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TMI Blog2018 (1) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... he order 01-03-2017 passed by Ld CIT(A)-8, Mumbai and it relates to the assessment year 2007- 08. The revenue is aggrieved by the decision of Ld CIT(A) in deleting the addition of ₹ 41.00 lakhs relating to Share application money made by the AO u/s 68 of the Act. 2. The assessee is doing real estate business. The revenue carried out search operations in the case of a person named Shri Praveen Kumar Jain and it was revealed that he and his group of companies were providing accommodation entries in the form of bogus investment, share application money etc. It was noticed that the assessee has received from the companies belonging to Praveen Kumar Jain, share application money to the tune of ₹ 41.00 lakhs a detailed below:- Name of share holders Amount Rs. M/s. Khush Hindustan Entertainment Ltd. 11,00,000/- M/s. Alka Diamond Industries Ltd. 10,00,000/- M/s. Javda India Impex Ltd. 5,00,000/- M/s. Yash-V-Jewelers Ltd. 5,00,000/- M/s. Vanguard Jewels Ltd. 5,00,000/- M/s. Hema Trading Co. Pvt. Ltd. 5,00,000/- Total 41,00,000/- The assessing officer assessed the same as unexplained cash credit u/s 68 of the Act. 3. The Ld CIT(A) noticed that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders Amount Rs. M/s. Khush Hindustan Entertainment Ltd. 11,00,000/- M/s. Alka Diamond Industries Ltd. 10,00,000/- M/s. Javda India Impex Ltd. 5,00,000/- M/s. Yash-V-Jewelers Ltd. 5,00,000/- M/s. Vanguard Jewels Ltd. 5,00,000/- M/s. Hema Trading Co. Pvt. Ltd. 5,00,000/- Total 41,00,000/- 5.1.2 According to the Assessing Officer the share applicants were not engaged in genuine business activities. At para 11 of his order, the Assessing Officer has referred to one Shri Praveen Kumar Jain as "one of the leading entry providers in Mumbai indulging in providing accommodation entries....". The basis for issuing notice u/s 148 was also information received from Investigation Wing, Mumbai w.r.t. search operation on Shri Praveen Kumar Jain and his group companies (PKJ Group). He further stated that the appellant had failed to submit documentary evidence to support the transactions. In course of assessment proceedings, the Assessing Officer had issued notices u/s 133(6) of the Act to the above parties. As per paras 13 and 14 of the order, no responses were received from any party. Accordingly, the Assessing Officer held that identity, creditworthiness and genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o why anyone would want to pay "heavy" premium to a company like the appellant. This approach is not supported by the decision of Hon'ble ITAT. 5.1.4 The Hon'ble Supreme Court in case of C/7"v. P. Mohanakala [2007] 291 ITR 278/161 Taxman 169 held that the expression "assessee offers no explanation" means where the assessee offers no proper, reasonable and acceptable explanation as regards the sum found credited in the books maintained by the assessee. It further held that the opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material & other attending circumstances available on record. The opinion of the AO is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the In the instant case, the appellant filed all reasonable and acceptable explanation and the AO has not even mentioned them or explained why he has rejected them. 5.1.5 In the case of Orient Trading Co. Ltd. v. Commissioner of Income-tax (1963) 49 ITR 723 (Bom.), one of the questions referred to the Bombay High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute the fact of share application/premium into appellant's books, from an identifiable source, through banking channels. 5.1.7 The law does not expect the impossible on the part of the tax payer as was pointed out in Life Insurance Corporation of India vs. CIT (1996) 219 ITR 410 (SC), although pronounced in a different context. All that matters is that the explanation is prima facie reasonable. If it is so, it cannot be rejected on mere surmises. It was so held in CIT vs. Bedi & Co. Pvt Ltd. (198) 230 ITR 580 (SC). In Mehta Parikh & Co. vs. CIT (1956) 30 ITR 181 (SC), it was pointed out that where the assessee's account were accepted as genuine, it is ordinarily not possible to show that the credits therein do not come from the sources attributed for them. 5.1.8 In the instant case, the Assessing Officer has not brought forth any evidence but has based his conclusions on suspicion. It is trite law that on suspicion of the highest degree cannot take place of evidence. There must be some material on record as evidence for addition. Addition made on the basis of presumption cannot be sustained in law. This position is strongly supported by the following decisions: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he mentioned them in the assessment order. In the context of the body of unchallenged documentary evidence and details submitted by the appellant, the same could not be rejected merely on the ground that there were no responses to notices u/s. 133(6), more so, when the Assessing Officer has accepted other aspects of the audited accounts of the appellant. 5.1.13 In Balaji Textile Industries (P.) Ltd. v. ITO (1994) 49 ITD 177 (Mum.)(Trib.), summons issued to 12 parties returned unserved. Payments were crossed cheque (Not account payee cheques). There was no allegation or proof that the amount was received back by assessee. Sales were accepted - No sales can be made without purchases. Addition was deleted. 5.1.14 Lastly, the term accommodation entry is used to denote "fake loans" or bogus purchases or share application/capital that shows in the accounts of the recipient and gets absorbed there. For an entry to be considered "accommodation entry", there must be some evidence that the appellant had paid unexplained cash to the share applicant which was routed through share application/premium back to the appellant. In the instant case, there is no such evidence. In a similar case i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the assessee, nor he brought on record any other adverse material to controvert the evidences placed on record by the assessee. It is worth noting here that the AO had made direct inquiries with M/s Buniyaad Chemicals u/s 133(6), in response to which confirmation was filed by the said company. But Ld. AO preferred to rely upon the 'statement' of Mr. Mukesh Choksi and disregarded all the evidences filed by the assessee as well as evidences collected by him directly from the shareholder company which confirmed claim of the assessee. Thus, respectfully following aforesaid isions of Coordinate Bench, we find that in the peculiar facts and rcumstances of this case, the addition made by the AO is not stainable as per law and the same is directed to be deleted." 5.1.16 In the instant case also, the Assessing Officer has not pointed out any specific defects in the accounts of the appellant or confirmations and other details of shareholders. His decision is merely based on the appellant taking share application from PKJ group companies. There is no other incriminating evidence against the appellant. The ratio of Hon'ble Supreme Court in Lovely Export Pvt. Ltd 216 CTR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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