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TMI Blog2010 (11) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... had contributed their stocks to the assessee company as share capital - The assessee had duly established the identity and creditworthiness of the persons, as well as the genuineness of the transactions - The details filed included the names, addresses, firms, PAN, copies of income-tax return, copies of cheques received, copies of PandL A/c and copy of balance-sheet showing the closing stock of the three proprietary business - That being so, the AO was unable to show as to how the stock/cheques received remained unexplained - Decided against the revenue. - ITA No.2988/Del./2009 - - - Dated:- 30-11-2010 - G.E. Veerabhadrappa, A.D. Jain, JJ. R.S. Singhvi, CA for the Appellant Ashok Pandey, CIT(DR) for the Respondent ORDER Per: A.D. Jain: This is department's appeal for AY 2006-07, taking the following grounds: 1. On the fats and circumstances of the case, the Ld.CIT(A) has erred in deleting addition of Rs.3,99,00,000 made by the AO u/s 68 of the Act on account of induction of fresh share capital and Rs.2,00,000 on account of commission paid from undisclosed sources ignoring the fact that : (a) The assessment order passed by the AO is based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 lacs vi) M/s Kesri Lab (Electronics) (P) Ltd. Rs.32.50 lacs vii) M/s Kuberco Sales (P) Ltd. Rs.10 lacs viii) M/s Meghdoot Sales (P) Ltd. Rs.18 lacs ix) M/s Nishant Finvest (P) Ltd. Rs.18 lacs x) M/s Right Choice Constn.(P) Ltd. Rs.8 lacs xi) M/s Shriniwas Leasing and Finance(P)Ltd. Rs.13 lacs xii) M/s Sparrow Mktg.(P) Ltd. Rs.20 lacs xiii) M/s Technocom Associates (P) Ltd. Rs.26 lacs xiv) M/s Sekhawati Finance (P) Ltd. Rs.21 lacs xv) M/s SRS Vijay Sales (P) Ltd. Rs.9 lacs xvi) M/s Basant Agency (P) Ltd. Rs.6 lacs xvii) M/s Chintpurni Credit and Leasing(P)Ltd. Rs.37.50 laacs xviii) M/s Changia Steels (P) Ltd. Rs.18 lacs xix) M/s Division Trading (P) Ltd. Rs.6 lacs xx) M/s Shree Gupteshwar Mktg.(P) Ltd. Rs.9 lacs xxi) M/s K.R. Fincap (P) Ltd. Rs.11 lacs xxii) M/s New Generation Finvest (P) Ltd. Rs.5 lacs xxiii) M/s R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wing of the department; that the CIT(A) has failed to see that in his said statement, Sri Mahesh Garg categorically deposed that the companies were not doing any actual business other than giving of accommodation entries. 8. The Ld.Counsel for the assessee, on the other hand, has placed strong reliance on the impugned order submitting that all relevant and necessary details were duly filed before the AO which the AO did not bother to verify; that the assessee company was incorporated in 1975; that the year under consideration was first year of operation of the assessee company; that by duly filing of the necessary and relevant requisite documentary evidences before the AO, the assessee had duly discharged its onus u/s 68 of the Act; that even in the assessment order itself, the AO admits that the identity of the creditors of the assessee stands established; that in "Sarthak Securities Co. Ltd. vs. ITO", in an order dated 18.10.2010 (copy placed on record), the Hon'ble Jurisdictional High Court under similar circumstances, has quashed the very reopening of the completed assessment, which order be followed herein upholding the order under appeal while dismissing the department's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barred by limitations. How, then, can be procedures of courts strictly be followed in the proceedings under various provisions of the Income Tax Act. In view of limited time available it is practically impossible to allow opportunity of cross examination in cases. Providing opportunity in the interest of natural justice does not imply doing something which is humanly not possible. Practical aspects of each and every matter have to be kept in mind while taking recourse to a line of action. If near about the last day of limitation a request is made to the effect that the assessee company through it's Directors or A.R,. should be provided with an opportunity to cross examine the various 'Entry Operators', then, under all practical circumstances is it possible to acceded to such a request? Rather, is there any justification in making of such a request on the part of the assessee company? In most cases and in this case also the Authorised Representatives either keep making requests for adjournments or attend hearings at their own convenience. It is also not practically possible to keep track of scheduled dates of hearings in cases because of the tremendous work load. Should a particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s would that cash have been seized [u/s 132(1) of the Act.? Obviously, it would have been the Assessee company only. Assessment of the same also would then have been made in the hands of the assessee company only. What difference does it then make? It is proved from the statements given on oath by the 'Entry Operators' that the cash was provided by the assessee company [through it's representatives] and hence where does the doubt remain that the sums taken as entries are not assessable in the hands of the assessee company. The entities which have provided the cheques are, no doubt, existing and they have also provided all documentary evidence to show that the transactions are genuine. The truth is that it is being 'SHOWN' to be a genuine transaction. In reality it is not. The situation is similar to a magician's acts. He only makes it 'appear' to be true or genuine. What lies behind the magician's acts is 'known' to everyone. Yet, people appreciate his acts only because of the smooth manner in which he deceives them. Same is the case here. Those who permit themselves to be willingly deceived would believe the contentions of the assessee and side with it. Those who believe otherwise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A), the statement of Mahesh Garg, which was recorded much prior to the incorporation of the assessee company and the transactions involved herein, could not be made the basis for the addition in question. To reiterate, at the time of recording of the statement of Mahesh Garg by the Investigation Wing of the department, the very inception of the assessee company had not come about. Therefore, the statement of Mahesh Garg and the report of the Investigation Wing, which had its basis in such statement, was wrongly relied on by the AO to make the addition in question. Other than such statement and the report of the Investigation Wing, the AO was not in possession of any evidence whatsoever against the assessee. In our view, the CIT(A) correctly relied on the decision in 'CIT vs. Lovely Exports, 216 CTR (SC) 195, wherein it has been held to the effect that where the assessee has discharged its onus u/s 68 of the Act, even if the creditor companies are found to be bogus addition, if any, can only be made in the hands of those creditors and not in the hands of the assessee. In view of the above, finding no merit therein, ground no.1 raised by the department is rejected. 13. G ..... 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