9911796707
TMI Blog2012 (12) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... ar : 2007-08) : ITA 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 stated, the facts of the case are that a search & seizure operation was conducted by the Department on the assessee on 26th of March, 2010. Also relevant to mention here is that a survey was conducted at the premises of one Shri Aseem Gupta, CA on 26th of March, 2010 at Delhi. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 money was transferred into companies managed and controlled by me i.e. either KMC Portfolio Pvt. Ltd. or Ganpati Fincap Services Pvt. Ltd. and from KMC Portfolio Pvt. Ltd. / Ganpati Fincap Services Pvt. Ltd. the money was introduced in the books of account of Vacmet Packaging (India) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee were given to the AO for his comments. The AO was also directed to confront the assessee the contents of the black diary on which reliance has been placed in the assessment order. Also on the same day as it was contended by the ld. Counsel for the assessee that copy of statement of Shri Aseem Gupta on which reliance had been placed by the AO has not been provided to the assessee, the AO was directed to provide the same to the assessee. The AO was further directed that if the assessee comes out with the plea that opportunity of cross examination of Shri Aseem Gupta should be al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 & Associates . The assessee company does not know any such firm named in the questionnaire as 'M/s Agarwal Vishwanath & Associates'. Directors of assessee company do not know Shri Aseem Kumar Gupta, Chartered Accountant and question of any meeting with this person does not arise". iii) That immediately after filing the written submission dated 16.11.2011 another written submission dated 23.11.2011 was filed suo-moto in continuation of the earlier submission giving therein the detail of the document received from the subscriber companies. Copy of the following details/documents were filed before the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 represented these investing companies d) Clarification whether Shri Rajan Gupta CA, Shri Rajesh Gupta CA, Shri Sunil Kansal CA and Shri S. K. Jain CA were known to the assessee company ……………. 4.6 That in response to order sheet entry dated 13.12.2011 a detailed written submission was filed on 19.12.2011 making submission on the details as required vide order sheet entry dated 13.12.2011 covering all the aspects with regard to the document filed from time to time. In addition to the documents already filed, following paper/documents were also filed vide writte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Officer brushing aside the document filed from time to time and rejecting the appellant's submission made the addition of the amount of Rs. 8,50,00,000/- received from M/s KMC Portfolio (P) Ltd as share capital u/s 68 of the Act treating the same to be unexplained investment. 4.12 Further submission before your honour:- i) That the assessment of sister concern of the appellant company namely M/s Vacmet Finance & Investment Ltd for A.Y. 2006-07 was completed u/s 143(3) of the Act. In that year also M/s Vacmet Finance & Investment Ltd received share capital from M/s KMC Portfolio Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired 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 Assessing Officer simply relying on the statement of Mr. Aseem Gupta CA forwarded to the Assessing Officer by the Department carried out survey. In this regard the appellant wish to submit as under:- a) That on enquiry from the subscriber company M/s KMC Portfolio (P) Ltd it has been informed that the person named Mr. Aseem Gupta has never been the Director of the said company. b) That on inspection of the assessment file, the important fact which come in the knowledge of the assessee company is that during the course of assessment proceedings the Assessing Officer issued notice u/s 133(6) of the Act to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 then the Assessing Office has neither shown any statement on which he has relied nor the assessee has been allowed opportunity to cross examine. g) That even after repeated request the Assessing Officer has neither confronted the assessee with the statement, as mentioned in the Assessment Order, of Shri Aseem Gupta nor the Assessing Officer has allowed opportunity of cross examination. It is the prime duty of the Assessing Officer to allow not only the cross examination of the witness but also confront the assessee with the adverse material, if any, before reaching to any adverse conclusion. In law the Assessing Officer has vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x 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 the assessees and provided 'accomodation entries' in the form of agricultural receipts - Same would constitute reason to believe that income chargeable to tax had escaped assessment - However it was mandatory for the Revenue to produce A for cross examination by the assessee on their specific demand in this regard - AO must first discharge the burden of showing that income has escaped assessment - Opportunity to cross examine A denied to the assessee - Reopening of assessment not therefore valid". iv) Hon'ble ITAT Delhi Bench in the case of Yamuna Synthetic (P) Ltd vs. DCIT reported in 91 TTJ 69 has held "Addition u/s 68 of the Act made on the basis of statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 February 2005 and March 2005' which does not relates to the year under consideration. Thus even the transactions as said to have been noted in the black dairy has no relevancy at all and cannot be made basis of addition for the following reasons:- a) The transactions