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TMI Blog2024 (12) TMI 1325X X X X Extracts X X X X X X X X Extracts X X X X ..... idence to discard it as having no evidentiary value when the AO had considered all of them together to make a case against the assessee. The approach of the CIT(A) in singularly dismissing each piece of evidence, we find, is totally incorrect, and we are of the view that the matter needs to be reconsidered by the CIT(A) after giving a holistic consideration to all the evidences and statements relied upon by the Assessing Officer for holding the share application and share premium received by the assessee during the year to be bogus accommodation entry. Decided in favour of revenue for statistical purposes. Assessment u/s 153C v/s 147 - HELD THAT:- There is no merit on facts itself, in the ground raised by the assessee before us in the impugned CO that the assessment in the present case ought to have been framed in terms provisions of section 153C of the Act as opposed to having been framed u/s 147 of the Act, thus, rendering it invalid. Assessee, has been unable to demonstrate how the provisions of section 153C were applicable in the facts of the case. As per the admission of Assessee himself before us, no material pertaining to the assessee having been found during the search on S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for treating the share capital and premium received by the assessee during the year as bogus accommodation entries to be not sufficient or having no evidentiary value. On the contrary, he found the assessee to have discharged its onus of proving the share capital and premium so received to be genuine having established the identity, creditworthiness and genuineness of the transactions before him. 6. Aggrieved by the order of the ld. CIT(A), the Revenue has come up in appeal before us raising the following grounds:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 6,70,00,000/- made by the AO u/s. 68 of the Act on account of unexplained share capital and share premium received from Prabhav Industries of Rs. 3,20,00,000/-, Shri Ganesh Spinners Ltd. of Rs. 3,00,00,000/- and Juliet Merchants Pvt. Ltd. of Rs. 50,00,000/-, without appreciating the fact that these three companies from which share capital and share premium is claimed to have been received are just paper companies/shell companies and are part of a big nexus managed and controlled by Shri Shirish Chandrakant Shah, Mumbai who is invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shah revealed the fact that 212 companies, which included the companies through which share capital had been received by the assessee, were engaged in providing accommodation entries only by way of share capital, share premium, share application money, unsecured loans, long term and short term capital gains and were all managed and controlled by Shri Shirish C. Shah. Paragraph No. 3.1 of the order of the Assessing Officer lists all such evidences which were found by the Assessing Officer as under:- 3.1 Evidence with regard to the fact that all the 212 companies are managed and controlled by him has also been found. The details of the evidence found during the course of search establishing these facts is summarized hereunder: Details of 220 bank accounts and more than 300 Blank and signed cheque books, bank statements, bank deposits - withdrawal and RTGS slips were found. These pertain to 210 companies including 16 listed companies managed and controlled by him and used for providing accommodation entries by Shirish Chandrakant Shah. Directors of the companies have been found to be dummy and for namesake. Statements of persons who are Directors in large number of companies, have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pintu as the main intermediaries through whom the clients availed accommodation entries from Shri Shirish Shah. The accommodation entries paid were found to be recorded in cheque sheets where the same reference of the intermediary referred to in the cash sheet were found . Thus, correlating the details of accommodation entry maintained in the cash sheets with the accommodation entries paid through cheque recorded in cheque sheets . Details of the accommodation entries were also found in excel sheets in softcopy in sheet named OT start to 31.3.12 . These details in the excel sheet revealed the assessee-company to have been paid cheques amounting to Rs. 30 lakhs (6 entries of Rs. 5 lakhs each) from Prabhav Industries Ltd. mentioning the reference of one of the intermediaries identified i.e. Satish Saraf. 