TMI Blog2014 (11) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... placed upon any evidence upsetting the view taken, revenue has failed to offer any meaningful argument in support of its claim - No reasons which can be legally accepted so as to remand the matter have also been placed – relying upon ACIT vs Lata Mangeshkar [1973 (6) TMI 13 - BOMBAY High Court] - in the facts of that case reliance placed by the Revenue on the statement of two witnesses was considered to be not relevant for making an addition in the hands of the assessee - whereas one of the witnesses was considered to be a person who could not have any knowledge the other witness who though was a partner in the concerned firm had given a statement that he had made payments to the singer in "black" - the statement at best could arouse suspicion but suspicion could not take place of proof and in the absence of proof, the statement was discarded – there was no merit in appeal – Decided against revenue. - ITA Nos. 5516 & 5517/Del/2012 - - - Dated:- 18-7-2014 - Diva Singh, JM And T. S. Kapoor, AM,JJ. For the Petitioner : Smt A Misra, CIT DR For the Respondent : Shri Ved Jain, CA ORDER Per: Diva Singh,JM. These are two appeals filed by the Revenue against the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized during the course of search in S.K.Gupta Group of cases. He specifically confronted the assessee with the extract of page 25 of Annexure A-1 of party A-5 seized during the course of search and seizure operation in S.K.Gupta Group of cases at H-108, 2nd Floor, New Asiatic Building, Connaught Place, New Delhi. The reply of the assessee thereto however was not accepted by the AO which resulted in the addition of ₹ 27,00,000/-. 2.3. Similarly in 2007-08 A.Year pursuant to a similar notice u/s 153A return declaring an income of ₹ 1,82,556/- was filed by the assessee. The AO after issuance of notice etc. confronted the assessee with question No.10.1 requiring him to explain the entries in the seized documents in S.K.Gupta Group of cases where the assessee s name appeared. The documents described as party Page -5 Annexure A-33 is extracted in the assessment order. Herein also the reply of the assessee was not accepted by the AO who proceeded to make the addition. 3. Aggrieved by this the assessee went in appeal before the CIT(A) in both the years. The CIT(A) considering the submissions advanced on behalf of the assessee deleted the additions made in both the years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the cross-examination of Sh.S.K.Gupta it was his submission that the cross-examination as the impugned order would show was in the presence of the AO and till date there is no statement by Sh.S.K.Gupta that he has ever received any cash or paid any cash to the assessee. The mere argument that he is an entry provider without any evidence was assailed. Referring to the specific questions 14 15 to which the Ld. CIT DR drew attention it was his submission that infact this is an extract from the statement of Sh. S.K.Gupta which was made at the time of search recorded on 13.12.2006 and is not a part of the questions put in the cross examination. Accordingly it was his prayer that since apart from making general and vague submission not borne out from the record, there is no concrete argument assailing the impugned order, the departmental appeals in the absence of any contrary fact or evidence deserves to be dismissed. 5.1. It was further submitted by him that although the issue is purely factual and relief is warranted on facts alone he would still in order to support the impugned order rely upon the judgement of Bombay High Court in the case of ACIT vs Lata Mangeshkar 97 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT DR in reply reiterates that the issue is factual and full facts are not coming out. Referring to page 15 of the impugned order which contains an extract from the statement of Sh.S.K.Gupta. It was her request that the issue may be restored. 6. We have heard the rival submissions and perused the material available on record. Before addressing the issues it would be appropriate to refer to the specific observations made in the assessment order which led to the addition being made on which heavy reliance has been placed by the Ld. CIT DR:- 3. Transactions of the assessee and his family companies/concerns as per the documents seized during the course of search in S.K.Gupta Group of cases:- In this connection, the assessee was asked to give information as per question no.10.2 10.3 of the questionnaire dated 07.11.2008 as under:- 10.2. During the course of search and seizure operation in S.K.Gupta Group of cases at H-108, 2nd Floor, Nes Asiatic Building, Connaught Place, New Delhi, a hand ledger has been seized as per Annexure A-31, in which your account is reflected at page 30 to 33 of the