Yogiraj Sharma v. Asstt. CIT - Taxpublishers.in

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The Tax Publishers2015 TaxPub(DT) 2046 (Ind-Trib) : (2015) 169 TTJ 0547 : (2015) 118 DTR 0020 Dr. Yogiraj Sharma v. Asstt. CIT INCOME TAX ACT, 1961 --Search and seizure--Assessment under section 153AComputation of undisclosed income--The assessee has been in State Government service since 1982 and was posted as Director, Health and Family Welfare from 2005. There had been a search and seizure operation under section 132 at the residential premises of the assessee. Survey under section 133A was also conducted at the office premises of the assessee, business premises of M/s VW (P) Ltd., M/s GD & Developers (P) Ltd. in which the wife and son of the assessee are directors. Various incriminating documents, cash, foreign exchange and other assets were found and seized from the premisesof the assessee. In consequence of search operation under section 132, the AO initiated proceedings under section 153A against the assessee. In response to notice under section 153A, assessee filed returns. Ground No. 1 in assessment years 2003-04, 2004-05, 2005-06 and 2006-07 in Revenue's appeals relates to the deletion of the addition of Rs. 20 lacs, Rs. 10 lacs, Rs. 50 lacs and Rs. 80 lacs respectively made by the AO on account of bogus share capital of M/s (P) Ltd. Similarly, in assessment years 2003-04, 2004-05, 2005-06 relates to the deletion of addition of Rs. 15 lacs, Rs. 10 lacs and Rs. 1.50 crores respectively made by the AO on account of bogus share capital of M/s VW & Distributors (P) Ltd. The AO noted that M/s GD (P) Ltd. and M/s VW (P) Ltd. were two companies where Smt. S, wife of the assessee and Shri G, son of the assessee are directors. The AO noted that no substantial business was carried by these companies. In both the companies, share capital has been inducted which was received from Indore based and Kolkata based companies. The AO was of the opinion that the share capital of these two companies was unexplained income of the assessee and therefore he made addition substantively in the hands of the assessee. The AO assessed the share application money received from the persons/concerns to be of the assessee's income. CIT(A) directed the Ao to assess the share capital received by these companies in the hands of the companies as the income of the year and deleted the substantive additionmade in the hands of the assessee. *Held:* The AO noted that M/s. GD (P) Ltd. and M/s VD (P) Ltd. are two companies where Smt. Shashi Sharma, wife of the assessee and Shri Gaurav Sharma, son of the assessee are directors. The AO noted that no substantial business was carried out by these companies. In both the companies, share capital has been inducted which was received from Indore based and Kolkata based companies. The AO was of the opinion that the share capital of these two companies was unexplained income of the assessee and therefore he made addition substantively in the hands of the assessee. The AO assessed the share application money received from the following persons/concerns to be of the assessee's income. The AO even though relied on the statements of the directors of these companies who have invested in M/s GD & D (P) Ltd. and M/s V & D (P) Ltd. but has not provided copies of these evidences to the assessee or to the companies, M/s GD (P) Ltd. and M/s VW (P) Ltd. for their rebuttal. The AO has releid on the statements recorded at the back of the assessee. This is a settled law thatthe statements recorded at theback of the assessee cannotbe used as a piece of evidnce against the assessee. The onus is on these companies, in our opinion, to explain from where they have invested the funds in M/s GD (P) Ltd. and M/s VW (P) Ltd. The assessee is not expected to prove the source of source. Merely there had been a survey in the case of M/s Gajanan Distributors & Developers (P) Ltd. as well as M/s Vignesh Warehouse & Distributors (P) Ltd. i.e., companies in which various companies, claimed to be paper companies later on, had invested huge funds by way of share capital contribution cannot be accepted to escape from the income-tax liability by giving statements that they have received cash in lieu of issuing cheques for contributing in the capital of these companies. No evidence or material has been placed on record by these various companies before AO or before Addl. Director of IT that these companies have received cash from Shri Gaurav Sharma. On the basis of their statements recorded subsequently mentioning that they have issued cheques in lieu of cash received for providing accommodation entries will not absolve these parties from income-tax liability. The persons who created the paper companies or provided such type of accommodation entries should not be made scot-free. In our opinion, they are the main culprits for evading the taxes. No evidence or material has been brought on record what action has been taken by the Revenue against these companies. The additions should have been made under the IT Act in the hands of these companies as they have shown investment by way of capital contribution in M/s GD (P) Ltd. and M/s VW (P) Ltd, and they are not able to prove the source of such investment. The aforesaid view is duly supported by the decision of Hon'ble Supreme Court