Principal Commissioner Of Income Tax, Delhi-2 v. Best Infrastructure (India) Pvt. Ltd

$~35 to 37 & 39 to 47 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA No. 13/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST INFRASTRUCTURE (INDIA) PVT. LTD. ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates + ITA No. 11/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST INFRASTRUCTURE (INDIA) PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates + ITA No. 12/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST CITY REALTORS (INDIA) PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and ITA No. 13 of 2017 & connected matters Page 1 of 34 Mr. Pranjal Srivastava, Advocates + ITA No. 20/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST REALTORS (INDIA) PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates + ITA No. 14/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST INFRASTRUCTURE (INDIA) PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates ...Respondent + ITA No. 15/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST INFRASTRUCTURE (INDIA) PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates ...Respondent ITA No. 13 of 2017 & connected matters Page 2 of 34 + ITA No.16/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST CITY DEVELOPERS INDIA PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates + ITA No. 17/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel : versus BEST CITY PROJECTS (INDIA) PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates + ITA No.18/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST CITY PROJECTS (INDIA) PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates + ITA No. 19/2017 ITA No. 13 of 2017 & connected matters Page 3 of 34 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST CITY REALTORS (INDIA) PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates + ITA No. 21/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST CITY DEVELOPERS INDIA PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates + ITA No. 22/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST REALTORS (INDIA( PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST CITY REALTORS (INDIA) PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates + ITA No. 21/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST CITY DEVELOPERS INDIA PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates + ITA No. 22/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-2 ...Appellant Through: Mr. Rahul Kaushik, Senior Standing Counsel versus BEST REALTORS (INDIA( PVT. LTD ...Respondent Through: Mr. Ved Kumar Jain, Ms. Rano Jain and Mr. Pranjal Srivastava, Advocates ITA No. 13 of 2017 & connected matters Page 4 of 34 CORAM: JUSTICE S. MURALIDHAR JUSTICE PRATHIBA M. SINGH O R D E R01.08.2017 % Dr. S. Muralidhar, J.: 1. These appeals filed by the Revenue under Section 260A of the Income Tax Act, 1961 (‘Act’) are against a common order dated 31[st] 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 21[st] 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 21[st] 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 15[th] 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. 15[th] September 2008 and the statements of Mr. Anu Aggarwal and Mr. Harjeet Singh, Directors of the Best Group, as recorded on 24[th] 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 15[th] 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? ITA No. 13 of 2017 & connected matters Page 6 of 34 Statement of Tarun Goyal 6. The relevant portion of the statement of Mr. Tarun Goyal as recorded on 15[th] 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? ITA No. 13 of 2017 & connected matters Page 6 of 34 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. ITA No. 13 of 2017 & connected matters Page 7 of 34 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 Buildtech (P) Ltd. Noida (iii)AMR Infrastructure (P) Ltd. Noida . (iv) Natraj Buildwell (P) Ltd. Mahipalpur, Delhi (v) Best Group of Companies - Pitampura, New Delhi (vi) S.K. Enterprises -Ashok Vihar, New Delhi 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 Buildtech (P) Ltd. Noida (iii)AMR Infrastructure (P) Ltd. Noida . (iv) Natraj Buildwell (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 ITA No. 13 of 2017 & connected matters Page 8 of 34 only be stated after going through the records which I will submit later on. S.No.Nameof thebeneficiaryAmount1 M. Tech Developers (P) Ltd. Rs.5.00 Cr. (Delhi Ashram)2 Green City Buildtech (P) Ltd. Rs.5.00 Cr. Noida(UP)3 AMR Infrastructure (P) Ltd. Rs.3.00 Cr. Noida4 Natraj Buildwell (P) Ltd. Rs.2.00 Cr. Mahipalpur, Delhi.5 Best Group of Companies Rs.8.00 Cr. Pitampura,New Delhi.6 S.K. Enterprises-Ashok Vihar, Rs.2.00 Cr. New Delhi 7. The following statement of Mr. Tarun Goyal was recorded on 15[th] September, 2008 under Section 133A: Q. No. 13 (Survey u/s 133A dt 15-09-2008) What do you know about the following companies: (a) M/s Aparna Credit (P) Ltd. (b) M/s Bhavani Portfolio (P) Ltd. (c) M/s Compari Fiscal Services (P) Ltd. (d) M/s Sai Baba Finvest (P) Ltd. (e) M/s Tejasvi Investment (P) Ltd. And also explain whether you have any interest in the above stated companies and connected in any manner what so ever? Ans. All the companies mentioned in question had their registered office in this premises i.e. 13/34, 4[th] Floor, WEA, Main Arya Samaj Road, Karol Bagh, New Delhi-110005. ITA No. 13 of 2017 & connected matters Page 9 of 34 Statement of Anu Aggarwal 8. As far as Mr. Anu Aggarwal, Director of the Best Group, is concerned, the questions put to him and the answers given by him on 15[th] September, 2008 read as under: Q.No.11 Please provide the details of share capital of various companies of Best group for the last six year. Ans. I will be providing these details in due course of time as the computer prints is being taken out. Q. No. 12 Please provide the details of share premium of various companies of M/s Best Group for the last six years. Ans. I will be providing these details in due course of time as the computer prints is being taken out. Q. No. 13 Please provide the details of secured loans raised by you for your various projects and also give details of the security provided against the secured loan. Ans. We have taken a secured loan of Rs. 16 Cr from Bank of Baroda, Naharpur, Rohini, New Delhi in our company M/s Best City Developers (I) (P) Ltd. against the security of our flat no. 14 and No. 26 both situated at Sector-20, Dwarka, New Delhi. Q. No. 14 Please provide the details of unsecured loans raised by you for your various projects by your various companies, during last six years. Ans. I am not able to give an immediate reply and I could give details of the unsecured loan after going through the looks of accounts in short time. Q. No. 15 I am showing you Annexure A-I of party BO-1 page No. I to 71, which gives details of cash received for sale of property not reflected in the books of accounts, Annexure A-4, Ans. We have taken a secured loan of Rs. 16 Cr from Bank of Baroda, Naharpur, Rohini, New Delhi in our company M/s Best City Developers (I) (P) Ltd. against the security of our flat no. 14 and No. 26 both situated at Sector-20, Dwarka, New Delhi. Q. No. 14 Please provide the details of unsecured loans raised by you for your various projects by your various companies, during last six years. Ans. I am not able to give an immediate reply and I could give details of the unsecured loan after going through the looks of accounts in short time. Q. No. 15 I am showing you Annexure A-I of party BO-1 page No. I to 71, which gives details of cash received for sale of property not reflected in the books of accounts, Annexure A-4, ITA No. 13 of 2017 & connected matters Page 10 of 34 pages 1 to 31 and Annexure A-11 pages I to 100 which give details of expenses made for construction work which are also not reflected in the books of accounts. You are requested to explain these documents and reconcile them with your regular books of accounts. Ans: I have gone through these documents in Annexure A-l, A-4 and A-11 and I am unable to explain these documents. We have received cash as Advance for sale of property in certain instances which has not been reflected in our books of accounts. Part of the cash received which has not been accounted by us in regular books of accounts has been utilized for making expenses in our construction business. This reflects our unexplained, unaccounted work in progress. This is the explanation for the seized documents Annexure A-4 and A-11. The unaccounted cash reflects are reflected in the seized documents Annexure A-I To account for these seized documents and other seized documents which cannot be adequately explain by us, we voluntarily offer a sum of Rs. 8 Crores (Rs. Eight Corers) which is over and above the normal income earned by us during the course of the year. This Rs. 8 Crores (Eight Crores) represents our undisclosed income earned during the year on accounts of unexplained cash receipts, unexplained work in progress as well as share capital and share premium received This discloser of Rs. Eight Corers which is over and above the normal income earned by us during the course of the year is being made to buy peace of mind, to avoid penalty and prosecution proceedings and also to avoid protected litigation. Q. No. 16 During the course of search at your office premises, H-8, 1st floor, Best Plaza, - Netaji Subhash Place, Pitampura, New Delhi cash of Rs.59,96,800/- (Rs Fifty nine lakh Ninety six thousand Eight hundred only) was found, and inventoried, however as per the looks of accounts, the cash in hand is Rs. 30,01,000/- (Rs. Thirty lakh one thousand only), please explain the source of cash. ITA No. 13 of 2017 & connected matters Page 11 of 34 Ans. I am unable to give the explanation right now. 9. The further statement of Mr. Anu Aggarwal, Director of Best Group, as recorded on 24[th] October, 2008 reads as under: Q. No. 3 Please provide the