TaxTMI 
TaxTMI 
2012 (12) TMI 94
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....uring the course of appellate proceedings. 1.1 The grounds of Cross Objections read as under:- 1. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the validity of reopening of the assessment u/s 148 of IT Act. 2. That on the facts and circumstances of the case and in law the very basis of re-initiation of assessment proceeding is erroneous and it vitiate the entire assessment proceedings abinitio hence the assessment is bad in law. 3. That the impugned assessment order passed by the learned Assessing Officer is against the principles of natural justice and has been passed without affording opportunity to cross examine Mr. Mahesh Chand Batra, Director of M/s MKM Finsec Pvt. Ltd. and without confronting the adverse material, if any in his possession. 4. That on the facts and circumstances of the case and in law, the Assessing Officer has erred in charging interest of Rs.15,65,114/- u/s 234B of Income Tax Act, 1961. 2. The original return of income was filed by the assessee on 24th September, 2002 declaring income of Rs. 842/- and it was processed u/s 143(1) on 23rd Decemb....
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....duced relevant portion of the statement of Shri Mahesh Batra in which he admitted that he is the Director of M/s MKM Finsec Pvt. Ltd. and maintaining bank accounts with various banks listed in answer to question No.6. It was stated that the company is giving accommodation entries for purchase and sale of shares. The modus operandi was replied in answer No.8 by stating that it used to get cash received from clients either directly in their bank account or through their associates. The amount deposited in the associates' accounts are thereafter transferred to the main account of the company and cheques were issued to the person who gave the cash after deducting the commission. In answer to question No.9, names of associate concerns were stated and in answer to question No.10 it was stated that no real business has taken place except accommodation entries in MKM Finsec Pvt. Ltd. and other associates' business. Referring to these submissions, the Assessing Officer observed that the statement itself is self-explanatory, therefore, the amount received by the assessee is in the nature of accommodation entry and the same is added back to the income of the assessee. It is in this manner the....
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....at M/s. MKM Finsec Private Limited has been allotted PAN by the I.T. department after getting various proof like registration number, address proof etc. (iii) That M/s. MKM Finsec Private Limited is regularly filing its return of Income with ITO, Ward-6(1), New Delhi. (iv) That the books of account of M/s. MKM Finsec Private Limited were duly statutory audited by practicing chartered accountant under the Companies Act 1956. (v) That M/s. MKM Finsec Private Limited has filed the copy of its audited balance sheet & profit & Loss account with respective ROC & Income Tax Office. (vi) That M/s. MKM Finsec Private Limited was maintaining bank account where before opening of such bank account, detail identity of the M/s. MKM Finsec Private Limited have been verified by the bankers and operation in the bank account of a body corporate, such as company registered under the Indian Company Act, 1956 is allowed only to the authorized persons. (vii) That the transactions of the assessee with M/s. MKM Finsec Private Limited were through proper banking channel. (viii) That the assessee company had made investment in shares of M/s. Young Builders Private Limited and M/s. Youth Construction Pri....
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....Audited Annual Accounts. (iv) Copy Of ITR (v) Confirmation Letter." 9. The balance sheet of the said company as on 31st March, 2002 and 31st March, 2007 was also filed. Referring to all these it was submitted that the Assessing Officer did not give any credence to the evidence filed before him as the close look of the balance sheet will indicate that the said company has shareholder funds of more than 76 lac which is sufficient to pay Rs. 45 lac to purchase shares from the assessee company and the brokerage income of the said company was more than Rs. 13 lac. It was contended that the payments have been received through cheques. The shares which were sold by the assessee were purchased by the assessee in financial year 1999-2000 and are duly reflected in the income-tax record of the assessee and is duly depicted in balance sheet as on 31st March, 2000 and 31st March, 2001. The confirmation from M/s MKM Finsec Pvt. Ltd. was also furnished along with the certificates from M/s Youth Builders Pvt. Ltd. and M/s Youth Constructions Pvt. Ltd. as third party evidence. In these certificates, these parties have confirmed the allotment of the shares to the assessee company du....
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....ervices Pvt. Ltd (supra). The Assessing Officer did not bring any information or evidence on record to disprove the claims of the assessee substantiated by irrebuttable evidence brought on record. The transaction of the assessee has been treated as accommodation entry without bringing any evidence on record and according to the well established law in the decision of Uma Charan Shaw (supra), no addition could be made merely on suspicion, surmises and conjectures and, in this manner, learned CIT (A) has deleted the addition. 11. The assessee in its Cross Objections is aggrieved by the decision of learned CIT (A) vide which validity of initiation of re-assessment proceedings has been upheld. The revenue in this appeal is aggrieved with the decision of learned CIT (A) vide which the impugned addition of Rs. 45 lac has been deleted. 12. After narrating the facts, it was pleaded by the learned DR that the Assessing Officer had rightly made the addition. He pleaded that the Assessing Officer had received a specific information regarding accommodation entry obtained by the assessee from MKM Finsec Pvt. Ltd. The Director of the said company had clearly admitted that they were running the....
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....following observations:- "5. We have considered rival contentions and gone through the records. In our view the order of the CIT(A) does not require any interference. First of all the assessee has produced all details in respect of its transactions. Copies of the contract notes and bills, that were issued to it, were all made available. The Assessing Officer has not verified these details and in respect of the material, which has been relied upon by him, he has not provided any findings of the investigation to the assessee. Therefore, in these circumstances, the addition made by the Assessing Officer cannot be said to be on the basis of some evidence that was put to the assessee in the course of assessment proceedings. The learned CIT(A) has correctly deleted the addition and we decline to interfere. Accordingly, order of CIT(A) on the issue in question is upheld. 6. In the result, revenue 's appeal is dismissed. 15. The aforementioned order of the Tribunal was considered by Hon'ble jurisdictional High Court in the aforementioned case of CIT vs. Vishal Holding and Capital Pvt. Ltd. which is now reported at 200 Taxman 186 and the order of the Tribunal was upheld by the Hon'ble H....