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TMI Blog2013 (5) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... und no. I taken by the assessee is general in nature, it does not call for any finding to be recorded, hence, it is rejected. 2. In ground no. 2 (I) and (II), assessee has challenged reopening of assessment u/s 147 of the Income Tax Act, 1961, however Ld. Counsel for the assessee did not press these grounds of appeal, hence, they are rejected. 2. In ground no. 3(I) to 3(III), assessee has pleaded that Ld. CIT (A) has erred in confirming the addition of ₹ 27,00,000/- with the aid of Section 68 of the Income Tax Act, 1961. This ground is inter connected with ground no. 4, wherein assessee has pleaded that Ld. CIT (A) has erred in confirming the addition of ₹ 13500/-. This addition has been made on the ground that assessee must have paid commission @ 0.5% for arranging the accommodation entries of ₹ 27,00,000/- which has been added as unexplained credit of the assessee. We take both these issues together. 3. The brief facts of the case are that assessee has filed its return of income on 31st October, 2002 declaring an income of ₹ 1,03,970/-. The assessing officer had received an information from the investigation wing indicating that assessee has recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives, friends and known persons, because it has not taken out any IPO. Since, the funds were arranged from the known persons, therefore, there should not be any difficulty for the assessee to produce such person before the assessing officer so that their affairs can be examined. He directed the assessee to produce the authorized persons of the share applicant companies. According to the assessing officer, assessee fail to produce the persons. The Ld. Assessing officer in this way concluded that it was just an accommodation entry and assessee must have paid commission @ 0.5% for arranging the accommodation entry. The Ld. Assessing Officer has made an addition of ₹ 27,13,500/-. 8. Appeal to the CIT(A) did not bring any relief to the assessee. The Ld. First Appellate Authority has made an elaborate discussion about the position of law blowing from the judgment of Hon ble Supreme Court in the case CIT Vs. Lovely export Pvt. Ltd. reported in 216 CTR 195, CIT Vs. Steller investment reported in 251 ITR 263, judgment of Hon ble Delhi High Court in the case of CIT Vs. Sofia Finance Ltd. 205ITR 98 and others. The reasons for not accepting the explanation of the assessee about the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een pronounced by the Hon ble Delhi High Court on 22nd .11.2012. The Ld. Counsel for the assessee also placed on record copy of the assessment order passed u/s 143 read with section 147 on 21.12.2009 in AY 2002-03, in the case of Fair Finvest Ltd. He pointed out that in this case also addition was made on the ground that assessee has taken accommodation entries of ₹ 55,01,125/- from the companies controlled by Shri Mahesh Garg. The Assessing Officer has relied upon the statement of Shri Mahesh Garg recorded by the ADI. On the strength of the assessment order, Ld. Counsel for the assessee submitted that nature of evidence available on the record in the case of the assessee as well as in the case of Fair Finvest is similar. Ld. Assessing Officer has confronted the assessee with the statement of Shri Mahesh Garg or Sanjay Kumar recorded by the investigation wing during search is carried out at the premises of Mahesh Garg or Sanjay Kumar, Apart from that material, independently, the assessing officer has not analyzed the details submitted by the assessee. 10. Ld. DR relied upon the orders of revenue authorities below. She submitted that it is a known factor that certain indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its of the Directors, Form 2 filed with the ROC by such applicants confirmations by the applicant for company s shares, certificates by auditors etc. Unfortunately, the assessing officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of Mr. Mahesh Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the assessing officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the assessing officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description of Section 68. Having regard to the entirely of facts and circumstances, the Court is satisfied that the finding of the Tribunal in this case accords with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce of the money. It is the submission of the assessee that even in case there is some doubt about the source of money in giving into coffers of the share applicants which they invested with the assessee, it would not automatically follow that the said money belongs to the assessee and becomes unaccounted money. According to us, the assessee appears to be correct on this aspect. We feel that something more which was necessary and required to be done by the AO was not done. The AO failed to carry his suspicious to logical conclusion by further investigation. After the registered letters sent to the investing company had been received back undelivered, the AO presumed that these companies did not exist at the given address. No doubt, if the companies are not existing, i.e., they have only paper existence, one can draw the conclusion that the assessee had not been able to disclose the source of amount received and presumption under Section 68 of the Act for the purpose of addition of amount at the hands of the assessee. But, it has to be conclusively established that the company is non-existence. 15. The AO did not bother to find out from the office of the Registrar of Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law that the assessee need not to prove the source of source . (Emphasis supplied) x x x x x x x x x x x x x x x During the arguments, we had posed these queries. Ld. Counsel appearing for the Revenue understood the limitation of their case. For this reason, a fervent plea was made that this case be remitted back to the AOs to enable him to make further investigation. However, in the facts and circumstances of these, would be difficult to give such an opportunity to the Revenue. cases There are number of reasons for denying this course of action which are mentioned below: It is not a case where some procedural defect or irregularity had crept in the order of the AO. Had that been the situation, and the additions made by the AO were deleted because of such infirmity, viz., violation of principle of natural justice, the Court could have given a chance to the AO to proceed afresh curing such procedural irregularity. One ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals relate to the assessment years, which are of 7-8 years old or even more and going by the nature of evidence which is required, it may not. 12. In the light of authoritative pronouncement, if we consider the facts of the present case then it would reveal that facts of the present case are similar to that of Fair Finvest, the assessing officer has not carried out any investigation on the details submitted by the assessee, therefore, the addition are not sustainable. We allow ground no. 3 and 4 including their sub grounds and delete the additions of ₹ 27,13,500/-. 13. In ground no. 5 assessee has pleaded that additions have been made by the assessing officer on the basis of evidence collected at the back of the assessee and without providing it an opportunity to rebut the same. As far as this ground is concerned the case of the assessee is that whatever material collected by the investigation wing was collected from its back, the statement of Mahesh Garg etc. could not be used against him unless an opportunity to cross examine was given. Since, we have already concluded that material was insufficient in the light of the details submitted by the assessee and withou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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