TaxTMI 
TaxTMI 
2015 (11) TMI 429
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....s would remain the same. 2. In view of the above we first deem it appropriate to reproduce the grounds raised in ITA 1269/Del/2013: "1. The order of the Ld.CIT(Appeals) is not correct in law and facts. 2. On the facts and in circumstances of the case the Ld.CIT(Appeals) has erred in deleting the addition of Rs. 1,17,12,111/- on account of credits against nonexistent sales without appreciating the fact that assessee has shown sales to M/s R.V.Traders proprietary concern of Shri Ravinder Yadav has provided accommodation entries and has not done any genuine business. 3. On the facts and in circumstances of the case the Ld.CIT(Appeals) has erred in deleting the addition of Rs. 2,82,92,872/- on account of credits against nonexistent/non genuine sales to M/s Swastik Packaging without5 appreciating the fact that assesseee could not furnish any evidence in order to prove the genuineness of sales. 4. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal." 3. A perusal of the above grounds shows that ground no.1 is general as such requires no adjudication, qua ground no.4 which was a residual ....
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....e account. However, the AO had received the information that Mr. Yadav was having the following Bank accounts in which huge cash was found and have been deposited in different dates and withdrawn in the shape of drafts and pay orders in the name of different parties Mr. Yadav was confronted with the same: Name of the Bank Account Number ICICI Bank 015505004043 ICICI Bank 015505004182 ICICI Bank 08805002694 HSBC 140003757001 Standard Chartered 5451038013 4.4 Accordingly summons u/s 131 of the Act were issued to Shri Ravinder Yadav again on 28.01.2008 who was confronted with the information obtained and his statement was recorded on 08.05.2008. Shri Ravinder Yadav after initial denial admitted opening these accounts. He accepted to have charged minor commissioning for the same, however, he stated that he could not recollect the names of the parties to whom the drafts or pay orders were issued, except, he specifically named the assessee as one of the beneficiaries of drafts/pay orders. These facts are found recorded in para 3.4 of the assessment order. It would be appropriate at this stage to extract also para 3.5 from the assessment....
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.... rupees. Q.3 Since, when you are giving this accommodation entries to Swastik Pipes groups companies and who introduced you with them for carrying out this business providing accommodation entries? Ans. I am doing this business with the same group of companies for the period starting early 2006 and ending 2007. I did business with this group for about two years. I am introduced by one sh. CP Aggarwal who used to be one tenant at WZ-245 Madipur village, New Delhi with one Mr. Mohan Kumar, the employee of one of the group companies. This business of providing entries was discontinued as soon as I received summons from Income tax department with regard to querries on my business activities in the month of December, 2007. Q.4 How much was the gross profit from the said business during which it was operational? Ans. The gross receipts of commission of the same business were Rs. 50,000/- approx. per quarter. After meeting my expenses, I used to file income tax return for the net profit earned. Q.5 What was the channel of receipt of cash for which you were providing the bank draft/demand draft/pay orders to said group cos. Ans. I used to receive cash from the employees name....
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....sted. These cash by the employees of the said companies to me for preparation of pay order that which Pay order to be adjusted/accounted for against which party by the said companies. Q.13 Do you maintain regular books of accounts? Ans. I have never maintained proper/regular books of accounts for the said entry business as well as my other business. I am filing my return on estimated basis. Q.14 Under which name and style you are carrying your business of providing accommodation entries for any other business? Ans. I am doing business under the name & style of A1Is Ravinder & Co. and R. V Traders having bother office at 4- A, LIG flats, Madhuban Enclave, Rohtak road, New Delhi. Q.15 Could you state the amount for which you have made pay order/bank draft for the above said companies after receiving cash from them during the year 2006 & 2007. Ans. As far I remember the amount for which 1 made pay order/demand draft could be Rs. 20 Crores (Approx) for two years i.e. 2006 & 2007. Q.19 It is seen from the papers available in your premises that a residential plot no.A-60 (measuring 200 Sq. yards) Shankar Garden New Delhi also belongs to you but you have failed to dis....
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....y the assessee from the bank accounts of Shri Ravinder Yadav. The Assessing Officer required the assessee to furnish evidences in order to prove the genuineness of the sales to these parties vide order sheet entry dt. 9.10.2010. In response to the said query the assessee filed its detailed reply vide letter dt. 10.12.2010 which has been extracted in the assessment order at pages 9 and 10, which is extracted for ready reference. "4.2 ................. "1. With reference to your query with regard to particulars towards delivery challan, octroi receipt in respect of the sales made, we have to submit that when ever the sale is made FOR basis the complete particulars with regard to RR / MR is being kept by the assessee. However, in case the goods are being sold EX Factory/ Ex Office the delivery of the goods is being taken by the customers themselves from the business premises and as such the seller does not have any record of dispatch. Since, it is up to the customers in which manner he transport the goods. In view of the above facts the assessee have maintained the complete record of delivery particulars when the goods are sold on FOR basis and the same could be veri....
