9911796707
TMI Blog2019 (1) TMI 1591X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of Kota Dall Mill (supra), we have no reason to take a different view on this issue. Accordingly, by following the earlier decision of this Tribunal in the case of group concern M/s Kota Dall Mill [ 2019 (1) TMI 344 - ITAT JAIPUR] we hold that the addition made by the Assessing Officer while passing the assessment orders for the A.Y. 2010-11 to 2012-13 u/s 153A are not sustainable and liable to be deleted. Hence, this ground of the assessee s appeal is allowed. Addition without giving the opportunity of cross examination of the witnesses and consequently there is a violation of principles of natural justice - HELD THAT :- The facts and circumstances in both the cases are identical and therefore, following the earlier order of this Tribunal in case of Kota Dall Mill, we hold that the addition made by the Assessing Officer on the basis of the information/report of the DDIT (Investigation), Kolkata as well as the statements of Shri Anand Sharma and Shri Ankit Bagri without giving an opportunity of cross examination is not sustainable as the addition is solely based on the statement and information which is nothing but summary of statements recorded by the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/s Caplin Dealcom Pvt. Ltd. - assessee was persuading with the Kolkata Stock Exchange as well as the SEBI for delisting of this company and thereafter preferential shares to be issued to these parties. The ld AR has produced before us the letters of Kolkata Stock Exchange dated 01/8/2014 as well as SEBI dated 03/9/2014 whereby the approval was granted for voluntary delisting of the equity shares of the assessee - SEBI has regretted the request by citing the reason that there is no provision under SEBI Act for delisting or waiver sought by the company. Hence, the explanation of the assessee that the special deposits were received as per the memorandum of understanding to issue the shares on preferential basis to these parties after delisting of the shares of the company in the stock exchange is found to be correct as the assessee has already applied to the Kolkata Stock Exchange as well as SEBI for delisting of its equity shares. Even otherwise when the creditworthiness of the party as well as genuineness of the transaction through the banking channel was established without pointing out any discrepancy either in the books of account or in the bank statement of the credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion U/s 32 of the Act is allowable once the asset is put to use, therefore, the fact of the guest house is in factory premises itself not in dispute which established that the guest house is used for the business purposes of the assessee and not for any other purpose - where the guest house is situated in the factory premises and being used for the purpose of business of the assessee, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Restriction of depreciation on UPS from 60% to 15% - HELD THAT:- This Tribunal has been taking a consistent view that the UPS is an integral part of computer and therefore, eligible for depreciation @ 60% - no error or illegality in the impugned order of the ld. CIT(A) qua this issue. Hence, this ground of the revenue s appeal stands dismissed. Disallowance of foreign travel expenses - AO held that the assessee has incurred these expenditure towards foreign travel expenses in respect of the visits of the Directors - HELD THAT :- An identical issue was decided in the A.Y. 2011-12, which was not challenged by the revenue before us. Hence, we do not find any error or illegality in the impugned order of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-13 respectively arising from the assessment framed in pursuant to the search and seizure action U/s 132 of the Income Tax Act, 1961 (in short the Act). The assessment for the A.Y. 2010-11 to 2013-14 and 2015-16 were framed U/s 153A of the Act whereas the assessment for the A.Y. 2016-17 was passed U/s 143(3) read with Section 153B(1)(b) of the Act. 2. All the appeals as well as the cross objections are being heard together and for the sake of convenience, a composite order is being passed. 3. The assessee is a group concern of Kota Dall Mill (KDM) group and subjected to the search and seizure action U/s 132 of the Act carried out on 02/5/2017. The Assessing Officer initiated the proceedings U/s 153A of the Act in pursuant to the search for the A.Y. 2010-11 to 2013-14 and 2015-16 and made various additions U/s 68 of the Act on account of unsecured loans, special deposits against the issue of preferential equity shares treating the same as accommodation entries availed by the assessee from the entry providers. The assessee challenged the orders passed by the Assessing Officer before the ld. CIT(A) and contended that the Assessing Officer has made the addition me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaring the assessment order as bad in law and void ab initio. The findings of Id CIT(A) in this regard are perverse and erroneous. It is contended that the Id. AO passed the assessment order against the doctrine of audi alterm partem , violating the principle of natural justice and not giving the opportunity of cross examination of the alleged accommodation entry providers, therefore the assessment order ought to held as bad in law and deserves to be annulled. 3. That the order of the Id CIT (A), confirming the addition made by the AO is arbitrary, whimsical, capricious, perverse, based on no evidence or irrelevant material or irrelevant evidence, and against the law and facts of the case. The addition confirmed by Id. CIT (A) deserves to be deleted. 4. On the facts and in the circumstances of the case and in law the Id. CIT (A) erred in confirming the additions made u/s 68 of the Income Tax Act, 1961 by: - (a) solely relying on the statements of some alleged accommodation entry providers recorded by some other authorities in some other cases/actions and the opportunity to cross examination was also not provided to assessee. (b) giving a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -13 on 21/3/2015. Thus it is clear that on the date of search i.e. 02/07/2015, the assessment for all the three years were completed U/s 143(3) of the Act and were not pending and consequently the assessment for these three years were not got abated by virtue of search and seizure action U/s 132 of the Act. The ld. CIT(A) though accepted the fact that there was no incriminating material found or seized during the course of search and seizure action to support the additions in question. However, the ld. CIT(A) has rejected the objection of the assessee on the ground that the SLP filed by the revenue against the decision of Hon ble Delhi High Court in the case of CIT Vs. Kabul Chawla 380 ITR 573 is pending before the Hon'ble Supreme Court. 7. Before us, the ld AR of the assessee has submitted that in compliance to the notice U/s 153A of the Act, the assessee submitted its return of income and declared the total income as it was declared in the original return of income. The Assessing Officer has made the addition U/s 68 of the Act on the basis of the statement of Shri Anand Sharma and in some cases on the basis of statement of Shri Ankit Bagri without any incriminating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment under section 153A of the Act are without jurisdiction and liable to be deleted. In support of his contention the ld. A/R has relied upon the decision of Hon ble Delhi High Court in case of Kabul Chawla, 380 ITR 573 (Delhi) and submitted that Hon ble High Court has held that in case of completed assessment not abated by virtue of search under section 132 of the Act in the absence of any incriminating material, the same can be reiterated and, therefore, no addition could have been made to the income already assessed. The ld. A/R has also relied upon the following decisions :- 1. Principal CIT vs. Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 571 (Delhi) SLP filed before the Hon ble Supreme Court was dismissed vide order dated 07.12.2015. 2. Principal CIT vs. Meeta Gutgutia (2017) 395 ITR 526 (Delhi) SLP filed before the Hon ble Supreme Court was dismissed vide order dated 2nd July, 2018. 3. Jai Steel (India) vs. ACIT (2013) 219 Taxman 223 (Raj.) Thus the ld. A/R has submitted that the Hon ble Jurisdictional High Court has held that the requirement of assessment or reassessment under section 153A has to be read i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of KBM Group (assessee) in obtaining entries of bogus unsecured loans, partners capital, special deposits etc. detected in the investigation carried out by the Investigation Wing Kolkata. Such information was received prior to the initiation of proceedings under section 153A and also during the pendency of proceedings under section 153A. Accordingly, during the course of assessment proceedings under section 153A, the Assessing Officer conducted further enquiry about the genuineness of the transaction of unsecured loans, partners capital, special deposits etc. The assessee was duly confronted with the results of all these enquiries and information shared by the Investigation Wing. In these circumstances it cannot be a case of addition made without any incriminating material but the Assessing Officer was having sufficient material disclosing the undisclosed and unexplained cash credit introduced by the assessee in the garb of unsecured loans and partners capital. Once the insurmountable evidences unearthed by the Investigation Wing Kolkata which is the basis of the additions made by the Assessing Officer, the assessee was required to discharge its onus by producing the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search, therefore, the proceedings U/s 153A of the Act in respect of these three assessment years would be in the nature of reassessment and not in the nature of assessment as in the case of the remaining assessment years in the A.Y. 2014-15 and 2015-16 which were got abated by virtue of search and seizure action U/s 132 of the Act on 02/7/2015. At the outset we note that the assessments framed by the Assessing Officer U/s 153A of the Act in the case of the assessee before us is solely on the basis of the information received from the Kolkata Investigation Wing which contains the statement of one Shri Anand Sharma in respect of some assessments and the statement of Shri Ankit Bagri in respect of some other assessments. Thus, undisputedly the Assessing Officer has made the addition while completing the assessment U/s 153A of the Act for all the assessment years on the basis of the information received from the Investigation Wing, Kolkata and not on the basis of any material or information gathered during the course of search and seizure action in the case of the assessee. We find that the assessment framed by the Assessing Officer as well as the orders passed by the ld. CIT(A) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e original/first assessment. In the second category where the assessment or reassessment has already been completed on the date of initiation of search or making of requisition as the case may be, the assessment under section 153A would be in the nature of reassessment. The Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla while analyzing the provisions of section 153A read with section 132 of the Act has observed in para 37 and 38 as under :- 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terated and the abated assessment or reassessment can be made. The Hon ble High Court has also referred the term used in section 153A as assess which is relatable to abated proceedings and the word reassess related to completed assessment proceedings. Therefore, the completed assessments can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of document or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. The Hon ble Delhi High Court has reiterated its view in case of Principal CIT vs. Kurele Paper Mills (supra) in para 1 to 3 as under :- 1. The Revenue has filed the appeal against an order dated 14.11.2014 passed by the Income Tax Appellate Tribunal (ITAT) in 3761/Del/2011 pertaining to the Assessment Year 2002-03. The question was whether the learned CIT (Appeals) had erred in law and on the facts in deleting the addition of ₹ 89 lacs made by the Assessing Officer under Section 68 of the Income Tax Act, 1961 ('ACT&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial relating to any one of the AYs could justify the re-opening of the assessment for all the earlier AYs was considered both in Anil Kumar Bhatia (supra) and Chetan Das Lachman Das (supra). Incidentally, both these decisions were discussed threadbare in the decision of this Court in Kabul Chawla(supra). As far as Anil Kumar Bhatia (supra) was concerned, the Court in paragraph 24 of that decision noted that we are not concerned with a case where no incriminating material was found during the search conducted under Section 132 of the Act. We therefore express no opinion as to whether Section 153A can be invoked even under such situation . That question was, therefore, left open. As far as Chetan Das Lachman Das (supra) is concerned, in para 11 of the decision it was observed: 11. Section 153A (1) (b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found in the course of the search or other post-search material or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income under Section 153A of the Act. The Court then explained as under: 22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: (a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material; and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. 