TMI Blog2019 (5) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of law for the completion of assessment proceedings. Ld. CIT(A) should accordingly decide the issue in light of the principle laid down by the Hon'ble Court. Loan received assessed as income u/s 68 - loan received from companies - accommodation entries from paper companies - taken for two months and interest was paid and TDS deducted - HELD THAT:- The assessee has been successful to prove the genuineness, creditworthiness and identity of the alleged cash creditors on account of the fact that all the relevant details and supporting documents are placed on record. Further no incriminating material was found during the course of search which could clearly prove that the alleged transaction of receiving loan was an accommodation entry. The assessee s case further finds support the fact that the alleged loans were taken for a period of two months and have been repaid back with interest. Tax has also been deducted at source on the interest paid. The alleged transaction of receiving loan and being repaid back has been duly acknowledged by the cash creditors in the affidavit. The documents filed in support of identity, creditworthiness and genuineness i.e. Profit los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the directors of the alleged companies buying the equity shares cannot make the transaction in genuine. We therefore in the given facts and circumstances of the case are of the considered opinion that the assessee has successfully explained the amount of ₹ 3,61,22,825/- which includes ₹ 54,90,000/- being the amount received against sale of equity shares but returned back to the purchaser as the transaction could not be finalized and remaining amount of ₹ 3,06,32,825/- represents the sale consideration of sale of equity shares held by the assessee since last financial year and the amount of capital gain from sale thereof is duly offered to tax. We accordingly set aside the findings of lower authorities and delete the addition. - Ground of assessee is allowed Telescoping of additions sustained vis- - vis income surrendered - HELD THAT:- We set aside this issue to the file of the AO with a direction to verify the income surrendered by the various assesses as stated in the declaration dated 18.03.13 filed at the time of search and also the income tax returns of the various assesses mentioned there in settlement commission. The AO will verify whether credit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of M/s. Pumarth Infrastructure Pvt. Ltd and the same deserves to be deleted. We accordingly orders and delete the addition of ₹ 13.60 crores made by the Ld. A.O u/s 68 of the Act on the basis of our finding that the addition for similar amount has already been confirmed by us in the hands of Shri Sumati Kumar Kasliwal. - Assessee ground allowed On money on sales of plots - HELD THAT:- The aforesaid issue has already been decided by this tribunal [ 2019 (3) TMI 631 - ITAT INDORE] confirming addition @ 25% of On-Money . From perusal of the above judgments common view has been taken thereby confirming the addition only for the profit element in On-Money . Respectfully following the above judgment and examining facts of the instances case we find that the On- Money has been received by the assessee company from its business activity of developing various projects. Undoubtedly against unaccounted On- Money there is also an element of unaccounted expenditure which cannot be brushed aside and further looking to the fact that in the very same Group concern addition confirmed by the ITSC is @ 25% of On-Money . Addition u/s 40A(3) - various expenses in cash, above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2017 29.01.2016 29.01.2016 153A r.w.s. 143(3) 143(3) Shri Parth Kasliwal 2012-13 2013-14 28.03.2017 28.03.2017 29.01.2016 29.01.2016 153A r.w.s. 143(3) 143(3) Smt. Sharda Kasliwal 2012-13 2013-14 28.03.2017 28.03.2017 29.01.2016 29.01.2016 153A r.w.s. 143(3) 143(3) M/s. Nishant Finance Pvt. Ltd 2012-13 2013-14 28.03.2017 28.03.2017 29.01.2016 29.01.2016 153A r.w.s. 143(3) 143(3) Shri Manoj Kasliwal 2013-14 28.03.2017 29.01.2016 143(3) 2. As the issues raised in these appeals are common, therefore these were heard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b.3,06,32,825 c.3,56,60,000 d.3,08,32,825 e.3,56,50,000 f.4,08,00,000 1 to 6 1 to 6 1 to 6 1 to 6 4 to 8 4. Income received in cash by Sumati Kumar Kasliwal Sumati Kumar Kasliwal 2013-14 ₹ 13,61,94,600 ₹ 58,40,000 ₹ 26,77,469 2 to 4 5. Share Capital Pumarth Infrastructure 2012-13 2013- 14 ₹ 13,60,00,000 A Y 2012-13 Ground. 1 to 4 and 2013-14 Departments Appeal Ground No.1 CO filed by assessee 6 On money on sales of plots Pumarth Infrastructure 2012-13 2013-14 ₹ 1,41,70,300 ₹ 1,31,36,750 5 6 And Ground. 1 to 3 departments appeal Ground No.1 7.Addition u/s 40A(3) Pumarth Infrastructure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi in the case of M/s. NKG Infrastructure Ltd vs. Pr. CIT ITANos.3825 to 3827/Del/2018 order dated 05.09.2018 ( ii) Hon'ble I.T.A.T., Indore Bench in the case of ACIT vs Pramod Kumar Sethi ITANo.382 383/Ind/2014 order dated 06.11.2018. ( iii)Hon'ble High Court of Madhya Pradesh in the case of CIT V/s Balchand Ajit Kumar order dated 14.4.2003. ( iv) Hon'ble High Court of Bombay in the case of CIT V/s Prime Developers ITANo.2452 of 2013 order dated 18.7.2016. Per contra Learned Departmental Representative, along with various judgements mentioned in the written submissions before us, has also relied on following judgments; ( i) Hon'ble High Court of Delhi in the case of Commission of Income Tax Vs M/s JRD Stock Brokers Pvt. Ltd ITA544/2005 order dated 12.09.2018. ( ii) Hon'ble Supreme Court of India in the case of Principal Commissioner of Income Tax (Central)-1 Vs NRA Iron Steel Pvt. Ltd SLP No. 29855 of 2018 dated 5.3.2019 ( iii)Hon'ble High Court of New Delhi in the case of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal, void and without jurisdiction and further in not considering that the same is in complete breach of principles of natural justice . 3. That the Ld. CIT(A) failed to appreciate that the entire factual narration made by the Ld. AO in the body of assessment is not found in the notice/questionnaire issued prior to assessment nor was the assessee at any point confronted with any such evidence as discussed in the assessment order. It appears that the Ld. AO has cut-paste the contents of the assessment done in case of Pumarth Infrastructure Pvt. Ltd without any relation of such evidence with the assessee s facts. The entire assessment is perverse and devoid of merit and deserves to be quashed. 4. That there is no justification either in law or on facts for the addition of ₹ 1,80,00,000 by treating the same as unexplained cash credits u/s 68 which received by the assessee as temporary loans which were duly repaid after 2 months and in respect of which the assessee had filed confirmation, bank statement, ITR, Balance Sheet, Affidavit. 5. That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act by the group plus the income offered for tax before the settlement commission by the group plus the income added in the hands of group entities and finally sustained should have been considered to arrive at a holistic picture of undisclosed income and if this is done then there would remain no amount which can be added. 6. The first two grounds (ground no.1 2) of appeal are challenging the assessment order being barred by limitation and hence being illegal, void and without jurisdiction. In support of these ground it was submitted by the Learned Senior Counsel for the appellant that notices u/s 153A for assessment year 2012-13 and u/s 143(2) for assessment year 2013-14 were issued to the assessee however, for these assessment years, the assessee has filed application before the Hon'ble Settlement Commission, Mumbai on 09/03/2015 hence the assessment proceedings were kept pending. Order u/s 245D(1) of the Act was passed on 20/03/2015 allowing the settlement application to be proceeded with. However vide order dated 08/05/2015, application was rejected. As per the assessment order itself the said 245D(2C) order passed on 08/05/2015 was received in the offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant cannot be permitted to pick a forum of second appeal to raise this issue without raising it either during assessment or during the first appellate proceedings. The Ld. DR further pointed out that during the course of assessment proceedings itself the appellant had filed an affidavit before the Assessing Officer wherein it was categorically stated by the appellant that the plea of limitation will not be raised by the appellant before the first appellate authority. The said affidavit was placed on record by the Ld. DR before us along with the report of the Assessing Officer. 6.4 In rejoinder the learned counsel for the appellant placed reliance on the decision of M/s NKG Infrastructure ltd v. Principal CIT [ITA No. 3825 to 3827 /Del/ 2018] decided by a coordinate bench of the Income Tax Appellate Tribunal Bench at Delhi.It was further submitted by the Learned Counsel for the appellant that the amendment to section 153B vide Finance Act,2017 also suggests that prior to 1.4.2017 the limitation period was 60 days which has been enhanced to 1 year only w.e.f. 1.4.2017. It was submitted by the Learned Counsel for the appellant that if the interpretation place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h conscious of the period of limitation of 60 days and thus when in June 2015 he took an affidavit from the appellant he was aware that the limitation would expire on 31st July 2015 and the Ld. AO consciously chose to let the limitation expire and thus now the department cannot chose to rely on the provisions of section 153 or the consent given by the appellant to brush aside the issue of limitation. Thus, according to the counsel for the appellant in case of Sumati Kumar Kasliwal the assessment order is barred by limitation as it has been passed beyond the period of 60 days from the date on which the order of settlement commission was received in the office of the Principal Commissioner. 