TaxTMI 
TaxTMI 
2013 (5) TMI 861
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.... CIT (A) has erred in confirming the addition of Rs. 13500/-. This addition has been made on the ground that assessee must have paid commission @ 0.5% for arranging the accommodation entries of Rs. 27,00,000/- which has been added as unexplained credit of the assessee. We take both these issues together. 3. The brief facts of the case are that assessee has filed its return of income on 31st October, 2002 declaring an income of Rs. 1,03,970/-. The assessing officer had received an information from the investigation wing indicating that assessee has received accommodation entries from three concerns namely; Shri Dina Nath Lahoriwala, Krishna Cinema (I) and Transpan Finance Services. These companies are controlled by Shri Mahesh Garg and Sanjay Kumar who deposed on oath before the investigation wing that these companies are engaged in providing accommodation entries. Therefore, assessing officer has reopened the assessment of the assessee. During the course of assessment proceeding it was contended by the assessee that it has received share application many of Rs. 13,00,000/- only from these 3 companies. The assessing officer has used same entries twice to make it 26,03,400/- in th....
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....me Court in the case CIT Vs. Lovely export Pvt. Ltd. reported in 216 CTR 195, CIT Vs. Steller investment reported in 251 ITR 263, judgment of Hon'ble Delhi High Court in the case of CIT Vs. Sofia Finance Ltd. 205ITR 98 and others. The reasons for not accepting the explanation of the assessee about the source of fund are mainly contained in Paragraph 14 of the Ld. CIT (A)'s order. The finding read as under ; " Based on the decision of the Delhi High Court in Oasis Hospitalities (supra), we have to dissect whether the assessee has proved the identity of shareholders, genuineness of transaction nd creditworthiness of the shareholders. The assessee had been able to provide the identity of the companies who had subscribed to the shareholding of the assessee by furnishing its PAN identity. Insofar the genuineness of the transaction is concerned, there is no doubt that the money has come through banking channels but the assessee hs not produced, even by its own admission, the shareholders register, share transfer register etc. In other words, genuineness of the transaction stands unproved. Insofar the credit worthiness is concerned, there is no crystal clear proof that the share ....
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....rried out at the premises of Mahesh Garg or Sanjay Kumar, Apart from that material, independently, the assessing officer has not analyzed the details submitted by the assessee. 10. Ld. DR relied upon the orders of revenue authorities below. She submitted that it is a known factor that certain individuals and companies managed by them are fictitious entities they were engaged in providing accommodation entries. The assessing officer has confronted the assessee with the material collected by the investigation wing. The assessee failed to produce the persons from whose concerns investment was made in its company. Thus, The assessing officer has rightly made the addition. 11. We have duly considered the rival contention and gone through the record carefully, Section 68 of the Income Tax Act contemplates that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to Income Tax as the income of the assessee of that previous year. Thus, in o....
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....enquiry report, which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description of Section 68. Having regard to the entirely of facts and circumstances, the Court is satisfied that the finding of the Tribunal in this case accords with the ratio of the decision of the Supreme Court in Lovely Exports (Supre). The decision in this case is based on the peculiar facts which attract the ratio of Lovely Exports (supre). Where the assessee adduces evidence in support of the share application monies, it is open to the assessing officer to examine it and reject it on tenable grounds. In case he wishes to rely on the report of the investigation authorities, some meaningful enquiry ought to be conducted by him to establish a link between the assessee and the alleged hawala operators; such a link was shown to be present in the case of Nova Promoters & Finlease (P) Ltd. (supra) relied upon by the revenue. We are therefore not to be understood to convey that in all cases of share capital added under Section 68, the ratio of Lovely Exports (supra) is attracted, irrespective of the facts, evidence and material." ....
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.... able to disclose the source of amount received and presumption under Section 68 of the Act for the purpose of addition of amount at the hands of the assessee. But, it has to be conclusively established that the company is non-existence. 15. The AO did not bother to find out from the office of the Registrar of Companies the address of those companies from where the registered letter received back undelivered. If the address was same at which the letter was sent or the Inspector visited and no change in address was communicated, perhaps it may have been one factor. In support of the conclusion which the AO wanted to arrive at, that by itself cannot be treated as the conclusive factor. As pointed out above, these applicant companies have PAN and assessed income tax. No effort was made to examine as to whether these companies were filing the income tax return and if they were filing the same, then what kind of returns these companies were filing. If there was no return, this could be another factor leading towards the suspicion nurtured by the AO. Further, if the returns were filed and scrutiny thereof reveals that such returns were for namesake, this could yet another be con....
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....nbsp; x x x x x x x "During the arguments, we had posed these queries. Ld. Counsel appearing for the Revenue understood the limitation of their case. For this reason, a fervent plea was made that this case be remitted back to the AOs to enable him to make further investigation. However, in the facts and circumstances of these, would be difficult to give such an opportunity to the Revenue. cases There are number of reasons for denying this course of action which are mentioned below: It is not a case where some procedural defect or irregularity had cr....