9911796707
TMI Blog2012 (9) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... commodation entries for commission, it does not follow that the loans taken by the assessee from the various companies allegedly belonging to the Madhupuri Group of Companies were accommodation loans. From the statement it is not possible to establish any link between Mahendra Shah and the creditor companies or that he was in a position to influence those companies into carrying on the accommodation entry business - The material on the basis of which the addition in the present case is sought to be made falls short of the requirement of the sub-section (1) of 158BB which says that computation of the undisclosed income of the block period has to be made on the basis of evidence found as a result of search as there is nothing to link the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd statements were recorded. A statement from Mahendra Shah appears to have been recorded on the date of search in which he has stated that he was giving and taking loans on commission basis. It would appear that the books of the assessee company showed loans of Rs.74,29,460/- from the Madhupuri Group of companies, which was controlled by Mahendra Shah and Hemant Shah. On the basis of the statement of Mahendra Shah, a satisfaction note was recorded by the Assessing Officer who had jurisdiction over him (and Hemant Shah) and the same was communicated to the Assessing Officer having jurisdiction over the assessee. Based on the satisfaction note, proceedings were initiated against the assessee under Section 158BD and a notice was issued on 11t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see that no opportunity to cross-examine Mahender Shah was given and, therefore, the addition was bad in law. 5. The CIT(Appeals) on a perusal of the assessee s submission and the comments of the Assessing Officer concluded that the validity of the proceedings initiated under Section 158BD can no longer be called in question in view of the judgment of the Gujarat High Court in the case of Priya Blue Industries P. Ltd. Vs. JCIT, (2001) 251 ITR 615 (Guj) in which initiation of proceedings against certain assessees under Section 158BD, based on the material gathered during the search of the Madhupuri Group of Companies, had been upheld. On merits, he recorded the following findings:- (1) No seized material was passed on to the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in IT(SS)A No.403/Del of 2004. The Tribunal noticed that the only basis of the addition was the statement of Mahendra Shah. However, according to the Tribunal, he did not explain how he was connected with the concerns from which the assessee has taken the loans and there was nothing in his statement to suggest that even those concerns were engaged in providing bogus entries. The Tribunal further observed that the assessee s name was not referred to in the statement of Mahendra Shah, which was general and which would be an unreliable material to rest the addition. In this view of the matter and after citing several authorities handed down by this Court, the Tribunal endorsed the order of the CIT(Appeals). 7. The Revenue is in app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing business in present and past are as under : Presently my running business as a proprietor by name of M/s Madhupuri Corporation and M/s M Sagar Corporation no other business is run except above two business frim. Previously I do business of shop product in the name of M/s Manka Shop Factory, except this, I do business in the name of M/s Mayur Scrap in Partnership. Sale of scrap in the name of M/s Madhupuri metal Industries as a proprietor business. Except this I do not do any business as a proprietary and in partnership. In answer to question No.14 he generally explained the modus oprendi adopted in the case of accommodation entries. In answer to question No.15, he stated that his investment in the business was nominal because he wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company can be condemned. Even if the Revenue can be said to have successfully established that Mahendra Shah was carrying on the business of giving accommodation entries for commission, it does not follow that the loans taken by the assessee from the various companies allegedly belonging to the Madhupuri Group of Companies were accommodation loans. From the statement it is not possible to establish any link between Mahendra Shah and the creditor companies or that he was in a position to influence those companies into carrying on the accommodation entry business. We are concerned with a block assessment made under Section 158BD read with Section 158BC. The computation of the undisclosed income of the block period has to be made on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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