Rajat Exports Import (India) Pvt. Ltd Vs ITO (ITAT Delhi)
The AO noted in the assessment order that the DIT (Inv.) in the course of investigation in the case of Shri Mukesh Gupta, Shri Rajan Jassal and Shri Surinder Pal Singh recorded their statements. The assessee was supplied with the seized material at the fag end of the assessment proceedings and assessee sought opportunity to cross examine these persons for rebuttal of the allegation. Similarly, assessee was provided with the copies of the statement recorded by the DIT(Inv.) of Shri Vishal Agrawal and Ms. Manju Agrawal, who are apparently also Directors of the Companies from whom the assessee has received share application money, the assessee again sought their cross examination. However, the AO did not provide any opportunity to the assessee to cross examine these persons on behalf of assessee to find out the truth. Therefore, such statements cannot be read in evidence against the assessee. We rely upon decision of the Supreme Court in the case of Kishanchand Chelaram 125 ITR 713 (SC) and of Bombay High Court in case of Paradise Inland Shipping Pvt. Ltd. (supra). Since, according to the AO some of the Directors of the Investor Companies were examined by the DIT(Inv.) and their statements were relied upon by AO at assessment stage, which were not subjected to cross examination on behalf of the assessee, therefore, no adverse inference should be drawn against the assessee. Ld. DR relied upon the decision of Delhi High Court in the case of M/s Nova Promoters and Finlease Pvt. Ltd. 342 ITR 169 and decision of Delhi High Court in the case of Jansampark Advertising and Marketing Ltd. 375 ITR 373 and contended that if AO has not done proper enquiry in the matter, matter may be remanded to the CIT(A). However, considering the facts of the case and in the light of the above discussion, it is clear that the initial burden upon the assessee to prove identity of the investors, their creditworthiness and genuineness of the transaction have been discharged by the assessee. AO thereafter, did nothing in the matter, therefore, no addition could be made against the assessee. Therefore, in our view, it is not a fit case to remand matter to the CIT(A). We are, therefore, of the view that assessee proved identity of the investors, their creditworthiness and genuineness of the transaction in the matter. Therefore, no addition could be made against the assessee.
FULL TEXT OF THE ITAT JUDGMENT
This appeal by assessee has been directed against the order of Ld. CIT(A)-XVIII, New Delhi dated 02.09.2013 for A.Y. 2004-05.
2. We have heard Ld. Representatives of both the parties and perused the material on record.
3. Ld. Counsel for the assessee did not press ground nos. 1 & 2 of the appeal, the same are dismissed as not pressed.
4. On ground nos. 3 & 4, assessee challenged the addition of Rs. 35 lakhs as income from undisclosed sources u/s 68 of the Income Tax Act, 1961 and on ground no. 5 challenged the addition of Rs. 1,04,156/- on account of disallowance of expenses.
5. It may be noted here that earlier appeal of the assessee was dismissed for default which is restored by allowing miscellaneous application of the assessee.
6. The AO noted that as per the details filed by the assessee and as per information received from DIT(Inv.) the assessee had received following sum from the following companies on account of share application money: –
i. Hopewin Admark & Consultancy Services P. Ltd. = Rs. 4,00,000/-
ii. Shivam Softech Ltd. = Rs. 3,00,000/-
6.1 As per information received from DIT(Inv.) that the DIT(Inv.) during the course of investigation in the case of Mukesh Gupta group along with its close confidants Shri Rajan Jassal and Shri Surinder Pal Singh found that the group had operated multiple accounts in various branches to plough back unaccounted black money for the purpose of business or for personal needs such as purchase of assets etc. in the form of gifts, share application money, loans, etc. The investigation discovered that the assessee who has unaccounted money wants to take the same in his books of accounts without paying tax through entry operator on commission. It was also noticed during assessment proceedings, the assessee had received share application money from other companies that are also mentioned in the said report as entry providers/conduits as under:
