9911796707
TMI Blog2012 (12) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... TA No. 406/Agra/2012 (Assessment year : 2008-09) : 3. Both the departmental appeals are filed against the common order of ld. CIT(A)-II, Agra dated 15.05.2012 for the assessment years 2007-08 and 2008-09, challenging the deletion of addition of Rs.8,50,00,000/- and Rs.5,00,00,000/- respectively made on account of unexplained cash credits u/s. 68 of the IT Act. 4. The AO has made following additions in assessment year 2007-08 and 2008- 09 on account of share application money received from following companies holding them to be non-genuine : S.No. Name of company who have given entry Name of company who have taken entry Period (A.Y.) Amount 1. M/s. KMC Portfolio (P) Ltd. Delhi M/s. Vacmet Packaging (India)Pvt. Ltd., Agra 2007-08 Rs.8.5 crore 2. M/s. Ganpati Fincap Services (P) Ltd., Delhi M/s. Vacmet Packaging (India)Pvt. Ltd., Agra 2008-09 Rs.5 crore 5. Briefly state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st entry 332711- 15/2/05-5000000, 332711 refers to the cheque no. of my company either KMC Portfolio Pvt. Ltd. or Ganpati Fincap Services Pvt. Ltd., 15/02/05 refers to the date of cheque and 5000000 refers to the amount of share application money given to Vacmet Packaging (India) Pvt. Ltd. for 50000 shares of face value Rs.10 per share having share premium at Rs.90 per share. On this page there are entries totaling Rs.500,00,000 (Five crores) i.e. my companies either KMC Portfolio Pvt. Ltd. or Ganpati Fincap Services Pvt. Ltd. have given share application money of Rs.5 crores to Vacmet Packaging (India) Pvt. Ltd. for 5 lakh shares of face value of Rs.10 per share having share premium at Rs.90 per share. The Modus Operandi is that one of the Directors of Vacmet Packagings (India) Pvt. Ltd. one Mr. Agarwal approached me to arrange some share application money into his company i.e. Vacmet Packaging (India) Pvt. Ltd. in lieu of certain commission that I would earn for arranging share application money in his company some cash and cheques were given to me and this cash and cheques were deposited by me in accounts held in the name of ABM Traders or Surya Enterprises and then this m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was also not aware of the financial capacity of the company who subscribed for the shares. Thus, the AO by relying on the statement of Shri Aseem Gupta and the appraisal report wherein, as per the AO, it has been concluded that the amount of Rs.8.5 crore and Rs.5 crore claimed to have been received during the period relevant to A.Y. 2007-08 and A.Y. 2008-09 respectively in the guise of share application money were only accommodation entries and accordingly he made the addition of Rs.8.5 crore and Rs.5 crore in A.Y. 2007-08 and A.Y. 2008-09 respectively. The AO also relied on the contents of the black diary which was confronted to Shri Aseem Gupta during the course of statement on 22nd of April 2010 by ADIT (Intelligence)-III, New Delhi and wherein he has stated that all these entries pertain to M/s.Vacmet Packaging (India) Pvt. Ltd. It was further elaborated by him that 50,000 shares of face value of Rs.10 per share were sold at a premium of Rs.90 per share. 6. The addition was challenged before the ld. CIT(A) and during the course of appeal proceedings, the ld. Counsel for the assessee filed his written submissions on 29.03.2012. The written submissions filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 18.07.2011 in the name of M/s Vacmet India Ltd was received, copy enclosed, vide which query at S. No. 12 the appellant company was asked to furnish the details of share capital received during the year. In the same notice vide query at. S. No. 20 21 the assessee was asked about the relationship with Shri Aseem Gupta CA. After dropping of the proceedings in the name of M/s Vacmet India Ltd for Assessment Year 2004-05 to 2009-10 another notice u/s 142(1) of the Act dated 02.11.2011 was issued in the name of assessee company having almost the similar queries. ii) In response to these notices written submission dated 16.11.2011 was filed giving the details of increase in share capital received during the year alongwith confirmation from the subscriber companies. Copy enclosed. In this submission for the query made by Assessing Officer as regards relationship with Shri Aseem Gupta CA it was submitted vide Para 20 -21 of the submission:- The assessee company has neither any relationship with the person nor any transactions with person namely Shri Aseem Kumar Gupta, Chartered Accountant who is said by your goodself to be the partner of M/s Agarwal Vishwanath Associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorize representative of the assessee company attended almost daily the office of the Assessing Officer. After filing the written submission dated 23.11.2011 no further query was made by the Assessing Officer as regards the increase in share capital. 