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TMI Blog2019 (5) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... e of assessee Assessment Year Date of CIT order Date of A.O order Order passed u/s Shri Sumati Kumar Kasliwal 2012-13 2013-14 29.03.2017 28.03.2017 29.01.2016 29.01.2016 153A r.w.s. 143(3) 143(3) M/s Pumarth Infrastructure Pvt. Ltd 2012-13 2013-14 31.03.2017 31.03.2017 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 together and are being disposed off by this common order for sake of convenience and brevity. 3. Brief facts of the case as culled out from the records are that the Search and Seizure operations u/s 132 were carried out on 21.9.2012 at the business as well as residential premises of the Apollo (Pumarth) Group of Indore. Since the search operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue in these bunch of appeals and cross objection, Ld. Senior Counsel for the assessee along with various judgments mentioned in the written submissions before us, has also relied on following judgments; (i) Hon'ble M.P. High Court in ITA No.219/18 order dated 20.02.2018 in the case of PCIT Vs Shri Kiran Mittal. (ii) Hon'ble M.P. High Court in ITA No.65/2010 order dated 25.10.2010 in the case of CIT Vs STL Extrusion (P) Ltd (2011) 11 taxmann.com 125 (MP). (iii)Hon'ble Delhi High Court in the case of CIT Vs Kamdhenu Steel & Alloys Ltd (2012) 19 taxmann.com 26 (Delhi). (iv) Hon'ble Punjab & Haryana High Court in ITA No.251/2008 order dated 15.7.2008 in the case of CIT Vs Laul Transport Corporation. (v) Hon'ble Supreme Court in the case of CIT Vs Orissa Corpn (P) Ltd (1986) 25 Taxmann 80F (S.C) (1986). (vi) Hon'ble M.P. High Court in MAIT No.27/2008 order dated 27.06.2013 in the case of CIT Vs Peoples General Hospital Ltd. (vii) Hon'ble Supreme Court in the case of CIT Vs Bhageeratha Engg. Ltd (1993) 199 ITR 12 (SC). (viii) Hon'ble High Court of Madhya Pradesh in the case of PCIT vs Chain House International (P) Ltd (2018) 98 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .com 458 (Delhi) 4. We shall proceed to first consider the appeals of Sumati Kumar Kasliwal as the said case contains facts which are mostly common in respect of all other connected cases and the findings arrived at in the case of Sumati Kumar Kasliwal would then govern the other connected cases. The Ld. Counsel for the assessee and the Ld. DR agreed to this fact and therefore mostly addressed the facts as contained in the case of Sumati Kumar Kasliwal. IT(SS)A No.181/IND/2017,Assessment Year 2012-13 SUMATI KUMAR KASLIWAL 5. The grounds of appeal raised in this appeal for AY 2012-13 of Sumati Kumar Kasliwal are as under: 1. That the entire assessment order is illegal, void and without jurisdiction as the same has been passed beyond the period of limitation u/s 153B. The settlement order rejecting the application was passed on 8/5/2015 which was received by PCIT on 18/5/2015 and the asstt. order has been passed on 29/1/2016 which is beyond the period of limitation. 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 bre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded 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. 9. 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. 10. That without prejudice to the aforesaid grounds of appeal, if the addition of Rs. 1,80,00,000 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. 11. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid section would clearly demonstrate that the assessment order is barred by limitation. 6.3 Rebutting the aforesaid submission of the appellant the Learned DR submitted that the provision governing the period of limitation in this case would be section 153 and not section 153B. It was submitted by the Learned DR that the proviso to section 153 provides that in case of abatement of proceedings of Settlement Commission the period of limitation would be 1 year and not 60 days as contained in the proviso to section 153. It was further submitted by the Learned DR that this issue of limitation has not been raised at any point of time before the Assessing Officer or the Ld. CIT(A) and has been raised for the first time before this Hon'ble Tribunal which should not be permitted since the issue of limitation should be raised at the first available opportunity and the 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 whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai). It was further submitted by the learned counsel for the appellant that when the affidavit was filed before the Assessing Officer in June 2015 the period of limitation was very much available till 31st July 2015 and the Learned AO could not consciously choose to let the period of limitation expire even when he had more than a month left till 31st July 2015 to pass the assessment order. According to the learned Counsel for the appellant the period of limitation provided under the Act is sacrosanct and cannot be extended by consent of the parties more-so that when the consent was given the limitation was yet to expire and it was not as if the consent was given after the limitation had expired. According to the learned counsel for the appellant the assessing officer was very much 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reassessment, as the case may be, is less than sixty days such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly. 6.9 The counsel for the appellant has placed strong reliance on the decision of co-ordinate Delhi Bench of this Tribunal in the case of M/s NKG Infrastructure ltd v. Principal CIT [ITA No. 3825 to 3827 /Del/ 