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TMI Blog2017 (5) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... ue raised in ground number 2 by the assessee in this appeal is that learned CIT-A erred in upholding the order of AO by sustaining the disallowance of Rs. 18 lakh on account of share and application money. 4. The facts in brief are that the assessee is a private Limited company where a survey operation u/s 133A of the Act was conducted in the business premises of M/s Bubna Properties Private Limited (for short BPPL) and M/s Gokul Leasing & Finance Private Limited (for short GLFPL) dated 03.80.2011. During the course of survey operation statement u/s 131 dated 04.08.2011 of Shri Rajendra Bubna, Managing Director of the BPPL was recorded wherein it was admitted that accommodation entries of Rs. 18 lacs has been provided to the assessee. The relevant extract of the statement is reproduced below:- "Q.5 Do you know the companies named APS Containers Pvt Ltd. and VKD Traders Pvt. Ltd.? Ans. Yes, I know these companies, they are run by Alok Agarwal. Q.6. During the course of Survey U/s 133A of the IT Act in your office you are stated that you have given accommodation entries of Rs. 18,00,000/- to APS Containers Pvt. Ltd in the FY 2008-09 and Rs. 10,00,000/- in the FY 2009-10 thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that the addition made by Assessing Officer was solely on the basis of the statement given by Mr. Rajendra Bubna, Director of M/s Bubna Properties Pvt. Ltd. (BPPL for short) which was retracted by him in the course of assessment proceedings. Besides this there was no document found in the course of survey suggesting that the assessee has taken accommodation entry from BPPL. The assessee also submitted that the copy of the statement used against it was not made available for the purpose of confrontation. The assessee also submitted that BPPL has subscribed shares of assessee-company forRs. 18 lakh in the year ending as on 31.03.2009 and the net worth of the BPPL i.e. on 31.03.2009 stood for Rs. 1017 lakh. Therefore, it can be inferred that there was sufficient fund available with the BPPL for making such investment in the court. The assessee also submitted that Shri Alok Agarwal, Director of the assessee-company remained silent at the time of recording the statement of Shri Rajendra Bubna u/s 131 of the Act even the allegation was framed by Shri Rajendra Arora against the assessee. It is beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endra Bubna against the appellant company. Hence, the addition of Rs. 18 lakhs made by the AO is confirmed. In support the reliance is placed on the decision in the case of CIT vs. Neva Promoters & Finlease Pvt. Ltd., 342 ITR 169 (Delhi) and CIT vs. Oasis Hospitalities Pvt. Ltd., 333 ITR 119 (Delhi). The ground no. 2, 3, and 4 are dismissed." Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us on the following ground:- "2a) That the Ld. CIT(Appeals) erred in having upheld the addition of Rs. 18,00,000/- 8u/s 68 of Act being the equity share application money received by the assessee in spite of the fact that during assessment proceedings the assessee was able to prove the identity of the share applicant and the source of the subscription as well as genuineness of the transactions by filing copies of bank statement of the investor reflecting its investment in the shares, declaration affirming the investment and source, income-tax details, statement of audited accounts of the investor reflecting the investment made by it in the investee company. (b) That the Ld. CIT(Appeals) failed to appreciate that during search and survey operation at the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as on the BPPL and GLFPL dated 01.08-2011 and 03.08.2011 respectively. At the time of survey operation, a statement u/s 131 of Shri Rajendra Bubna Managing Director of the BPPL was recorded wherein it was admitted the assessee was provided accommodation entry of Rs. 18 lacs in form of share capital. At that relevant time, Shri Alok Agarwal, Director of the assessee company was also present and an opportunity for cross examination was also provided to him for his rebuttal but he remained silent. Thus the addition was confirmed. 7.1 From the foregoing discussion, it appears that the opportunity for cross examination was provided to the assessee in the instant case. But the due procedure as required under the law has not been adhered. As per the provisions of section 131 of the Act the AO after recording the statement of Shri Rajendra Bubna should have issued the summon u/s 131 of the Act to the assessee for its confrontation. Neither such notice has been issued nor any statement of Shri Rajendra Bubna was provided to the assessee for his rebuttal. The director of the assessee company was under no legal obligation to reply at the time of recording the statement of Shri Rajendra Bub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Share Brokers Lt. (2007) 288 ITR 345 (Del) in this case the Hon'ble High Court held as follows:- "We are of the opinion that the Tribunal was right in its view that in the absence of Manoj Aggarwal being made available for cross-examination, despite repeated requests by the assessee, his statement could not be relied upon to his detriment." We rely in the judgment of Hon'ble jurisdictional High Court in the case of Bangodaya Cotton Mills Ltd. vs. CIT (2009) 21 DTR 200 (Cal). In the said case the Hon'ble jurisdictional High Court held as under:- "AO having made the impugned addition simply on the basis of some letters seized from a third party in the absence of any corroborative evidence and without issuing summons to the concerned person or making him available for cross-examination, the order passed by the Tribunal upholding the addition is set aside and the matter is remanded back to the AO to consider the matter afresh." Again the Hon'ble jurisdictional High Court in the case of Eastern Commercial Enterprise (1994) 210 ITR 103 (Cal) at page 111:- "Cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the IT Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/coercion shall be viewed by the Board adversely." From the above circular it is amply clear that the CBDT has emphasized to its officers to focus on gathering evidences during search/survey operations and strictly directed to avoid obtaining admission of undisclosed income under coercion/ undue influence. Keeping in view the guidelines issued by the CBDT from time to time regarding the statements obtained during search and survey operation, it is undisputedly clear that the lower authorities have not collected any other evidence to prove the impugned transaction as bogus other than the statement. Therefore under such facts & circumstances we are inclined to reverse the order of authorities below in this regard direct the AO to delete the addition. Ground No.3 is not required to be adjudicated as the main addition has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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