A copy of the statement of Mr. Tarun Goyal, recorded under Section 132 (4) of the Act, was not provided to the Assessees. Mr. Tarun Goyal was also not offered for the cross-examination. The remand report of the AO before the CIT(A) unmistakably showed that the attempts by the AO, in ensuring the presence of Mr. Tarun Goyal for cross-examination by the Assessees, did not succeed. The onus of ensuring the presence of Mr. Tarun Goyal, whom the Assessees clearly stated that they did not know, could not have been shifted to the Assessees. The onus was on the Revenue to ensure his presence. Apart from the fact that Mr. Tarun Goyal has retracted his statement, the fact that he was not produced for cross- examination is sufficient to discard his statement.
Full Text of the High Court Judgment / Order is as follows:-
1. These appeals filed by the Revenue under Section 260A of the Income Tax Act, 1961 (‘Act’) are against a common order dated 31st May, 2016 passed by the Income Tax Appellate Tribunal (‘ITAT’) in the appeals filed by the Assessee for Assessment Years (‘AYs’) 2005-06 to 2009-10. The Assessees belong to the ‘Best Group’.
Questions of law
2. In three of the appeals filed by the Revenue i.e. ITA Nos. 11, 12 and 21 of 2017 the question of law framed by the Court by the order dated 21st March, 2017 reads as under:
“Did the ITAT fall into error in holding that the additions made under Section 68 of the Income Tax Act, 1961, on account of the statements made by the assessee’s Directors in the course of search under Section 132 of the Act were not justified?”
3. In the other appeals, ITA Nos. 13 to 20 and 22 of 2017, the question of law framed by this Court by the order dated 21st March, 2017 reads as under:
“Whether having regard to the materials seized in the course of search under Section 132 and the statements made on behalf of the assessee, additions made by the Assessing Officer under Section 153A, were not justified as held by the ITAT?”
Background facts
4. The facts which lead to the filing of these appeals are that a search took place in the case of both Mr. Tarun Goyal as well as the Best Group of Companies on 15th September, 2008. During the search various loose papers were found. According to the Revenue, the seized documents were with regard to unaccounted receipts from sale of certain properties and unrecorded expenditure in the construction business.
5. In support of its assumption of jurisdiction under Section 153 A of the Act, the Revenue places reliance on the statements of Mr. Tarun Goyal and Mr. Anu Aggarwal as recorded on the day of search i.e. 15th September 2008 and the statements of Mr. Anu Aggarwal and Mr. Harjeet Singh, Directors of the Best Group, as recorded on 24th October, 2008. These statements were made under Section 132 (4) of the Act. The case of the Revenue is that for the purposes of Section 153A of the Act these statements, by themselves, constitute incriminating material. The Revenue also places reliance on three documents i.e. A-1, A-4 and A-11.
Statement of Tarun Goyal
6. The relevant portion of the statement of Mr. Tarun Goyal as recorded on 15th September, 2008 during the survey/search and relied upon by the Revenue reads as under:
Q. No. 2 Please provide details of your transaction with Best Group of Companies, such as M/s Best Infrastructure (I)(P) Ltd, M/s Best City Projects (I)(P) Ltd., their directors, Sh. Harjeet Singh Arora, Sh. Balvinder Singh, Sh. Anu Aggarwal and other group concern?
Ans. Personally, I had made no transactions with Best Group of Companies or their directors. However, certain companies for which I am the authorized signatory has made transactions with the Best Group of Companies, such as M/s Best Infrastructure (I) (P) Ltd., M/s Best City Projects (I) (P) Ltd., M/s Best City Realtors (I) (P) Ltd. and other group concerns. M/s Best group of companies, through their Directors, Sh. Harjeet Singh Arora had approached us for providing them entry for share capital. They had provided us cash, against which we issued him cheques through companies of which I am the authorized signatory. These companies have taken a commission of 0.25% for providing them cheque against the cash received. We have provided them approx. 8 crores of bogus share capital against which we have received commission income in these companies we are offering this income for taxation, which is over and above the normal income earned by me during the course of the year. At the rate of 0.25% of the undisclosed income earned by us would tantamount to Rs. 2 lakhs.
Q. No. 3 Have you provided entries to the Best Group of Companies or to their directors also?
Ans. The companies for which I am authorized signatory have provided entry to the Best Group of Companies only and not to their directors.
Q. No. 4 Please confirm that regarding your answer to Q.No. 2 of this statement you were taken to the office of the Best Group of Companies at Plot No. H-8, Best Plaza, Netaji Subash Place, Pitampura, New Delhi to confront your statement with them. However they refused any such confrontation or cross examination.
Ans. I confirm that I was taken to the office of Best Group of Companies for confrontation/cross examination by the directors of the company however they refused any such cross examination/confrontation regarding transactions mentioned in my answer to Q. No. 2 of this statement.
Q. No. 6 Please mention the name of the companies and the bank accounts which are used for the purpose of accommodation entries as stated by you in the answer to question No. 5.
Ans. Though I do not remember exactly the name of the companies and name of the bank accounts which are used for accommodation entry purpose however I confirm that the accounts of M/s Max-well Securities (P) Ltd. are mostly used for accommodation entries. Regarding rest of the companies and bank accounts used for the purpose can be stated by me after going through the records, which I will submit later on.
Q. No. 7 Please state for the last six years what amount of accommodation entries have been given by you through the entities controlled by you. Please also give the name of the beneficiary with corresponding amount and the year of the transactions.
Ans. For the last six years the total amount of accommodation entries given by me through the entities controlled by me is around 30 to 35 crores of rupees. Some of the beneficiaries along with approximate value of accommodation entries are given as under;-
(i) MTech Developers (P) Ltd. (Delhi Ashram)
(ii) Green City Build tech (P) Ltd. Noida
(iii)AMR Infrastructure (P) Ltd. Noida .
(iv) Natraj Build well (P) Ltd. Mahipalpur, Delhi
(v) Best Group of Companies – Pitampura, New Delhi
(vi) S.K. Enterprises -Ashok Vihar, New Delhi
The amount of accommodation transaction are with above mentioned six companies are Rs. 5.0 Cr. Rs. 5.0 Cr, Rs. 3.0 Cr, Rs. 2.0 Cr., Rs. 8.0 Cr. and Rs. 2.0 Crores respectively. The same is also represented in the table at next page. Regarding other beneficiaries and amount at accommodation entries can only be stated after going through the records which I will submit later on.
