TMI Blog2023 (7) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... case of H R Mehta [ 2016 (7) TMI 273 - BOMBAY HIGH COURT] the addition made with opportunity of cross examination is bad in law. We have also perused the annual audited accounts of the assessee during the year and observe that there has not been any issue of equity share capital or raising of fresh loans. We observe that that whatever little unsecured loans were raised were from the relatives . We direct the AO to delete the addition. Appeal of the assessee is allowed. - I.T.A. No. 593/Kol/2022 - - - Dated:- 25-7-2023 - Shri Sanjay Garg, Judicial Member And Shri Rajesh Kumar, Accountant Member For the Appellant : Shri Miraj D Shah, A.R For the Respondent : Shri Vijay Kumar, Addl. CIT, Sr. DR ORDER PER SHRI RAJESH KUMAR, AM: This is the appeal preferred by the assessee is against the order of the Ld. Commissioner of Income Tax(Appeals)-20, Kolkata (hereinafter referred to as the Ld. CIT(A) ] dated 21.09.2022 for the AY 2014-15. 2. Issue raised in ground no.1 is general in nature and does not require any specific adjudication. 3. Issue raised in ground nos. 1 to 6 is against the confirmation of addition of Rs. 2,80,00,000/- by the Ld. CIT(A) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is dismissed by the Ld. CIT(A) after taking into account various contentions and arguments of the assessee by observing and holding as under: 6.3(a) 1 have carefully considered the facts of the case and submission of the appellant. Appellant has laid great emphasis on the issue that seized document is a dumb document and hence no cognigence should be taken of the notings on that paper. However, while explaining the contents of the document, appellant contradicts itself as it has accepted that notings reflect the cash given to Shri Gopal Agarwal on the various dates for safe keeping. Thus, the notings reflect genuine transactions. The explanation offered by the appellant establishes the authenticity of date-wise cash handed over to Shri Gopal Agarwal. Thus, assessee s own explanation confirmed the date on which assessee s cash has been handed over to Shri Gopal Agarwal. On this document there is information about the date, amount of cash and the person whom this cash was handed over. Further it is also accepted that the cash belongs to assessee. So, there is no dispute about these facts and the information contained in this document is genuine and related to assessee s bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable with the Investigation Wing, Shri Mahendra Sethia is an entry operator involved in providing accommodation entry for share capital, bogus, unsecure loan, LTCG entries etc. These things have been accepted by Mr. Mahendra Sethia himself when his statement was recorded on earlier occasion. Whether the cash handed over to Shri Gopal Agarwal was routed with help of Mr. Mahendra Sethia or some other person, is not relevant here. What is relevant is the source of cash and whether these are accounted in the books. As per the provisions of section 132(4A) onus is on the assessee to explain the contents of the seized documents found from his premises during search. Assessee has to first discharge its responsibility and prove that the cash transactions mentioned on the seized document are from disclosed source. Assessee s theory of the cash being part of the cash on hand and given for safe keeping to Shri Gopal Agarwal whenever assessee went out of town, is not convincing. A.O. has not made addition on the basis of statement of Shri Mahendra Sethia. Rather his name was suggested by Shri Gopal Agarwal. Assessee has failed to provide a satisfactory reply regarding notings on seized paper. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of the notings clearly point out that there has been only one way movement of cash. But in the books, there are no recording of any transactions against these cash payments. Thus, it is apparent that these cash are unaccounted cash from undisclosed sources of assessee. 6.3(e) As is apparent from the above discussion, there are several loopholes in the explanation of the assessee. The explanation given by the assessee does not pass the test of human probabilities. Circumstantial evidences also suggest that assessee s explanation is not true. Seized document mas found at the premises of the assessee and it is assessee s responsibility to satisfactorily explain its contents. However, as discussed above, appellant has failed to provide cogent explanation for the cash given to Shri Gopal Agarwal. Under the circumstances, the cash transaction reflected on the seized documents are held to be unaccounted cash of the assessee from undisclosed sources. Hence, addition of Rs. 2,80,00,000/- is confirmed. 6. The Ld. A.R vehemently submitted before us that the order was passed by Ld. CIT(A) is wrong and contrary to the facts on record. The Ld. A.R submitted that AO has made an addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any discussion as to how these persons were connected with assessee. The Ld. A.R further submitted that no cross-examination was allowed to the assessee before making the addition and therefore on that basis too the addition deserved to be deleted by relying on the following decisions: i) Supreme Court in the case of Andaman Timber Industries in Civil Appeal No. 4228 of 2006 (2015) 324 E.L.T 641 (SC) ii) H R Mehta vs. ACIT 387 ITR 561, Bombay High Court iii) CIT vs. Ashwani Gupta 322 ITR 396 Delhi High Court iv) CIT vs. SMC Share Brokers Ltd. 288 ITR 345 Delhi High Court v) CIT vs. Eastern Commercial Enterprises (1994) 210 ITR 103, 111 (cal) The Ld. A.R therefore prayed that the order of Ld. CIT(A) may kindly be reversed and AO may be directed to delete the addition. 7. The Ld. D.R on the other hand relied heavily on the order of authorities below. The Ld. D.R stated that theory that cash was handed over to Shri Gopal Agarwal by the directors of the assessee has also been an afterthought. The ld DR submitted that it is clearly mentioned in the document seized that cash totaling to Rs. 2,80,00,000/- which belonged to the assessee was given to Mahender Setia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of addition alone. The case of the assessee finds support from the several decisions as stated hereinabove. Accordingly on this account the addition cannot be sustained and deserve to be deleted. We further note that the addition has been made on the basis of statement of Gopal Agarwal who nowhere named the assessee to be beneficiaries of accommodation entries and also no cross examination was ever provided to the assessee of Mr Gopal Agarwal and therefore as has been held by the Hon ble Supreme Court in the case of Andaman Timber Industries (supra) and Hon ble Bombay High Court in the case of H R Mehta (supra), the addition made with opportunity of cross examination is bad in law. We have also perused the annual audited accounts of the assessee during the year and observe that there has not been any issue of equity share capital or raising of fresh loans. We observe that that whatever little unsecured loans were raised were from the relatives. In view of the facts and circumstances and ratio laid down we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. 9. In the result, the appeal of the assessee is allowed. Order is pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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