TMI Blog2019 (4) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... ch. Therefore, the assessment for AY 2010-11 & A.Y 2011-12 was deemed completed. Not providing opportunity to cross examination - relying on the decision of the Tribunal in the case of M/s Kota Dall Mill Vs. DCIT [2019 (1) TMI 344 - ITAT JAIPUR] for the A.Y. 2010-11 and 2015-17, it was held that addition made without providing opportunity of cross examination is not sustainable. The details clearly show that at the time of granting of loans to the assessee these companies were having sufficient funds. Further, we have already recorded the details of repayment made by the assessee of these loans and once regular repayment was there even prior to the date of search, then the transactions cannot be doubted as nothing can be achieved by taking the loan and then repaying the same through banking channel even if there is corresponding channelization of cash. As we have discussed that the AO has not pointed out any discrepancy in the financial statements or in the bank account statements of the loan creditors to show that there was deposit or introduction of the cash prior to giving the loan to the assessee no addition to be made. No addition in case of not abated assessment, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectively against the order passed by the ld. CIT(A) in the matter of order passed U/s 153A read with Section 143(3) of the Income Tax Act, 1961 (in short the Act). The grounds taken in the cross appeals by the assessee and the revenue are as under: Grounds of assessee s appeal for the A.Y. 2010-11 1. On the facts and in the circumstances of the case and in law the order passed u/s 153 A read with section 143(3) of the Income Tax Act 1961 is bad in law, void ab-initio, and deserves to be annulled as the assessment for the year under consideration was not abated as on the date of search and CIT (A) erred in holding that the contention of the assessee cannot be accepted in view of SLPs admitted in various cases. The Id. CIT (A) further erred in holding that the additions are to be adjudicated on merits as per relevant ground of appeal hence the issue remains for academic discussion only. 2. On the facts and in the circumstances of the case and in law the Id. CIT (A) erred in not declaring the assessment order as bad in law and void ab initio. The findings of Id CIT(A) in this regard are perverse and erroneous. It is contended that the Id. AO passed the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther erred in confirming the addition of ₹ 67,85,000/- as against actual addition of ₹ 62,85,000/- made by the ld. A.O. 6. On the facts and in the circumstances of the case and in law the Id. CIT(A) erred in rejecting the theory of peak credit and erred in not allowing the benefit of telescoping, recycling and rotation of funds. 7. The assessee prays for leave to Add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal. Grounds of revenue s appeal for the A.Y. 2010-11 1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of ₹ 1,45,00,000/- made by the AO u/s 68 of the IT Act on account of unexplained share application money allegedly obtained by the assessee from M/s Teac Consultants Pvt. Ltd. and M/s Sangam Distributors Pvt. Ltd., M/s Tech Consultants Pvt. Ltd. 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of Share application money by observing that the alleged investor companies M/s Teac Consultants Pvt. Ltd. and M/s Sangam Distributors Pvt. Ltd., M/s Tech Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. Grounds of revenue s appeal for the A.Y. 2011-12 1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of ₹ 1,20,00,000/- made by the AO u/s 68 of the IT Act on account of unexplained share application money allegedly obtained by the assessee from M/s ISIS Mercantile Pvt. Ltd. 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of Share application money by observing that the alleged investor company M/s ISIS Mercantile Pvt. Ltd. is not shell company without considering the financial statements of the company. 3. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of unsecured loans allegedly obtained from M/s ISIS Mercantile Pvt. Ltd. merely for the reason that evidences in the form of statement on oath of the relevant entry operators were not available on record. 4. Whether on the facts and circumstances of the case and in law, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of appeal hence the issue remains for academic discussion only. 2. On the facts and in the circumstances of the case and in law the ld. CIT(A) erred in not declaring the assessment order as bad in law and void an initio. It is contended that the A.O. passed the assessment order against the doctrine of audi alterm partem , violating the principle of natural justice and not giving the opportunity of cross examination of the alleged accommodation entry providers, therefore, the assessment order ought to hold as bad in law and deserves to be annulled. The findings of the ld. CIT(A) in this regard are perverse and erroneous. 3. The appellant craves leave to add, alter, amend, any of the grounds of appeal at or before the time of hearing of appeal. 2. Common grounds have been taken in both the appeals therefore all the appeals as well as the cross objection are being heard together and for the sake of convenience, a composite order is being passed. 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is engaged in the business of leasing of property and plant and machinery. There was a search at various premises of M/s Kota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no bearing with the assessment of this company as the company is separate assessee. However, the Assessing Officer rejected the assessee s submission and made following additions: Assessment year Nature of Addition Description of addition Addition Made Amount Total additions for the Assessment year 2010-11 Share Capital Premium M/s Sangam Distributors Pvt. Ltd. 1,30,00,000 Share Capital Premium M/s Teac Consultants Private Limited. 15,00,000 Unsecured Loan M/s Jalsagar Commerce Pvt. Ltd. 62,85,000 Others Disallowance u/s 14A 53,523 2,08,38,523 2011-12 Share Capital Premium M/s ISIS Mercantiles Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gar Commerce Pvt. Ltd 62,85,000 67,85,000 Share Capital Premium M/s Sangam Distributors Pvt. Ltd 1,30,00,000 1,30,00,000 Share Capital Premium M/s Teac Consultants Private Limited 15,00,000 15,00,000 Others Disallowance u/s 14A 55,523 55,523 2011-12 Share Capital Premium M/s ISIS Mercantiles Pvt. Ltd 1,20,00,000 1,20,00,000 Others Disallowance u/s 14A 1,98,478 1,98,478 Aggrieved by the order of ld CIT(A), both assessee and department is in appeal before us. 9. Rival contentions have been heard the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Central-2, New Delhi v. Meeta Gutgutia [2017] 395 ITR 526. In this case Hon ble Delhi High Court the entire gamut of the case law had been analysed and the legal position was reiterated that unless there is incriminating material qua each of the AYs in which additions are sought to be made, pursuant to search and seizure operation, the assumption of jurisdiction under Section 153A of the Act would be vitiated in law. (Copy at Case Law PB 4-26 in case of M/s Kota Dall Mill) The revenue filed SLP before Hon'ble Supreme Court against the above order, which has been dismissed vide SLP No 1812/2018 dated 02/07/2018 (Copy at Case Law PB 27-28 in case of M/s Kota Dall Mill) Therefore, Hon ble Supreme Court has approved the findings made by Hon'ble Delhi High Court. (iii) Hon ble Delhi High Court in the case of Pr. CIT Central-2 v/s Ram Narain Jindal in ITA 1020,1021,1023/2017 vide order dated 21/11/2017 (Copy at Case Law PB 29-30 in case of M/s Kota Dall Mill) relying the decision of Kabul Chawla has held that:- In these appeals, the addition made under Section 153A were set aside by the Tribunal, on application of the decision in Commissioner of Income Tax Vs. Kabu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Pr. CIT Central-3 v/s Dharampal Premchand Ltd in ITA 512,513,514/2016 vide order dated 21/08/2017. (Copy at Case Law PB 194-198 in case of M/s Kota Dall Mill) (xii) Hon ble Delhi High Court in the case of Pr. CIT -2 v/s M/s Global Realty Creations Ltd, M/s Global Heritage Venture Ltd in ITA 1097-1098/2017,1099/2017 1100 /2017 vide order dated 04/12/2017 (Copy at Case Law PB 199-201 in case of M/s Kota Dall Mill) (xiii) Hon ble Delhi High Court in the case of Pr. CIT -6 v/s New Horizon Buildwell P. Ltd. in ITA 1107/2017 1112/2017 vide order dated 05/12/2017 (Copy at Case Law PB 202-203 in case of M/s Kota Dall Mill) (xiv) Hon ble Delhi High Court in the case of Pr. CIT -1 v/s Rakesh Kumar Garg Kusum Lata Garg in ITA 984/2017, 114/2018, 94/2018 1029/2017 vide order dated 12/03/2018. (Copy at Case Law PB 204-206 in case of M/s Kota Dall Mill) (xv) Principal Commissioner of Income-Tax-18 V. Ms. Lata Jain [2016] 384 ITR 543 (Delhi) (Copy at Case Law PB 158-159 in case of M/s Kota Dall Mill) (xvi) Hon ble ITAT Jaipur has decided several cases following the decision of Hon ble Delhi High Court in the case of Kabul Chawla and decision of Hon ble jurisdictional Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m various companies are not genuine. In view of above submission this is to submit that order passed u/s 153A r.w.s. 143(3) of Income Tax Act, 1961 is bad in law, void-ab initio and deserve to be annulled and the findings made by ld CIT(A) deserves to be set aside. 11. In support of the proposition that the assessment order passed without giving opportunity of cross examination amounts to violation of principles of natural justice, therefore, the assessment order ought to have been held as bad in law and deserves to be annulled. Reliance was placed on the decision in the case of M/s Baran Roller Flour Mills Pvt. Ltd. for the A.Y. 2010-11 and 2011-12. It was argued by the ld AR that the assessee has taken the similar ground in the group's main lead case M/s Kota Dall Mill (in ITA 997/JPR/2018, ITA 998/JPR/2018, ITA 999/JPR/2018, ITA 1000/JPR/2018, ITA 1119/JPR/2018, ITA 1001/JPR/2018 and ITA 1002/JPR/2018 for A.Y 2010-11 to A.Y 2016-17). Hon'ble ITAT has followed its findings on this issue in assessee's another group case M/s Baran Roller Flour Mills Pvt. Ltd (in CO 45/JPR/2018 CO 46/JPR/2018). The facts and circumstances of this case are same to M/s Kota Dall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to crossexamine those dealers and what extraction the appellant wanted from them . ii) Commissioner of Income Tax v. Ashwani Gupta, 2010 322 ITR 396 (Del); The Delhi High Court held that once there is a violation of the principles of natural justice inasmuch as when its seized material was not provided to an assessee nor was he permitted to cross examine a person on whose statement the Assessing Officer relied, it would amount to deficiency, amounting to a denial of opportunity and therefore violation of principles of natural justice. In that case CIT (A) had deleted addition made by the Assessing Officer since the Assessing Officer had failed to provide copies of seized material to the assessee nor had he allowed the assessee to cross-examine th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not accepting the said loan transaction as a genuine transaction by the Assessing officer and the resultant addition made under section 68 of the Act. Undisputedly, the primary onus to establish genuineness of the loan transaction is on the assessee. In the instant case, the assessee has provided the necessary explanation, furnished documentary evidence in terms of tax filings, affidavits and confirmation of the Directors, bank statements of the lender, balance sheet of the lender company, and an independent confirmation has also been obtained by the Assessing officer to satisfy the cardinal test of identity, creditworthiness and genuineness of the loan transaction. However, the Assessing officer has not given any finding in respect of such explanation, documentary evidence as well as independent confirmation. Apparently, the reason for not accepting the same is that the Assessing officer was in receipt of certain information from the investigation wing of the tax department as per which the transaction under consideration is a bogus loan transaction. The said information received from the investigation wing thus overweighed the mind of the Assessing officer. The Assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mali vs. CIT 256 ITR 536(Raj.) among others. In this regard, it was submitted by the assessee that if the entries and material are gathered behind the back of the assessee and if the AO proposes to act on such material as he might have gathered as a result of his private enquiries, he must disclose all such material to the assessee and also allow the cross examination and if this is not done, the principles of natural justice stand violated. 