TMI Blog2021 (4) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... ven companies in respect of TPL Finance, the AO has found cash deposit of ₹ 50.00 lakhs whereas the company has subscribed to an amount of ₹ 3.00 crores, but no inquiry has been conducted by the AO about the balance amount of ₹ 2.50 crores; nor any statement of the directors/principal officers of this company was record. This being the factual position, the action of the AO is highly disputable and no merit to stand. The basis for the impugned addition is merely the statement of the assessee and nothing else. The mere investment in the share capital made in the Asstt.Year 2009-10, ipso facto does not suggest that the assessee had income in that year, in the absence of any concrete material evidence to prove accordingly. Even otherwise also ultimately the impugned amount has suffered tax in the Asstt.Year 2010-11 and even the AO has not given credit of amount of taxation in the Asstt.Year 2010-11, while assessing the amount in the Asstt.Year 2009-10, it amounts to double taxation. Considering all these aspects, and after going through the well reasoned order of the ld.CIT(A) on this issue, we do not find any merit in the ground of appeal of the Revenue challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, addition now stand confirmed at ₹ 10,50,000/- - IT(SS)A No.239/Ahd/2014, IT(SS)A No.306/Ahd/2014 - - - Dated:- 12-4-2021 - Shri Rajpal Yadav, Vice-President And Shri Amarjit Sinh, Accountant Member For the Assessee : Shri S.N. Soparkar, Sr.Adv. And Shri Parin Shah, AR For the Revenue : Shri Virendra Ojha, CIT-DR ORDER PER RAJPAL YADAV, VICE-PRESIDENT: Assessee is in appeal against order of the ld.CIT(A) dated 1.4.2014 passed for the Asstt.Year 2010-11; whereas the Revenue is in appeal against order of the ld.CIT(A)-I, Ahmedabad dated 31.3.2014 passed for the Asstt.Year 2009-10. 2. Registry has pointed out that appeal of the assessee is time barred by 40 days. In order to explain the delay, it has been pleaded by the assessee that impugned order was passed on 1.4.2014 and it was received by the assessee on 16.4.2014. Thereafter, the assessee had undergone coronary artery bypass on 19.4.2014. This appeal was to be filed on or before 15.6.2014, but since the assessee was hospitalized and treated for coronary artery disease, bypass surgery was conducted upon him, therefore, he could not look after incometax litigation for short period, and this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100000 10000000 5. Rang Udhyog Investment Pvt. Ltd. 125000 12500000 6. Chopra Yarns Pvt. Ltd. 115000 11500000 7. Platinum Corporation Pvt. Ltd. 100000 10000000 8. Ken Securities Ltd. 175000 17500000 9. Arcadia Merchantile Capital Ltd. 200000 20000000 10. Genus Communiction Trade Ltd. 200000 20000000 11. Universal Credit Securities Ltd. 175000 17500000 12. Adheshwar Cotton Industries 100000 10000000 13. TPL Finance Ltd. 300000 30000000 14. Siyaram Metals Pvt. Ltd. 150000 15000000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition has been made on protective basis by the AO in the Asstt.Year 2010-11 also. Revenue further pleaded that the ld.CIT(A) has erred in deleting the addition of ₹ 44.00 lakhs which was added by the AO by estimating the alleged commission/ brokerage paid by the assessee for obtaining accommodation entries. In the Asstt.Year 2010-11, the assessee is impugning order of the ld.CIT(A) on the ground that the ld.CIT(A) has erred in holding that 1% of the brokerage was paid by the assessee as against 0.5% offered by the assessee. 9. With the above background, we have heard learned representatives and perused record carefully. We find that while deleting the addition from the Asstt.Year 2009-10, the ld.CIT(A) has lucidly considered each and every details noticed by the AO while making addition. The finding recorded by the ld.CIT(A) in the Asstt.Year 2009-10 reads as under: 4. I have gone through the assessment order and the submissions and arguments of the AR of the appellant carefully. It is seen that the AO has made the addition in the hands of the appellant because the appellant is the director of M/S B R Metal Alloys (Guj) Pvt. Ltd. and during the year the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e onus of such part acceptance of the evidence lies heavily on the revenue which has to be discharged with concrete evidence. 4.3 As far as the source of income for generating this unaccounted income of ₹ 20,50,00,000/- is concerned, it is seen that no evidence has been gathered by the AO to establish whether the appellant had the ability to generate funds to the extent of ₹ 20,50,00,000/-. This issue may be relevant, However it cannot be a decisive factor if it can be established that the money in the form of share capital had been provided by the appellant in F.Y. 2008-09 relevant to the A.Y. 2009-10. 4.4 When the facts of the present case are examined in light of the above discussion, it would be seen that the only evidences with the AO other than the statement of the appellant are the following: 1. The bank account of M/S B R Metal Alloys (Guj) Pvt. Ltd. wherein the money has been deposited in F.Y. 2008-09 relevant to the A.Y. 2009-10 2. Copies of bank accounts of the persons making the investment in purchase of shares of M/S B R Metal Alloys (Guj) Pvt. Ltd. 3. Statements of the persons in control of some of the entities making investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from M/S B R Metal Alloys (Guj) Pvt. Ltd.. No enquiry has been made by the AO about the cash coming from M/S B R Metal Alloys (Guj) Pvt. Ltd. Further the AO has not made any addition in the hands of the company M/S B R Metal Alloys (Guj) Pvt. Ltd. thereby holding that the share capital of the company is genuine. 