9911796707
TMI Blog2010 (3) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... stified in initiating proceedings under s. 147/148 of the IT Act, 1961, insofar as learned AO had no reasons to believe to initiate proceedings under s. 147/148 of IT Act, 1961. 2. That the appellant craves the right to amend, add, delete or withdraw any of the grounds of appeal either before or at any time of hearing of this appeal. 3. The return of income in the present case was filed at an income of ₹ 3,53,959. A survey operation under s. 133A of IT Act, 1961 ('the Act') was conducted at the premises of the assessee by the Investigation Wing Unit-V, Delhi on 10th Aug., 2006 wherein statement of Shri Amit Gupta (director of assessee company) was recorded. In the statement said Shri Amit Gupta offered an amount of ₹ 4,80,00,000 for taxation by way of admission of routing through the said amount into company's capital by way of accommodation entries during financial year 2002-03. According to assessment order, cheques were also issued to satisfy the payment which may accrue as tax on the said offer. The impugned amount constituted the share capital and share premium received from 15 parties the details of which are given at p. 2 of the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of assessment proceedings, statement of the said Shri Amit Gupta was again recorded. The statements of entry operators recorded during the investigation by Investigation Wing, copy of the statement of the then director Shri Amit Gupta recorded during the survey operation and the statement recorded during the assessment proceedings were also given by the AO to the learned Authorised Representative of the assessee to enable the assessee to make its submissions on the subject. 5. It is observed by the AO that as a result of the investigation carried out by the Investigation Wing, Delhi, it was found that the companies who have provided the share application money and share premium to the assessee were non-genuine entities and were giving only accommodation entries. The fact that those companies were neither reliable nor genuine as per investigation carried out by Investigation Wing and the fact that those companies were not in a position to advance those deposits was brought to the notice of the assessee company. Copies of statements of the persons relating to share applicants, namely, Shri Perminder Singh, Shri Raghuvir Singh, Shri Sanjay Gupta, Shri Mukesh Kumar, Shri Sonu Shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribes that the assessee in the present case has dealt with the group of persons which has been investigated and examined by the Investigation Wing and such description has been given by the AO as under : 1. Pankaj Khaitan Group (a) Group is managed by Shri Vinod Kumar Aggarwal; the concerns used by the group for operation of bank accounts and entry business are : Pushpak Exports (P) Ltd. and Sunrise Developers (P) Ltd. (b) Shri Sonu Sharma who carried operations from Standard Chartered Bank in the name of Bliss Credit Leasing (P) Ltd. and Meerut Credit Leasing (P) Ltd. (c) Shri Mukesh Kumar. His group has accounts with the HDFC, Standard Chartered, Ratnakar Bank, Khatri Co-operative Bank and Syndicate Bank, etc. The list of different companies utilized by the group for operation of bank accounts is : * Vivek Cyber Tech (P) Ltd. * Blossom Advertising (P) Ltd. * Atalantic Vision (P) Ltd. * N.S.M. Securities (P) Ltd. 2. The next group called Khemka Group is managed by Shri Sanjay Gupta, Shri Raghubir Singh and Shri Parminder Singh. This group used the following companies : -Tulip Engineering (P) Ltd., Saar Enterprises (P) Ltd., -Savitri Electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Raghubir Singh 22-3-2005 Working on behalf of Parminder Singh, getting salary of ₹ 500 to 600 per month Shri Sanjay Gupta 22-3-2005 Working on behalf of Parminder Singh, getting salary of ₹ 500 to 600 per month 10. Thereafter, the AO observed that during the year under consideration the company has shown to have received share capital and share application money of ₹ 4,80,00,000 and the assessee in support of such claim has vide letter dt. 22nd Oct., 2007 filed copies of confirmations from shareholders, board resolution, the share application form, photocopy of bank statement, etc. The AO also observed that in the written submissions it is so submitted that Shri Amit Gupta, one of the independent directors, who surrendered the said amount to tax was not connected with the assessee company in any capacity during the asst. yr. 2003-04 in which such capital was raised. It was observed that the assessee did not even produce any of the so-called directors or principal officers of the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during this period Shri Amit Gupta was a director of the company. This fact was also admitted by him in his statement. It was categorically stated by him that the balance call money and balance share premium amount which was @ 2.50 per share and @ 47.50 per share respectively which was total of ₹ 8 lacs share capital and ₹ 1,52,00,000 share premium were not paid by the applicant and therefore after giving proper notices, the company forfeited the amount paid by them on 8th Feb., 2005, accordingly proper entries were made in the books of account. 