as noted in the so called black dairy were neither shown to the assessee nor copy of the same was provided, nor the assessee was ever confronted with the same though specifically asked again and again that if there is any adverse material or evidence against us is in your possession then kindly provide us the copy of the same in case of documentary evidence so that we can rebut the same. b) That as per the statement of Mr. Aseem Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Officer on direct and independent enquiry. Genuineness is also proved from the fact that the shares were allotted and the share certificate were issued which the subscriber company has also confirmed. Copy of share certificate sent by them are on record of Assessing Officer. Further the high net worth of subscriber company substantiated the genuineness of the transactions. viii) Considering all these facts and submission as mentioned above the assessee company fully discharged his onus as required u/s 68 of the Act. ix) It is settled position of law that where a matter concerns receipts by way of share application from investor, the assessee has to prove the existence of the persons from whom the share application is received. Once the existence is pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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. reported at (2006) 286 ITR 477 (Raj) Tribunal having found that the subscribers are genuinely existing persons and they have filed confirmations in respect of investments made by them and their statements were also recorded, the amount of share capital/share application money could not be treated as unexplained cash credits and no addition could be made under s. 68. * Barkha Synthetics Ltd. vs. Asstt. CIT 197 CTR (Raj) 432. Share applications are made by number of persons, may be in their own names or benami, but the fact that share applications received from different places accompanied with share application money on this only ground no presumption can be drawn that same belong to the assessee. Further the same cannot be assessed in his hands as his undisclosed income unless some nexus is establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under: "Whether distinction between a public and a private limited company is not very material, as far as introduction of share capital money is concerned - Held yes - Whether in respect of share application money received from subscribers, assessee company has to prove only existence of person in whose name share application is received - held yes - Whether if identity of creditor is established, then burden to prove that money advanced by creditor did not belong to him but to somebody else is on revenue who has to find real subscriber and, if any share holder is found to have made unexplained investment, then addition of such investment is required to be made in hands of share holder and not in account of assessee - Held yes, Whether where assessee company had received share application money through banking channels and it had submitted detailed list of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 belonging to assessee itself - If the creditor's explanation about the source of deposit is not found to be acceptable, the investment owned by such persons may be subjected to proceeding for inclusion of the amounts as their income from undisclosed sources, or if they are found benami, the real owner can be brought to tax - In the absence of anything to establish that the sources of creditor's deposit flew from the assessee, the cash credit cannot be treated as unexplained income of the assessee" * Hon'ble Supreme Court in the case of CIT vs. Daulat Ram Rawat Mull reported in 87 ITR 349 has held "The fact that B had not been able to give a satisfactory explanation regarding the source of Rs. 5,00,000/- would not be decisive even a matter as to whether B was or was not the owner of that amount. A person could still be held to be the owner of a sum of money even though the explanation furnished by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee, the burden immediately shifts on to the department to show as to why the assessee's case could not be accepted". * Hon'ble ITAT Agra Bench in the case of Subhash Dall Mill vs. ACIT reported in 257 ITR 115 has held "The source of the source of the assessee's credit cannot be inquired by the Department". xiii) That in the Assessment Order the Assessing Officer has mentioned that in the so called statement Mr. Aseem Gupta has also stated the modus operandi that initially the cash is being received which is being deposited in the bank account opened in the name of M/s ABM Traders and M/s Surya Enterprises from where the money is routed in the bank account of the subscriber company and the amount received as share capital is infact the appellant's own money. In this regard the appellant respectfully submit:- a) That during search at the business premises of the assessee and at the residential premises of the Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 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 should follow the decision of the Tribunal or the High Court, as the case may be. He cannot ignore it merely on the ground that the Tribunal's order is the subject matter of revision in the High Court or that the High Court's decision is under appeal before the Supreme Court. Permitting him to take such a view would introduce judicial indiscipline, which is not called for even in such cases. It would lead to a chaotic situation." 'Agrawal Warehousing and Leasing Ltd. Vs. CIT (2002) 257 ITR 235 (MP)' "The orders passed by the Tribunal are binding on all the Revenue authorities functioning under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities shall be followed unreservedly by the subordinate authorities." 