TaxTMI 
TaxTMI 
2015 (9) TMI 136
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....f providing accommodation entries, being run by M/s. B.C. Purohit & Co. (searched on 12.04.2005) it was noticed that some entries from the bogus entities being run by these racketeers had gone to Soni Hospital Ltd., Jaipur. In order to verify these entries and confront this party about the non-genuineness of these entries a limited purpose survey was conducted u/s 133A by the Investigation Wing at the office premises of its hospital located at Sector-5, Vidhyadhar Nagar, Jaipur on 03.05.2005 with the authorization issued by the Addl. Director of Income-tax (Inv.), Jaipur. 2.1. The AO further observed that during the course of survey operation when the books of accounts and returns of income of M/s. Soni Hospital Ltd., Jaipur were verified it was found that share application money was shown as received by this company from certain entities being operated by M/s. B.C. Purohit & Co. Group. The Managing Director of the assessee company Dr. Bimal Rai Soni was confronted with the findings of non-genuineness of these parties from whom loans were shown in the books of accounts of his company. However, Shri Bimal Rai Soni did not accept that the transactions relating to receipt of share ....
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....ons of no means. The Bogus Companies/Firms : Certain private limited companies which have been floated by this group to provide the accommodation entries. In these companies the share capital is built up in the name of the large number of Bogus individuals whose income tax files are being maintained by the entry operators. The returns of income of these companies are being filed as finance and investment companies. One or two partnership firms have also been used for this purpose. The Middlemen : These are the persons who act as contact persons between the Entry Operators and the Beneficiaries. They are chartered accountants, tax advocates or finance brokers or persons dealing in shares. Generally the beneficiaries even do not know the Entry Operators. The giving of cash and receiving of cheques may be done through these middlemen only. In the registers seized from the residence of the Purohit Family at Kamal Apartment, Jaipur names of about 14-15 such middlemen are mentioned. Some important persons of this group like Pawan Purohit s/o Kripa Shankar Sharma in their statements have also identified some such middlemen also. 2.4. The AO further observed that these Entry Opera....
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....0. Great Eastern Movies (P) Ltd., 48, Patel Nagar, Ajmer Road, Jaipur. Rs. 3,00,000/- 11. Jaytara Movies (P) Ltd., 48, Patel Nagar, Ajmer Road, Jaipur. Rs. 2,00,000/- 12. K.K. Petrochem (P) Ltd., A-94, Nandpuri, Hawa Sarak, Jaipur. Rs. 8,00,000/- 13. Kotputli Investment (P) Ltd. S-64, Agarsen Tower, Vidhyadhar Nagar, Jaipur Rs. 11,50,000/- 14. Padam Bearing India Ltd., F-105, Time Square, Vidhyadhar Nagar, Jaipur. Rs. 5,00,000/- 15. Ram Prasad Acharya, 28, Nehru Nagar, Jaipur. Rs. 2,00,000/- 16. Sushila Capfin (P) Ltd., M-9, New Market, Khasa Kothi Circle, Jaipur. Rs. 6,50,000/- 17. Govind Ram 71, Baba Harish Chandra Marg, Jaipur. Rs. 1,50,000/- 18. Mahendra Kumar Bissa 4, Patel Nagar, Ajmer Road, Jaipur. Rs. 1,50,000/- 19. Om Prakash Agarwal, 3/757, Malviya Nagar, Jaipur. Rs. 1,50,000/- Total : Rs. 79,00,000/- The AO gave show cause notice on this issue and required the assessee to prove the genuineness of share application money of Rs. 79,00,000/- and also requested to produce the relevant parties for examination. Further it wa....
