D.C.I.T.CC - VIII,KOL., KOLKATA vs. SHRI SAGAR MAL NAHATA, KOLKATA

ORDER SHRI M.BALAGANESH, AM

These appeals of the revenue arise out of the consolidated order of the Learned CIT(A), Central-1, Kolkata in Appeal Nos. 117-122/CC-VIII/CIT(A)C-I/Kol/11-12 dated 18.10.2012 against the separate order of assessments framed for the Asst Years 2005-06 to 2010-11 respectively by the Learned AO u/s 153A/ 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’). Since the issue involved in all the appeals are identical, the same are taken up together and disposed off by this common order for the sake of convenience.

Group. During search / survey the following documents seized / impounded clearly established this fact.

(xxxvii) Pages 29 & 30 of documents SMN-1 seized from your residence has noting of different companies with details of amount paid, received and balance under the title "status as on 15- 02-2010" , "summary" and "Total SMN A/c status". Total amount paid as mentioned on the page is Rs.152,20,00,000/-, received Rs. 73,47,00,000/-, and balance Rs.78,73,00,000/-. These pages show how much amount received by your companies, amount for which accommodation entries provided and balance amount to be received. The mentioning of "Total SMN A/c status" on top of these pages clearly establishes your personal involvement otherwise there is no reason why reconciliation of accounts between companies includes your name.

(xxxviii) Pages 12 to 19 of document SMN-1 seized from your residence have list of shareholders of different companies. The shareholders includes you, your employee Mr. Radhakant Tiwari and your group companies. The companies whose shareholders list were found had given accommodation entry in form of share capital to above mentioned four companies of Bhushan Group.

(xxxix) Page 51 of document SMN-1 seized from your residence is a ledger of M/s. Bhushan Power & Steel Pvt. Ltd. in the books of M/s.Caplin Commercial Pvt. Ltd. for the period 01-04-2008 to 31-03-2009. Finding of this ledger at your residence proves that you were not only aware of such transactions but also involved with them.

(xi) Page No. 68 of document. PMCM/17 impounded from your office at 8, Canning Street, 3rd floor, Room No. 305, Kolkata-1, is a letter dated 10/02/2010 from Mr. R.K.Gupta, Vice President and Company Secretary of M/s. Bhushan Power & Steel Ltd. In this letter Mr. Gupta has written to one Mr. Alkesh Sharma of Kolkata office of his company that they were sending documents like Memorandum of sale of shares, delivery of share certificates, letter of offer for sale of shares and list of transfer deeds for getting signed from the Directors of respective companies of Mr. S.M.Nahata. A list containing names of companies whose shares were required to be transferred, transferor companies and transferee companies along with no. of shares has been enclosed with the letter. This list was also impounded and marked pages 65 to 67 of PMCM/17. All the transferor companies are the same whose names appeared in the list of 31 companies sent to you vide this office letter dated 30-11-2011. When a senior officer of the Rank of Vice President and Company

Secretary of M/s. Bhushan Power & Steel Ltd. clearly and categorically mentioning the transferor companies as of Mr. S.M.Nahata, it leaves no doubt that you are directly managing and controlling the affairs of these 31 companies. A Photocopy of the letter and its annexure are enclosed herewith. Pages 74 to 76 of impounded document PMCM/17 are letters from Mr. Tarkeshwar Sancheti of Guwahati dated 05-11-2008 and 07- 11-2008 addressed to you. In the letters, details about buy back of shares of companies controlled by you by person like Santosh Maheswari, Dilip Maheswari and others along with details of amount paid and payable have been given. The companies mentioned in the documents are part of 31 companies.

(xli) Pages 95 to 99 of impounded document PMCM/17 have names of shareholders of M/s. Jasmine Steel Trading Ltd., M/s. Marsh Steel Trading Ltd., M/s. Diyajyoti Ltd., M/s. Vision Steel Ltd. and M/s. Arromatic Steel Pvt. Ltd., numbers of shares held by them and date of allotment. These companies belongs to Bhushan Group and the shareholders are companies controlled by you. It has been mentioned on these documents that the shares hold by your companies would be purchased by Mr. Sanjay Singal, Mrs. Aarti Singal and M/s. Sanjay Singal (HUF) @ of Rs.10/-. As you are aware that Mr. Sanjay Singal is a Director of M/s. Bhushan Power & Steel Ltd.

(xlii) Page 139 of impounded document PMCM/17 has details of share transaction of M/s BPO Investments Pvt. Ltd., M/s. Brilliant Vyapaar Pvt. Ltd. and others by M/s. S.M.Nahata & Co. your proprietorship concern.

(xliii) During survey at your office premise at 8, Canning Street, Room No.305, 3rd floor, Kolkata on 03-03-2010, statement of Mr. Sandip Bej was recorded. In his statement, Mr. Sandip Bej has stated that he had been working under you since year 2002 and was director of M/s.Castle Commodities Pvt. Ltd., M/s. Mani Marketing & Holding Pvt. Ltd.; M/s. Multiplier Enterprise Pvt. Ltd. and M/s. Piyush Mercantile Pvt. Ltd. In his replies to question nos. 5 & 7 of that statement, he has stated that Mr. S.M. Nahata was key man of their group of companies and accounts of those companies were prepared at your instruction only. In replies to question nos. 10 & 12, he reiterated that only you would be able to explain the transactions entered into by the companies in which Mr. Bej was directors with companies of Bhushan Group. A copy of this statement is enclosed with this letter.

(xliv) Statement of Mr. Radha Kant Tiwari was also recorded during survey

U/s. 133A on 03-03-2010. In his statement, he has accepted that he was director of M/s. Ascent Vyapaar Pvt. Ltd., M/s. Briiliant Vyapaar Pvt. Ltd, M/s. Caravan Vyapaar Pvt. Ltd; M/s. Mission Vyapaar Pvt.Ltd. and M/s. Braggart Vyapaar Pvt. Ltd. In reply to question no. 3 he has accepted that accommodation entries were· provided by these companies to the companies of Bhushan Group. A copy of this statement is enclosed with this letter.

(xlv) Statement of Ujjwal Das was recorded during survey U/s. 133A on 03- 03-2010 at your office 863, Marshall House, 33/1, N.S.Road. In his statement, he has stated that he was working as peon of Mr. S.M. Nahata and he used to receive letters and correspondences of various companies. He stated that the office belongs to you. When he was asked to explain the existence of Ascent Vyapaar Pvt. Ltd; Braggart Vyapaar Pvt. Ltd, Brilliant Pvt. Ltd, Karavan Vyapaar Pvt. Ltd, Mission Vyappar Pvt. Ltd, he stated that the companies belong Mr. S.M Nahata and he also produced stamp of 17companies . A copy of this statement is enclosed with this letter.

(xlvi) During survey U/s. 133A at Park Plaza, Ground Floor, Room No.13, 71,Park Street, Kolkata-16, on 03-03-2010, Statement of Mr. Baldeo Singh was recorded in his statement, he stated that he was working as peon of M/s. Mahavir Finance Ltd; M/s. Panchmukhi Properties Ltd. and other companies. He stated that M/s. Mahavir Finance Ltd., M/s. Panchmukhi Properties Ltd, M/s. Gemco Engineering Industries Ltd., M/s. Cemfil Enterprises Ltd were operating from that premise. He also stated that Mr. S.M Nahata is the main person for all these companies. A copy of this statement is enclosed with this letter.

(xlvii) During survey U/s.133A at 2, Clive Ghat Street,Kolkata- 700001 on 03- 03-2010, statement of Mr. Baldeo Singh was recorded. In his statement, he stated that he was working as peon of M/s. S.M. Nahata & Co. for nearly three years.

(xlviii) When asked about other employees working in various offices of S.M.Nahata, he stated that Soma Dutta, Kureswar Barik, Sandip Baid and Radha Kant Tiwari worked both at 8, Canning Street and 2, Clive Ghat Street, Kolkata, Chhotulal Shaw worked at 863, Marshall House, 33/1, N.S.Road and Baldeo Singh was employed at 71, Park Street, Kolkata - 16. All the employees were found during the survey at premise stated by Mr. Barik and all of them are directors in one or another companies managed and controlled by you. A copy of this statement is enclosed with this letter.