4.5 That vide order sheet entry dated 13.12.2011 the assessee company was asked to furnish certain queries in respect to share applicant namely M/s Ganpati Fincap Services (P) Ltd for Rs. 5,00,00,000/- received as share capital in A.Y. 2008-09 and M/s KMC Portfolio (P) Ltd for Rs. 8,50,00,000/- received as share capital in A.Y. 2007-08 to establish/substantiate the genuineness of these credits with reference to credible supporting evidence. The assessee company was further required to furnish the following by 19.12.2011 :- a) Complete details of the directors / key persons of these two companies subscribing the share capital of the assessee company b) To explain as to how the share application forms were received along with supporting evidence . c) Statutory records Register of Shareholders, Minute Books of the AGM of the assessee company along with details in respect of the persons who represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Dinesh Chand Agarwal for examination on 19.12.2011. On 19.12.2011 vide order sheet entry Shri Dinesh Chand Agarwal was required to be produced for statement on 21.12.2011 on which date Shri Dinesh Chand Agarwal attended the office of the Assessing Officer and his statement was recorded on oath. Copy of statement recorded is enclosed. On perusal of the statement your goodself will find that when it was asked regarding Shri Aseem Gupta CA it was specifically stated by Shri Dinesh Chand Agarwal that enquiries with regard to some Mr. Aseem Gupta are being made time and again not only in this statement but also on earlier occasions and therefore, Assessing Officer was specifically requested to produce Shri Aseem Gupta for my cross examination in case he has given any wrong information in respect of me or my companies in any manner whatsoever. 4.10 That written submission dated 27.12.2011 was also submitted before Assessing Officer and as per his verbal directions the same was filed in Dak on 29.12.2011 which has been taken by the Assessing Officer on record as per order sheet entry dated 29.12.2011 which is before the completion of assessment. 4.11 That the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share capital received from M/s KMC Portfolio (P) Ltd has already been accepted in the case of sister concern M/s Vacmet Finance Investment Ltd in scrutiny assessment for A.Y. 2006-07 therefore there is no reason for any departure from such acceptance in the absence of any contrary evidence on record. iii) That in the present case also during the course of assessment proceedings u/s 153A of the Act, the Assessing Officer made direct and independent enquiry from M/s KMC Portfolio (P) Ltd by issue of notice u/s 133(6) of the Act which have been duly responded by the subscriber company and the required details/documents in the form of confirmation giving the details of cheque number, amount and the name of the bank on which the cheque was drawn, share received confirmation, bank statement, copy of share certificates, income tax return, balance sheet were directly sent to the Assessing Officer . Copy of the same are enclosed for ready reference of your goodself. The same has been obtained on inspection of the assessment file on 21.03.2012. (IV) Re: Statement of Aseem Gupta [C.A.] On perusal of the Assessment Order it seems that the addition has been made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the statement of Shri D.C. Agarwal was recorded by the Assessing Officer on 21.12.2011 it was again asked whether you know Mr. Aseem Gupta. In reply Shri D.C. Agarwal specifically stated that he does not know Mr. Aseem Gupta and the specific request was made that I am again and again saying that I do not know the person named Mr. Aseem Gupta and if the said person has given any wrong information/statement to the Department as regards my companies then the said person may kindly be called upon and I may be allowed opportunity to cross examine him. f) It is very surprising that even after the submission dated 19.12.2011 vide which specific request was made that if there is any adverse or contrary evidence against us in your possession then kindly provide us the copy of the same in case of documentary evidence so that we can rebut the same and an opportunity to cross examine may also be provided in view of natural justice in the case of personal statement of any person against the facts submitted by us and further in the statement of Shri Dinesh Chand Agarwal recorded on 21.12.2011 the Assessing Officer was again requested to provide opportunity of cross examination, even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deponent filing affidavit is a primary requisite condition and in the absence of the some adverse inference can be drawn. ii) Allahabad High Court in the case of L. Sohan Lal Gupta vs. CIT reported in 33 ITR 786 After the assessee had filed the affidavit, he was neither cross examined on that point, nor was he called upon to produce any documentary evidence. Consequently, the assessee was entitled to assume that the income tax authorities were satisfied with the affidavit as sufficient proof on this point. If it was not to be accepted as a sufficient proof either by the Income Tax Officer or by the Appellate Asstt. Commissioner of Income Tax or by the Income Tax Appellate Tribunal, the assessee should have been called upon to produce documentary evidence, or, at least he should have been cross examined to find out how far his assertions in the affidavit were correct . iii) Hon ble ITAT Delhi Bench in the case of CIT vs. Pradeep Kumar Gupta reported in 207 CTR 115 (Del) Reassessment Validity Reopening on the basis of third party s statements Assessees showing agricultural income Deposition by A that he was involvedin bogus transaction with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in 59 CTR 17 has held Merely because creditor turns hostile, the story of the assessee setting up a cash