2.9 In light of above discussions, in our view, the crux of the issue at hand is that whether the principle of natural justice stand violated in the instant case. In other words, where the AO doesn t want to accept the explanation of the assessee and the documentation furnished regarding the genuineness of the loan transaction and instead wants to rely upon the information independently received from the investigation wing of the department in respect of investigation carried out at a third party, can the said information be used against the assessee without sharing such information with the assessee and allowing an opportunity to the assessee to examine such information and explain its position especially when the assessee has requested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Law PB 585-591 filed in case of M/s Kota Dall Mill) has held that whether there was any material evidence to justify the findings of the Tribunal that the amount of ₹ 1,07,350 said to have been remitted by Tilokchand from Madras represented the undisclosed income of the assessee. The only evidence on which the Tribunal could rely for the purpose of arriving at this finding was the letter, dated 18-2-1955 said to have been addressed by the manager of the bank to the ITO. Now it is difficult to see how this letter could at all be relied upon by the Tribunal as a material piece of evidence supportive of its finding. In the first place, this letter was not disclosed to the assessee by the ITO and even though the AAC reproduced an extract from it in his order, he did not care to produce it before the assessee or give a copy of it to the assessee. The same position obtained also before the Tribunal and the High Court and it was only when a supplemental statement of the case was called for by this Court by its order, dated 16-8-1979 that, according to the ITO, this letter was traced by him and even then it was not shown by him to the assessee but it was forwarded to the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The order of the ld CIT(A) is accordingly confirmed and the ground of the Revenue is dismissed. 14. It was also argued by the ld AR that the assessment order has been passed on the basis of unacceptable, unreasonable, incorrect and misconceived interpretation of the various judicial pronouncements of Hon ble Apex Court and Hon ble High Courts as relied upon by the Ld. AO, which is explained as under: (i) Dhakeswari Cotton Mills Ltd V. Commissioner of Income Tax, West Bengal (1954) 26 ITR 775 (SC): Ld. AO has proceeded with to pass the assessment order in violation of the principles and ratio laid down by the Hon ble Apex Court in the aforesaid judgment. While placing reliance upon the judgment of Hon ble Apex Court in case Dhakeswari (supra) , Ld. AO declined access to the documents, relied upon by him and did not afford opportunity for cross-examination of witnesses, statements of which were recorded behind the back of Appellant on the pretext that Income Tax Officer is not fettered by technical rules of evidence and pleadings and he is entitled to act on material which may not be accepted as evidence in a court of law. However, ld. AO failed to appreciate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is submitted that in the present case of the Appellant, Appellant has already discharged its prima facie onus to prove the cash credit by furnishing relevant documents substantiated identity, creditworthiness and genuineness of the transaction. The ld. AO could not pointed out any defects in the documents or material so furnished by the appellant. However, Ld. AO failed to apply ratio laid down by Hon ble Apex Court that burden of proof is fluid for the purposes of Section-68. Once assessee has submitted basic documents relating to identity, genuineness of transaction and creditworthiness then AO must do some inquiry to call for more details to invoke Section 68. However, in the instant case of Appellant, the burden of proof for identity, creditworthiness and genuineness of the transaction was duly discharged by the Appellant by submitting all the relevant records and affidavit of respective Lenders. The respective Lenders have also filed relevant documents with Ld. AO and respective authorities, in reply to notice under Section-131 and 133(6) of the Act. It is also pertinent to mention that no authorities raised any doubt regarding the truthfulness of the document, furnished by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id judgment with that of the case of Appellant is a misconceived interpretation of the Ld. AO. (iii) Commissioner of Income-tax v. Durga Prasad More [1971] 82 ITR 540 (SC) and Sumati Dayal v. Commissioner of Income-tax [1995] 80 TAXMANN 89/214 ITR 801 (SC) : Ld. AO, while placing reliance upon the aforesaid judgments has held that the theory of preponderance of human probability as pronounced by the Hon ble Apex Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 and Sumiti Dayal v. CIT (1995) 80 Taxmann 89/214 ITR 801 (SC) is of utmost importance. In the cases where it has been established that the source company is a near Paper Company solely engaged in the activity of providing accommodation entries, the presumption on the basis of human probability is important. Ld. AO has placed reliance upon the observation of Hon ble Supreme Court in CIT v. Durga Prasad More (1971) 82 ITR 540 that it is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and a little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax v. Independent Media (P) Ltd 210 Taxmann 14 (Delhi) (2012) Though the Ld. AO has placed reliance upon the aforesaid judgment to substantiate his action for making addition under Section-68 of the Act but the act of Ld. AO is derogatory to the aforesaid judgment of Hon ble High Court of Delhi. Ld. AO did not provide opportunity to the crossexamination of so-called witnesses, relied upon by Ld. AO, which must have been allowed as held by the Hon ble High Court of Delhi in the above judgment. The relevant paras are reproduced below: the Tribunal, however, may be justified in directing the assessing officer to afford an opportunity to the assessee of cross-examination the persons who had allegedly given statements before the Investigation Wing implicating the assessee in the modus operandi adopted by them, namely, giving of accommodation entries for commission . the assessee appears to have sought cross-examination of those persons but that opportunity was not given by the assessing officer as found by the Tribunal, a position not disputed before us on behalf of the Revenue . We may only state that the assessing officer shall act in accordance with law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings, the Income Tax Officer is supposed to follow the principle of natural justice and when a notice is given to the assessee to explain such an entry, the explanation which has been given has to be taken into consideration . In the instant case of Appellant, Ld. AO has acted in utter disregard to the principle of natural justice and neither considered documentary evidences nor considered the explanation of the Appellant. Furthermore, Ld. AO without appreciating what has been held in the aforesaid judgment of Hon ble Court has acted in derogatorily to the aforesaid pronouncement itself. It has clearly been held by the Hon ble Court that If the explanation is not supported by any documentary or other evidence, then the deeming fiction credited by Section-68 can be invoked . In the instant case of the Appellant ample documentary evidences were submitted by the Appellant as well as by the Lender Companies. More so, the Lender Companies executed affidavits duly supported by the relevant records and the same were submitted to the Ld. AO along with the explanation. Furthermore, the respective Lenders duly complied with the notices under Section-131 and/or Section-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the money and, lastly, the genuineness of the transaction. These things must be proved prima facie by the assessee and only after the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts on the department . 15. In view of above, it was contended that the cases cited by AO are entirely distinguished from those the appellants case or AO failed to apply the ratio laid down by the Hon ble Courts in those cited cases, as such no reliance should be placed on the cases, having no relevancy with the Appellant case. However, most of the cases, cited by the AO are supporting the contention of the Appellant, as submitted above. In view of the above, impugned assessment orders for AY 2010-11 and AY 2011-12 deserve to be quashed as the same is bad in law, perverse and without jurisdiction and passed in violation of principles of natural justice. 16. We have heard the rival contentions and carefully gone through the orders of the authorities below. We also perused the order passed by the Coordinate Bench in group case, as cited above. We had also deliberated on the judicial pronouncements referred by the lower authorities in their respective orders as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 and CO Nos. 45 46/JP/2018. The pr cised observation of the Tribunal in the case of Kota Dall Mills Vs. DCIT (supra) are from page No. 92 to 102 as reproduced under: 15. We have considered the rival submissions as well as the relevant material on record. The AO has made the addition on account of unsecured loans taken from all the parties whereas the ld. CIT (A) has deleted the addition in respect of the loans taken from M/s. Birla Arts Pvt. Ltd., M/s. Teac Consultant Pvt. Ltd and M/s. Sangam Distributors Pvt. Ltd. and confirmed the addition made on account of loan taken from M/s. Jalsagar Commerce Pvt. Ltd. The issue of addition made in respect of the unsecured loans taken from M/s. Jalsagar Commerce Pvt. Ltd. was considered and decided by us in the assessee s appeal. The revenue is aggrieved by the order of the ld. CIT (A) as the unsecured loans taken from these three companies were deleted on the ground that the AO was not having any material to substantiate that these companies are controlled by so called entry operators. The relevant finding of the ld. CIT (A) in para 6.1 to 6.14 are as under : 6.1 As discussed in para 4.4.8 above, in respect of these three le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions is established. There is no gain saying that the onus squarely lies on the appellant to prove the identity, creditworthiness and genuineness of the cash credits. In the case of Addl. CIT v. Bahri Bros. (P) Ltd. [1985] 154 ITR 244 (Pat), the Hon'ble Patna High Court has held if the loans are given by an account paying cheque, it amounts to identification of the parties and discharge of burden by the borrower . In view of the above, it is clear that Appellant discharged its burden u/s 68 of the Act. Even otherwise, there is no adverse finding of any investigation conducted by the department in relation to these companies. Therefore, in the absence of any independent inquiry and any adverse findings to rebut the evidences filed by the Appellant, I find that the addition in respect of unsecured loans from 03 companies namely, M/s Birla Arts Private Limited, M/s Teac Consultants Private Limited and M/s Sangam Distributors Private Limited totaling to ₹ 12,36,40,000/- is unjustified; firstly, on the ground that no inquiries were made to rebut the evidences filed by the Appellant and secondly, on the ground that Appellant duly discharged its burden casted upon u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and with respect to LTCG only and not in respect of any other transactions be it be receipt of unsecured loans. Further, Rajendra Agarwal is not a partner in the Appellant Firm. Therefore, I find that in the absence of any nexus of the Statement of Shri Rajendra Agarwal with the appellant firm or its total income, this basis of addition adopted by the AO is farfetched cannot be concurred. 