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Assistant Commissioner of Income Tax Versus M/s Shrim Investment Solution (P) Ltd. & Deputy Commissioner of Income Tax

2015 (5) TMI 896 - ITAT DELHI

Unexplained credits - jurisdiction of provisions of section 153C r.w.s. 153A - CIT(A) deleted addition - Held that:- CIT(A) has deleted the addition in dispute contrary to the principle of natural justice. It is very clear from the submission of the assessee that the AO has made the addition on the basis of statement given by SK Gupta. It is also admitted position that the AO has neither provided the statement of Sh. SK Gupta not provided an opportunity of cross examination to the assessee.

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y Sh.SK Gupta to the assessee and also provide an opportunity for cross examining him and decide the issue in dispute, afresh under the law, after giving adequate opportunity of being heard to the assessee for substantiating its claim before the AO. - Decided in favour of revenue for statistical purposes. - I.T.A. Nos. 5262 & 5254/Del/2013, C.O. NOS. 26 & 25/Del/2014 - Dated:- 17-4-2015 - Shri S.V. Mehrotra And Shri H.S. Sidhu JJ. For the Appellant : Sh. Ramesh Chandra, CIT(DR) For the Responden .....

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CIT(A) is not correct in law and facts. 2. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 32,00,000/- made by the AO on account of unexplained credits received by the assessee company from unexplained sources. 3. The appellant craves leave to add, amend any / all the grounds of appeal before or during the course of hearing of the appeal. 3. The grounds raised in the Assessee s Cross Objection being 26/Del/2013 (A.Y. 2008-09) read as under: .....

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Officer is bad-in-Iaw and void. 2. On the facts and circumstances of the case and in law, the addition I disallowance made by the assessing officer is beyond the scope I jurisdiction of provisions of section 153C r.w.s. 153A and the Commissioner of Income Tax (Appeals) erred in not holding so. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) should have held that the addition made by the Assessing Officer of ₹ 32,OO,OOOI- on account of alleged .....

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g of appeal. The aforesaid grounds are without prejudice to each other. 4. Briefly stated the facts are that a search and seizure action u/s. 132 of the Income Tax Act, 1961 was carried out in the M/s Bhushan Steel Group of cases on 30.3.2010. The premises at 1st Floor, F-Block, International Trade Tower, Nehru Place, New Delhi belong to M/s Bhushan Steel Ltd. was covered u/s. 132 of the Income Tax Act, 1961. During the course of search proceedings various documents pertaining to M/s Kedia Consu .....

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d questionnaire u/s. 142(1) was issued on 10.8.2011 and ld. Counsel of the assesee attended the proceedings and filed the necessary details/ clarifications. In this case the assessee company had filed its original return of income, declaring a total income of Rs. NIL on 26.9.2008. This return was processed u/s. 143(1) of the I.T. Act, 1961 at Rupees NIL. A survey operation u/s. 133A of the I.T. Act, 1961 was carried out in the business premises of one Sh. SK Gupta, CA by the Investigation Wing o .....

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s ₹ 32,00,000/-. The assessee was asked to explain the above transactions vide questionnaire dated 30.9.2011. The assessee has filed its replies with documentary evidences, but same was rejected by the AO and the amount of ₹ 32,00,000/- is treated as unexplained money of the assessee earned from unexplained sources and is added to the total income of the assessee vide assessment order dated 30.12.2011 passed u/s. 153C r.w.s. 143(3) of the I.T. Act, 1961. 5. Aggrieved with the aforesa .....

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ions of the assessee from pages 1 to 26 of the impugned order. After considering the grounds raised by the Assessee and the Written Submissions of the Assessee, Ld. CIT(A) has concluded his finding on the jurisdiction of the AO to initiate the proceedings and decide the same issue against the assessee. 7.1 As regards, second issue relating to incriminating material for recording the satisfaction u/s. 153 for initiating the proceedings, Ld. CIT(A) has also rejected the same by holding that the do .....

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e gone through the assessment order and submissions If the appellant. I shall sift out the undisputed facts. One Sh. S K Gupta admitted during tax investigations and before the Income Tax Settlement Commissioner (ITSC) that he has been providing accommodation entries to various persons / entities. This has been held to be so by the ITSC, and has thus become final and undisputed qua Sh. SK Gupta. The appellant / other persons of Bhushan group have transactions with certain companies controlled by .....

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ital gains in the assessments made. 5.3 It is well settled that strict rules of evidence are not applicable to tax proceedings. It was held in Dhakeswari Cotton Mills Ltd. v. ClT . [1955] 27 lTR 126 (SC) that the ITO is not fettered by technical rules of evidence and pleadings, and he is entitled to act on material which may not be accepted as evidence in a court of law. In C. Vasantlal & Co. v. CIT [1962] 45 ITR 206 (SC) it was held that it is open to the ITO to collect materials to facilit .....

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s neither provided copy of the statements (s) relied upon nor the opportunity to cross-examine the person(s) who made the statement. The revenue on the other hand claims that the assessee was provided opportunity but did not avail of it. The assessee contests it. The Hon'ble Supreme Court in Tin Box Co. vs. ClT [2001] 116 Taxman 491 (SC) held that where the Tribunal had recorded that it agreed with the assessee s submission that the ITO had not given to the assessee proper opportunity of bei .....

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on that Sh. SK Gupta is an entry provider, the transactions that the assessee / his group had with companies controlled by Sh. Gupta are to be treated as accommodation entries and amounts received by the assessee / other persons of Bhushan group are to be held as unexplained credits. The assessee, on the other hand, contents that there is no specific statement made by Sh. S K Gupta implicating the appellant/ other persons of Bhushan group, that the transactions are not loans/ advances / share ca .....

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rarn v Commissioner, of Income, Bombay City II [(1980) 125 ITR 713 (SC)], Hon'ble Apex Court held that ït is true that the proceedings under the income tax law, are not governed by the strict rules of evidence and therefore, it might be said that even without calling the manager of the bank in evidence to prove this letter, it could be taken into account as evidence. But before the LT authorities could reply upon it, they were bound to produce it before the appellant so that the appella .....

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es the assessment. Further, while the finding of the ITSC that Sh. SK Gupta is an entry operator is final qua the said person. This is not final qua the persons / entities alleged to have been taken entries from that person. That finding needs to be examined and corroborated in the facts of each case. The real facts could have emerged had the cross examination been got conducted by the revenue. That has not happened. In this view of the matter, I hold that the case of unexplained cash credit has .....

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position that the AO has neither provided the statement of Sh. SK Gupta not provided an opportunity of cross examination to the assessee. A reference is invited to Pages 9 to 11 of the assessment order, wherein the AO has himself reproduced the reply dated 23.12.2011 submitted before him. In the interest of justice, we are of the view that the if the AO has used any statement against the assessee for making the addition in dispute and the statement is doubted by the AO that statement should be .....

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