6.7 We have considered the rival submissions and gone through the documents placed on record and have also considered relevant judgments referred to and relied by both the parties before us. The first issue that requires our consideration is whether the impugned assessment order is legal, void and without jurisdiction as the same has been passed beyond the period of limitation u/s 153B of the Act. The department has placed reliance on the second proviso to Sub S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 143 or section 144 at the time after the expiry of two years from the end of the assessment year in which the income was first assessable, and many provisos are provided to the section; whereas section 153-B starts with the expression that notwithstanding anything contained in section 153 , and states that the Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in class (b) of subsection (1) of section 153-A etc. 12. Admittedly the assessment involved in this matter is under section 153Aof the Act. While section 153-B specifically refers to the order of assessment under section 153-A of the Act, there is no such reference to section 153-A in section 153 of the Act. On a careful reading of these two provisions of law under section 153 and section 153-B of the Act, it occurs to our mind that the provisions under section 153-B of the Act are applicable to the facts of the case and section 153 has no relevance at all, lest we are afraid that it would attribute redundancy to the wisdom of legislature in enacting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the appellant had given an affidavit before the Assessing Officer stating that the issue of limitation will not be raised before the CIT(A). The learned counsel for the appellant on the issue of estoppel has relied on the decision of coordinate Bench of Mumbai Tribunal in the case of Dilip S. Dahanukar v. Assisstant Commissioner Income Tax [2004] 90 ITD 525 (Mumbai) and thus it would be appropriate to extract the relevant paras of the said decision hereunder : 37. ....We do not find any merit in the argument of the learned CIT/DR that the assessee is estopped from the raising the plea of limitation. In our view, the issue of limitation goes to the very root and strikes at the very basis of Assessing Officer's jurisdiction to complete the assessment and therefore such a legal plea can be raised any time. In fact, in some of have already been referred (supra), it has been held that even if no plea of limitation is taken, the courts are bound to consider it and even if a written undertaking is given by the assessee stating that he will not raise the plea of limitation, merely on that basis, the limitation does not get extended Therefore, in our view, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining the period of limitation under sections 149, 153B, 154, 155, 158BE and 231 and for the purposes of payment of interest under section 243 or section 244 or, as the case may be, section 244A, this proviso shall also apply accordingly. 4. On the issue of the applicability of special provision vs general provision, the principle is - Generalia Specialibus non derogant:- Generalia specialibus non derogant, or, in other words where there are general words in a later Act capable of reasonable and sensible application without extending to subjects specially dealt with by the earlier legislation, you are not to hold that earlier or special legislation indirectly repealed, altered or derogated from merely by force of such general words, without any indication of particular intention to do so (Maharaja Pratap Singh Bahadur v. Man Mohan Dev AIR 1966 SC 1931). The literal meaning of this expression is that general words or things do not derogate from special. This expression was explained to mean that when there is conflict between a general and special provision, the latter shall prevail (CIT v. Shahzada Nand Sons[1966] 60 ITR 392 (Se) and Union of India v. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of a firm under the Incometax Act, there is no scope for importing the concept and the provisions of the Partnership Act. (CIT v. Shambulal Nathalal Co.[ 1984] 145 ITR 329 (Kar.). The legal position of a firm under the income-tax law is different from that under the general law of partnership in several respects;. In case of conflict between the two statutes, the general rule to be followed is that the later abrogates the earlier one. In other words, a prior special law would yield to a later general law, if either of the two following conditions is satisfied: (i) The two are inconsistent with each other; (ii) There is some express reference in the later to the earlier enactment (Ajay Kumar Banerjee v. Union of India AIR 1981 SC 1130) 5. In view of the above, a prior special law yields to a letter general law if either the two are inconsistent with each other or there is some express reference in the later to the earlier enactment. Both the conditions are satisfied in this case. The inconsistency has been addressed by a later amendment in section 153B by insertion of third proviso to the Explanation to section 153 extending the period of limitation to one y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is regarded as being not in existence and cannot be looked into for any purpose, nor can be relied on or referred to by any authority much less an authority subordinate to the Tribunal. Needless to observe, the four additional issues urged by the assessee will have to be decided by the Commissioner of Income-tax (Appeals) keeping in view the law laid down by the Supreme Court and the High Courts in several cases holding the field in their right perspective. Let this be done within six months by the Commissioner of Income-tax (Appeals) from the date of appearance. Parties to appear before the Commissioner of Income-tax (Appeals) on April 3, 2006. 6.14 In these given facts and circumstances of the case we find that issues raised in Ground No. 1 2 is a legal issue and has been raised for the first time before the Tribunal. There was no occasion with the Ld. CIT(A) to adjudicate this issue. Therefore in light of judgment of Hon'ble High Court in the case of CIT V/s Tolaram Hossomal 2008 (supra) we set aside legal issue raised by the assessee for Assessment Year 2012-13 relating to the validity of the impugned assessment order whether being valid or invalid co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the directors of such briefcase companies are lying in slum area of Indore while, the registered office of the company has been mentioned in Registrar of Companies at Mumbai. According to the Assessing Officer it was noticed from return of income of such companies that it had no business activities, but it has provide so called huge amounts in the shape of accommodation entries of 'Pumarth Group of Companies' on very large scale. As stated in the Assessment order during the course of post search enquiries, it has been found that Pumarth Group of Companies has accepted huge amounts of Unsecured loans Share Premium by way of accommodation entries from the companies in which Shri Ashish GendalalVerma is a director. The name of those companies in which Shri Ashish GendalalVerma is/was a director, has been enquired from R.O.C. database, are as under :- ( i) M/s Idani Trading Pvt. Ltd. ( ii) Ms JasolMaa Share Trading Pvt. Ltd. ( iii) M/s Arawali Stock Broking Pvt. Ltd. ( iv) M/s Gupteshwar Securities Pvt. Ltd. ( v) M/s Arrow Exim Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h various banks. He also furnished an Affidavit in this regard . It has been stated in the assessment order that that when the same affidavit filed by Shri Jaiprakash Jakhetia has been confronted before the assessee, he did not wish to clarify and substantiate his claim. Therefore according to the assessing officer it was clear that the assessee has failed to counter the very finding of post search enquiry in this regard. 7.5 It has been further stated in the assessment order that on perusal of the earlier enquiries of the Investigation Wing, the other companies have also been noticed which have provided accommodation entries to 'Pumarth Group of Companies in the shape of Unsecured Loans and Share Premium by colorable device and its directors address on R.O.C. database are at the Indore. 7.6 According to the assessing officer it was noticed from the ROC details of 'M/s Idani Trading Pvt. Ltd.' that Shri Ashish GendalalVerma and Shri Manoj Chaturvedi was the initial directors of the company. After cessation of Shri Ashish GendalalVerma, Shri Kamlesh Shah was appointed as director in the company. Looking to the inter connection of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and PAN is a number which is allotted and helps the Revenue to keep track of the transactions and thus PAN number is relevant but cannot be blindly and without considering surrounding circumstances be treated as sufficient to discharge the onus, even when payment is through bank account. As per the AO there is no actual business activity undertaken by these creditors and it is also not established as to why these companies have provided loans to the applicant. The AO mentioned that mere filing of confirmation of the creditors is not sufficient until and unless the creditors are produced for cross examination and verification on the basis of supporting evidence on record. As per the assessment order the assessee has been asked to produce the director of ASBN MultitradePvt. Ltd, Gambhari Trading Pvt. Ltd, Color union International Pvt. Ltd., Magma Dealers Pvt. Ltd., MartinmasVyapak Trading Pvt. Ltd., Mohin Infrastructure Pvt. Ltd., Venkateshwara Bunglows Pvt. Ltd. for Statement u/s 131 from whom the assessee has taken Unsecured Loan and sold shares. But till the date of passing the order the assessee failed to produce all the directors for giving statement on oath to substantiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommodation entries to Pumarth Group of Companies in the form of unsecured loans and share premium and the addresses of the Directors of these companies is at Indore. The CIT(A) noticed that during the course of post search proceedings by the Investigation wing