(xiii) A survey was also conducted at 407, 4th Floor, Gupta Chembers, Gali No.-9, Gurudwara Road, 2459/10, Beadonpura, Karolbagh, New Delhi, on 03-03-2010. Some of companies managed and controlled by Viz. M/s. Elar Securities Ltd., M/s. Jahangirabad Finance Co. Pvt. Ltd., M/s. Tapasya Finvest Pvt. Ltd. and M/s. BPO Finance & Investment Company Ltd. had their office at that address. The survey team found that premise closed. On enquiry, it was found that Mr. Manish Sharma was owner of that premise and he has lat out the premise to Mr. S.M. Nahata as admitted by him in his statement recorded. He categorically stated in his statement that S.M. Nahata is the only person who sometimes attends the office, usually once in a month, collects the letters from the letter box and goes away.

3. From the documents seized / impounded during search at your residence and survey at your business premises and statements of your employees and other persons during survey, it is established beyond doubt that you are managing and controlling affairs of 31 companies list of which were intimated to you vide this office letter dated 30-11-2011. The documents mentioned above clearly established that the companies had their offices at the premise owned by you and your family members. It is also established from these documents and statements recorded during survey that either you or your employees or both were directors of these companies. It is also crystal clear from these documents that you were actively engaged in providing accommodation entries to Bhushan Group of companies as well as to others through 31 companies as mentioned above. As prevalent in this field of activities, money originally received in cash or in the form of inter corporate deposits in different companies have been routed through numerous self owned and self managed companies, before finally landing in the destination companies. For this purpose, commission, as prevalent in market, is charged by the person managing the affairs of the companies through which the entries are routed. These facts are established from the statements of Mr. Sandip Bej and Mr. Radha Kant Tiwari and various documents seized/impounded. In view of the above, you are hereby show-caused to explain why commission on the accommodation entries provided by the 31 companies mentioned above will not be treated as income earned by you and consequently taxed in your hand. A chart showing accommodation entries provided during different financial years by your companies prepared on the basis of data available is enclosed with this letter as Annexure-A. It may be noted that the figure mentioned in the chart may increase if further data regarding accommodation entries of the 31 companies are available in future. If there is any cross holding amongst your group companies, submit a chart showing such cross holding.”

3.1. The assessee replied to the said show cause notice which is reproduced as under:- “That I am a Chartered Accountant and my job involves audit of books of accounts, rendering consultation regarding financial and legal matters, restructuring of business and other similar professional assignments in connection with my carrying on of Chartered Accountancy practice.

Admittedly, in connection with the search conducted in M/s. Bhusan Power & Steel Ltd., a search / survey U/s. 132/133A were conducted at my residential premise also and various documents and books of accounts were impounded and seized. Admittedly the books of accounts and documents seized belong to my clients which include the name of 31 companies as mentioned in your earlier notice dated 30-11-2011. All these companies are paying me my professional fee monthly, which is matter of record. It is true that I have rendered various services to these companies in relation to investments made by them by way of share application as also structuring/restructuring of their assets/capital base. Such services in no way hings upon any activity which may amount to “Jama Kharchi” / accommodation entries as alleged by you in your impugned notice. Undersigned therefore is totally perplexed at the several allegations made by you in your impugned notice.

May I say and submit that in course of search, the authorized officers and inspectors have undertaken very high-handed action and show-cause notice served by you are the bye-products of such action. My I draw your kind attention to the fact that all these activities of the Authorized Officers and Inspectors were latter on officially communicated to ADI New Delhi vide a letter dated 21.06.2010 enclosing therein the sworn affidavits of the persons whose statements are now being relied upon by you. Since the retraction made by them is a matter of record and such retractions on sworn affidavits by them has not been challenged till this date by the Department nor have you allowed me cross-examination of these persons in relations to their statements, the reliance placed by you on such statements are not correct. I deny any of the persons, whose statements have been put in your notice, are employees of the undersigned or render any service to the undersigned. Under such circumstances, it is my humble prayer, not to enter into the field of surmise and conjecture and subject me to undue tax liability which is in no way relatable to the income earned by me.

