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TMI Blog2015 (12) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... ed share application money to the tune of Rs. 3.8 Crores from Kolkata and Delhi based companies. After indepth investigationsand after giving many opportunities to assessee, assessee's case for the AY 2010-11 was reopened u/s 147 on 14/03/2014 with reason as below: 2. "......During the course of assessment proceedings of M/s. Paradise Inland Shipping Pvt. Ltd., PAN: AAFCP2941R for AY. 2011-12 it was seen that the assessee has allotted equity shares to various companies from Kolkata and New Delhi. Assessee was asked about the share holding pattern and assessee submitted the following details: Sl.No Name of the Company Address No. of Equity Shares Amount of investment Date of Allotment 1 SONY FINANCIAL SERVICES LIMITED 1/4233, Ansari Road 2nd Floor darya Ganj, New 40,000 40,00,000 09.01.2010 2 AKI ORGANICS PRIVATE LIMITED 449, RPS Flats, Mansarover Park, Shahdara„ Delhi - 110032, Delhi, India 40,000 40,00,000 09.01.2010 3 CONTINENTAL FISCALMANAGEMENT LTD 36, GANESH CHANDRA AVENUE, CABIN NO-4B, KOLKATA - 700013 30,000 30,00,000 09.01.2010 4 CENTAK DISTRIBUTORS PVT LTD 1-B, BLACKBURNLANE, 4th FLOOR ,KOLKATA - 12 50,000 50,00,000 09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... steps to be taken are awaiting." Commission to the Deputy Director of Income Tax (Inv), New Delhi was issued in the matter of share holding companies based out of New Delhi which are: 1. SONY FINANCIAL SERVICES LIMITED 2. AKI ORGANICS PRIVATE LIMITED The Office of the Deputy Director of Income Tax (Investigation), New Delhi replied vide letter dated 10.03.2014, saying that "The principal officers of M/s Sony financial services limited and AKI organics private limited were summoned for furnishing the following details. However, neither of the principal officers responded to the summons Afterwards, an inspector of Unit-VI, New Delhi was deputed to serve the summons at the registered office of AKI organics private limited at 449, RPS Flats, Mansarovar Park, Shandara, Delhi-110032... Inspector's report in this regard is enclosed herewith." Inspector's report said as below: "It was found during my visit to the aforesaid premises that no company in the name of M/s AKI Organics Private Ltd. was found to be existing here. Enquiries from neighborhoods about the existence of the above mentioned company was done. But no one could reply in positive about this company. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as offered how the companies came to know about the share issue. No newspaper advertisement, etc. which publicized the sha4 issue was given No Original receipt of application of these companies for share allocation was .given Thus, the assessee company offered no satisfactory explanation in the opinion of the assessing officer about the share application money credited. In this background, this assessing officer has objective reasonsas discussed above to believe that income chargeable to tax has escaped assessment for the AY. 2010-11. The assessee company not having assessed for A.Y. 2010-11, it is hereby decided to reopen the case u/s 14g for assessment for A.Y. 2010-11..." 3. Subsequently a notice u/s 148 was sent to the assessee on 14.03.2014. Assessee replied to this notice vide letter dated 05.04.2014, saying that the original return of income declaring income as NIL be considered as filed in response to the above notice. In the same letter dated 05.04.2014 assessee asked for reasons for reopening the assessment and a copy of reasons were provided by this office vide letter dated 09.07.2014. Assessee attended the proceedings on 22.07.2014 and 09.03.2015. 4. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. at 65B Guru Garden Road ...(1 company) 11. 13 Khudiram Bose Road, Saranji, Mall Enclave, Kolkata ....(1 company) 12. at 171/12 Ray Bahadur Road ...(1 company) These above companies are fully managed and operated by me and Dilip Agarwal by placing various directors in _ place. I along with Dilip Agarwal are the brain behind these companies and its operations. Q6. Please explain the nature of transactions entered amongst companies operated and managed by you with M/s Rashmi.... and other Rashmi Group of companies. Ans: The above companies have provided accommodation entry in the form of capital and share premium to M/s Rashmi Cement Ltd.... and other Rashmi companies on various dates by charging commission @ 25 paise for Rs. 100 during FY 2007-08 to 2010-11. All the transaction affected by the above companies managed by me with the Rashmi Group are accommodation entries...." 5. Relevant- excerpts of another statement on oath of Shri. Deepak Patwari recorded u/s 131 of the IT Act, 1961 on 05.06.2013. is given below: "...Q4. During the course of your statement recorded on 27.02.2013 u/s 131 of the IT Act, 1961, you have admitted the cash was received from the Ras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari..." 8. The director of M/s Paridhi Finvest Pvt. Ltd, Shri. Amit Agarwal said as below "..I, Amit Agarwal, the resident of 29A, Weston Street, 31(1 Floor, Kolkata - 700012 and the then Director of the company M/s. Abex I-nfocom Pvt. Ltd. during the F.Y 2007-08 was just a dummy director in the company which was operated and managed by Mr. Deepak Patwari. I was just a paid employee of Mr. Deepak Patwari and for signing cheque and balance Sheet I used to get a monthly remuneration of Rs. 2000/- to Rs. 3000/-. The details of the company and their activities can only be provided by Mr. Deepak Patwari..." 