34. The argument of the Revenue that the AO was free to disturb income de hors the incriminating material while making assessment under Section 153A of the Act was specifically rejected by the Court on the ground that it was not borne out from the scheme of the said provision which was in the context of search and/or requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the. aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act is linked with search and requisition under sections 132 and 132A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or requisition. However, instead of the earlier regime of block assessment whereby, it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. ** ** ** 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of an the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as. the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tar Verma (supra) followed the decision in Kabul Chawla (supra). The decision of this Court in Kurele Paper Mills (P.) Ltd. (supra) which was referred to in Kabul Chawla (supra) has been affirmed by the Supreme Court by the dismissal of the Revenue's SLP on 7th December, 2015. The decision in Dayawanti Gupta 64. That brings us to the decision in Smt. Dayawanti Gupta (supra). As rightly pointed out by Mr. Kaushik, learned counsel appearing for the Respondent, that there are several distinguishing features in that case which makes its ratio inapplicable to the facts of the present case. In the first place, the Assessees there were engaged in the business of Pan Masala and Gutkha etc. The answers given to questions posed to the Assessee in the course of search and survey proceedings in that case bring out the points of distinction. In the first place, it was stated that the statement recorded was under Section 132(4) and not under Section 133A. It was a statement by the Assessee himself. In response to question no. 7 whether all the purchases made by the family firms, were entered in the regular books of account, the answer was: We and our family fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affirmed by the ITAT. Even the Revenue has challenged only two of such deletions in ITA No. 306/2017. 68. In para 23 of the decision in Smt. Dayawanti Gupta (supra), it was observed as under: 23. This court is of opinion that the ITAT's findings do not reveal any fundamental error, calling for correction. The inferences drawn in respect of undeclared income were premised on the materials found as well as the statements recorded by the assessees. These additions therefore were not baseless. Given that the assessing authorities in such cases have to draw inferences, because of the nature of the materials - since they could be scanty (as one habitually concealing income or indulging in clandestine operations can hardly be expected to maintain meticulous books or records for long and in all probability be anxious to do away with such evidence at the shortest possibility) the element of guess work is to have some reasonable nexus with the statements recorded and documents seized. In tills case, the differences of opinion between the CIT (A) on the one hand and the AO and ITAT on the other cannot be the sole basis for disagreeing with what is essentially a factua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the AO himself in his remand report accepted them as having been disclosed. This has been noticed by the CIT (A) in para 7.2.1 of his order for AY 2004-05. As regards non-refundable security deposit, the CIT (A) accepted the AO's findings that treating the sum as 'goodwill written off on deferred basis' was not correct, hence the addition of ₹ 5,09,343 was held to be justified and correct. It was duly accounted for under 'liabilities' and transferred to income in a phased manner. This was not done by manipulating the account books of the Assessee as alleged by the Revenue. This would have been evident had the return been picked up for scrutiny under Section 143(3) of the Act. This, therefore, was not material which was subsequently unearthed during the search which was not already available to the AO. Consequently, the additions sought to be made by the AO on account of security deposits were rightly deleted by the CIT (A). Thus the essential corollary of these decisions is that no addition can be made in the proceedings under section 153A in respect of the assessments which were completed prior to the date of search except based on some inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub-section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made. (Emphasis supplied) 24. The said judgment also in no uncertain terms holds that the reassessment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment or reassessment proceedings is liable to be abated. The principles of interpretation of taxing statutes do not permit the Court to interpret the Second Proviso to Section 153A in a manner that where the assessment or reassessment proceedings are complete, and the matter is pending in appeal in the Tribunal, the entire proceedings will abate. 20. There is another aspect to the matter, namely that the abatement of any proceedings has serious causes and effect in as much as the abatement of the proceedings, takes away all the consequences that arise thereafter. In the present case after deducting bogus gifts in the regular assessment proceedings, the proceedings for penalty were drawn under Section 271(1)(c) of the Act. The material found in the search may be a ground for notice and assessment under Section 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty. (Emphasis supplied) The said judgment which essentially deals with second proviso to Section 153A of the Act also supports the conclusion, which we have reached h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation Wing Kolkata, the AO has neither referred to or was having in possession of any material to indicate that the unsecured loans shown in the books of accounts as well as partners capital received by the assessee are nothing but assessee s own unaccounted and undisclosed income routed back in the garb of unsecured loans and partners capital. There is no dispute that these transactions of unsecured loans and partners capital contribution are duly recorded in the books of accounts and disclosed in the return of income which were already completed as the assessments for these four assessment years were not pending on the date of search, therefore, it is manifest from the record that during the course of search and seizure under section 132 of the Act in the case of the assessee no material much less the incriminating material was unearthed or any undisclosed income which was not disclosed in the books of accounts was detected or found. The only incriminating material which was referred by the AO is pages 21 to 26 of Annexure AS-1 in respect of long term capital gain earned by Shri Rajendra Agarwal and his family members. The said long term capital gain was disclosed by Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the books of account of the assessee. In land mark cases like Kale Khan Mohammad Hanif v CIT (1963) 50 ITR 1 (SC), Roshan Di Hatti v CIT (1977) 107 ITR (SC) it has been held that the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee, is on him. Where the nature and source thereof cannot be explained satisfactorily, it is open to the revenue to hold that it is the income of the assessee and no further burden is on the revenue to show that the income is from any particular source. It may also be pointed out that the burden of proof is fluid for the purposes of Section 68. Once assessee has submitted basic documents relating to identity, genuineness of transaction and creditworthiness then AO must do some inquiry to call for more details to invoke Section 68. b. The assessee firm has filed confirmation letters and this office has carried out further enquiry to examine the reality of the transactions. An enquiry was sent to the Investigation Directorate Kolkata and it has been established that these investor or lender Companies are controlled by the entry operators. The statements of various entry operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urned income as per ITR u/s 153A of the Act. ₹ 2,82,83,460/- Additions| Unexplained cash credits u/s |68 of the Act in the form of |unsecured loan and partner s |capital ₹ 67,20,14,999/- Assessed income ₹ 70,02,98,459/- R/o ₹ 70,02,98,459/- The total income of the assessee in the status of Firm for Assessment Year 2010-11 relevant to Previous Year 2009-10 is assessed at ₹ 70,02,98,459/- u/s 153A read with section 143(3) of I.T. Act, 1961. The form ITNS-150 showing calculation of tax and interest chargeable, if any, is attached herewith and forms a part of this Order. A notice of demand u/s 156 of the Act and challan for payment of tax, if payable, is hereby issued. Penalty notice u/s 274 rws 271(1)(c) is issued separately. The entire finding of the AO is based on the information received from the Investigation Wing Kolkata and statement of Shri Anand Sharma. The ld. CIT (A) though has not disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Warehousing (Nhava Sheva) Ltd., (supra), assessee s contention cannot be accepted. Moreover, in any case, the additions are to be adjudicated on merits as per relevant ground of appeal, the issue raised in this ground for present remains for academic discussion only. Accordingly, issue raised in ground no. 12 is dismissed. Therefore, neither in the assessment order nor in the order of the ld. CIT (A) there is any mention or finding that the additions have been made by the AO on the basis of any incriminating material found during the course of search and seizure in the case of the assessee. The AO has solely relied upon the report of the Investigation Wing Kolkata and statement of one Shri Anand Sharma recorded by the Investigation Wing during the survey under section 133A of the Act. Therefore, even if the information/report of the Investigation Wing Kolkata is considered as a relevant evidence, the same cannot be regarded as incriminating material unearthed during the course of search and seizure under section 132 of the IT Act in case of the assessee. The requirement for making the addition under section 153A in the assessment years where the assessment was not pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the decisions/binding precedents as relied upon by the ld AR and also considered by this Tribunal in the case of Kota Dall Mill (supra), we have no reason to take a different view on this issue. Accordingly, by following the earlier decision of this Tribunal in the case of group concern M/s Kota Dall Mill we hold that the addition made by the Assessing Officer while passing the assessment orders for the A.Y. 2010-11 to 2012-13 U/s 153A of the Act are not sustainable and liable to be deleted. Hence, this ground of the assessee s appeal is allowed. 10. Ground No. 2 of the appeal is regarding the addition made by the Assessing Officer without giving the opportunity of cross examination of the witnesses and consequently there is a violation of principles of natural justice. 11. The ld AR of the assessee has submitted that the sole basis of the addition is the statement of Shri Anand Sharma in some of the assessment years and the statement of Shri Ankit Bagri in some other assessment years whereas the assessee was not given the opportunity of cross examination despite repeated requests and demands. The Assessing Officer has violated the principles of natural justic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for the Assessing Officer to make them available at Kota for cross examination of the assessee. He has relied upon the orders of the authorities below. 13. In rebuttal, the ld AR of the assessee has submitted that the assessee agreed to bear the cost of cross examination of the witnesses, however after accepting the objections initially by the ld. CIT(A), the assessee was finally not granted the opportunity of cross examination, therefore, there is a violation of principles of natural justice. 