Your goodself is aware that I have already been subjected to search and in such, all my assets including my bank accounts have been inventorised / scrutinized. No unaccounted income or investments has been found in spite of having used the arm of the Department in the form of search and survey. Undersigned therefore, most humbly submits before you to complete the assessment without fastening upon me undue tax liability on the income which has not earned by me.”

3.2. The Learned AO did not accept the explanation submitted by the assessee. He held that the materials found in the course of search and survey operations clearly established that the assessee has managed and controlled the said 31 companies which were engaged in providing accommodation entries. The Learned AO also believed that the retraction made by the employees was only an after thought as the revenue authorities can pressurize no person to sign a statement. The Learned AO also downloaded from the site of Registrar of Companies (ROC) , the balance sheet and list of investment of the said companies, and then, inferred that the said companies had not only provided accommodation entries to Bhushan group of companies but also to other persons. The Learned AO further noted that it was prevalent in the market that the person providing accommodation entry charges commission @ 0.25% to 0.55% and then, concluded that the assessee who was managing and controlling the companies for providing accommodation entry has earned commission @ 0.55%. From the data available from the ROC site, the Learned AO determined assessment year wise the amount of accommodation entries provided by the said companies , and then, estimated the receipt of commission by applying the rate of 0.55% and brought the same to tax as under:- Sl.No. Assessment Amount of accommodation Income on account of Year(s) entry (Rs.) accommodation entry @0.55% (Rs.) 1. 2005-06 22,60,59,585/- 12,43,328/- 2. 2006-07 9,00,80,000/- 4,95,440/- 3. 2007-08 50,81,47,724/- 27,94,812/- 4. 2008-09 96,76,11,164/- 53,21,861/- 5. 2009-10 95,82,08,500/- 52,70,147/- 6. 2010-11 27,90,97,545/- 15,35,036/- Total 3,02,92,04,518/- 1,66,60,624/-

It is well settled that admissions constitute best piece of evidence because admissions are self-harming statements made by the maker believing it to be based on truth. It is well known that no one will tell a lie especially harming one’s own interest unless such a statement is true.

He argued that the Learned CIT(A) had held that materials in survey do not conclusively establish that 31 companies were dummy and managed by assessee and no linkage was proved by the Learned AO and even assuming that assessee has managed the said companies, no proof for deriving commission income was brought on record by the Learned AO. In this regard, he placed reliance on pages 6 to 9 of the assessment order wherein specific queries were raised by the Learned AO to assessee in the show cause notice explaining the link of the assessee vis a vis the said companies. He argued that the assessee had not disclaimed these documents and hence presumption u/s 132(4A) of the Act would lie against the assessee. He placed reliance on the decision of the Hon’ble Chattisgarh High Court in the case of CIT vs D.R.Bansal & Ors reported in (2010) 327 ITR 44 (Chattisgarh) on the applicability of presumption u/s 132(4A) to assessment proceedings. He further argued that in page 7 of the assessment order vide question xvi) of show cause notice issued to assessee , the Learned AO had brought to the notice of the assessee of one letter dated 10.2.2010 addressed by one Mr.R.K.Gupta, Vice President & Company Secretary of M/s Bhushan Power & Steel Ltd vide document PMCM/17 impounded during survey. Based on this, it was argued that how does a person by name Mr.R.K.Gupta , who is stationed in Delhi, is aware of the fact that the said companies belong to Mr.S.M.Nahata (assessee herein).

a) Decision of Co-ordinate Bench of this tribunal in the case of DCIT vs M/s P.N.R.Holdings P Ltd in /Kol of 2011 dated 26.8.2011. b) Decision of Co-ordinate Bench of this tribunal in the case of DCIT vs M/s Glamour Vanijya Pvt Ltd in ITA Nos. 308-309 /Kol of 2011 dated 7.3.2012. c) Decision of Co-ordinate Bench of Delhi tribunal in the case of DCIT vs Winsome Finance Pvt Ltd in ITA Nos. 6457 & 6458/Del/2013 dated 30.9.2015. d) Decision of Co-ordinate Bench of Delhi tribunal in the case of Supreme Polypropolene P Ltd vs ITO in ITA No. 4622/Del/2009 dated 28.2.2010. e) Decision of Hon’ble Punjab & Haryana High Court in the case of CIT vs Faqir Chand Chaman Lal reported in (2003) 262 ITR 295 (P&H).