9. As can be seen, the companies and directors of the companies who have invested in the Share application of the assessee company are accommodation entry providers. The statements show that they take cash from a customer in various accounts and then route it thru' different companies and then invest in the customer's company as share application money or share application premium. They charge around 25 paise per 100 Rupees for this transaction from FY 2007-08 to 2010-11 which is relevant here. Shri. Deepak Patwari, the person who is managing the business and routing co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of funds side (total) = Rs. 11,53,29,727 6 M/s Orpat Commercial Pvt. Ltd Rs.4,241 (for AY 2009-10) Income side (total) = Rs. 17,99,500 Sources of funds side (total) = Rs. 8,84,54,276 7 M/s J P Engg Corp Pvt. Ltd Rs.54,819 (for AY 2009-10) Income side (total) = Rs. 9,61,93,760 Sources of funds side (total) = Rs. 64,00,20,356 8 M/s Rameswar Retails Pvt. Ltd Rs.2,360 (for. AY 2009-10) Income side (total) = Rs. 10,28,02,814 Sources of funds side (total) = Rs. 9,96,33,555 9 M/ s Paridhi Finvest Pvt.Ltd Rs.78,135 (for AY 2009-10) Income side (total) = Rs. 3,89,96,196 Sources of funds side (total) = Rs. 50,62,99,085 10 M/s Omega Ventures Pvt. Ltd Rs.5,719 (for AY 2009-10). Income side (total) = Rs. 32,52,468 Sources of funds side (total) =Rs.8,38,85,178 As can be seen above, the returned income is negligible in all these companies. The balance sheet of all these companies are big corroborating the fact that the directors of these companies, who are lowly paid employees (Rs 3000-4000 per month), and who are not credit worthy to this extent of crores, are just a front for providing accommodation entry in the form of share application money. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the DCIT, C-1, Margao on 09/03/2015 at 03.25PM. 1. Identify yourself. An-s: I am Shri. Yuri Alemao, S/o of Shri Joaquim Alemao, aged 30 yrs, Director of M/s Paradise Inland Shipping Pvt. Ltd, residing House No. 150, Casa Alemao, Chadwadddo, Varca, Salcate, Goa. My contact numbers are 09552188899 and 0832 2744461. 2. Pl. submit any proof in respect of your identity and residential address Ans: I am submitting herewith photocopy of my election card bearing # SL10280065: 3. What is your educational qualification? Ans: I am a Commercial Pilot. I did my Diploma in Aviation in Australia. 4. Are you aware about the consequences of giving false statement under oath? Ans:. Yes, I am aware of the consequences. 5. Are you filing your return of income? Ans: Yes. My PAN is AKRPA9143M. I have filed my return of income till A.Y 2013-14. I am not sure if I have filed return for AY 2014-15. I am governed by sec 5A of the I T Act. 50% of income ,goes to my spouse Smt. Veolla Dias. I got married in January 2015. 6. What are your sources of income? Ans: I am the Director of M/s Paradise Inland Shipping Pvt. Ltd, Heera Niketan, 1st Floor, Comba, Margao. My brother Shri Braz Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in Delhi and some are in Calcutta as per our submission. Without referring to the list and the addresses of the companies, I am unable to explain the locations of these companies. 12. Do you the Directors of these Companies? No, I do not know any of the directors of these 10 companies. 13. Have you ever talked to the directors of the above companies? No. I have never talked to these directors either through Telephone or any other way. I have never visited Delhi/Calcutta regarding the share application money. I have never emailed or made any correspondence with any of these directors of the above mentioned companies. 14. When did these companies invest in your Company? As per our bank statement - HDFC, Margao Account No.00372320001690, - the investment from the aboVe companies came during December 2009 to January 2010. 15.How did you come to know that the above companies are ready to invest in your company? Ans: I, being the director of the Company, discussed with Mr. Rajendra Prasad Singla, a family friend of ours that we would like to have some investors for the- company. He agreed that hewould get the investors. This way the above companies have invested in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person also. 24. You are hereby shown a statement (Annexure-B) of Shri. Baikunt Nath Pandey Director of M/s JP Engineering Corporation Pvt. Ltd. in front of DDIT, (Inv), Unit-II(3), Kolkata, saying as below: I, Baikunth Nath Pandey resident of 66, Salkia School Road, 5th Floor, block - B, Kolkata - 711106 as then the Director in the following companies during the F.Y. 2009- 10. 