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TMI Blog2025 (2) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... hey were not presented for cross examination by the assessee in the assessment proceedings.
Thus, AO has made the additions based on surmises and conjectures without making proper verification of facts with relevant materials and evidences, whereas the CIT[A] made full verification of facts, material evidences and called for a remand report from the AO and deleted the additions. Further Revenue could not dispute the above findings with relevant materials or evidences. Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... Acknowledgement copy of ITR along with copy of Annual Report. iv) Bank Statement, v) Application Form, Form No. 2 vi) Master Data with Directors Details from the website of ROC vii) Memorandum and Articles of Association. viii) Copy of Board Resolution ix) Details of Net worth The copy of summary chart of all the documents submitted along with relevant page number of Paper Book is attached herewith. 3.1. Ld CIT[A] further held that the share application money received from the above companies cannot be treated as unexplained as the amount has been received through cheques and reflected in the audited accounts of the company. There is no factual evidence to prove that the transactions were not genuine or there were some cash transactions to prove that the share application money was not genuine and relied upon Supreme Court judgement in the case of Lovely Exports as follows: "... ... 9.22. After considering the finding given by the AO, the detailed submissions given by the appellant and facts of the case, I am of the considered opinion that appellant company has duly discharge its onus of explaining the share application money received by the appellant company. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banking channels and the appellant company after observing the formalities laid down under the Companies Act as regards to the issue of share capital and allotment of shares and for which necessary forms required to be filed with the Registrar of Companies have also been filed by the appellant company and that the respective parties who have made subscription in the share capital of the appellant company is being duly reflected as the investment in the share capital of the appellant company in their balance sheet and in their books of accounts. Sr. No. Submission of Facts/ Evidences Document Submitted Discharge of Duty by the Appellant 1. Is the existence of investor justified to JCIT.? In other words, is it proved that the investing entity is an actual persons and not fake names / entities created for the alleged purposes? MoA. AoA, Certificate of Incorporation Yes 2. Is it evident that the investing entity is credit worthy after considering their overall financial position in relation to the amount invested? Copy of Audited Balance Sheets Yes 3. Are the accounts of the investing entity audited and were they produced at the assessment stage? Copy of Audited Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s statement recorded behind the back of the appellant company as departmental witness cannot be used against appellant company without granting an opportunity of cross- examination in view of the judicial pronouncements of Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise, cited supra. 9.62, The A.O in the aforementioned paragraph has relied upon the statement of Shri Shirish C. Shah recorded on 11/03/2016 u/s. 131 of the I.T Act before DCIT Central Circle 1(a) Ahmedabad, the copy of which has not been provided to the appellant company nor is it attached to this remand report so it is required and liable to be rejected/ignored altogether on facts as well as in law. This is because the statement is not confronted to the appellant company at any stage even till today." 3.3. Ld CIT[A] held that the AO has alleged the transaction to be that of an accommodation entry without bringing on record independent or cogent material evidence suggesting that genuine transaction so carried out by the assessee company following due provisions u/s. 68 of the Act as well as due process of law as laid down under the Companies Act, 1956 by observin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO by way of bringing anything adverse on record. Further, in spite of availability of all the documents on record, nothing has been brought on record to doubt the transaction with the share applicant companies who have made the share application in the appellant company. The A.O instead of considering the cogent material evidences placed on record by the appellant company chose to rely upon the oral statements of the directors of the two investor companies, despite in the statements given by the directors of the two investor companies nowhere the name of the appellant company is appearing nor admitted of giving any share capital with premium issued to the two investor companies and Iscon Aviation Pvt. Ltd(without premium) being referred in those statements. The A.O, being a quasi judicial authority should have made an enquiry from the directors of the companies as well as from Shri Shirish C. Shah and others on whose statements, chooses to rely upon. It may also be noted that addition has been made on the basis of documents received during search conducted at the third-party premises i.e. Shri Shirish C Shah without any independent enquiry having been made nor supporting eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2011 to 01.10.2014 Acacio Tradelink Pvt Ltd, Jasmin Kumar Lodaya 10.10.2009 to 07.07.2010 Acacio Tradelink Pvt Ltd. Ajay Mahendra Shah 10.07.2013 to 21.01.2016 Acacio Tradelink