said annexure. The extract of the same is reproduced hereunder for your expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Swen 080252 180000 180000 13-8-05 Swen-716417 96000 940000 Page-31 17-8-05 Swen-SWG-160110 500000 440000 19-8-05 Era-PBN-SNG (PO)-535102 250000 190000 19-8-05 SPG (HDFC)-SNG-160554 250000 60000 20-8-05 Godde-Swen-094622 96000 36000 20-8-05 V.K.Gadde Swen 0495804 96000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bond-SPG TR 300000 6/9/2005 Cash Received 100000 7/9/2005 Cash Received 650000 7/9/2005 Cash received 650000 8/9/2005 Cash Received 685000 8/9/2005 Cash Received 515000 Swen 21600 Swen 21600 Swen (21600X7) 151200 Swen (21600X4) 86400 19-9-05 DD charges of 50 lac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 of Annexure A-1, in which investment entries of companies controlled by Shri. S.K.Gupta is mentioned. The extract of the same is reproduced hereunder for your explanation and giving nature, details and source of the entries mentioned therein. It is worth mentioning that name of certain companies in which you, your family members and your relatives are interested, are appearing in this account. Extract of page 25 of annexure A-1 of Party A-5, seized during the course of search and seizure operation in S.K.Gupta Group of cases at H-108, 2nd Floor, New Asiatic Building, Connaught Place, New Delhi. Sr. No. Date Company name Cheq. No. Amount 1. 15-01-2005 Era Advertising mark. Co. 470221 250000 2. 19-01-2005 Hightech Comvision Limited 190634 250000 3. 15-01-2005 North India Securities Pvt. Ltd. 820708 2500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22-01-05 P.G.Travels Pvt. Ltd. Quality Mamt. Consultants 184218 250000 2. Advertising Marketing Pvt. Ltd. 470222 250000 500000 You are requested to explain your connection with the investing companies and investee companies(your companies), with reference to the books of account and other documents. 3.1 In response thereto, the assessee has submitted following reply vide letter dated 23.12.2008 : 10.2) The assessee has already submitted that the said page 30-33 of annexure A-31 of party A-5 found and seized from the premises of Sh. S.K. Gupta do not belong to the assessee or his family members and concern. The assessee has no concern what so ever in the entries recorded in the said page 30-33 of annexure-A-31 of party A-5 found and seized from the premises of Sh. SK. Gupta. It is submitted further that search was also carried out at the assessee 's residence and office premises. These entries do not corroborate with any documents seized or books of accounts found from the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact the assessee, has taken accommodation entries for his family concerns/companies from tie concerns/companies of Sh. S.K. Gupta Group of cases. For this purpose assessee has made cash payments and also paid commission @ 2% which is very much evident from the entry dated 02.09.2005 at page 31 of annexure A-31 of Party A-5 seized during the course of search and seizure operation in Sh.S.K.Gupta Group of cases. (vi) The assessee has made cash payments on various dates against which the group companies of Sh. S.K.Gupta has issued pay orders, obviously accommodation entries of investment. Even if it is considered that assessee has acted as conduit for getting accommodation entries for his group of companies by rotating the cash funds, the peak cash amount is worked out on 08.09.2005 at ₹ 27,00,000/- (Rs. 1,00,000/- + ₹ 1,00,000/- + ₹ 6,50,000/- + ₹ 6,50,000 + ₹ 6,85,000/- + ₹ 5,15,000/-) Since assessee has failed to give any specific information alongwith confirmation from his group companies/concerns who have taken accommodation entries from the group companies/concerns of Sh.S.K.Gupta, this peak amount of ₹ 27,00,000/- is added to asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven by the appellant for taking accommodation entries. 3. It is also contended that the allegation made by the AD that the appellant being chartered accountant is auditor of various companies of the concerns of Shri S.K. Gupta is not factually correct. The appellant in his submission categorically stated that he had not carried out any audit for Shri S.K. Gupta in his personal capacity. No cogent evidence has been brought on record that the appellant is the auditor of the companies/ concerns of Shri S.K. Gupta. in his personal capacity. No cogent evidence has been brought on record that the appellant is the auditor of the companies/ concerns of Shri S.K. Gupta. 