2018]. Before proceeding to examine the said decision it would be appropriate to extract the relevant paras of the said decision hereunder : 11. A reading of section 153 makes it clear that, no order of assessment shall be made under section 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, clear that the orders passed on 31/03/2006 is not clearly within the period of limitation prescribed under section 153-B of the Act." 6.10 From a perusal of the facts of the aforesaid decision it transpires that the issue in question before the co-ordinate bench was the legality or otherwise of the order passed under section 263 and while examining that issue an additional issue that arose for consideration of the Delhi Tribunal was that of the validity of the assessment order. The issue was not in respect of direct challenge to assessment order. In the present case 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 v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of limitation available under this section to the. Assessing Officer for making an order of assessment, reassessment or re-computation, as the case may be, shall, after the exclusion of the period under subsection (4) of section 245HA, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended ,to one year; and for the purposes of 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 particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p Act, the effect is given to it. Where the provisions of the Indian Income-tax Act are clear, resort cannot be had to the provisions of another statute. (Dharam Pal Sat Dev v. CIT [1974] 97 ITR 302 (P&H) and Nandlal Sohanlal v. CIT [1977] 110 ITR 170 (P&H) (FB).) When the Legislature has deliberately made a specific provision to cover a particular situation, for the purpose of making an assessment 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 yi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax (Appeals) will be influenced by any of them. In other words, the Commissioner of Income-tax (Appeals) will decide the appeal strictly in accordance with law on the merits as if there is no finding on any of the issues ever recorded by the Tribunal because once we set aside the order of the Tribunal, then such order 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 occasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities, 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. (vi) M/s Printage Offset Pvt. Ltd. (vii) M/s Evershine Building Projects Pvt. Ltd. 7.2 Accordingly, It has been observed by the assessing officer that Pumarth Group has taken accommodation entries from these companies. It was stated by the assessing Officer that during the course of post search proceedings, the Investigation Wing were issued summon u/s 131 to Shri Ashish GendalalVerma and Shri DayaramMansore. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded 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 above directors, the complete details of the director and its companies who have provided accommodation entries to 'Pumarth Group of Companies'. According to the assessing officer during the post search proceedings, the Investigation Wing were issued Summon u/s 131 upon above directors of the companies who are residing at Indore and make field enquiry about them and it has been found that the addresses of the directors of such companies are lying in slum area of Indore while, the registered office of the company has been mentioned in the database of R.O.C. at Mumbai. During the course of enquiry, none of the directors could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting 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 identity, creditworthiness and genuineness of the transaction. The AO concluded that the fund providing companies are actually entry providing companies and according to the AO on surfing on the internet and after enquiring from the ROC Website, it was seen that the above companies are paper companies and they are not engaged in doing any real work. The AO thus concluded that it is clear that the applicant has failed to establish the identity and creditworthiness of the creditors and genuineness of the transactions and the amount of Rs. 1,80,00,000/- was added to the total income of the assessee as unexplained cash credit of the assessee u/s 68 for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer 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 to the Pumarth Group and there is cross share holding between the various companies. The CIT(A) observed that during the assessment proceedings the appellant was asked to produce the Directors of Martinnas Vyapak Pvt. Ltd., Mohin Infrastructure Pvt. Ltd. and Venkateshwara Bunglows Pvt. Ltd. to whom the appellant has sold shares to substantiate the identity, creditworthiness and genuineness of the transaction but the appellant failed to Produce the said Directors. On these reasons it was concluded by the Ld. CIT(A) that the addition was rightly made by the AO and thus the appeal filed by the assessee was dismissed. 