14. We have considered the rival submissions as well as relevant material on record. There is no dispute that the assessee demanded the cross examination of the witnesses, therefore, statements have been relied upon by the Assessing Officer while framing the assessments under consideration. The ld. CIT(A) though while calling the remand report of the Assessing Officer directed to allow the cross examination to the assessee, however, when the Assessing Officer has expressed his inability to produce the witnesses for cross examination, the ld. CIT(A) has finally rejected the objection raised by the Assessing Officer. An identical issue has been considered by us in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cross examination of the witnesses whose statements were relied on by the AO has held in para 6 to 9 as under :- 6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simpl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 264/Delhi/2008 under section 254(2) of the Income-tax Act, 1961 had been filed by the revenue before the said Tribunal. In that also, in paragraph (g) of the Miscellaneous Application, the revenue had submitted as under:- (g) Because, although findings of the Tribunal are factually correct but the decision of the Tribunal is not acceptable because violation of the canons of natural justice in itself is not fatal enough so as to jeopardize the entire proceedings. In the interest of justice, the Tribunal could have set aside the assessment order with the limited purpose of offering assessee an opportunity to crossexamine Shri Manoj Aggarwal before completing the proceedings. [Emphasis supplied] 6. A reading of the said paragraph (g) makes it clear that the revenue had accepted the findings of the Tribunal on facts as also the position that there had been a violation of principles of natural justice. However, the revenue's plea was that the violation of principles of natural justice was not fatal so as to jeopardize the entire proceedings. The said miscellaneous application was also rejected by the Tribunal by its order dated 28-11- 2008. 7. In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the assessee upon whom the initial burden lies, produces bank certificate to establish that the transaction was carried out through account payee cheques thus disclosing the identity of the creditors as also the source of income, the burden shifts on to the department and the department cannot add the cash credits to his income from undisclosed source. 12. The Hon'ble Supreme Court in Nemi Chand Kothari (supra) observed that in order to establish the receipt of a cash credit, the assessee must satisfy three conditions i.e. identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. In the instant case by virtue of the fact that the transaction was completed by cheque payments, the appellant has contended that it had satisfied all the three tests. 13. In Kishanchand Chellaram (supra) wherein the Supreme Court observed that the revenue authorities had not recorded the statement of the Manager of the bank and it was difficult to appreciate as to why it was not done and why the matter was not probed further by the revenue. 14. The Delhi High Court in Ashwani Gupta (supra)held that once there is a violation of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the account payee cheque and was repaid vide account payee cheque the least that the revenue should have done was to grant an opportunity to the assessee to meet the case against him by providing the material sought to be used against assessee in arriving before passing the order of reassessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the reassessment and therefore renders the orders passed by the CIT (A) and the Tribunal vulnerable. In our view the assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents. Despite the request dated 15th February, 1996 seeking an opportunity to cross examine the deponent and furnish the assessee with copies of statement and disclose material, these were denied to him. In this view of the matter we are inclined to allow the appeal on this very issue. Thus the denial of opportunity to cross examine was considered by the Hon ble High Court which goes to the root of the matter and strikes at the very foundation of the assessment and, therefore, renders the assessment order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments and statement of all various persons recorded in this regard and provide an opportunity to the assessee to cross examine such persons. However, the AO didn t provide to the assessee copies of such incriminating documents and statements of various persons recorded and allow the cross-examination of any of these persons. While doing so, the AO stated that in his statements, Bhanwarlal Jain had described that they are indulged in providing accommodation entries of bogus unsecured loans and advances through various Benami concerns (70) operated and managed by them. This admission automatically makes all the transactions done by them as mere paper transactions and in these circumstances, further as per the information name and address of assessee and the Benami Concern through which accommodation entry of unsecured loans was provided is appearing in the list of beneficiaries to whom the said Group has provided. This admission is sufficient to reject the contentions of the assessee. Further, regarding cross examination, the AO stated that the right of cross examination is not an absolute right and it depends upon the circumstances of each case and also on the statute concerned. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he is going to find that estimate; and that in case he proposes to use against the assessee the result of any private inquiries made by him, he must communicate to the assessee the substance of the information so proposed to be utilized to such an extent as to put the assessee in possession of full particulars of the case he is expected to meet and that he should further give him ample opportunity to meet it. It was held in that case that In this case we are of the opinion that the Tribunal violated certain fundamental rules of justice in reaching its conclusions. Firstly, it did not disclose to the assessee what information had been supplied to it by the departmental representative. Next, it did not give any opportunity to the company to rebut the material furnished to it by him, and lastly, it declined to take all the material that the assessee wanted to produce in support of its case. The result is that the assessee had not had a fair hearing. The Hon ble Supreme Court in case of C. Vasantlal Co. Vs. CIT 45 ITR 206 (SC) has held that the ITO is not bound by any technical rules of the law of evidence. It is open to him to collect material to facilitate assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven without calling the manager of the bank in evidence to prove this letter, it could be taken into account as evidence. But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him. 2.11 In light of above proposition in law and especially taking into consideration the decision of the Hon ble Supreme Court in case of C. Vasantlal Co. (supra) relied upon by the Revenue and which actually supports the case of the assessee, in the instant case, the assessment was completed by the AO relying solely on the information received from the investigation wing, statement recorded u/s 132(4) of Shri Bhanwarlal Jain and others, and various incriminating documentary evidence found from the search and seizure carried out by Investigation Wing, Mumbai on the Shri Bhanwarlal Jain group on 03.10.2013. It remains undisputed that the assessee was never provided copies of such incriminating documents and statements of Shri Bhanwarlal Jain and various persons and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal is decided in favour of the assessee. 15. Grounds No. 3 to 5 of the appeal are regarding the merits of the addition made by the Assessing Officer, part of which was sustained by the ld. CIT(A). The assessee has shown unsecured loans from two parties namely M/s Jalsagar Commerce Pvt. Ltd. of ₹ 25,71,25,000/- and M/s Teac Consultants Pvt. Ltd. of Rs, 2,02,50,000/- total amounting to ₹ 27,73,75,000/-. The Assessing Officer made the addition of the entire loan amount of ₹ 27,73,75,000/- by treating the same as accommodation entries received by the assessee and consequently unexplained cash credits U/s 68 of the Act. The assessee challenged the action of the Assessing Officer before the ld. CIT(A). The ld. CIT(A) confirmed the addition in respect of M/s Jalsagar Commerce Pvt. Ltd. but deleted the addition in respect of M/s Teac Consultants Pvt. Ltd. on the ground that the Assessing Officer was not having any material or even statement of the alleged enter operator in respect of M/s Teac Consultants Pvt. Ltd.. 16. Before us, the ld AR of the assessee has submitted that the Assessing Officer has relied upon the statement of Shri Anand Sharma fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he loan creditors have issued share capital during all these years and therefore, there was sufficient funds available with the loan creditor. The Assessing Officer has not pointed out any discrepancy in the books of account or in the bank statement to indicate that the assessee s own unaccounted money has routed back in the garb of unsecured loans. Once the assessee has already repaid the entire loan and supported the claim with documentary evidence then in absence of any contrary material, the addition made by the Assessing Officer merely on the basis of statement and report of Investigation Wing, Kolkata is not sustainable. He has pointed out that the Assessing Officer had already passed the assessment order U/s 143(3) of the Act for the A.Y. 2010-11 to 2012-13 and accepted these transactions as genuine, therefore, in the proceedings U/s 153A, the same cannot be treated as unexplained cash credit in absence of any material or evidence to justify the review of his own decision. The assessee has duly discharged its burden cast U/s 68 of the Act by proving the identity, creditworthiness and genuineness of the transaction. All the loan creditors complied with the notices/summons iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s being share capital and reserve and surplus which are much more than the loan given to the assessee. The Assessing Officer has not found any discrepancy in the accounts of loan creditor and particularly the bank statement of loan creditor. Therefore, treating the transaction as bogus and in the nature of entry provided against the cash is not sustainable in law. The assessee has paid interest after deduction of TDS and the interest expenditure is allowed by the Assessing Officer as genuine claim in the assessments framed U/s 143(3) as well as in the assessments framed U/s 153A of the Act. Therefore, the finding of the Assessing Officer treating the loan as accommodation entry is without any basis, material evidence but the same is based purely on surmises, conjectures and irrelevant material. No positive material was brought on record by the A.O to show that the loan creditor company is a shell company whereas the assessee produced all the relevant documents to establish the identity, creditworthiness and genuineness of the transaction as well as loan creditors. He has also submitted that an identical issue has also been considered by this Tribunal in the case of Kota Dall Mill ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. Even the assessee did not produce the partners who introduced the capital for examination. Thus the assessee has failed to establish the identity, creditworthiness of the creditor and genuineness of the transaction. The addition is not made merely on the basis of report of the Investigation Wing Kolkata but the Assessing Officer conducted enquiry through Investigation Wing and statements of entry operators were also recorded, therefore, overwhelming evidences in the possession of the Assessing Officer indicate bogus nature of transaction of loan and unsecured loan which has been extensively discussed in the assessment order. During the course of assessment proceedings, the assessee was provided a number of opportunities for producing the alleged creditors for verification and failure of the assessee in producing the creditors in the light of the evidences was enough to invoke the provisions of section 68 of the IT Act. The ld. D/R has further submitted that the repayment of loan for credit entries also does not in itself prove the transactions to be genuine. Shell companies are used to provide accommodation entries and even reversal of an entry does not ipso facto prove the ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stained by ld. CIT (A) in respect of unsecured loan from M/s. Jalsagar Commerce Pvt. Ltd. The other additions made by the AO on account of unsecured loans as well as partners capital for the assessment year 2010-11 were deleted by the ld. CIT (A) on the ground that the AO was not having in his possession even the statement of the concerned persons in support of his finding that the alleged loan and partners capital is nothing but bogus accommodation entries. Therefore, the revenue has challenged that part of the order in the cross appeal. The ld. A/R of the assessee has pointed out that for the assessment year 2010-11 there was no loan from the company controlled by Shri Anand Sharma, M/s. Royal Crystal Dealers Pvt. Ltd. but the assessee took the loan from M/s. Jalsagar Commerce Pvt. Ltd. which is not the company owned or controlled by Shri Anand Sharma. The ld. CIT (A) has sustained the addition in respect of loan from M/s. Jalsagar Commerce Pvt. Ltd. in para 5.1 to 5.12 as under :- 5.1 In this respect, I find that Shri Anand Sharma whose statement is reproduced at Page 56 of the Assessment Order has clearly accepted that M/s Jalsagar Commerce Pvt. Ltd. is beneficiary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -adequate creditworthiness of the so-called shareholders / depositors holds fields. During the appellate proceeding before me, though paper books for relevant AY and common Paper Books have been submitted, the same does not adduce any evidence to rebut the adverse factual finding made by the AO in the assessment order as mentioned by me in Para 4.1 above and categorically mentioned in the reports as discussed in para 4.4.7 above. Under these adverse background of appellant employing modusoperendi of resorting accommodation entry provider to build-up share capital / unsecured loans by foul means, what the AO is vehemently making the case for is the law on the issue-section 68 of Income-tax Act has to be applied by evolving perceptions for the law on the issue and not on the basis of routine perceptions on the law on the issue that is losing their relevance. 5.4 With all due respect to authorities cited by the appellant for canvassing his stand point, I am not able to persuade my conscience to agree with appellants arguments. In my considered opinion, under the adverse background of appellant employing modus-operendi of resorting accommodation entry provider to buildITA u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identity of the creditors, but the assessee failed to prove the genuine credit in the matter. All the creditors have been rightly found to be men of meager means and no source of income have been filed to prove that they were having sufficient funds or savings in order to give loans to the assessee. On verification of the bank account of the depositors, it was specifically found that there were no sufficient funds available in their bank account and they were having only small bank balance, which was even not sufficient to meet out their household expenses or day-to-day requirements. Therefore, it is unbelievable to accept the contention of the assessee that said persons were having creditworthiness to advance any loan to the assessee. CIT(A) was justified in confirming the addition u/s. 68 of the IT Act. In the present case, the assessee has not adduced any sufficient evidence before the authorities below to prove the creditworthiness of the creditors and genuineness of the transactions in the matter. Therefore, the assessee has not satisfied the essential ingredients of section 68 of the IT Act. Conclusion: Merely because the loans have been received through banki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dress of the parties. Inthemeanwhile, the Assessing Officer managed to get hold of the bank statements of the shareholders, who had allegedly made deposits by way of cheques and pay orders. The assessment order specifically records that huge cash deposits in lacs were being regularly deposited in the said accounts and then pay orders/cheques were issued to the respondent assessee. 8. On 14th December, 2009, authorized representative appeared and stated that the assessee was unable to produce directors or principal officers of the six shareholder companies pleading that they were not shareholders now and seven years had passed since the transactions took place. The assessment order records and mentions about the transactions recorded in the bank accounts of the shareholder/entry operator companies to show and establish that there was immediate deposit of cash and then issue of cheques. It was further mentioned that these companies were under control of one Mahesh Garg and his group, who were operating various accounts. The Assessing Officer made addition of ₹ 54,00,000/- under Section 68 of the Act and ₹ 1,08,000/- as commission paid for procuring the said shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney. The assessing officer has referred to the bank statement, financial position of the recipient and beneficiary assessee and surrounding circumstances. The primary requirements, which should be satisfied in such cases is, identification of the creditors/shareholder, creditworthiness of creditors/shareholder and genuineness of the transaction. These three requirements have to be tested not superficially but in depth having regard to the human probabilities and normal course of human conduct. 14. Certificate of incorporation, PAN number etc. are relevant for purchase of identification, but have their limitation when there is evidence and material to show that the subscriber was a paper company and not a genuine investor . It is in this context, the Supreme Court in CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC) had observed:- Now we shall proceed to examine the validity of those grounds that appealed to the learned judges. It is true that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s called upon to give explanation he put forward two explanations, one being a gift of ₹ 80,000 and the other being receipt of ₹ 42,000 from business of which he claimed to be the real owner. When both these explanations were rejected, as they have been it was clearly upon to the Income-tax Officer to hold that the income must be concealed income. There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Incometax Officer is entitled to draw the inference that the receipt are of an assessable nature . The conclusion to which the Appellate Tribunal came appears to us to be amply warranted by the facts of the case. There is no ground for interfering with that finding, and these appeals are accordingly dismissed with costs. (emphasis supplied) Section 68 recognizes the aforesaid legal position. The view taken by the Tribunal on the duty cast on the Assessing Officer by section 68 is contrary to the law laid down by the Supreme Court in the judgment cited above. Even if one were to hold, albeit erroneously and without being aware of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the following proposition was elucidated:- In this analysis, a distillation of the precedents yields the following propositions of law in the context of Section 68 of the IT Act . The assessed has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the credit worthiness or financial strength of the creditor/subscriber. (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable Explanation by the assessed. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessed nor should the AO take such repudiation at face value and construe it, without more, against the assessed. (7) The Assessing Officer is duty-bound t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him. The case before us does not fall under this category and it would be a travesty of truth and justice to express a view to the contrary. 18. Lovely Exports Pvt. Ltd.(supra) was also considered and distinguished in N.R. Portfolio Pvt. Ltd. (supra) and it was held that the entire evidence available on record has to be considered, after relying upon CIT Vs. Nipun Builders and Developers, [2013] 350 ITR 407 (Delhi), wherein it has been held that a reasonable approach has to be adopted and whether initial onus stands discharged would depend upon facts and circumstances of each case. In case of private limited companies, generally persons known to directors or shareholders, directly or indirectly, buy or subscribe to shares. Upon receipt of money, the share subscribers do not lose touch and become incommunicado. Call money, dividends, warrants, etc. have to be sent and the relationship remains a continuing one. Therefore, an assessee cannot simply furnish some details and remain quiet when summons issued to shareholders re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or ascertaining active nature of business activity. PAN is a number which is allotted and helps the Revenue keep track of the transactions. PAN number is relevant but cannot be blindly and without considering surrounding circumstances treated as sufficient to discharge the onus, even when payment is through bank account. 19. On the question of credit worthiness and genuineness, it was highlighted that the money no doubt was received through banking channels, but did not reflect actual genuine business activity. The share subscribers did not have their own profit making apparatus and were not involved in business activity. They merely rotated money, which was coming through the bank accounts, which means deposits by way of cash and issue of cheques. The bank accounts, therefore, did not reflect their creditworthiness or even genuineness of the transaction. The beneficiaries, including the respondent-assessee, did not give any share-dividend or interest to the said entry operators/subscribers. The profit motive normal in case of investment was entirely absent. In the present case, no profit or dividend was declared on the shares. Any person, who would invest money or g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of remit to the tribunal to decide the whole issue afresh. As reported at 2015-TIOL-314-SC-IT, in the above case, the Hon ble Supreme Court observed to effect that merely because the assessee has been able to show that the shareholder companies were duly incorporated and their identity genuineness stands established, there were deposits of cash in the bank accounts prior to issue of cheque or pay orders, the same would raise suspicion and addition can be made on such account 5.7 It may be mentioned that as reported at 2016-TIOL-207-SC-IT, the Hon ble Supreme Court dismissed SLP by Rick Lunsford Trade Investment Ltd in case of Rick Lunsford Trade Investment Ltd Vs CIT upholding that it is open to the Revenue Department to make addition on account of alleged share capital u/s 68, where the assessee company has failed to show genuineness of its shareholders. 5.8 Hon ble Delhi High Court in case of Commissioner of Income Tax-II V/s MAF Academy Pvt. Ltd. involving exactly similar facts in ITA 341/2012 dated 28th November, 2013 observed in Para 33 to 36 as under: 33. The Assessee company is a private limited company and had not come out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that none of the addresses could be found . The authorised representative of the Assessee refused to produce the parties who had invested in the share capital on the ground that they were not in a position to produce them. The fact that the Assessee failed to produce the persons who had invested towards share capital shows that these were people who were completely unrelated to the Assessee and as such, all the entries were merely accommodation entries . Otherwise, in a private limited company, it would not have been difficult on the part of the Assessee to produce persons who were investing substantial amount of money in the company towards share capital. 