details of share premium of various companies of the Best Group of companies for the last 6 year. Ans. The required information is being produced/submitted today itself. Q.No.5 During the course of search cash of Rs.59,96,800/- was found and as per the books total cash in hand was Rs. 30,01,000/-. Please explain the difference and give explanation. Ans: The cash in question was received from different persons on account of advance on account of sale of properties. As I have already mentioned in my earlier statement dated 15-09-2008 to question No. 15 where I had clearly mentioned that we have received cash from different persons in lieu of bookings of properties. I may clarify that the amount of Rs. 8 crores surrendered at the time of search, includes this unexplained cash of Rs. 30 Lacs (Approximately.) Ans. The required information is being produced/submitted today itself. Q.No.5 During the course of search cash of Rs.59,96,800/- was found and as per the books total cash in hand was Rs. 30,01,000/-. Please explain the difference and give explanation. Ans: The cash in question was received from different persons on account of advance on account of sale of properties. As I have already mentioned in my earlier statement dated 15-09-2008 to question No. 15 where I had clearly mentioned that we have received cash from different persons in lieu of bookings of properties. I may clarify that the amount of Rs. 8 crores surrendered at the time of search, includes this unexplained cash of Rs. 30 Lacs (Approximately.) Q. No. 6 During the course of search on Sh. Tarun Goyal, he has stated in his statement that he has provided you accommodation entries. Please explain the same. Ans. I personally do not know Sh. Tarun Goyal, except that he may have invested in our group companies. However we have not received any accommodation entries from anybody. I have already given my statement on 15-09-2008 in which in my answer to question no. 15. I had surrendered a total amount of Rs. 8 Cr. on account of unexplained cash received from various bookings in my group companies and the unexplained expenses towards the work in progress of various projects in those companies and other outgoing. These unexplained receipts and out goings can be correlated and detailed at the time of ITA No. 13 of 2017 & connected matters Page 12 of 34 assessment after going through the seized material and other available records. Q. No. 7 At the time of search on 15-09-2008 to the question No. 15, you also confirmed in your answer that this surrender of Rs. 8 Cr. includes receipt of share capital and share premium. Please explain and clarify the same. Ans. As explained in the answer to the question no. 6, the utilization of the unexplained receipts and its correlation with the outgoings can be ascertained after examining the seized material and therefore it is difficult to detail if any amount from the surrender was utilize towards the receipt of any share capital or not. Q. No.8 During the course of statement on oath u/s 131(IA) of Sh. Mahesh Garg, who was running two companies namely M/s Dreamland Solutions (P) Ltd. and M/s Meghdoot Express (P) Ltd. having business address at 104, B.D. Chambers, D.B. Gupta Road, New Delhi has stated that he has provided your group accommodation entries. Please explain. Ans. We don't know Sh. Mahesh Garg personally. However, we can't add anything more to our statement given on 15-09-2008 in regard to the unexplained receipts and unexplained outgoings and our further answer to question No. 6 & 7 above. Q. No.9 Please give bifurcation of the surrendered amount i.e. heads in which you are willing to surrender and the companies in which you desire to surrender. Ans. It has already been explained in our answer to question no. 6 that the surrendered amount is towards the group of companies from unexplained receipts and outgoing there against and we shall be able to provide the precise details at the time of assessment after examining the seized material and other documents in our possession in detail. Statement of Harjeet Singh 10. The statement of Mr. Harjeet Singh as recorded on 24[th] October, 2008 reads as under: Q. No. 3 During the course of search on 15-09-2008, you were not present at your premises. You were requested to come and co-operate and you joined your office late night. In your absence, Sh. Anu Aggarwal who is also Director in the Best Group of Companies gave his statement. In his statement Sh. Anu Aggarwal had surrendered an amount of Rs. 8 Crores on account of undisclosed income earned during the year on account of unexplained cash receipts, unexplained work in progress as well as the share capital and share premium received. Do you agree with the statement given by Sh. Anu Aggarwal? Statement of Harjeet Singh 10. The statement of Mr. Harjeet Singh as recorded on 24[th] October, 2008 reads as under: Q. No. 3 During the course of search on 15-09-2008, you were not present at your premises. You were requested to come and co-operate