Rishipal Investments and Finance (P) Ltd. Vs ITO (ITAT Delhi)
We find, the AO, in the instant case, reopened the assessment on the basis of the report of the Investigation Wing that the assessee has received accommodation entry of Rs.23,50,000/- from four companies, the details of which are given in the reasons recorded. We find, the AO after going through the various statements filed by the assessee from time to time, made addition of Rs. 55,85,000/-being the share application money/share capital received by the assessee by invoking the provisions of section 68 of the Act and made further addition of Rs.83,775/- being 1.5% of the above amount which the assessee incurred as commission for arranging the accommodation entries. We find, the ld. CIT(A) dismissed the ground challenging the validity of the reassessment proceedings as well as the addition on merit. It is the submission of the ld. Counsel that the assessee during the assessment proceedings had categorically asked for the corss-examination of Shri S.K. Gupta, whose statement was the basis for making the addition of Rs.55,85,000/- to the total income of the assessee. However, we find from the assessment order that despite the request of the assessee for cross-examination of Shri S.K. Gupta, whose statement is the basis of addition made by the AO, the AO has not provided the opportunity of cross-examination to the assessee.
Coordinate Bench of the Tribunal in the case of Vijayshree Food Products Pvt. Ltd. has deleted the addition on account of non-granting of opportunity of cross-examination to the assessee of the person whose statement was the basis for making the addition and which has been recorded behind the back of the assessee. Since, in the instant case also the reopening was made on the basis of the report of the Investigation Wing in the case of Mukesh Gupta group along with its close confidants Sh. Rajan Jassal and Sh. Surinder Pal Singh, but the addition was made on the basis of the statement of Shri S.K. Gupta recorded during the course of survey on 20.11.2007 in the case of M/s Sino Credits & Liasing Limited, M/s Rapid Packaging Limited, Girisho Company (P.) Limited, M/s Mitsu Securities Management (Pvt.) Ltd., M/s Sino Securities and M/s Anila Industries and since even after repeated requests of the assessee, the AO has not provided the opportunity of cross-examination of Shri S.K. Gupta to the assessee, therefore, respectfully following the decisions cited supra, we hold that the addition made by the AO and sustained by the CIT(A) is not in accordance with the law. We, therefore, delete the addition.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order dated 23rd February, 2017 of the CIT(A)-7, New Delhi, relating to the assessment year 2006-07.
2. Facts of the case, in brief, are that the assessee is a company and had filed its return of income on 20.11.1006 declaring nil income. The return was processed u/s 143(1) of the Act on 02.07.2007. Subsequently, the AO reopened the assessment as per the provisions of section 147 of the Act by recording the following reasons:-
The assessee filed return of income for the A. Y. 2006-07 on 20.11.2006 declaring total income of Rs.Nil. The return was processed u/s 143(1) on 28.06.2007.
DIT(lnv.) during the 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 have 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. During the investigations it was seen that the Bank Accounts held by the assessee was used by the above person for providing accommodation entries. During the course, of investigations by the DIT(Inv.) it was discovered that the assessee who have unaccounted money (hereinafter called as entry takers or beneficiaries) and want to introduce the same in the books of accounts without paying tax approach another person (entry operator) and hand over cash (plus commission) and take cheques/DDs/Pos. The cash is deposited by the entry operator in a bank account either in his own name or in the name of relative/friends or other person hired by him, for the purpose of opening bank account. The entry operator thereafter issues cheque/DD/PO in the name of beneficiary from the same account (in which the cash is deposited) or another account in which funds are transferred through clearing in two or more stages. The beneficiary in turn deposits these instruments in his bank accounts and the money comes to his regular books of account in the form of gifts, share application money, loan etc. through banking Channels and the transaction looks genuine.
It is noticed from the list of entries that the assessee M/s Rishipal Investment & Finance P. Ltd. has taken following accommodation entries from the following persons (beneficiary) as per details hereunder:
