DEEN DAYAL GOEL,NEW DELHI vs. ITO, NEW DELHI

O R D E R Prashant M Maharishi, A. M. 1. These are the appeals filed by the assessee and cross objections are filed by the department against the different orders of ld. CIT(A). In all the years the issue is similar and therefore AY 2008-09 being lead year is taken up first. ASSESSMENT YEAR 2008-09

[ (ITA NO 2628/Del/2013 By Revenue) & by Assessee)]

as under :- “1. The learned CIT (A) has erred on facts and circumstances of the case and in law, deleting the addition of Rs.41,18,416/- on unsecured loan being already added in AY 2007-08 whereas no addition has been made during AY 2007-08 on account of unsecured loan. The addition of Rs.15,90,000/- has also been wrongly deleted.

2. The learned CIT (A) has erred on facts and circumstances of the case and in law in deleting the addition of Rs.9,36,56,472/- whereas during survey on 20.11.2007 2 3 assessee himself had admitted given cash to Shri S.K. Gupta, entry operator for taking accommodation entry on behalf of the companies in which he is a director.

4 6. The ld. DR fairly accepted that the difference of Rs.41,18,416/- has arisen on account of AO wrongly considering the list of loans and advances which are assets of the assessee and, therefore, addition u/s 68 has been made. He fairly agreed to the statement at page nos.35 to 37 of the order of the CIT (A).

8. We have carefully considered the rival submissions. According to the statement of affairs, the assessee has outstanding unsecured loan as on 31.03.2008 of Rs.1,81,51,341/- and loans and advances which are assets of the assessee amounting to Rs.41,18,416/-. The assessee submitted the confirmation of all these parties and AO totaled the same outstanding of this parties debit and credit both and was of the view that same is the unsecured loan of the assessee. The addition is made on the basis of wrong interpretation of the loans and advances accounts advanced by the assessee as unsecured loans taken by the assessee. The CIT (A) has deleted this addition vide para 8.2 of his order and we do not find any infirmity in the same. Therefore, we confirm the order of the CIT (A) in deleting the addition and ground no. 1 is dismissed.

9. Ground No 2 is against the deletion of addition of Rs. 9,36,56,472/- made by AO u/s 69 of the act based on the statement obtained of the assessee during the course of survey which took place on 27.02.2008 which was retracted by the assessee vide letter dated 3.3.2008 and also a note in the computation of total income filed by assessee along with the return of income.

5 10. A survey was conducted at the business premises of M/s. Express Properties Pvt. Ltd. and its director, who is assessee here, on 27.02.2008. This survey was based upon the information gathered from one more survey conducted by the revenue at the business premises of S.K. Gupta, CA on 20.11.2007. During survey on this gentleman, some reference and ledger account of the assessee was found. S.K. Gupta, in his statement recorded, had admitted that he is providing accommodation entries through a number of concerns controlled by him which do not have any actual business activity and are used only to issue accommodation entries. During the course of survey, some documents, vouchers and laptops were impounded and from one of the laptops, several accounts maintained in accounting software “Tally” was found from AYs 2003-04 to 2007-08. Admitted modus operandi was also explained in the course of survey. He also explained that he maintains conduit-wise ledger accounts for the purpose of his record. The above information is available to the assessee from the survey report about survey on S.K. Gupta, CA.

11. The statement of S.K. Gupta was recorded during the course of survey wherein questions no.12, 13, & 14 are pertaining to the assessee which are reproduced as under :- “Q.12 I am showing you Annx-2. Please acknowledge Pages 78 to 84 containing a/c of D D Goyal from 1.4.06 to 31.3.07. From the said a/c, it is observed that cash of Rs.9,03,21,829.44 was received form Shri D D Goyal and total cheques amounting to Rs.8,78,22,356.97 was issued 5 6 to him from various concerns controlled by you. Please explain why Shri D D Goyal paid such large cash to you & why the cheques were issued. Similarly Page 69 to 77 also pertains to D D Goyal. Please explain. An. These are the accommodating entries, and paid as loan, and the cash received and cheques were issued from my different concerns appx. is Rs.10.00 cr. i.e. I have given accommodation entries in the shape of loan to Shri D D Goel which should be approx. is Rs.10.00 Crores. The exact figures could be worked out from these papers. Q.13 Please identify who is D D Goyal & how he is related to you. Ans. D D Goel is a family friend, and his is builder. He is living at N-64, Greater Kailash-1, and working in the name of Express Properties (P) Ltd. Q.14 On the basis of these papers how much “accommodation entries” you have given to various parties. Ans. These are Appx to the tune of Rs.30.00 Cr including D.D. Goel excluding Raj Hans.”