7.8 At the time of hearing, detailed arguments were made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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 such statement is placed on record. Settlement Commission in its order dated 24/11/2015 has categorically observed that such statements cannot be used against the assessee since no copies thereof have been ever provided to the assessee. Inspectors report is dated 29/12/2012 wherein, Inspectors states that he has been directed to issue summons by the AO.The AO assumed jurisdiction over the assessee on 30/04/2013 by virtue of order u/s 127. How the Inspector got director to serve summon u/s 131 on 29/12/2012when AO himself got jurisdiction on 30/04/2013. Thus the very foundation of Inspectors Report is without jurisdiction and is clearly a made up one. Moreover it is wrong to say that the directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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.The lender company has also confirmed that it had made the loan in the appellant company. 7.11 The Ld. Counsel for the appellant placed reliance on the following decisions: i) CIT v. Sahibganj Electric Cables (P.) Ltd. [1978] 115 ITR 408 (Cal.) ii)Principal Commissioner of Income Tax-II Indore Vs Karan Mittal Hon'ble High Court of Madhya Pradesh. iii) Commissioner of Income Tax-II, Indore V STL Extrusion P Ltd [(2011) 11 Taxman 125 ](MP) iv) Commissioner of Income Tax- II V Kamdhenu Steel & Alloys Ltd [2012 19 Taxman 26 (Delhi)] v) Commissioner of Income Tax- Faridabad v Laul Transport Corporation [(2009) 180 Taxman 185 (Punjab and Haryana) vi) Commissioner of Income Tax V Orissa Corpn (P) Ltd [( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough the judgements carefully. Before proceeding further it would be appropriate to discuss the judgements cited by the Ld. Senior Counsel for the appellant during the course of arguments. These judgements are extracted hereunder : In the Case of Principal Commissioner of Income Tax-II Indore Vs Karan Mittal Hon'ble High Court of Madhya Pradesh has held that: Para 5. This question has been considered by the Apex Court in the case of Commissioner of Income Tax v. Orissa Corporation (Private) Limited reported in 1986 AIR 1849 = [1986] 25 Taxman 80F (SC) = 1986 SCR (1) 979; relevant paragraph No.13 reads, as under: - "13. In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index number was in the file of the Revenue. The Revenue, apart from issuing notices under Section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 63 of 2004, dated 11-10- 2007] in which it has been laid down that onus is on the assessee to establish the genuineness of the credits. He also argued that no opportunity was available to the appellant to controvert the affidavits. Para 6. Having considered the contention of the appellant we find that the Tribunal has taken note of judgment of this Court in the case of Rathi Finlease Ltd.(supra) as also the various judgments of the Supreme Court as well as Delhi High Court and has held that though it is the duty of the assessee to establish the genuineness of the credits but in the present case the assessee has duly established the identity and source of credits. The Tribunal has also held that once the identity and source of the subscribers of the share is established no addition can be made under section 68 of the Income-tax Act. The assessee having duly furnished the names, age, address, date of filing the application of share, number of shares of each subscriber there was no justification for the Assessing Officer for making the impugned addition because once the existence of the investors/share subscribers is proved, onus shift on the revenue to establish that either the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make thorough probe of the nature indicated above before it could nail the assessee and fasten the assessee with such a liability under Section 68 and 69 of the Act. Para 21. However, in the facts and circumstances of these cases, it would be difficult to give such an opportunity to the Revenue. There are number of reasons for denying this course of action which are mentioned below: (i) It is not a case where some procedural defect or irregularity had crept in the order of the AO. Had that been the situation, and the additions made by the AO were deleted because of such infirmity, viz., violation of principle of natural justice, the Court could have given a chance to the AO to proceed afresh curing such procedural irregularity. One example of such a case would be when statement of a witness is relied upon, but opportunity to cross-examine is not afforded to the assessee. (ii) On the contrary, it is a case where the AO(s) did not collect the required evidence which they were supposed to do. To put it otherwise, once the assessee had discharged their onus and the burden shifted on the AO(s), they could not come out with any cogent evidence to make the additions. No doubt, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e creditor has been established by producing the record of the assessee in which those transactions have been duly accounted for, but the assessee has also discharged its onus in explaining the nature of source and the cash credit. It is also well settled that the assessee can be made to explain the source of the credits in the books of account, but not the source of the source, i.e., source of the creditors. Para 7. In our view, the Commissioner of Income-tax (Appeals) as well as the Tribunal while taking into consideration the material and documents and appreciating the evidence available on the record, have recorded a pure finding of fact which cannot be interfered by this court in appeal filed by the revenue. It has been held in Raichand Kothari (HUF) v. CIT [1997] 223 ITR 250 (Gau.) that in cash credit cases the Tribunal is the final fact-finding body. Further, it has been held in CIT v. Shree Gopal & Co. [1993] 204 ITR 285 (Gau.) that the High Court cannot, in a reference/appeal, embark upon a reappraisal of the evidence. The question of the genuineness of a credit or the correctness of the assessee's explanation is a question of fact which cannot be interfered in appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises. 7.15 As regards the applicability of recent judgement of Hon'ble Supreme Court in the case of PCIT vs. NRA IRON & STEEL PVT. LTD. (supra) heavily relied by Learned Departmental Representative , we observe the Principles laid down in para 11 of the said judgment are not applicable to the facts of the case at hand as would be evident from the following analysis : Principles laid down by the Hon'ble Supreme Court Facts of the present case 1. Principles are for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed by the revenue authorities at any stage. Ld. A.O seems to have 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 credit of Rs. 