'Union of India vs. Kamalakshi Finance Corporation Ltd., AIR 1992 SC 711; [1991] 55 ELT 433 (SC) emphasized (Page 712 of AIR 1992 SC)' "It cannot be too vehemently emphasised that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 onus u/s 68 of the Act in the case of receipt of share capital. It is requested that the appeal may kindly be allowed as submitted above and as claimed in grounds of appeal." 6.1 The remand reports of the AO on the submissions made the by ld. AR for both the years are identical except the names of the shareholders and the amounts. Thus, to avoid duplication remand report pertaining to A.Y. 2007-08 is only being reproduced here as under: "Para 4 - Addition of Rs.8,50,00,000 made u/s.68 of the Act. It is submitted that the addition of Rs.8,50,00,000 received as share application money during the year was rightly made in the hands of the assessee company as the assessee was not able to prove the genuineness and creditworthiness of M/s.KMC Portfolio Pvt. Ltd., Delhi. During the course of survey proceedings in the office premises of Shri Aseem Gupta, CA a black diary was found the impounded. As per your kind directions a copy of black diary impounded from the office of Shri Aseem Gupta, Delhi and statement of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 Delhi, it appears that he is avoiding appearance in this office for confrontation as during his statement at Delhi he has stated that he has provided entry of share application money to the Vacmet Group and now has shown his ignorance." 6.2 In the rejoinder to the remand report, the assessee further submitted as under: "1.1 The Assessing Officer in the remand report at page 1 last para has mentioned that the addition has been rightly made as the assessee was not able to prove the genuineness and creditworthiness of the companies from whom share capital has been received. 1.2 In this regard it is submitted that detailed submission has already been filed before your goodself vide written submission dated 29.03.2012 from which it is conclusively proved that the assessee fully discharge his onus of proving the genuineness and creditworthiness which cast upon the assessee as per the provisions of section 68 of the Act. 1.3 Assessee company once again wish to invite your goodself kind attention to the document filed before the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aseem Gupta. iv) That before the completion of assessment u/s 153A of the Act the Assessing Officer neither provided the statement of Shri Aseem Gupta and the so called Black Dairy nor opportunity of cross examination was allowed which clearly violates the principle of natural justice as the addition in the Assessment Order is entirely based on the statement of Shri Aseem Gupta and the so called Black Dairy ignoring the facts of the case and the document filed before your goodself. It is not out of place but rather important to mention here that before making addition u/s 68 of the Act, no show cause notice was given by the Assessing Officer either in the order sheet or by way of separate notice as regards the Assessing Officer intention of making addition. Thus no opportunity was provided to the assessee company. 2.3 Copy of three statements of Shri Aseem Gupta has been provided. Two statement are dated 26.03.2010, one recorded at 9:15 A.M, place not mentioned where this statement has been recorded. Another statement dated 26.03.2010 recorded at 2D, DDA Flats, Gulabi Bagh, New Delhi. This statement is typed statement whereas the statement recorded by the officer of the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to the facts of the assessee's case and the question arises, for the following reasons, that under why and what circumstances he has given such statement. i) Shri Aseem Gupta who has stated, as per the Department to have provided accommodation entry to the assessee company is not the Director of the companies named M/s KMC Portfolio (P) Ltd or Ganpati Fincap Services (P) Ltd then how and why he has stated the word " my companies". ii) He is not sure that from which company the amount has been given on the dates as mentioned on the separate sheet as in his statement he has stated either from M/s KMC Portfolio (P) Ltd or M/s Ganpati Fincap Services (P) Ltd. iii) On the dates mentioned in the separate sheet no amount has been received by the assessee company either from M/s KMC Portfolio (P) Ltd or from M/s Ganpati Fincap Services (P) Ltd as has been stated by Shri Aseem Gupta. Thus this statement is wrong and no adverse inference can be drawn on this statement. iv) That on inspection of the file it is seen that your goodself during the course of assessment proceedings u/s 153A of the Act issue notice u/s 133(6) of the Act to Shri Aseem Gupta in response to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re allottees alongwith the balance sheets. (iv) copies of share allotment certificates (v) copies of Board resolution of the share applicants It is well settled postion of law that initial burden lies on the assessee to explain the nature and source of the share application money received by the assessee. It is also well settled that the assessee has to satisfactorily establish the identity of the shareholders, the genuineness of the transaction and the creditworthiness of the shareholders. The initial onus of proving these ingredients which lies on the assessee is not static. Once the assessee proves the identity of the share applicants furnishing their PANs and copies of bank accounts and shows the genuineness of the transaction by showing that money in the banks is by account payee cheques or by draft etc. then the onus to prove the transaction as non-genuine will shift to the department. In the appellant's case no discrepancy has been