summons u/s 131 were issued to the Directors of the companies who are residing at Indore but during the course of field inquiry none of the Directors could be found in place at the addresses mentioned in the ROC database. Further', during the search loose papers, bank statements, Memorandum of Association and Article of Association, certificate of incorporation of Company, copy of return of income, blank share transfer form were found in respect of M/s Kothistar Developer Pvt. Ltd., M/s. Printage Offset Pvt. Ltd., M/s Evershine Building Pvt. Ltd. and M/s. Color union International Pvt. Ltd, the 4 investor companies in Pumarth Infrastructure Pvt. Ltd. (PIPL) which have not been found genuine by the Hon'ble Settlement Commission. The CIT(A) noticed that there is inter connection between the Directors of the Companies mentioned in the above table and the aforementioned companies which have provided accommodation entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even prior to taking of the loan. According to the Ld. Counsel for the appellant this very fact shows the complete eye wash attempted by the Ld. AO without actually making any enquiry. According to the Ld. Counsel for the appellant the dates tell the correct facts. Search in the assesses premises was on 21/09/2012 while Statement of Ashish Verma recorded on 07/02/2012 i.e. prior to search. This statement cannot be termed as post search proceedings. Also on 07/02/2012 no transaction was made by any company with the assessee. The assessee received unsecured loan in March 2012 while the alleged statement was recorded in Feb 2012.The statement of Jai Prakash Jagetia is also dated 13/2/2012. The assessee received loan in March 2012. How can such a statement be relied upon. Moreover even in this statement no mention of assessee s company has been made. Affidavit of Jai Prakash Jagatia is also on 15/02/2012. On 15/02/2012 no transaction was made by any company as loan with the assessee. The assessee received unsecured loan on 26/03/2012.No statement of Dayaram Mansore on record. No copy was ever provided in spite of repeated request by the Appellant. Even before this Hon ble Tribunal no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company has not proven the identity and creditworthiness of the lenders and genuineness of the transaction, therefore he treated the loan as alleged unexplained cash credit u/s.68 of the Income Tax Act, 1961 but this finding is not based on any inquiry or investigation as is evident from the dates on record. The counsel for the appellant submits that the Ld. AO failed to appreciate the fact that the assessee company filed the affidavit of the directors of the company wherein they confirmed for the lending the unsecured loan and also the source of source. The ld. Counsel submitted that the factum of Repayment of Loan in short period and that too much before search has also to be considered. It was submitted that the credentials and genuineness gets established by the fact that the unsecured loans were returned within two months of time. Loan was taken on 26th March 2012 and returned on 23rd May 2012. Even Interest at the rate of 12% has been paid to the above companies against the borrowings. Tax at source has also been deducted on interest payment to the above companies. As per the section 68 when the assessee has not offered any explanation regarding the nature and sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that High Share premium is a capital building exercise while the appellants case is not of share capital or share premium and there is no capital building exercise since all amounts were duly repaid in 2 months with interest. This was a case of genuine business loans. The Ld. Counsel for appellant thus submitted that the ratio of the Hon ble Supreme Court s decision in PCIT v. NRA Iron and Steel Pvt. Ltd. is not applicable to the facts of the present case. The Ld. Counsel for the appellant submitted that since the lender companies are existing companies and duly assessed to income tax, no addition can be made in the hands of appellant company for the loans received from these companies during the year. 7.13 On the other hand, the Learned CIT DR has supported the addition made by the assessing officer and has also drawn support from the observations and findings of CIT(A) by placing following written submissions:- 7.14 We have heard rival contentions and perused the records placed before us and gone through the judgements carefully. Before proceeding further it would be appropriate to discuss the judgements cited by the Ld. Senior Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15640/2012 filed by the Department has been dismissed on 17.09.2012 by the Hon'ble Apex Court. He has further submitted that all the requirement under Section 68 of the Income Tax Act, 1961 has been duly proved by the assessee by giving all the details and the findings recorded by the learned Appellate Tribunal, they are the findings of fact based on proper appreciation of documents on record. No substantial question of law is arising in this appeal. Para 8 On due consideration of the arguments of the learned 9 counsel for the parties, so also the reasoning assigned by the learned Appellate Tribunal, we are of the view that the income tax appeal filed by the department has no merit nor any substantial question of law is arising in the matter. In the case of Commissioner of Income Tax-II, Indore V STL Extrusion P Ltd [(2011) 11 Taxman 125 ] Hon ble High Court Madhya Pradesh has held that Para 5. Shri R.L. Jain, learned Senior counsel for the appellant argued that the Tribunal has committed error in not considering the law laid down by this Court in the case of CIT v. RathiFinlease Ltd. [IT Appeal No. 63 of 2004, dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and made available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of Sections 68 and 69 of the Income Tax Act. The burden of proof can seldom be discharged to the hilt by the assessee; if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty bound. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company. (Emphasis supplied) Para 19. In conclusion, we are of the opinion that once adequate evidence/material is given, as stated by us above, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter in case such evidence is to be disca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record, the order of the Tribunal is justified. Even the Tribunal acts purely as an appellate authority. In that capacity, the Tribunal has to see whether the assessment framed by the AO, all for that matter, orders of the CIT(A) were according to law and purportedly framed on facts and whether there was sufficient material to support it. It is not for the Tribunal to start investigation. The Tribunal is only to see as to whether the additions are sustainable and there is adequate material to support the same if not the addition has to be deleted. At that stage, the tribunal would not order further inquiry. It is to be kept in mind that the AO is prosecutor as well as adjudicator and it is for the AO to collect sufficient material to make addition. There may be exceptional circumstances in which such an inquiry can be ordered, but normally this course is not resorted to In the case of Commissioner of Income Tax- Faridabad v Laul Transport Corporation [(2009) 180 Taxman 185 (Punjab and Haryana) Hon ble High Court of Punjab and Haryana held that Para 6. In the present case, a perusal of the impugned order passed by the Tribunal reveals tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch that the only proper inference was that the receipt must be treated as income in the hands of the assessee, there was no reason why the assessing authority should not draw such an inference. Such an inference was an inference of fact and not of law. It was further observed that in determining whether an order of the Tribunal would give rise to a question of law the Court must read the order of the Tribunal as a whole to determine whether every material fact, for and against the assessee, had been considered fairly and with due care; whether the evidence pro and con had been considered in reaching the final conclusion ; and whether the conclusion reached by the Tribunal had been coloured by irrelevant considerations or matters of prejudice. It was further reiterated that the previous decisions of this Court did not require that the order of the Tribunal must be examined sentence by sentence through a microscope as it were, so as to discover a minor lapse here or an incautious opinion there to be used as a peg on which to hang an issue of law. In considering probabilities properly arising from the facts alleged or proved, the Tribunal did not indulge in conjectures, surmises or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been made by the AO as has been demonstrated in the preceding paras. 4. High Share premium is a capital building exercise 4. Not a case of share capital or share premium. No capital building since all amounts were duly repaid in 2 months with interest. This was a case of genuine business loans. Thus the ratio of the Hon ble Supreme Court s decision in PCIT v. NRA Iron and Steel Pvt. Ltd. is not applicable to the facts of the present case. 7.16 In the light of above judgments and given facts and circumstances of the case are of the considered view that the appellant i.e. the assessee has been successful to prove the genuineness, creditworthiness and identity of the alleged cash creditors on account of the fact that all the relevant details and supporting documents are placed on record. Further no incriminating material was found during the course of search which could clearly prove that the alleged transaction of receiving loan was an accommodation entry. The assessee s case further finds support the fact that the alleged loans were taken for a period of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation. 2. That the Ld. CIT(A) has erred in law and on facts in not appreciating that the entire assessment is illegal, void and without jurisdiction and further in not considering that the same is in complete breach of principles of natural justice . 