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2020 (3) TMI 1017 - AT - Income TaxAddition u/s 68 - Addition on account of joint venture agreement - allegation of infusion of its own fund through accommodation entry provider - HELD THAT:- From a perusal of the balance sheet of M/s. NCPL, we note that as on 31-3-2013 M/s. NCPL had share capital of ₹ 19,27,000/- and Reserve & Surplus of ₹ 18,07,40,956, thus total of ₹ 18.26 crs. We also take note of the copy of the accounts of the assessee for the year ending on 31-03-2013. We cannot subscribe to the allegation of the AO that assessee in order to wriggle out of the search conducted on 2.7.2013 at the premises of Mr. Anand Sharma and Mr. Janardhan Chokhani and their statements before the Investigation Wing that M/s. NCPL is a bogus company is engaged in giving/providing accommodation entry, the assessee had come out with a story of JV and is an afterthought. A perusal of the JV agreement dt. 31-7-2012, that it was executed on Non Judicial Stamp Paper of ₹ 50/- and in case if the AO had any doubts about the veracity of the JV agreement, then the AO had powers to investigate and find out the truth which could have come to light whether the Stamp Paper was purchased on 31.7.2013 or was procured later and JV agreement was executed ante-dated by summoning the stamp vendor itself. AO could have summoned the Notary Public and got the statutory books maintained by him and inspected/verified to see whether the date on which the JV agreement executed was on 31.07.2012 is correct or not, which exercise the AO has not carried out and he based his adverse finding on the basis of conjectures & surmises. And it is a matter of fact, that the assessee company was declared as a ‘sick industry’ by BIFR. Assessee had furnished the copy of the JV, copy of the cancellation of JV, and in addition the assessee produced documents to prove the identity, creditworthiness and genuineness of the transaction with M/s. NCPL, M/s. NCPL’s PAN is AACCN5258J and that M/s. NCPL is a regular income tax assessee the ITR intimation is of AYs 2015-16, 2016-17, 2017-18 and 2018-19 - the director of M/s. NCPL has filed an affidavit sworn before the Judicial 1st class Magistrate wherein he has admitted that M/s. NCPL provided ₹ 17.46 cr. to set up manufacturing unit at Silvasa along with the assessee and that the JV has been terminated and that the assessee had refunded the full amount of ₹ 17.46 cr. back to M/s. NCPL. These documents were filed before the authorities below and the documents could not be controverted or its veracity was assailed before us as not genuine documents, therefore, the addition made u/s. 68 of the Act only on the basis of two statements which could not stand the scrutiny of law, was warranted and therefore, the addition cannot be sustained as per law. Audit report of the assessee does not mention the existence of any J.V with assessee. We note that the auditor has not reported the event because the M/s. NCPL had terminated the JV agreement in Feb., 2013 itself and that the assessee company had issued 5 cheques of ₹ 17.46 crs on 31/3/2013 itself in the name of M/s. NCPL. Therefore, the auditor has not reflected the same in his audit report prepared as on 31/3/2013. Thus, we do not subscribe to the views taken by the AO/ld. CIT(A) that the assessee had infused its own fund through accommodation entry provider, M/s. NCPL for the reasons discussed supra. Therefore, we delete the addition as confirmed by the ld. CIT(A) made u/s. 68 - Decided in favour of assessee.
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