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....a fy[ks x;s pSadksa ,oa dqN ds'k dk vknku iznku esjs ek/;e ls gqvk gSaA bu i'"Bksa ij fofHkUu ikfVª;ksa ls izkIr ds'k rFkk mls mu ikfVª;ksa ls izkIr ds'k rFkk vls mu ikfVª;ksa dks pSd ds ek/;e ls entries n'kkZus dk fooj.k fy[kk x;k gSA tSls bu i'"Bksa esa ist 20 ij Rattangarh, Ganpati, Annushree, Bengal, Bhavika, Arpan, Agro, Art line fy[ksa gSaA ;g lkjh dEifu;k Jh ckypUn iqjksfgr ,oa muds ifjokj dh gS ftuds uke Øe'k% Rattangarh Finlease Pvt. Ltd., Ganpati Film, Producers Pvt. Ltd. Anushree Finlease Pvt. Ltd., Arpan Agro Pvt. Ltd., Artline Finvest Pvt. Ltd. gSaA rFkk vU; i'"Bksa ij Hkh ;gh uke repeat gq, gSA buds vykok i'"B 21 ij Thar, Jaitara, Great dk ftØ gSa ;s Hkh Jh ckypUn iqjksfgr ,oa muds ifjokj dh dEifu;k gSA ftuds uke Øe'k% Thar Finance Pvt. Ltd., Jaitara Movies Pvt. Ltd. , oe Great Eastern Movies Pvt. Ltd. gSA bu lkjh dEifu;ksa ds Bank Accounts ls fofHkUu ikfVZ;ksa dks tks entries nh xbZ gS ;g mudh detail gS rFkk buesa 5,00,000/- dks 5]000-00 rFkk blh izdkj 3]00]000@& dks 3]000-00 fy[kk x;k gS rFkk ckdh Entries Hkh blh izdkj gSaA bu i'"Bksa ij fy[kh xbZ Detail ds vuqlkj lksuh gkfLiVy] t;iqj ftls bu i'"Bksa ij lksuh gkfLiVy fy[kk gS] ujs....
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....heques are issued to the beneficiaries. In respect of the bogus companies and bogus individuals whose files are maintained by B.C. Purohit family, it was noticed that in the income-tax returns addresses of 30 persons were given as 48, Patel Nagar, Ajmer Road, Jaipur, 49, Patel Nagar, Ajmer Road, Jaipur and 50, Patel Nagar, Ajmer Road, Jaipur. The AO further observed that on enquiry by the Investigation Wing, it was found that these were plots only having a common boundary wall owned by Purohit Family and no office of any company was there and no individual resided there. 2.8. It was further observed that on account of enquiry by the Investigation Wing and statements of various persons recorded during the course of investigation in search operation, M/s. Ajay Fourwheels Pvt. Ltd. surrendered the accommodation entries from B.C. Purohit Group / Kripa Shankar Sharma as its undisclosed income in the names of the following companies/individuals (included in the list of Rs. 79,00,000/- as mentioned above. 1. M/s. Bequeen Textiles Pvt. Ltd. 2. M/s. Sushil Capfin Pvt. Ltd. 3. M/s. K.K. Petrochem Pvt. Ltd. 4. M/s. Padam Bearing India Pvt. Ltd. 5. Govind Ram Similarly, M/....
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.... no such parties exist at the given address". Under these circumstances, the AO vide order sheet entry dated 23.11.2007 requested the assessee to produce the above said parties for examination. But the assessee vide order sheet entry dated 23.11.2007 had shown its inability to produce any of the said 3 parties. However, through its letter dated 26.12.2007 the assessee stated that the amount was received through banking channel and the companies are registered with ROC and the companies are genuine entities. Since the assessee was failed to satisfy the AO to prove the genuineness of the transaction of share application money of Rs. 20,00,000/-, he treated this money to have been invested out of undisclosed income of the assessee itself as accommodation entries. Therefore, he made addition of Rs. 20,00,000/- in the income of the assessee. 3. Being aggrieved by the order of AO, assessee carried the matter before ld. CIT (A) who has allowed the appeal by observing as under :- "3.1. I have duly considered the submissions of the appellant. I find that in the present case, the appellant had filed the subscription forms from each of the investors. The said subscription form contained....