in the case of CIT v. Lovely Exports (2008) 216 CTR (SC) 195 : (2008) 6 DTR 308 (SC). It appears that the AO went on with the presumption that since the assessee is a Government servant and M/s G (P) Ltd. and M/s VW (P) Ltd. are controlled by the son of the assessee, therefore, whatever investment has been made in the share capital of these companies by the various companies, the money must have flown from the assessee. The onus is on the revenue to prove that the money has flown from the assessee. There had been search in the case of the assessee and search in the case of directors of the companies. No evidence was found during the course of the search and brought to our knowledge or produced by the Departmental Representative which may prove that the assessee has made investment in M/s GD (P) Ltd. and M/s VW (P) Ltd. in the garb of various companies. Even no loose paper seized during the course of the search was placed before us or brought on record to prove that the assessee has received commission by way of illegal gratification during these years. These companies have separate PAN as well as company registration number under the Companies Act. Corporate veil of these companies has not been lifted. These companies are filing their IT returns from year to year which have been accepted by the revenue. There had been a search in the case of the assessee. No material or evidence was brought to our knowledge which may prove that these companies are the benami concerns of the assessee. The assessee is not authorised to operate the bank accounts of these companies. The assessee has not even introduced the bank accounts. No paper or documents have been found even during the course of the search that the assessee is having control over the business. There had been a search but the revenue could not bring any evidence which may prove that the assessee enjoyed the benefit or profit from these concerns. Merely because the son and wife of the assessee are the directors and had made investments in these concerns does not mean that these concerns are the benami concerns of the assessee. Even though certain persons in their respective statementss have stated that the companies were paper companies but they did not deny that they have issued cheques and cheques have been signed by them on behalf of the companies in which they are directors. These persons in their statements also stated that they have issued the cheques by taking cash from Shri G (son of assessee) not from assessee. The AO, just relying on the statements of these persons, took the view that the investments in M/s GD (P) Ltd. as well as M/s VW (P) Ltd. have been made by the assessee. None of the persons in their statements nowhere stated that they had any meeting with the assessee or assessee has provided the cash to them. The AO even though relied on the statements of the directors of these companies who have invested in M/s GD (P) Ltd. and M/s VD (P) Ltd. but has not provided copies of these evidences to the assessee or to the companies, M/s GD (P) Ltd. and M/s VW (P) Ltd. for their rebuttal. Even the copies of the statements recorded by various authorities were not provided to the Tribunal so that the Tribunal could have provided these copies to the counsel of the assessee. The AO has relied on the statements recorded at the back of the assessee. This is a settled law that the statements recorded at the back of the assessee cannot be used as a piece of evidence against the assessee. The AO we noted has not even brought out any evidence on record that these persons who have provided, as contended by the Revenue, accommodation entries to M/s Gajanan Distributors & Developers (P) Ltd. and M/s Vignesh Warehouse & Distributors (P) Ltd. have shown any such income in their returns from the business of providing entries so as to establish that it was their business of providing accommodation entries by earning commission from such entries. All the companies from whom M/s Gajanan Distributors & Developers (P) Ltd. and M/s Vignesh Warehouse & Distributors (P) Ltd. received the cheques towards the capital contribution are duly registered with the Registrar of Companies and their identity cannot be doubted. These companies have issued the cheques. They have not contributed for the share capital in cash. The onus is on these companies, in our opinion, to explain from where they have invested the funds in M/s G D (P) Ltd. and M/s VW (P) Ltd. The assessee is not expected to prove the source of source. Merely there had been a survey in the case of M/s GD & D Ltd. as well as M/s VW (P) Ltd., i.e., companies in which various companies, claimed to be paper companies later on, had invested huge funds by way of share capital contribution cannot be accepted to escape from the income-tax liability by giving statements that they have received cash in lieu of issuing cheques for contributing in the capital of these companies. No evidence or material has been placed on record by these various companies before AO or before Addl. Director of IT that these companies have received cash from Shri G. On the basis of their statements recorded subsequently mentioning that they have issued cheques in lieu of cash received for providing accommodation entries will not absolve these parties from income-tax liability. The persons