credit should not be disbelieved Assessing authority under the circumstances required to go deeper into the matter and call the creditors by issuing notice u/s 131 and find out truth if the assessee produces collateral evidence to show the circumstances under which creditors had resiled - Fact that onus to prove genuineness of cash credit is on the assessee does not mean that the assessee is required to win over false witness if he can show that creditors had resiled . (V) Re: Black Dairy i) The Assessing Officer in the Assessment order at page 2 has mentioned about a black dairy said to have been found and impounded from the office of Shri Aseem Gupta which has also been made one of the ground by the Assessing Officer to made addition u/s 68 of the Act. ii) As regards the black dairy, Mr. Aseem Gupta in his so called statement, though never confronted to the assessee, which has been reproduced by the Assessing Officer in the Assessment Order, he has clearly stated that:- The transaction pertain to F.Y. 2004-05 and more specifically F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts regularly and assessed to tax. Further, the independent identity is also substantiated from the fact that the directors of the subscriber company responded to the direct independent enquiry made by the Department. Moreover, the subscriber company Bank Account and numerous transactions appearing therein with different parties is also evidence of the independent identity and existence. Credit worthiness and capacity The credit worthiness and capacity of the subscriber company can also not be doubted. It is evident from their Balance Sheets that the subscriber company is company with sound net worth and huge reserves. Also, the amount received from the subscriber company is through regular banking channels, details of which were filed by the assessee company and also directly by the subscriber company which shows a number of transactions with various parties Genuineness The subscriber company has confirmed their investment in the share capital of the assessee company. Their confirmation alongwith other document which proves the genuineness of a transaction were filed by the assessee company and were also sent by them to the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re capital were not genuine, under no circumstances the amount of share capital could be regarded as undisclosed income of the company. The Order of the High Court is affirmed by the Hon ble Apex court reported in 164 CTR 287. Commissioner of Income Tax vs Electro Polychem Ltd. reported at (2008) 217 CTR (Mad) 371 While dismissing the appeal of the revenue the Hon ble High Court referred to the case of CIT v. Stellar Investment Ltd. (1991)192 ITR 287(Delhi) where the increase in subscribed capital of the respondent-company, accepted by the Income Tax Officer and rejected by the Commissioner on the ground that a detailed investigation was required regarding the genuineness of subscribers to share capital, as there was a device of converting black money by issuing shares, with the help of formation of an investment, which was reversed by the Tribunal, the Delhi High Court held that even if it is to be assumed that the subscribers to the increased share capital were not genuine, under no circumstances the amount of share capital could be regarded as undisclosed income of the company. Commissioner of Income Tax vs First Point Finance Pvt. Ltd. repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ati High Court in the case of CIT vs. Down Town Hospitals (P) Ltd reported in 267 ITR 439 has held That regarding amounts received as share application moneys, the Tribunal had given a clear finding after appreciation of the materials on record that the assessee had filed the details regarding the source of funds of the parties and their income tax file numbers before the AO. According to the Tribunal, the assessee had also submitted before the AO the confirmations from the creditors where full addresses income tax file numbers, etc, were given. The Tribunal was justified in deleting the addition of the sums from the income of the assessee Hon ble Allahabad High Court in the case of M/s Jaya Securituies Ltd. Vs. CIT-II, Kanpur reported in 166 Taxmann Page 7, the head note of the judgment as under: Whether an addition u/s 68 can be made in respect of investment made by different persons in share capital of assessee company, limited by shares, whether public or private Held no Hon ble ITAT Jodhpur Bench (Third Member) in the case of Uma Polymers (P) Ltd vs. DCIT Spl Range reported in (2006) 100 ITD Page 1, the head note of the judgment as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce of deposit. Though in the present case the amount received as share application money is through banking channels and the earlier deposit in the bank account of the subscriber company is through clearing not cash. xii) There are various judicial pronouncement in which it has been held that to discharge the onus as required in section 68 of the Act the assessee is not required to prove the source of the source. Reliance is placed on the following judgments:- Hon ble Rajasthan High Court in the case of Aaravali Trading Co. vs. ITO reported in 8 DTR page 199 , the headnote of the judgment as under:- Income Cash credit Burden of proof Once the existence of the creditors is proved and such persons own the credit which are found in the