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. 8. Ground No. 10& 11 in AY 2012-13 is an alternative ground raised by the appellant. However in view of the fact that the main grounds are allowed therefore there remains no occasion for deciding ground No. 10& 11 and the same is treated as infructuous. 9. In the result Appeal for Assessment Year 2012-13 in the case of Shri Sumati Kumar Kasliwal is partly allowed for statistical purposes. ITA NO.472/IND/2017 for Assessment Year 2013-14 SUMATI KUMAR KASLIWAL 10. The grounds of appeal raised in the memo of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 9. 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. 10. The Learned CIT(A) has erred in relying upon the finding of the Income Tax Settlement Commission (ITSC) order without appreciation the fact that the issue of sale of shares has not been dealt with by the ITSC in its order. 11. 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 amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Income Tax Settlement Commission and the same was rejected which needs to be considered while applying the period of limitation. We therefore are of the considered view that as the legal issue challenging the validity of impugned assessment being barred by limitation which has been challenged for the first time before the Tribunal and Learned CIT (A) had no occasion to deal with the same, we respectfully following the judgement of Hon'ble Jurisdictional High Court in the case of CIT V/s Tolaram Hosamal (supra), as referred by us while adjudication the similar legal issue in the case of assessee for AY 2012-13 and therefore taking a consistent view, set aside this legal issue raised for adjudication to the file of Learned CIT(A) . Therefore Ground No. 1 & 2 of the assessee's appeal in the case of Shri Sumati Kumar Kasliwal for Assessment Year 2013-14 is allowed for statistical purposes. 12. Ground no. 3, 4 & 5 in AY 2013-14 is regarding the addition in respect of undisclosed income received in cash by Sumati Kumar Kasliwal at Rs. 14,57,12,069/-(13,61,94,600/-,Rs. 68,40,000/-and Rs. 26,77,469/-) 12.1 At the outset, the learned Senior counsel for the appellant referring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received as share capital. The source of the said share capital is this income received by Sumati Kumar Kasliwal and the only prayer is that the benefit of this addition be given in the hands of PIPL. It was submitted that the amount already taxed in one hand can be a source of payment for unsecured loan if the allegation of the AO that the group has paid cash to get the loan. The AO himself states in the assessment order of the appellant that group has paid cash to get credit entry in the assessment order. It was argued that even in the case of SS Kasliwal the basis of addition is the same page 62 which is alleged to be the unexplained cash credit. The very same page has in column "cash" the same total as is equivalent to the capital raised. It was argued that if one portion of "page 62" is being relied upon to make addition in the hands of SS Kasliwal and the same page which has the name of PIPL and shows a credit entry, then the theory of peak credit would very much be available as held by Allahabad High Court in [2014] 42 taxmann.com 476 (Allahabad)/[2014] Commissioner of Income-tax (Central), Kanpur v. Fertilizer Traders. 12.3 It was argued that alternative claim can be put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orth remains in his control. Referring to the disclosures made by the assessee Shri Sumati Kumar Kasliwal before the Income Tax Settlement Commission it was further submitted before us that in continuation of the aforesaid disclosure made before the Income Tax Settlement Commission the appellant i.e. Shri Sumati Kumar Kasliwal now offers the entire amount of alleged share capital of Rs. 13.60 lakhs received in M/s. Pumarth Infrastructure Pvt. Ltd during Assessment Year 2012-13 as an undisclosed income. The source of income is from the land transaction settlement amount and the income of Rs. 13.60 crores accrued to Shri Sumati Kumar Kasliwal in March, 2012 which the assessee got in the form of share capital from certain investors appearing in the books of M/s. Pumarth Infrastructure Pvt. Ltd which are termed as accommodation entry provider by the Ld. A.O. The Ld. Senior Counsel for the assessee further submitted that later on as the deal of share investment got cancelled and the investors wanted their investment back the shares allotted to the investors were re purchased back at an equal or higher amount and on cancellation of the deal the assessee received cash in June, July 2012 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer i seized document 'B-1/5/Page-62', details of amounts in the name of 'Pumarth Group of Companies' and its directors have been mentioned. The assessing Officer was of the opinion that the data in seized paper 62 represents the following assessees and the following amounts: MK 35650000 MK stands for Manoj Kaslimali NFPL 30832825 NFPL stands for Nishant Finance Pvt. Ltd. PIPL 84300000 PIPL stands for Pumarth Infrastructure Pvt. Ltd. MK HUF 30632825 MK stands for Manoj Kasliwal HUF : SSK 36122825 SSK stands for Sumati s Kasliwal SSK HUF 36482825 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 DIFF -2877469.06 Remaining amount to be received. 