12. Since it was the claim of the assessee that Shri Amit Gupta was no more a director of the company, therefore, the AO examined the then director, Shri Saurabh Aggarwal, whose statement was recorded on 2nd Nov., 2007 and summary of his statement has been given by the AO as under : ' He also stated that a number of 3,20,000 shares were issued having face value of ₹ 10 each on a premium of ₹ 190 each share to our friends and known business associates. Initially ₹ 7.50 called towards share capital and ₹ 142.50 towards share premium. The balance was to be paid as and when called by the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se he was a qualified person well versed with the business of the company and was having full authority and knowledge about the affairs of the company. The AO observed that there was no formal retraction on behalf of the company. Rather the company acted on the statement and affirmation of Shri Amit Gupta and a sum of ₹ 25 lacs was deposited as a tax and retraction was only an afterthought idea to avoid tax and further tax was not deposited. The assessee company failed to produce any of the persons relating to share applicant entities and surprisingly all the 15 companies after depositing the substantial part of share capital of ₹ 7.50 per share and ₹ 142.50 of share premium did not pay the balance call money or the premium which was only ₹ 50 per share which was resultantly forfeited in the next financial year. The AO also rejected the legal contention of the assessee regarding furnishing of evidence on the ground that all the share applicants were companies incorporated under Indian Companies Act which fact has been verified with reference to the record maintained in the office of the RoC, Ministry of Corporate Affairs, Government of India, which, accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be accepted was also rejected on the ground that this has to be seen in view of the special facts and circumstances of the case. 14. Then, the AO discussed the various case law relied upon by the assessee and came to the conclusion that the onus being laid upon the assessee to prove creditworthiness, identity of the person and genuineness of the transaction has not been discharged and the assessee has abstained itself from producing the share applicants for verification, therefore, the transaction is not clean and genuine. The assessee has introduced its own unaccounted money in the shape of share capital and share application money in the names of various persons who are not creditworthy to advance such huge sum to the assessee. The transactions are completely unexplained and bogus and the Department by bringing corroborative evidence contrary to the stand of the assessee has proved that these transactions are non-genuine and are colourable device to defraud the Revenue and, in this manner, a sum of ₹ 4,80,00,000 was added being unexplained cash credit and 1 per cent commission thereon also amounting to ₹ 4,80,000 was added. Aggrieved, the assessee filed an ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that unlike the provisions of s. 132(4) or 131, s. 133A(3)(iii) does not provide jurisdiction to IT authorities to record statement under oath and such statement if recorded does not have any evidentiary value and for this purpose, reliance was placed on the decision of Hon'ble Kerala High Court in the cases of Paul Mathews Sons vs. CIT (2003) 181 CTR (Ker) 207: (2003) 263 ITR 101(Ker), Ashok Manilal Thakkar vs. Asstt. CIT (2006) 99 TTJ (Ahd) 1262: (2005) 279 ITR 143(Ahd)(AT) and Late Shri Mukund V. Kapadia vs. ITO (2002) 77 TTJ (Mumbai) 595: (2002) 82 ITD 489(Mumbai). Reference was made to Circular No. 286 of 2003, dt. 10th March, 2003 to contend that mere statement of surrender of an income during the survey or search cannot entitle the Revenue to make addition unless the same is corroborated with true facts found at the site. Reference was made to the retraction by Shri Amit Gupta and retraction resolution passed by the board to contend that the surrender was factually erroneous and to support such contention books of account were also produced and the documentary evidence filed by the assessee to support its contention on the identity, creditworthiness and genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amendment brought in s. 147/148 w.e.f. 1st April, 1989 and by observing that at the time of initiating the action the AO should have the reasons to believe that the income has escaped the assessment and such belief could be arrived at in any manner and it is not qualified by a precondition of full and true disclosure of material facts by the assessee as contemplated in the pre-amended s. 147(a). So far as it relates to merits, learned CIT(A) referring to the decisions inter alia of Hon'ble Supreme Court in the case of CIT vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195: (2008) 6 DTR (SC) 308 and decision of Hon'ble Delhi High Court in the case of CIT vs. AGR Investment Ltd. [IT Appeal No. 825 of 2006 (Del)] (unreported decision) observed that even in a case where several persons were not available at the given address because they may have shifted out, it was held that the same could not be treated as unusual and the said facts could not lead to any adverse inference against the assessee. It was also observed that the applications even if they were made from a common address and the payments were made from a common bank account given