books of the assessee, the assessee s onus stands discharged and the latter is not further required o prove the source from which the creditors could have acquired the money deposited with him either in terms of s. 68 or on general principle Merely because the depositor s explanation about the sources of money was not accepetable to the A.O., it cannot be presumed that the depsoits made by the creditors is money belon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or part thereof from the creditor, by way of cheque in the form of loan and in such a case, if the creditor fails to satisfy as to how he had actually received the said amount and happened to keep it in the bank, the said amount cannot be treated as income of the assessee from undisclosed sources . Hon ble Madhya Pradesh High Court in the case of CIT vs. Metachem Industries reported in 245 ITR 160 has held Once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee is over. Whether that person is an income tax payer or not and where he had brought this money from, is not the responsibility of the firm Hon ble Patna High Court in the case of Sarogi Credit Corporation vs. CIT (1976) 103 ITR 344 has held It will not, therefore, be for the assessee to explain further as to how or in what circumstances the third party obtained the money or how or why he came to make an advance of the money as a loan to the assessee. Once such identity is established and the creditors, as in the present case, have pledged their oath that they have advanced the amounts in question to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see could not be expected to call the concerned person in evidence to help the Department to discharge the burden that lay upon it. e) Hon ble Bombay High Court in the case of Smt. Panna Devi Chowdhary (1994) 208 ITR 849 (Bom.) has held that Income- Income from undisclosed sources-Burden of Proof-Receipt of amount-Burden of proving that receipt constituted income of assessee is on the revenue . xiv) Though the order pronounced by the Apex Court happens to be the law of land and binding on all the authorities functioning in India still it is trite law that the order passed by the Jurisdictional Tribunal / High Courts are binding on all the tax authorities functioning under the jurisdiction of Tribunal / High Courts. In this regard, your goodself kind attention is drawn towards the following case laws wherein binding nature of the orders of the Tribunal / High Courts has been discussed: - K.N. Agarwal vs. CIT (1999) 100 CTR (All) 170: (1991) 189 ITR 769 (All) Indeed, the orders of the Tribunal and the High Court are binding upon the Assessing Officer and since he acts in a quasi judicial capacity, the discipline of such functioning demands that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished by the assessee. To Sum up the submission and the issue before your goodself:- i) Addition made without confronting with the statement, mentioned referred and relied in the Assessment Order and without allowing opportunity of cross examination is bad on facts and in law. ii) Addition has been made merely on the so called satisfaction of the Department. iii) Addition being based on, as mentioned in the Assessment Order, some black dairy, the transaction noted therein which also as per Assessment Order does not pertain to the year under consideration. iv) Evidences/documents brought on record were sufficient enough to discharge the burden that lay upon the assessee in terms of deeming provision of section 68 of the Act. On the basis of such evidence the courts throughout the country as well as Hon ble Apex Court in plethora of cases has held accordingly as referred above. v) No addition is called for as not only the identity of the subscriber company is fully proved on the basis of evidence brought on record but the creditworthiness and genuineness is also proved though not required in the case where the assessee has to discharge the onu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, which indicates my connection with the above groups, may kindly be provided to the undersigned, so that compliance thereof may be made to your office for early disposal of the proceedings if any pending before your goodself. Further undersigned is the practicing Chartered Accountant and possibility of any transaction with the above groups by my any client cannot be ruled out. However, it is again sure and confirm that I have not done any transaction directly with the above groups during A.Y. 2004-05 to 2010-11. Hence, without exact details of transaction undersigned is unable to submit any information and also ther is no use to appear before your goodself without any documents, as your summons is also not contained any specific list of documents required for disposal of the above proceedings. In the light of above submission you are requested to kindly take into consideration the above submission place the same on record, either withdraw the summons issued against me or provide me the detail / documents possessed by your goodself indicating the transaction done by me with the above groups during A.Y. 2004-05 to 2010-11. From the above submissions Shri Aseem Gupta CA at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s even know who is Shri Aseem Gupta nor there are any transaction either of the assessee company or of its Directors with this person named Shri Aseem Gupta. ii) That vide written submission dated 