13.1 The assessing offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditworthiness and genuineness of the transaction does not stand established and therefore the cash credit of Rs. 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 sale of shares duly reflected in the books and not cash credits/loans and the assessee has supplied the full details of both the purchases and the sales In view of the above, there is no justification for the revenue authorities to treat th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not confronted to the appellant since it never existed. Further Vijay Nagar area which is shown as the address of the Directors of several companies is not a slum area. The appellant during the appeal proceedings also furnished the PAN card and residential proof of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in loose paper with supportive evidence, than no addition can be made in the hands of the appellant. But the Learned Assessing Officer has not considered the same. The Assessing Officer not provided any adverse comment or findings on the explanation provided by the assessee. He has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELHI 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 documentary evidences cannot be treated as unexplained credit U/s 68 of the Act without any doubt in respect of purchase thereof. 13.8 On the other hand the learned CIT DR has relied on the order of the CIT(A) appeal and the assessment order in support of her arguments. 13.9 We have heard rival contentions and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 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 Rs. 3,61,22,825/- which includes Rs. 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 Rs. 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 of Rs. 3,61,22,825/- and allow the assessee's Ground No. 6,7,8,9 & 10 for Assessment Year 2013-14. Ground No.11 is general in nature which needs no adjudication. 14. Ground no. 11 in AY 2013-14 relates to consequential relief claimed on the basis of income already surrendered for tax during search and duly offered for tax in the returns and also the credit of income on which tax has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 asessee's book in the account. As or Rs. 5,000 each on 1st October, 1990 and again on 5th November, 1990 but there is a debit by way of repayment shown on 27th October, 1990, the explanation will be that the credit appearing on 5th November, 1981 has or could have come out of the withdrawal/repayment on 27th October, 1981. This plea is generally accepted as it is logical and acceptable (whether the creditor is a genuine party or not), provided there is nothing in the material on record to show that a particular withdrawal/repayment could not have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emporary 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 Rs. 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. CIT(A) failed to appreciate that in the entire assessment order the basis of making the addition is the alleged share capital received in the case of Pumarth Infrastructure Pvt. Ltd. and the AO has only narrated the evidences relating to that company without considering the evidences filed by the assessee in the form of 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances 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 from 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. 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 genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on facts in sustaining the addition of Rs. 3,06,32,825 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. Balchand Ajit Kumar . 4. That while sustaining the addition of Rs. 3,06,32,825the 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 witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned back as the transaction could not materialized. This fact is verifiable from the bank statement. Therefore Rs. 54,09,000/- is duly explained and no addition is called for this amount. As regards the sale consideration from sale of shares of Rs. 3,06,32,825/- we find that Rs. 1,03,00,000/- was received from sale of 1,00,000 shares of Pumarth Meadows Pvt. Ltd and remaining amount of Rs. 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 Rs. 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 Rs. 6,33,325/- for tax being the difference between the sale consideration of Rs. 3,06,32,82 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture 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 Rs. 40,00,000 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 Rs. 40,00,000 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. CIT(A) failed to appreciate that in the entire assessment order the basis of making the addition is the alleged share capital received in the case of Pumarth Infrastructure Pvt. Ltd. and the AO has only narrated the evidences relating to that company without considering the evidences filed by the assessee in the form of confirmation, bank statement, ITR, Balance Sheet, Affidavit and without considering that the loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are adopted for other cases also. 28. 