also could not be relevant because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditors, the addition could not be made. Then, learned CIT(A) referred to the particulars regarding all the 15 parties with reference to their day of incorporation as company, their status as per RoC record, their PANs describing particular ward where they are being assessed, number of shares applied by them, application money advanced by them with cheque number and date and the name and address of the bank and, these particulars have been tabulated in a chart found at pp. 16, 17 and 18 of the order of CIT(A) and, then, the learned CIT(A) referred to the CBDT Circular dt. 10th March, 2003 to hold that the surrender made by the assessee could not be used by the Department unless corroborative material is found during the search and seizure and survey operations and attempts should not be made to obtain confessions as to the undisclosed income. After examining all these facts and position of law the findings of the CIT(A) as summarized by him at pp. 19 and 20 of the impugned order are as under : (i) The impugned share money to the tune of ₹ 4,80,00,000 was received by the appellant company from the stated 15 companies during the financial year 2002-03 relevant to asst. yr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Shri Amit Gupta, not director during the period of impugned investments in share capital and the Investigation Wing report would not have much evidentiary value in quasi judicial proceedings unless substantially corroborated with material findings on record and documentary evidence found and inventoried during survey operations to suggest and indicate that the assessee had undisclosed income, excess cash, stock, inventory, valuables and undisclosed and unexplained income or assessee's own undisclosed fund has been re-routed to its own coffer in the form of share capital in the name of non-existing and fictitious companies or unidentifiable legal entities. These ingredients are lacking in the instant case. (ix) The identity of the share subscribers is identifiable/verifiable from their given addresses, records of the concerned RoC, income-tax records/PAN and bank accounts. Similarly, the creditworthiness of the creditor subscribers is verifiable from their bank statements. Last but pertinent that share money transactions are confirmed by the shareholder companies by way of latest confirmations available at page Nos. 83 to 107 of the paper book. 22. Considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Departmental Representative submitted that there was enough evidence with the Department to prove that what was stated by the assessee as statement of affairs of having received share application money was neither true nor correct. The persons of no means were running those concerns and were stated to be share applicants. They were working on petty amount of commission. Some of the so-called directors of those companies admitted in their statements that they were mere employees and were getting petty sums of ₹ 500 to 600 per month to sign the blank cheques and to open the bank accounts etc. Pointing out from the various documents filed in the paper book, he submitted that those persons were only regulating the affairs of the company and some of them have signed the share application forms as well as issued the cheques. He contended that in subsequent examination during the course of assessment proceedings, the director of the assessee company had refused to avail the opportunity given by the AO to produce those persons and also to place proper material in order to prove the genuineness of the transactions and creditworthiness of the investor companies. He submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was not genuine. It was submitted that the learned CIT(A) was not right in holding that the addition was made by the AO simply on the basis of statement made by the director during the course of survey proceedings, as the other material existed on record, which was also sufficient to hold that what was apparent was not real. 25. The learned Departmental Representative referred to the decision of Hon'ble Kerala High Court in the case of CIT vs. Poulose Mathen (P) Ltd. (1998) 148 CTR (Ker) 247: (1999) 236 ITR 416(Ker), to contend that the AO is entitled to penetrate the veil and ascertain the truth and in that manner he could examine whether transaction was genuine or sham. In the said judgment, their Lordships have referred to the decision of Hon'ble Supreme Court in the case of Sunil Siddharthbhai vs. CIT (1985) 49 CTR (SC) 172: (1985) 156 ITR 509(SC). 