19.12.2011filed before the Assessing Officer specific request was made that if there is any adverse or contrary evidence against the assessee company in the possession of the Assessing Officer then kindly provide us the copy of the same in case of documentary evidence so that we can rebut the same and an opportunity to cross examine may also be provided in view of natural justice in the case of personal statement of any person against the facts submitted by us. iii) Further Shri Dinesh Chand Agarwal Managing Director of the assessee company in his statement recorded by the Assessing Officer during the course of assessment proceedings u/s 153A of the Act on 21.12.2011 clearly stated that he does not know Shri Aseem Gupta nor he/or assessee company has any transaction with Shri Aseem Gupta and further specific request was made to provide opportunity of cross examination of Shri Aseem Gupta. iv) That before the completion of assessment u/s 153A of the Act the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of M/s Vacmet Packagings (India) Pvt. Ltd and M/s Vacmet Finance Investment Ltd has been mentioned. c) Thus this statement is not at all relevant to the facts of the case of the assessee company and no adverse inference can be drawn from this statement. Re: Statement dated 26.03.2010 recorded at Survey proceedings u/s 133A of the Act. --------------------------------------------------------------------------------- a) Nothing adverse against the assessee can be drawn from this statement as no where in this statement name of M/s Vacmet Packagings (India) Pvt. Ltd and M/s Vacmet Finance Investment Ltd is mentioned. Re: Statement recorded on 22.04.2010 a) In this statement Shri Aseem Gupta has stated that entry totaling Rs. 5 Crore has been given by my companies either M/s KMC Portfolio (P) Ltd or M/s Ganpati Fincap Services (P) Ltd, the details of which are given in the separate sheet provided to the assessee. b) On perusal of statement of Shri Aseem Gupta in reply to the notings mentioned in the separate sheet it is very much clear that the said statement is wrong, not applicable to the facts of the assessee s case and the question a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the transaction as noted in the impugned page relates to F.Y. 2004-05 and the addition in the year under consideration has been solely made on the basis of this page from the black dairy. 6.3 The ld. CIT(A), considering the submissions of the assessee in the light of the material on record deleted both the additions in both the assessment years and allowed the appeals of the assessee. The findings of the ld. CIT(A) in the appellate order in para 3.4 are reproduced as under : 3.4 I have gone through the assessment orders, submissions made by the ld. AR, remand report of the AO and the counter comments of the ld. AR on the remand reports of the AO. To prove the genuineness of the amounts received on account of allotment of shares to the following companies i.e. (i) M/s.KMC Portfolio Ltd. - Rs.8,50,00,000 for A.Y. 2007-08 and (ii) M/s.Ganpati Fincap Services (P) Ltd., Delhi Rs.5 crore for A.Y. 2008-09 the assessee had filed the following documents in support of its claim during the assessment proceedings : (i) Share application forms (ii) Copies of bank account of share applicants (iii) copies of I.T. returns of the share allottees alongwith the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. Anant Plaza, IInd Floor 4/117-2A, Civil Lines, Church Road, Agra 282002 10 + 90 332711 - 15.02.05 - 50,00,000 332701 - 15.02.05 - 50,00,000 332710 - 11.02.05 - 50,00,000 332724 - 18.02.05 - 25,00,000 75 - - - 25,00,000 203350 - 22.02.05 - 50,00,000 332712 - 22.02.05 - 50,00,000 332726 - 25.02.05 - 25,00,000 332713 - 3.3.05 - 50,00,000 332732 - 07.03.05 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Gupta for providing opportunity of cross examination to the appellant. In response to the summons issued Shri Aseem Gupta wrote a letter dated 27.04.2012 stating as under: In this regard it is submitted that as per the best of memory undersigned has not made any transaction during A.Y. 2004-05 to 2010-11 with any Vacmet Groups, Agra or other means he has no knowledge about the said groups. Further if your goodself possessed any specific information, which indicates my connection with the above groups, may kindly be provided to the undersigned, so that compliance thereof may be made to your office for early disposal of the proceedings if any pending before your goodself. Further undersigned is the practicing Chartered Accountant and possibility of any transaction with the above groups by my any client cannot be ruled out. However, it is again sure and confirm that I have not done any transaction directly with the above groups during A.Y. 2004-05 to 2010-11. Hence, without exact details of transaction undersigned is unable to submit any information and also there is no use to appear before your goodself without any documents, as your summons is also not contained any specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e identity as well as financial worth of each of its subscribers. The company must, however, maintain and make available to the AO for his perusal, all the informations contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tight-rope of ss.68 and 69 of the I.T. Act. The burden of proof can seldom be discharged to the hilt by the assessed; if the AO harbours doubts of