7.1. We find that the assessee had submitted at every stage that he was acting as consultant looking after accounts, finance, audit, income tax of all those companies and received fees from the 31 companies including that of Bhushan group of companies on a monthly basis. We find that the Learned CIT(A) had recorded that the assessee was also rendering various services to those companies in relation to investment made by them by way of share application as also in structuring / restructuring of their assets / capital base and in lieu of such services, the assessee had received his professional fees which is a matter of record. Therefore there was nothing surprising for anybody if such papers were found with the assessee or in his office. We find that certain depositions were also taken from the employees, peons and directors of certain companies namely Mr Sandip Bej, Mr Radha Kant Tiwari, Mr Ujjwal das and Mr Baldeo Singh. We agree with the arguments of the Learned AR that when the assessee was acting as a consultant of those companies, those people must have come in contact of the assessee on day to day basis and accordingly those employees could have framed an opinion that the assessee is the defacto management of those companies. In any case the opinion formed by those employees is not in the domain or control of the assessee. We hold that this aspect alone does not prove or establish that the assessee was otherwise concerned with those people or the companies for arranging alleged accommodation entries. We find that the Learned AO had placed reliance on statements of certain employees of those companies which were later retracted and which were not supported by any cogent material on record. We find that just because these employees have retracted their statements, that cannot be the basis for drawing adverse inferences against the assessee. Hence the various arguments of the Learned DR together with the relevant case laws on this aspect need not be adjudicated at all as admittedly no action was taken by the revenue on the said employees who had retracted from their statements.

7.2. We find that the Learned AO had relied on the details available on ROC site and concluded that the transactions of these companies are in the nature of accommodation entries. It is quite strange to accept the version of the Learned AO that the website of ROC contains details of accommodation entries provided by parties. The Learned AO had only verified the balance sheets together with the list of shareholders and directors as available in the ROC website. These details would not in any way lead to a conclusion that would be tenable in law that the transactions are merely accommodation entries. In any case, the details available in ROC website does not constitute any search materials. We hold that no evidence has been brought on record by the Learned AO by way of documentary proof to show that assessee was in any way involved with these companies financially except acting as a consultant for the companies in consideration of which , professional fees were received by the assessee.

7.3. With regard to the decision relied upon by the Learned DR on the Hon’ble Chattisgarh High Court in the case of CIT vs D.R.Bansal & Ors reported in 327 ITR 44, we find that though the presumption u/s 132(4A) of the Act is applicable to assessment proceedings, we find that the assessee had categorically replied in his letter before the Learned AO to the show cause notice that the relationship between him and the various companies were only on account of profession and not otherwise and it is not in dispute that the assessee has been rendering various professional services to those companies and receiving professional fees for the same which are matter on record. We find that the assessee had clearly demonstrated the circumstances under which the documents of those companies were found in his premises. Hence the argument of the Learned DR that no reply was filed by the assessee as to how these documents were found in his premises does not hold water as it is contrary to the evidences available on record.

7.4. We find that the Learned AR had placed on record a copy of the Learned CITA order passed in one of the 24 companies listed in the assessment order by the Learned AO i.e M/s Ascent Vyapaar Pvt Ltd wherein, the Learned CITA had given a categorical finding that the said company is a genuine company in existence vide his order in Appeal No. 455/CC-VIII/CIT(A)C-I/12-13 dated 18.2.2014. No contrary evidence to this effect has been brought to our notice by the revenue in this regard.

7.5. We find that the following decisions supports the case of the assessee :-

(i) Pullangode Rubber Produce Co. vs State of Kerala and Anr (1973) 90 ITR 18 (SC) The Hon’ble SC has observed that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect.

(ii) Paul Mathews & Sons vs CIT reported in (2003) 263 ITR 101 (Ker) The evidentiary value of statement recorded u/s 132(4) is very high since examination is on oath. Statement during survey has no evidentiary value. It was held that statement during survey does not give the same status of ‘evidence’. Section 132(2) specifically states that such statement can be used as ‘evidence in any proceedings under the Act’.