3. That there is no justification either in law or on facts for the addition of ₹ 13,61,94,600 by treating the entires pertaining to cash received in the loose paper no. 62 of LPS B-1/5 as being income of the assessee. 4. That there is no justification either in law or on facts for the addition of ₹ 68,40,000 by treating the entries pertaining to Others column in the loose paper no. 62 of LPS B-1/5 as being income of the assessee. 5. That there is no justification either in law or on facts for the addition of ₹ 26,77,469 by treating the entry pertaining to Diff mentioned in the loose paper no. 62 of LPS B-1/5 as being unexplained expenditure of the assessee. 6. That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of ₹ 3,61,22,825/- made by the Ld. AO u/s 68 by treating entire share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time bared by limitation. Both the assessee and revenue have made the same submissions as were made for the similar issue raised for Assessment Year 2012-13. The Senior Counsel for the assessee referring to the submissions made for Assessment Year 2012-13 requested for setting aside this legal issue to the file of Ld. CIT(A). We find that the assessments for Assessment Years 2007-08 to 2012-13 were framed by the Ld. A.O u/s 153A r.w.s. 143(3) of the Act whereas the assessment for Assessment Year 2013-14 has been framed u/s 143(3) of the Act. The legal issue raised for Assessment Year 2012-13 by the assessee challenging the validity of the assessment being barred by limitation has been have discussed by us in the preceding paras and the provisions referred to Section 153 and Section 153B of the Act were being discussed to compute the period of limitation in the case where search has been conducted and assessment have been framed by issuance of notice u/s 153A of the Act. The instant appeal relates to Assessment Year 2013-14. The assessment framed u/s 143(3) of the Act is a regular assessment and the time limitation for completion of such assessment u/s 143(3) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat since Shri Kasliwal had himself offered the said amount before the Settlement Commission along with claiming the expenditure there from and since the entire amount of alleged unexplained cash has been held by Ld. A.O to be belonging to Shri Sumati Kumar Kasliwal and if the nexus of the alleged addition of ₹ 14,57,12,069/- is made to the addition for unexplained cash credit of ₹ 13,60,00,000/- made in another group case of Pumarth Infrastructure Pvt. Ltd during Assessment Year 2012-13 then the assessee i.e. Shri Sumati Kumar Kasliwal is not pressing the grounds challenging the addition of ₹ 14,57,12,069/-. It was further submitted that Shri Sumati Kumar Kasliwal earned undisclosed income during the Assessment Year 2012-13 from certain land transactions and same was routed through Pumarth Infrastructure Pvt. Ltd of which he is the Director and in the subsequent assessment year i.e. 2013-14 cash was received as the accommodation share capital entries were reversed back as the investors wanted their amount back. 12.2 An alternative submission has been made by the Ld. Counsel for the appellant that credit of this addition should be given in the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime by placing reliance on the decision of Madras High Court in case of Indian Express (Madurai) (P.) Ltd. (1983) 140 ITR 705 (Mad). It was submitted by the Ld. Senior Counsel that the taxability of SHARE CAPITAL OF ₹ 13,60,00,000 in the hands of Pumarth Infrastructure Pvt. Ltd. basically becomes an academic issue in view of the fact that corresponding addition has already been made in the hands of the director. The source of unsecured loan even if treated to be out of undisclosed income would be the addition already made in the hands of SS Kasliwal of a corresponding same figure derived from the same seized paper and thus there remains no further requirement of any addition of share Capital in the hands of the company. 12.4 On the other hand, the learned CIT DR has submitted that the assesse has not been able to prove the genuineness of share capital in the case of Pumarth Infrastructure Pvt. Ltd. and therefore that addition is required to be confirmed in the case if Pumarth Infrastructure Pvt. Ltd. on the basis of detailed finding given by the AO in the assessment order of Pumarth Infrastructure Pvt. Ltd. 12.5 We have heard rival contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in June, July 2012 which appeared in the seized loose paper document i.e. LPS-B-1/5 . Therefore the additions challenged by the assessee in Ground No. 3,4 5 totaling to ₹ 14,57,12,069/- inter alia includes the undisclosed income of ₹ 13.60 crores of Shri Sumati Kumar Kasliwal which was routed through the books of M/s. Pumarth Infrastructure Pvt. Ltd in the form of share capital and premium during Assessment Year 2012-13. Therefore we confirm the addition of ₹ 14,57,12,069/-. We however on perusal of the assessment order for Assessment Year 2012-13 passed in the case of Shri Sumati Kumar Kasliwal find that the total addition made for the unexplained cash is ₹ 13,67,12,069/-. From perusal of the seized document LPS 1/5 of Page 62 we find that there is a totaling error in the sheet. Total of entries relating to cash received is ₹ 13,61,94,600/- but it is wrongly mentioned as 12,61,94,600. Assessee on knowing the mistake has rightly challenged the correct amount of ₹ 13,61,94,600/-. Therefore the addition of ₹ 14,57,12,069/- (₹ 13,61,94,600/- + ₹ 68,40,000/- + ₹ 26,77,469/-) stands confirmed in the hands of the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SSK stands for Sumati s Kasliwal HUF PCSL 35802825 PCSL stands for Premier Capital and Services Ltd. PK 30632825 PK stands for Parth Kasliwal SMK 35660000 SMK stands for Sharda Manoj Kasliwal РСРL 17077904 PCPL stands for Pumarth Commodities Pvt. Ltd. CASH 126194600 Amount of cash received on various dates from OTHER 6840000 TOTAL RECD 516029454 Amount received by group PAID 518706923.1 Amount paid by group for accommodation entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see failed to produce all the directors for giving statement on oath to substantiate identity, creditworthiness and genuineness of the transaction accordingly, the AO was of the opinion that the identity, creditworthiness and genuineness of the transaction does not stand established and therefore the cash credit of ₹ 3,61,22,825/- was added to the total income for A.Y. 2013-14 as unexplained cash credit u/s 68 of the Act, 1961. 13.2 In appeal the learned CIT(A) has dismissed this ground of appeal. According to the Ld. CIT(A) the AO was justified in coming to the said conclusion in view of the seized paper no. 62. 13.3 During the course of arguments it was submitted by the Ld. Senior Counsel for the appellant that addition u/s 68 could not be made in respect of the amount which was a sale receipt particularly when purchases were not doubted. Since the purchases of these shares have been held to be genuine, the corresponding sales cannot, by any stretch of imagination be termed as unexplained. It was submitted by the Ld. Senior Counsel for appellant that both the lower authorities failed to appreciate the case of the assessee that these were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the same was returned back as the transaction could not be finalized. It is argued by the Ld. Counsel for the appellant that the sale consideration of shares is duly supported with valuation of the equity shares of these companies and the source of the purchase of the shares and the value of shares has not been doubted by the Assessing Officer. Further, even the capital gains offered to tax has been duly accepted. It was argued that that when the original purchase and capital gains has not been doubted and the shares have been sold at around the same rates, the question of doubting the genuineness of the sale transaction does not arise. The appellant has submitted various documents in support of the transaction such as Debit note for sale of shares, Bank Statement reflecting the payment. Board Resolution, Acknowledgement of Return of income, Balance sheet, copy of share certificate, affidavit of directors of the company etc. in order to prove the identity', creditworthiness and genuineness of the parties transaction. It was further argued that that the alleged report of the investigation Wing that the Directors were not found at the addresses mentioned in the ROC site as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sold at around the same rates, the question of doubting the genuineness of the sale transaction does not arise. The shares were purchased by the assessee out of either it s own funds or borrowed funds and these shares have been sold by it to third parties at similar valuations. It is a well decided judicial principle that when purchases have not been doubted, the AO cannot merely doubt the sales of the assessee. It was argued that the appellant submitted various documents of the company who purchased the shares such as Debit note for sale of shares, Bank Statement reflecting the payment, Board Resolution, Acknowledgement of Return of income, Balance sheet, Copy of Share certificate, affidavit of directors of the company etc. in order to prove the identity, creditworthiness and genuineness of the parties transaction and the Ld. AO has simply brushed aside the clinching evidences submitted by the appellant and made the addition merely on the basis of seized document. The appellant submits that during the course of assessment proceedings it has explained the entries made in the loose sheet with documentary evidences and If the assessee has satisfactorily explained the entries made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded in the books of the assessee. Thus, there is no element of undisclosed income in the hands of assessee company in the noting of page 62 in the hands of company. Reliance was placed by the Ld. Counsel for the appellant on the case of Twobro Investment Finance Ltd., vs Department Of Income Tax DELHI ITAT (ITA No.4486 /DEL/ 2011). The counsel for the appellant submitted that no addition can be made on the basis of the loose sheet without providing any incriminating documents in support of its contention. There was a legal obligation on the Assessing Officer to make it a fully speaking document since he wanted to make addition on the basis of the document. There were no indications or observations in the assessment order showing whether the Assessing Officer made any efforts to rebut the findings given by the assessee. Nothing emerged from the perusal of the document, and, therefore, no addition could have been made simply relying on the document that too without bringing any material on record to explain and substantiate the document. 