37. The Assessing Officer in his order has as a sample referred to the entries in the account of some of the share holders noticing that there are cash deposits of the exact amount for which cheque is subsequently issued to the Assessee. Perusal of the bank statements clearly establishes that these parties were depositing cash and immediately either on the same day or in the near future withdrawing the same through a cheque which was issued in favour of the Assessee. Then Hon ble Delhi High Court held in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to produce the functional directors of the above companies for verification. As mentioned in the assessment order, after certain adjournments, a letter was finally filed from the appellant mentioning that it is no in touch of the above share holders and their present whereabouts are not known to it. The appellant, however, relying upon the decision of Hon'ble Delhi High Court in the case of CIT vs. Sophia Finance Ltd. In which the powers of the Assessing Officer was not precluded from making enquiries in share application money, submitted that no addition can be made. 2.1.1 The AO however was not convinced with the submission of the appellant . He observed that that it was only in the course of enquiry that he tried to examine the above share applicants. Since the summons issued to such persons remained unserved, it became the duty of the appellant either to produce them for verification or to state their correct addresses . It appears to be highly improper that in a Private Ltd. Company, the assessee is not in a position to state the exact whereabouts or fail to produce the persons who collectively hold more than 25% of its total share holding. He also observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of M/s. Rubicon Associates Pvt. Ltd., Shri Mahesh Garg, Director of M/s. S.J. Hosiery Pvt. Ltd. Etc. have categorically stated before the Investigation wing, in their statement taken on oath, that they used to take the amount in cash and give entries to different concerns as gift, loan or share application money. According to AO, to enquire into this aspect also, the appellant was asked to produce the functional directors of such share holders. 2.1.3. In view of these facts and circumstances, the Assessing Officer concluded that the credit in the name of these shareholders are not genuine and represents unexplained cash credits. Accordingly he made addition of ₹ 1.50 lakhs to the returned income. Then Hon ble Income Tax Appellate Tribunal Delhi Bench: 'B held in Para 6 as under: 6. As regards ground No. 2, we find that the assessee has stated to have received fresh share capital to the tune of ₹ 15 lacs and share premium of ₹ 1,00,35,000/- i.e. a share of face value of ₹ 10/- each issued at a premium of ₹ 90/- totaling to ₹ 100/-. When the AO asked the appellant to furnish the details the assessee produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch circumstances the court cannot put blinker on the eye and look only at the papers presented before it. There is something more than that meets the eye. As rightly contended by Ld. DR in such situation the observation of Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More 82 ITR 540 and in the case of Sumati Dayal Vs. CIT 214 ITR 801 are apt for application. We therefore do not find any reason to hold that the share capital receipts by assessee were from persons whose identity is established and the amount is genuinely received towards share capital. 5.10 In a recent decision in case of Principal Commissioner Of Income vs Bikram Singh in ITA 55/2017, the Hon ble High Court of Delhi held on 25 August, 2017 as under:- 25. The law applicable to transactions of this nature is well settled by this Court in Divine Leasing (supra). Both parties have referred to and relied upon this judgment. This Court, after analyzing the entire law on the subject in the context of Section 68 of the Act, held as under: ...16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of Section 68 of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the constant use of the deception of loan entries to bring unaccounted money into banking channels. This device of loan entries continues to plague the legitimate economy of our country. As seen from the facts narrated above, the transactions herein clearly do not inspire confidence as being genuine and are shrouded in mystery, as to why the so-called creditors would lend such huge unsecured, interest free loans - that too without any agreement. In the absence of the same, the creditors fail the test of creditworthiness and the transactions fail the test of genuineness. 5.11 In my considered view, the technical objections raised by the Appellant in respect of loan from M/s Jalsagar Commerce Pvt. Ltd. are of no avail to the appellant due to following undisputed facts:- i. It is undisputed fact that the Income Tax Department has made tremendous investigations in such shell companies of Kolkata, Mumbai and Delhi providing accommodation entry and statements made by several accommodation entry providers have become virtually in public domain. It is no argument that the AO did not provide such statement before the assessement or in any of the notices. These facts wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed. Thus the addition was confirmed based on the report of the DDIT (Inv.) Kolkata. We find that the report of the DDIT (Inv.) Kolkata is also based on the statements of various persons recorded during their investigation and the statement of Shri Anand Sharma was also sent along with the report of the AO. The ld. CIT (A) has confirmed the addition because of the reason that the statement of Shri Anand Sharma was very much in the possession of the AO who has admitted in his statement that M/s. Jalsagar Commerce Pvt. Ltd. was engaged in the activity of providing accommodation entry. However, we find that M/s. Jalsagar Commerce Pvt. Ltd is not managed or controlled by Shri Anand Sharma, rather the company M/s. Royal Crystal Dealers Pvt. Ltd. was stated to have been owned by Shri Anand Sharma and in his statement dated 6th February, 2014 Shri Anand Sharma has stated to have been providing entries from M/s. Royal Crystal Dealers Pvt. Ltd. to M/s. Jalsagar Commerce Pvt. Ltd. Therefore, there is no allegation or any admission in the statement of Shri Anand Sharma that he has provided bogus loan entry to the assessee or any group concerns of the assessee. Since the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of Shri Anand Sharma and the report of the Investigation Wing Kolkata, the AO has not brought on record any other material to controvert or disprove the documentary evidence produced by the assessee. It is pertinent to note that the loan creditor was assessed to tax and the AO completed the assessment under section 143 (3) for various assessment years which are relevant for the assessment year under consideration. The AO in case of loan creditor has not disturbed the transactions of loan given by this company to the assessee. From the financial statements of the loan creditor it is apparent that the loan creditor was having sufficient funds to advance the loan amount to the assessee and once the said financial statements were not disturbed, then the creditworthiness of the loan creditor cannot be doubted when it was accepted in the assessment order passed under section 143(3) of the IT Act. We further note that the AO insisted the assessee to produce the directors of the loan provider company. The assessee produced the affidavit, and the notices issued by the AO under section 131 and 133(6) of the Act were duly complied with by the creditor. The statement of the Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st credited in loan a/c during the year Interest credited in interest Paid/payable a/c Loan repayment /TDS/ transfer in partner capital during the year Closing balance Jalsagar Commerce Private Ltd 10-11 41,298 34,70,40,000 13,96,176 12,56,558 34,21,15,916 51,05,000 Jalsagar Commerce Private Ltd 11-12 51,05,000 77,18,70,000 16,71,599 15,04,439 77,18,37,160 53,05,000 Jalsagar Commerce Private Ltd 12-13 53,05,000 78,95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have taken place prior to the date of search and duly recorded in the books of accounts and also subjected to assessment under section 143(3) for some of the assessment years. Therefore, even as per the evidence produced by the assessee, the alleged suspicion of the AO was got dispelled and in the absence of any contrary evidence except the statement which is not even a conclusive proof of transaction of bogus entry to the assessee, the additions made by the AO are not sustainable. Thus, the Tribunal has considered the fact that the assessee produced all the relevant documentary evidence in support of the claim to establish the identity, creditworthiness and genuineness of unsecured loan. We further note that in support of its claim, the assessee produced following documents: S. No. Particulars of Documents 1 Copy of Ack. of ITR of AY 2010-11 2 Copy of balance sheet and annexure of loans advance of AY 2010-11 3 Copy of relevant page of bank statement showing the entry o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d unsecured loans claimed to have obtained by the assessee from M/s Teac Consultant Pvt. Ltd. 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of unsecured loans by observing that the alleged lender M/s Teac Consultant Pvt. Ltd is not shell company without considering the financial statements of these companies. 3. Whether on the facts and circumstances of the case and in law, the CTI(A) was justified in deleting the addition of unsecured loans claimed to have obtained from M/s Teac Consultant Pvt. Ltd merely for the reason that evidences in the form of statement on oath of the relevant entry operators were not available on record. 4. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of unsecured loans claimed to have obtained from M/s Teac Consultant Pvt. Ltd despite the fact that the directors or Principal Officers of these companies were never produced before the Assessing Officer for examination despite number of opportunities provided by the AO for producing and also ignoring the fact that the assessee neither expressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and decided in favour of the assessee and against the revenue by this Tribunal in the case of Kota Dall Mill (supra). He has supported the order of the ld. CIT(A). 24. We have considered the rival submissions as well as relevant material on record. At the outset, we note that an identical issue was considered by us in the case of Kota Dall Mill (supra) in para 15 as under: 15. We have considered the rival submissions as well as the relevant material on record. The AO has made the addition on account of unsecured loans taken from all the parties whereas the ld. CIT (A) has deleted the addition in respect of the loans taken from M/s. Birla Arts Pvt. Ltd., M/s. Teac Consultant Pvt. Ltd and M/s. Sangam Distributors Pvt. Ltd. and confirmed the addition made on account of loan taken from M/s. Jalsagar Commerce Pvt. Ltd. The issue of addition made in respect of the unsecured loans taken from M/s. Jalsagar Commerce Pvt. Ltd. was considered and decided by us in the assessee s appeal. The revenue is aggrieved by the order of the ld. CIT (A) as the unsecured loans taken from these three companies were deleted on the ground that the AO was not having any material to substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons with other substantiating documents along with assessment orders in case of lender companies, which are available at page no.443 to 644 of PB. From these documentary evidences placed on record, identity, creditworthiness and genuineness of transactions is established. There is no gain saying that the onus squarely lies on the appellant to prove the identity, creditworthiness and genuineness of the cash credits. In the case of Addl. CIT v. Bahri Bros. (P) Ltd. [1985] 154 ITR 244 (Pat), the Hon'ble Patna High Court has held if the loans are given by an account paying cheque, it amounts to identification of the parties and discharge of burden by the borrower. In view of the above, it is clear that Appellant discharged its burden u/s 68 of the Act. Even otherwise, there is no adverse finding of any investigation conducted by the department in relation to these companies. Therefore, in the absence of any independent inquiry and any adverse findings to rebut the evidences filed by the Appellant, I find that the addition in respect of unsecured loans from 03 companies namely, M/s Birla Arts Private Limited, M/s Teac Consultants Private Limited and M/s Sangam Distributors Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein he made disclosure in respect of Long Term Capital Gain in his individual hands. I have gone through the statement of Shri Rajendra Agarwal and his disclosure made in his statement, Notably, the disclosure made was in his personal capacity only and with respect to LTCG only and not in respect of any other transactions be it be receipt of unsecured loans. Further, Rajendra Agarwal is not a partner in the Appellant Firm. Therefore, I find that in the absence of any nexus of the Statement of Shri Rajendra Agarwal with the appellant firm or its total income, this basis of addition adopted by the AO is farfetched cannot be concurred. 