Pvt. Ltd. Sharmila Bipin Jain 18.05.2010 to 16.06.2012 Adamina Trades Pvt. Ltd. Prasant Sanjay Indalkar 12.10.2012 to 05.03.2014 Adamina Trades Pvt. Ltd. Kalpesh Vinodrai Mehta 01.12.2009 to 13.10.2011 9.76. So when a person was not director or director for few months during the year under consideration then the specific knowledge about the investment in share capital in the appellant company could not be expected from him. Even in their affidavits no one has admitted that the investee company has provided the accommodation entries in the form of share capital to the appellant company. So their affidavits does not have any evidentiary value against the appellant company more so when their affidavits have not been provided to the appellant company for rebuttal in the assessment proceedings or they were not presented for cross examination in the assessment proceedings. 9.77. In the remand report the AO has mentioned that in the statement recorded of Shri Shirish C. Shah on 11.02.2016 u/s 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imary fact that a legally registered and backed NOC was issued in favour of the appellant company for use of the aforementioned portion of the premises puts to rest any legal claims of any third party as regards the possession of the said property especially in view of the statement under oath of Shri Kamleshkumar Naranbhai Patel, an employee of Dalal & Associates not being factually backed by any legal documents or acceptable evidence. 9.67. The statement on oath of Shri Kamleshkumar Naranbhai Patel, an employee of Dalal & Associates used by the AO as reliable incriminating evidence against the appellant company could not have been factually correct with regards to the alleged unhindered occupation of the premises since 2005 by Dalal & Associates as has been taken on record by the AO behind the back of the appellant company without granting the opportunity of cross examination of Shri Kamleshkumar Naranbhai Patel being departmental witness; in view of the Agreement of Business Utility entered and submitted with the ROC. Hence, the statement used by the AO against the appellant company stands disproved and inadmissible on grounds of both factual incorrectness and on grounds of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deposit in the bank account of J.P. Fincorp Services Pvt.Ltd maintained with Allahabad Bank, Ahmedabad& Citi Bank, Ahmedabad and subsequently, return of the funds by J.P. Fincorp Services Pvt.Ltd to the bank account of J.A. Infracon Pvt.Ltd maintained with Axis Bank, Ahmedabad opened, operated and maintained by the directors appointed by the management of companies who subscribed in the share capital with premium of the appellant. company and further, the said funds have been transferred through RTGS to various companies managed and controlled by Shri Shirish C Shah, so as to say the entire funds were enjoyed by none other than Shri Shirish C Shah in his controlled and managed companies, 9.71. The aforesaid facts establish that the share capital along with premium issued by J.A. Infracon Pvt.Ltd. to the respective companies were genuine share capital funds received by J.A. Infracon Pvt.Ltd, and J.P. Iscon Group are not the ultimate beneficiaries of the said funds except the said funds were available with J.P. Iscon Group only for a temporary period as Unsecured Loanfinter Corporate Deposits in J.P. Fincorp Services Pvt. Ltd. and as soon as J.P. Fincorp Services Pvt. Ltd decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5% on the above amount of Rs. 26,25,000/- as unexplained expenditure u/s. 69C of the Act and allowed the assessee appeal. 4. Aggrieved against the appellate order, the Revenue is in appeal before us raising the following Grounds of Appeal: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 10,50,00,000/- made by the Assessing Officer u/s 68 of the Act on account of unexplained cash credit. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 26,25,000/- made by the Assessing Officer u/s.69C of the Act on account of unexplained expenditure. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 5. In support of the above Grounds of Appeal, Ld CIT DR Sri A.P. Singh heavily relied on the assessment order passed by the Ld AO and requested to uphold the additions. 6. Per contra Ld Counsel Ms. Nupur Shah appearing for the assessee strongly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee company is appearing nor admitted of giving any share capital with premium issued to the two investor companies and M/s. Iscon Aviation Pvt. Ltd (without share premium) being referred in those statements. In the above circumstances the Ld AO, being a quasi-judicial authority should have made an enquiry from the directors of the companies as well as from Shirish C. Shah and others on whose statements relied upon by him. It is further noticed that the addition made on the basis of documents received during search conducted at the third- party premises Shirish C Shah without any independent enquiry having been made by the Ld AO nor supporting evidences having been brought on record are not sustainable in law. 9. Thus the A.O has made the aforesaid allegation merely on presumption without bringing on record any independent and cogent material evidences to substantiate that the funds in the guise of share capital have been received in the company by paying cash to Shirish Chandrakant Shah. Further it is noticed that there was no incriminating material or seized material found from the premises of JP Iscon Group when the search was carried out on 25.02.2016. Further the A.O h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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