12. From the laptops of S.K. Gupta, a copy of account maintained in Tally software was retrieved which is attached as Annexure-1 to the order of the AO running into 21 pages. Accordingly, a chart was prepared by the AO showing the year wise transaction as under :-

Period Description Debit Credit Page No. FY 2003-04 and Loan Jul’03 to Jul’04 13,10,690 13,10,690 1 to 2 2004-05 6

7 FY 2004-05 Loan Aug’04 to Mar’05 1,41,24,500 1,39,74,500 3 to 4 FY 2005-06 Loan Apr’05 to Mar’06 2,34,19,817 2,32,18,098 5 to 6 FY 2006-07 Loan Apr’06 to Mar’07 8,78,22,356 9,03,21,829 7 to 13 FY 2007-08 Loan Apr’07 to Mar’08 8,91,17,000 9,36,56,472 14 to 21

13. During the course of survey on the assessee, a statement was recorded on 27.02.2008 wherein Deen Dayal Goel when confronted with the statement and his loan account taken out from laptops of S.K. Gupta, he admitted that he has taken accommodation entries and thereafter he also issued cheques for the payment of taxes. Copy of his statement is attached by AO as Annexure-2 of the assessment order. Vide letter dated 03.03.2008, the assessee retracted the statement stating that survey team has made him to make a surrender by showing some “chit” and without looking his books of accounts and understanding the law, he was compelled to disclose this amount. He could not also consult his advocate or his staff during the course of that survey. Furthermore, he has also stated that the cheques issued should not be deposited towards the tax liability. This letter was addressed to Assistant Director of Income-tax, New Delhi.

8 15. The AO has stated that this retraction is factually misrepresented by the assessee by putting bogus signatures without any seal of the department or the name and designation of the person. He further doubted the veracity of the letter that there is no mention in the survey report about the letter of retraction made by the assessee. Hence, the AO was of the view that it is not the retraction but an afterthought. On the above set of facts and for following reasons, the AO has made an addition to the income of the assessee :- (i) That Deen Dayal Goel, assessee herein has confessed in his statement recorded during the course of survey on 28.02.2008 the amount of undisclosed income; (ii) The letter of retraction is merely an afterthought; (iii) The cheques and demand drafts in the loan account tally with the financials of Deen Dayal Goel and companies run by him; (iv) The loan account found from S.K. Gupta also includes commission; and (v) There was a further survey on 05.01.2009 where, in question no.1, he has made a reference to the assessee.

Information was gathered from the AO of S.K. Gupta

9 where a letter dated 24.12.2010 written by the counsel of S.K. Gupta stated that details of mediator, amount of cash received, the amount of the name of the beneficiaries and the bank from which the entry was provided and the amount is mentioned.

Therefore, these accommodation entries cannot be added in the hands of the assessee. According to CIT (A), if any 10 action is required to be taken, it should be in the hands of those assessee and not the assessee herein.

and, therefore, no addition can be made in the hands of the assessee; ii. The entries stated in the purported ledger account recovered from S.K. Gupta is not the ledger of the assessee and while the name of the assessee is mentioned in that ledger account is not known to the assessee;

11 iii. The amount of entries allegedly bogus entries has been returned to the parties from whom they have taken in subsequent years; iv. Regarding the amount of loan of Rs.6.30 crores which is alleged to be the bogus entry has been accepted by the revenue u/s 143(3) of the Act dated 31.12.2010. He submitted that in para 3 of the assessment order, the AO of that company has recorded his finding about the survey on the assessee and its outcome and after full examination, he accepted the loan entry with the loan received by the assessee of Rs.6.30 crores as genuine. v. Identically, he submitted that in case of DKG Finance and Chit Fund Pvt. Ltd, the assessment was reopened u/s 147 for AY 2007-08 for the purpose of verification based on the same set of account and ledger from S.K. Gupta and after detailed verification, the assessment of this company was not disturbed. Therefore, he submitted that when the accounting entries have been accepted by the revenue, all these loans are genuine in the hands of the beneficiaries,

12 therefore, there is no reason that there should be any addition in the hands of the assessee u/s 69 of the Act. vi. He further submitted that assessee has retracted his statement made during the course of survey as it was taken by force and without any assistance offered to the assessee for verification of his accounts and associates and lawyers etc. He further submitted that retraction is valid retraction as same has been filed after three days of the survey. vii. His next argument was that the return of income filed by the assessee on 23.07.2008 wherein assessee has given a foot note relating to his retraction. The date of survey is 27.02.2008 and the date of filing of return is 23.07.2008.

Therefore, even otherwise, note on retraction also mentions reference to letter dated 03.03.2008. The AO has questioned this letter only by letter dated 15.09.2010 i.e. 2

½ years after the letter of retraction. During that period, the AO could have verified the veracity of this letter which is being challenged. viii. He further argued that in absence of evidence, the statement recorded during the course of survey does not have any 12

13 evidentiary value and addition made based on that account does not survive. ix. He further submitted that the evidence has not been found from the assessee but from third party and therefore evidence found from third party cannot be used by revenue for making addition in the hands of assessee when during survey at the premises of the assessee no evidence was found. He submitted that none of the documents are in hand writing of the assessee, they do not have any corroborative evidence, they are also not bearing any signature of the assessee. x. He further relied on the decision of coordinate Bench of the in for AY 2008-09 wherein identical circumstances and the facts are based on the survey on S.K. Gupta, the addition has been deleted in the hands of the assessee. Therefore, he submitted that this issue is squarely covered in favour of the assessee. xi. In view of this, he requested that addition should be deleted.

14 21. In rejoinder, ld. DR relied on the same set of arguments and submitted that the survey statement has an evidentiary value and it cannot be said that the statement recorded by S.K. Gupta cannot be used against the assessee.

15 and AR both confirmed that assessee filed his return of income and same was assessed u/s 143(1) of the act. There are no actions pending against the assessee for AY 2006-07.

Gupta which was immediately confirmed by the assessee and issued 8 post-dated cheques starting from the date of 14.03.2008 to 25.07.2008 amounting to Rs.4,01,88,720/-. It was submitted that this statement was retracted vide letter dated 03.03.2008 which is also mentioned by AO in assessment order and rejected the same. For a moment, if it is accepted that no such letter was filed by the assessee before the Addl. Director of Income-tax (Inv.) on 03.03.2008, then following question arises :- a) The assessee in his statement has mentioned that he has issued cheques on 14.03.2008 of Rs.30 lakhs and subsequently, up to 25.07.2008 where the last cheque 16

17 was of Rs.51,88,720/-, in total of 8 cheques amounting to Rs.4,01,88,720/- for payment of taxes why revenue has not deposited these cheques and encashed taxes involved therein. b) It is also apparent from the fact that return of income was filed by the assessee on 23.07.2008 by which most of the sums except last cheque would have been recovered by the revenue. ii. Strangely on looking at the computation of total income and return of income filed for AY 2008-09 by the assessee, it shows tax paid u/s 140(A) of the Act of Rs.2,06,280/- only.

Therefore, it is apparent that the revenue has not deposited these cheques for tax collected during the course of survey and it is only because of the reason that in the letter dated 03.03.2008 after retraction of disclosure in para no.3 assessee has made a specific request to return all those cheques or in alternative they should not be presented for clearance. Furthermore, it is apparent that no such cheques have been deposited and even if deposited, no action has been taken on the assessee if such cheques have not been 17

18 dishonored. This single fact which is vital and involve a huge revenue proves that the letter dated 03.03.2008 is not at all an afterthought. The cheques deposited were with the Assistant Director of Income-tax (Inv.) and letter was addressed to the office of the Addl. Director of Income-tax (Inv.) (officer higher than to whom cheques were issued). iii. Secondly, in his return of income filed by the assessee on 23.07.2008, it shows that the assessee has retracted his statement made during the course of survey. This return was physically delivered at the office of the ITO, Ward 11 (2), New Delhi on 23.07.2008. AO instead of picking up the issue immediately has chosen to wait up to 25.10.2010 and did not raise a single query about such retraction and suddenly after 2 ½ years of filing of the letter and retraction in the return of income, the AO has questioned the veracity of the letter dated 03.03.2008. The moment return was received where there is an emphatic action of retraction as return of income was filed at much lower figure than disclosure made by assessee during survey and it has mention of letter dated 03.03.2008, the AO should have 18

19 immediately asked for the veracity of this letter and put the assessee to the task of proving of such retraction. This action proves that AO has miserably failed in his duty to respond to such retraction. iv. Ld. AO has also held that the survey report received by him form Investigation wing does not mention about it.

Merely because the survey report sent by ITO (Inv.) has not mentioned about such retraction or has not given a copy thereof to the AO, it cannot be said that it has never been put before the revenue. The receipt of letter and receipt of survey report from the Investigation Wing is an entirely matter of the revenue and assessee is not concerned with that. Had this issue been asked to the assessee and also the officer of the Investigation wing immediately after filing of return of income or has it been enquired from the Investigation Wing of the revenue itself, the matter could have been taken up by the AO differently had that letter been fabricated in any way. This is a serious allegation raised by the revenue against the assessee without evidence.

20 v. In view of the above facts, we are not in a position to now question the assessee that letter of retraction filed by him on 03.03.2008 an afterthought. In view of this, we are of the view that assessee has retracted immediately and then repeated his retraction of disclosure made during the course of survey in the return of income. vi. The above finding leads us to the next step of evidentiary value of statement recorded during the course of survey.

The revenue has relied on the statement of Shri Deen Dayal Goel which is taken on oath. The Hon’ble Supreme Court in case of CIT vs. S. Kadir Khan Son – 352 ITR 480 (SC) has held that section 133A does not empower any Income-tax authority to examine any person on oath, hence any such statement does not have any evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. In the case before us, the statement of Shri Deen Dayal Goel, assessee was recorded u/s 133A during the course of survey on 27.02.2008 on oath which was administered by Assistant Director of Income-tax (Inv.) and whole of the addition is dependent on this 20

21 statement. In view of this decision of the Hon’ble Supreme Court, we cannot approve this addition on this score only as it is against the judicial precedent laid down by the Hon’ble Apex Court. vii. Coming to the evidences which have been covered from the survey conducted at the office of Shri S.K. Gupta, CA. The AO has attached Annexure-1 which is starting from page 1 to 21 of the assessment order. The ld. AR has submitted a letter dated 03.03.2008 from pages 32 to 34 wherein they have asked for a hard disk, other computer and other papers taken away by the survey team. Copy of a “chit” which was shown to the assessee allegedly seized from the office of Shri S.K. Gupta as the action u/s 133A was based on that only. The assessee also asked for the copies of the statement recorded. Neither this chit nor any other material was given to the assessee. It is the established practice and principles of natural justice that any material which is used against the assessee is required to be supplied to the assessee for his defense. By doing this, the AO has made the addition based on material which was collected behind the back of the 21

22 assessee and for which no opportunity was given to the assessee to rebut it. viii. Furthermore, the addition is solely based on account of ledger of the assessee received from the computers of the third party. In a case where such an information is received from the third party then AO should have given the copy of statement of Shri S.K. Gupta and also should have afforded examination of Shri S.K. Gupta to the assessee. In this case, Shri S.K. Gupta is the witness of the revenue. The same companies from whose accounts the money has been received in the hands of Express Properties Pvt. Ltd. and DKG Finance and Chit Fund Pvt. Ltd., these amounts have been confirmed by the depositors in separate assessment proceedings in the hands of the borrowers in scrutiny assessment. Therefore, now the parties to whom Shri S.K.

Gupta has given loan, he has now confirmed those accounts and these confirmations have been accepted by the revenue in the assessment of Express Properties Pvt. Ltd. and DKG Finance and Chit Fund Pvt. Ltd. which are completed after the date of survey and the assessment order also mentions 22

23 the fact of survey. In those cases revenue has accepted that these loans are genuine. Now, revenue cannot turn back and say that the amount is chargeable to tax in the hands of the assessee though it is considered as genuine in the hands of those persons in whose accounts these loans are credited. ix. In the case of one of the two companies i.e. Express Properties Pvt. Ltd., an amount of Rs.6.30 crores is received from Shri S.K. Gupta, M/s Optium Limited, Beriwal Chit Fund Ltd. etc. which are alleged to be the bogus companies floated by Shri S. K. Gupta, on various dates in FY 2007-08 related to AY 2008-09. The assessment of this company was framed u/s 143(3) of the Act by ITO, Ward 11(2), New Delhi on 31.12.2010 (i.e. after the survey). In the assessment order in para no.3, it has been mentioned that a survey operation u/s 133A was conducted on Shri Deen Dayal Goel and Express Properties Pvt. Ltd. Before that AO, Shri Deen Dayal Goel himself attended and during the course of assessment proceedings, conformation of all these parties were placed before the AO who despite the statement did not make any addition in the hands of the company 23

24 either on substantive basis or on protective basis and, therefore, it is clear that he has accepted the identity, creditworthiness and genuineness of these transactions.

Pitifully, Shri D D Goel despite attending the assessment was not at all questioned on this aspects. Similarly, in the case of DKG Finance and Chit Fund Pvt. Ltd. the amount of same parties was received to the extent of Rs.2,56,60,000/- is also remained undisturbed. It is also glaring to note that the assessment for AY 2007-08 was framed by the AO on 31.01.2014 by ITO, Ward 10(2), New Delhi u/s 147 read with section 143(3) for which there was a specific reasoning of the accommodation entries pertaining to the survey on Shri S.K. Gupta amounting to Rs.4.30 crores. In the reopened assessment also, despite there being reason of the accommodation entries of S.K. Gupta, the AO on furnishing of confirmation etc. has accepted the identity, creditworthiness and genuineness of the transaction.

Similarly, an amount of Rs.1,51,405/- which was received by DDG Sons & HUF no action has been taken by the revenue. From the above assessment and income-tax 24

25 records of the assessee and those assesses who are assessed u/s 143(3) and 147 of the act by different officers both of whom have privileged of all the information about the survey, did not take any adverse view of those alleged loans. It is apparent that the credit entries appearing in the books of those companies have been accepted by the revenue by different officers as genuine but in the hands of the assessee addition has been made u/s 69 of the Act. We fail to understand that when entries are found to be genuine in the books of the other parties, how revenue can take a different stand for taxing the same transaction in the hands of the assessee. It has been held in the case of CIT vs. Roshan Lal Seth – 178 ITR 660 that where a deposit stands in the name of the third person, even that person related to the assessee, the assessee cannot call upon to explain such deposit. In such a case, the proper course is that either the person in whose books the deposit appears or the person in whose name the deposit stands should be called upon to explain the deposit. In this case, the action of the revenue also fails on that count. 25

26 x. Hon’ble Delhi High Court in the case of CIT vs. Rajesh Kumar[ 306ITR 27] has held that when the amount of the deposit stands in the name of the wife of the assessee, It cannot be added to the assessee’s income and the material collected behind the back of the assessee was used against him without disclosing the material or giving an opportunity to cross examine the person whose statement has been used by the department against the assessee. It is a violation of principles of natural justice. In this case, the amounts of transactions have been accepted as genuine in the hands of various persons who have received the loan. Further Shri S. k. Gupta who has admitted of providing accommodation entries have confirmed so in his statement during the course of survey but later on for the same transaction he and his companies are giving confirmation contending that these are real loans and same revenue accepts these statements. Therefore on contradictory statement of Shri S.

K. Gupta addition has been made in the hands of the assessee without giving an opportunity to cross examine Shri S.K. Gupta who has at the first instance confessed, then 26

27 confirmed the above transaction. Therefore, the inconsistency is in the statement of S.K. Gupta inasmuch as in the statement of the assessee. From the above, it is apparent that Shri S.K. Gupta is giving different statements at the different times which are accepted by revenue at all the times at face value without collecting adequate evidence and putting Shri S. K. Gupta for cross examination against whom he has given differing statements. xi. The AO has also relied on the statement made by the counsel of Shri S.K. Gupta on 24.12.2010 before the AO of Shri S.K. Gupta. The copy of the letter has been reproduced by AO at page no.18 and in para 8 of the assessment order. We have perused the particulars of that letter relied upon by the AO. It is apparent that it does not contain any reference of the assessee. Secondly, in the last para of that letter, it is mentioned that details of mediators, amount of cash received, the names of the beneficiaries, the bank from which entries were provided and the amount etc. This information provides that the accounting entries are through some mediator but neither Shri S.K. Gupta in his statement 27

28 has mentioned any such mediator but has referred assessee Shri Deen Dayal Goel as a family friend. Therefore, there is a basic contradiction between the two evidences which are merely the averment of third parties and are accepted by revenue without any evidence. It is also highly unusual for Shri S.K. Gupta to enter in to purportedly alleged transaction with assessee through a mediator when Shri S. k. Gupta refers assessee as a family friend. In any case such mediator is neither referred in the assessment of the assessee nor called for examination in both the survey on Shri S.K.

Gupta and another on Assessee. xii. According to section 69, which opens with the words, “wherein the financial year immediately providing the assessment year, the assessee has made investment……”.

Thus, in the first instance, it is incumbent upon the revenue to establish that there was any investment made by the assessee, and that such investments were not recorded in the books of accounts maintained by the assessee then only addition can be made u/s 69 of the Act. In the present case, except the frequent changing statement of Shri S.K. Gupta, 28

29 revenue does not have any evidence of such investment made by the assessee. In absence of any such evidence of making such investment apart from the entries found in the books of accounts which was also not the final books of accounts of Shri S.K. Gupta, there was no material which could link the amount of the addition of Rs.9,36,56,472/- by the assessee. Therefore, we are of the view that provisions of section 69 were not attracted in the present case. Our view is further supported Chand Aggarwal [300 ITR 426] and further Hon’ble Gujarat High Court in the case of Usha Kant and Sons [282 ITR 553 (Guj.)]. We are also constrained to state further that though there may be strong possible inference, a further investigation in the form of oral examination of the parties concerned and throwing back onus on the respective parties by affording full opportunity of cross examination might have led to more positive conclusion on either side. Same has not been at all looked into by the AO. xiii. Further Communication of CBDT no F. No. 286/98/2013- IT (Inv. I1) dated 18/12/2014 it also supports the issue that 29

30 there is a need to gather evidence and officer should not stop at getting admission. It was further stated in that communication that It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. From this communication it is apparent that board is also aware of the issues that no additions can be sustained merely on the basis of admission without any evidence. xiv. It was also argued that evidence found form the survey at the place of third party which does not bear his signature, not in his handwriting, does not have any corroborative evidence and it is the entries recorded by him which is also not confirmed by him ultimately. It is fact that the account statement purportedly in the name of the assessee was found from Shri S K Gupta and not from the assessee. During the survey at the premises of the assessee revenue could not find 30

31 any document evidencing even such a transaction. Further the copy of account extracted by revenue from Shri S K Gupta was denied by assessee having any such transaction in the form of retraction. Further the entries are accepted by revenue in the case of other assessee, therefore merely some document found from the premises of third party which cannot be corroborated independently and more so when in survey at the premises of the assessee nothing was found, addition in the hands of the assessee is unjustified. xv. In the end, the assessee has relied upon the decision of Delhi Bench of the ITAT in the case of DCIT vs. Raj Hans Tower Pvt. Ltd. In & 4257/Del/2011 for AY 2008-09 order dated 12.06.2014. The contention of the assessee is that ground no.1 in ITA No.4922/Del/2011 squarely covers the issue which is on the identical facts for the same assessment year and arising from the same statement of Shri S.K. Gupta. It was his further submission that ITAT has deleted an addition after relying on the decision of Hon’ble High Courts and Hon’ble Supreme Court. Therefore, the same may be followed. Against this, ld. DR could not point 31 out any difference in that order of ITAT as well as the facts of the present case. We have carefully perused paras no.6 to 13 of that order which is reproduced as under :-

“6. The relevant facts are that the assessee engaged in the business of real estate and building construction etc. was subjected to survey operation u/s 133A of the Act by the Investigation Wing at its business premises. During the course of survey statements of Shri. R. C. Goyal, Director of the assessee Company was recorded, wherein he disclosed a sum of Rs. 15,00,55,000/- as additional income of the Company outside the regular books of accounts as per the details given below:-

Sl. No. Head Amount in Rs. 1 On account of accommodation entries taken in 7,10,55,000/- the shape of unsecured loans(Page 11 of the statement of Sh. R.C. Goyal) 2 Undisclosed cash receipts (Page 12 of the 6,65,00,000/- statement of Sh. R. C. Goyal) 3 Unexplained cash credits in the cash book (page 1,25,00,000/- 11 of the statement of Sh. R. C. Goyal) Total disclosed amount 15,00,55,000/-

7. The assessee, however had not included its above unaccounted income declared at the time of survey in its return of income. A show cause notice was issued to the assessee by the AO specifically asking therein as to why the disclosed unaccounted amount by Shri R.C. Goyal on behalf of the assessee company at the time of survey may not be added back in the total income of the assessee company? In reply, the assessee alleged that so called surrendered was not voluntary and bonafide and the same was obtained in an illegal and arbitrary manner, particularly in the absence of any evidence or material in relation to such surrender was called for and as such the alleged surrender was retracted. Reference of CBDT Circular No. 286 dated 10/3/2003 was made. It was contended that surrender at the time of search or survey cannot be a sole basis of addition without corroboration and proper apperception of facts and evidence on record. The AO countered the cause shown by the assessee with this observation that the disclosure of unaccounted income at the time of survey is based on the evidence gathered by the Department at the time of survey in the case of Shri S. K. Gupta, Chartered Accountant and also the Director in the assessee company and from the business premises of the assessee company itself. The AO observed further that another Director Shri R. C. Goyal available at the time of survey at the business premises of the assessee company was duly confronted with the evidences, on the basis of which the disclosure was made. The AO mentioned that during the survey no coercion was made by the survey team 32 as the assessee did not register any complaint against the alleged act. The assessee on the other hand contended that the only observation made in the shared statement of Shri R.C. Goyal is that the amount was received from various fake companies. Such observation alone cannot be any basis for the addition and is thus highly arbitrary and uncalled for without proper opportunity or investigation. It was contended that there is no reference to names of the companies or how and in what manner the inference was drawn relating to alleged accommodation entries. It was submitted that these are all genuine transaction through banking channels and correctness of all these transactions are fully supported and verifiable. The assessee enclosed copy of account, income tax and assessment particulars as well as balance-sheet of all the parties in support of these entries with this submission that it is self- evident that genuineness of all these entries duly recorded in the books of accounts are not in dispute and there is no case of any adverse inference. It was submitted that all such entries were loan to the assessee company and has already been repaid in the next years. It was also contended that most of the loans out of Rs.7,10,55,000/-(added u/s 68 of the Act) are old and continuing from earlier years. In support reference was made to audited balance-sheet showing that during the year no fresh loan was received and on the contrary unsecured loans which remained subject matter of dispute has come down as compared to precedent year and as such there is no prima facie basis for any such addition. It was contended that the Assessing Officer has not made any verification from concerned companies or from office of Registrar of Companies and adverse inference was drawn on mechanical manner merely on the ground that surrender was made at the time of survey. The AO was not agreeable with these contentions of the assessee and made addition of Rs.7,10,55,000/- u/s 68 of the Act on account of bogus accommodation entries. The Ld. CIT (A) has however deleted the addition being satisfied with the explanation/contention of the assessee. This action of the Ld. CIT (A) has been impugned by the Revenue in Ground No. 1 of it its present appeal.