the legitimacy of any subscription he is empowered, nay duty-bound, to carry out thorough investigations. But, if the AO fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company. In the case of CIT vs. Sophia Finance Ltd. 113 CTR (Del.) FB 472, the Hon ble Delhi High Court held that if the explanation preferred by the assessee is found not to be satisfactory, further enquiries can be made by the AO himself, both in regard to the nature and the source of the sum credited by the assessee in its books of accounts, since the wording of section 68 is very wide. The Full Bench als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment proceedings u/s.153A. It is also uncontroverted fact that these companies have PANs and are filing their I.T. returns. The appellant which has received share application money has produced documents in the form of share applicant forms, share allotment letter, IT returns, copies of bank accounts through which the funds were transferred. Thus, the assessee has discharged its onus. No discrepancy has been pointed out by the AO at any stage with regard to documents / proof submitted by the assessee to prove its case. Thus, the onus never shifted back to the assessee. As regards the statement of Shri Aseem Gupta dated 22.04.2010 wherein he had indicted M/s.Vacmet Packaging (India) Ltd. of having received accommodation entries, I have already held that it has no evidenciary value. As far as contents of Annexure A-20 (black diary) are concerned they don t pertain to the assessment years under consideration as is clear from the notings which have been reproduced above that these pertain to A.Y. 2005-06 and the same cannot be made the basis for making additions in A.Yrs. 2007-08 and 2008-09. Thus keeping in view the facts of the case and the legal position as discussed above, I ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviding companies only as per appraisal report and their balance sheet only shows that they were companies on papers. After search, lot of material came to the notice of the department. So even if in the earlier year in the case of sister concern, the order was passed u/s. 143(3) is not enough to delete the addition. The statement of Shri DC Agarwal did not provide relevant statutory records, would lead to inference that relevant material was not produced before the AO to discharge the onus to prove genuine transaction of share application money u/s. 68 of the IT Act. 8. On the other hand, the ld. Counsel for the assessee reiterated the submissions made before the authorities below, copies of which are filed in the paper book. He has also relied upon all the decisions cited before the ld. CIT(A), copies of which are also filed in the paper book. He has referred to PB-254, which is copy of seized diary to show that no other material was found during the course of search and all the entries contained in the diary pertain prior to March, 2005. Therefore, the same would fall in assessment year 2005-06 and did not pertain anything to assessment years under appeals. Therefore, the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2006-07, the AO did not make similar addition vide order u/s. 143(3) dated 29.12.2008. He has submitted that the facts are same in the case of M/s. Ganpati Fincap Services Pvt. Ltd., in which share application forms are filed in PB-75 to 88, bank statement (PB-89 to 93), PB-95 is share certificates, PB-97 to 98 are the replies of the assessee. PB-99 is confirmation by share applicant and PB-100 to 103 are share application forms. PB-125 to 128 are the details furnished before the Registrar of Companies. PB-152 is the notice of the AO to the share applicants u/s. 133(6), which was duly replied and transaction was confirmed directly to the AO and all confirmations, copy of bank account and share certificates were filed to prove the genuineness of the share application money. Similar confirmations were made in the case of M/s. KMC Portfolio Ltd. u/s. 133(6) directly to the AO along with all the documents. He has, therefore, submitted that the ld. CIT(A) on proper appreciation of facts and material on record rightly deleted the addition. 9. We have considered the rival submissions, gone through the material on record. The assessee had filed all the documentary eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the AO at the assessment stage which was also obtained by the AO at the remand proceedings, copy of which is filed in the paper book to indicate that the transaction recorded therein pertained to February and March, 2005, which is relevant to the assessment year 2005-06 only. The assessee in his written submissions categorically submitted that even in assessment year 2005-06, no share capital has been received from M/s. KMC Port Folio Pvt. Ltd. and M/s. Ganpati Fincap Services Pvt. Ltd., nor any such addition has been made by the AO against the assessee of the amount mentioned in the diary even in regular assessment u/s. 143(3)/153A of the IT Act dated 30.12.2011 for assessment year 2005-06. Therefore, the diary is not relevant to the assessment year under appeals, i.e., 2007-08 and 2008-09. It is also established on record that during the assessment proceedings, the AO issued notice u/s. 133(6) to both these companies and both the companies directly confirmed the transaction with the assessee in their reply filed before the AO, which is supported by their confirmations, bank