1. M/s. Afsons (India) Pvt. Ltd 2. M/s. J.P. Engineering Corpn. Pvt. Ltd. was just a dummy director in those companies which were operated and managed by Mr. Deepak Patwari. I was just a paid employee of Mr. Deepak Patwari and for signing cheque and balance Sheet. I used to get a monthly remuneration of Rs. 2,000/- to Rs. 3,000/-. The details of the companies and their activities can only be provided by Mr. Deepak Patwari. Do you have anything to say? Ans: No. I do not have anything to say. I do not know the person also. 25. In the statement shown to you right now, Shri. Baikunt Nath Pandey, the director of the company has stated that he is just a dummy director in M/s JP Engineering Corporation Pvt. Ltd. and gets paid a monthly remuneration of around Rs. 2000 to Rs. 3000 for signing cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Pvt. Ltd These above companies are fully managed and operated by me and Dilip Agarwal by placing various directors in place. I alongwith Dilip Agarwal are the brain behind these companies and its operations. The above companies have provided accommodation entry in the form of capital and share premium to M/ s Rashmi Cement Ltd. ...and other Rashmi companies on various dates by charging commission @ 25 paise for Rs. 100 during FY 2007-08 to 2010-11...." Have you read the statement and do you have anything to say? Ans: Yes. Ihave read the statement and I do not have anything to say. I do not know anything about the content of the statement. 29. You are hereby shown a sworn statement (Annexure-E)of Shri. Deepak Patwari at The Aayakar Bhawan, Kolkata on 05.06.2013 saying that some companies he is operating are as below: M/s. J P Engg Corp Pvt.Ltd M/s. Centak Distributors Pvt. Ltd M/s. Paridhi Finvest Pvt.Ltd M/s. Kanupriya Commercial Pvt. Ltd M/s. Continental Fiscal Management Pvt. Ltd Do you confirm that you have seen the statement? Ans: Yes. I have seen the sworn statement shown to me. 30. In the above statement of 05.06.2013, Shri. Deepak Patwari said that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hom the assessee claimed to have arranged the investment from other companies. The assessee submitted a reply on 16/03/2015 as under: "...We are in receipt of your letter dated 13/ 03/2015 asking us to produce Mr. Rajendraprasad Singla on 16/ 03/2015. We regret to inform you that Shri. Rajendraprasad Singla expired on 26/03/2013. He was residing at Margao and his detailed address is as under: H. No. 235/ 1, KarleVilla, Pulwado, Benaulim Road, Margao, Salcete Goa 403601 Late, Rajendraprasad Singla is assessed to tax at Circle-1, Margao Goa..." Hence assessee claimed that the middleman expired in 2013. The assessee had said vide his letter dated 09.03.2015 that the investing companies had invested in Hence assessee claimed that the middleman expired in 2013. The assessee had said vide his letter dated 09.03.2015 that the investing companies had invested in However, during the assessment of A.Y. 11-12, when this issue was first identified, assessee had said about the share application money vide letter dated 05.12.2013, as below: "...The promoters of Paradise Inland Shipping Pvt. Ltd. belong to. a business family of considerable repute. The goodwill and credibility is ackn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se companies. They were asked to- get a confirmation from these companies But the assessee did not produce those parties Assessee could not give the contact details other than addresses of those parties. Companies were found to be non-existent in those addresses as verified by DDIT(Inv), Kolkata and DDIT(Inv), New Delhi. No communication with the parties were given No explanation was offered how the companies came to know about the share issue. The latest explanation of communication via a family friend is given after 1 year of asking multiple times how the investor companies came to know about this and the claim is not verifiable since the supposed middleman has expired. No newspaper advertisement, etc. which publicized the share issue was given The Original receipt of application of these companies for share allocation was not given Even after multiple opportunities assessee could only provide public documents available at Ministry of Corporate Website and no original confirmation from assessee. Assessee could not even get a single original communication from the parties other than the share application form. Also, The directors of the investor companies sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 148 dated 14.03.2014 was issued requiring your appellant to file the return of income. In response to the said notice a letter dated 05.04.2014 was submitted stating therein the original return of income filed on 27.09.2010 may please be treated as filed in. response to notice u/s 148 dated 14.03.2014. A letter was submitted on 05.04.2014 seeking the reasons recorded for issue of notice u/s 148. After more than three months the learned ACIT by letter dated 09.07.2014 with an Annexure provided the reasons for reopening the assessment. The sum and substance of the issue of notice as stated in Annexure A to the letter. dated 09.07.2014 was to verify the genuineness and the capability of the companies who invested in share capital of your appellant company. The notice u/s 143(2) dated 09.07.2014 was issued asking your appellant to appear on 22.07.2014 which was complied. A summons u/s 131 dated 02.03.2015 was issued asking your appellant's director Shri. Yuri Alemao to appear in person on Friday 6th of March 2015 which was a public holiday (Holi). Shri. Yuri Alemao was informed over the telephone on 9th of March 2015 calling him to appear before the Assessing Officer on that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. On 9th March