loans from the stated 15 companies in the assessment order are old belonging to earlier years and the outstanding loan amount has been partly repaid during the year under consideration. Most of the unsecured amount received by the assessee company from the above lender companies are carried forward opening balances from earlier years. During the year under consideration, the assessee had repaid Rs.1,15,40,000/-to three parties and has received to only Rs.23 lacs from three parties out of the above mentioned companies. He submitted that the impugned unsecured loan of Rs.7.10,55,000/- has been received from various companies through account payee cheques/drafts and the assessee to establish its genuineness had filed copies of confirmations/affidavits from the said parties confirming the payment of the amount as unsecured loan, copies of income tax returns, their PAN, their balance-sheets, their bank statements etc in support of the claim. The AO has made the addition without verifying the correctness of these documents and merely on the basis of statement of Shri. R. C. Goyal, Director of the assessee company recorded during the course of survey proceedings. He submitted that it is incorrect to say on part of the AO that Shri. S. P. Gupta was Director of lender companies or in control thereof. Shri Gupta is Director only in M/s Champ Finvest Pvt. Ltd and has not been associated with other companies either as a Director or share holder or in professional capacity, hence the finding of the Assessing Officer that Shri S. K. Gupta was controlling these companies is factually incorrect. He submitted that the assessee was not provided any opportunity for cross- examination of Shri. S. K. Gupta and as such general statement of Shri S. K. Gupta is not relevant and admissible. While referring decisions relied upon by the assessee before the authorities below, the Ld. AR also placed reliance on the following decisions:- CIT Vs. Madhsy Films P. Ltd 301 ITR 384 (Delhi) CIT, Kerala Vs. Manick Sons 74 ITR 1 (SC) CIT Vs. S. Khader Khan Son (2012) 79 DTR (SC) 184 Sonia Magu Vs. CIT (2011) 336 ITR 227 (Delhi) CIT Vs. Anil Bhalla (2010) 322 ITR 191 (Delhi) 10. Considering the above submissions, we find from the assessment order that during the course of survey by the Investigation Wing at the office premises of Shri S. K. Gupta, Chartered Accountant by profession some computers and laptops were impounded. The backup files relating to ledger accounts were retrieved and it was revealed that during the year under consideration Shri S. K. Gupta had provided accommodation entries to the assessee company through its Director Shri R. C. Goyal. The summary of these ledger accounts is as under:- Sl No. Particulars Closing Remarks Balance Debit Credit 1 AGM Holdings Ltd. 350000 Indirapuram 2 Belief Chits P. Ltd 23525000 Indirapuram 3 Beriwal Investment and Chit 175000 Indirapuram Fund P. Ltd

4 Champ Finvest P. Ltd 2000000 Indirapuram 5 Cubic Commercial 1000000 Indirapuram Resources Ltd 6 Dhamaka Trading and 2500000 Indirapuram Construction Co.P Ltd 7 Giriasho Co. P. Ltd 2500000 Indirapuram 8 Novino Marketing P. Ltd. 1116610 Indirapuram 9 V.A. Foods Pvt. Ltd 150000 Indirapuram 10 Vaudeva Farms P. Ltd 4600000 Indirapuram 11 Viagra Trading Co.P. Ltd 140000 Indirapuram 12 Belief Chits P. Ltd 16550000 Kaushambi 13 Mitsu Securities 8940000 Kaushambi Management P. Ltd 14 V.A. Foods P. Ltd 1500000 Kaushambi 15 Mitsu Securities 7300000 Head Office Management P. Ltd Total 12,91,610/- 7,10,55,000/-

