TMI Blog2015 (12) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... uested for cross-examination of the makers of the statements. But strangely, the Assessing Officer did not take any step to allow effective opportunity to the assessee to cross-examine the makers of the statements. The Assessing Officer did not pursue the matter further. Thus, we find that the assessee was not allowed any opportunity to cross-examine the persons who made the statements at the back of the assessee. In our considered view, the statements of those persons cannot be read against the assessee. See case of Kishinchand Chellarm (1980 (9) TMI 3 - SUPREME Court) and Chartered Speed Pvt. Ltd.[2015(3) TMI 809 - GUJARAT HIGH COURT]. 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 09.01.2010 5 KANUPRIYA COMMERCIAL PRIVATE LIMITED 14 GANESH CHANDRA AVENUE, 2nd Floor, Kolkata-700013 40,000 40,00,000 09.01.2010 6 ORPAT COMMERCIAL PRIVATE LIMITED 33, - C.R. AVENUE, 9TH FLOOR, Kolkata - 700012 25,000 25,00,000 09.01.2010 7 J P ENGINEERING CORPN PVT LTD AE-326, SALT LAKE CITY, Kolkata 700064 25,000 25,00,000 09.01.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No communication with the parties were given No explanation was 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Enclave, Kolkata ...(1 company) 8. At 211/1/ Sarat Chatterjee Road ...(1 company) 9. at 12 Bharpara Road, 4th floor, Howrah ...(1 company) 10. 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 ₹ 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 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a paid employee of Mr. Deepak Patwari and for signing cheque and balance Sheet I used to get a monthly remuneration of ₹ 2000/- to ₹ 3000/-. The details of the companies and their activities can only be provided by Mr. Deepak Patwari... 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 ₹ 2000/- to ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid employees. 11. It was also seen from the statements of these companies that they get money from various bank accounts and were transferred to assessee account within the same day. The profit and loss account and Balance sheet figures of these companies look as below: Sl.No. Investor Company Returned income P L (for AY 2010-11) Balance Sheet (for AY 2010-11) 1 M/s. Sony Financial Services Ltd Rs.56,000 (for AY 2008-09) Income side (total) = ₹ 12,35,283 Sources of funds side (total) = ₹ 11,53,29,727 2 M/s AKI Organics Pvt. Ltd Rs.56,972 (for AY 2008-09) Income side (total) = Rs.8,70,000 Sources of funds side (total) = ₹ 108639994 3 M/s Continental Fiscal Management Pvt. Ltd NIL (for AY 2008-09) Income side (total)= ₹ 1,15,57,930 Sources of funds side (total)= ₹ 40,28,95,480 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitting the photocopies of the applications of investors along with the original for verification. 2. The investing companies had invested in the shares of our company though our common friend Shii. Rajendra Prasad Singla who is a reputed industrialist in Goa. 3. The funds were arranged by Shri. Rajendra Prasad Singla. We have no direct communication with the parties. 4. The Share issue was not a public issue and hence there was no public communication inviting public to invest in our company. Our company is a private limited company and cannot offer its shares to the public either through prospectus or statement in lieu of prospectus. Since we are private limited company any advertisement inviting the public to invest is prohibited by law. I am submitting separately all the documents list in the said letter to prove the identity of the investors and genuineness of the investments and transactions... It was seen from the above submission that even after multiple opportunities, Assessee is still not able to produce the parties Assessee is still not able to give any communication they had with the parties other than a latest explanation that the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N of the Company is AAFCP2941R. 7. Till which A.Y the company has filed the return of income? Ans:The Company has filed the return of income till A.Y 2014-15. 8. When was the Company incorporated? Ans:The company was incorporated in 19/12/2009. 9. For the Asst. Year 2010-11, i.e., year ending 31/03/2010, the Balance Sheet submitted with the Income Tax Department shows that share application money of ₹ 3,80,00,000/- (Rs.3.8 Crores) is received by your Company from various other companies. Do you confirm? Yes, I do confirm. As per the balance sheet shown, M/s Paradise Inland Shipping Pvt. Ltd. has received share application money from the following 10 companies and the share application money totaled to ₹ 3,80,00,000/-. The companies are: a) M/s. Sony Financial Services Ltd ₹ 40,00,000 b) M/s. AKI Organics Pvt. Ltd ₹ 40,00,000 c) Continental Fiscal.Management Pvt. Ltd Rs.30,00,000 d) M/s Centak Distributors Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e located? Ans: Some companies are located 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri. Santosh Kumar Gupta director of M/s Continental Fiscal Management and I have gone thru the contents of the statement. I do not know 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 ₹ 2,000/- to ₹ 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 stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies and their addresses are as follows: 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 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to the reasons recorded vide letter dated 16.03.2015. Assessee's objections, though at the end of proceedings, were rejected via a speaking order dated 20.03.2014. 