who created the paper companies or provided such type of accommodation entries should not be made scot-free. They are the main culprits for evading the taxes. No evidence or material has been brought on record what action has been taken by the revenue against these companies.The additions should have been made under the IT Act in the hands of these companies as they have shown investment by way of capital contribution in M/s Gajanan Distributors & Developers (P) Ltd. and M/s Vignesh Warehouse & Distributors (P) Ltd., and they are not able to prove the source of such investment. The aforesaid view is duly supported by the decision of Supreme Court in the case of CIT v. Lovely Exports (2008) 216 CTR (SC) 195 : (2008) 6 DTR 308 (SC). It appears that the AO went on with the presumption that since the assessee is a Government servant and M/s GD (P) Ltd. and M/s VW (P) Ltd. are controlled by the son of the assessee, therefore, whatever investment has been made in the share capital of these companies by the various companies, the money must have flown from the assessee. The onus is on the Revenue to prove that the money has flown from the assessee. There had been search in the case of the assessee and search in the case of directors of the companies. No evidence was found during the course of the search and brought to knowledge of Triunal or produced by the learned Departmental Representative which may prove that the assessee has made investment in M/s GD (P) Ltd. and M/s VW (P) Ltd. in the garb of various companies. Even no loose paper seized during the course of the search was placed before this Tribunal or brought on record to prove that the assessee has received commission by way of illegal gratification during these years. Although the addition has been made by AO in assessment year 2008-09 on the bassis of loose papers seized but no addition during the impugned year was made in which these companies received the share capital. It is not denied that the assessee is neither a director nor a shareholder in M/s GD (P) Ltd. and M/s VW (P) Ltd. Even no evidence has been brought on record which may prove that cash has been paid by the son of the assessee, Shri G for making the investment in M/s GD (P) Ltd. and M/s V W (P) Ltd. This is a settled law that no addition can be made on the basis of presumption, surmises and conjectures. Supposition, howsoever strong it may be, it cannot take the place of actuality. [Para 12] On going through the assessment order as well as the material filed before Tribunal it is noted, we noted that the Revenue has not proved that M/s GD (P) Ltd. and M/s VW (P) Ltd. are the benami concerns of the assessee. M/s G Distributors & Developers (P) Ltd. and M/s V W (P) Ltd. are incorporated under the Companies Act on 11-12-2002 and are independent corporate entities. They are being assessed to income-tax separately. They are having their own business (which) may not be big enough. These companies have separate PAN as well as company registration number under the Companies Act. Corporate veil of these companies has not been lifted. These companies are filing their IT returns from year to year which have been accepted by the revenue. There had been a search in the case of the assessee. No material or evidence was brought to our knowledge which may prove that these companies are the benami concerns of the assessee. The assessee is not authorised to operate the bank accounts of these companies. The assessee has not even introduced the bank accounts. No paper or documents have been found even during the course of the search that the assessee is having control over the business. There had been a search but the Revenue could not bring any evidence which may prove that the assessee enjoyed the benefit or profit from these concerns. Merely because the son and wife of the assessee are the directors and had made investments in these concerns does not mean that these concerns are the benami concerns of the assessee. [Para 13] Merely because certain papers which do not empower the assessee to carry on the business were found at the premises of the concern in which assessee's son is a director cannot authorise the revenue to regard these concerns to be the benami concerns of the assessee. These companies are being assessed separately to income-tax and the incomes by these concerns are duly shown by them in their respective IT returns. The investments made in these concerns were not proved to have been made by the assessee. Therefore, these concerns cannot be regarded to be the benami concerns of the assessee merely on the ground that in these concerns the assessee's wife and son are the major shareholders. [Para 15] Therefore, the revenue, cannot hold merely on presumptions that these concerns are Benami concerns of the assessee and whatever share capital was brought in, that belong to the assessee. [Para 16] In view of the aforesaid discussion, the order of CIT(A) so far it relates to deletion of addition in the hands of the assessee. [Para 24] Income Tax Act, 1961, Section 153A INCOME TAX ACT, 1961 --Search and seizure--Assessment under section 153AComputation of undisclosed income--The assessee's son, Shri Gaurav Sharma, has shown these gifts in his original return filed much prior to search and for which the assessment was not pending at the time