TaxTMI 
TaxTMI 
2015 (5) TMI 542
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.... company was only a conduit for funds transfer and hence, the credits in the assessee's books could not have been treated as its income under section 68 of the Income-tax Act, 1961; 4. Not appreciating the complete impart of the proceedings in Shri S.K. Gupta's case, ignoring that such evidence is deemed to be correct as per Section 292(2) of the Act; 5. Not returning a cogent finding on the aspect of credits in the assessee's books also having been taxed in the hands of the other intermediaries; 6. Not accepting the findings given in the order u/s 245(D)(4) of the Act dated 22.6.2012 passed by the Hon'ble Settlement Commission in the case of Shri S.K. Gupta; 7. Ignoring that in respect of A.Y. 2004-05, the Ld. Addl CIT had issued directions u/s 144A of the Act on identical facts, to the effect that no addition was to be made in the hands of the assessee, sine it was only a conduit company; 8. Not appreciating that in the preceding as well as subsequent years, on identical facts, the returned income of the assessee has been accepted after detailed security; 9. Enhancing the income by Rs. 57,06,000/- without appreciating the assessee's reply dated 14.03.2013; 10....
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....m a small office premises without sufficient infrastructure or employees to carry out meaningful business activity in so many companies. 2.1 Further, from the perusal of ledger accounts maintained in one of the laptops impounded during survey, it is noticed that a large amount of cash is deposited and cheques are issue on the same day/within few days to various parties from the accounts of the company controlled by him. As per enquiries carried out by the Investigation wing the assessee was found to have been using the bank accounts opened in different banks to route the entries through two to four accounts to give the color of genuineness to these transactions." 3. The Assessing Officer called for the specific explanation for the sources for the cash deposited vide letters dated 1.11.2010 and 02.12.2010. In response to the specific query, what all the assessee company submitted was that it belongs to Group of companies owned by Mr. Gupta only commission income was earned in consideration of providing the accommodation entries. The Assessing Officer having found the explanation offered unsatisfactory, brought the amount to the taxed placing reliance on the following decisions....
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.... the case of M/s Omni Farms Pvt. Ltd. and Anr. Vs. DCIT in ITA No.3477/Del/2013 dated 28.01.2015. Wherein it has been held as follows:- "17. Thus, there is an order of the Settlement Commission as well as the Additional Commissioner of Income Tax under Section 144A holding that Shri S.K. Gupta was providing accommodation entries, he used various companies as conduit for providing the accommodation entries, cash was received through mediators from the persons who wanted to avail the accommodation entries, such cash was deposited in the bank account of the conduit companies and thereafter, cheque of the similar amount was being issued to the beneficiaries (i.e. the person who wanted to avail the accommodation entry) within a day or so. The Assessing Officer himself in the assessment order has accepted these facts. Considering the totality of these facts and the logical consequences of the order of the Settlement Commission as well as Additional CIT under Section 144A, we have no hesitation to hold that the addition under section 68 cannot be made in the case of theconduit companies. Therefore, we delete the addition made under section 68 in the case of all the nine companies, whic....
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....of the aforesaid provision would show that it envisages two situations when an addition can be made on account of unexplained investments. The first situation being, where the assessee does not offer any explanation about the nature and source of the investment. The second situation being, where the explanation offered by him is, in the opinion of the Assessing Officer, not satisfactory. In the present case, there was no explanation filed before the AO except filing the copy of the bank pass book and it was only during the course of proceeding before the CIT(A) the assessee company tried to explain that the cash deposits were made out of the money belong to the beneficiary to whom accommodation entries were provided and the same explanation was reiterated before us. In our considered opinion, this would not meet the requirement of Section 69 of the Act. There was no material on record that Mr. S.K. Gupta who acted as intermediary between the assessee company and the beneficiary of accommodation entries had filed the confirmation letter stating that amount deposited in the Bank account was provided by him. Nor, the order of the Hon'ble Settlement Commission establishes the availabil....