12. Further, even the assessment order notes Shri Ganesh Spinners Ltd. also to be one of the companies managed and operated by Shri Shirish C. Shah. It also notes that the Directors of both Prabhav Industries and Shri Ganesh Spinners Ltd to have filed an affidavit to the effect that they are dummy directors and name lenders as directed by employee of Shri Shirish C. Shah who also af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion entries to the assessee, as having no evidentiary value since the assessee was not afforded any opportunity of cross-examination. This the ld. CIT(A) holds, we find, without controverting the findings of the Assessing Officer who rejects the assessee s request for cross-examination of Shri Shirish C. Shah and others noting that the case of the Revenue is not based merely on the statement of Shri Shirish C. Shah, but also on evidences collected during search and, therefore, until the assessee counters and contradicts the evidences so collected during search, there is no need for providing any cross-examination of Shri Shirish C. Shah and his accomplices to the assessee. The AO rejected cross examination noting that the statement recorded was not the main or material evidences to make the case against the assessee, but was only a collateral evidence. The Assessing Officer relied upon several decisions in this regard, including that of the Hon ble Bombay High Court in the case of Satellite Engg. Ltd Vs. Union of India, 1983 ELT 2177 (Bom.) and Kanungo and Co. Vs. Collector of Customs [1983] ELT 1486 (SC), laying down the proposition that principles of natural justice do not requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various bogus entities and the assessee being a beneficiary from such bogus entities during the impugned year. All the above facts considered together have led the AO to the conclusion that the share capital taken by the assessee from the alleged bogus entities of Shirish Shah was nothing but an accommodation entry. 19. The approach of the ld. CIT(A) in singularly dismissing each piece of evidence, we find, is totally incorrect, and we are of the view that the matter needs to be reconsidered by the ld. CIT(A) after giving a holistic consideration to all the evidences and statements relied upon by the Assessing Officer for holding the share application and share premium received by the assessee during the year to be bogus accommodation entry. For the said purpose, we restore the issue back to the ld. CIT(A) to adjudicate it afresh. 20. The appeal of the Revenue is allowed for statistical purposes. 21. We shall now be dealing with the assessee s cross objection. CO No.144/Ahd/2019 22. The assessee in its cross-objection filed before us has raised the following grounds: 1. The Ld. CIT(A)-11, Ahmedabad erred in law and on facts in dismissing the ground of the Assessee challenging the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search conducted on one Shri Shrish C Shah and his key employee and associates who were allegedly involved in providing accommodation entry. The ld.counsel for the assessee contended that since the basis of reopening was the information collected during search, proceedings under section 153C of the Act, ought to have conducted on the assessee, and since the AO had instead framed assessment under section 147 of the Act, the assessment so carried out was invalid. Reliance was placed on the decision of A-Bench of the ITAT Ahmedabad in the case of Ghanshyam Madhusudan Soni Vs. ITO in ITA No.296/Ahd/2018 dated 2.7.2024 for the proposition that when the action to make assessment was based on material found during third-party search, reopening under section 147 of the Act was not valid in law. Copy of the order was placed before us. 26. The ld.DR on the other hand, vehemently contested this plea of the assessee, stating that it is only in the circumstances that when the material pertaining to a third-person is found during search on a person that proceedings under section 153C of the Act have to be initiated on the third person. The ld.DR emphasised the fact of assumption of jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, thereafter, was asked to submit before us as to which document, therefore, pertaining to the assessee was found during the search on Shri Shrish C Shah. Regretfully and disappointingly, despite taking up so much time of the Bench in arguing on this issue before us, he was unable to draw our attention to even a single document, which could be said to be adverse against the assessee found during search conducted on Shri Shrish C Shah. The only document probably which he could point out before us was the document identified as excel sheet OT start to 31-03-12 . But as the facts noted in the order of the AO and the ld.CIT(A) reveal that this document only revealed entry of share capital received by the assessee from two entities viz. Prabhav Industries Ltd., and Shri Ganesh Spinners Ltd., which were duly accounted for in the books of the assessee. This document found during the search on Shri Shrish C Shah therefore did not reveal anything adverse pertaining to the assessee. On the contrary, the contention of the ld.DR that the information in the possession of the AO from the search conducted on Shri Shrish C Shah was only to the effect that he was involved in providing accommo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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