26. Then, the learned Departmental Representative referred to the decision of Hon'ble Supreme Court in the case of CIT vs. Sri Meenakshi Mills Ltd. (1967) 63 ITR 609(SC), to contend that tax authorities would be justified to look into the reality of the transaction after piercing the veil of the corporate ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Referring to the contention of the assessee that in view of the record of RoC, the companies were active and they existed on their records and the AO has mentioned that the same is not a conclusive proof in the light of pre-planned and deliberate system involved/employed to defraud the Revenue in providing accommodation entries and the statements of persons operating various bank accounts and the modus operandi have clearly shown that a pre-planned and deliberate system was involved and employed. Similarly, with regard to the contention of the assessee that shareholder companies were existing on the given addresses and since their accounts are audited under the Indian Companies Act and their status are being shown as 'active', learned Departmental Representative submitted that AO has observed that it cannot also constitute conclusive proof of genuineness of the transaction in the background of the persons allegedly running the so-called companies and their status and admission in the form of sworn statements. So far as it relates to the contention of the assessee that those companies were also assessed to income-tax as per certificate from the IT Department, the learned Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the reply of the director was that the persons are telling blatant lies as no cash was deposited in their bank accounts and details have already been filed to prove identity, genuineness and creditworthiness of those parties and transactions and, therefore, in the opinion of the director, production of those parties was not required. Thus, it was pleaded by the learned Departmental Representative that the assessee failed to avail the said opportunity given by the AO and the assessee cannot now contend that cross-examination of those parties was not provided to the assessee. 34. Referring to the order of the learned CIT(A), it was pleaded by the learned Departmental Representative that he has deleted the addition without properly appreciating the facts of the present case which are peculiar and have been discussed by him in the course of earlier discussion. He contended that a bare reading of the order of the learned CIT(A) will reveal that nowhere in his order he has given any finding with regard to the statements of seven persons on the basis of which the premises of the assessee was surveyed and the impugned additions are made. It was contended that the said fact was a mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not to be made and any such action will be viewed adversely. Thus, it was pleaded by the learned Authorised Representative that resting the addition simply on the basis of admission of the director was not in accordance with law and, therefore, the learned CIT(A) was right in holding that the addition rested on the basis of admission during the course of survey cannot be relied upon. 38. The learned Authorised Representative further submitted that if the statements taken at the back of the assessee are utilized to make the addition and the assessee has requested for granting opportunity to cross-examine and such opportunity is not given to the assessee, then addition is liable to be deleted in the absence of such opportunity. For this purpose, he relied upon the decision of Hon'ble Delhi High Court in the case of CIT vs. SMC Share Brokers Ltd. (2007) 210 CTR (Del) 353: (2007) 288 ITR 345(Del). 39. He further submitted that in case the AO fails to summon the person in spite of request, then the evidence pertaining to that person could not be used against the assessee without granting the opportunity to controvert the same and for this purpose he relied upon the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to prove the genuineness of the share application money. He contended that the assessee had obtained fresh confirmations from all the shareholder companies copies of which are placed in the paper book. It was submitted that the assessee has also collected the evidence from the official record of the RoC, IT Department and status of all those concerns has been found to be active and evidence in this regard is also enclosed in the paper book. Learned Authorised Representative further referred to the companies' bank statements which have also been filed in respect of each of the applicants and thus it was submitted that there is ample evidence on record to show the identity and creditworthiness of the share applicants and also genuineness of the transactions. He submitted that in the case of one of the share applicants, namely, Meerut Credits Leasing (P) Ltd. the assessee is able to obtain the audited balance sheet of the said company and share application money received from them has been duly shown in the said audit report and he in this regard referred to pp. 119 to 127 of the paper book. He contended that copies of fresh confirmations obtained from all these sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant received fresh equity share capital of ₹ 4,80,00,000 during the year from companies registered with RoC, NCT (Delhi and Haryana). It is submitted that the reasons recorded are misconceived and erroneous on facts insofar as it may be appreciated that from the unauthorized statement of the director Shri Amit Gupta recorded on 10th Aug., 2006 (copy at page Nos. 20-24 of the paper book) wherein he has nowhere admitted that share application money and premium were routed through accommodation entries in the concern and to the contrary, he very categorically mentioned in his answer to various questions posed in statement, that he is a professional director joined only in subsequent year i.e., year subsequent to issue of share capital, that all the shareholders are identifiable, share capital was raised for capital requirement of company, their reference is properly