6.7 It is further seen that AO has not brought any specific defect / discrepancies in the direct evidence brought on record by the Appellant. The AO has observed that on the date of debit in the account statement of creditor, there is corresponding credit entry of equal amount, however, this observation of the AO is itself not sufficient to prove beyond doubt that Appellant routed its unaccounted income by these companies rather it proves the source in the hands of the Appellant. It is usual business practice, while making loans to party, funds are required to be arranged by the lender, therefore reflection of such entries in bank statement doesn t lead to draw any adverse inference against the Appellant. Needless to say that Appellant is not required to prove source of the source u/s 68 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the department is free to reopen the assessment of creditor and no addition can be made in the hand of borrower as rightly held in case of CIT v/s Lovely Exports Pvt. Ltd. [2008] 216 CTR 195 (SC), Commissioner of Income-tax v. Rock Fort Metal Minerals Ltd. [2011] 198 TAXMAN 497 (Delhi), Divine Leasing Finance Limited [2008] 299 ITR 268 (Delhi) CIT v. Orissa Corporation (P.) Ltd. [1986) 159 ITR 78/25 Taxman 80F (SC) and others on this question of law. 6.11 Further, power to call for information/production of evidences or enforcing attendance under the law is given to the income tax authorities only and therefore, in view of the judgment CIT v/s Victor Electrodes Ltd. [2010] 329 ITR 271, the Appellant cannot be fastened upon the burden to produce the lenders before the assessing authorities though in the instance case, appellant has cooperated in assessment by showing his willingness to produce the directors of lender companies and some directors/officer were also produced before the AO. Thus, in view of the judicial precedents referred above, under the facts and circumstances of the present case it is untenable to make any addition for alleged non-appearance by the concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is legally untenable and unjustified. 6.14 In view of the above discussion of relevant facts and following the several ratios on the subject from Hon ble Apex Court, High Courts including jurisdictional High Courts, Tribunals including jurisdictional Tribunals, the impugned addition in respect of unsecured loans from 03 companies namely, M/s Birla Arts Private Limited, M/s Teac Consultants Private Limited and M/s Sangam Distributors Private Limited totaling to ₹ 12,36,40,000/- is not sustainable and hence the same stands deleted. Thus the ld. CIT (A) was of the view that so far as the loans taken from M/s. Jalsagar Commerce Pvt. Ltd., the AO was having the statement of Shri Anand Sharma to the effect that the said company was involved in providing accommodation entry and controlled by the entry operator whereas in respect of these three companies the AO was not having any document or even the statement of any person who are entry operators and controlling these companies so as to establish that the transactions are in the nature of bogus accommodation entries. We have already considered the issue on merits in respect of the addition made on account of unsec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 996-1997 1995-1996 26,00,000 2001-2002 2000-2001 73,98,000 2003-2004 2002-2003 1,00,00,000 2005-2006 2004-2005 4,85,50,000 2007-2008 2005-2006 3,35,00,000 2010-2011 2009-2010 2,76,00,000 2011-2012 2010-2011 94,00,000 M/s Sangam Distributors Pvt. Ltd . Assessment Year Financial Year Share capital raised 2005-2006 2004-2005 2,47,50,000 2006-2007 2005-2006 10,50,00,000 2007-2008 2006-2007 7,93,50,000 2011- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bogus entry provider. The AO has referred to the statement of Shri Anand Sharma and other three persons as mentioned in the report of the Investigation Wing for treating the share capital and premium received from these two companies as undisclosed cash credit being the assessee s own unaccounted and undisclosed income routed in the shape of share capital and premium. It is also not disputed that the AO was not even having the alleged statement of Shri Amit Kedia and Shri Alok Harlalka but only a reference was made in the report of the Investigation Wing. Therefore, except the report of the Investigation Wing Kolkata, the AO was not having any other material in his possession to support his decision of treating the share capital and premium received from these two companies as bogus transaction and addition under section 68 of the Act. On the contrary, the assessee has produced the following documentary evidence in support of the claim :- M/s Teac Consultants Pvt. Ltd S. No. Particulars Paper Book Page No. 1 Copy of Ack. of ITR of AY 2010-11 along with compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 486-487 2 Copy of Balance sheet of AY 2010-11 along with enclosures 488-489 3 Copy of relevant page of bank statement showing the entry of payment made to assessee. 490 4 Confirmation of account showing the transaction with Assessee Company. 491 5 Copy of share application form of equity share 492-493 6 Copy of affidavit of Mrs Neelam Gautam director of M/s Birla Arts Pvt Ltd. On behalf of amalgamated company M/s Sangam Distributors Pvt Ltd. 494-497 7 Copy of order dated 19.07.2014 passed by Calcutta High Court regarding amalgamation of other companies in this company 498-524 8 Copy of balance sheet of company of 31.03.2010, 31.03.2011, 31.03.2012, and 31.03.2013. 525-528 9 Copy of assessment order passed in the case of above named company for AY 2006-07, AY 200708 and 2013-14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t orders passed under section 143(3) in respect of the share applicant companies, details of which are as under :- Assessment u/s 143(3) : Name of Company Assessment year Income Assessed Assessment Order u/s 143(3) at PB pg M/s Teac Consultants Pvt. Ltd 2005-06 13,980 451-453 M/s Teac Consultants Pvt. Ltd 2006-07 45,395 454-455 M/s Teac Consultants Pvt. Ltd 2012-13 49,91,290 459-462 M/s Teac Consultants Pvt. Ltd 2014-15 10,14,150 466/ M/s Sangam Distributors Pvt.Ltd 2006-07 Nil 530-531 M/s Sangam Distributors Pvt.Ltd 2007-08 9,600 534-535 M/s Sangam Distributors Pvt.Ltd 2013-14 6,79,400 538 M/s ISIS Mercantile Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs confirmed investment in shares of the Appellant and source of providing the said. Also, it is evident from the assessment Order that no statement/evidence has been relied upon or provided by the AO for substantiating that these companies are controlled by the so-called Entry Operators. 5.3 For this investor namely, M/s Sangam Distributors Pvt. Ltd. and M/s Teac Consultants Private Limited, the Appellant in discharge of its onus u/s 68 of the Act has filed confirmation of accounts as well as bank statement reflecting the transactions with other substantiating documents along with assessment orders in case of investor companies, which are available at Page no. 292 to 389 of PB. From these documentary evidences placed on record, identity, creditworthiness and genuineness of transactions is established. There is no gain saying that the onus squarely lies on the appellant to prove the identity, creditworthiness and genuineness of the cash credits. In the case of Addl. CIT v. Bahri Bros. (P) Ltd. [1985] 154 ITR 244 (Pat), the Hon'ble Patna High Court has held if the loans are given by an account paying cheque, it amounts to identification of the parties and discharge of burde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duly replied to the notices issued by DCIT/DDIT(Inv.), Kolkata in respect of commission, these facts remain uncontroverted by the AO. 5.5 The AO during assessment proceedings took negative inference from the statement of Shri Rajendra Agarwal recorded during search u/s 132(4) wherein he made disclosure in respect of Long Term Capital Gain in his individual hands. I have gone through the statement of Shri Rajendra Agarwal and his disclosure made in his statement, Notably, the disclosure made was in his personal capacity only and with respect to LTCG only and not in respect of any other transactions be it be receipt of unsecured loans. Further, Rajendra Agarwal and appellant are separate legal entity. Therefore, I find that in the absence of any nexus of the Statement of Shri Rajendra Agarwal with the appellant or its total income, this basis of addition adopted by the AO is farfetched cannot be concurred. 5.6 It is further seen that AO has not brought any specific defect / discrepancies in the direct evidence brought on record by the Appellant. The AO has observed that on the date of debit in the account statement of investor, there is corresponding credit entry of equal amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms Ltd (2011) 333 ITR 100 (Bom), Commissioner of Income-tax-I v. Patel Ramniklal Hirji [2014] 222 Taxman 15 (Gujarat)(MAG.), Principal Commissioner of Income-tax-4 v. G G Pharma India Ltd. [2016] 384 ITR 147 (Delhi) referred above which have been also been followed recently by Hon ble Delhi Tribunal in case of ITO vs. Softline Creations (P) Ltd. in ITA No. 744/Del/2012 vide its order dated 10.02.2016. Further, Hon ble Apex Court as well as High Court has held that once the identity of creditor is established, the department is free to reopen the assessment of creditor and no addition can be made in the hand of borrower as rightly held in case of CIT v/s Lovely Exports Pvt. Ltd. [2008] 216 CTR 195 (SC), Commissioner of Income-tax v. Rock Fort Metal Minerals Ltd. [2011] 198 TAXMAN 497 (Delhi), Divine Leasing Finance Limited [2008] 299 ITR 268 (Delhi) CIT v. Orissa Corporation (P.) Ltd. [1986) 159 ITR 78/25 Taxman 80F (SC) and others on this question of law. 5.10 Further, power to call for information/production of evidences or enforcing attendance under the law is given to the income tax authorities only and therefore, in view of the judgment CIT v/s Victor Electrodes Ltd. [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is noted that no clinching evidences has been brought on record that any unaccounted income was routed through Share application and share premium by the Appellant as no evidences as to receipt/payment of cash for receipt of share application and share premium were found during search in case of the Appellant. Mere suspicion howsoever strong cannot take place of evidence. Thus, in the absence of any incriminating material found during search to rebut the evidences filed by the Appellant, the impugned addition made in respect of Share application Share premium u/s 68 of the Act is legally untenable and unjustified. 