4. It is further contended that the appellant and his family members or relatives are not interested in the said concerns except E - Synergy Infosystems Private Limited. However, it is pertinent to note that M/s E - Synergy Infosystems Private limited is a separate taxable entity and any transactions mentioned on certain pages about the said company cannot be treated as unexplained cash of the appellant. If any transactions related to the said company and any other concern were found recorded in the documents seized f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t doubt, suspicion, conjecture and surmises. It is also pertinent to note that the cases of Shri S.K. Gupta Group were also assessed by the learned assessing officer, but he failed to confirm the said facts from Shri S.K. Gupta during the course of assessment proceedings. 8. It is also contended that the right of natural justice is so fundamental that the failure to observe the principles of natural justice .cannot be made good in appeal and lack of opportunity before the Assessing Officer cannot be rectified by the appellate authority by giving such opportunity. Reliance was placed on the following decisions rendered by Hon'ble Supreme Court: (i) Shreeram Durga Prasad [RB vs. Settlement Commission (1989) 176 ITR 169 (SC)] (ii) Nawaabkhan vs. State of Gujarat AIR 1974 SC 1471 (iii) CWT vs. Jagdish Prasad Choudhary (1995) 211 ITR 472 (Patna) [F.B.] (iv) Appropriate Authority vs. Vijay Kumar Sharma (2001) 249 ITR 554 (SC) (v) Tin Box Co. Vs. CIT (2001) 249 ITR 216 (SC). 6.2. The record shows that these submissions were forwarded by the CIT(A) to the AO as is evident from page 10-13 of the order under challenge wherein the Remand Report received by the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oor, New Asiatic Building, Connaught Place, New Delhi), it is stated that there is no material to show that the assessee was provided any such opportunity. The submission of the appellant that a search and seizure operation was also carried out in the case of the appellant himself and no corroborative evidence was found from his business and residential premises, need not be given any importance as it is a matter of common sense that evidences that can establish unaccounted money (or money's worth 1) are kept to the minimum, in least number of hands/place and that too for the least possible time. Therefore, once evidences to establish the payment of cash for obtaining accommodation entry have been found at one place covered under search, non finding of the same from any other place is immaterial. The submission of the appellant that no other corroborative evidences were found, is incorrect in the light of the following:- a) It has been established that Shri. S.K. Gupta was providing accommodation entries with the help of his companies and entities. b) The evidences relied upon were found from the premises of Shri. S.K. Gupta. (c) The evidence relied upon mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conduit for getting accommodation entries for his group of companies by rotating the cash funds, the peak cash amount is worked out on 08.09.2005 at ₹ 27,00,000/- (Rs.1,00,000/- + ₹ 6,50,000/- + ₹ 6,50,000 + ₹ 6,85,000/- + ₹ 5, 15,000/-). Since assessee had failed to give any specific information along with confirmation from his group companies/concerns who have taken accommodation entries from the group companies/concerns of Shri. S.K. Gupta, this peak amount of ₹ 27,00,000/- was rightly added to assessee's income as unexplained cash in the hands of the assessee. 6.3. The impugned order further shows that thereafter the CIT(A) confronted the assessee with the remand report received. The assessee filed a Rejoinder thereto. The contents of the same have been brought out by the CIT(A) in para 2.2.1 to 2.2.2 of the impugned order. The same is reproduced hereunder for ready-reference:- 2.2.1 In his rejoinder, the appellant has given detailed para-wise arguments against the observations made by the AO in his remand report. According to the appellant, the addition made by the AO was not justified in view of the facts that the documents on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntelligible narrations signifying payments of cash on various dates by appellant to various group companies of Shri S.K.Gupta , who have issued accommodation entries for investment in the companies in which the appellant and his relatives are interested. The appellant on the other hand has contended that no presumption is available to the Assessing Officer u/s 132(4A)/292C of the I T Act with regard to the impugned seized documents as they were neither found and seized from the appellant nor do they belong to the appellant. Further, the appellant has also contended that despite a simultaneous search operation in the case of the appellant, no evidence whatsoever has been found which correlates with the impugned seized documents found from the premises of Shri S. K. Gupta ,a third party. The appellant has also taken the ground that Shri S. K. Gupta himself had denied the authorship/ ownership of the impugned documents during his statement on 13/12/2006 and