TMI Blog2019 (1) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds of appeal of the Revenue is dismissed. - ITA No.4819/DEL/2018 - - - Dated:- 17-1-2019 - SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER For The Appellant : Shri Yogesh Sharma, Sr.D.R. For The Respondent : Shri Raj Kumar Shri Sumit Goyal, CA ORDER PER N.S. SAINI, A. M. This is an appeal filed by the Revenue against the order of learned CIT(A), Meerut dated 06.04.2018 for the Assessment Year 2010-11. The sole issue involved in this appeal is that the learned CIT(A) has erred in deleting the addition of ₹ 69,00,000/- made by the Assessing Officer on account of unexplained cash credit in the guise of sale of shares. 2. The brief facts of the case are that the Assessing Officer observed that information was received from Assistant Director of Income Tax (Investigation), New Delhi that search and seizure/survey operation was carried out upon the entry providers, Shri Pradeep Kumar Jindal, Shri Sajan Kumar Jain, Shri Prem Arora Group and Shri Pawan Arya and his family members. During the course of investigation, it was found that the said persons were entry provider and was providing accommodation entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shares prior to the Assessment Year 2010-11, i.e., partly in Assessment Year 2006-07 and partly in Assessment Year 2009-10 as under: A.Y. 2006-07 Date of purchase No. of shares purchased Face value per share Per share purchase cost Total purchase cost at par 03.02.2006 92070 10/- 9.86 908000 03.02.2006 5000 10/- 10/- 50000 03.02.2006 200 10/- 10/- 2000 Total 97270 960000 A.Y. 2009-10 Date of purchase No. of shares purchased Face value per share Per share purchase cost Total purchase cost at par 22.11.2008 1473005 10/- 10/- 14730050 4.2 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f time and at the same value were sold to the parties other then M/s. Mayank Medilab (P) Ltd. and the Assessing Officer has not doubted the said sale transactions. The assessee has filed copy of sale invoice issued by the assessee to M/s. Mayank Medilab (P) Ltd. showing sale of 5 lac shares. The copy of ledger account of M/s. Mayank Medilab (P) Ltd. in the books of assessee, the bank statement of the assessee, the balance sheet and the details of share holdings of the assessee as on 31.03.2009 and the balance sheet and the holdings of shares as on 31.03.2010 in the books of assessee which all documents has been placed on record clearly proves the contention of the assessee. 4.4 Ld. CIT(A) further observed that assessee was having the capital of ₹ 50,00,000/- in the shape of 5 lac number of shares of M/s Shri Ganga Paper Mills (P) ltd., partly from A.Y. 2006-07 and partly from A.Y.2009-10, and the same holding has never being doubted which was being liquidated in this year at the face value itself brought in ₹ 50,00,000/- from the purchaser of those shares being M/s Mayank Medilab (P) Ltd., and the same has been given vide two RTGS of ₹ 25,00,000/- each, stood c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at only substantive material against the assessee relating to this amount was the report of Investigation Wing which was based on the statements of 3rd parties, recorded behind the back of the assessee and which have been used adversely. In that case, as per the settled law, in case, the assessee, demands for cross-examination, it is necessary for the A.O. to facilitate for the cross-examination in the absence of which, such alleged adverse material cannot be used. This legal preposition stands laid down by Hon'ble Supreme in the case of M/s. Andaman Timber Industries, 281 CTR 241 (SC). The Hon'ble Supreme Court has held as that Denial of opportunity to the assessee to cross-examine the witnesses whose statements were made the sole basis of the assessment is a serious flaw rendering the order a nullity inasmuch as it amounted to violation of principles of natural justice . 4.5 Ld. CIT(A) also observed that he found substance in the contention of the assessee that in the assessment order it is nowhere mentioned that the transaction under consideration has been specifically stated by the said persons as in the nature of accommodation entry. He observed that in the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wing that they had provided accommodation entry to the assessee, Smt. Reeta Singhal. Further, he requested the Assessing Officer to provide cross-examination of the maker of the statement. The Assessing Officer denied the same and added ₹ 69 lac to the income of the assessee as unexplained cash credit u/s.68 of the Act. 6. On appeal, Ld. CIT(A) deleted the addition mainly on the ground that the sum of ₹ 50 lac received by the assessee was towards sale consideration of shares of M/s. Shri Ganga Paper Mills Pvt. Ltd. at face value on which the assessee had not earned any capital gain. The shares already existed in the balance sheet of the assessee in the Assessment Years 2006- 07 and 2009-10. Further, the assessee was not allowed crossexamination of the maker of the statement that the assessee received accommodation entry of ₹ 69 lac in the guise of sale consideration of shares, and therefore, the statement of the persons cannot be used against the assessee for making addition u/s.68 of the Act and relied upon the decision of Hon'ble Supreme Court in the case of M/s. Andaman Timber Industries (supra). No material has been brought on record by the Department t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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