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2021 (5) TMI 729 - AT - Income TaxValidity of reopening of assessment u/s 147 - HELD THAT:- During the course of search proceedings in the case of Shirish Chandrakant Shah, statements were recorded from various persons on oath. Similarly statement of Shri Shirish Chandrakant Shah was recorded u/s.132(4) of the Act on 13/04/2013 wherein he had accepted that he is engaged in providing accommodation entries against receipt of cash. In the said statement, he also explained the modus operandi followed by him in providing various accommodation entries to various people. From the aforesaid statements, AO observed that M/s. Avance Technologies Ltd.and M/s. Prabhav Industries Ltd., were controlled and managed by the Shri Shirish Chandrakant Shah and these companies are bogus entities from whom the assessee has received share application money against cash. Since these evidences were gathered by the ld. AO pursuant to search and seizure operation conducted in the case of Shri Shirish Chandrakant Shah, the said information constitutes tangible information and accordingly, assessment of the assessee was duly reopened. In the instant case, the reopening has been made within four years from the end of the relevant assessment year. We hold that tangible information was very much available with the ld. AO to trigger the process of reopening and hence, the reopening is held to be valid and accordingly, the ground No.1 raised by the assessee challenging the validity of reopening of assessment is dismissed. Unexplained cash credit u/s.68 - Capital share gain with share premium - All the transactions are routed through account payee cheques in the regular banking channels. The justification for premium was also duly made by the assessee by giving explanation in writing. This clearly proves the genuineness of the transactions. We find that the ld. AO after receiving all the information in the form of various documentary evidence remained silent. AO did not resort to make any verification in any manner whatsoever either by issuing notice u/s.133(6) of the Act or issuing summons u/s.131 of the Act to the concerned shareholders in order to exmine the veracity of such documents. We find that the ld. AO without resorting to any sort of verification in the manner known to law, had simply proceeded to make addition in the hands of the assessee by treating the receipt of share capital and share premium as accommodation entries merely by relying on the statement recorded from Shri Shirish Chandrakant Shah and his key employess. In any case we also find that the statement of Shri Shirish Chandrakant Shah and his key employees were never furnished to the assessee for its rebuttal. Hence, the said statements cannot be relied upon as sole basis for framing addition in the hands of the assessee. We hold that the addition made u/s.68 of the Act in the case of the assessee is merely based on surmise and conjecture and absolutely without any basis and absolutely without any verification in the manner known to law. Accordingly, we have no hesitation in deleting the addition made u/s.68 of the Act in the case of the assessee. Receipt of share capital and share premium are not accommodation entries, there cannot be any addition that could survive on account of commission u/s.69C.
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