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2015 (11) TMI 426
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....assessment. He issued section 148 notice dated 29-03-2011 as under:- "Reasons recorded, for reopening the assessment: The return of income was filed on 20.09.2005 declaring the income of Rs. NIL/. Order u/s!43(3) of the Act was completed on 28.12.2007 making an addition of Rs. 85,005/- on account of excess depreciation and Rs. 73,766/- on account of valuation of work in progress. A search and seizure action u/s. 132 of the Income tax act was conducted in case of M/s. Mahasagar Securities Private Limited by Investigation wing of Income-tax department, Mumbai, on 25-11- 2009. The search was conducted on the basis of information received in an FIU alert from New Delhi regarding suspicious transactions taking place in the bank accounts of this company and its related companies. The directors of these companies were one Mukesh M.Choksi and Jayesh K-Sampat. During the course of the search it was revealed that the Mahasagar Securities private Limited and its related group of 34 odd companies (the prominent ones being Alliance Intermediaries & Netwo....
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....oss sums of Rs. 26 lacs as unexplained cash credits. The assessee preferred appeal on 12-09-2011. The CIT(A) dismissed it on 26-06-2012. The assessee submits that its appeal against the CIT(A)'s order is pending before the tribunal. 4. It is to be seen post facto CIT(A)'s order, the CIT formed an opinion that above stated reassessment framed in assessee's case was erroneous causing prejudice to the interest of Revenue as under:- "1. Please refer to the assessment order for A.Y. 2005-06 passed u/s. 143(3) r.w.s. 147 of the IT Act dated 29.08.2011 by the ITO, Ward-l(2), Surat. In this case, the assessment was reopened on the basis of information that the assessee was a beneficiary of fraudulent tilling entry to the tune of Rs. 11 lakh from M/s. Mahasagar Securities Pvt. Ltd. and its group companies run by Shri Mukesh M. Choksi, Director of the companies. During the course of re-assessment proceedings, the A.O. had found , another company also indulging in-billing entry and total addition of Rs. 26 lakh were made as under: 1) Mihir Agency Pvt. Ltd. Rs. 11,00,000/- 2) Buniyad Chemicals Pvt. Ltd. Rs. 15,00,000/- Total Rs. 26,00,000/- ....
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.... or through your authorized representative, you may, if so, desired, make you submission in writing, on or before the date of hearing, which will be duly taken note of before passing any order." 5. The assessee filed its reply pleading therein that the Assessing Officer had made all verifications before framing reassessment sought to be revised in proceedings u/s. 263 of the Act. The CIT has declined the same in the order under challenge reading as follows: "5. The contention of the assessee is that complete details with respect to all the share applicants were submitted even in reassessment proceedings and were verified by the A.O. For this the assessee relied on the order of the A.O, and stated that since all the required details, were submitted and accepted by the A.O, onus in respect of every share applicant with regard to the genuineness and creditworthiness had been discharged. 5.1 It would be pertinent to-mention the fact leading1 to reassessment proceedings and the additions. A search and seizure action U/s.132 of the Act was conducted in the case of M/s. Mahasagar Securities Pvt. Ltd., by the Investigation Wing of Mumbai on 25.11.2009. The search was conducted on ....
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....0,000 31,20,000 24,80,000 5.4 The AO had made addition of Rs. 26,00,000/- on the ground that the assessee had failed, to establish nature and source of credit recorded in its books of account in respect of M/s. Mihir Agency Pvt. Ltd. and M/s Buniyad Chemicals Pvt. Ltd. in the form of share .application money and share premium. However, while finalizing the assessment order, the AO has not verified the genuineness of share application/share premium and the creditworthiness of the above mentioned 11 parties/share applicants in the light of the hew evidence that the assessee was taking bogus share capital entries from various concerns. 5.5. Further, on going through the details filed by the assessee the following facts emerge, which the A.O should have investigated' in the light of fresh evidences that the share capital entries were not genuine but the AO did not independently verify the same. Sr. No. Name of party Amount Remarks 1 M/s. Venus Dealing Pvt. Ltd Rs. 10,00,00,0/- The company has filed its return showing income of Rs. 28,440/- only. The shares of the company is taken by one S. Das and Mrinal Ch....
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....Ltd. Rs.5,00,000/- The company has filed its return showing loss of Rs. 6,00,341/-. The shares of the company is taken by one Rajesh Kumar Odaka and Shanti Kr. Ganeriwal by 10 shares each. 5.6 On careful analysis of the above chart, it can be seen that there are many common directors in the above mentioned share applicant companies. It is apparent that all of the above companies did not have enough money of their own to apply for shares at a premium, These share applications therefore required further investigations to be carried out by the A.O., especially in the light of the statement of entry provider, Shri Mukesh Choksi, before deciding on their genuineness. 5.7. M/s Pankaj Enka Pvt Ltd. assessed with 'ITO Ward l(4), Surat had also taken accommodation entries, in the garb of share applications, from the companies mentioned in para 5.5. During the course of assessment proceedings of M/s Pankaj Enka Pvt Ltd, it was noticed by the A.O that M/s Pankaj Enka Pvt Ltd had taken share application money from the following parties in addition to share application money received from M/s Buniyad Chemicals Pvt. Ltd, Mumbai and M/s Mihir Agencies Pvt Ltd:- Sr. no....
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....rthiness and genuineness. 2.10 Further, in. response to notice u/s. 133(6) dated 12.03.2012 and reminder dated 03.04.2012 following parties has not replied till date. 1. M/s. Ednumd Commercial Pvt Ltd. 2. M/s. Study Sales Pvt Ltd. 3. M/s Dhaval Marketing Pvt Ltd. 4. M/s. Emarald System Engg. Ltd. 2.11 Since the above mentioned parties have not given any reply in response to notice u/s. 133 (6) and reminder dated 03.04.2012 which are already served upon them. 2.12 On this basis, you are requested to go through the list and arrange to supply the Information as required from these parties along with their confirmation(s). In absence, please show-cause as if why an adverse view may not be taken and 'necessary action as per applicable provisions of the act may not be taken and the amount of share application in respect to above mentioned 12 companies of Rs. 85,00,000/- (1,0600,00- 21,00,00) for which no satisfactorily reply as well as creditworthiness, genuineness and identity proved by all the 12 parties should not be treated as unaccounted income within meaning of section 68 of the I.T. Act." 5.7.2. There was no reply to the show cause and the share applica....
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....e to identity and creditworthiness of 11 of these share applicants and genuineness of the share application transactions. We find from the case file that the Assessing Officer issued section 142(1) notice dated 25-05-2011 at page 40 of the paper book. The assessee placed on record necessary details. The CIT himself acknowledges the very fact. A perusal of the reassessment framed on 29-08-2011 states these facts. That being the case the question that arises for our consideration as to whether the present case can be treated as that of no inquiry by the Assessing Officer or not. In view of the above said facts and circumstances and specific inquiry of the Assessing Officer and equally elaborate assessee's reply, we hold that this case does not fall in the above stated category. We notice from the case file that the assessee's details forming part of discussion in reassessment led to addition of Rs. 26 lacs being made on account of bogus share application and premium. We observe in these facts that the Assessing Officer examined this issue and confirmed this addition of Rs. 26 lacs only. The hon'ble Bombay high court in case of CIT vs. Garbiel India (1993) 71 Taxman 585 (Bom) deals wi....