6.7 It is further seen that AO has not brought any specific defect / discrepancies in the direct evidence brought on record by the Appellant. The AO has observed that on the date of debit in the account statement of creditor, there is corresponding credit entry of equal amount, however, this observation of the AO is itself not sufficient to prove beyond doubt that Appellant routed its unaccounted income by these companies rather it proves the source in the hands of the Appellant. It is usual business practice, while making loans to party, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich have been also been followed recently by Hon ble Delhi Tribunal in case of ITO vs. Softline Creations (P) Ltd. in ITA No. 744/Del/2012 vide its order dated 10.02.2016. Further, Hon ble Apex Court as well as High Court has held that once the identity of creditor is established, the department is free to reopen the assessment of creditor and no addition can be made in the hand of borrower as rightly held in case of CIT v/s Lovely Exports Pvt. Ltd. [2008] 216 CTR 195 (SC), Commissioner of Income-tax v. Rock Fort Metal Minerals Ltd. [2011] 198 TAXMAN 497 (Delhi), Divine Leasing Finance Limited [2008] 299 ITR 268 (Delhi) CIT v. Orissa Corporation (P.) Ltd. [1986) 159 ITR 78/25 Taxman 80F (SC) and others on this question of law. 6.11 Further, power to call for information/production of evidences or enforcing attendance under the law is given to the income tax authorities only and therefore, in view of the judgment CIT v/s Victor Electrodes Ltd. [2010] 329 ITR 271, the Appellant cannot be fastened upon the burden to produce the lenders before the assessing authorities though in the instance case, appellant has cooperated in assessment by showing his willingness to produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt of unsecured loans were found during search in case of the Appellant. Mere suspicion howsoever strong cannot take place of evidence. Thus, in the absence of any incriminating material found during search to rebut the evidences filed by the Appellant, the impugned addition made in respect of unsecured loan u/s 68 of the Act is legally untenable and unjustified. 6.14 In view of the above discussion of relevant facts and following the several ratios on the subject from Hon ble Apex Court, High Courts including jurisdictional High Courts, Tribunals including jurisdictional Tribunals, the impugned addition in respect of unsecured loans from 03 companies namely, M/s Birla Arts Private Limited, M/s Teac Consultants Private Limited and M/s Sangam Distributors Private Limited totaling to ₹ 12,36,40,000/- is not sustainable and hence the same stands deleted. Thus the ld. CIT (A) was of the view that so far as the loans taken from M/s. Jalsagar Commerce Pvt. Ltd., the AO was having the statement of Shri Anand Sharma to the effect that the said company was involved in providing accommodation entry and controlled by the entry operator whereas in respect of these t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 20,00,000 2014-2015 2013-2014 67,57,37,000 M/s Teac Consultants Pvt. Ltd Assessment Yea r Financial Year Share capital raised 1996-1997 1995-1996 26,00,000 2001-2002 2000-2001 73,98,000 2003-2004 2002-2003 1,00,00,000 2005-2006 2004-2005 4,85,50,000 2007-2008 2005-2006 3,35,00,000 2010-2011 2009-2010 2,76,00,000 2011-2012 2010-2011 94,00,000 M/s Sangam Distributors Pvt. Ltd. Assessment Year Financial Year Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of the ld. CIT(A) in the case under consideration is identical as in the case of Kota Dall Mill (supra), therefore, following the earlier order of this Tribunal, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Hence, the appeal of the revenue is dismissed. 25. In the appeal for the A.Y. 2011-12, the revenue has raised following grounds of appeal: 1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of ₹ 42,15,21,050/- made by the AO u/s 68 of the IT Act on account of unexplained unsecured loans claimed to have obtained by the assessee from M/s Birla Arts Pvt. Ltd. and Teac Consultant Pvt. Ltd. 2. Whether on the facts and circumstances of the case and in law, the CTI(A) was justified in deleting the addition of unsecured loans by observing that the alleged lender M/s Birla Arts Pvt. Ltd. and M/s Teac Consultant Pvt. Ltd are not shell company without considering the financial statements of these companies. 3. Whether on the facts and circumstances of the case and in law, the CTI(A) was justified in deleting the addition of unsecure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. The ld. CIT-DR has submitted that the company was found to be a shell company and the assessee was asked by the Assessing Officer to produce the Principal Officer/ Director of the company for examination but the assessee failed to discharge its onus. He has reiterated its contention as raised in the case of M/s Teac consultants Pvt. Ltd. 28. On the other hand, the ld AR of the assessee has reiterated its contention as in the case of M/s Teac Consultants Pvt. Ltd. and submitted that the assessee has produced all the relevant documentary evidence in support of the claim which has not been controverted by the Assessing Officer. He has supported the order of the ld. CIT(A). 29. We have considered the rival submissions as well as the relevant material on record. The facts and circumstances relevant to the issue of loan taken from M/s Birla Arms Pvt. Ltd., which was treated as bogus accommodation entry by the Assessing Officer but was deleted by the ld. CIT(A) are identical as in the case of M/s Teac Consultants Pvt. Ltd. for the A.Y. 2010-11. We have already reproduced our finding in the case of Kota Dall Mill (supra) wherein M/s Birla Arts Pvt. Ltd. was one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee s appeal for the A.Y. 2010-11. In view of our finding on this issue for the A.Y. 2010-11, ground No. 2 of the C.O. of the assessee stands allowed. 33. In the appeal for the A.Y. 2012-13, the revenue has raised following grounds of appeal: 1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of ₹ 24,66,00,000/- made by the AO u/s 68 of the IT Act on account of unexplained unsecured loans claimed to have obtained by the assessee from M/s Birla Arts Pvt. Ltd. and Teac Consultant Pvt. Ltd. 2. Whether on the facts and circumstances of the case and in law, the CTI(A) was justified in deleting the addition of unsecured loans by observing that the alleged lender M/s Birla Arts Pvt. Ltd. and M/s Teac Consultant Pvt. Ltd are not shell company without considering the financial statements of these companies. 3. Whether on the facts and circumstances of the case and in law, the CTI(A) was justified in deleting the addition of unsecured loans claimed to have obtained from M/s Birla Arts Pvt. Ltd and M/s Teac Consultant Pvt. Ltd merely for the reason that evidences in the for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken from M/s Birla Arts Pvt. Ltd. and M/s Teac Consultants Pvt. Ltd., was considered by us for the A.Y. 2010-11 as well as A.Y. 2011-12 and in view of our finding on this issue, we do not find any merit or substance in the appeal of the revenue. Hence, the grounds raised by the revenue in the appeal stand dismissed. 36. In the cross objection of the assessee for the A.Y. 2012-13, following grounds have been taken by the assessee: 1. On the facts and in the circumstances of the case and in law the order passed U/s 153A read with Section 143(3) of the Income Tax Act, 1961 is bad in law, void-ab-initio, and deserves to be annulled as the assessment for the year under consideration was not abated as on the date of search and CIT(A) erred in holding that the contention of the assessee cannot be accepted in view of SLP s admitted in various cases. The ld. CIT(A) further erred in holding that the additions are to be adjudicated on merits as per relevant ground of appeal hence the issue remains for academic discussion only. 2. On the facts and in the circumstances of the case and in law the ld. CIT(A) erred in not declaring the assessment order as bad in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and facts of the case. The addition confirmed by ld.CIT (A) deserves to be deleted. 4. On the facts and in the circumstances of the case and in law the Id. CIT (A) erred in confirming the additions made u/s 68 of the Income Tax Act, 1961 by : - a) solely relying on the statements of some alleged accommodation entry providers recorded by some other authorities in some other cases/actions and the opportunity to cross examination was also not provided to assessee. b) giving a contradictory finding that a doubt is raised on the identity and genuineness of the company whose name is mentioned in the statement of accommodation entry providers as well as reports of DDIT (Inv.)-Kolkatta. c) holding that the assessee has not adduced any evidence to rebut the adverse factual finding made by the AO in the assessment order though detailed paper book for relevant AY and common paper books have been submitted, and d) holding that incriminating material had been found during the course of search of accommodation entry provider. Further incriminating material had been gathered by issuing commission to DDIT (Inv.) Kolkatta. 5. On the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer has made addition of unsecured loan taken from M/s Birla Art Pvt. Ltd. as well as various special deposits received from five parties by treating the same as bogus accommodation entries based on the report of the Investigation Wing, Kolkata as well as the statement of one Shri Ankit Bagri. The ld. CIT(A) has sustained the addition in respect of M/s Caplin Dealcom Pvt. Ltd. but deleted the rest of the additions on this ground that the Assessing Officer was not having any material or the statement of alleged entry providers except Shri Ankit Bagri. The ld AR of the assessee has submitted that the ld. CIT(A) has confirmed the addition on the basis of statement of Shri Ankit Bagri recorded U/s 131 of the Act on 03/7/2014. The Assessing Officer has made the entire addition based on the said statement. The ld AR has referred to question No. 6 and 8 of the statement of Shri Ankit Bagri wherein he stated that after the death of his partner on 07/4/2012, he has not done any transaction of accommodation entry. The ld AR has then submitted that the transaction in question as receipt from M/s Caplin Dealcom Pvt. Ltd. is subsequent to the said date i.e. 07/4/2012 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT-DR has submitted that once the Investigation Wing, Kolkata has detected that these are shall companies and engaged in providing accommodation entries then it was the duty of the assessee to produce the Principal Officers/Directors of these companies. Further Shri Ankit Bagri has admitted in his statement as entry provider and controlling these companies, therefore, the assessee has failed to discharge its onus when the Assessing Officer asked to produce the Principal Officers/Directors of these companies. 43. We have considered the rival submissions as well as the relevant material on record. We note that the Assessing Officer has relied upon the statement of Shri Ankit Bagri for making the addition in respect of the special advance received from M/s Caplin Dealcom Pvt. Ltd. as well as other parties. The relevant part of the statement as reproduced by the Assessing Officer in the assessment order in questions No. 6,8 and 13 are as under: Q.6. Please explain the nature of business done by you. Ans. I along with Late Sumit Kejriwal, who was an accomplished accommodation entry operator of Kolkata, was engaged in the business of providing accommodation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : In the case of Mahabir Danwar Jewellers Pvt. Ltd. Sl.No. Name of the company Date of allotment F.Y. A.Y. Total No. of shares Amount including premium (Rs.) 1. Rajat Polypack Pvt. Ltd. 31.03.2010 2009-10 2010-11 4000 20,00,000/- 2. Caplin Dealcom Pvt. Ltd. 31.03.2010 2009-10 2010-11 4000 20,00,000/- 3. Pabla Leasing Finance Pvt. Ltd. 31.03.2010 2009-10 2010-11 6000 30,00,000/- 4. Westport Export Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,00,000/- Total 1,85,00,000/- Please explain the same. Ans. Over the years, accommodation entries in the form of share capital have been provided to Mahabir Group of Companies in lieu of commission to the tune of ₹ 0.10 per hundred. In reply to question No. 6, Shri Ankit Bagri has explained the nature of business and submitted that he alongwith Shri Sumit Kejriwal were providing accommodation entries against the cash. However, Shri Sumit Kejriwal died on 07/4/2012. In reply to question No. 8, he has given the specific answer that he does not control any company or proprietorship concern. Before death of Shri Sumit Kejriwal, they were controlling around 10 to 12 companies, one of which was M/s Caplin Dealcom Pvt. Ltd.. This is the only incriminating statement of Shri Ankit Bagri. In response to question No. 13, it is clear that all the details of the alleged accommodation entries were in respect of A.Y. 2007-08 to 2010-11 and for a particular group M/s Mahabir Group of companies. In the entire statement, there is no allegation of any accommodation entry provided to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 Copy of ROC master data. 637-638 12 NBFC Registration Certificate 639 13 Copy of PAN card. 640 14 Copy of Certificate of Incorporation 641 15 Copy of summon no. 4560 dated 16.10.2017 and reminder notice no. 1583 dated 31.10.2017 issued by DDIT (Investigation), Unit-1(3), Kolkata u/s 131 of Income Tax Act, 1961 642-644 16 Copy of reply submitted by company in response to notice/ summon issued to it Along with dispatched proof 645-647 Thus, the assessee has produced all the relevant supporting documentary evidence to establish the identity, creditworthiness of the creditors as well as the genuineness of the transaction which is through the banking channel. The Assessing Officer has not brought on record an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted fact that these operators had been running the affair of the said company. v. The statement of Shri Ankit Bagri and Shri Shankar Bank in which name of M/s Caplin Dealcomm Private Limited and M/s VSG Leasing and Finance Co. Ltd. respectively appeared, cannot be completely ignored solely on the legal grounds raised by the Appellant. 