and you joined your office late night. In your absence, Sh. Anu Aggarwal who is also Director in the Best Group of Companies gave his statement. In his statement Sh. Anu Aggarwal had surrendered an amount of Rs. 8 Crores on account of undisclosed income earned during the year on account of unexplained cash receipts, unexplained work in progress as well as the share capital and share premium received. Do you agree with the statement given by Sh. Anu Aggarwal? Ans. Yes I agree with the statement given by Sh. Anu Aggarwal. He is fully authorized to take decision in the best interest of the Group. I stand by his statement and promise to pay tax liabilities within the time allowed by the Department. Assessment Order 11. Although separate assessment orders were passed in respect of each Assessees for the AYs in question, illustratively, the assessment order dated 30[th] December, 2010 passed by the Assessing Officer (‘AO’) in the case of Best Infrastructure (India) Pvt. Ltd. For AY 2005-06 is being discussed herein. 12. In the above assessment order, the AO set out a tabulated chart on the basis of the above statements of Mr Tarun Goyal and Mr Anu Aggarwal and concluded that the share premium and share application money was nothing but an unexplained credit and accordingly added Rs. 3.60 Crores to the assessable income of the Assessee under Section 68 of the Act. The reason ITA No. 13 of 2017 & connected matters Page 14 of 34 given by the AO for this addition was that the Assessees had failed to give any explanation or furnish any documentary evidence to prove the identity of the investors and their creditworthiness. They were also unable to prove the genuineness of the above transactions. It was also noted that the Assessees failed to produce the persons who purportedly advanced the alleged share application money or their bank accounts. 13. In para 5.3 of the assessment order, the AO noted that “the Assessee has submitted some evidences in the form of affidavit and certificate of incorporation regarding Tarun Goyal Group of Companies, which were examined on test check basis.” The AO further noted that the said affidavits were undated and not countersigned by Notary/Oath Commissioner. These affidavits were on forms that were purchased before the date of payment by the so called Directors of Tarun Goyal Group of Companies. The AO also noted that Mr. Anu Aggarwal in her statement had “categorically denied knowing these directors of Tarun Goyal Group of Companies” and he went on to state that he is not aware if these Employees/Directors who have signed the affidavits have left the companies. 14. The AO proceeded to also add the commission that might have been paid for the accommodation entries. It was found that since Assessee company had taken accommodation entries to the tune of Rs. 3.60 crores, therefore, by applying the rate of commission at the rate of 2.25%, it must have paid a sum of Rs. 8.10 lakhs out of its undisclosed income. Order of the CIT (A) 15. The Commissioner of Income Tax (Appeals) [‘CIT (A)’] dismissed the ITA No. 13 of 2017 & connected matters Page 15 of 34 14. The AO proceeded to also add the commission that might have been paid for the accommodation entries. It was found that since Assessee company had taken accommodation entries to the tune of Rs. 3.60 crores, therefore, by applying the rate of commission at the rate of 2.25%, it must have paid a sum of Rs. 8.10 lakhs out of its undisclosed income. Order of the CIT (A) 15. The Commissioner of Income Tax (Appeals) [‘CIT (A)’] dismissed the ITA No. 13 of 2017 & connected matters Page 15 of 34 appeal in the case of ‘Best Infrastructure (India) Pvt. Ltd.’ for AY 2005-06 by order dated 11[th] November, 2013. The ground taken by the Assessee that the addition was made by the AO without any evidence being collected during the search and seizure operation under Section 132 of the Act, was negatived. The CIT (A) also noted that when Mr. Anu Aggarwal, Director of Best Group of Companies, was confronted with those seized documents, he admitted the undisclosed income of Rs. 8 crores for the entire Group under Section 132 (4) of the Act, which, included bogus share capital/ share application money. 16. The CIT (A) noted that during the search proceedings, Mr. Tarun Goyal had stated under Section 132(4) of the Act that he had received cash from Best Group and in return he had given them share capital in the form of a cheque. It was observed by the CIT (A) that the evidence “does not mean only documentary evidence. Judicially it has been held that statement under Section 132(4) is an important evidence collected as a result of search and seizure operation. Therefore, I hold that in the instant case the addition of share capital is based on evidence gathered during the search.” 