your appellant had submitted 550 pages Paper Book containing all the documents relating to the 10 investor companies. The learned ACIT has not sought any clarification on the documents submitted. In the 29 page assessment order not a word is said about the documents submitted by your appellant On 9th March 2015. The learned AO also does not say that the companies who subscribed in to the share capital of your appellant company are non-existent or bogus or they have not invested any funds in the shares of your appellant's company. Under the Income Tax Act, the directors, share holders and the company have a separate status. A private company cannot seek share capital from public by advertising in the newspaper. None of the statements recorded at Calcutta have pointed out any funds flowing out of this company to the investor companies. Under the Companies Act, Directors of the company need not be the shareholders of the companies. Your appellant vide letter dated 10th March 2015 sought the copy of the statement of one of the Directors recorded on 9th March 2015 which was provided after 14 days on 24th March 2015. However, without waiting for our response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Certificate of Commencement of Business d) Acknowledgement of the Return of Income AY 08-09 e) Affidavit of the Director confirming the investment f) Application for allotment of shares g) Photocopy of the share certificate h) Audited account and. Directors report thereon including balance sheet, Profit and Loss Account and schedules for the year ended 31.03.2009 Audited account and Directors report thereon including balance sheet, Profit and Loss Account and schedules for the year ended 31.03.2010 j) The Bank statement highlighting receipt of the amount by way of RTGS. k) Banks certificate certifying the receipt of the amount through Banking channels. 2. AKI Organics Private Ltd. - CIN U74899DL1992PTCO51265 - Date of Registration 08/12/1992 a) Memorandum of Association and Article of Association b) Certificate of Incorporation c) Acknowledgement of the Return of Income AY 08-09 d) Affidavit of the Director confirming the investment e) Application for allotment of shares f) Photocopy of the share certificate g) Audited account and Directors report thereon including Balance- sheet, Profit and Loss Account and schedules for the year ended 31.03.2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh Banking channels. 6. Orpat Commercial Private Ltd. - CIN U51909WB2003PTC096652 - Date of Registration 28/07/2003 a) Memorandum of Association and Article of Association b) Certificate of Incorporation c) Acknowledgement of the Return of Income 09-10 d) Affidavit of the Director confirming the investment e) Application for allotment of shares f) Photocopy of the share certificate g) Audited account and Directors report thereon including Balance sheet, Profit and Loss Account and schedules for the year ended 31.03.2010 h) The Bank statement highlighting -receipt of the amount by way of RTGS. i) Banks certificate certifying the receipt of the amount through Banking channels. 7. J P Engineering Corp Pvt. Ltd. - CIN U34103WB1951PTC019638 -Date of Registration 19/04/1951 a) Memorandum of Association and Article of Association b) Certificate of Incorporation c) Acknowledgement of the Return of Income 09-10 d) Affidavit of the Director confirming the investment e) Application for allotment of shares f) Photocopy of the share certificate g) Audited account and Directors report thereon including Balance sheet, Profit and Loss Account and schedules for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verify that the statement recorded is a voluntary statement or recorded under a threat or duress or with an evil design to protect the investors in those companies or their directors. 5. The assessment is completed by disregarding the written request made by your appellant to arrange the cross examination of the persons whose statements are relied on by the AO. 6. The learned AO has not established the trail of funds invested in the investor companies. Hence the assessment is beating around the bush allowing the real bird to fly away. 7. The learned AO states in the assessment order the date of hearing as 22.07.2014 and 09.03.2015. No hearing has taken place on 09.03.2015 as your appellant's CA was not allowed hence this statement is malicious. 8. All the investments in shares are received through banking channels and appearing as investment in the respective company balance sheets. 9. The shares are allotted at par and no premium is received on allotment. 10. The share capital received was immediately deployed for construction of barge for iron-ore transportation. It is therefore prayed that for all the reasons stated above the appeal may kindly be allowed. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d iii. Paridhi Finvest Pvt Ltd iv. Kanupriya Commercial Pvt Ltd v. The Continental Fiscal Pvt Ltd However there is no doubt raised or statement recorded against the other five companies namely: i. Orpat Commercial Pvt Ltd ii. Rameswar Retail Pvt Ltd iii. Omega Ventures Pvt Ltd. iv. Sony Financial Services Ltd. v. AKI Organics Pvt Ltd 4. The Commissioner of Income Tax (Appeals), after considering the submission of the assessee deleted the addition and held as under: 5. "I have gone through the assessment order and the submission of the appellant. In this case, the appellant company was incorporated on 19th December 2009 i.e. during financial year 2009-10 relevant to A.Yr. 2010-11. After incorporation, the appellant company received share capital totaling to Rs. 3.8 crores and shares were allotted on 09.01.2010, i.e. the same financial year. The investor companies were from Kolkata and New Delhi. With this money, the appellant company purchased barges and commenced its business of transportation of iron ore in the subsequent financial year. Since there was no business in F. Y. 2009-10, the appellant company declared its total income for A. Yr. 2010-11, relevant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r communication. vi) No advertisement or communication was done via media to let investors know about the share issue. vii) Assessee did not have any explanation about the statementgiven by Shri. Deepak Patwari, the operator of investor companies who gave in statement that he is an accommodation entry operator who receives cash from customers and route it through different bank accounts and last route it to customer companies back as share application money etc. viii) Assessee did not have any explanation about the statements given by the Directors of the investor companies who said that they are just lowly paid employees signing on cheques and drafts on behalf of Shri. Deepak Patwari. On the basis of the above, the A.O. concluded that source of investment was not satisfactorily explained by the appellant company and consequently, he added entire share application money amount of Rs. 3.80 Crores as unexplained cash credit u/s.68 as income of the appellant company. On the other hand, the appellant, during the course of appellate proceedings raised following points in its support. i) During the course of reassessment proceedings. A summons u/s.131 was issued to Shri. Yuri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dra Prasad Singla. All the investors are companies, details of which are available on the site of Registrar of companies. Entire share capital has come through banking channels, through account payee cheques. Since these investors were initial investors, inspite of mining boom in Goa, no premium was charged and shares were issued, subscribed and allotted at par. The learned counsel further stated that valid share certificates were issued and all the relevant documents were submitted before the A.O., which he chose to ignore, while framing assessment order. Therefore, the appellant has proved the identity, credit worthiness and genuineness of the transaction and addition u/s. 68 was not warranted. In view of the above facts, in my opinion, the A.O. has made the addition with pre-conceived mind without appreciating full facts of the case. The appellant company is a new company and it could not have made or generated unaccounted income, without even commencement of business, which could have been routed back to the company in the form of share capital on premium. What becomes clear from the order of the A.O. and investigation carried out by the Investigation wing that the source of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the common Directors of these companies Shri Santosh Kumar Gupta, Shri Baikunth Nath Pandey, Shri Amit Agarwal. The assessee claimed before the Assessing Officerthat the money was received through banking channel which are supported by the following documents. i. Copy of Memorandum of Association ii. Copy of Article of Association iii. Copy of Share Application form iv. Certificate of Incorporation v. Income Tax return filled Acknowledgement vi. Affidavit of Directors confirming the investment. vii. Audited accounts and director report viii. Bank certificate certifying the receipt through banking channel 7. In view of this overwhelming evidences and the material furnished by the assessee, the transaction in question cannot be held as not genuine. The identity of share application cannot be doubted. 8. The statement made by the persons in question were self-serving statements and same cannot be taken as evidence against the assessee unless the assessee was allowed an opportunity to cross-examine them. The statements were recorded at the back of the assessee. The assessee vide its letter dated 16/03/2015 specifically asked the Assessing Officerto allow cross exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now the investor companies directly, but a family friend and reputed industrialist of Goa Shri. Rajendra Prasad Singla helped the appellant to get investment from these companies. The A.O. recorded the statement of Shri. Yuri Alemao and he reiterated the same thing. He admitted that he did not know Directors of these companies. The A.O. also confronted Mr. Yuri Alemao with the statements of dummy Directors of investor companies and on the basis of all the material gathered, the A.O. reached the following conclusion: ix) Assessee did not know any of the Directors of these companies x) Assessee said, he will not be able to produce these directors. xi) Assessee never communicated with these companies either there email or telephone or post. xii) Assessee says one Shri. Rajendra Prasad Singla, who is a family friend, got these investors but the assessee company does not have any business