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....othing wrong if confirmations were prepared by the assessee and got signed from the share applicants since the assessee was required to prove only the identity of the share applicant. Even otherwise they had not been found to be false or forged. There was nothing wrong if some of the shareholders had accounts with the same bank. It was not the case of the Revenue that such accounts were bogus or operated by the assessee. It was also not the case of the Revenue that either of the share applicants was a benami of the assessee. Therefore the reasons given by the Assessing Officer were to be rejected." 3.1. He relied on the order of ITAT Delhi in the case of Sky High Properties Pvt. Ltd. vs. ITO, 258 ITR AT 098. The onus is on the assessee to prove difference between an ordinary cash credit and credit by way of share capital. He placed reliance on the following decisions :- M/s. Sky High Properties Pvt. Ltd. vs. ITO 258 ITR AT 098 (ITAT Delhi) M/s. A-One Housing Complex Ltd. 299 ITR AT 327 (Delhi) - On burden of prove in case of share capital through Public Issue is lighter. CIT vs. Value Capital Services Pvt. Ltd. 307 ITR 334 (Delhi High Court) - On investment made by the ....
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...., Rohini, New Delhi 110 085. Accordingly to financial statements of both the companies for the year ended 31.03.2006, the said companies had enough creditworthiness to make investment in the share capital of the appellant company. The assessee submitted following additional evidences before the ld. CIT (A):- (1) Copy of the financial statements of both the companies for the year ending 31.03.2008 which proved beyond doubt that the said companies had sufficient resources to invest in the share capital of the appellant company. (2) M/s. Labh Tronics Overseas Pvt. Ltd. and M/s. Shashi Sales & Marketing Pvt. Ltd. had now shifted to A-4/181, Sector No. 17, Rohini, New Delhi 110 085. (3) Photocopies of the Balance Sheets of both the companies as on 31.03.2006 along with copies of respective ITR-V for the A.Y. 2006-07. (4) Photocopy of the Balance Sheet as on 31.03.2008 and the Profit & Loss Account for the year ending 31.03.2008 of M/s. Lexus Infotech Ltd. along with photocopy of acknowledgement of Return (now known as Traingular Infocom Ltd.) along with copy of PAN Card thereof. These additional evidences were forwarded to ACIT, Circle-5, Jaipur vide letter dated 04.02.20....
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....r drawing cheque of sizable amounts was established. In short, therefore, the very genuineness of transaction was not established. 4.2. In case of CIT vs. T. S. Krishna & Co. Ltd., 315 ITR 163, the Hon'ble Delhi High Court has held that burden of prove is on the assessee to prove genuineness of the transaction, creditworthiness of creditor, identity of the creditor. The addition made by the AO under section 68 is justified. 4.3. The Hon'ble Delhi High Court in case of CIT vs. Youth Construction Pvt. Ltd. (2013) 357 ITR 97 (Del.) has confirmed the share capital under section 68 on the ground of creditworthiness and genuineness has not been proved by the assessee, wherein Lovely Export (supra) decision had been followed by the Hon'ble Delhi High Court. The ld. D/R further has drawn our attention on recent decision of Hon'ble Supreme Court in the case of N. Tarika Property Invest (P) Ltd. vs. CIT, (2014) 51 Taxmann.com 387 (SC) and argued that identical issue decided by the Hon'ble Supreme Court recently in the above case wherein share application money was subscribed through bank account cheque before depositing cash in respect to shareholders bank account. Therefore, AO was ju....
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.... Supertech Diamond Tools Pvt. Ltd. (2015) 229 Taxman 62 (Raj.)(HC) wherein addition made under section 68 on the basis of Third Party statement made behind the back of the assessee and no opportunity of being heard or cross examining Third Party was provided to the assessee and confirmed the order of the lower authorities for deleting the addition. Further, Hon'ble Allahabad High Court in case of CIT vs. Vacmet Packaging (India) Pvt. Ltd., (2014) 367 ITR 217 (All.) held that assessee had filed documentary evidence consisting of share application forms, copies of bank accounts of the share applicants, copies of the income-tax returns of the share allottees, balance sheets and copies of share allotment certificates and of the Board's Resolution of the share applicants, and on that basis the Hon'ble High Court held that variation of the transaction had been established by calling the documents and assessee has discharged its onus establishing the identity, creditworthiness and genuineness of the transaction. Therefore, he requested to uphold the order of ld. CIT (A). 5. We have heard rival contentions and perused the material on record. There was a search on M/s. B.C. Purohit & Co.....