(iii) CIT vs S.Khader Khan Son reported in (2008) 300 ITR 157 (Mad) Held that :- “An admission is an extremely important piece of evidence , but it cannot be said that it is conclusive and it is open to the person , who made it, to show it has incorrectly been made and the person, making the statement should be given proper opportunity to show that it does not show the correct state of facts.”

The materials found in the course of survey could not be the basis for making any addition in the assessment. The word “may” used in section 133A(3)(iii) makes it clear that the material collected and statement recorded during the survey u/s 133A are not conclusive piece of evidences by itself.

The aforesaid decision was affirmed by the Honourable Supreme Court in CIT , Salem vs S.Khader Khan in Civil Appeal No. 13224 of 2008 & 6747 of 2012 dated 20.9.2012, wherein their Lordships of Supreme Court held as under:-

Heard Counsel on both the sides. Leave granted. The civil appeal filed by the department pertains to Assessment Year 2001-02. In view of the concurrent findings of fact, this civil appeal is dismissed.

(iv) ACIT vs Shanti Kumar Surana reported in (2015) 44 CCH 0241 KolTrib in IT(SS) A Nos. 12 to 16/Kol/2012 , 140&141/Kol/2011 , 17 to 19/Kol/2012 dated 22.6.2015, wherein the Head Notes are reproduced hereunder:- Search and Seizure—New scheme of assessment in search cases—Validity of assessment framed u/s 153A—Search and seizure operation was conducted at residences, office premises and bank lockers on number of individuals and group companies within Surana Group of cases—Assessee was one of persons searched—Assessee in response to notice u/s 153A disclosed return of income at Rs.3,05,880/- for relevant AY 2003-04—Separate search and seizure operation was conducted on residence, office and business premises of ''X'' who was CA and his statement was recorded—AO added all share application money and loans as unexplained cash credit u/s 68—Consequential disallowance of interest on loans and disallowance of expenses of exempted income by invoking provisions of section 14A, in identically worded assessments—AO noted in assessment order that statement of ''X'', was one of directors in companies which were found to be indulged in providing accommodation entries to stated person—AO, treated share application and loans as income of Assessee against unaccounted cash—CIT(A) deleted addition made by AO—CIT(A) held that those assessment years completed assessment could not be abated in term of provision of section 153A(1)—Held, assessee had obtained loans/share money/premium in all assessment years which were under appeal—Fact that loan confirmations were on record along with bank statements in support of fact that transactions of loan were by cheques—Assessee had collected statement of audited accounts of those limited companies, from where Assessee had obtained loans, same were with ROC—statements of account proved that those loan creditors that all of them had funds and they had invested in shares and loans of Assessee in year under assessments—in absence of any incriminating material found during course of search assessments framed u/s 153A relating to assessment years under appeal and where original assessments had not been abated because no proceedings were pending in those assessments, assessments framed were valid or not—For this, second proviso to section 153A(1)—AO was empowered to reopen those proceedings and re-assess total income, taking note of undisclosed income, if any, unearthed during search—AO had been entrusted with duty of bringing to tax total income of Assessee whose case was covered by section 153A, by even making reassessments without any fetters—Assessee obtained search or requisition u/s 132A as case might be—There was no incriminating material found during course of search in present case for those assessment years, except statement of ''X'' as admitted by AO in his remand report— Despite number of opportunities revenue could not produce any incriminating material before Bench and assessments were already completed for those assessment years originally, assessments framed u/s. 153A of the Act was in valid and quashed—Revenue's Appeal dismissed. (v) CIT vs P.V.Kalyanasundaram reported in (2006) 282 ITR 259 (Mad) “the assessee had purchased land on Oct.26 1988 registered for Rs.4.10 Lakh from one Rduring the course of search some notings had been found indicating a higher consideration. Mr. R's Statement was also taken. In a sworn statement on 8th December, 1998 he admitted that he received Rs.34.85 Lakhs. In another sworn statement on 11th Dec, 1998, R stated that he received Rs.34.85 Lakhs. Subsequently in an affidavit given. on 8th Jan, 1999 he mentioned the sale consideration at Rs. 4.10 lakh. The CIT noted that due to conflicting nature of statements given by sellers, his statement could not be relied upon and deleted the said addition. The Tribunal confirmed the findings of the CIT(A). On appeal the Madras High Court held that the burden of proving actual consideration in such a transaction was that of the revenue. The AO did not conduct any independent enquiry relating to the value of the property purchased. He merely relied on the statement given by the seller. As such the deletion of the addition was justified.”