3.13 In view of above discussion, it is clear that the incriminating material had been found during the course of search of accommodation entry provider. Further incriminating material had been gathered by issuing commission to DDIT (Inv.) Kolkata, during the assessment proceedings and all such material have been shared with the appellant at least during the remand report proceeding. In view of nation-wide known scam by the accommodation entry providers of Kolkata and elsewhere burst by the Income Tax Department, there was no need to provide opportunity for cross-examination of same accommodation entry providers. Anyway, in the rejoinder submission to remand report the appellant is absolutely silent on cross-examination and by such conduct he has forgone his right to cross-examine. Therefore, the principles of natural justice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Confirmation of loan given to assessee from books of accounts of party. 1009-1011 Confirmation of loan given to assessee from books of accounts of assessee. 1012-1013 Copy of affidavit of Kavita Jain director of company. 1014-1017 Order passed by Calcutta High Court regarding amalgamation of other companies in this company 1018-1039 Copy of balance sheet of company of 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 and 31.03.2016. 1040-1046 Copy of assessment order passed in the case of above named company for AY 2006-07, 200809, 2009-10, 2010-11 and 2014-15. 1047-1070 Copy of ROC master data. 1071-1072 Copy of NBFC Certificate. 1073 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Caplin Dealcomm Pvt. Ltd 2010-11 1,20,000 1063-1064 M/s Caplin Dealcomm Pvt. Ltd 2014-15 2,85,945 1066-1068 Once the party is regularly assessed to tax and orders under section 143(3) were passed by the AO, then the transactions cannot be treated as bogus once. It is manifest from the financial statements of these companies that the share capital and reserve of M/s. Caplin Dealcomm Pvt. Ltd. and M/s. VSG Leasing Finance Co. Pvt. Ltd. as on 31st March, 2016 were ₹ 136,63,90,504/- and ₹ 97,11,26,758/- whereas the amounts given to the assessee by these two companies was ₹ 16.10 crores and ₹ 10.88 crores respectively. Thus the creditworthiness of these companies as evident from their financial statements was undisputedly sufficient to give the amounts in question to the assessee. Accordingly, having regard to the documentary evidence filed by the assessee and our findings on this issue for the assessment year 2010-11, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing grounds of appeal: 1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of ₹ 73,00,00,000/- made by the AO u/s 68 of the IT Act on account of unexplained unsecured loans claimed to have obtained by the assessee from M/s Birla Arts Pvt. Ltd, M/s Magnate Capital Market Ltd, M/s Competent Securities Pvt. Ltd., M/s Blossom Dealers Pvt. Ltd. and M/s Bajnath Commosales Pvt. Ltd. 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of unsecured loans by observing that the alleged lender M/s Birla Arts Pvt. Ltd, M/s Magnate Capital Market Ltd, M/s Competent Securities Pvt. Ltd, M/s Blossom Dealers Pvt. Ltd and M/s Bajnath Commosales Pvt. Ltd are not shell companies without considering the financial statements of these companies. 3. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of unsecured loans claimed to have obtained from M/s Birla Arts Pvt. Ltd, M/s Magnate Capital Market Ltd, M/s Competent Securities Pvt. Ltd, M/s Blossom Dealers Pvt. Ltd and M/s Bajn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case and in law, the CIT(A) was justified in considering the amalgamating companies as genuine and the resultant amalgamated company as Shell company which is a theoretical impossibility as the constituents can never be greater than the whole. 9. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance of ₹ 1,66,360/- made by the AO on account of depreciation on guest house building. 10. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance of ₹ 16,787/- made by the AO on account of excess claim of depreciation on UPS. 11. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance of ₹ 3,72,253/- made by the AO out of foreign travel expenses. 12. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance of ₹ 24,720/- made by the AO on account of professional service charges of prior years. The Appellant crave, leave or reserving the right to amend modify, alter add or for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd., was subsequently merged with M/s Caplin Dealcom Pvt. Ltd. as per approval of the Hon ble Kolkata High Court. He has supported the order of the ld. CIT(A). He has referred to the various documents produced by the assessee in support of the claim and to show that these companies are genuine NBFCs and were having sufficient funds to give this deposit to the assessee. 49. We have considered the rival submissions as well as relevant material on record. Out of these six parties for which the Assessing Officer made the addition, the ld. CIT(A) deleted the addition in respect of five parties which are as under: i) M/s Birla Arts Pvt. Ltd. ii) M/s Blossam Dealers Pvt. Ltd. iii) M/s Competent Securities Pvt. Ltd. iv) M/s Magnet Capital Market Ltd. v) M/s Baijnath Commosales Pvt. Ltd. As regards the transactions with M/s Birla Arts Pvt. Ltd., M/s Magnet Capital Market Ltd. and M/s Competent Securities Pvt. Ltd. we note that the identical transactions were considered by this Tribunal in case of Kota Dall Mill (supra) which has also been considered by us in the earlier paras of this order while deciding the issue r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years 2011-12 and 14-15 stand disposed off on the same terms and finding of the assessment year 2011-12 is mutatis-mutandis applicable for these assessment years. . .. 30. In the Revenue s cross appeal the issue on account of unsecured loans from two partners, namely, M/s. Competent Securities and M/s. Intellectual Builders for the assessment years 2015-16 and 16-17 were deleted by the ld. CIT (A) on the ground that the AO has not brought any material or documentary evidence to establish that the transactions are bogus accommodation entries as there was no statement of any person of alleged entry operator having control over these companies or managing these companies. 31. An identical issue was involved in all the assessment years of the revenue wherein the ld. CIT (A) has deleted the additions for want of any documentary evidence or any other material in support of the finding of the AO. Therefore, in view of our finding on this issue in assessment year 2010-11, the finding of the ld. CIT (A) is upheld. We further note that the assessee produced the supporting documents in respect of each of the parties as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 Copy of Pan Card. 758/Vol -III 14 Copy of summon no. 1446 dated 13.10.2017 and reminder notice no. 1582 dated 31.10.2017 issued by DDIT (Investigation), Unit-1(3), Kolkata u/s 131 of Income Tax Act, 1961 759-762/Vol - III 15 Copy of reply submitted by company in response to notice/summon issued to it Along with dispatched proof 763-765/Vol - III M/s Baijnath Commosales Pvt Ltd 1 Copy of Ack. of ITR of AY 2013-14 766/Vol -III 2 Copy of Balance sheet of AY 2013-14 along with Annexure 767-774/Vol - III 3 Copy of relevant page of bank statement showing the entry of payment made to assessee. 775/Vol -III 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2013-14 along with Annexure. 828-833/Vol - III 3 Copy of relevant page of bank statement showing the entry of payment made to assessee. 834-849/Vol - III 4 Confirmation of loan given to assessee from books of accounts of party. 850-851/Vol - III 5 Confirmation of loan given to assessee from books of accounts of assessee. 852-854/Vol - III 6 Copy of affidavit of Neelam Gautam director of company. 855-858/Vol - III 7 Order passed by Calcutta High Court regarding amalgamation of other companies with this company 859-885/Vol - III 8 Copy of balance sheet of company of 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of company of 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013, 31.03.2014, 31.03.2015 and 31.03.2016. 527-533/Vol - II 10 Copy of assessment order passed in the case of above named company for AY 2014-15. 534-538/Vol - II 11 Copy of ROC master data. 539-540/Vol - II 12 Copy of PAN card. 541/Vol -II 13 Certificate of Incorporation 542/Vol -II 14 Copy of NBFC Certificate 543/Vol -II 15 Copy of summon no. 1443 dated 13.10.2017 and reminder notice no. 1585 dated 31.10.2017 issued by DDIT (Investigation), Unit-1(3), Kolkata u/s 131 of Income Tax Act, 1961 544-547/Vol - II 16 Copy of reply submitted by company in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Copy of summon no. 1437 dated 13.10.2017 and reminder notice no. 1588 dated 31.10.2017 issued by DDIT (Investigation), Unit-1(3), Kolkata u/s 131 of Income Tax Act, 1961 705-708/Vol - II 15 Copy of reply submitted by company in response to notice/summon issued to it Along with dispatched proof 709-711/Vol - II a) Assessment u/s 143(3) Name of Company Assessment year Income Assessed Assessment Order u/s 143(3) at A.Y 2013-14 PB pg M/s Blossom Dealers Pvt. Ltd. 2013-14 5,30,978 742-745/Vol-III M/s Blossom Dealers Pvt. Ltd. 2014-15 14,958 749-752/Vol-III M/s Baijnath Commosales Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is also shown as amalgamated. As it is clear from the record that the scheme of amalgamation was approved by the Hon'ble High Court of Kolkata. The assessee has established the availability of funds with these companies which are NBFCs raised share capital during the various financial/assessment years, therefore, once the companies were having sufficient fund to give special deposits under the memorandum of understanding whereby the assessee has undertaken to issue the equity shares on preferential basis against these deposits after the equity shares were delisted from the stock exchange. The process of delisting was not in dispute as it was acknowledged by the Stock Exchange, Kolkata as well as by the SEBI which is an independent record and there is no scope of any manipulation by the assessee. Therefore, having regard to the documentary evidence produced by the assessee and the statement which is relied upon by the Assessing Officer is full of contradictions not establishing the case that the transactions of special deposits between the assessee and these parties are accommodation entries. The statement itself does not give a clear picture but Shri Ankit Bagri has stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell as relevant material on record. Once the guest house is situated in the factory premises itself, then the use of the guest house is not in dispute. It is not a claim of deduction U/s 37(1) of the Act to consider the expenditure is laid out wholly and exclusively for the business of the assessee. The claim of depreciation U/s 32 of the Act is allowable once the asset is put to use, therefore, the fact of the guest house is in factory premises itself not in dispute which established that the guest house is used for the business purposes of the assessee and not for any other purpose. The ld. CIT(A) has considered this issue in para 12.2 and 12.3 of its order as under: 12.2. The A/R of the Appellant has attended the proceedings and made submissions as follows: The company is having a building in the factory premises which is used as guest house for business customer and associate agencies. In the business of production of copper and copper alloy tubes our company has to allow inspection of products to customers before packing and dispatch. As our factory runs for 24 hours in order to make the inspection conveniently in all working hours we provide facility for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified. Our claim of depreciation @ 60% is supported by the following judgement: 1. ACIT Vs Ram Kishan Verma (2011) 30CCH 0561 Jaipur Trib 2. ITO Vs Omni Globe Information Technology India (2011)30 CCH 0217 Del Trib 3. Ushodaya Enterprises Ltd Vs ACIT (2013) 37CCH 0621 Hyderabad Trib The Ld AO did not appreciate the justification submitted by the Appellant Company in this respect a copy of the same is annexed herewith at Page No 114-117 of PB-1. The same issue was considered favorably for the Appellant Company in the appeal order no 49/14-15 dated 07.04.2016 issued by CIT(Appeals), Kota for the AY 2011-12. Thus the claim of depreciation may be allowed. 