TMI Blog2018 (12) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... atory on the part of AO to have provided all the materials, which were used by him against the assessee. In case, the assessing officer was relying on the statement of different persons then the assessee will have to be given an opportunity to cross-examine them and rebut averments made by them. In such cases, otherwise additions cannot be sustained. No offer was made by the learned departmental representative that the copies of the statement of those persons or their cross-examination would be afforded by the revenue now; we do not have any option but to delete the addition made by the learned assessing officer on this count itself. No option but to reverse the finding of the lower authorities and direct the learned assessing officer to delete the addition made under section 68 - decided in favour of assessee. - ITA No. 7825/Del/2017 - - - Dated:- 11-12-2018 - SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For the Appellant : Shri Hiren Mehta CA For the Revenue : Shri S. S. Rana CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT (A)-29, New Delhi [ th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (India) Pvt. Ltd. in ITA No. 12/2017 vide order dated 01.08.2017. 3.7 AO has relied upon the inquiries conducted by Investigation Wing on the investing companies without providing any opportunity to the assessee for a rebuttal during the entire assessment proceedings inspite of issuing specific questionnaires dated 20.01.2015 and 18.03.2015. 3.8 AO has relied upon the inquiries conducted in respect of investing companies based out of Kolkata without confronting with the findings of these inquiries to the assessee for a rebuttal and clarification. 3.9. AO has relied upon the statement of Sh. Rajesh Kumar Aggarwal recorded by DDIT (Inv), Unit-IV(l), Kolkata without providing a copy of the said statement for rebuttal and cross-examination of Sh. Rajesh Kumar Aggarwal which is against the proposition of law laid down by the Delhi High Court in CIT vs. Best Infrastructure (India) Pvt. Ltd. in ITA No. 12/2017 vide order dated 01.08.2017. 3.10 A.O. has relied relied upon the statement of Sh. Radhey Shyam Bansal recorded by DDIT (Inv), Unit-I(2), New Delhi, without providing a copy of the said statement for rebuttal and cross-examination of Sh. Radhey Shyam Bansal. 3.11 AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies. Out of the 18 companies 7 companies submitted the confirmation along with acknowledgement of the return of income filed with the annual accounts to the assessing officer. Therefore the learned assessing officer was of the view that all the share applicants failed to submit the requisite details and documents asked for and only part compliances were made by the aforesaid companies. He consequently held that assessee has failed to satisfy all the conditions of section 68 of the income tax act as the financials of the companies are also weak to show that they are not capable of investing such a huge sum in the assessee company. The entries reflected in the bank statement as per the learned assessing officer clearly indicated the modus operandi of an entry operator company as they are doing no business in just engaged in giving and taking entries living nominal balance in the state bank account. He therefore rejected the contention of the assessee that the transactions under consideration were not in the sense of accommodation entries but are legitimate and genuine transactions. He further stated that during the course of search and survey proceedings the promoters of the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere analyzed and it was found that the entries are credited in the bank account through transfer and on the same date money is debited to the account of those companies leaving nominal balance in the account. He therefore based on these enquiries conducted by the investigation wing, relied upon the decision of the honourable Delhi High Court in case of CIT vs. Nipun builders and developers private Ltd held that the assessee has failed to show the genuineness of the credits and creditworthiness of the share applicants. Accordingly, he made an addition of INR 50,000,000 in the hands of the assessee vide order dated 30/3/2015 determining total income of the assessee at INR 49845015/ against the returned the loss of INR 154985/ . 6. The assessee aggrieved with the order of the learned AO preferred an appeal before the learned Commissioner of Income Tax Appeals. The learned CIT A, held that during the course of search and survey operation appellant was given sufficient opportunity of being heard and they were confronted with all the facts including the whereabouts of the share applicants in the detail and documents and the result of notices issued under section 133 (6) of the act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le with them. Therefore they have invested in the assessee company. He further stated that the assessee has established the identity, creditworthiness and genuineness of the about transaction by the initial discharge of the onus cast upon the assessee but the learned assessing officer, without making any enquiry has made the addition under section 68 of the income tax act. He further stated that the learned Commissioner of income tax appeals has also not carried out any independent enquiry but merely relied upon the observation of the learned assessing officer discarding all the evidences and judicial precedent confirmed the addition. He further stated that since the material statement used against the assessee of the investigation wing have never been confronted to the assessee or given copies of that statement, he therefore stated that when the assessee was not at all confronted for clarification of the details, which are collected by the investigation wing in case of SRM group related to the assessee, assessment order on the same ground is invalid. He referred to the decision of the CIT vs. Sunita Dadha of the honourable Supreme Court in SLP number 49432/2018 dated 28 3/2018. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and balance sheet and profit and loss account of those companies along with the confirmation. After that the ld AO has not carried out any investigation/ inquiry of those shareholders. The learned assessing officer has mostly relied upon the search proceedings in SRM group and statement of 3 directors of that group recorded during search. However, it is a fact that none of these statement showed that the assessee has surrendered any sum on account of this transactions. Further, Shri Praveen Gupta, the director of the company has confirmed and submitted the requisite detail during the course of search proceedings about all these companies. Some other companies disclosed some unaccounted money cannot be used against the assessee without carrying out detailed inquiry and proving the claim of the assessee as false. Based on this information gathered by the investigation wing at that particular time, collected the bank statement of these companies from the bankers. The summons was also issued by investigation wing only which is apparent at para number 24 of the assessment order. Therefore on reading of the assessment order it is apparent that assessing officer has not issued any summon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have also enquired why the banks have not reported that transaction as suspicious transactions. No such inquiries are made by the ld AO. It is not the allegation of the AO that the investments in appellant are not appearing in the balance sheet of investor companies. Para number 39 of the assessment order clearly shows that the learned assessing officer has only seen that certain transfer entries are coming in those bank accounts and the amounts are issued by debit to the various other parties. However, unless the assessing officer proves that these companies, receives the funds were only for providing the accommodation entry to the appellant, addition under section 68 cannot be upheld, When assessee has discharged its initial burden of proving the identity, creditworthiness of the parties and genuineness of the transactions. Ld AO must reach to the submission of the assessee by conducting exhaustive inquires to throw back the onus on the assessee. Further non receipt of the details u/s 133 (6) should be the trigger point to make further inquires; it is not the resting point. In the present case, the fact shows that the assessing officer has merely relied upon the enquiries co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arises; the appeal is consequently dismissed. 10. Further the honourable Supreme Court has also dismissed the special leave petition of the revenue in [2018] 98 taxmann.com 173 (SC) Principal Commissioner of Income Tax v. Himachal Fibers Ltd.* where the honourable Delhi High Court confirmed the deletion of addition under section 68 on account of share application money where the assessee furnished all the details about the shareholders but the AO did not conduct any further enquiry except resting his conclusions on surmises and enquiries conducted by the investigation wing. 11. Further, the decisions relied upon by the learned departmental representative in case of Konark builders ( supra) was on its own facts, wherein The cheque numbers have been mentioned in the affidavits. The dates of cheques mentioned in all affidavits are 23-8-2006 and cheques had been drawn on 'V' bank. The last digit of cheque numbers is 1 and that is how a finding has been recorded that cheque books issued to all the 23 persons were of the same series and first leaf was used by all of them for allegedly making payment of the subscription. The findings of fact of the Tribunal are completely b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the revenue that the share applicants are accommodation entry providers, the assessee did not have any opportunity to rebut those averments made by them. The assessee did not have any occasion to ask for the cross-examination of those entry providers, unless the statement was provided to the assessee. As per principle of natural justice, it was obligatory on the part of the learned assessing officer to have provided all the materials, which were used by him against the assessee. In case, the assessing officer was relying on the statement of different persons then the assessee will have to be given an opportunity to cross-examine them and rebut averments made by them. In such cases, otherwise additions cannot be sustained. No offer was made by the learned departmental representative that the copies of the statement of those persons or their cross-examination would be afforded by the revenue now; we do not have any option but to delete the addition made by the learned assessing officer on this count itself. 14. In view of the above facts and circumstances of the case, we do not have any option but to reverse the finding of the lower authorities and direct the learned assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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