available in the books of account and shareholders register mentioned the addresses of all the shareholders and was available for verification. In view of the facts and circumstances given above which were borne on record, the satisfaction recorded by learned AO for initiation of reassessment proceedings is not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he accommodation entries and on the contrary he mentioned in his answer that he is a professional director joined only in subsequent year and all the shareholders were identifiable and share application money was received for the requirement of the company and their reference is properly available in the books of account and shareholders register in which addresses of all shareholders are also available for verification and thus the initiation of reassessment proceedings is not correct de hors the material and rather they were whimsical and totally contrary to the facts as borne out from records and it has been the case of the assessee that such information must have direct nexus with the reasons to believe and such information should be precise and certain. Information derived from certain facts which are assumed to exist and not supported by specific data cannot amount to information for reopening assessment. The learned CIT(A) has dealt with this issue in para 15.1 of his order wherein he observed that for initiating reassessment proceedings the AO should have reasons to believe that income has escaped assessment and such belief can be reached in any manner and is not qualifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that reassessment proceedings were validly carried out and we decline to interfere in such finding of the learned CIT(A) and the grounds of cross-objection filed by the assessee are dismissed. 49. Having decided the legal objection raised by the assessee in its cross-objection, we now proceed to decide the issue of addition on merits. Before proceeding further, it will be relevant to mention here that the AO on the basis of sufficient information made available to him by the Investigation Wing had carried out his own verifications also and on the facts of the present case it has been held by him that the so-called share application money and premium shown to have been received by the assessee were not in fact the real state of affairs. The share application money and premium were shown to be received by the assessee from the entities who were carrying on the activity of providing accommodation entries only. They were men of no means. They were carrying out these activities either to earn small commission or to get some paltry sum as monthly remuneration. The seven persons who were examined by the Investigation Wing were managing the affairs of the share applicant companies. Tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia (1971) 3 SCR 9 this Court cautioned : 'It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment'. Keeping in view the aforementioned observations it has to be found out that in what context those judicial pronouncements were referred and whether the facts of those cases match with the facts of present case. Unless it is found that the facts in those cases were matching with the assessee's own case, those decisions could not be relied upon to decide the issue in favour of assessee. It can be seen from the order of CIT(A) that he has ignored the peculiar facts of the present case while deciding the issue in favour of assessee and his action is thus, not in accordance with the principles of law laid down by Hon'ble Supreme Court in the aforementioned case of Sun Engineering (supra). 50. To demonstrate that what was brought by the AO on record in the shape of assessment order and what were the documents submitted by the assessee to support its contention, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reserve and surplus as at the end of the relevant year stands at ₹ 4,58,23,879 which is an aggregated sum of ₹ 4,56,00,000 received on account of share premium and ₹ 2,23,879 representing profit of the year. The only activity carried out during the year is sale and purchase of glass, the turnover of which has already been described. From the orders of the AO and the learned CIT(A) or the documents filed by the assessee in the paper book, it cannot be ascertained that what was the justification of charging the premium on the shares of a company which does not have any asset in its balance sheet or which does not have track record to justify the premium charged. Moreover, at first hand, the share applicants have paid 75 per cent amount of the face value as well as the premium which has been forfeited by the assessee company on the ground that balance amount was not paid by them and to support such contention, the assessee has filed copies of letters issued to those share applicant companies requiring them to submit the outstanding amount and in two cases, the assessee has also filed the copies of the notices sent by the advocates of the share applicant companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce. 52. The confirmations alleged to have been freshly obtained and filed by the assessee, as mentioned earlier, are filed at pp. 104 to 116. In some of the confirmations alleged to have been freshly obtained, even the addresses of share applicant companies are not mentioned the details of which are as under : Sl. No. Date of confirmation Name of the company Relevant pages 1. 