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. 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. These transaction of receiving lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 Rs. 3,56,60,000 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. 3,56,60,000 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee since preceding financial year and some of the remaining amount of Rs. 54,09,000/- which was also received against the sale consideration for sale of shares from M/s. Venkateshewhara Bunglows Pvt. Ltd but the same was returned back as the transaction could not materialized. This fact is verifiable from the bank statement. Therefore Rs. 54,09,000/- is duly explained and no addition is called for this amount. As regards the sale consideration from sale of shares of Rs. 3,06,32,825/- we find that Rs. 1,03,00,000/- was received from sale of 1,00,000 shares of Pumarth MeadowsPvt. Ltd and remaining amount of Rs. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce/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 Rs. 1,50,00,000 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 Rs. 1,50,00,000in 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. CIT(A) failed to appreciate that in the entire assessment order the basis of making the addition is the alleged share capital received in the case of Pumarth In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 38. 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 No.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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of Rs. 3,08,32,825 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 Rs. 3,08,32,825 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. Balchand Ajit Kumar . 4. That while sustaining the addition of Rs Rs. 3,08,32,825 the CIT(A) failed to appreciate that the addition of sale amount without distur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and the paper book submitted before us there remains no dispute to the fact that the alleged amount of Rs. 3,61,22,825/- is appearing in the regular books of accounts of the assessee. This amount comprises of two parts firstly Rs. 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 Rs. 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 statement. Therefore Rs. 54,09,000/- is duly explained and no addition is called for this amount. As regards the sale consideration from sale of shares of Rs. 3,06,32,825/- we find that Rs. 1,03,00,000/- was received from sale of 1,00,000 shares of Pumarth Meadows Pvt. Ltd and remaining amount of Rs. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppreciating 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 Rs. 3,56,50,000 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. 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 Rs. 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 R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 3,61,22,825/- is appearing in the regular books of accounts of the assessee. This amount comprises of two parts firstly Rs. 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 Rs. 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 statement. Therefore Rs. 54,09,000/- is duly explained and no addition is called for this amount. As regards the sale consideration from sale of shares of Rs. 3,06,32,825/- we find that Rs. 1,03,00,000/- was received from sale of 1,00,000 shares of Pumarth MeadowsPvt. Ltd and remaining amount of Rs. 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 Rs. 3,06,32,825/- i.e. the sale consideration from sale of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 there is no justification either in law or on facts for the addition of Rs. 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 Rs. 7,65,00,000 which was the amount actually received during A.Y. 2012- 13, since Rs. 1,60,00,000 was received in A.Y. 2010-11 and Rs. 4,35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Rs. 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 Rs. 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 additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Rs. 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 Rs. 13.60 crores made by the Ld. A.O u/s 68 of the Act. Now the assessee is in appeal before the Tribunal. At the outset Senior Counsel for the assessee referring to its submissions made in the case of Shri Sumati Kumar Kasliwal in Appeal vide ITA No.181 & 472/Ind/2017 filed by the assessee dealt by us in the preceding paragraphs submitted that Shri Sumati Kumar Kasliwal was at helm of affairs of Pumarth Group. Shri Sumati Kumar Kasliwal has admitted that the undisclosed income in the form of unexplained transaction of receiving cash as appearing in the seized loose paper No.LPS-62, P/5 totaling to Rs. 14,57,12,069/- which inter alia includes the unexplained cash of Rs. 13,61,94,600/-. Ld. Sr. Counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. AO. It is a complete breach of principles of natural justice for the AO to rely on any adverse material without confronting the assessee with such material. Moreover, this report has not been brought on record till date even before this Hon'ble Tribunal. Thus a bald Cloth of "so called investigation" has been given to assumptions, suspicious and summarizes. It was submitted that Balance sheets