of search and therefore, could have not abated. These gifts were also again shown by G in his returns filed in response to notice issued under section 153A. There had been a search in the case of the assessee but no evidence or material was found or brought on record which may prove that the gifts have been received by the assessee. The gifts had been received through cheques and G has submitted the relevant evidence. Whether G has proved genuineness of the gifts has to be seen in his case. There is no evidence on record which may prove that the funds have flown for these gifts from the assessee. Therefore, the order of CIT(A) that these gifts cannot be added in the hands of the assessee is confirmed. Income Tax Act, 1961, Section 153A INCOME TAX ACT, 1961 --Search and seizure--Assessment under section 153AComputation of undisclosed income--The AO noted that Smt. S (wife of assessee) deposited cash in bank account with A Bank during assessment years 2005-06 and 2006-07. Similarly, was deposited by Smt. S in UTI Bank during assessment year 2006-07 and was deposited in UTI Bank during assessment year 2007-08. According to the AO, these bank accounts were not disclosed by Smt. S. When confronted, it was explained that the cash so deposited was surrendered by G, son of the assessee in his return. The AO in the absence of any source of income of G added these cash deposits as unexplained deposits in the hands of the assessee substantively. The cash deposits made in A Bank and UTI Bank have been offered by G for taxation in his hands who carries various business activities. CIT(A) deleted the addition on the plea that since the disclosure made by G consists of unexplained deposits in the bank accounts of Smt. S and G grossly failed to correlate the disclosure made with the source of the undisclosed income, the disclosures made by G in different years have substantively been assessed in the hands of the assessee and therefore, there cannot be any separate addition as it will tantamount to double taxation. Therefore, CIT(A) deleted the addition. *Held:* Once the deposits are fully covered by the disclosure made by G, no addition can be made separately in respect of the deposits in the hands of the assessee until and unless there are evidences being found during search or brought on record that the deposits made in the bank accounts have come out of the income of the assessee. Therefore, the ground is dismissed in all the years. The Departmental Representative even though vehemently relied on the order of the AO but did not adduce any evidence which may prove that the cash deposits made by Smt. S in her accounts are not covered by the disclosure made by Shri G in his return filed under section 153A. Once the deposits are fully covered by the disclosure made by Shri G, no addition can be made separately in respect of the deposits in the hands of the assessee until and unless there are evidences being found during search or brought on record that the deposits made in the bank accounts have come out of the income of the assessee. Therefore, the ground is dismissed in all the years. Income Tax Act, 1961, Section 153A INCOME TAX ACT, 1961 --Search and seizure--Assessment under section 153AComputation of income--Search and seizure operation has been carried out at A-70, Shakti Nagar which belonged to the son of the assessee, G. The assessee was allotted Government accommodation and has also occupied the same. The son of the assessee, Shri G got incorporated two private limited companies on 11-12-2002. These companies in which G was the director were carrying on business even though on a small scale. These companies, viz. M/s GD (P) Ltd. and M/s Shree VW (P) Ltd. have filed their IT returns. G has also derived salary from these companies as director. Shri G was also filing his IT returns regularly. The returns filed by G were duly accepted under section 143(1). The returns up to assessment year 2007-08 were filed within the due date and prior to the carrying out of the search and seizure operation, he is an income-tax assessee from assessment year 2001-02. He received property through Will of his grandmother. This fact has not been disputed by the AO. In the return filed in response to notice under section 153A, G has shown additional income in each of the assessment years. *Held:* The AO added the income surrendered by G in the hands of the assessee presuming that the income earned by assessee through unscrupulous means must be added in the hands of the assessee. The source declared by the son of the assessee, G is entirely different from the source on the basis of which the AO intends to make the addition in the hands of the assessee and, in fact, has made the addition in the assessment years 2007-08 and 2008-09. If there are evidences and the revenue can prove by discharging its onus that the assessee has earned the income, the revenue is not prohibited from making the addition of that income in the hands of the assessee. Except for presumption and assumption, this Tribunal does not find any cogent material or evidence being brought on record which may prove that the income surrendered by G belonged to the assessee. 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The Tax Publishers2015 TaxPub(DT) 2046 (Ind-Trib) : (2015) 169 TTJ 0547 : (2015) 118 DTR 0020