13.7 It was further argued that even otherwise sale proceeds received on sale of shares, which is duly supported with docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subjected to tax. In the instant case the assessee has offered Short Term Capital Gain of ₹ 6,33,325/- for tax being the difference between the sale consideration of ₹ 3,06,32,825/- and the purchase/cost price of the equity shares sale of ₹ 2,99,99,500/-. Further all the necessary details about the identity and genuineness of the concern purchasing the shares from the assessee have been placed on record. Merely for not producing the directors of the alleged companies buying the equity shares cannot make the transaction in genuine. We therefore in the given facts and circumstances of the case are of the considered opinion that the assessee has successfully explained the amount of ₹ 3,61,22,825/- which includes ₹ 54,90,000/- being the amount received against sale of equity shares but returned back to the purchaser as the transaction could not be finalized and remaining amount of ₹ 3,06,32,825/- represents the sale consideration of sale of equity shares held by the assessee since last financial year and the amount of capital gain from sale thereof is duly offered to tax. We accordingly set aside the findings of lower authorities and delete the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground and we find that there is no discussion either by the AO or the CIT appeal regarding the income surrendered by the various assesses of the Apollo and taxation thereof and the consequential credit available. We find that this alternative claim is made on the basis of the decision of the Allahabad high court 42 taxmann.com 476 (Allahabad)/[2014] Commissioner of Income-tax (Central), Kanpur v. Fertilizer Traders wherein it has been held as under : 14. Regarding the peak theory, it may be mentioned that the peak theory was defined in the SampathIyengar's Law of Income-tax, Vol. 3, 9th edition, page 3547. Accordingly, Peak credit theory - One of the commonest defects of an assessee, where a single credit or number of credits appear in the books in the account of any particular person side by side with a number of debits is that they should all be arranged in serial order, that a credit following a debit entry should be treated as referable to the latter to the extent possible and that, not the aggregate but only the peak of the credit should treated as own explained. To give a simple example, suppose there are credits in the asesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the entire factual narration made by the Ld. AO in the body of assessment is not found in the notice/questionnaire issued prior to assessment nor was the assessee at any point confronted with any such evidence as discussed in the assessment order. It appears that the Ld. AO has cut-paste the contents of the assessment done in case of Pumarth Infrastructure Pvt. Ltd without any relation of such evidence with the assessee s facts. The entire assessment is perverse and devoid of merit and deserves to be quashed. 3. That there in no justification either in law or on facts for the addition of ₹ 90,00,000 by treating the same as unexplained cash credits u/s 68 which received by the assessee as temporary loans which were duly repaid after 2 months and in respect of which the assessee had filed confirmation, bank statement, ITR, Balance Sheet, Affidavit. 4. That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of ₹ 90,00,000 in respect of short term loans received by the appellant for a period of 2 months which were duly repaid with interest within a sport span of 2 months. 5. That the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a holistic picture of undisclosed income and if this is done then there would remain no amount which can be added. 17. The facts arising from the order of Assessing Officer and the CIT(A) in respect of addition of ₹ 90,00,000 towards loans treated as unexplained are identical to those contained in the order of Sumati Kumar Kasliwal for AY 2012-13. Both the Ld. Counsel for the appellant and the Ld. DR agreed at the time of arguments that arguments made in the case of Sumati Kumar Kasliwal are adopted for other cases also. 18. The issue of loan received and paid back within 2 months alongwith interest has already been adjudicated in the case of Sumati Kumar Kasliwal in ITASS 181/IND/2017 for AY 2012-13. The finding arrived at in the case of Sumati Kumar Kasliwal is as under : 7.16 In the light of above judgments and given facts and circumstances of the case are of the considered view that the appellant i.e. the assessee has been successful to prove the genuineness, creditworthiness and identity of the alleged cash creditors on account of the fact that all the relevant details and supporting documents are placed on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KASLIWAL 21. The grounds of appeal raised in the memo of appeal for AY 2013-14 read as under : 1.That the Ld. CIT(A) has erred in law and on facts in not appreciating that the entire assessment is illegal, void and without jurisdiction and further in not considering that the same is in complete breach of principles of natural justice. 2. That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of ₹ 3,06,32,825 made by the Ld. AO u/s 68 by treating entire share trading receipt as unexplained cash credit since the assessee had given full details of the sale transaction and by no stretch of imagination the entire trading receipt could be treated as unexplained cash credit since at most only the profit thereof could be taxed which was already offered in the return as share trading profit. Trading receipt of shares is a business income and cannot be treated as cash credit u/s 68. 3. That without prejudice to grounds no. 1 2, the Ld. CIT(A) has erred in law and on facts in sustaining the addition of ₹ 3,06,32,825 as unexplained cash credit without appreciating that the same wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ati Kumar Kasliwal others ITANo.181,472/Ind/2017,ITA(SS)No.178,ITANo.468/Ind/2017 C.O.No.31/Ind/2018 and others 13.9 We have heard rival contentions and perused the records placed before us and gone through the judgments referred to and relied by the Ld. Counsel for the assessee. Grievance raised by the assessee in Ground No. 6 to 10 revolves round the addition of ₹ 3,61,22,825/- being unexplained cash credit treated by the Ld. A.O u/s 68 of the Act on the basis of details available in the seized loose paper No.62 of LPS/B-115. On perusal of the orders of both the lower authorities and submissions made by the Ld. Counsel for the assessee and the paper book submitted before us there remains no dispute to the fact that the alleged amount of ₹ 3,61,22,825/- is appearing in the regular books of accounts of the assessee. This amount comprises of two parts firstly ₹ 3,06,32,825/- is for the sale consideration of sale of shares held by the assessee since preceding financial year and some of the remaining amount of ₹ 54,09,000/- which was also received against the sale consideration for sale of shares from M/s. Venkateshwara Bunglows Pvt. Ltd b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding arrived at on identical facts in the case of Sumati Kumar Kasliwal the addition of ₹ 3,06,32,825 in respect of shares sold but treated as unexplained is deleted. The grounds of appeal no.1 to 6 in the case of Parth Kasliwal are allowed. 24. Ground no. 7 in Parth Kasliwal s case is an alternative ground which does not survive since the other grounds are already allowed. This ground no.7 has thus become infructuous. 25. Consequently the appeal of Parth Kasliwal for AY 2013-14 is allowed. ITA(SS) 174/IND/2017 Assessment Year 2012-13 SHARDA KASLIWAL 26. The grounds of appeal raised in this appeal read as under : 1. That the Ld. CIT(A) has erred in law and on facts in not appreciating that the entire assessment is illegal, void and without jurisdiction and further in not considering that the same is in complete breach of principles of natural justice . 2. That the Ld. CIT(A) failed to appreciate that the entire factual narration made by the Ld. AO in the body of assessment is not found in the notice/questionnaire is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch have neither been given to the applicants nor opportunity of cross examination has been given and that it would not be fair and proper to place reliance on such statements. 8. That the Learned CIT(A) has erred in relying upon the finding of Income Tax Settlement Commission (ITSC) without appreciating the fact that the issue of unsecured loan has not been dealt with by the ITSC in its order. 9. That without prejudice to the aforesaid grounds of appeal, if the addition of ₹ 40,00,000 is sustained then firstly benefit of income offered for tax before the settlement Commission should be given and secondly credit for repayment of the unsecured loan should be allowed. 10. That without prejudice to the aforesaid grounds, cumulative effect of Income offered in the return of income filed U/s 153A of the Act by the group plus the income offered for tax before the settlement commission by the group plus the income added in the hands of group entities and finally sustained should have been considered to arrive at a holistic picture of undisclosed income and if this is done then there would remain no amount which can be adde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We therefore in the given facts and circumstances of the case and respectfully following the judgments in the preceding paragraphs are of the considered view that the addition for unexplained cash credit of ₹ 1,80,00,000/- needs to be deleted. We therefore set aside the finding of both the lower authorities and allow this issue of unexplained cash credit raised by the assessee in Ground No. 3 to 9. 