of the investor companies show considerable investments and current assets. The AO has made a bald observation without actually looking into the balance sheets and bank accounts of these companies. The so called post search enquiries are in fact prior to the search and even prior to the receipt of capital by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer 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 Rs. 10/- issued at premium of Rs. 990/- as against the actual allotment of face value of shares of Rs. 1000/- at premium of Rs. 49000/- it is submitted that the assessee company was planning to convert its share face value from Rs. 1000 to Rs. 10, but due to some legal issue the process of converting could not completed before allotment, hence new application of Rs. 1000 plus Rs. 49000/- was obtained from subscribers. Here it is pertinent to note that in next year the assessee company converted shares from Rs. 1000 to Rs. 10. Evidence showing share capital converted from Rs. 1000 to Rs. 10 in next year is enclosed in paper book. Both AO as well as CIT(A) has relied upon the order of settlement commission, in this regard the assessee submits that the settlement proceedings are different from the assessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 applicants, Allotment letter of shares, Copy of share certificates issued, Copy of shareholders register, Copy of Form-2 filed with Registrar of Companies after allotment of shares, Financial Statement of shareholder companies for the year ended 31.03.2011 and 31.03.2012, Copy of Acknowledgement of filing Income Tax Return for the Assessment Year 2011-2012 and 2012-2013 which fully prove the identity, genuineness and creditworthiness of the investor. It was submitted that the Learned Assessing Officer ignored all these details and made the addition of Rs. 13,60,00,000/- u/s.68 of the Income Tax Act, 1961 by treating the amount received on account of share capital and share premium as alleged Unexplained Cash Credit. The counsel for the appellant submits that the Ld. AO failed to appreciate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from subscribers. Here it is pertinent to note that in next year the assessee company converted shares from Rs. 1000 to Rs. 10. Evidence showing share capital converted from Rs. 1000 to Rs. 10 in next year is enclosed in paper book. 54.7 Both AO as well as CIT(A) has relied upon the order of settlement commission, in this regard the counsel for the appellant has submitted that the settlement proceedings are different from the assessment proceedings. The settlement commission has rejected the application at the admission stage without going through the various documentary evidences submitted by the assessee. As regards the finding of the settlement order for the bank statement of the investor company the assessee submits that the assessee has proved the creditworthiness of the investor by filing its bank accounts and financial statement. From the banks accounts of the investor company it is apparent that the investors' company has not deposited any cash in the said bank account. Nowhere in the settlement order or in assessment order it was proved that the funds received in the investor companies belongs to the assessee company or that the assessee company was related to that co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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 assessee is not to be accepted. But the Learned Assessing Officer without providing any evidence in contrary simply mentioned that the assessee has failed to prove the creditworthiness and genuineness of investor. AO relied on certain material which was of February 2012 i.e. much before the search. He relied on an Inspectors Report which again was before the AO assumed jurisdiction. Thus in fact the entire addition is based on presumption. Affidavits of directors of these companies were also filed. The AO did not choose to issue summons u/s 131 after receiving these affidavits. The AO conveniently ignored the fact that these shares were subsequently repurchased at a higher value in September, 2012 i.e. before search and all the investors made short term gains which as per their affidavit have been duly shown by the investors in their returns. Had the share capital been accommodating entries then repurchase at a higher value could not have been possible. 54.13 While arguing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13-14 appeal filed by the assessee in the preceding paragraphs while adjudicating appeal No. ITA No.181 & 472/Ind/2017 in which ground relating to unexplained cash of Rs. 14,57,12,069/- were NOT PRESSED by Sumati Kumar Kasliwal. While going through the written submissions as well as during the course of hearing it has been an undisputed fact that during the course of search no un accounted income in physical form was unearthed. Certain documents for unexplained investments and transactions were found which included loose paper No.62 of LPS/B-1/5 containing various transactions which is reproduced below and relates to sale of equity shares by various persons and companies part of the group and also cash amount received at Rs. 13,61,94,600/- and Rs. 68,48,000/-which were not explained before the revenue authorities. There was also difference of cash payment of cash received of Rs. 26,77,469/- the total of these three figures comes to Rs. 14,57,12,069/-. Addition for this amount has already been confirmed by us in the case of Shri Sumati Kumar Kasliwal as the related grounds were not pressed by the assessee Shri