statements, Income-tax Returns and the balance sheets. No other incriminating material are found in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e departmental appeals were dismissed. Copy of the order is placed on record. It is also stated that the said decision of the Tribunal has been confirmed by the Hon ble Allahabad High Court in group cases of ITA No. 487/Agra/2012 vide order dated 05.04.2012. Copy of the judgment of Hon ble High Court is also placed on record. In view of the above facts in the light of judgments cited before the ld. CIT(A) and the judgment of Hon ble jurisdictional High Court above, we do not find any infirmity in the order of the ld. CIT(A) in deleting the addition in both the assessment years under appeals. The facts in the case of Nova Promoters and Finlease Pvt. Ltd. (supra) relied upon by the ld. DR are clearly distinguishable. In the present case before us, the ld. CIT(A) had considered all the relevant material before arriving at the just decision in the matter. Therefore, the findings of the ld. CIT(A) cannot be faulted with. In view of the above discussion, we do not find any merit in the departmental appeals. The same are, accordingly, dismissed. In the result, ITA No. 405 406/Agra/2012 are dismissed. ITA No. 404/Agra/2012 (Assessment year : 2006-07): 10. This appeal by the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the assessee referred to all the documents in the paper book in respect of the three companies in support of the contention that the share application money was genuine. The same documents filed in the paper book are application forms for issue of shares, share certificates, acknowledgement of returns, balance sheets, bank statements, confirmations of share applicant companies, Board s Resolution and information given to the Registrar of Companies and further all the companies who have applied for share certificates were given notice u/s. 133(6), which were responded to by all the three companies and they filed their replies before the AO along with their confirmations, bank statements, share applications, share certificates and balance sheets and have confirmed giving amount to the assessee through banking channel for issue of share capital. The ld. DR in addition to the arguments already made also referred to the bank statement to show that sometimes cheques were returned because time did not match and thereafter cheques were issued to the assessee company. The ld. DR also relied upon 26 Taxman.com 235. Apart from the above submissions on merits, the ld. Counsel for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the ld. Counsel for the assessee in this case that this issue is already dealt with by the AO in proceedings u/s. 143(3) in the same assessment year prior to conduct of the search. The ld. CIT(A) also held that the diary in question did not pertain to the assessee. Therefore, no incriminating material is left against the assessee for consideration. Statement of Aseem Gupta could not be considered to be relevant because the assessee was not given any opportunity of being heard at the assessment stage. The ld. Counsel for the assessee in support of his contention that the similar issue of share capital has been considered by the AO prior to search in the regular assessment order dated 29.12.2008 in the case of same assessee in the same assessment year is supported by the statement recorded of Shri R.K. Raj of M/s. Rav Net Solutions Pvt. Ltd. Delhi and Shri Sanjay Varshney of M/s. Moderate Credit Corporation Ltd. Delhi on 14.12.2008. Copies of their statements recorded at the original assessment stage are filed in the paper book. It would, therefore, clearly establish that prior to search, similar issue was considered on merits in the regular assessment proceedings u/s. 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is made.] (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation.-For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 13.2. ITAT, Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. vs. DY. CIT 137 ITD 287 (SB) considered the following two questions : 1. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext of relevant provisions means books of account, other documents, found in the course of search but not produced in the course of original assessment, and undisclosed income or property discovered in the course of search. The above decision of Special Bench squarely applies in favour of the assessee because in the case of the assessee in the same assessment year under appeal 2006- 07, prior to search, the regular assessment order was passed on 29.12.2008 u/s. 143(3) and on the similar issue, the AO after conducting due enquiries and recording the statement of two concerned persons of the share applicants, accepted the claim of the assessee of genuine share capital invested by the three companies. Therefore, no assessment or reassessment proceedings for the block period were pending on the date of initiation of search and as such those assessments could not be treated to have abated. Since the issue is already considered in the regular assessment prior to the search on the basis of books of account and no incriminating material was found during the course of search, therefore, on the issue of share capital, no addition could be made against the assessee as per decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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