28.1 Following the aforesaid finding arrived at on identical facts in the case of Sumati Kumar Kasliwal the addition of ₹ 40,00,000 in respect of loans treated as unexplained is deleted. The grounds of appeal no.1 to 9 in the case of Sharda Kasliwal are allowed. 29. Ground No.10 in Sharda Kasliwal s case is an alternative ground which does not survive since the other grounds are already allowed. This ground No.10 has thus become infructuous. 30. Consequently the appeal of Sharda Kasliwal for AY 2012-13 is allowed. ITA NO.469/IND/2017 Assessment Year 2013-14 SHARDA KASLIWAL 31. The grounds of appeal raised in the memo of appeal for AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid grounds, cumulative effect of Income offered in the return of income filed U/s 153A of the Act by the group plus the income offered for tax before the settlement commission by the group plus the income added in the hands of group entities and finally sustained should have been considered to arrive at a holistic picture of undisclosed income and if this is done then there would remain no amount which can be added. 32. The facts arising from the order of Assessing Officer and the CIT(A) in respect of addition of ₹ 3,56,60,000towards shares sold but treated as unexplained are identical to those contained in the order of Sumati Kumar Kasliwal for AY 2013-14. Both the Ld. Counsel for the appellant and the Ld. DR agreed at the time of arguments that arguments made in the case of Sumati Kumar Kasliwal are adopted for other cases also. 33. The issue of shares sold has already been adjudicated in the case of Sumati Kumar Kasliwal in ITA No.472/IND/2017 for AY 2013-14. The finding arrived at in the case of Sumati Kumar Kasliwal is as under : 13.9 We have heard rival contentions and perused the records placed before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncern purchasing the shares from the assessee have been placed on record. Merely for not producing the directors of the alleged companies buying the equity shares cannot make the transaction in genuine. We therefore in the given facts and circumstances of the case are of the considered opinion that the assessee has successfully explained the amount of ₹ 3,61,22,825/- which includes ₹ 54,90,000/- being he amount received against sale of equity shares but returned back to the purchaser as the transaction could not be finalized and remaining amount of ₹ 3,06,32,825/- represents the sale consideration of sale of equity shares held by the assessee since last financial year and the amount from sale thereof is duly offered to tax. We accordingly set aside the findings of lower authorities and delete the addition of ₹ 3,61,22,825/- and allow the assessee s Ground No. 6,7,8,8 10 for Assessment Year 2013-14. 33.1 Following the aforesaid finding arrived at on identical facts in the case of Sumati Kumar Kasliwal the addition of ₹ 3,56,60,000 in respect of shares sold but treated as unexplained is deleted. The grounds of appeal no.1 to 6 in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmation, bank statement, ITR, Balance Sheet, Affidavit and without considering that the loans received by the present appellant were not share capital and were duly repaid in a sport span of 2 months. 6. That the Ld. CIT(A) failed to appreciate that the discussion about statements of certain persons in the body of assessment order do not pertain to loans received and repaid by the present assessee and the AO has treated the facts of another case of Pumarth InfrstructurePvt Ltd as applicable to the present assessee which is grossly perverse and shows complete non-application of mind of the AO to the facts of the assessee s case and shows that the addition has been made in haste without considering the submissions and documents filed by the assessee. 7. That the Ld. CIT(A) failed to appreciate that the Settlement Commission has recorded a categorical finding in its order dated 24.11.2015 that the statements of five persons recorded during search have neither been given to the applicants nor opportunity of cross examination has been given and that it would not be fair and proper to place reliance on such statements. 8. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck with interest. Tax has also been deducted at source on the interest paid. The alleged transaction of receiving loan and being repaid back has been duly acknowledged by the cash creditors in the affidavit. These transaction of receiving loan can be equated to a capital formation exercise or of converting capital building exercise of alleged transaction purely looks to be a normal business transaction in which short term loan has been taken for business purposes and have been repaid back after having sufficient funds. The documents filed in support of identity, creditworthiness and genuineness i.e. Profit loss accounts, income tax returns, audit reports, affidavit of the cash creditors and identity proof have not been disputed by the revenue authorities at any stage. Ld. A.O seems to have been made the addition without making any investigation after the loan was taken. The finding given in the impugned assessment order about the investment is during the period prior to taking the loan. We therefore in the given facts and circumstances of the case and respectfully following the judgments in the preceding paragraphs are of the considered view that the addition for unexplained cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P) CIT v. Balchand Ajit Kumar . 4. That while sustaining the addition of Rs ₹ 3,08,32,825 the CIT(A) failed to appreciate that the addition of sale amount without disturbing the purchase amount is not justified either in law or on facts since if the sale is held to be bogus then the purchase should also be held as bogus thereby neutralizing both the outflow and inflow and thereby no addition could have been made. 5. That the Ld. CIT(A) failed to appreciate that the receipt on trading of shares which were purchased in the course of business is not of the nature of unexplained cash credit u/s 68 since the source of such sale of shares is the purchase of shares and thus no addition could be made. 6. The Learned CIT(A) has erred in relying upon the finding of the Income Tax Settlement Commission (ITSC) order without appreciating the fact that the issue of sale of shares has not been dealt with by the ITSC in its order. 7. That without prejudice to the aforesaid grounds, cumulative effect of Income offered in the return of income filed U/s 153A of the Act by the group plus the income offered for tax be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res of Pumarth Meadows Pvt. Ltd and remaining amount of ₹ 2,03,32,825/- is from sale of 66,665 equity shares of Pumarth Holdings Pvt. Ltd. Ld. A.O has treated this sum of ₹ 3,06,32,825/- i.e. the sale consideration from sale of shares as unexplained cash credit u/s 68 of the Act on the basis that the amount received from the companies who were purchased the shares from the assessee are not explained. However Ld. A.O has not doubted the genuineness of the purchase of the equity shares made by the assessee in the preceding financial year. It is established principle of law that if the purchases are genuine then only the difference between the sale and purchase amount can be subjected to tax. In the instant case the assessee has offered Short Term Capital Gain of ₹ 6,33,325/- for tax being the difference between the sale consideration of ₹ 3,06,32,825/- and the purchase/cost price of the equity shares sale of ₹ 2,99,99,500/-. Further all the necessary details about the identity and genuineness of the concern purchasing the shares from the assessee have been placed on record. Merely for not producing the directors of the alleged companies buying the equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That without prejudice to grounds no. 1 2, the Ld. CIT(A) has erred in law and on facts in sustaining the addition of ₹ 3,56,50,000 as unexplained cash credit without appreciating that the same was on account of sale of sales and since the purchase of these shares was not doubted by the AO therefore addition of the entire sale amount is arbitrary and illegal and contrary to the decision of the jurisdictional High Court in (2003) 263 ITR 610 (MP) CIT v. BalchandAjitKumar . 4. That while sustaining the addition of Rs ₹ 3,56,50,000 the CIT(A) failed to appreciate that the addition of sale amount without disturbing the purchase amount is not justified either in law or on facts since if the sale is held to be bogus then the purchase should also be held as bogus thereby neutralizing both the outflow and inflow and thereby no addition could have been made. 5. That the Ld. CIT(A) failed to appreciate that the receipt on trading of shares which were purchased in the course of business is not of the nature of unexplained cash credit u/s 68 since the source of such sale of shares is the purchase of shares and thus no addition could be made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the sale consideration for sale of shares from M/s. Venkateshwara Bunglows Pvt. Ltd but the same was returned back as the transaction could not materialized. This fact is verifiable from the bank statement. Therefore ₹ 54,09,000/- is duly explained and no addition is called for this amount. As regards the sale consideration from sale of shares of ₹ 3,06,32,825/- we find that ₹ 1,03,00,000/- was received from sale of 1,00,000 shares of Pumarth MeadowsPvt. Ltd and remaining amount of ₹ 2,03,32,825/- is from sale of 66,665 equity shares of Pumarth Holdings Pvt. Ltd. Ld. A.O has treated this sum of ₹ 3,06,32,825/- i.e. the sale consideration from sale of shares as unexplained cash credit u/s 68 of the Act on the basis that the amount received from the companies who were purchased the shares from the assessee are not explained. However Ld. A.O has not doubted the genuineness of the purchase of the equity shares made by the assessee in the preceding financial year. It is established principle of law that if the purchases are genuine then only the difference between the sale and purchase amount can be subjected to tax. In the instant case the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law or on facts for the addition of ₹ 13,60,00,000 by treating the same as unexplained cash credits u/s 68 and in respect of which the assessee had filed confirmation, bank statement, ITR, Balance sheet, Affidavit. 