Sumit Kumar Kasliwal before us. It was contended by Senor Counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Kasliwal has already accepted the addition of Rs. 13,61,94,600/- being part of the total additions not pressed of Rs. 14,57,12,069/- and therefore the revenue authorities are free to collect the tax on the addition confirmed by us in the case of Shri Sumati Kumar Kasliwal even though the year of taxability of Shri Sumati Kumar Kasliwal is Assessment Year 2013-14 whereas the addition made in the case of instant appeal of M/s. Pumarth Infrastructure Pvt. Ltd is for Assessment Year 2012-13. We are conscious of the fact that the taxability of the year is different but looking to the connective transactions which very well speak by itself that the unaccounted income of Shri Sumati Kumar Kasliwal of Rs. 13.60 crores took shape of share capital and share premium of Rs. 13.60 crores in the hands of M/s. Pumarth Infrastructure Ltd. Even the Ld. A.O assessing the case of Shri Sumati Kumar Kasliwal while examining the seized paper at Page 61 & 63 of LPS B-1/5 made following observations; 11.3It is notable here that the page No.63 of same LPS i.e. B-1/5, is a page containing information of some bank account in the names of various persons of Pumarth Group. When Bank statement/ledger of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69/- in the hands of Shri Sumati Kumar Kasliwal in view of our findings given herein above. 57.1 The aforesaid adjudication of the grounds raised by the assessee in the case of M/s. Pumarth Infrastructure Pvt. Ltd for Assessment Year 2012-13 wherein we have deleted the addition of Rs. 13.60 crores, the same will take care in the case of Department Appeal No.462/Ind/2017 wherein revenue has challenged the deletion and addition of Rs. 4,35,00,000/- made u/s 68 of the Act against the amount of Rs. 41,45,275/- on account of unexplained cash credit received by M/s. Pumarth Infrastructure Pvt. Ltd for Assessment Year 2013-14 which was part of the share capital and share premium issued during Assessment Year 2012-13. As this amount of Rs. 4,35,00,000/- is a part of addition of Rs. 13.60 crores for Assessment Year 2012-13 which already stands deleted. This ground of revenue will also not stand for and the same deserves to be dismissed. Similarly Cross Objection No.31/Ind/2017 filed by the assessee is also stands dismissed as merely support the finding of Ld. CIT(A) relating to the addition of Rs. 4,35,00,000/- deleted by Ld. CIT(A). 58. Grounds No. 5 & 6 for AY 2012-13 & ground No. 2 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice. It is also well evidenced by various documentary evidences found during the search which shows that applicant has been receiving on- money in its all of its projects whether they are on self owned land or on third parties land under aj oint-development agreement and accounting for it through the modus operandi of small denomination cheques. It is also seen that Garha group too has admitted that it has been receiving on-money in its various projects including the Golf-Green project. During the search of Garha group too incriminating material to this effect was found as a consequence of which the Garha Group made a substantial disclosure of income before the investigation wing. In view of these facts. It seems highly unrealistic that when a plot of land/flat is being sold by one partner at a much higher amount than that mentioned in the conveyance deed, similar plot/flat in the same project would be sold by the other partner for a consideration equivalent only to the rate mentioned in the conveyance deed. The argument that the applicant did not have to carry out much of infrastructure development activity in the Golf Green Project as compared to Golf Link project cited in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be regarded as the profit of the assessee. The net profit rate has to be adapted and once a net profit rate is adopted, it 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Gujarat High Court dismissed the Department's appeal on the ground that no substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney' i.e Rs. 96,76,800/-, Rs. 3,09,80,760/- & Rs. 50,96,575/- which comes to Rs. 24,19,200/- Rs. 77,45,190/- & Rs. 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 Rs. 35,42,575 (being 25% of 1,41,70,300) for AY 2012-13 and Rs. 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 Rs. 7,50,000. 61. Brief facts relating to this issue is that there were various eexpenses in cash, above Rs. 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 should not be disallowed u/s 40A(3) of the Act. Assesse could not succeed in appeal before the ld.CIT(A). 62. Now the issues in before us. 63. At the outset Ld. counsel for the assessee requested for setting aside this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 3,61,22,825/- is appearing in the regular books of accounts of the assessee. This amount comprises of two parts firstly Rs. 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 Rs. 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 statement. Therefore Rs. 54,09,000/- is duly explained and no addition is called for this amount. As regards the sale consideration from sale of shares of Rs. 3,06,32,825/- we find that Rs. 1,03,00,000/- was received from sale of 1,00,000 shares of Pumarth MeadowsPvt. Ltd and remaining amount of Rs. 2,03,32,825/- is from sale of 66,665 equity shares of Pumarth Holdings Pvt. Ltd. Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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