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....whose sales are verifiable. 8. In view of the above facts no wrong inference could be drawn with regard to the sales made to the parties who have purchased goods by furnishing DD obtained from Mr. Ravinder Yadav or his firm. " 4.8 Considering the above, the Assessing Officer proceeded to make an addition of Rs. 1,17,12,101/- on the following reasons. "4.3 In this context, it is also relevant to notice the conduct of the assessee during the post search proceedings. The search in the case of the assessee was conducted on the basis of the information that the assessee company and the associated concerns have been taking accommodation entries from Sh. Ravinder Yadav. In order to verify, these allegations the ADIT(Inv.), Unit-IH(3), New Delhi had issued detailed questionnaire to the assessee company vide letter dated 11.11.2008. Further, opportunity letters were sent on 17.11.2008. Another questionnaire dated 28.11.2008 was sent to the assessee by AD IT (Inv), Unit-HI (3), New Delhi. However, the assessee did not respond to any of the queries in order to prevent any further investigation by the Income Tax Department. 4.4 The assessee has been unable to furnish any proo....
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....d on the various individuals and companies of the Bansal Group (also known as the Swasiik Pipes Group). The premises at I, Central Market, Punjabi bagh (W), New Delhi belonging to appellant was also covered. Notice u/s 153A was issued on 30.12.2009. ln response to the notice the appellant filed return or income declaring total income or Rs. 68.60.683/- on 28.1.2010. Notice u/s 143(2) was issued on 10.2.2010 calling for details. Notice u/s 142( I) along with questionnaire was issued on 12.8.2010. These notices were duly complied with and necessary details filed. The case was assessed at an income of Rs. 5,07,08,428/- after making certain additions and disallowances including unexplained credits amounting to Rs. 1,17,12,111/- & Rs. 2,82,92,872/- and unreconciled purchases amounting to Rs. 37,56,398/-. The appellant is in appeal against this order. 3.1 . Facts of the case arc that Sh Ravinder Yadav gave a statement u/s 132(4) that he was earlier working for Swastik Pipes Group and mainly providing accommodation entries in the form of demand drafts/ pay orders against cash and receiving commission of Rs. 250 per lakh thereon. 'The beneficiaries of these demand drafts / pay....
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....ogus transactions and goods claimed to be sold to M/s Swastik Packaging were never actually sold or delivered." 5.1 The assessee before the Ld.CIT(Appeals) filed written submissions along with details of the transactions pertaining to Shri Ravinder Yadav. These details and arguments were sent to the Assessing Officer for comments on 3.1.2012 and in response thereto the Assessing Officer vide his report dt. 5.3.2012 stated that there was nothing new in the submissions of the assessee as they had already been considered at the time of the assessment proceedings. 5.2 The CIT(A) considering the remand report and the reply of the assessee dismissed ground nos. 1 to 7 raised whereby the validity of the proceedings before the Ld.CIT(Appeals) were challenged in appeal. However considering the submissions advanced on behalf of the assessee qua ground no. 9 the CIT(A) deleted the addition made on merit and accepted the explanation of the assessee. 6. Aggrieved by which the Revenue is in appeal before us. 7. Shri Gunjan Prasad, Ld.CIT, D.R. vehemently relying upon the assessment order and the statement recorded of Shri Ravinder Yadav contended that in the peculiar facts and circum....
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....cepted that the amounts have been adjusted against sales to various parties. For ready reference the same is extracted hereunder from the assessment order: "4. During the course of assessment proceedings the details of money transferred from the bank account of Shri Ravinder Yadav to the bank accounts of the assessee was obtained. The assessee was asked to furnish the details of treatment of the receipts in his regular books of accounts. The assessee vide its letters dt. 9.12.2010 and 14.12.2010 submitted that the amounts received from the bank accounts of Shri Ravinder Yadav have been adjusted against the sales to various parties." (emphasis ours). 8.1 The explanation offered to the Assessing Officer vide letter dated 9.12.2010 and 14.12.2010 referred to by the assessee which has been extracted in para 4 of the assessment order when juxtaposed with the explanation offered in letter dt. 10.12.2010 also extracted by the Assessing Officer in para 4.2 of his order it was submitted fully met the objections of the AO. It was his submission that despite recording these the AO has ignored them while drawing a conclusion against the assessee. Heavily relying upon the submissions adva....
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....CIT(A) has considered the issue in the following manner: "Shri Ravinder Hadav has been held to be the beneficial owner of the transactions routed in his various bank accounts and the peak credit in the bank accounts, along with the profits of the business and the accruals to/increases in the balance sheet of M/s R.V.Traders, was brought to tax in his hands. In the appeal for Assessment Year 2004-05 in the case of Shri Ravinder Yadav (Appeal no.130/11-12), the CIT(Appeals) has issued directions to the Assessing Officer to reopen the assessment and tax the closing balance of the balance sheet at Rs. 33,71,710/- as on 31.3.2003 and profit at Rs. 1,48,257/- of M/s R.V.Traders in Assessment Year 2003-04 as this was not disclosed by Shri Yadav in the return of income. Thus, the entire transactions relating to the demand drafts/pay orders and transactions of M/s R.V.Traders with the appellant company as well as other group concerns stands fully taxed in the hands of Shri Ravinder Yadav. It was not proper for the same Assessing Officer to tax the same amounts in the hands of Shri Ravinder Yadav as well as other group concerns. The sales to different parties pertaining to the demand draf....