dealings with Shri. Singla too. xiii) The claim of the appellant is not verifiable since the supposedmiddleman Shri Singla has expired. xiv) The assessee did not have the acknowledgement of original application receipts either by post or some other communication. xv) No advertisement or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvertising in the Newspaper. vii) Statements of the Directors of the investor companies was recorded at Kolkata, behind the back of the appellant company, and the same was used to draw adverse conclusion in the case of the appellant. Inspite of specific request made vide letter dated 16.03.2015, for allowing cross-examination, the A.O. did not give the opportunity to cross examine, violating the principles of Natural Justice. viii) The A.O. issued a notice u/s.148 to verify the genuineness of investor, which is not permissible under: the provisions of the Act. In the reasons recorded, the A.O. does not mention of any income escaping assessment. Apart from raising above technical grounds, the learned counsel of the appellant argued on facts as under: The appellant company came into existence through incorporation on 19.12.2009 but no business could be started during financial year 2009-10. Since, the appellant company did not have any business, there is no question of earning any unaccounted income, which could be routed back to the company, as alleged by the A.O. The investor companies were contacted through common contact, i.e. Shri. Rajendra Prasad Singla. All the investo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coded by the department the addition made was fully justified. 11. On the other hand, the Authorized Representative of the assessee submitted that the receipt of share application by the assessee from the above mentioned 10 persons are supported by various documents which were filed before the Assessing Officer. In view of these documents, which were filed before the Assessing Officer, the identity of share applicant is beyond dispute. Further, the transactions were through banking channels and were also supported by share application form duly executed by the share applicant companies. Thus, the genuineness of the transaction and their creditworthiness was also proved by the assessee. In these circumstances, the initial onus which was upon the assessee u/s 68 of the Act to explain the nature and source of credit was duly discharged by the assessee. Thereafter, the Assessing Officerignored all these evidences by solely relying upon the statements which were inadmissible in law. He explained that these statements were recorded at the back of the assessee. These statements were self-serving statements made by those persons. The assessee requested for cross-examination of those perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh. Such could be proved by the Revenue in the present case through the statement of the persons, but unfortunately, they were not made available for cross-examination and therefore, the statements could be used as an evidence against the assessee. No other evidence was available with the Revenue. 7. Under these circumstances, if the Tribunal has found that the explanation under section 68 of the Act was acceptable in absence of non-discharge of the burden upon the Revenue, such a finding of fact would not call for interference when the appeal before this Court is limited to the substantial questions of law. The decision upon which the reliance has been placed by Mr.Bhatt in Tax Appeal No.800/12 (supra) is of no help to the Revenue because the facts and circumstances of the present case cannot be equated with the facts of the said case considered by this Court. It is hardly required to be stated that whether the explanation is sufficient or not would essentially depend upon the facts and circumstances of each case. But the principle remains that once the initial burden is discharged by the assessee, it would be for the Revenue to show that the transaction was bogus leading to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport from the decision of the Hon. Supreme Court in the case of Kishinchand Chellarm(supra) and the decision of Hon. Gujarat High Court in the case of Chartered Speed Pvt. Ltd.(Supra). 16. In view of the above settled position of law, we find force in the argument of the assessee that the statements of the persons mentioned above are not admissible evidence against the assessee. In absence of these statements, we find that no other material has been brought on record by the Revenue to show that why still the amount in question should be treated as income of the assessee when the assessee furnished all the documents which were available with it to discharge the onus which was upon it u/s 68 of the Act. In the above circumstances, in our considered view, the addition was made solely based upon the inadmissible and unreliable material and therefore additions so made cannot be sustained. We, therefore, do not find any infirmity in the order of the Commissioner of Income Tax (Appeals) in deleting the addition of Rs. 3.80 crores made by the Assessing Officer as unexplained cash credit. We, therefore, dismiss the ground of appeal of the Revenue. 17. In the result, appeal of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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