5.13 In view of the above discussion of relevant facts and following the several ratios on the subject from Hon ble Apex Court, High Courts including jurisdictional High Courts, Tribunals including jurisdictional Tribunals, the impugned addition in respect of Share Application and Share premium received from M/s Sangam Distributors Pvt. Ltd. and M/s Teac Consultants Private Limited totalling to ₹ 1,05,00,000/- is not sustainable and hence the same stands deleted. In view of above the ground No. 2, 13 to 18 and 20 of appeal is allowed to the extent ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PB Page No./ AY 2011-12 1 Copy of Ack. of ITR of AY 2011-12 along with computation sheet. 430-432 2 Copy of Balance sheet of AY 2011-12 along with enclosures. 433-450 3 Copy of relevant page of bank statement showing the entry of payment made to assessee. 451-454 4 Confirmation of account showing the transaction with Assessee Company, along with ledger account from the books of share applicants 455-456 5 Copy of share allotment advice 457 6 Copy of share application form of equity share along with Form 2 458-468 7 Copy of affidavit of Mrs Babita Kriplani director of company. 469-472 8 Copy of order passed by Calcutta High Court regarding amalgamation of other companies in this company 473-495 9 Copy of balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as under: 6. We have considered the rival submissions as well as the relevant material on record. Undisputedly, the assessments for the assessment years 2010-11 to 13-14 were not pending on the date of search on 2nd July, 2015. Even in some of the assessment years orders under section 143(3) were passed and in other cases the assessment was completed under section 143(1) of the Act. Thus the assessments for the assessment years 2010-11 to 13-14 were not got abated by virtue of search under section 132 on 2nd July, 2015 and the AO would reassess the total income of the assessee as per the provisions of section 153A in respect of these four assessment years i.e. 2010-11 to 13-14. The proceedings under section 153A in respect of these four assessment years would be in the nature of reassessment and not in the nature of assessment as in the cases of the remaining two assessment years i.e. 2014-15 and 15-16 those were got abated by virtue of search and seizure action under section 132 of the Act on 2nd July, 2015. It is a settled proposition of law that the assessment or reassessment under section 153A in respect of the assessment years which have already been completed and assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v . In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi . Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii . Completed assessments can be interfered with by the AO while making t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO was not justified in invoking Section 68 of the Act for the purposes of making additions on account of share capital. 3. As far as the above facts are concerned, there is nothing shown to the court to persuade and hold that the above factual determination is perverse. Consequently, after considering all the facts and circumstances of the case, the Court is of the opinion that no substantial question of law arises in the impugned order of the ITAT which requires examination. The SLP filed by the revenue against the said decision of Hon ble Delhi High Court was dismissed by the Hon ble Supreme Court vide order dated 7th December, 2015. In a subsequent decision, the Hon ble Delhi High Court in the case of Principal CIT vs. Meeta Gutgutia has again analyzed this issue in para 55 to 71 as under :- 55. On the legal aspect of invocation of Section 153A in relation to AYs 2000-01 to 2003-04, the central plank of the Revenue's submission is the decision of this Court in Smt. Dayawanti Gupta ( supra ). Before beginning to examine the said decision, it is necessary to revisit the legal landscape in light of the elaborate arguments advanced by the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and observed as under: 31. What distinguishes the decisions both in CIT v. Chetan Das Lachman Das ( supra ), and Filatex India Ltd. v. CIT-IV ( supra ) in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 ( Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd. ), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT (A), affirmed by the ITAT, deleting the addition, was not interfered wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 'reassess'-have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. ' 60. In Kabul Chawla ( supra ), the Court also took note of the decision of the Bombay High Court in CIT v. Continental Warehousing Corpn (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78/232 Taxman 270/374 ITR 645 (Bom.) which accepted the plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under Section 153A and 153C of the Act. The legal position was thereafter summarized in Kabul Chawla ( supra ) as under: 37. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 61. It appears that a number of High Courts have concurred with the decision of this Court in Kabul Chawla ( supra ) beginning with the Gujarat High Court in Saumya Construction (P.) Ltd. ( supra ). There, a search and seizure operation was carried out on 7th October, 2009 and an assessment came to be framed under Section 143(3) read with Section 153A(1)(b) in determining the total income of the Assessee of ₹ 14.5 crores against declared income of ₹ 3.44 crores. The ITAT deleted the additions on the ground that it was not based on any incriminating material found during the course of the search in respect of AYs under consideration i.e., AY 2006-07. The Gujarat High Court referred to the decision in Kabul Chawla ( supra ), of the Rajasthan High Court in Jai Steel (India) ( supra ) and one earlier decision of the Gujarat High Court itself. It explained in para 15 and 16 as under: '15. On a plain readin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding. 16. Section 153A bears the heading Assessment in case of search or requisition . It is well settled as held by the Supreme Court in a catena of decisions that the heading or the Section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153. the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should connected With something round during the search or requisition viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case stands concluded by the decision of this court In the case of CIT v. Jayaben Ratilal Sorathia ( supra ) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years ; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year.' 62. Subsequently, in Devangi alias Rupa ( supra ), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Saumya Construction (P.) Ltd. ( supra ) and of this Court in Kabul Chawla ( supra ). As far as Karnataka High Court is concerned, it has in IBC Knowledge Park (P.) Ltd. ( supra ) followed the decision of this Court in Kabul Chawla ( supra ) and held that there had to be incriminating material qua each of the AYs in which additions were sought to be made pursuant to search and seizure operation. The Calcutta High Court in Salasar Stock Broking Ltd. ( supra ), too, followed the decision of this Court in Kabul Chawla ( supra ). In Gurinder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the transactions were not recorded therein. 66. Further, in answer to Question No. 11, the Assessee in Smt. Dayawanti Gupta ( supra ) was confronted with certain documents seized during the search. The answer was categorical and reads thus: Ans:- I hereby admit that these papers also contend details of various transactions include purchase/sales/manufacturing trading of Gutkha, Supari made in cash outside Books of accounts and these are actually unaccounted transactions made by our two firms namely M/s. Asom Trading and M/s. Balaji Perfumes. 67. By contrast, there is no such statement in the present case which can be said to constitute an admission by the Assessee of a failure to record any transaction in the accounts of the Assessee for the AYs in question. On the contrary, the Assessee herein stated that, he is regularly maintaining the books of accounts. The disclosure made in the sum of ₹ 1.10 crores was only for the year of search and not for the earlier years. As already noticed, the books of accounts maintained by the Assessee in the present case have been accepted by the AO. In response to question No. 16 posed to Mr. Pawan Gadia, he stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make additions of franchisee commission. 70. The above distinguishing factors in Smt. Dayawanti Gupta ( supra ), therefore, do not detract from the settled legal position in Kabul Chawla ( supra ) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts. 71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs. The Hon ble Delhi High Court has concurred with the view as taken in case of Kabul Chawla (supra) as well as the decision of Hon ble Jurisdictional High Court in the case of M/s. Jai Steel India Ltd. vs. ACIT (supra). Even on the issue of addition made by the AO in the proceedings under section 153A in respect of the assessment year which was already completed on the date of search, the Hon ble High Court has held that in the absence of any material which was subsequently unearthed during the search and was not already available to the AO, the additions made by the AO on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant extract of the said judgment reads as under:- 19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the 'total income' of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. 20. A question may arise as to how this is soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub-Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition shall abate . Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in case where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determinin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assessee beyond provisions of Sections 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or avoided as held by the Hon'ble Supreme Court in the case of K.P. Varghese ( supra ). 