15. On 13/03/2015, this office issued a letter to the assessee, requesting to produce Shri. Rajendraprasad Singla, through whom 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oesn't 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. Assessee had been given multiple opportunities during assessment to produce the directors or any communication they had with these 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 3.8 Crores is taken as unexplained cash credit since the explanation offered by the assessee is not satisfactory as discussed. 6. The assesee filed appeal against this order of the AO to CIT(A) and submitted as under vide written submission dated 29/4/2015 Your appellant is a Private Limited Company carrying on the business of transportation of iron-ore by means of barges since 19th December 2009. A notice u/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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IDBI Bank, -Brabourne, Kolkata 18.12.2009 25,000.00 7 JP Engineering Corp Private Limited 25,00,000.00 000174 HDFC Bank, Stephen House, Kolkata 19.12.2009 25,000.00 8 Rameswar Retails Private Limited 35,00,000 RTGS Oriental Bank of Commerce ,RN Mukharjee , Kolkata 18.12.2009 25,000.00 9 Paridhi Finvest Private Limited 60,00,000.00 000264 HDFCBank, Stephen House, Kolkata 10.12.2009 60,000.00 10 Omega Ventures Private. Ltd. 35,00,000.00 612764 HDFCBank, GC Avenue, Kolkata 21.12.2009 35,000.00 No notice u/s 143(2) or 142(1) was issued after 22nd July 2014 and till the order u/s 143(3) r.w 147 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said persons particularly Shri Deepak Patwari, Shri. Amit Agarwal and Shri. Dilip Agarwal. This fair request was also summarily rejected, thus denying natural justice. It is an established principle that if share application money is received by your appellant's company from some allegedly bogus shareholders, whose names are given to the Assessing Officer, then the Department was free to reopen those investing individuals/Companies assessments in accordance with the law. However, in no case the amount of share money received can be regarded as undisclosed income under Section 68 of the assessee company. The assessing officer has issued a notice u/s 148 dated 14.03.2014 only to verify the genuineness of the investor which is not permissible under the Income Tax Act, 1961. Hence notice issued u/s 148 itself is bad in law. In pursuance of a notice issued to verify genuineness of investments made by some investors he has inexplicably proceeded on to treat it as undisclosed in the hands of the assesse company. The assessment completed u/s 143(3) dated 25.03.2015 is illegal, bad in law for the following reasons: 1. The notice issued u / s 148 to verify the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) Certificate of commencement of business d) Acknowledgement of the Return of Income AY 09-10 e) Affidavit of the Director confirming the investment f) Application for allotment of shares g) Photocopy of the share certificate 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 Cheque. i) Banks certificate certifying the receipt of the amount through Banking channels. 4. Centak Distributors Private Limited - CIN U51109WB1995PTC073 478 - Date of Registration 11/08/1995 a) Memorandum of Association and Article of Association b) Certificate of Incorporation c) Acknowledgement of the Return of Income AY 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 Cheque. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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. 9. Paridhi Finvest Private Ltd. - CIN U18805WB1996PTC081805 - Date of Registration 17/10/1996 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 Cheque. i) Banks certificate certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. In view of the above your appellant prays that the appeal be allowed. 7. The appellant filed another submission dated 04.05.2015, contents of which are reproduced as under: In continuation to the submission made at the time of hearing on 29.04.2015 your appellant further submits as under: 1. The Company was incorporated on 19th December 2009 and the Company did not commence any business during the previous year relevant to A.Y 2010-11 (period from 19.12.2009 to 31.03.2010). The business commenced only from July 2010 by putting into voyage newly constructed barge for transportation of iron ore. A.Y 2010-11 first assessment year of the company without any business. On the date of receipt of share capital your appellant company was not carrying on the business. 2. As on 31.03.2010 the capital structure of the company was as follows: a. Authorised capital Rs.4,00,00,000/- b. Issued and subscribed capital Rs.3,81,00,000/- c. Issued and subscribed capital Rs.3,80,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yr. 2009-10 at Rs. NIL. 6. During the course of assessment proceedings u/s.143(3) r.w.s.147, the A.O. asked for details of these investor companies and the same was furnished by the appellant. The A.O. issued a commission u/s.131(1)(d) to the DDIT (Investigation), Kolkata and requested him to verify credentials of these companies. Similar request was made to Asst. D.I.T., (Investigation), Delhi also. The A.O. received a report that none of the investor companies could be located at the given addresses. In view of such adverse report, the A.O. reopened the case of the appellant u/s.147 of the Act. In the meantime the A.O. received information from Investigation wing, Kolkata about accommodation entry providers and the A.O. found that companies, which invested in assessee company's shares were also involved in the business of providing accommodation entry. Shri. Deepak Patwari is the person who managed all the companies providing accommodation entries, admitted that he was in the business of providing accommodation entries in terms of capital and share premium. Equipped with this information, the A.O. asked the appellant to prove genuineness of its transactions. In respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons u/s.131 was issued to Shri. Yuri Alemao, the Director of the appellant company to appear in person on 6th march, 2015 which as a public holiday (Holi). He was informed, subsequently, over phone to attend on 9th March and his statement was recorded on the same day in the afternoon. The appellant contended that this statement has no evidentiary value, as it was recorded without any valid notice u/s.131. The appellant placed reliance on the decision of Hon'ble Supreme Court in the case of CIT, Salem Vs Kadar Khan, 352 ITR 481. (SC). Dated 29.09.2012. ii) No Notice u/s.143(2) or 142(1) was issued after 22.07.2014 and till the order was passed on 25.03.2015. On 9th march, 2015, appellant's counsel, Shri. R. K. Pikale was not allowed to argue the matter by the A.O. iii) After 22nd July 2014, no hearing took place, no clarification wassought for and the assessment was finalized with pre-conceived mind. iv) The appellant submitted voluminous documents on 9th march 2015, but the A.O. has not even made a mention of the same in assessment order. v) The A.O. has not said that investment companies were non-existent or bogus or that they have not invested in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation carried out by the Investigation wing that the source of funds in case of investor company is doubtful and that they are in the business of providing accommodation entries, but this does not prove that the appellant company also availed of accommodation entries and it routed its own un accounted income, back to itself in the form of share capital. If at all the funds invested in the appellant company are unaccounted the addition could be made in the hands of investors and not the appellant company. All the statements, on which the A.O. placed reliance, while framing assessment were recorded behind the back of the appellant and the appellant definitely deserved a chance to cross-examine the witnesses of the A.O., since their statements have been used against the appellant. Also, a case can be reopened u/s. 147 for assessing the income escaping assessment and not for making verifications. Thus, in view of the totality of facts and circumstances, the A.O., in my opinion, was not justified in making an addition of ₹ 3.80 crores u/s.68 of the Act. The A.O. is directed to delete the addition of ₹ 3.80 crores accordingly: 5. We have heard rival submissions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 examination of the persons whose statements were recorded at Calcutta. The Assessing Officerdid not respond to the request of the assessee and passed the assessment order on 25/3/2015 u/s 143(3) r.w.s. 147 of the Income Tax Act1961and added the entire amount of share application of ₹ 3.80 crore to the income of the assessee u/s 68 of the Act. 9. On appeal the Commissioner of Income Tax (Appeals), deleted the addition by observing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies 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 communication was done via media to let investors know about the share issue. xvi) Assessee did not have any explanation about the statement given 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 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 persons vide letter dated 16/3/2015. The Assessing Officerdid not allow to cross-examinethem as requested by the assessee. The Assessing Officer without allowing the cross-examination of those persons whose statements were recorded beyond the back of the assesseeunreasonably held that the assessee has not discharged its burden which was on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 conclusion for discarding of the explanation. In the present case, as observed by us hereinabove, the burden was not discharged and therefore the Tribunal has held in favour of the assessee. We do not find that any substantial question of law would arise for consideration in the present appeals, as canvassed. 8. Hence, the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