pointed out by the AO in the documents submitted by the assessee neither in the assessment order nor in the remand report submitted during the appellate proceedings. The AO has heavily relied on the statement of Shri Aseem Gupta made by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts filed by the appellant or by the investors in the shares. Nothing comes out from the reading of the assessment orders or from the remand reports of the AO that anything incriminating was found during the search of the assessee's premises. There is not even a whisper to that effect in the assessment orders. Shri D.C. Aggarwal director of the company had along been denying in his statement recorded during the search as well as before the AO that he had not known Shri Aseem Gupta and had no dealings with him. The AO has relied on the entries made in the black diary (Annexure -20), the contents of which as already stated pertain to assessment year 2005-06. As the assessee was not confronted with the statement of Shri Aseem Gupta, keeping in view the principles of natural justice, the AO was directed to give a copy of statement of Shri Aseem Gupta to the appellant and if it wanted to cross examine Shri Aseem Gupta as was demanded before the AO also during the assessment proceedings the same should be allowed. Accordingly, the AO obtained the photocopy of the black diary and statement of Shri Aseem Gupta from ACIT, Central Circle-9, New Delhi that goes to show that at the time of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it by asking for an opportunity to cross - examine the person with reference to statement made by him. As the appellant has not been given the opportunity to cross-examine Shri Aseem Gupta who is department's witness coupled with the fact that he has contradicted his own statement dated 22.04.2010 atleast on two occasions as stated above, therefore, the statement made on 22.04.2010 looses its evidenciary value and cannot be used against the appellant for making the addition. Now coming to the pertinent question as to what kind of proof is required to be submitted by the assessee to discharge its onus to prove the genuineness of credits as appearing in its books of accounts, the Hon'ble Delhi High Court in the case of Divine Leasing & Finance Ltd. 207 CTR (Del.) 38 held as under:- "15. There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the Revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessed it should not be harassed by the Revenue's insistence tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the material produced by the AO rebutting the assessee's documentary evidence. In this regard, a useful reference can be made to the case of CIT vs. Kundan Investment Ltd. 182 CTR (Cal.) 608 wherein the Hon'ble Calcutta High Court observed as under: "……………….. Under s.68, the ITO is empowered to lift the veil of corporate identity and find out as to whether the apparent is real. It is the assessee on whom the onus lies. Unless sufficient materials are produced, the onus does not shift on the Revenue. But once the materials are scrutinized and the result of the scrutiny is communicated to the assessee, the onus shifts from the Revenue to the assessee. Then the assessee has to take appropriate steps for proving its case. Unless there are sufficient materials after such communication, produced by the assessee, the ITO can do no further." With this legal position again adverting to the facts of the case, it is a fact that the share applicants are companies incorporated under the Indian Companies Act. As these are incorporated under the Companies Act, atleast on paper their identity is established. However, it is a matter of record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was a negative balance sheet and the profit was meager though the share premium was Rs.3.36 lacs in earlier year, but nothing is clarified as to why M/s. KMC Portfolio (P) Ltd. made investment in shares in a sum of Rs.8.50 crores. He has submitted that these companies in question were giving cheques only or funds from other companies. Their financing capacity is not explained and since the assessee is the beneficiary, therefore, the addition was rightly made in the case of the assessee. The ld. DR relied upon the decision of Hon'ble Delhi High Court in the case of CIT vs. Nova Promoters and Finlease Pvt. Ltd., 342 ITR 169, in which the findings of the Tribunal were based on irrelevant material or had been entered ignoring relevant material. Therefore, on consideration of the material on record, the order of the Tribunal in deleting the addition on account of share capital was set aside and the departmental appeal was allowed. The ld. DR submitted that even if diary was obtained at the appellate stage, but this was not the sole basis for making addition against the assessee. Similarly, the statement of Shri Aseem Gupta was though obtained at the appellate stage, but again th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny unexplained share capital against the assessee. Therefore, the seized diary and statement of Shri Aseem Gupta would not be relevant to the matter in issue. He has further submitted that there was no share capital from both these companies in assessment year 2005-06 would also prove that the contents of the diary were fabricated. PB-229 is the order sheet of AO dated 19.12.2011 where the AO has verified all the facts of share capital and thereafter did not provide any opportunity to the assessee. Therefore, the addition is unjustified. PB-219 is the explanation of the assessee before the ld. CIT(A), in which it was explained that the name of the assessee has not been mentioned in the statement of Shri Aseem Gupta. Therefore, none of the statements are relevant to the matter in issue under appeals. He has submitted