4.9 The statement of Modaram Modi, it has been stated that M/s Veemotech Exim P. Ltd. has invested ₹ 1.25 crores in M/S B R Metal Alloys (Guj) Pvt. Ltd. and M/s Chopra Yarn P. Ltd. has invested ₹ 1.15 crores in M/S B R Metal Alloys (Guj) Pvt. Ltd. Shri Modi has stated that he is not associated with any other concern other than the two noted above. He has further stated that he does not have any other bank account other than that of the two companies. It is to be noted that there are no cash deposits of matching amounts in the bank account of the two companies. If Shri Modaram Modi is stating the truth then it is impossible to have received the money from the appellant since no cash deposits have been made in any of the two accounts. It is also to be noted that Shri Modi has given vague answer to the question regarding which person had given him th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any of the two accounts belonging to M/s Genus Commu Trade Ltd. It is also to be noted that Shri Panchal has given vague answer to the question regarding which person had given him the cash. The other very important aspect is that the appellant was not provided any opportunity to cross-examine Shri Panchal despite requests for the same to the AO.- In such situation where the opportunity of cross- examination was not provided and there are inherent anomalies in the statement, the complete reliance of the AO on the statement of Shri Hitesh Pancha! does not appear to be justified. 4,12 As far as TPL Finance is concerned, no statement of any person has been recorded. There is no evidence of any deposit of cash other than the ₹ 50,00,000/- deposited in the bank account of Mahavir Enterprise. Even regarding this amount there is no evidence of who deposited the money. Only on the basis of cash deposited amounting to ₹ 50,00,000/- in the account of a person who gave a cheque to another person who in turn had invested ₹ 3,00,00,000/- in M/S B R Metal Alloys (Guj) Pvt. Ltd. it cannot be said that the appellant had provided the entire funds in the A.Y. 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly the same as had been offered voluntarily, it was held by the ITAT that the department cannot accept one part of the statement and reject the other part just because it chose to do so. The ITAT held that either the department relies on the statement as a whole and assess the assessee in A.Y. 1989-90 or the department should reject the statement and assess the incomes in individual years based on independent evidence. When the department rejects the statement then no relevance be given to statement at all. 4.15 In view of the above, it is clear that the AO was not justified in holding that the appellant had contributed to the entire fresh share capital invested in M/S B R Metal Alloys (Guj) Pvt. Ltd. of ₹ 20,50,00,000/- in A.Y. 2009-10 out of unaccounted sources. The addition made by the AO of ₹ 20,50,00,000/- is deleted. 10. The only dispute relates to the year of taxability. There is no dispute with regard to the fact that the share capital introduced by B.R.Metal Alloys P.Ltd. is concerned, it was accepted by the assessee as arranged by him. The assessee has offered for taxation in the Asstt.Year 2010-11, whereas the AO was of the view that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) in his impugned order. The assessee has categorically stated in his statement recorded on oath on 27.09.2010 in reply to question no.6 that the amount of ₹ 20.50 crores was offered for taxation in the Asstt.Year 2010-11, as cash has been paid to the nominees during F.Y.2009-10. Even in reply to question no.2, the assessee stated that he has paid cash to the intermediary during F.Y.2009-10, and therefore the disclosure pertains to Asstt.Year 2010-11. The ld.CIT(A) further observed that the AO has not cross examined the assessee to establish that assessee had funds available with him in the A.Y.2009-10; nor any evidence of income for the Asstt.Year 2009-10 was available with the AO. Except voluntary disclosure of the assessee about the undisclosed income, there is nothing with the department to establish that the undisclosed income declared by the assessee pertained to the year 2009-10. The ld.CIT(A) recorded a finding that enquires have been conducted in the case of only seven companies, which together contributed a share capital of ₹ 12 crores and the AO straight away assumed and concluded that entire share capital of ₹ 20.50 crores subscribed by 16 entities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee for introduction of share capital/premium. The assessee alternatively pleaded that instead of 1% as estimated by the ld.CIT(A), a reasonable rate of brokerage be restricted to 0.5%. 16. As facts emerge from the record, the ld.AO has made addition of ₹ 41.00 lakhs assuming that the assessee has incurred expenditure of 2% to 4% for the purpose of obtaining entry of introduction of share capital. The assessee submitted that this being a notional addition without any basis, as most of entry operators has stated that they had received 0.25% to 0.50% as against 2% to 4% estimated by the AO. The ld.AO however made a notional addition of ₹ 41.00 lakhs at the rate of 2% of the capital introduced by the assessee. The issue was agitated before the ld.first appellate authority, who after considering order of the ld.AO and submissions of the assessee restricted the addition to 1% of the capital introduced. Against part addition, the assessee is now before the Tribunal. 17. Before us, the ld.counsel for the assessee reiterated submissions as were made before the Revenue authorities. He further submitted that both the authorities estimated the notional addition wi ..... 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