Dr. Yogiraj Sharma v. Asstt. CIT

INCOME TAX ACT, 1961

--Search and seizure--Assessment under section 153AComputation of undisclosed income--The assessee has been in State Government service since 1982 and was posted as Director, Health and Family Welfare from 2005. There had been a search and seizure operation under section 132 at the residential premises of the assessee. Survey under section 133A was also conducted at the office premises of the assessee, business premises of M/s VW (P) Ltd., M/s GD & Developers (P) Ltd. in which the wife and son of the assessee are directors. Various incriminating documents, cash, foreign exchange and other assets were found and seized from the premisesof the assessee. In consequence of search operation under section 132, the AO initiated proceedings under section 153A against the assessee. In response to notice under section 153A, assessee filed returns. Ground No. 1 in assessment years 2003-04, 2004-05, 2005-06 and 2006-07 in Revenue's appeals relates to the deletion of the addition of Rs. 20 lacs, Rs. 10 lacs, Rs. 50 lacs and Rs. 80 lacs respectively made by the AO on account of bogus share capital of M/s (P) Ltd. Similarly, in assessment years 2003-04, 2004-05, 2005-06 relates to the deletion of addition of Rs. 15 lacs, Rs. 10 lacs and Rs. 1.50 crores respectively made by the AO on account of bogus share capital of M/s VW & Distributors (P) Ltd. The AO noted that M/s GD (P) Ltd. and M/s VW (P) Ltd. were two companies where Smt. S, wife of the assessee and Shri G, son of the assessee are directors. The AO noted that no substantial business was carried by these companies. In both the companies, share capital has been inducted which was received from Indore based and Kolkata based companies. The AO was of the opinion that the share capital of these two companies was unexplained income of the assessee and therefore he made addition substantively in the hands of the assessee. The AO assessed the share application money received from the persons/concerns to be of the assessee's income. CIT(A) directed the Ao to assess the share capital received by these companies in the hands of the companies as the income of the year and deleted the substantive additionmade in the hands of the assessee. Held: The AO noted that M/s. GD (P) Ltd. and M/s VD (P) Ltd. are two companies where Smt. Shashi Sharma, wife of the assessee and Shri Gaurav Sharma, son of the assessee are directors. The AO noted that no substantial business was carried out by these companies. In both the companies, share capital has been inducted which was received from Indore based and Kolkata based companies. The AO was of the opinion that the share capital of these two companies was unexplained income of the assessee and therefore he made addition substantively in the hands of the assessee. The AO assessed the share application money received from the following persons/concerns to be of the assessee's income. The AO even though relied on the statements of the directors of these companies who have invested in M/s GD & D (P) Ltd. and M/s V & D (P) Ltd. but has not provided copies of these evidences to the assessee or to the companies, M/s GD (P) Ltd. and M/s VW (P) Ltd. for their rebuttal. The AO has releid on the statements recorded at the back of the assessee. This is a settled law thatthe statements recorded at theback of the assessee cannotbe used as a piece of evidnce against the assessee. The onus is on these companies, in our opinion, to explain from where they have invested the funds in M/s GD (P) Ltd. and M/s VW (P) Ltd. The assessee is not expected to prove the source of source. Merely there had been a survey in the case of M/s Gajanan Distributors & Developers (P) Ltd. as well as M/s Vignesh Warehouse & Distributors (P) Ltd. i.e., companies in which various companies, claimed to be paper companies later on, had invested huge funds by way of share capital contribution cannot be accepted to escape from the income-tax liability by giving statements that they have received cash in lieu of issuing cheques for contributing in the capital of these companies. No evidence or material has been placed on record by these various companies before AO or before Addl. Director of IT that these companies have received cash from Shri Gaurav Sharma. On the basis of their statements recorded subsequently mentioning that they have issued cheques in lieu of cash received for providing accommodation entries will not absolve these parties from income-tax liability. The persons who created the paper companies or provided such type of accommodation entries should not be made scot-free. In our opinion, they are the main culprits for evading the taxes. No evidence or material has been brought on record what action has been taken by the Revenue against these companies. The additions should have been made under the IT Act in the hands of these companies as they have shown investment by way of capital contribution in M/s GD (P) Ltd. and M/s VW (P) Ltd, and they are not able to prove the source of such investment. The aforesaid view is duly supported by the decision of Hon'ble Supreme Court in the case of CIT v. Lovely Exports (2008) 216 CTR (SC) 195 : (2008) 6 DTR 308 (SC). It appears that the AO went on with the presumption that since the assessee is a Government servant and M/s G (P) Ltd. and M/s VW (P) Ltd. are controlled by the son of the assessee, therefore, whatever investment has been made in the share capital of these companies by the various companies, the money must have flown from the assessee. The onus is on the revenue to prove that the money has flown from the assessee. There had been search in the case of the assessee and search in the case of directors of the companies. No evidence was found during the course of the search and brought to our knowledge or produced by the Departmental Representative which may prove that the assessee has made investment in M/s GD (P) Ltd. and M/s VW (P) Ltd. in the garb of various companies. Even no loose paper seized during the course of the search was placed before us or brought on record to prove that the assessee has received commission by way of illegal gratification during these years. These companies have separate PAN as well as company registration number under the Companies Act. Corporate veil of these companies has not been lifted. These companies are filing their IT returns from year to year which have been accepted by the revenue. There had been a search in the case of the assessee. No material or evidence was brought to our knowledge which may prove that these companies are the benami concerns of the assessee. The assessee is not authorised to operate the bank accounts of these companies. The assessee has not even introduced the bank accounts. No paper or documents have been found even during the course of the search that the assessee is having control over the business. There had been a search but the revenue could not bring any evidence which may prove that the assessee enjoyed the benefit or profit from these concerns. Merely because the son and wife of the assessee are the directors and had made investments in these concerns does not mean that these concerns are the benami concerns of the assessee.