3. That the Ld. CIT(A) failed to appreciate that the Settlement Commission has recorded a categorical finding in its order dated 24.11.2015 that the statements of five persons recorded during search have neither been given to the applicants nor opportunity of cross examination has been given and that it would not be fair and proper to place reliance on such statements. 4. that without prejudice to the aforesaid grounds, the quantification of share capital received during A.Y. 2012-13 could not be 13,60,00,000 but could only be ₹ 7,65,00,000 which was the amount actually received during A.Y. 2012- 13, since ₹ 1,60,00,000 was received in A.Y. 2010-11 and ₹ 4,35,00,000 was received in A.Y. 2013-14. 5. That there is no justification either in law or on facts for the Ld. CIT(A) in sustaining the entire addition of ₹ 1,41,70,300 as alleged on money received by the assessee. The determina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire trading receipt could be treated as unexplained cash credit since at most only the profit thereof could be taxed which was already offered n the return as share trading profit. Trading receipt of shares is a business income and cannot be treated as cash credit u/s 68. 5. That without prejudice to grounds no. 1 2 , the Ld. CIT(A) has erred in law and on facts in sustaining the addition of ₹ 4,08,00,000/- as unexplained cash credit without appreciating that the same was on account of sale of sales and since the purchase of these shares was not doubted by the AO therefore addition of the entire sale amount is arbitrary and illegal and contrary to the decision of the jurisdictional High Court in (2003) 263 ITR 610 (MP) CIT v. BalchandAjitKumar . 6. That while sustaining the addition of ₹ 4,08,00,000/- the CIT(A) failed to appreciate that the addition of sale amount without disturbing the purchase amount is not justified either in law or on facts since if the sale is held to be bogus then the purchase should also be held as bogus thereby neutralizing both the outflow and inflow and thereby no addition could have been made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2 crores 5. I nnova E Services Pvt.Ltd ₹ 1.60 crores Total ₹ 13.60 crores To explain the identity, genuineness and creditworthiness of the share capital and share premium from the above stated five companies assessee provided various details in the firm of identity proof, bank and audited financial statements, income tax returns. On the other hand Ld. A.O being not convinced with the submissions of the assessee took the basis of the investigation carried out in some other cases for the said cash creditors and also certain investigations carried out during the course of assessment proceedings come to a conclusion that the alleged share capital and share application money totaling to ₹ 13.60 crores are unexplained and liable to be added to the income of the assessee u/s 68 of the Act. Assessee failed to get any relief from Ld. CIT(A) for the addition of ₹ 13.60 crores made by the Ld. A.O u/s 68 of the Act. Now the assessee is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been not pressed in the case of Sumati Kumar Kasliwal therefore the said addition in the hands of Sumati Kumar Kasliwal is sufficient to explain the source of the said share capital even if it is treated as unexplained and therefore there remains no scope of addition of ₹ 13,60,00,000 in respect of share capital in the hands of Pumarth Infrastructure Pvt Ltd. 54.2. On merits the Ld. Counsel for the appellant has placed reliance on the fact that no enquiry at all has been conducted in the case of Pumarth Infrastructure Pvt. Ltd. by the AO to arrive at the conclusion that the said share capital as bogus. The written submissions in respect of lack of enquiry of AO in respect of share capital and also the factum of genuineness thereof has been placed on record by way of written submissions filed by the counsel for appellant. It was submitted that there is an apparent lack of inquiry on the part of AO and wrong reliance placed by AO on statements which were recorded in Feb 2012 while the search took place in Sep 2012 and the share capital was received in March/ April/June 2012. It was argued that so called enquiry report was never brought on record by the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Inspectors Report is without jurisdiction and is clearly a made up one. It is wrong to say that the director could not be traced in view of the affidavits of these directors filed before the settlement commission and also placed before the AO.As regards the allegation of the department that the blank share transfer form board resolution was found on the computer of the assessee the appellant submits that these shares were allotted on private placement basis. Hence assessee company has to provide application form and draft Board resolutions to these companies. Some of these subscriber mailed these documents to the assessee company for approval which got stored in the computer system. Further transfer deed was taken from party on repurchase of share capital. But these transfer deed ware dated 18/06/2012 whereas the shares were repurchased by group companies on 06/09/2012, hence these Transfer deeds were not valid at that point of time hence new transfer deeds were obtained. 54.3 Regarding the allegation that seizure of documents shows that the face value of shares of ₹ 10/- issued at premium of ₹ 990/- as against the actual allotment of face value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Directors of respective companies. The amount of investment is also reflected in the Balance Sheet of the respective companies and all the companies have sufficient net-worth so as to justify the share capital contributed by them. Thus the assessee has proved the identity, genuineness and creditworthiness of transaction with documents before the Ld AO. Further the share premium was also justified by the assessee by filing the valuation report. It was submitted that in assessment proceedings the Learned Assessing Officer issued a show cause notice asking why the addition of ₹ 13,60,00,000/- should not be made in the hands of the assessee company u/s.68 of the Income Tax Act, 1961. In response to the same the assessee has submitted Valuation report to justify allotment price, Copy of PAN of all applicants, Certificate of Incorporation of applicant companies, Memorandum and Article of association of applicant companies, Copy of Share application Form, Copy of Board Resolution of applicant companies authorizing the company to apply for share,Copy of Bank Statement from which funds have been received, Copy of Confirmation letter for share application, Affidavit from all the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ored in the computer system. Further transfer deed was taken from party on repurchase of share capital. But these transfer deed ware dated 18/06/2012 whereas the shares were repurchased by group companies on 06/09/2012, hence these Transfer deeds were not valid at that point of time hence new transfer deeds were obtained. 54.6. Regarding the allegation that seizure of documents shows that the face value of shares of ₹ 10/- issued at premium of ₹ 990/- as against the actual allotment of face value of shares of ₹ 1000/- at premium of ₹ 49000/- it is submitted that the assessee company was planning to convert its share face value from ₹ 1000 to ₹ 10, but due to some legal issue the process of converting could not completed before allotment, hence new application of ₹ 1000 plus ₹ 49000/- was obtained from subscribers. Here it is pertinent to note that in next year the assessee company converted shares from ₹ 1000 to ₹ 10. Evidence showing share capital converted from ₹ 1000 to ₹ 10 in next year is enclosed in paper book. 54.7 Both AO as well as CIT(A) has relied upon the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Learned Assessing Officer proved the identity, genuineness and creditworthiness of transaction, but the Learned Assessing Officer ignored the same and without giving any cogent evidence made the addition u/s.68 of the Act. 54.10 It was argued that as per the section 68 when the assessee has not offered any explanation regarding the nature and source of credit found in the books, then only addition can be made under section 68. But if the assessee provides satisfactory explanation then addition cannot be made under section 68. 54.11. The investor company has also confirmed that it had made the investment in the appellant company. But the Learned Assessing Officer had not accepted the same and without pointing out any defects in the documents, he simply mentioned that the assessee not proved the creditworthiness of the investor party. 54.12 The counsel for the appellant submitted that the initial onus is on the assessee to prove with the documents the identity, genuineness, and creditworthiness of the investor. If it proved with documents than onus shifts on the Assessing Officer to prove why the explanation of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in Ground No. 1 to 4 for Assessment Year 2012-13 in the case of M/s. Pumarth Infrastructure Pvt. Ltd is in respect of treating share capital and share premium totaling to ₹ 13.60 crores as unexplained cash credit added by Ld. A.O u/s 68 of the Act and has been confirmed by Ld. CIT(A) also. Ld. A.O treated the following amount received from following companies towards share capital and share premium at ₹ 49,000/- charged on the face value of ₹ 1,000/- and Ld. A.O was not satisfied with the creditworthiness of the cash creditors. 1. Ever Shine Building Project Pvt. Ltd ₹ 3 crores 2. Colour Union International Pvt. Ltd ₹ 3 crores 3. Kothistar Developments Pvt. Ltd ₹ 5 crores 4. Printage Offset Pvt.Ltd ₹ 2 crores 5. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 2012 which is appearing in the seized document of loose paper No.62 of LPS B-1/5. The above series of transaction has been duly admitted by Shri Sumati Kumar Kasliwal and are supported to some extent by various documents observed by us while adjudicating various grounds through the concern namely share capital and share premium received by M/s. Pumarth Infrastructure Pvt.Ltd, shares sold to the investors of M/s. Pumarth Infrastructure Ltd having further sold to the group members which have been further sold on higher price and capital grain have been offered to tax. So admittedly some transactions are tallying with the story/submission given by Shri Sumati Kumar Kasliwal and coincidently the figures of ₹ 13,61,94,600/- found in the seized document during the course of search is also almost same as the figure of ₹ 13.60 crores of undisclosed income added in the case of M/s. Pumarth Infrastructure Pvt.Ltd. It is also an undisputed fact that no other documents were found during the course of search which could prove that the cash income of ₹ 13,61,94,600/- from any other source has been earned by Shri Sumati Kumar Kasliwal or any other group concern or related per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here are various other deposits in these bank accounts in the same period but when inter-group transfer are excluded and only amounts of these entry provider companies are added, the amount mentioned in the page 62 exactly matches. This clearly shows that this sheet was prepared to check the position of accommodation entry taken by the group. The document is authentic as the above discussed entries are exactly tallying. 56.2 The above observation of Ld. A.O supports our view that an unexplained income of ₹ 14,57,12,069/- inter alia including the amount of ₹ 13,61,94,600/- admitted as undisclosed income and offered to tax by Shri Sumati Kumar Kasliwal has its direct nexus with the addition of unexplained share capital of ₹ 13.60 crores in the case of M/s. Pumarth Infrastructure Pvt. Ltd. As we have already confirmed the addition in the hands of Shri Sumati Kumar Kasliwal it will not be justified to sustain the addition of ₹ 13.60 crores in the case of M/s. Pumarth Infrastructure Pvt. Ltd and the same deserves to be deleted. We accordingly orders and delete the addition of ₹ 13.60 crores made by the Ld. A.O u/s 68 of the Act on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid issue has already been decided by this tribunal by order dated 12.02.2019 in ITASS No.175 to 177/IND/2017 and for the sake of ready reference, the aforesaid finding in the said order has been extracted: We have heard rival contentions and perused the records placed before us. For all three assessment years i.e 2009-10 to 2011-12 common issue raised by the assessee, in Ground No. 2 3 is for the additions confirmed by Ld. CIT(A) of On-Money of ₹ 96,76,800/-, ₹ 3,09,80,760/- ₹ 50,96,575/- received from buyers for plots/row houses in the project undertaken by the assessee in the name of Pumarth Park Pumarth Meadows . Both the lower authorities have confirmed addition for gross amount of On-Money received from the projects run by the assessee. 2. Ld. counsel for the assessee has filed extract of the statement given before Income Tax Settlement Commission (in short ITSC) for the other group concerns as well as the submissions made for the assessee company which was later on rejected by the Income Tax Settlement Commission. In this submission, the assessee has disclosed gross receipts and has also c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely because did not incur much expenditure on infrastructure development. These facts were pointed out to the AR of the applicant during the hearings before the Commission, during the hearing on 26.4.2016, the applicant after considering the above factors came forward in a spirit of settlement to offer the corresponding unaccounted portion of the receipts on its 540% share of sale to which it was entitled under the Agreement with Garha Group. The disclosure made by the applicant on account of unaccounted receipt from the Gold-Green project amounts to ₹ 25,00,000/- on which taxable income has been worked out after applying a net profit rate of 25% which amounts to ₹ 6,25,00,000/-. A letter dated 26.4.2016 to this effect filed by the applicant is placed on record. The year-wise working made by the applicant gives the details of additional income in the project Golf-Greens by estimating profit at the rate of 25% on estimated unaccounted (difference in deal rate of plots sold by Applicant and Garha Group )as under: A.Y. Area sold (Sq.feet Difference in sales rate (per sq feet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said that there is perversity of approach. Whether the rate is tow or high, it would depend upon the facts of each case. In the present case net profit rate of five percent has been applied. We do not think it appreciable that the same requires to be enhanced. We are also inclined to think that it is high. In any case, it cannot be said that there has been perversity of approach. 4. Hon'ble Bombay High Court in the Commissioner of Income Tax vs. M/s. Prime Developers ITANo.2452 of2013- ( a) has held that the respondent-assessee is engaged in the business of construction. During the subject assessment year the respondent-assessee undertook construction of a project called Prime Mall. However in its return of income filed for the subject assessment year the respondent- assessee did not disclose any profit on its above project as it was following the Project Completion Method. ( b) On 20thApril, 2006 there was a search on the respondent assessee under section 132 of the Act. During the course of the search it was found that during the previous year relevant to assessment year under consideration i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Revenue before us is that the adoption of net profit of 17.08% as determined by the Tribunal is not correct. Although the questions as formulated does not state that the adoption of any particular rate of net profit, in submissions it is submitted that it has to be replaced/substituted by 65% as net profit as arrived at by the Assessing Officer. ( f) We find that the Revenue seeks to substitute the estimated net profit arrived at by the Tribunal with a new figure of net profit. This without in any manner showing that the estimate arrived at by the Tribunal in the impugned order is perverse. It is a settled position of law that in estimated net profit arrived at by the authorities is a question of fact and if the material on record does support the estimate arrived at by the Tribunal then it does not give rise to any substantial question of law (see CIT vis. Piramal Spinning and Weaving Mills Ltd. 124 ITR 408). In this case, we find that the net profit estimated at 17.08% is a very possible view on the facts found. ( c) Hon'ble Supreme Court in Income Tax Officer v. Annand Builders SLP (C) No. 14166 of 2003 The Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore inclined to hold that in the instant three appeals, addition should be sustained, only to the extent of 25% of the alleged On-Money i.e ₹ 96,76,800/-, ₹ 3,09,80,760/- ₹ 50,96,575/- which comes to ₹ 24,19,200/- ₹ 77,45,190/- ₹ 12,74,144/- for A.Ys. 2009-10 to 2001-12,respectively. 59. In view of the aforesaid finding already given in ITA (SS)No.175 to 177/IND/2017 for the preceding years, we direct that the addition of ONMONEY be restricted to 25% of the undisclosed receipts which would work out to ₹ 35,42,575 (being 25% of 1,41,70,300) for AY 2012-13 and ₹ 32,84,188 (being 25% of 1,31,36,750) for AY 2013-14. 60. Now we take up Ground No.7 for A.Y 2012-13 wherein assessee has challenged the addition sustained by Ld. CIT(A) relating to disallowance u/s 40A(3) of the Act ₹ 7,50,000. 61. Brief facts relating to this issue is that there were various eexpenses in cash, above ₹ 20,000/- under different heads as eevident from the Tally account placed on record before the assessing officer. Assessee did not file any detail so as to prove that the alleged amount shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.9 We have heard rival contentions and perused the records placed before us and gone through the judgments referred to and relied by the Ld. Counsel for the assessee. Grievance raised by the assessee in Ground No. 6 to 10 revolves round the addition of ₹ 3,61,22,825/- being unexplained cash credit treated by the Ld. A.O u/s 68 of the Act on the basis of details available in the seized loose paper No.62 of LPS/B-115. On perusal of the orders of both the lower authorities and submissions made by the Ld. Counsel for the assessee and the paper book submitted before us there remains no dispute to the fact that the alleged amount of ₹ 3,61,22,825/- is appearing in the regular books of accounts of the assessee. This amount comprises of two parts firstly ₹ 3,06,32,825/- is for the sale consideration of sale of shares held by the assessee since preceding financial year and some of the remaining amount of ₹ 54,09,000/- which was also received against the sale consideration for sale of shares from M/s. Venkateshwara Bunglows Pvt. Ltd but the same was returned back as the transaction could not materialized. This fact is verifiable from the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of shares sold but treated as unexplained is deleted. The grounds of appeal No. 4 to 8 in respect of addition towards sale of share in the hands of Pumarth infrastructure Pvt Ltd are allowed. 70. In the result the appeals of different assessee s are disposed off as under; S. No. Name of Appellant Appeal No Assessment Year Result 1 Sumati Kumar Kasliwal ITA No.181 472/ Ind/2017 2012-13 2013-14 Partly allowed for statistical purpose. 2 Shri Parth Kasliwal ITA(SS)No.179/Ind/ 2017 ITA No.465/Ind/2017 2012-13 2013-14 Allowed 3 Smt. Sharda Kasliwal ITA(SS)No.174/Ind/ 2017 ITA No.409/Ind/2017 2012-13 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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