13.3. I have considered the rival submission and material placed on records, In my considered view, the issue remains decided in favour of the Appellant, in appellants own case for A.Y. 2011-12 in appeal no. 49/14-15 dated 07.04.2016 passed by CIT(Appeals), Kota for the A.Y. 2011-12. Further respectfully following the decision of Hon ble Jaipur Tribunal in case of 1.ACIT Vs Ram Kishan Verma (2011) 30CCH 0561 Jaipur Trib and Others as relied upon by the A/R, the claim of depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : The appellant company has incurred expenses on foreign travelling to explore our product for export market to various counties. A part of foreign travelling expenses was incurred for import of machinery, spare parts of machinery and raw materials. A statement made by the company during the year under assessment has been submitted to the AO during the assessment proceedings. You are request to allow the same as business expenses and the same have been incurred during the year for the purpose of business. The Ld AO did not appreciate the justification submitted by the Appellant Company in this respect a copy of the same is annexed herewith at Page No 114- 117 of PB-1. The same issue was considered favorably for the Appellant Company in the appeal order no 49/14-15 dated 07.04.2016 issued by CIT (Appeals), Kota for the AY2011-12. Thus the expenses may be allowed. 14.3 I have considered the rival submission and material placed on record. In my considered view, the issue remains decided in favour of the Appellant, in appellants own case for A.Y. 2011-12 in appeal no. 49/14-15 dated 07.04.2016 passed by CIT (Appeals), Kota for the A.Y. 2011-12. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law the Id. CIT (A) erred in not declaring the assessment order as bad in law and void ab initio. The findings of Id CIT(A) in this regard are perverse and erroneous. It is contended that the Id. AO passed the assessment order against the doctrine of audi alterm partem , violating the principle of natural justice and not giving the opportunity of cross examination of the alleged accommodation entry providers, therefore the assessment order ought to held as bad in law and deserves to be annulled. 2. That the order of the Id CIT (A), confirming the addition made by the AO is arbitrary, whimsical, capricious, perverse, based on no evidence or irrelevant material or irrelevant evidence, and against the law and facts of the case. The addition confirmed by ld.CIT (A) deserves to be deleted. 3. On the facts and in the circumstances of the case and in law the Id. CIT (A) erred in confirming the additions made u/s 68 of the Income Tax Act, 1961 by : - a) solely relying on the statements of some alleged accommodation entry providers recorded by some o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the C.O. of the assessee for the A.Y. 2011-12 and 2012-13, the same is decided in favour of the assessee and against the revenue. 63. Grounds No. 2 to 5 of the appeal are regarding the addition made by the Assessing Officer on account of unsecured loan from M/s Caplin Dealcom Pvt. Ltd. 64. We have heard the ld AR as well as the ld. CIT-DR and considered the relevant material on record. The Assessing Officer has made this addition based on the statement of Shri Ankit Bagri as it was made in the A.Y. 2013-14. In view of our finding on this issue of amount received from M/s Caplin Dealcom Pvt. Ltd. for the A.Y. 2013-14, the addition made by the Assessing Officer is deleted. 65. Ground No. 6 of the assessee s appeal is regarding denial of benefit of telescoping, recycling and rotation of funds by rejecting the peak credit theory. This issue has been considered by us while deciding ground No. 6 of the assessee s appeal for the A.Y. 2010-11. Accordingly, in view of our finding on this issue for the A.Y. 2010-11, ground No. 6 of the assessee s appeal is infructuous. 66. In the cross appeal for the A.Y. 2015-16, the revenue has taken following gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) 56 taxmann.com 18(SC) when there were genuine concerns of the genuineness of the transactions. 7. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance of ₹ 1,34,751/- made by the AO on account of depreciation on guest house building. 8. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance of ₹ 2,668/- made by the AO on account of excess claim of depreciation on UPS. 09. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance of ₹ 2,79,133/- made by the AO out of foreign travel expenses. 10. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance of ₹ 15,000/- made by the AO on account of professional service charges of prior years. 11. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance of ₹ 58,770/- made by the AO on account of prior period expenses. The Appellant crave, leave or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and against the revenue in the A.Y. 2013- 14. Accordingly this ground of revenue s appeal stands disposed off in favour of the assessee and against the revenue. 72. Ground No. 11 of the appeal is regarding the disallowance on account of prior period expenditure. 73. The Assessing Officer noted that the assessee company has claimed prior period expenses of ₹ 58,770/- which is not allowable for the assessment year under consideration. In response to the show cause notice, the assessee submitted that it has paid the demand of entry tax relating to financial year 2006-07 and 2007-08 in the year 2011-12 and debited to recoverable account on account of appeal was pending with Commercial Taxes Department. The matter was decided against the assessee during the year under consideration and consequently the assessee has claimed the said amount as expenses. The Assessing Officer was not satisfied with the explanation of the assessee and made the addition on this account. On appeal, the ld. CIT(A) has allowed the claim of the assessee. 74. Before us, the ld CIT-DR has submitted that once the expenditure is pertaining to the prior period being r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case and in law the CIT(A) was justified in deleting disallowance of ₹ 1,21,274/- made by the AO on account of depreciation on guest house building. 3. Whether on the facts and circumstances of the case and in law the CIT(A) was justified in deleting the disallowance of ₹ 1,074/- made by the AO on account of excess claim of depreciation on UPS. 4. Whether on the facts and circumstances of the case and in law the CIT(A) was justified in deleting the disallowance of ₹ 2,27,487/- made by the AO on account of foreign travel expenses. 5. Whether on the facts and circumstances of the case and in law the CIT(A) was justified in deleting the disallowance of ₹ 25,190/- made by the AO on account of professional service charges. 6. Whether on the facts and circumstances of the case and in law the CIT(A) was justified in deleting the disallowance of ₹ 42,000/- made by the AO on account of prior period expenses. 7. Whether on the facts and circumstances of the case and in law the CIT(A) was justified in deleting the disallowance of ₹ 1,64,836/- made by the AO out of telephone mobile phone charges. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a registered Grid Connect Client of Indian Energy Exchange and its transaction were executed on exchange through exchange registered member M/s Parshavath Power Projects P Ltd. The power will flow through the existing STU/CTU network depending on the location of the entity's injection / drawl point. In the case of assessee, the existing STU as Jaipur Vidyut Vitran Nigam Limited . The assessee used to inform its daily requirement for a day in advance to M/s Parshavath Power Projects P Ltd. who in turn was buying energy from IEX on assessee's behalf for the next day s requirement. The assessee has been paying advance money for the electricity purchased for the next date, therefore, the purchases were made on estimated requirement while actual consumption was not always same and consequently some units remained underutilized. As the seller was injecting all sold energy on the grid point of JVVNL, therefore, the charges for underutilized energy was to be refunded by the JVVNL. It was also responsibility of the exchange registered member M/s Parshavath Power Projects P Ltd. to arrange the refund of underutilized energy but despite the best efforts of the assessee it could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be refunded but finally it was learnt by the assessee that the said amount would not be refunded to the assessee. Therefore, the assessee has finally written off the said amount during the year under consideration. We note that the payment made by the assessee for purchase of electricity from open access is otherwise an allowable expenditure being laid out for the purpose of business of the assessee. The only dispute is whether the excess payment made by the assessee over and above the consumption of electricity can be allowed for the year under consideration as written off amount. Once the said expenditure is an allowable claim for the respective years during which the payment was made for purchase of electricity then there is no bar for allowing the said excess amount paid by the assessee which could not be recovered due to the complications involved in the process of purchase of energy from open source and transmission of the same through various intermediaries and written off. Even otherwise the claim of the assessee is revenue neutral as the assessee has also paid maximum marginal rate of tax for the assessment year 2012-13 and 2013- 14 during which the payment was made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when in the relevant assessment year the applicant company was expecting the recovery or such advance. Further in the case of written off of debts/business advance the written off the same in books of accounts is sufficient and the same is treated as loss for the applicant company in the year in which the same is written off. In view of above the addition of ₹ 65,18,820/- made is hereby deleted. Therefore the ground No. 2 of appeal is allowed. The Kolkata Benches of the Tribunal in the case of Kesoram Industries Ltd. Vs. Addl.CIT (supra) while considering the issue of non-recoverable advance written off as held in paras 13 to 15 as under: 13. Now we take up revenue's appeal in ITA 1722/Kol/2012 preferred by the revenue. Ground No. 1 is against the action of the Ld. CIT(A) in deleting the disallowance of ₹ 1,65,748/- made on account of advances written off. Briefly stated the facts of the case are that the assessee company had written off certain debit balances from its balance sheet aggregating to ₹ 1,65,748/- and debited it to its profit and loss account being no longer recoverable. The advances written off comprised of the unadjusted ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance made by the Assessing Officer on account of depreciation on guest house which was deleted by the ld. CIT(A). This issue is common to the issue raised by the revenue for the A.Y. 2013-14 and 2015-16. We have considered the decided this issue in favour of the assessee and against the revenue in the A.Y. 2013-14 and 2015-16. Accordingly this ground of revenue s appeal stands disposed off in favour of the assessee and against the revenue. 83. Ground No. 3 of the appeal is regarding the disallowance of higher depreciation on UPS. This issue is common to the issue raised by the revenue for the A.Y. 2013-14 and 2015-16. We have considered the decided this issue in favour of the assessee and against the revenue in the A.Y. 2013-14 and 2015-16. Accordingly this ground of revenue s appeal stands disposed off in favour of the assessee and against the revenue. 84. Ground No. 4 of the appeal is regarding the disallowance on account of foreign travel expenses. This issue is common to the issue raised by the revenue for the A.Y. 2013-14 and 2015-16. We have considered the decided this issue in favour of the assessee and against the revenue in the A.Y. 2013-14 and 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
