merely relied upon third party evidence and third-party statements for making addition to the returned income of the assessee. Reliance has been placed on the statement of Sh. Joginder Pal Gupta ignoring the fact that: * The statement was recorded in a very much generalised manner. * Sh. Joginder Pal Gupta wasn't a director in M/S Saloni Buildtech Pvt. Ltd. during the year under consideration as alleged by the AO and CIT (A) in the assessment and appellate order respectively. * Sh. Joginder Pal Gupta never admitted to the fact that he has given accommodation entry to the assessee company. 20. He submitted that there are numerous judgement on third party evidence stating that no addition can be made on the basis of any document or any material seized from the premises of the third party. We are relying upon the following judgements:- (i) Subhash Chander Gupta vs. ITO, Ward 3, ITA No. 768/CHD/2024 ORDER DATED 07.04.2025 (....
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....ral Excise. d) [2024] 161 com586 (Punjab & Haryana) Principal Commissioner of Income-tax (Central) v. DSG Papers (P.) Ltd. 24. From perusal of above referred case laws, it is submitted that, wherein the opportunity of cross examination has not been provided to assessee then the assessment framed will be considered as invalid assessment, thereby violating the principal of natural justice, therefore, needs to be quashed. 25. Ld. AR submitted that during the year under consideration the assessee had received a short-term advance from M/s. Saloni Buildtech Pvt. Ltd. amounting to Rs. 39lacs which was repaid via banking channels within a time period of 32 days. The assessee has filed the following documents before the AO as well as ld. CIT (A) to prove the authenticity of the transaction: * Ledger A/C of M/S Saloni Buildtech Pvt. Ltd. * Form No. AOC-4 of M/S Saloni Buildtech Pvt. Ltd. * Affidavit from the director of M/S Saloni Buildtech Pvt. Ltd. declaring the fact that the loan advanced by it has been repaid by the assessee * Bank account in the books of the assessee showing the entry received and paid back by the assessee during the y....
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....tax v. Ambe Tradecorp (P.) Ltd. as reported in [2022] 145 taxmann.com 27 (Gujarat) vide order dated 05.07.2022. * Judgment of the ITAT Surat Bench in the case of Rajhans Construction (P.) Ltd. v. ACIT as reported in [2022] 140 taxmann.com 370 (Surat-Trib.) vide order dated 14.03.2022. 30. Without prejudice to above, he submitted that just for the sake of argument, the AO had wrongly invoked section 69A (unexplained money) whereas the issue, if at all, relates to section 68. The definition of section 69A as per the provisions of Income Tax Act, 1961 is as under:- "Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or other valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [Assessing] officer, satisfactory, the money and the value of the bullion, jewellery or other article may be deemed to be th....
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....lief to the assessee without giving proper opportunity to the AO. He submitted that J.P. Gupta is the controller of M/s. Saloni Buildtech Pvt. Ltd. He submitted that ld. CIT (A) has not considered the statement of Rajiv Mehta who has accepted in his statement that he has only a Driver. He submitted that notice under section 148 of the Income-tax Act, 1961 (for short 'the Act') was issued based on the ramification that the assessee is one of the beneficiaries of taking accommodation entries. With regard to not providing cross examination to the assessee, he submitted that all the documents were already provided to the assessee and he raised the issue why the assessee has not requested for cross examination. Further, ld. DR submitted that the various case laws relied by the assessee are distinguishable. 36. Considered the rival submissions and material placed on record. We observed that the assessee had taken short term loan from Saloni Builtech Ltd, the relevant lender company was controlled by the alleged accommodation entry provider Shri JP Gupta, the AO proceeded to make the addition merely on the basis of statement given by Shri JP Gupta during the search proceedings. Further....
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....the amount of Rs. 1,50,000/- which was received by the assessee from Naresh Kaoor had been repaid to him within a period of 15 days and the said transaction was a bona fide transaction and the provisions -of Section 68A were not attracted. At this stage, it would be advantageous to refer to the findings recorded by the Tribunal which read thus: "After considering the rival submissions and perusing the relevant material on record, it is noted as a factual position that the amount of Rs. 1,50,000/- was received by the assessee by way of A/c payee cheque on 28.11.1991 and was repaid within a period of less than 15 days through banking channel. The transaction having been opened and closed through bank draft within the short span of 15 days cannot be held to be in genuine unless any specific material is brought on record, which goes against it. Simply because Shri Naresh Kapoor could not be produced before the AO, cannot lead to the confirmation of addition u/s 68. It is axiomatic that impossible cannot be complied with. Newspaper cuttings duly establish that Shri Naresh Kapoor was absconding and in our considered opinion his physical production before the AO could not have co....
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....ut the claim of the assessee by bringing on record cogent / concrete evidences to dislodge the claim of the assessee. Unless this 21 exercise is done by Ld. AO, no such addition of unexplained cash credit could be made in the hands of the assessee. 10. In the light of above settled legal position, we find that the assessee has duly furnished ample documentary evidences to discharge the required onus of Sec.68. Once these documents have been furnished, the onus of the assessee stood discharged. The Hon'ble Apex Court in the case of Pr. CIT vs. New Video Pvt. Ltd. (2018; 7 TMI 1455 SLP No.18325/2018) held that when the loans were repaid in subsequent years and the explanation offered by the assessee on repayment was accepted by revenue, the addition could not be sustained. The Hon'ble Punjab & Haryana High Court in the case of CIT Vs Karaj Singh (15 Taxmann.com 70) held that where the assessee filed competed details to prove the genuineness and creditworthiness of the loan creditors and the loans stood repaid through normal banking channels, Ld. AO was not justified in treating the said loan as unexplained cash credit u/s 68. Similar is the decision of Chandigarh Tribunal in....
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....al of assessment record. The allegation that the approval was mechanical approval had no basis. In Central charges, all search and seizure assessments are regularly supervised and monitored by the range heads. The Addl. CIT as range head is actively involved in assessment of all such cases from beginning and at all stages of search and seizure assessment, the assessing officer discusses and seek his guidance. The CBDT Circular F.No.286/161/2006IT (Inv. II) dated 22-12-2006 highlight the consultative approach between the Assessing Officer and the Range Head in search and seizure assessments. The range head as well as AO have followed the instructions / guidelines of the Board for the completion of search and seizure assessment and the assessment order was finalized by Ld. AO after obtaining approval u/s 153D from the Range Head. The seized documents were part of the assessment records. The approval u/s 153D was accorded after due examination and verification by the Range Head. Therefore, the allegation of the assessee qua mechanical approval was without any basis. Further, the approval was in the nature of administrative power. The Range head do not examine or adjudicate upon rights....