TMI Blog2022 (2) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... ram [ 1980 (9) TMI 3 - SUPREME COURT] wherein it has been held that additions can not be made without giving an opportunity of cross examination to the assessee - In view of these facts and the ratio laid down by the various judicial forums, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition as the assessee has proved all three ingredients of section 68 of the Act i.e. identity, creditworthiness of the investors and genuineness of the transactions. The ground no. 1 is allowed. Addition u/s 68 in respect of share application/unsecured loans received from M/s. Shyam Alcohol Chemical Ltd. - We note that the assessee has filed the ITRs, confirmations and bank statements from the lender/investor. The assessee has also filed before the AO the letter informing that the entire share application money has been paid subsequently. We also note that the lender has responded to the notice issued under section 133(6) of the Act by filing various documents therewith such as balance sheet, bank statements etc. beside filing affidavit of Shri Vipul Vidur Bhatt and thus confirmed the loan transactions. In our opinion, the issue decided in ground No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als Ltd. 2.The Ld CIT(A) erred in making addition of share application money/loan ₹ 4.66,50,000/- received from M/s Shyam Alcohol Chemicals Ltd u/s 68 without appreciating that said amount represented repayment of loan and thus did not fall within the ambit of S.68 and hence, addition u/s 68 of ₹ 4.66,50,000/- may be deleted. 2.1 Without prejudice to above, the Ld CIT(A) erred in making the addition on the basis of statement of Vipul Vidur Bhatt without appreciating that Assessee had proved the identity, creditworthiness and genuineness of the party by filing documentary evidences and Vipul Vidur Bhatt has retracted his statement and hence, addition u/s 68 of ₹ 4,66,50,000/- may be deleted. 2.2 Without prejudice to above, the Ld CIT(A) erred in enhancing addition u/s 68 by ₹ 90,00,000/- by consolidating Share Application A/c and Loan A/c of M/s Shyam Alcohol Chemicals Ltd without appreciating that such consolidation is impermissible under the law and hence the enhancement is bad in law. 2.3. The Ld CITY A) failed to appreciate that no addition of share application money can be made u/s 68 as same is received in earlier year. 2.4. The Ld C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emium by these two parties on the ground that Shri Vipul Vidur Bhatt during the course of search has admitted to be engaged only in providing accommodation entries and thus added ₹ 53,00,000/- to the income of the assessee under section 68 of the Act as unexplained cash credit. 5. The Ld. CIT(A) in the appellate proceedings dismissed the appeal of the assessee by observing and holding as under: 4.5 Decision on ground No.1: 45.1 The appellant claimed to have received a sum of ₹ 20 lakh from M/s. Sampada Chemicals Ltd. and another sum ₹ 33 lakhs from M/s P. Saji Textiles Ltd. towards share capital and share premium. I find that Shri Vipul Vidur Bhatt is director of those two companies. As mentioned above, in the course of search action u/s 132 was carried out by the Investigation Wing, Mumbai his case, statement of Shri Vipul Vidur Bhatt was recorded u/s 132(4) of the Act and Shri Vipul Vidur Bhatt had admitted that he was into the business of providing accommodation entries and that for that purpose, 347 bogus entities were managed and controlled by Shri Vipul Vidur Bhatt. This fact has to be borne in mind while deciding the appeal. 4.5.3. 1st provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/- each partly paid up (₹ 2.50 paid up) at premium of ₹ 225/- to M/s. P. Saji Textile Ltd on the basis of valuation report as per rule 11(UA) which was prepared on the basis of net asset value method. The Ld. A.R. submitted that the AO has ignored all the evidences filed by the assessee in the form of ITRs, confirmations from investors, bank statements of investors, evidences evidencing receipt of payments through banking channels and share application forms etc and relied merely on the statement of Shri Vipul Vidur Bhatt who admitted in his statement recorded under section 132(4) of the Act that he was providing accommodation entries in the form of share capital and bogus unsecured loans. The Ld. A.R. submitted that even the said statement has been withdrawn and retracted by Shri Vipul Vidur Bhatt. The Ld. A.R. also submitted that, in the reply given to show cause notice dated 23.12.2016 , the assessee has requested the AO to provide opportunity of cross examination of Shri Vipul Vidur Bhatt which was not provided to the assessee. The Ld. A.R. also submitted that the notices issued under section 133(6) of the Act by the AO to these parties independently were duly res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Bombay High Court has also followed this decision in the case of Gagandeep Infrastructure Pvt. Ltd. (2017) 394 ITR 680 (Bom.) as well as in CIT vs. Orchid Industries Pvt. Ltd. (2017) 397 ITR 136 (Bom.) by laying down same ratio. The Ld. A.R. also relied on the decision of Andaman Timber Industries vs. CCE (2015) 281 CTR 241 (SC) wherein it has been held that addition made without giving opportunity of cross examination is void ab-initio and order is nullity. The Ld. A.R. also relied on another decision of Hon ble Supreme Court in the case of Kishanchand Chellaram vs. CIT (1980) 125 ITR 713 (SC) to defend his arguments that addition made without giving the opportunity of cross examination is invalid and bad in law. The Ld. A.R. also referred to the decision of H.R. Mehta vs. ACIT (2016) 387 ITR 561 (Bom.) wherein it has been held that addition made without giving an opportunity of cross examination was to be deleted. Besides the Ld. A.R. also relied series of decisions namely; ITO vs. MJD Financial Services Pvt. Ltd. ITA No.6051/M/2018 A.Y. 2012-13 dated 20.09.2020, ITO vs. Celebrity Life Space Pvt. Ltd. ITA No.6301/M/2017 A.Y. 2014-15 dated 05.12.2019 and M/s. Moraj Realty Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidences of these transactions being carried out through banking channel and share application forms etc. We also note that the AO has issued notices under section 133(6) of the Act to these investors in order to verify the genuineness of the investments which have been responded to by these investors filing all the evidences before the AO and admitting that the investments were genuine. We also note that Shri Vipul Vidur Bhatt has filed an affidavit which stated that investments were made in the case of M/s. Sampada Chemicals Ltd. out of repayments of loans received from M/s. SIL Retails Pvt. Ltd. whereas the investment by M/s. P. Saji Textile Ltd. was made out of OD facility of the investor with Bank of Maharashtra. We also note that the AO/ Ld. CIT(A) have not pointed out any defect/deficiencies in these evidences filed by the assessee and merely relied on the statement recorded under section 132(4) of the Act of Shri Vipul Vidur Bhatt during the course of search which has even been retracted by him later on. In our opinion, the reliance on his statement which has been retracted is not correct as it has no evidentiary value in the eyes of law. The Hon ble Delhi High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yam Alcohol Chemical Ltd. 10. The facts in brief are that during the course of assessment proceedings the AO observed that assessee has received unsecured loan from M/s. Shyam Alcohol Chemical Ltd. during the year under consideration. The AO noted that the debits and credits appearing in the account of said party were ₹ 10,26,00,000/- and ₹ 6,49,50,000/- respectively and the assessee has shown at the year end as on 31.03.2014 the long term liability from body corporate at ₹ 4,32,00,000/-. Accordingly the assessee was called upon by the AO to furnish the details of loans taken, repaid and squared up during the year which were replied by the assessee vide letter dated 25.07.2016 submitting the tax audit report along with its enclosures in Annexure -2 and also submitted that the details of unsecured loan taken in Annexure-7. The AO found and observed on the basis of said details that assessee has entered into loan transactions with M/s. Shyam Alcohol Chemical Ltd. and accordingly issued notice under section 133(6) of the Act on 05.12.2016 which was not served upon the said party however later on the party made compliance to the said notice by filing details as des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,00,000 21.12.2013 11,00,000 23.12.2013 18,00,000 26.12.2013 25,00,000 30.12.2013 10,00,000 31.12.2013 30,00,000 02.01.2014 45,00,000 06.01.2014 15,00,000 07.01.2014 8,00,000 08 01.2014 11,00,000 11.01.2014 10,00,000 11.01.2014 6,00,000 13 01.2014 10,00,000 13.01.2014 10,00,000 28.01.2014 25,00,000 01.02.2014 15,00,000 Total 4,66,50,000 5.4.7 Therefore, the appellant's contention that there was no fresh cash credit in the account of M/s. Shyam Alcohol and Chemicals Ltd. is not correct. As regards the genuineness of the source of the cash credits, I find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to point out that any of such findings arrived at by the authorities below were on the basis of misleading of evidence or failure to examine any material documents whilst coming to such conclusions. Under the guise of the substantial question of law, this Court in an Appeal under Section 260A of the Income Tax Act cannot re-appreciate the evidence to come to any contrary evidence. Considering that the authorities have rendered the findings of facts based on documents which have not been disputed, we find that there are no substantial question of law which arises in the present Appeal for consideration. (emphasis supplied) 5.49 Therefore, in that case the Hon'ble High Court did not decide any question of law. Even otherwise, the fact of that case is totally different from this case. In this case, the director of the company (Shri Vipul Vidur Bhatt) from whom the money was received himself admitted that he used to give bogus entries of loan, share application money etc. 5.4.10 Considering the facts mentioned above, I confirm the addition of ₹ 3,76,50,000/- made by the AO and also make further addition (enhancement) of ₹ 90 00,000/- (₹ 4,66,50,000/- minu ..... 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