that the AO asked the explanation about the relationship of assessee with Shri Aseem Gupta, which was denied. The detailed reply was filed before the ld. CIT(A) on the matter in issue from PB-7 onwards to satisfy that the addition is unjustified. Since no right to cross examination has been given to the statement of Aseem Gupta, therefore, it could not be read in eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the replies filed by the companies directly to the AO u/s. 133(6) of the IT Act. 9.1 The department heavily relied upon the statement of Shri Aseem Gupta, C.A. in which in initial statement, he has not named the assessee and later on it came on record that his statement was never brought on record of the AO at the assessment stage, which was obtained by the AO as per the directions of the ld. CIT(A) at the appellate stage. Therefore, when his statement was not before the AO at assessment stage, there was no reason to rely upon the same statement against the assessee for making the huge addition. Further, it is established on record that when the statement of Shri Aseem Gupta was obtained at the appellate stage by the AO in the remand proceedings, Shri Aseem Gupta was never produced before the AO for cross examination on behalf of the assessee. Therefore, his statement cannot be read in evidence against the assessee unless the assessee had been given opportunity to cross examine Shri Aseem Gupta. The AO also called explanation of Shri Aseem Gupta u/s. 133(6) and Shri Aseem Gupta filed his reply directly before the AO and denied to have executed any share transaction between the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een recorded and were also reported to the Registrar of Companies. There were sufficient bank balances available in their bank accounts and both these companies confirmed the transactions with the assessee directly to the AO u/s. 133(6) of the IT Act. The assessee also produced on record that these companies filed applications for allotment of shares and ultimately, the shares of the assessee were also allotted to them on making investment in shares. Therefore, evidence and material on record clearly prove the identity of both the share applicant companies, their creditworthiness and genuineness of transactions in the matter. All the decisions cited by the ld. Counsel for the assessee before the ld. CIT(A) clearly support the findings of ld. CIT(A) in deleting the addition. The ld. CIT(A) was, therefore, justified in relying upon the decision of Hon'ble Delhi High Court in the case of Divine Leasing and Finance Ltd. (supra) and Sophia Finance Ltd. (supra) and the judgment of Hon'ble Supreme Court in the case of Lovely Exports Pvt. Ltd. (supra). The ld. Counsel for the assessee during the course of arguments also relied upon the order of ITAT, Agra Bench in the group cases of M/s. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f company who have given entry Name of company who have taken entry Period (A.Y.) Amount of accommodation entry 1. M/s.Moderate Credit Corporation Ltd., Delhi M/s.Vacmet Finance & Investments Ltd., Agra 2006-07 Rs.6 crore 2. M/s.Rav Net Solutions (P) Ltd., Delhi M/s.Vacmet Finance & Investments Ltd., Agra 2006-07 Rs.2 crore 3. M/s.KMC Portfolio (P) Ltd., Delhi M/s.Vacmet Finance & Investments Ltd., Agra 2006-07 Rs.3.10 crore The assessee made similar written submissions, which is incorporated in the appellate order and the ld. CIT(A) giving same reasons for decision deleted the addition. The ld. CIT(A) as far as the contents of Annexure A-20 (black diary) are concerned, found that they do not pertain to the assessee and accordingly, appeal of the assessee was allowed. 12. Both the parties stated that since the issue is same as has been considered in the case of M/s. Vacmet Packagings (India) Pvt. Ltd. (supra), therefore, findings in that case may be followed. The ld. Counsel 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 genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re capital has already been considered and decided on merit by the AO in the regular proceedings u/s. 143(3) on 29.12.2008 prior to search in question, therefore, the similar addition should not have been made in the case of the assessee in the proceedings u/s. 153A of the IT Act. 13. We have considered the rival submissions and the material on record and do not find any justification to interfere with the findings of the ld. CIT(A) in deleting the addition under challenge. On examination of facts and evidence on record, we find that the issue is same as is considered in the case of M/s. Vacmet Packagings (India) Pvt. Ltd. (supra), in which we have dismissed the departmental appeals in ITO Nos. 405 & 406/Agra/2012. Since the issue is identical, which is also admitted by both the parties, therefore, by following the reasons for decision in the case of M/s. Vacmet Packagings (India) Pvt. Ltd. (supra), we dismiss the departmental appeal. 13.1 Apart from the above issue on merit, we find interesting point raised 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search." Ultimately, the Special Bench answered the question as under : "Thus, the question raised before the Special Bench No.1 is answered as under : (a). In assessment that are abated, the Assessing Officer retains the original jurisdiction as well as jurisdiction conferred on him under section 153A for which assessments shall be made for each of the six assessment years separately; (b) In other cases, in addition to the income that has already been assessed, the assessment under section 153A will be made on the basis of incriminating material, which in the context 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 Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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