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.... it was finally admitted that M/s Swastik Packaging was owned by the promoters of M/s Northern Strips Ltd. of the assessee. Referring to the facts extracted in the impugned order which clearly stated that the drafts and pay orders were issued at the instance of Bansal Group and the fact that the assessee had made substantial transactions with M/s Swastik Packaging and huge amounts were transferred from the bank accounts of M/s Swastik Packaging to the accounts of the assessee and taking into consideration that the Director of the assessee Sh. P.V. Bansal had given an evasive and noncommittal reply qua the said concern despite the fact that his company had benefited to the extent of crores of rupees from the transactions with Swastik Packaging juxtaposed with the statement of extracted in the impugned order that M/s Swastik Packaging was also one of the group concern of the promoters of M/s Northern Strips Ltd. group. Accordingly taking into consideration the various facts on record the AO was of the belief that M/s Swastik Packaging is a non existent entity floated for the benefit of the assessee and the Northern Group. The reasons for coming to such a conclusion are set out in par....
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.... year 2006-07. Rs. 66,348/- is shown as salary income. Thus, the business income shown by Sh. Lalit B. Sharma is to the tune of Rs. 29,000/- only. It is impossible to imagine that a person trading in commodities worth over Rs. 2.82 Crores would be showing a business income of only Rs. 29,000/-. Further it is to be noted that the ADIT(Inv.), Nasik had reported that no return of income could be traced in the case of Sh. Lalit B. Sharma. Since, the date of filing of this return is not legible, it is quite likely that the return would have been filed after the date of search i.e. 28.08.2008 as is the case for assessment year 2007-08. 5.12 In view of the discussion above, it is clear that the sales to M/s Swastik Packaging by the assessee company of Rs. 2,82,92,872/- are not genuine. Hence the receipts from M/s. Swastik Packaging are treated as credit against non existent sales. The receipts are Rs. 2,82,92,872/- unexplained credits into the books of the company and added to the income from other sources'. Penalty proceedings u/s 271(1)(c ) of the Income Tax Act, 1961 are separately initiated." 11. In appeal before the First Appellate Authority the addition was assailed by way of ....
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....said that the sales are not genuine and also rely on the same sales/accounts to make the addition. Thirdly, there is no evidence whatsoever for the revenue to conclude that the sale are not genuine. The purchases of the appellant company has not been challenged (except for unreconciled a/c with JPL), and the accounts have not been rejected. In this background, the onus does not lie on the appellant but shifts to the revenue to adduce evidence to prove that the receipts claimed against sales are actually not sales and 'something else.' Having searched the appellant, and not having discovered any adverse evidence, any such conclusion would be legally unsustainable. In any case, the sale having already been credited to the P&L account of the appellant company and already taxed in the respective years, making ay addition based on the same amounts would clearly tantamount to double taxation. This is not permissible under the law. Accordingly this ground of appeal is allowed. Appellant gets relief of Rs. 2,82,92,872/-." 13. No specific arguments qua the said ground was advanced by the Revenue or by the assessee as the stand has been that the arguments advanced for ground no. 2 would b....
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....34,460/- Rs.1,05,869/- DD PO 119039 Nikita Enterprises Prem Packers Arvind Poly Plast Swastic Packaging Arvind Poly Plast Swastic Packaging Sweta Enterprises Sweta Enterprises Shree Sai Poly Pack Shree Sai Poly Pack Chopra Laminators Amrit Industries Shush ant Jain 85512534 Sapana Packaging 22 3/27/2006 Rs.1,95,894/- DD 85512535 Sapana Packaging 23 3/27/2006 24 3/27/2006 25 3/2712006 26 3/28/2006 Rs.2,18,560/- DD Rs.3,29,677/- DD Rs. 20,000/- DD Rs.3,96,461/- DD 85512536 Sapana Packaging 85512537 Sapana Packaging 119476 85512556 Shanta Kumar Sapana Packaging Total Rs.49,26,260/- A. Y. 2006-07 Ann.I: Pay order issued by the HSBC Bank on the request of account no. 140003757001 held in the name of M/s RV. Traders in favor of Northern Strips Pvt. Ltd. and particulars of amount received by Northern Strips Pvt. Ltd. on account of parties. SR NO. DATE DDNO. 1 2/312006 557990 2 2/3/2006 557991 3 2115/2006 001291 4 2115/2006 001292 5 2/22/2006 001366 6 7 AMOUNT PARTY NAME Rs.1,2....