17. Reference was made by the CIT (A) to the decision of this Court in CIT v. Anil Kumar Bhatia (2013) 352 ITR 493 (Del) where it was held that the AO had the jurisdiction under Section 153A of the Act to make assessment for all the six years and compute the total income of the Assessee, including the undisclosed income, notwithstanding that the Assessee filed returns before the date of search which stood processed under Section 143 (1) of the Act. Therefore, the challenge to the assessment orders on the ground of ITA No. 13 of 2017 & connected matters Page 16 of 34 erroneous assumption of jurisdiction under Section 153A of the Act was negatived by the CIT (A). 18. As regards the merits of the additions made under Section 68 of the Act, the CIT (A) again referred to the statements recorded in the course of search and in particular the statement of Mr. Anu Aggarwal where he accepted undisclosed income of Rs.8 crores earned during the year on account of "unexplained cash receipts, unexplained work-in-progress as well as share capital and share premium received.” The CIT (A) noted in the course of the appellate proceedings that the authorised representative (‘AR’) of the Assessee had filed detailed written submissions dated 7[th] February, 2012 and his arguments were, thus, summarised as under: i) The appellant company has placed on record entire evidence and material to discharge the burden which lay upon it u/s 68 of I.T. Act. Ne emphasized that following evidences were filed in support of genuineness of share capital. a) PAN of shareholder. b) Name, address and confirmation of shareholder. c) Each shareholder is a corporate entity, i.e. identity of shareholder is not doubtful. d) Payment is through banking channels. ii) As a result of search and seizure operation u/s 132 no cash or loose papers were even found to allege, assume or conclude that, share capital received represented undisclosed income of the appellant company. iii) In the paper book, the Ld. AR has filed copy of form no. 2 filed by the appellant company before the registrar of company showing allotment of shares. iv) Ld. AR has relied upon the following judicial and material to discharge the burden which lay upon it u/s 68 of I.T. Act. Ne emphasized that following evidences were filed in support of genuineness of share capital. a) PAN of shareholder. b) Name, address and confirmation of shareholder. c) Each shareholder is a corporate entity, i.e. identity of shareholder is not doubtful. d) Payment is through banking channels. ii) As a result of search and seizure operation u/s 132 no cash or loose papers were even found to allege, assume or conclude that, share capital received represented undisclosed income of the appellant company. iii) In the paper book, the Ld. AR has filed copy of form no. 2 filed by the appellant company before the registrar of company showing allotment of shares. iv) Ld. AR has relied upon the following judicial ITA No. 13 of 2017 & connected matters Page 17 of 34 pronouncement that under these circumstances, section 68 cannot be invoked. a) CIT v. Stellar Investment Ltd. 192 ITR 287. b) Sophia Finance Ltd. 205 ITR 98 (FB) (Del). c) CIT v. Divine Leasing and Finance Ltd 299 ITR 268(Del.) d) CIT v. Lovely Exports (P) Ltd. 319 ITR5 (ST) 19. The Assessee also raised the point that the statement of Mr. Tarun Goyal had been recorded behind the back of the Assessee and in the absence of cross-examination such evidence was of no evidentiary value. It was further specifically pointed out that “statement of Shri Tarun Goyal has not been provided to the Appellant company.” Further, the Director of the Appellant company denied that Mr. Goyal was brought before them, face to face, for the purpose of his cross-examination. It was denied that any entry had been received from Mr. Goyal or Mr. Mahesh Garg and merely because the share holders had a common addresses, it does not become a ground to hold that share capital was unexplained under Section 68 of the Act. In support of this proposition, reliance was placed on the decision of this Court in CIT v. Victor Electrodes Ltd.(2012) 329 ITR 271 (Del). 20. A request was made by the Assessee during the appellate proceedings before the CIT (A) for admission of additional evidence in the form of bank statements of the share holders. This application was forwarded by the CIT (A) to the AO who by his letter dated 25[th] October, 2012 opposed to the admission of the additional evidence. Even then, the CIT (A) admitted the additional evidence and directed the AO to conduct an enquiry. In pursuance to which, the AO by letters dated 10[th] July and 19[th] August, 2013, submitted the remand report. The AO stated that the summons under Section 131 were ITA No. 13 of 2017 & connected matters Page 18 of 34 issued to Mr. Goyal but he did not appear. Then the AO requested Mr. Harjeet Singh and Mr. Anu Aggarwal to produce Mr. Tarun Goyal to which they replied that they “do not presently know the whereabouts of Mr. Tarun Goyal.” The AO maintained that during the entire course of the assessment proceedings, the Directors of the Best Group had never demanded to cross-examine Mr. Goyal. ITA No. 13 of 2017 & connected matters Page 18 of 34 issued to Mr. Goyal but he did not appear. Then the AO requested Mr. Harjeet Singh and Mr. Anu Aggarwal to produce Mr. Tarun Goyal to which they replied that they “do not presently know the whereabouts of Mr. Tarun Goyal.” The AO maintained that during the entire course of the assessment proceedings, the Directors of the Best Group had never demanded to cross-examine Mr. Goyal. 21. The CIT (A) had further noted the submission of learned counsel for the Assessee that Mr. Tarun Goyal had later retracted his statement made under Section 132 (4) of the Act on 10[th] October and 4[th] November, 2008 and stating that they had been taken under coercion. The CIT (A) relied on the disclosure of Mr. Anu Aggarwal offering Rs. 8 crores to tax during the search proceedings. Reference was made to Annexure A-1 and A-11 which contained details of “unaccounted cash received and expenses” which had not been entered in the books of accounts. Reference was also made to the statements of Mr. Harjeet Singh and Mr. Tarun Goyal. The version of the AO that till 15[th] October, 2008 Mr. Anu Aggarwal kept quiet and did not ask for a copy of the statement of Mr. Goyal or seek his cross-examination was accepted by the CIT (A). Consequently, the additions made by the AO were sustained. Appeals before the ITAT 22. As already noted that separate assessment orders and separate corresponding orders were passed in appeal by the CIT (A) in respect of each of the Assessees forming part of the Best Group. The further appeals ITA No. 13 of 2017 & connected matters Page 19 of 34 filed by the Assessees before the ITAT against the orders of the CIT (A) for the AYs 2005-06 to 2009-10 were consolidated, heard together and disposed of by way of a common impugned order by the ITAT on 31st May, 2016. 23. Two issues were raised by the Assessees, in all these appeals, for the consideration of the ITAT. 24. In three of these appeals, the first issue was raised before the ITAT regarding the addition made under Section 68 of the Act, wherein, the ITAT on merits found the additions made to be unjustified. Against the judgment concerning these three matters, the Revenue has filed ITA Nos. 11, 12 and 21 of 2017. 25. The other issue that arose before the ITAT was whether the assumption of jurisdiction under Section 153A of the Act, qua each of the Assessees, was justified in law. The ITAT held this issue in favour of the Assessee, therefore, the Revenue has challenged the same by filing the remaining appeals, i.e., ITA Nos.13 to 20 and 22 of 2017. Here, the ITAT had held that there was no incriminating material for each of the AYs other than the year of search, i.e., AY 2008-09 to justify the assumption of jurisdiction under Section 153A of the Act. Submissions of counsel for the Revenue 26. Mr. Rahul Kaushik, learned Senior Standing counsel for the Revenue, has submitted that the statement of Mr. Tarun Goyal remained unrebutted as the Assessees never sought to cross-examine him. Secondly, the statement of Mr. Anu Aggarwal surrendering Rs.8 crore in the course of search and ITA No. 13 of 2017 & connected matters Page 20 of 34 Submissions of counsel for the Revenue 26. Mr. Rahul Kaushik, learned Senior Standing counsel for the Revenue, has submitted that the statement of Mr. Tarun Goyal remained unrebutted as the Assessees never sought to cross-examine him. Secondly, the statement of Mr. Anu Aggarwal surrendering Rs.8 crore in the course of search and ITA No. 13 of 2017 & connected matters Page 20 of 34 also his admission of receiving accommodation entries was itself incriminatingmaterial for the purposes of assumption of jurisdiction under Section 153A of the Act. In support of his contention, learned counsel for the Revenue placed considerable reliance on the decision of this Court in Smt. Dayawanti Gupta v. CIT (2016) 390 ITR 496 (Del) and sought to distinguish the judgment of this Court in Commissioner of Income Tax (Central-III) v.Kabul Chawla (2016) 380 ITR 573(Del). He submitted that apart from the above, the documents A-1, A-4 and A-11 that were seized during the search, also constituted incriminating material. According to him, there was no requirement that incriminating material qua each of the AYs, for which the addition was made, needed to exist. He relied upon the observations of this Court in the decision in CIT v. Anil Kumar Bhatia (supra). He also sought to distinguish the recent decision of this Court in Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia 2017 (295) CTR 466 (Del). 27. As regards additions made on merits under Section 68 of the Act, Mr. Kaushik again took this Court through the materials and submitted that the deletion made by the ITAT, of the additions which had been made by the AO which were further confirmed by the CIT (A), was not called for in the facts and circumstances of the case. Submissions of counsel for the Assessee 28. Supporting the order under appeal, Mr. Ved Kumar Jain, learned counsel appearing for the Assessee, submitted that the surrender of Rs. 8 crores made by Mr. Anu Aggarwal was only vis-a-vis the year of search and not ITA No. 13 of 2017 & connected matters Page 21 of 34 other years. Even for the year of search, the additions under Section 68 of the Act were found to be unjustified by the ITAT. He pointed out that the ITAT had examined thoroughly the entire evidence and returned a factual finding which has not been assailed on the ground of perversity. 29. Mr. Jain submitted that as far as the assumption of jurisdiction was concerned, the so-called documents seized were only loose sheets. These were confronted to Mr Anu Aggarwal who categorically stated: I am unable to explain these documents. We have received cash as advance for sale of property in certain instances which has not been reflected in our books of accounts. Part of the cash received which has not been accounted by us in regular books of accounts has been utilizedfor making expenses in our construction business. This reflects our unexplained, unaccounted work in progress. 30. Mr. Jain placed reliance on the decision of this Court in Commissioner of Income Tax v. Harjeev Aggarwal (2016) 290 CTR 263 and submitted that mere statements made during the course of the search, under Section 132 (4) of the Act, cannot be considered to be incriminating material. He submitted that the decision in Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia (supra) has considered the legal position after analysing the entire case law and, therefore, the decision in Smt. Dayawanti Gupta v. CIT (supra) would not come to the aid of the Revenue in the present case. He pointed out that apart from the fact that Mr. Tarun Goyal had later retracted his statement, it was plain that even a copy of the statement of Mr. Tarun Goyal was not provided. Further, Mr. Tarun Goyal could not be produced for cross-examination, therefore, no reliance could be placed on his statement. ITA No. 13 of 2017 & connected matters Page 22 of 34 Analysis and reasons 31. In Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia (supra), this Court had considered the entire gamut of case law on the assumption of jurisdiction under Section 153A of the Act. In Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia (supra) this Court had the occasion to extensively discuss the decision in Smt. Dayawanti Gupta v. CIT (supra) to point out why the said decision was distinguishable in its application to the facts of the former case. However, since the same arguments have been advanced by the Revenue in the present case, the said decision in Smt. Dayawanti Gupta v. CIT (supra) is being again discussed herein. 32. In Smt. Dayawanti Gupta v. CIT (supra) the Assessees were dealing in the business of pan masala, gutkha, etc. Firstly, the Assessees therein were, by their own admission not maintaining regular books of accounts. Secondly, they also admitted that the papers recovered during the search contained “details of various transactions include purchase/sales/manufacturing trading of Gutkha, Supari made in cash outside books of accounts” and they were “actually unaccounted transactions made” by two of the firms of the Assessees. Thirdly, the Court found as a matter of fact that the Assessees were “habitually concealingincome” and that they were “indulging in clandestine operations” and thatsuch persons “can hardly be expected to maintain meticulous books or records for long.” As pointed out by this Court in Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia (supra) the ITA No. 13 of 2017 & connected matters Page 23 of 34 decision in Smt. Dayawanti Gupta v. CIT (supra), therefore, turned on its own facts and did not dilute the law explained in Commissioner of Income Tax (Central-III) v.Kabul Chawla (supra). 33. At this stage, it requires to be noticed that the decision of this Court in Commissioner of Income Tax (Central-III) v.Kabul Chawla (supra) took note inter alia of the decision of the Bombay High Court in Commissioner of Income Tax v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78 (Bom), wherein it was held that if no incriminating material was found during the course of search, in respect of each issue, then no addition in respect of any such issue can be made to the assessment under Sections 153A and 153C of the Act. The decisions of this Court in CIT v. Anil Kumar Bhatia (supra) and CIT v. Chetan Das Lachman Das [2012] 254 CTR 392 (Del) were extensively discussed in Commissioner of Income Tax (Central-III) v.Kabul Chawla (supra). The Court in Commissioner of Income Tax (Central-III) v.Kabul Chawla(supra) had also discussed and concurred with the decision of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (2013) 36 Taxman 523 (Raj) which had held that the assessment in respect of each of the six assessment years, preceding the year of search “is a separate and distinct assessment.” It was further held in the said decision that “If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated.” ITA No. 13 of 2017 & co