Even though certain persons in their respective statementss have stated that the companies were paper companies but they did not deny that they have issued cheques and cheques have been signed by them on behalf of the companies in which they are directors. These persons in their statements also stated that they have issued the cheques by taking cash from Shri G (son of assessee) not from assessee. The AO, just relying on the statements of these persons, took the view that the investments in M/s GD (P) Ltd. as well as M/s VW (P) Ltd. have been made by the assessee. None of the persons in their statements nowhere stated that they had any meeting with the assessee or assessee has provided the cash to them. The AO even though relied on the statements of the directors of these companies who have invested in M/s GD (P) Ltd. and M/s VD (P) Ltd. but has not provided copies of these evidences to the assessee or to the companies, M/s GD (P) Ltd. and M/s VW (P) Ltd. for their rebuttal. Even the copies of the statements recorded by various authorities were not provided to the Tribunal so that the Tribunal could have provided these copies to the counsel of the assessee. The AO has relied on the statements recorded at the back of the assessee. This is a settled law that the statements recorded at the back of the assessee cannot be used as a piece of evidence against the assessee. The AO we noted has not even brought out any evidence on record that these persons who have provided, as contended by the Revenue, accommodation entries to M/s Gajanan Distributors & Developers (P) Ltd. and M/s Vignesh Warehouse & Distributors (P) Ltd. have shown any such income in their returns from the business of providing entries so as to establish that it was their business of providing accommodation entries by earning commission from such entries. All the companies from whom M/s Gajanan Distributors & Developers (P) Ltd. and M/s Vignesh Warehouse & Distributors (P) Ltd. received the cheques towards the capital contribution are duly registered with the Registrar of Companies and their identity cannot be doubted. These companies have issued the cheques. They have not contributed for the share capital in cash. The onus is on these companies, in our opinion, to explain from where they have invested the funds in M/s G D (P) Ltd. and M/s VW (P) Ltd. The assessee is not expected to prove the source of source. Merely there had been a survey in the case of M/s GD & D Ltd. as well as M/s VW (P) Ltd., i.e., companies in which various companies, claimed to be paper companies later on, had invested huge funds by way of share capital contribution cannot be accepted to escape from the income-tax liability by giving statements that they have received cash in lieu of issuing cheques for contributing in the capital of these companies. No evidence or material has been placed on record by these various companies before AO or before Addl. Director of IT that these companies have received cash from Shri G. On the basis of their statements recorded subsequently mentioning that they have issued cheques in lieu of cash received for providing accommodation entries will not absolve these parties from income-tax liability. The persons who created the paper companies or provided such type of accommodation entries should not be made scot-free. They are the main culprits for evading the taxes. No evidence or material has been brought on record what action has been taken by the revenue against these companies.The additions should have been made under the IT Act in the hands of these companies as they have shown investment by way of capital contribution in M/s Gajanan Distributors & Developers (P) Ltd. and M/s Vignesh Warehouse & Distributors (P) Ltd., and they are not able to prove the source of such investment. The aforesaid view is duly supported by the decision of Supreme Court in the case of CIT v. Lovely Exports (2008) 216 CTR (SC) 195 : (2008) 6 DTR 308 (SC). It appears that the AO went on with the presumption that since the assessee is a Government servant and M/s GD (P) Ltd. and M/s VW (P) Ltd. are controlled by the