(vi) CIT vs Lalit Bhasin reported in 290 ITR 245 (Del) “assessee purchased a ticket of Calcutta Stock Exchange for Rs.50,000/-. The AO took the value of ticket at Rs. 11.5 lakh on the basis of the prevailing market price and added Rs.11 lakh as unexplained investment. The Delhi High Court deleted the addition on the ground that AO arrived at conclusion primarily on imaginative basis and conjectures rather than on the basis of any record or books of account and hence deleted the addition. “ (vii) Omega Estates vs ITO reported in 106 ITD 427 (Chennai ITAT) “AO relying on some letters given by the assessee to prospective buyers mentioning rate of flats at Rs. 1,250 per sq. ft calculated sale receipts of all flats at the said rate. The Chennai Bench of ITA T held that since the revenue could not prove that actual consideration was more than that" recorded by the assessee and since books of account had not been rejected, there was no basis of making the estimated addition.

(viii) Amarjit Singh Bakshi (HUF) vs ACIT reported in 263 ITR (AT) 75 (Delhi ITAT) “a search was conducted at the premises of one Mr. A and the agreement between the assessee and Mr. A was found pertaining to sale of 9.16 acres of land, the consideration mentioned in the agreement was Rs. 7.07 Crore as against the consideration of Rs.23.5 Lakhs declared by the assessee. The AO added the difference of ~.6.83 Crore U / s. 69B. The Court held that the provisions of the Indian Evidence Act are not strictly applicable to the proceedings under IT Act but the broad principles of Law of evidence apply to such proceedings. Notings on loose sheets of paper are required to be supported/ collaborated 'by other evidence. A distinction also needs to be drawn between slips of paper-or loose sheets found from the possession of the assessee and similar documents found from a third person. In case the statement of the third person- is recorded or relied upon then such statement undoubtedly has to be confronted to the assessee and he is to be allowed an opportunity of cross examination. The Delhi IT AT Bench said that the entire addition was based on the document found but there was no evidence to support Revenue's case that a huge figure over and above the figure booked in the records and accounts changed hands between the parties and thus no addition could be made. The above case clearly establish that merely on account of suspicion and conjectures without any evidence or proof that the assessee actually and or even notionally received any commission on account of alleged accommodation entries, no addition can be made.

Hence the addition made on account of commission received in any of the year is without any basis and should be deleted.”

(ix) CIT vs Faqir Chand Chaman Lal reported in (2003) 262 ITR 295 (P&H).

“The Tribunal also ordered deletion of the addition of Rs 21,00,000 made on account of interest allegedly earned by the assessee from pawning business for the assessment years 1986-87 to 1996-97 by assigning the following reasons:

"After considering the abovementioned submissions of learned counsel for both the parties, we are of the view that the Assessing Officer, while making the addition was not sure regarding the amount invested by the assessee in pawning business On the one hand, he calculated the amount of interest at Rs 3,40,000 per annum and, on the other hand, the addition has been estimated at Rs 2,00,000 per annum In other words, the entire exercise done by the Assessing Officer was merely based on conjectures and surmises However, he had no basis to estimate the interest income As regards the addition for the assessment year 1986-87 is concerned, the same is not tenable in view of our findings given in respect of grounds Nos 2 and 3 and additional ground, as we have already held that there was no partnership firm in existence in that year In that view of the matter, no addition was called for in the assessment year 1986-87 At this stage, we may also add that as regards the other years also, no addition is called for because there is no material on record for the basis on which it could be said that the-Assessing Officer was justified, in his action It is well settled that the provisions relating to search and seizure are intended to unearth the hidden or undisclosed income or property and bring it to taxation net It is also not in dispute that the objective of Chapter XIV-B is to get hold of evidence having bearing on the tax liability of a person which the said person is seeking to withhold from the Assessing Officer but the scheme of Chapter XIV-B does not give power to the Revenue to draw presumption in regard to the undisclosed income It is also a well settled proposition that the presumption howsoever strong cannot substitute evidence and if there is no direct nexus on the point, no addition in block assessment can be made In the instant case also, there was no evidence with the Assessing Officer in support of his contention that the assessee, in fact, earned the income by way of interest amounting to Rs 2 lakhs each year from the assessment years 1986-87 to 1995-96 and Rs 1 lakh in the assessment year 1996-97 In instant case, it is not in dispute that the closed income was worked out by the Assessing Officer on an estimated basis but in a block assessment generally estimated additions cannot be justified In that view of the matter, we are of the view that the Assessing Officer was not justified in making the addition on the basis of estimate only We, therefore, delete the same" Dr NL Sharda could not point out any infirmity in the appreciation of evidence made by the Tribunal or the reasons assigned by it for deleting the additions made by the Assessing Officer Therefore, none of the questions, of which determination has been sought by the Revenue, can be treated as a substantial question of law

Hence, the appeal is dismissed. “ The other decisions relied upon by the Learned AR does not require any reference as the same are otherwise covered in the aforesaid cases relied herein.

7.6. To sum up , we find that – (i) No evidence has been brought on record by the revenue to prove that the transactions of 24 companies with Bhushan group of companies are accommodation entries. No material has been brought on record to prove that the said companies were actually engaged in providing accommodation entries.

(ii) No material has been found in search or survey to conclusively establish that all the 24 companies are dummy and the assessee had managed and controlled their financial affairs. The Learned AO had alleged that cheques were issued in lieu of cash received. But then, there was no recovery of unaccounted cash during the search or survey operations.

(iii) No evidence has been brought on record by the revenue to prove that the assessee had earned commission income @ 0.55% on these alleged accommodation entries. Moreover, the receipt of commission income of Rs. 1.66 crores for all the asst years put together as assessed by the Learned AO is not matched by recovery of undisclosed assets or documents indicating undisclosed expenditure which were found during search and survey operations.

(iv) No material was found in search and survey operations which would prove that the assessee was managing or controlling the 24 companies except placing reliance on statements of certain employees of those companies which were later retracted by them.

(v) No material has been brought on record by the revenue to prove that sufficient action was taken by the revenue on the employees who had retracted the statements and who had also originally offered to pay tax on the commission income derived by them.

(vi) No examination was carried out by the revenue with Mr.R.K.Gupta , Vice President and Company Secretary of M/s Bhushan Power & Steel Ltd who had addressed a letter dated 10.2.2010 stating that documents like memorandum of sale of shares, delivery of share certificates etc are being sent for getting signature from directors of respective companies of Mr.S.M.Nahata. This letter was admittedly addressed by Mr.R.K.Gupta to one of the employee of those companies which were found in the office premises of the assessee. The assessee had already demonstrated the circumstances under which the papers of those companies had come to his possession i.e in his professional capacity.

(vii) No evidences has been brought on record by the Learned AO except alleging that the money was routed in the bank account of the companies through other bank accounts. But then the onus was on the Learned AO to discover such bank accounts and establish the money trail.

(viii) The Learned AO has failed to point out any bank account in which cash was initially deposited.

(ix) The ROC website does not contain the nature of transactions except containing the balance sheet, list of directors and shareholders. Hence from the said website, it is very strange that how the Learned AO was able to conclude that the transactions are accommodation entries.

(x) The valuable assets found during the search and survey such as cash and jewellery have been properly explained by the assessee and no addition has been made on that account by the Learned AO. The details of 21 bank accounts were also found in the search and survey operations which were explained at the assessment stage that all the bank accounts were duly disclosed in the regular books of accounts of account holders which has been accepted by the Learned AO.

(xi) There was no discovery of any bank account wherein the commission allegedly received by the assessee was found deposited.

(xii) The entire addition has been made by the Learned AO only based on mere suspicion, surmises and conjectures.

In view of the aforesaid facts and circumstances, findings given thereon and judicial precedents relied upon hereinabove, we find no infirmity in the order of the Learned CIT(A) and accordingly the grounds raised by the revenue are dismissed.

ORDER PRONOUNCED IN THE OPEN COURT ON 11 -5 -2016.