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TMI Blog2018 (10) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.03.2010. Shri Aseem Kumar Gupta was providing accommodation entries to several beneficiaries with the help of several bank accounts opened in the name of several proprietary concerns and companies in which either he himself, or his employees, were director or proprietor. The search & survey covered the premises of Sh. Aseem Kumar Gupta, Several associates/ employees of Sh. Aseem Kumar Gupta, Several Intermediary companies & some beneficiaries including that of the assessee. The assessee filed return of income on 17.10.2011 declaring total income of Rs. 8,45,910/-. 4. During the course of assessment proceedings, the Assessing Officer noticed that a sum of Rs. 1,53,62,570/- was credited in the books of the appellant which comprised of loan of Rs. 1,47,50,000/- said to have been received from M/s Ganpati Fincap Services Pvt. Ltd. and interest of Rs. 6,12,570/- credited on account of the said loan. The Assessing Officer observed that during the course of assessment proceedings u/s 153C in the case of M/s Ganpati Fincap Services Pvt. Ltd. it was established that the said company did not have any real business activity and was a fictitious entity fully controlled by Sh. Aseem Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., Aseem Kumar Gupta, M/s Chotti Leasing & Finance Pvt. Ltd. Surya Enterprises, ABM Traders etc. Annexure A-8, A-9 and A-10 seized from 2D, MIG DDA Flats, Gulabi Bagh, Delhi-07 that contains singed cheque books in which name of the payee is blank. Such cheques have been signed by M/s S.G. Portfolio Pvt. Ltd. M/s Ganpati Fincap Services Pvt. Ltd. Sh. Aseem Kumar Gupta on behalf of M/s Shey Infradevelopers Pvt. Ltd. Sh. Aseem Kumar Gupta on behalf of Maya Jail Securities, and Sh. Aseem Kumar Gupta on behalf of M/s Sushre Securities Pvt. Ltd. Sh. Aseem Kumar Gupta in his individual capacity, ABM Tradres, KMC Portfolio Pvt. Ltd., M/s Chotti Leasing & Finance Pvt. Ltd. M/s SAM Portfolio Pvt. Ltd. SR Securities. Annexures A-21, A-22 to A-33, A35 to A37 seized from 2D, MIG DDA Flats, Gulabi Bagh, Delhi- 07 that contains details of accommodation entries. These details include - date, company name, party name, deposit amount, withdrawal amount, balance. There is a direct one to one correlation between deposits and withdrawals mentioned against the names of most of the parties. There is temporal nexus between deposits and withdrawals. Letter head/ letter pads of M/s Ganpati Fincap Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed with the so called loans taken by the assessee from M/s Ganpati Fincap Services Pvt. Ltd. The Assessing Officer, therefore, observed that there was not an iota of doubt that the so called loan taken by the assessee from M/s Ganpati Fincap Services Pvt. Ltd. was merely an accommodation entry. 9. The Assessing Officer also observed that the facts M/s Ganpati Fincap Services Pvt. Ltd. was not actually in existence or had capacity to lend such a huge loan further strengthened by the statement of the husband of the assessee Mr. Raj Kumar Chawla recorded on 14.12.2011. The Assessing Officer incorporated the relevant portion of the statement of Mr. Raj Kumar Chawla in the assessment order and observed that from the statement of Mr. Raj Kumar Chawla one thing was very clear that although Mr. Raj Kumar Chawla was sole decision maker in M/s Ganpati Fincap Services Pvt. Ltd. yet he did not know anything about the affairs of the company M/s Ganpati Fincap Services Pvt. Ltd. The Assessing Officer observed that Mr. Raj Kumar Chawla, who was the sole decision maker of M/s Ganpati Fincap Services Pvt. Ltd. was not able to tell the source of funds that were used by the said company to provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o perused the case laws relied upon by the Assessing Officer in support of his findings and the case laws relied upon by the appellant in support of its case. The Assessing Officer made the impugned addition because he found the creditor M/s Ganpati Fincap Services Pvt. Ltd. to be non-existent and a fictitious entity created only for the purpose of providing accommodation entries and, therefore, its identity, creditworthiness and genuineness of the transaction was also doubtful. 12.1 In the instant case it was found by the Investigation Wing of the Department that the appellant was one of the beneficiaries who had received an accommodation entry in the form of share capital from the company fully controlled by Sh. Aseem Kumar Gupta, namely M/s Ganpati Fincap Services Pvt. Ltd. In the statement recorded during the course of survey proceedings u/s 133A of the IT Act, 1961 at his residence 2D, DDA Flats, Gulabi Bagh, New Delhi, Sh. Aseem Kumar Gupta had given a statement before the Investigation Wing that he was providing accommodation entries through various fictitious paper companies/concerns controlled by him after receiving cash and after charging commission. In his statement, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of assessment proceedings, there was enough evidence with the Assessing Officer to establish that the credit entry appearing in the books of the appellant was an accommodation entry routed through fictitious entities existing on papers only. In this case it was admitted by the entry provider before the investigation Wing that he was giving accommodation entries after receiving cash and after charging his commission. The Hon'ble High Court of Delhi in the case of Commissioner of Income Tax vs. Independent Media Pvt. Ltd. 2010 Taxman 14 (2012), while dealing with doubtful cash credits, held that if the explanation adduced by an assessee with regard to identity and creditworthiness of the subscriber companies and genuineness of transactions was not acceptable for valid reasons, Assessing officer could make addition u/s 68 of the IT Act, 1961. It is important to keep in mind that it may not be the responsibility of the assessee to prove the source of the source but nothing precludes the Assessing Officer to make enquiry in respect of the source as well to establish that both the source and it's source are part of a larger chain of paper companies engaged in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est on the said loan on the ground that the said company was giving mere accommodation entries and did not have any business activity. Further the assessee also failed to establish the existence or credit worthiness of M/s. Ganpati Fincap Private Limited. We find the Ld. CIT (A) upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraph. We find identical issue had come up before the coordinate bench of the Tribunal in the case of the husband of the assessee Sh. Raj Kumar Chawla wherein the Assessing Officer had made addition of Rs. 2,29,73,630/- being the loan of Rs. 2,20,75,630/-received from M/s. Ganpati Fincap Private Limited and interest there on at Rs. 8,98,630/- both totalling Rs. 2,29,73,630/-. We find the CIT(A) had upheld the addition made by the Assessing Officer and on further appeal by the assessee, the Tribunal in ITA No. 1323/Del/2015 order dated 26.09.2018 deleted the addition by observing as under :- 11. We have considered the rival submissions and perused the material available on record. In this case, it is an admitted fact that assessee filed copy of the loan agreement with calculation of interest b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in the remand order passed by the AO. The Ld. CIT(A) has also not dealt with the submissions of the assessee specifically in the appellate order. It is well settled law that any material evidence collected at the back of the assessee and not confronted to the assessee at assessment stage could not be read in evidence against the assessee. We rely upon the decision of the Hon'ble Supreme Court in the case of Kishanchand Chelaram vs. CIT 125 ITR 713. The authorities below solely made addition against the assessee because of the material seized during the course of search from Sh. Aseem Kumar Gupta and his statement recorded at the back of the assessee. Therefore, such material cannot be used against the assessee. The assessee also filed PB 269 which is retraction letter by Sh. Aseem Kumar Gupta to the AO, retracting from his statement given at the time of search. Therefore, there were no basis to make addition against the assessee. It may also be noted here that the assessee appeared before the AO for recording his statement as a director of the investor company in which he did not deny giving of loan by the investor company to the assessee. Ld. DR pointed out cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion should be made in the hands of the assessee. Therefore, there were no basis to make the addition against the assessee. In support of above findings, we rely upon the following decisions: i. "CIT vs. Fair Investment Ltd., 357 ITR 146 in which it was held that A.O. did not summon investors and did not make efforts. There is no finding that material disclosed was untrustworthy. The Appellate Authorities rightly deleted the addition. ii. Decision of Supreme Court in the case of CIT vs. Lovely Exports Pvt. Ltd., (2008) 216 CTR 195 in which it was held as under: "If the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of assessee company. " iii. Decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Kamdhenu Steel and Alloys Ltd., & Ors. 361 ITR 220 (Del.) in which it was held as under: "Once adequate evidence/material is given, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd fictitious therefore, the impugned order is set aside. " vii. Decision of Hon'ble M.P. High Court in the case of CIT vs. Peoples General Hospital Ltd., (2013) 356 ITR 65, in which it was held as under: "Dismissing the appeals, that if the assessee had received subscriptions to the public or rights issue through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 of the Income-tax Act, 1961, in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented the company's own income from undisclosed sources. It was nobody's case that the non-resident Indian company was a bogus or non-existent company or that the amount subscribed by the company by way of share subscription was in fact the money of the assessee. The assessee had established the identity of the investor who had provided the share subscription and that the transaction was genuine. Though the assessee's contention was that the creditworthiness of the creditor was also established, in this case, the establishment of the identity of the inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived by way of account payee cheques. On appeal to the High Court: Held, dismissing the appeals, that the deletion of addition was justified." ix. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Winstral Petrochemicals P. Ltd., 330 ITR 603, in which it was held as under: "Dismissing the appeal, that it had not been disputed that the share application money was received by the assessee-company by way of account payee cheques, through normal banking channels. Admittedly, copies of application for allotment of shares were also provided to the Assessing Officer. Since the applicant companies were duly incorporated, were issued PAN cards and had bank accounts from which money was transferred to the assessee by way of account payee cheques, they could not be said to be non-existent, even if they, after submitting the share applications had changed their addresses or had stopped functioning. Therefore, the Commissioner (Appeals) and the Tribunal were justified in holding that the genuineness of the transactions had been duly established by the assessee. " x. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Value Capital Services P. Ltd., (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) in confirming the addition of Rs. 10,99,904/- on account of income from house property made by the Assessing Officer on following properties :- 1. Flat at I. P. Extension, Delhi 2. A-58, Nirman Vihar, Delhi 3. 20-GF, Global Flyover, Gurgaon 19. Facts of the case in brief are that the Assessing Officer during the course of assessment proceedings observed that the assessee was owner several immovable properties as reflected in the balance sheet. During the year the assessee has declared rental income in respect of property located at B-223, GK-1, New Delhi and 18- Commercial Complex Karkardooma. However, no rental income has been declared in respect of other properties. Therefore, rental income in respect of properties should be prima facie, taken u/s 23 (1) (a) of the IT Act. He, therefore, asked the assessee to explain as to why income from house property should not be taken on these properties as per provision u/s 23 (1) (a) of the Income Tax Act. Rejecting the various explanation given by the assessee and keeping in view the fair market rent in the area in which the properties are situated, the Assessing Officer determined the annual value of the above 3 properties a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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