30. Consequently, it is held that it is not open for the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because a assessment under Section 153A of the Act in pursuance of search or requisition is required to be made. In the case in hand, the transactions of unsecured loans as well as introduction of capital by the partners were duly recorded in the books of account and available with the AO. Further, during the course of search under section 132 of the Act on 2nd July 2015 no material much less incriminating material was either found or seized to disclose any undisclosed income on account of unsecured loans or partners capital received by the assessee firm. The AO has proposed to make the addition on account of unsecured loans and partners capital under section 68 being unexplained cash credit solely on the basis of the information received from Investigation Wing Kolkata. It is pertinent to note that the said information was available with the AO prior to the search conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50, para 19 page 83 and para 22 page 86 as under :- 12. Submissions made on behalf of the assessee firm have been duly considered. However, even the very elaborate and case laws loaded submissions of the assessee are totally off the mark. Against the self-speaking facts of the very nature of the activities of the so called partner s providing huge partner s capital in the most uninterested manner and providing huge unsecured loans without any collateral or other security, the emphasis of the assessee firm in its submissions has been on seeking protection under various judicial decisions even without having any fact coherence. The submissions made by the assessee are completely devoid of merit in the light of the following facts and circumstances; a. The department has very sound basis to treat, the receipts of unsecured loan and partner s capital from the above mentioned companies as bogus and in genuine. The findings of this office and Investigation report of the Investigation Directorate Kolkata are not based on any presumption, assumption, guess or bare suspicion. Where the nature and source of a receipt, whether it be of money or other property, cannot be satisfacto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial decision, it is established that genuineness of the transaction has not been proved. Section 68 of the I.T. Act provides for charging to income tax on any sum credited in the books of the assessee maintained for any previous year if the assessee offers no explanation about the nature and source thereof or the explanation offered is not, in the opinion of the Assessing Officer, satisfactory. It places no duty upon the Assessing Officer to point to the source from which the money was received by the assessee. Where an assessee fails to prove satisfactorily the source and the nature of certain amount of credit during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt are of an assessable nature. Thus, the assessee is unable to discharge its burden of proof by failing to establish lender s identity, forget the genuineness of transactions and creditworthiness of the lender. Hence, the unsecured loans and partner s capital shown to have been received from various Kolkata Based Companies and other Companies remained unexplained. In the circumstances, I am left with no option than to tax the entire unexplained credits by way of part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has to assess or reassess the total income of such six assessment years.(emphasis supplied by me). (The decisive words used in the provisions are to 'assessee or reassess the total income' ). The A.O. is thus duty bound to determine the 'total income' of the assessee for such six assessment years and it is obvious that 'total income' refers to the sum total of income in respect of which a person is assessable. The total income therefore will cover not only the income emanating from declared sources or any material placed before the Assessing Officer but from all sources including the undisclosed ones, or based on the unplaced material before the AO. 3.2.3 The concept of assess or reassess and shall abate as contemplated u/s 153A is under hot judicial debate. I find that legally, this issue is very contentious in view of the divergent views of the various authorities. The appellant has tried to highlight most of them. However, it is equally pertinent to mention here that the Department has not accepted the decisions of Hon'ble Mumbai High Court in the case of M/s All Cargo Global Logistics as well as Continental Warehousing (Nhava Sheva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.Y. 2010-11, the relevant observation of the Tribunal with the issue are contained at page Nos. 33 to 54 as under: 14. We have considered the rival contentions as well as the relevant material on record. In pursuant to the same search and seizure action under section 132 carried on 2nd July, 2015, an identical issue was considered and decided by us in the case of group concern, namely, M/s. Kota Dall Mill in ITA Nos. 997 to 1002/JP/2018 and 1119/JP/2018 and others vide order dated 31st December, 2018 as under :- 6. We have considered the rival submissions as well as the relevant material on record. Undisputedly, the assessments for the assessment years 2010-11 to 13-14 were not pending on the date of search on 2nd July, 2015. Even in some of the assessment years orders under section 143(3) were passed and in other cases the assessment was completed under section 143(1) of the Act. Thus the assessments for the assessment years 2010-11 to 13-14 were not got abated by virtue of search under section 132 on 2nd July, 2015 and the AO would reassess the total income of the assessee as per the provisions of section 153A in respect of these four assessment years i.e. 2010-11 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resh exercise. iii . The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv . Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v . In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 of the Income Tax Act, 1961 ('ACT') on bogus share capital. But, the issue was whether there was any incriminating material whatsoever found during the search to justify initiation of proceedings under Section 153A of the Act. 2. The Court finds that the order of the CIT(Appeals) reveals that there is a factual finding that no incriminating evidence related to share capital issued was found during the course of search as is manifest from the order of the AO. Consequently, it was held that the AO was not justified in invoking Section 68 of the Act for the purposes of making additions on account of share capital. 3. As far as the above facts are concerned, there is nothing shown to the court to persuade and hold that the above factual determination is perverse. Consequently, after considering all the facts and circumstances of the case, the Court is of the opinion that no substantial question of law arises in the impugned order of the ITAT which requires examination. The SLP filed by the revenue against the said decision of Hon ble Delhi High Court was dismissed by the Hon ble Supreme Court vide order dated 7th December, 2015. In a subsequent decision, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch or other post-search material or Information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. 58. In Kabul Chawla ( supra ), the Court discussed the decision in Filatex India Ltd. ( supra ) as well as the above two decisions and observed as under: 31. What distinguishes the decisions both in CIT v. Chetan Das Lachman Das ( supra ), and Filatex India Ltd. v. CIT-IV ( supra ) in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two . decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch and/or requisition. The Court also explained the purport of the words assess and reassess , which have been found at more than one place in Section 153A of the Act as under: 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess'-have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. ' 60. In Kabul Chawla ( sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 61. It appears that a number of High Courts have concurred with the decision of this Court in Kabul Chawla ( supra ) beginning with the Gujarat High Court in Saumya Construction (P.) Ltd. ( supra ). There, a search and seizure operation was carried out on 7th October, 2009 and an assessment came to be framed under Section 143(3) read with Section 153A(1)(b) in determining the total income of the Assessee of ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding. 16. Section 153A bears the heading Assessment in case of search or requisition . It is well settled as held by the Supreme Court in a catena of decisions that the heading or the Section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153. the intention of the Legislature is clear, viz., to provide for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT ( supra ). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court In the case of CIT v. Jayaben Ratilal Sorathia ( supra ) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years ; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year.' 62. Subsequently, in Devangi alias Rupa ( supra ), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Saumya Construction (P.) Ltd. ( supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, manufacturing and sales in our regular books of accounts but it is also fact that some time due to some factors like inability of accountant, our busy schedule and some family problems, various purchases and sales of Supari, Gutka and other items dealt by our firms is not entered and shown in the regular books of accounts maintained by our firms. 65. Therefore, there was a clear admission by the Assessees in Smt. Dayawanti Gupta ( supra ) there that they were not maintaining regular books of accounts and the transactions were not recorded therein. 66. Further, in answer to Question No. 11, the Assessee in Smt. Dayawanti Gupta ( supra ) was confronted with certain documents seized during the search. The answer was categorical and reads thus: Ans:- I hereby admit that these papers also contend details of various transactions include purchase/sales/manufacturing trading of Gutkha, Supari made in cash outside Books of accounts and these are actually unaccounted transactions made by our two firms namely M/s. Asom Trading and M/s. Balaji Perfumes. 67. By contrast, there is no such statement in the present case which can be said to constitute an admission by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of the revenue and against the assessee. 69. What weighed with the Court in the above decision was the habitual concealing of income and indulging in clandestine operations and that a person indulging in such activities can hardly be accepted to maintain meticulous books or records for long. These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to make additions of franchisee commission. 70. The above distinguishing factors in Smt. Dayawanti Gupta ( supra ), therefore, do not detract from the settled legal position in Kabul Chawla ( supra ) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts. 71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs. The Hon ble Delhi High Court has concurred with the view as taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the decision of Hon ble Delhi High Court in case of Principal CIT vs. Meeta Gutgutia was dismissed vide order dated 2nd July, 2018. There are series of decisions on this issue including the decision of Hon ble Jurisdictional High Court in case of M/s. Jai Steel India vs. ACIT (supra) wherein the Hon ble High Court has held in para 23 to 30 as under :- 23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra) also does not help the case of the assessee. The relevant extract of the said judgment reads as under:- 19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings shall abate . The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub-Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition shall abate . Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken. 25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under Section 153A of the Act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assessee beyond provisions of Sections 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided. 29. The argument of the counsel for the appellant if taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued under Section 153A of the Act, the AO would have power to undo what has been concluded up to the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Hon'ble Supreme Court in the case of K.P. Varghese ( supra ). 