reiterated the same even during his cross examination by the appellant before the AO on 05/04/2012. The appellant has also taken the ground that since Shri S. K. Gupta, during his cross examination by the appellant before the AO, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies enter transfer and deposits. Further explanations will be given in your office . B. Extracts from the Cross Examination of Sh. S.K. Gupta dated 05.04.2011 as conducted before the AO: 01. Mr. S.K. Gupta as per page 7 and other statements given by you to the Income Tax department during the course of search on your premises on 12- 12-2006 you have disowned Annexure A, particularly Annexure A-31, A-33 and A-5. You have also said that these are rough books lying in your office. Do you still stand by these statements? A 1. I still stand by my statement given on 13-12-2006. 02. Are you the author of annexure A-5, annexure A-31, or annexure A-33 found and seized from your premises? A2. No.1 am not. Q3. Whether I have been given or taken cash as per or in lieu of any recordings done in the annexure A-5, A-31 or A-33? A3. No I have not given or taken any cash from you and your office. 04. Did I pay or receive any commission out of any transactions referred to in any of the annexure A-1,.A-31 or A-33? A4 .. No, neither I received nor I paid any commission. Q5. Do you know any other person by the name Anil Khandelwal? A5. Yes, I know 2-3 more Anil Khan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t possible be construed as books of account regularly kept in the course of business. Such evidence would, therefore, be outside the purview of Section 34 of the Evidence Act, 1972. Therefore, the revenue would not be justified in resting its case just on the loose papers and documents found from third party if such documents contained narrations of transactions with the assessee as decided by the Hon ble Supreme Court in the case of Central Bureau of Investigation vs. V.C.Shukla (1988) 8 SSC 410 and Chuharmal vs. Commissioner of Income Tax (1988) 172 250/38 Taxman 190 (SC). 2.3.3 On a careful consideration of the totality of the facts and circumstances of the case and the evidence on record, it is clear that neither any document was found from the possession or control of the appellant during the simultaneous search operation which shows that any amount was transacted in cash by the appellant with the Companies of Shri. S.K.Gupta for getting accommodation entries from them so as to enable the Assessing Officer to draw adverse inference against the appellant on the basis of legal provision available u/s 132(4A)/292C nor the Assessing Officer has been able to bring out any materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee recorded at office of assessee 14-30 04. Panchnama 31-34 05. Statement of assessee recorded on 25.04.2007 35-39 6. Annexure A - 31 of party 5 seized from the premises of S K Gupta during the course of Search Seizure operation On 12.12.2006 40-41 7. Assessment order under section 143(3) of the I,T Act, 1961 of Anil Khandelwal for the assessment year 2006-07 passed by the Asst. Commissioner of Income tax, Central Circle - 9, New Delhi 42- 47 8. Statement recorded on Cross Examination of Sh.S.K Gupta at the office 35 Of DClT, CC-9, New Delhi. 48-49 09. Copy of Remand Report 50-52 10. Appellate order under section 143(3) of the Income tax Act, 1961 of assessee for the assessment year 2006-07 passed by the Commissioner of Income Tax (Appeals) - XXXII, New Delhi 53-71 IN ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT vs Lata Mangeshkar (1973) 97 ITR 696 (Bom.). A perusal of the same shows that in the facts of that case reliance placed by the Revenue on the statement of two witnesses was considered to be not relevant for making an addition in the hands of the assessee therein. It is seen that whereas one of the witnesses was considered to be a person who could not have any knowledge the other witness who though was a partner in the concerned firm had given a statement that he had made payments to the singer in black . Their Lordships were pleased to observe in the facts of that case that the statement at best could arouse suspicion but suspicion could not take place of proof and in the absence of proof, the statement was discarded. We also find that the order of the Coordinate Bench dated 07.02.2013 relied upon by the assessee in DCIT vs Yashpal Narendra Kumar in ITA No-5340 to 5342/Del/2012 also supports the case of the assessee fully. The Co-ordinate Bench therein held that addition on the basis of statement of the third party without any corroborative evidence is not tenable. 7.2. Accordingly for the detailed reasons given hereinabove, we find that there is no merit in the departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X
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