inference except those statements to arrive at this conclusion that the claimed unsecured loan of Rs.7,10,55,000/- from the above named parties was not correct. The AO has also not bothered himself to verify the explanation of the assessee that as per the balance-sheets furnished, most of the unsecured loan amount received by the assessee company from the above lender companies are carried forward opening balances from earlier years and during the year under consideration the assessee had repaid Rs.1,15,40,000/- to three parties and had received only Rs.23 lacs from three parties out of the above mentioned companies. Under these circumstances, we are of the view, that the Ld. CIT(A) has rightly held the action of the AO in making the addition of Rs.7,10,55,000/- u/s 68 of the Act as unjustified. The first appellate order in this regard is also well supported by the decisions of Hon’ble High Courts and of Hon’ble Supreme Court followed by the Ld. CIT(A). The Hon’ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd (2008) 216 CTR 195 (SC) has been pleased to hold that even if the share application money received by the appellant company is from alleged bogus share holder, whose identity is produced by the appellant company, the revenue can always proceed against such share holders and if necessary re- open their individual assessment. The Hon’ble Jurisdictional Delhi High Court in the case of Dwarka Dheesh Investigation (P) Ltd. and Dwarka Dheesh Capital Pvt Ltd (supra) vide its judgment dated 2/8/2010 has been pleased to hold that the onus of proof is not a static one. Though in Section 68 proceedings, the initial burden of proof lies on the assessee let once he proves the identity of creditors/share applicants by either furnishing their PAN or income tax assessment and shows the genuineness of transaction by showing money entered in his books either by account pay cheque or by draft or by any other mode, then the onus of proof would shift to the revenue. Again in the case of Sonia Magu Vs. CIT (Supra), the Hon’ble Delhi High Court has been pleased to hold that where the assessee had made a surrender at the time of search regarding assets, the acquisition of which she could subsequently explained, there cannot be any addition regarding unexplained assets basing on the statement given at the time of search. It is also an established proposition of law that the loan amount pertaining to earlier years cannot be added during the year under consideration as per the provisions of Section 68 of the Act. The Hon’ble Supreme Court in the case of CIT Vs. S. Khader Khan Son (Supra) has been pleased to held that provisions u/s 133A does not empower any income tax authority to examine any person of authority and therefore any admission made in a statement recorded during survey cannot by itself be made the basis for addition. In the case of CIT Vs. Anil Bhalla (supra), the decision of the Tribunal deleting the addition after examining the entire evidence on record including the statements made by the assessee during the search proceedings as well as before the Assessing Officer, with this finding that the addition could not be sustained in the absence of any other corroborative evidence, has been upheld by the Hon’ble Delhi High Court. In that case there was no independent material to show that jottings of paper represented unaccounted transaction of the assessee and the transactions were explained from books of the company as relating to projects undertaken by it. In the present case before us, we find that the Ld. CIT(A) has passed a comprehensive and reasoned order after discussing the case of the parties on issue in details. The same is upheld. Ground No. 1 is accordingly rejected.”

38 25. Respectfully following the decision of the coordinate Bench of the Tribunal as well as detailed reasoning given by us above, we are also of the view that it covers the issue in this appeal and no addition u/s 69 can be made in the hands of the assessee. We therefore confirm the order of CIT (A) in deleting the addition of Rs. 9,36,56,472/- u/s 69 of the Act and ground no. 2 of the appeal of the revenue is dismissed.

39 29. We have carefully considered the above grounds of appeal. We failed to understand that CIT (A) has made certain observation in case of some third parties and how the assessee is aggrieved with them. In case if the third party is aggrieved by the order than they are entitled to safeguard their rights as provided in the Income Tax Act. We are of the view that assessee is not aggrieved by the findings of CIT (A) related to some third parties which are not in appeal before us. Hence both these grounds of appeal are dismissed.

ASSESSMENT YEAR 2005-06

ASSESSMENT YEAR 2005-06

[ITA NO.1363/Del/2013 – By Revenue]

41 ASSESSMENT YEAR 2007-08 [(ITA NO.2598/Del/2013 – By Assessee)]

42 Gupta for whose cross examination was asked for but was not given. He has relied on plethora of case laws contesting the addition. It was further submitted that the issue is identical to the issue already submitted in assessee’s case for AY 2008-09 wherein CIT (A) on identical submission as allowed the appeal of the assessee and small amount of additions have been retained.