son of the assessee, therefore, whatever investment has been made in the share capital of these companies by the various companies, the money must have flown from the assessee. The onus is on the Revenue to prove that the money has flown from the assessee. There had been search in the case of the assessee and search in the case of directors of the companies. No evidence was found during the course of the search and brought to knowledge of Triunal or produced by the learned Departmental Representative which may prove that the assessee has made investment in M/s GD (P) Ltd. and M/s VW (P) Ltd. in the garb of various companies. Even no loose paper seized during the course of the search was placed before this Tribunal or brought on record to prove that the assessee has received commission by way of illegal gratification during these years. Although the addition has been made by AO in assessment year 2008-09 on the bassis of loose papers seized but no addition during the impugned year was made in which these companies received the share capital. It is not denied that the assessee is neither a director nor a shareholder in M/s GD (P) Ltd. and M/s VW (P) Ltd. Even no evidence has been brought on record which may prove that cash has been paid by the son of the assessee, Shri G for making the investment in M/s GD (P) Ltd. and M/s V W (P) Ltd. This is a settled law that no addition can be made on the basis of presumption, surmises and conjectures. Supposition, howsoever strong it may be, it cannot take the place of actuality. [Para 12] On going through the assessment order as well as the material filed before Tribunal it is noted, we noted that the Revenue has not proved that M/s GD (P) Ltd. and M/s VW (P) Ltd. are the benami concerns of the assessee. M/s G Distributors & Developers (P) Ltd. and M/s V W (P) Ltd. are incorporated under the Companies Act on 11-12-2002 and are independent corporate entities. They are being assessed to income-tax separately. They are having their own business (which) may not be big enough. These companies have separate PAN as well as company registration number under the Companies Act. Corporate veil of these companies has not been lifted. These companies are filing their IT returns from year to year which have been accepted by the revenue. There had been a search in the case of the assessee. No material or evidence was brought to our knowledge which may prove that these companies are the benami concerns of the assessee. The assessee is not authorised to operate the bank accounts of these companies. The assessee has not even introduced the bank accounts. No paper or documents have been found even during the course of the search that the assessee is having control over the business. There had been a search but the Revenue could not bring any evidence which may prove that the assessee enjoyed the benefit or profit from these concerns. Merely because the son and wife of the assessee are the directors and had made investments in these concerns does not mean that these concerns are the benami concerns of the assessee. [Para 13] Merely because certain papers which do not empower the assessee to carry on the business were found at the premises of the concern in which assessee's son is a director cannot authorise the revenue to regard these concerns to be the benami concerns of the assessee. These companies are being assessed separately to income-tax and the incomes by these concerns are duly shown by them in their respective IT returns. The investments made in these concerns were not proved to have been made by the assessee. Therefore, these concerns cannot be regarded to be the benami concerns of the assessee merely on the ground that in these concerns the assessee's wife and son are the major shareholders. [Para 15] Therefore, the revenue, cannot hold merely on presumptions that these concerns are Benami concerns of the assessee and whatever share capital was brought in, that belong to the assessee. [Para 16] In view of the aforesaid discussion, the order of CIT(A) so far it relates to deletion of addition in the hands of the assessee. [Para 24]

Income Tax Act, 1961, Section 153A

INCOME TAX ACT, 1961

--Search and seizure--Assessment under section 153AComputation of undisclosed income--The assessee's son, Shri Gaurav Sharma, has shown these gifts in his original return filed much prior to search and for which the assessment was not pending at the time of search and therefore, could have not abated. These gifts were also again shown by G in his returns filed in response to notice issued under section 153A. There had been a search in the case of the assessee but no evidence or material was found or brought on record which may prove that the gifts have been received by the assessee. The gifts had been received through cheques and G has submitted the relevant evidence. Whether G has proved genuineness of the gifts has to be seen in his case. There is no evidence on record which may prove that the funds have flown for these gifts from the assessee. Therefore, the order of CIT(A) that these gifts cannot be added in the hands of the assessee is confirmed.

Income Tax Act, 1961, Section 153A

INCOME TAX ACT, 1961

--Search and seizure--Assessment under section 153AComputation of undisclosed income--The AO noted that Smt. S (wife of assessee) deposited cash in bank account with A Bank during assessment years 2005-06 and 2006-07. Similarly, was deposited by Smt. S in UTI Bank during assessment year 2006-07 and was deposited in UTI Bank during assessment year 2007-08. According to the AO, these bank accounts were not disclosed by Smt. S. When confronted, it was explained that the cash so deposited was surrendered by G, son of the assessee in his return. The AO in the absence of any source of income of G added these cash deposits as unexplained deposits in the hands of the assessee substantively. The cash deposits made in A Bank and UTI Bank have been offered by G for taxation in his hands who carries various business activities. CIT(A) deleted the addition on the plea that since the disclosure made by G consists of unexplained deposits in the bank accounts of Smt. S and G grossly failed to correlate the disclosure made with the source of the undisclosed income, the disclosures made by G in different years have substantively been assessed in the hands of the assessee and therefore, there cannot be any separate addition as it will tantamount to double taxation. Therefore, CIT(A) deleted the addition. Held: Once the deposits are fully covered by the disclosure made by G, no addition can be made separately in respect of the deposits in the hands of the assessee until and unless there are evidences being found during search or brought on record that the deposits made in the bank accounts have come out of the income of the assessee. Therefore, the ground is dismissed in all the years.

The Departmental Representative even though vehemently relied on the order of the AO but did not adduce any evidence which may prove that the cash deposits made by Smt. S in her accounts are not covered by the disclosure made by Shri G in his return filed under section 153A. Once the deposits are fully covered by the disclosure made by Shri G, no addition can be made separately in respect of the deposits in the hands of the assessee until and unless there are evidences being found during search or brought on record that the deposits made in the bank accounts have come out of the income of the assessee. Therefore, the ground is dismissed in all the years.

Income Tax Act, 1961, Section 153A

INCOME TAX ACT, 1961

--Search and seizure--Assessment under section 153AComputation of income--Search and seizure operation has been carried out at A-70, Shakti Nagar which belonged to the son of the assessee, G. The assessee was allotted Government accommodation and has also occupied the same. The son of the assessee, Shri G got incorporated two private limited companies on 11-12-2002. These companies in which G was the director were carrying on business even though on a small scale. These companies, viz. M/s GD (P) Ltd. and M/s Shree VW (P) Ltd. have filed their IT returns. G has also derived salary from these companies as director. Shri G was also filing his IT returns regularly. The returns filed by G were duly accepted under section 143(1). The returns up to assessment year 2007-08 were filed within the due date and prior to the carrying out of the search and seizure operation, he is an income-tax assessee from assessment year 2001-02. He received property through Will of his grandmother. This fact has not been disputed by the AO. In the return filed in response to notice under section 153A, G has shown additional income in each of the assessment years. Held: The AO added the income surrendered by G in the hands of the assessee presuming that the income earned by assessee through unscrupulous means must be added in the hands of the assessee. The source declared by the son of the assessee, G is entirely different from the source on the basis of which the AO intends to make the addition in the hands of the assessee and, in fact, has made the addition in the assessment years 2007-08 and 2008-09. If there are evidences and the revenue can prove by discharging its onus that the assessee has earned the income, the revenue is not prohibited from making the addition of that income in the hands of the assessee. Except for presumption and assumption, this Tribunal does not find any cogent material or evidence being brought on record which may prove that the income surrendered by G belonged to the assessee.