30. Consequently, it is held that it is not open for the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because a assessment under Section 153A of the Act in pursuance of search or requisition is required to be made. In the case in hand, the transactions of unsecured loans as well as introduction of capital by the partners were duly recorded in the books of account and available with the AO. Further, during the course of search under section 132 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made any addition in the hand of the assessee on account of long term capital gain which was found during the course of search and seizure. Thus, except the material disclosing the long term capital gain in the hand of Shri Rajendra Agarwal, no other incriminating material either found or referred or is the basis of the addition made by the AO while framing the assessment under section 153A of the Act for the assessment years 2010-11 to 13-14. It is appropriate to refer relevant part of the assessment order in para 12 pages 48 to 50, para 19 page 83 and para 22 page 86 as under :- 12. Submissions made on behalf of the assessee firm have been duly considered. However, even the very elaborate and case laws loaded submissions of the assessee are totally off the mark. Against the self-speaking facts of the very nature of the activities of the so called partner s providing huge partner s capital in the most uninterested manner and providing huge unsecured loans without any collateral or other security, the emphasis of the assessee firm in its submissions has been on seeking protection under various judicial decisions even without having any fact coherence. The submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. The department has carried out search over the assessee group and during the course of search action u/s 132 of the I.T. Act, 1961, the incriminating documents seized during search proceedings vide pg no. 21 to 26 of Annexure AS-1 of Party B-1, wherein the details of year-wise LTCG earned by Shri Rajendra Agrawal and his family members, is maintained, which during search action has been accepted to be bogus by all family members in their respective statements. 19. In view of above facts of the case and in the light of above judicial decision, it is established that genuineness of the transaction has not been proved. Section 68 of the I.T. Act provides for charging to income tax on any sum credited in the books of the assessee maintained for any previous year if the assessee offers no explanation about the nature and source thereof or the explanation offered is not, in the opinion of the Assessing Officer, satisfactory. It places no duty upon the Assessing Officer to point to the source from which the money was received by the assessee. Where an assessee fails to prove satisfactorily the source and the nature of certain amount of credit during the accounting year, the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for decision by the Hon ble Supreme Court. The relevant part of the finding of the ld. CIT (A) in para 3.2.2 and 3.2.4 at pages 35 and 36 are as under :- 3.2.2 As per the provisions of this section where a search is initiated u/s 132 of the Act, the A.O shall issue a notice requiring the person searched to furnish his return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Once such returns are filed, the AO has to assess or reassess the total income of such six assessment years.(emphasis supplied by me). (The decisive words used in the provisions are to 'assessee or reassess the total income' ). The A.O. is thus duty bound to determine the 'total income' of the assessee for such six assessment years and it is obvious that 'total income' refers to the sum total of income in respect of which a person is assessable. The total income therefore will cover not only the income emanating from declared sources or any material placed before the Assessing Officer but from all sources including the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial found during the search and seizure in the case of the assessee. Accordingly, in the facts and circumstances of the case and in view of the binding precedents on this issue in which the SLP filed by the revenue was also dismissed by the Hon ble Supreme Court, the additions made by the AO while passing the assessment orders under section 153A for the assessment years 2010-11 to 13-14 are not sustainable and accordingly the same are liable to be deleted. We order accordingly. Since the facts involved as well as the contentions of both the parties for both the assessment years are same, therefore, our finding in the case of Kota Dall Mill on this issue is applicable in this case also. Accordingly, the addition made by the AO without any material much less the incriminating material is not sustainable in law. Further, the report of the Investigation Wing Kolkata is also not a material or document either found or detected during the search and seizure action in case of the assessee but it pertains to the investigation carried out by the Investigation Wing Kolkata in a separate matter. Therefore, the said report will not partake the character of incriminating material found o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. is beneficiary company like Kota Dal Mill and both of these were provided bogus loans/advances by Royal Crystal Dealer Pvt. Ltd which is a paper company controlled by him. He further stated that the beneficiary party such i.e, M/s Jalsagar Commerce Pvt. Ltd. gave him cash in lieu of which cheques was given by him for some commission income. He also admitted that some paper companies have sold to beneficiary parties. Though, in the initial report dated 28.11.2017, M/s Jalsagar Commerce Pvt. Ltd. was treated a party in Rajasthan, in later report dated 06.12.2017 the entry operator Shri Anand Sharma was linked with M/s Jalsagar Commerce Pvt. Ltd. as per the data base prepared by Directorate of Investigation Kolkata The relevant part of the said statement as reproduced on page no.57 of the assessment order is as under: - 5.2 However, it is the submission of the Appellant that no notice under Section 131 or 133(6) of the Act was issued to this company, either by the Ld. AO or by the concerned AO or by the DDIT (Inv.) Kolkata. Also, on bare perusal of the assessment order, it is evident that the name of the said companies does not appear in the statement of any of the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsecured loans as established in the assessment order as briefly highlighted in Para 4.1 above, and armed with several authorities on the issue cited by the AO, I fully agree with the view taken by AO. However, to fortify the finding of the AO and to highlight the guiding principle on adjudicating non-genuine unsecured loans raised through accommodation entry proviers, I place further reliance on few more case laws with underlining the similarity of adverse facts prevailing in the present case as follows:- 5.5 In case of Suman Gupta V/s. Income Tax Officer ITAT, Agra Bench (2012) 138 ITD 0153 held as under:- The AO discussed each and every creditor in the assessment order and the crux of the findings of the AO had been that there were very small bank balances in the bank accounts of the creditors and they were having meager income and as such, they were not men of means to advance any loan to the assessee. It is well settled law that burden is upon the assessee to prove ingredients of section 68 of the Act by proving identity and creditworthiness of the creditors and genuineness of the transactions. The assessee has, however, failed to prove the creditworthiness of the credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rosanct to make a non-genuine transaction as genuine transaction. The above decision is confirmed by Hon ble Allahabad High Court vide their judgment in ITA No.680/12 vide judgment dated 07.08.2012 and SLP of assessee was dismissed before the Hon ble Apex Court as reported in 2013-LL-0122-69 5.6 Hon ble High Court of Delhi in case of Commissioner of Income Tax V/s. Navodaya Castles Pvt. Ltd. reported at (2014) 367 ITR 0306 involving exactly similar facts observed in Para 2, 3 then Para 2 as under:- 2. The appeal arises out of the impugned order dated 31st October, 2011, passed by the Income Tax Appellate Tribunal, upholding the order passed by the Commissioner of Income Tax (Appeals) deleting addition of ₹ 54,00,000/- made under Section 68 of the Income Tax Act, 1961 (Act, for short), by the Assessing Officer on account of share application. 3. The assessee, a company, had filed their return of income for the assessment year 2002-03 declaring loss of ₹ 1,58,035/- on 20th October, 2002, which was processed under Section 143(1) of the Act. Subsequently, on the basis of a report submitted by the Investigation Wing that the assessee was a recipient of accomm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ........................................................................................................... .. 11. We have heard the Senior Standing counsel for the Revenue, who has relied upon decisions of the Delhi High Court in Commissioner of Income Tax Vs. Nova Promoters and Finlease (P) Ltd. [2012] 342 ITR 169 (Delhi), Commissioner of Income Tax Vs. N.R. Portfolio Pvt. Ltd., 206 (2014) DLT 97 (DB) (Del) and Commissioner of Income Tax-II Vs. MAF Academy P. Ltd., 206 (2014) DLT 277 (DB) (Del). The aforesaid decisions mentioned above refer to the earlier decisions of Delhi High Court in Commissioner of Income Tax Vs. Sophia Finance Ltd., [1994] 205 ITR 98 (FB)(Delhi), CIT Vs. Divine Leasing and Finance Limited [2008] 299 ITR 268 (Delhi) and observations of the Supreme Court in CIT Vs. Lovely Exports P. Ltd. [2008] 319 ITR (St.) 5 (SC). 12. The main submission of the learned counsel for the assessee is that once the assessee had been able to show that the share holder companies were duly incorporated by the Registrar of Companies, their identity stood established, genuineness of the transactions stood established as payments were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. 15. Summarizing the legal position in Nova Promoters and Finlease (P) Ltd.(supra), and highlighting the legal effect of section 68 of the Act, the Division Bench has held as under:- 32. The tribunal also erred in law in holding Assessing Officer ought to have proved that the monies emanated from the coffers of the assessee-company and came back as share capital. Section 68 permits the Assessing Officer to add the credit appearing in the books of account of the assessee if the latter offers no explanation regarding the nature and source of the credit or the explanation offered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed monies was the coffers of the assessee, we are inclined to think that in the facts of the present case such proof has been brought out by the Assessing Officer. The statements of Mukesh Gupta and RajanJassal, the entry providers, explaining their modus operandi to help assessee s having unaccounted monies convert the same into accounted monies affords sufficient material on the basis of which the Assessing Officer can be said to have discharged the duty. The statements refer to the practice of taking cash and issuing cheques in the guise of subscription to share capital, for a consideration in the form of commission. As already pointed out, names of several companies which figured in the statements given by the above persons to the investigation wing also figured as share-applicants subscribing to the shares of the assessee-company. These constitute materials upon which one could reasonably come to the conclusion that the monies emanated from the coffers of the assessee-company. The Tribunal, apart from adopting an erroneous legal approach, also failed to keep in view the material that was relied upon by the Assessing Officer. The CIT (Appeals) also fell into the same error. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the repudiation. 17. Nova Promoters and Finlease (P) Ltd. (supra) after referring to the dismissal of SLP against Divine Leasing case (supra) observed as under:- So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holders register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec.68 and the remedy open to the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed accommodation entry providers , whose business it is to help assessees bring into their books of account their unaccou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they had received money, but could do nothing more and it was for the Assessing Officer to enforce shareholders attendance in spite of the fact that the shareholders were missing and not available. Their reluctance and hiding may reflect on the genuineness of the transaction and creditworthiness of the creditor. It would be also incorrect to universally state that an Inspector must be sent to verify the shareholders/subscribers at the available addresses, though this might be required in some cases. Similarly, it would be incorrect to state that the Assessing Officer should ascertain and get addresses from the Registrar of Companies website or search for the addresses of shareholders themselves. Creditworthiness is not proved by showing issue and receipt of a cheque or by furnishing a copy of statement of bank account, when circumstances requires that there should be some more evidence of positive nature to show that the subscribers had made genuine investment or had, acted as angel investors after due diligence or for personal reasons. The final conclusion must be pragmatic and practical, which takes into account holistic view of the entire evidence including the difficult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They are undoubtedly relevant and material facts for ascertaining creditworthiness and genuineness of the transactions. 30. What we perceive and regard as correct position of law is that the court or tribunal should be convinced about the identity, creditworthiness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within the assessee s knowledge. Mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take the decisions, controls and manage them. 20. Now, when we go to the order of the tribunal in the present case, we notice that the tribunal has merely reproduced the order of the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/-, out of which only ₹ 92,00,000/- was infused from the Directors/family members of the Directors. The remaining share capital had been infused from parties which were completely unrelated either to the Assessee or to any of its Directors. In a private limited company, normally the investment of shares is from parties or persons who are friends or relatives of Promoters/Directors. 34. It is noticed that the shares had face value of ₹ 100 /- and were allotted at a premium of ₹ 100 /- to ₹ 200/- and were then subsequently purchased by the Promoters/Directors, who had originally transferred these shares at ₹ 35 /- per share. 35. It is really surprising that a person who had purchased shares at a premium of ₹ 100 /- to ₹ 200/- per share i.e. at a price of ₹ 200 /- to ₹ 300/- per share, sold the shares at ₹ 35 /- per share i.e at a substantial loss. Another surprising factor is that the entire investment happened during a short span of time and re-transfer of the shares to the four Promoters/Directors of the company at ₹ 35 /- per share by different parties also happened during a short span of few days. The mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to discharge the initial onus and has not been able to establish the identity, creditworthiness of the share applicants and the genuineness of the transaction. Though, in our considered opinion, none of the above judgments, referred to by the Assessee respondent, are applicable in the facts of the present case and in view of the findings recorded by us hereinabove. 54. In view of the above, we are of the view that the Assessee has not discharged the onus satisfactorily and the additions made by the Assessing Officer were justified and sustainable. 5.9 Hon ble Income Tax Appellate Tribunal Delhi Bench: 'B in case of M/s. Amtrac Automotive India Pvt. Ltd. Versus ACIT, Circle 1(1), involving exactly similar facts in their appellate order ITA No.2920/Del/09 for A.Y. 2005-06 dated 31.12.2009 observed in Para 3 then Para 2 as under:- 3. The assessee company is engaged in share trading in the year under consideration. In the course of scrutiny, the assessing officer noted that the appellant has introduced fresh share capital to the tune of ₹ 15,00,000/- at a share premium of ₹ 1,35,00,000/-......... 2.1 The AO as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . United Commercial Industrial Co. (P) Ltd .[1991] 187 ITR 596. He further observed that the facts that the amount were paid by account payee cheques do not make it satisfactory as held in CIT vs. Precision finance Pvt. Ltd. 208 ITR 465 (Cal.). Even income -tax file particulars, where the share holder is assessed to tax is not sufficient as found in CIT vs. Korlay Trading Co. Ltd . 232 ITR 820 (Cal.) 2.1.2 The AO also referred the enquiry initiated by investigation wing of the Department in August 2003 which culminated into detection of many entry operators who are operating number of accounts in the same bank/branch or in different branches, in the names of companies, firms, proprietary concerns and individuals. For the operations of these bank accounts, filing income tax returns etc. persons are hired. Like any other business it does requires manpower according to the scale of operation. Except for two or three persons who are required regularly to visit banks and do other spade work like collection of cash etc., most of the other persons involved are on part time basis. The part time employees are called as and when required to sign documents, cheque books etc. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact was Asstt. year 2005-06 brought to the notice of assessee also. Thereafter the assessee except producing the papers could not prove existence or availability of the respective share applicants. When the identity of the person is required to be proved so as to examine whether in fact they have applied for allotment of shares, the existence itself is not proved. The existence of a person is not merely on paper. Particularly when the AO required the assessee to produce the share applicants and particularly when at the stated address the share applicants do not found to be existing, it cannot be said that the amount received by assessee is proved to be towards share capital. The transaction cannot be proved merely on paper. Neither before AO nor before Ld. CIT (A) the assessee could make the share applicants available. Therefore when the identity of the person itself is not proved, the amount received by assessee cannot be considered to be genuinely received. 6.1. It is also to be noted that the assessee company is stated to have issued shares at premium 9 times its face value. The assessee is a private limited company. It has not issued prospectus for issue of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or/subscriber. (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Shared Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation by the assessee. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the AO take such repudiation at face value and construe it, without more, against the assesee. (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor /subscriber the genuineness of the transaction and the veracity of the repudiation.... 26. In Divine Leasing (supra), on the question of burden of proof, the Court relied upon CIT v. Musaddilal Ram Bharose , (1987) 165 ITR 14, to hold that the initial burden is upon the Assessee to show the absence of fraud and this is not discharged by the Assessee tendering an incredible and fantastic exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le nor viable and therefore uncalled for. iii. It is undisputed fact that in the statement dated 06.02.2014 Shri Anand Sharma had admitted to be one of such accommodation entry providers. The sum and substance of the said statement is that the concern M/s Jalsagar Commerce Pvt. Ltd. was engaged in the activities of providing accommodation entries and the appellant happened to be one of such beneficiary of such concern. It is also admitted fact that Shri Anand Sharma had been running the affair of the said company. v. The statement of Shri Anand Sharma in which name of M/s Jalsagar Commerce Pvt. Ltd. cannot be completely ignored solely on the legal grounds raised by the Appellant. 5.12 In view of above discussion, it is clear that the incriminating material had been found during the course of search of accommodation entry provider. Further incriminating material had been gathered by issuing commission to DDIT (Inv.) Kolkata, during the assessment proceedings and all such material have been shared with the appellant at least during the remand report proceeding. In view of nation-wide known scam by the accommodation entry providers of Kolkata and elsewhere burst by the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough the statement of Shri Anand Sharma where he has purported to have provided the alleged entry. Since there is no direct allegation or admission of providing loan by Shri Anand Sharma to the assessee through M/s.Royal Crystal Dealers Pvt. Ltd., then even if there is a possibility of bogus accommodation entry routed through another intermediary company M/s.Jalsagar Commerce Pvt. Ltd., it requires a definite link of the transactions from M/s.Royal Crystal Dealers Pvt. Ltd. to M/s.Jalsagar Commerce Pvt. Ltd. and then the loan to the assessee. Once the chain of transactions and flow of money from one entity to another entity and finally to the assessee has not been established, then the addition made merely on suspicion, how so strong it may be, is not sustainable. On the contrary, when the assessee produced all the relevant record which contains their financial statements, bank accounts statement of loan creditor, return of income, assessment orders framed under section 143(3), confirmation of the loan creditor, then a proper examination could have very well established the link, if any, in providing the accommodation entry from one entity to another and finally to the assessee. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumentary evidence was either gathered or has been referred in these reports. Therefore, even if these reports are to be taken into consideration, these are nothing but narration of the statements of various persons taken during the investigation. It is well settled principle as well as the directions of the CBDT issued under the Circulars that during the course of investigation, the department should concentrate and focus on collecting documentary evidence disclosing undisclosed income instead of obtaining the statement and then support of their claim merely on the basis of the statement. Therefore, the statements recorded by the DDIT Kolkata are also not based on any documentary evidence so as to have an evidentiary value for sustaining the additions made by the AO. The entire report of the Investigation Wing is based on statements recorded during survey and search. Once the assessee has produced the documentary evidence and particularly the financial statements of the loan creditors, their bank account statement, then in the absence of any discrepancy or fault in these financial statements or in the bank account statement to reflect that the transactions in question are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16-17 0 87,11,00,000 1,67,23,178 1,50,50,860 87,27,72,318 0 All these details were before the AO as all these assessment years were passed by the AO pursuant to the search and seizure action under section 132 of the IT Act. Thus it is clear that for the assessment year 2015-16 there was Nil balance on account of loan taken from M/s. Jalsagar Commerce Pvt. Ltd. and the entire loan was already repaid by the assessee. We further note that it is not the case of repayment of loan after the search action on 2nd July, 2015 but there is a regular repayment of loan for each year as it is evident from the details reproduced above. Therefore, the transactions of taking loan and repayment cannot be treated as bogus once the assessee has been regularly repaying the loan amount and small balance was there at the end of the year. Once there was no balance at the end of the year on the loan account, then the addition cannot be made by treating the loan taken and repaid as bogus transaction. Apart from these facts, the assessee has also made the payment of interest which was also s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investigation Wing Kolkata at the back of the assessee, even the proceedings by the Investigation were conducted at the back of the assessee, therefore, the said statement of Shri Anand Sharma cannot be the sole basis of assessment without giving an opportunity of cross examination to the assessee. The Hon ble Supreme Court in the case of Andaman Timber Industries vs. CCE (supra) while dealing with the issue of violation of principles of natural justice for not providing the opportunity of cross examination of the witnesses whose statements were relied on by the AO has held in para 6 to 9 as under :- 6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectness of the statement and wanted to cross examine the witness which was not given by the AO as well as ld. CIT (A), then the orders passed based on such statement are not sustainable in law. The Hon ble Delhi High Court in case of CIT vs. Ashwani Gupta, 322 ITR 396 (Delhi) while dealing with the issue of not providing the opportunity to cross examine the witnesses has held in para 5 to 7 as under :- 5. Secondly, in fact, a rectification application being MA 264/Delhi/2008 under section 254(2) of the Income-tax Act, 1961 had been filed by the revenue before the said Tribunal. In that also, in paragraph (g) of the Miscellaneous Application, the revenue had submitted as under:- (g )Because, although findings of the Tribunal are factually correct but the decision of the Tribunal is not acceptable because violation of the canons of natural justice in itself is not fatal enough so as to jeopardize the entire proceedings. In the interest of justice, the Tribunal could have set aside the assessment order with the limited purpose of offering assessee an opportunity to cross-examine Shri Manoj Aggarwal before completing the proceedings. [Emphasis supplied] 6. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case no such effort was made by the revenue. We find that in S. Hastimal (supra) the Madras High Court observed that after a lapse of several years the assessee should not be placed upon the rack and called upon to explain not only merely, the origin and source of his capital contribution but the origin of origin and the source of source as well. In yet another case of Bahri Brothers (P) Ltd. (supra) the Division Bench of Patna High Court observed that where the assessee upon whom the initial burden lies, produces bank certificate to establish that the transaction was carried out through account payee cheques thus disclosing the identity of the creditors as also the source of income, the burden shifts on to the department and the department cannot add the cash credits to his income from undisclosed source. 12. The Hon'ble Supreme Court in Nemi Chand Kothari (supra) observed that in order to establish the receipt of a cash credit, the assessee must satisfy three conditions i.e. identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. In the instant case by virtue of the fact that the transaction was completed by cheque payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of reassessment without having first given the assessee an opportunity to cross examine the deponent on the statements relied upon by the ACIT. Quite apart from denial of an opportunity of cross examination, the revenue did not even provide the material on the basis of which the department sought to conclude that the loan was a bogus transaction. 17. In our view in the light of the fact that the monies were advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the revenue should have done was to grant an opportunity to the assessee to meet the case against him by providing the material sought to be used against assessee in arriving before passing the order of reassessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the reassessment and therefore renders the orders passed by the CIT (A) and the Tribunal vulnerable. In our view the assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents. Despite the request dated 15th February, 1996 seeking an opportunity to cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incumbent on the assessee to produce the parties alongwith necessary documents to establish the genuineness of the transaction. In response, the assessee submitted that Shri Bhanwarlal Jain is not known to him and regarding various incriminating documentary evidences seized during the course of search and statements recorded of Shri Bhanwarlal Jain and other persons, he specifically requested the AO to provide copies of such incriminating documents and statement of all various persons recorded in this regard and provide an opportunity to the assessee to cross examine such persons. However, the AO didn t provide to the assessee copies of such incriminating documents and statements of various persons recorded and allow the crossexamination of any of these persons. While doing so, the AO stated that in his statements, Bhanwarlal Jain had described that they are indulged in providing accommodation entries of bogus unsecured loans and advances through various Benami concerns (70) operated and managed by them. This admission automatically makes all the transactions done by them as mere paper transactions and in these circumstances, further as per the information name and address of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this subject has been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Sinqh where it was stated that while proceeding under sub-section (3) of section 23, the Income-tax Officer, though not bound to rely on evidence produced by the assessee as he considers to be false, yet if he proposes to make an estimate in disregard of that evidence, he should in fairness disclose to the assessee the material on which he is going to find that estimate; and that in case he proposes to use against the assessee the result of any private inquiries made by him, he must communicate to the assessee the substance of the information so proposed to be utilized to such an extent as to put the assessee in possession of full particulars of the case he is expected to meet and that he should further give him ample opportunity to meet it. It was held in that case that In this case we are of the opinion that the Tribunal violated certain fundamental rules of justice in reaching its conclusions. Firstly, it did not disclose to the assessee what information had been supplied to it by the departmental representative. Next, it did not give any opportunity to the company to rebut th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITO, no reliance could be placed upon it, since it was not shown to the assessee until at the stage of preparation of the supplemental statement of the case and no opportunity to cross examine the manager of the bank could in the circumstances be sought or availed of by the assessee. It is true that the proceedings under the income-tax law are not governed by the strict rules of evidence and, therefore, it might be said that even without calling the manager of the bank in evidence to prove this letter, it could be taken into account as evidence. But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him. 2.11 In light of above proposition in law and especially taking into consideration the decision of the Hon ble Supreme Court in case of C. Vasantlal Co. (supra) relied upon by the Revenue and which actually supports the case of the assessee, in the instant case, the assessment was completed by the AO relying solely on the information receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. 26. Similarly grounds No. 3 to 5 of the appeal with regard to unsecured loan taken from Jalsagar Commerce Pvt. Ltd. amounting to ₹ 67,85,000/- is covered by the order of the Tribunal in the case of M/s Kota Dall Mill Vs. DCIT (Supra) for the A.Y. 2010-11 to 2013-14, which has already been discussed in detail in earlier paragraphs of this order and decided in favour of the assessee and against the revenue. 27. Ground No. 6 of the assessee s appeal for the A.Y. 2010-11 is with regard to peak credit. The issue is covered by the decision of the Coordinate Bench in the case of M/s Kota Dall Mill vs. DCIT(Supra) for the A.Y. 2010-11 to 2015-16 at page 87 of the order. 28. We have considered the rival contentions and carefully gone through the orders of the authorities below and found that all the issues involved in the appeals have been dealt by the Tribunal in the group cases threadbare and after meeting all the objections of the A.O., ld. CIT(A) and the department, the Tribunal have confirmed the order of the ld. CIT(A) with respect of the share application money accepted at premium from following three concerns namely M/s Sangam Distributors Pvt. Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance u/s 14A of the Act. Therefore, in view of the non-fulfillment of such statutory requirement as laid down in various judicial precedents and Circulars as relied upon by the A/R in his submission, in my considered view, the disallowance u/s 14A of the Act of ₹ 53,523/- is unwarranted. Accordingly, the same is deleted. In view of the above, addition of ₹ 53,523/- is deleted and these grounds of appeals are allowed. 30. Similarly for the A.Y. 2011-12, the addition made U/s 14A was deleted by the ld. CIT(A) after observing as under: 8.3.1 In my considered view, the AO has legally erred in directly applying the provision of section 14A of the Act, without recording any satisfaction as to the correctness of the claim made by the Appellant. In the assessment order, there is no satisfaction recorded by the AO as required by section 14A(1) of the Act before proceeding further to make any disallowance u/s 14A of the Act. Further, it is seen that AO has mechanically applied the Rule 8D as amended w.e.f. 02.06.2016, which was not even applicable to relevant assessment year. In my considered view, the law cannot be applied mechanically and that too retrospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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