25-7-2007 Saar Enterprises (P) Ltd. 105 2. 14-6-2007 Kylsans Finance (P) Ltd. 107 3. 6-8-2007 Tulip Engineering (P) Ltd. 108 4. 27-7-2007 Impulsive Financial Services (P) Ltd. 5. 9-7-2007 Savitri Electricals (P) Ltd. 110 6. 27-8-2007 Gupta Impex (P) Ltd. 114 7. 7-9-2007 FMEC Tours Trave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hubir Singh, applicant of Tulip Engineering (P) Ltd. is enclosed. The said statement is recorded on 22nd March, 2005 and G-24, Vishnu Garden is stated to be the residential address of the said Shri Raghubir Singh. He has stated in the question put to him that the Department is showing him the bank account maintained by M/s Tulip Engineering (P) Ltd. in Corporation Bank which showed that Shri Raghubir Singh was operating the said account and he was put to a question that from which other bank accounts the amount has come in the said bank account and from whose account the said amount has come, what is the business relation of Raghubir Singh with that bank account holder and in answer he has stated that the said account of Tulip Engineering (P) Ltd. is being operated by Shri Parminder Singh who is resident of C-63, Vishnu Garden and Raghubir Singh stated that he has been issuing blank cheques and other documents to Parminder Singh from time to time and in consideration of the same, Shri Parminder Singh had been giving him a remuneration of ₹ 500 to ₹ 600 per month. Thus, the very applicant who has contributed to the assessee company with a huge amount of ₹ 24 lacs h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to answer the question that what was the address and nature of the work done by his proprietary concerns and in answer to such question he has stated that the address is C-107, ABC Complex, 20, Veer Sarvarkar Block, Shakarpur, Delhi-110 092 and, thus, it can be seen that both the addresses given by Pushpak Exports (P) Ltd. only belong to Pankaj Khaitan who has stated in answer to question No. 8 that he was giving the accommodation entries on charging the commission of approximately from 0.30 to 0.50 per cent. 56. In the case of FMEC Tours Travels Co. (P) Ltd. which is stated to have contributed a sum of ₹ 37,50,000 as share application money and premium thereon, the copy of share application is filed at p. 293 which is signed by its director Shri Kamal Dhawan and the address stated on the application is J-220/36, Vishnu Garden, New Delhi. Copy of bank account which is placed at pp. 300-302 the address is mentioned as C-43, Vishnu Garden and the copy of company master details in the office of RoC which is placed at p. 303 no address of the company is mentioned. On the confirmation which is stated to be dt. 7th Sep., 2007, no address of the said company is mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fairs and keeping in view the facts mentioned above, the case of the assessee cannot be accepted on the face value of it as there are so many discrepancies in the claim of the assessee that the amount received by it was a genuine share application money and premium thereon. Here, it can also be mentioned that if the assessee is able to obtain fresh confirmations from the so-called share applicants then those persons can be produced also to prove that in fact those persons have really contributed the share application money as against that fact, as pointed out in the earlier part of this order, there is substantial material with the Department to show and to believe that what has been explained by the assessee is not a real state of affairs. It is also important to note that the director of the assessee company when was put to the requirement to produce the share applicants has refused to do so and reference in this regard can be made to question No. 5 and answer thereto reproduced in para 12 of this order. In any case, this is a case where thorough verification was required to be made before accepting the claim of the assessee that the money received by it was really share applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as in their statements they have stated that they do not own any movable or immovable properties and they have clearly stated that they were earning their income from the activity of providing accommodation entries at a nominal commission. For example, Shri Sanjay Gupta in his statement, copy of which is placed at pp. 70-71 of the paper book, has clearly stated that the bank account in his name in Corporation Bank, Paschim Vihar was opened at the instance of Shri Parminder Singh (other person examined by the Investigation Wing) and in his bank account heavy cash was deposited and, thereafter, transferred to various other accounts. He used to sign blank cheques and other documents for a monthly remuneration of ₹ 500 to ₹ 700. 61. Shri Parminder Singh in his statement has clearly stated that he was maintaining bank accounts in the names of several persons whose name and account numbers were given by him in his statement and those bank accounts were maintained to facilitate him regarding operation of the entities in whose name he was carrying on the activity of providing accommodation entries. Shri Parminder Singh in his statement also admitted that apart from Saar En ..... X X X X Extracts X X X X X X X X Extracts X X X X
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