TaxTMI 
TaxTMI 
2008 (4) TMI 757
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....ncome. Subsequently, the AO received information from Director of IT (Inv.) that the assessee company was involved in bogus accommodation entries i.e. cash credit. During the course of survey operations undertaken at the premises of Shri Sanjay Rastogi, chartered accountant, it was found that the appellant was involved in receiving bogus cash credit entries. Shri Sanjay Rastogi admitted in his statement recorded under s. 131 that M/s Hallmark Healthcare Ltd. and M/s Finorg Chemicals Ltd., inter alia, were giving bogus entries. On the basis of above information, the AO recorded reasons for reopening of completed assessment wherein he observed as under : "Vide DO No. CIT-IV/bogus trans/2003-04/1451 dt. 20th Oct., 2003, the CIT, Delhi-IV, New Delhi forwarded the report of Addl. Director of IT (Inv.) (Unit-VII), New Delhi vide letter No. Addl. Director of IT (Inv.)/Unit-VII(3)/Survey/14/2003-04/372 dt. 16th Oct., 2003. In the said report dt. 16th Oct., 2003, the Addl. Director of IT, Unit-VII has reported that M/s Ekta Agro Industries Ltd. has undertaken bogus transactions, which were detected during the course of survey on the business premises of Shri Sanjay Rastogi-chartered ....
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....acs as unexplained cash credit in respect of s. 68 of the Act. 4. Learned CIT(A) upheld the validity of reassessment framed under s. 147. Even before CIT(A), the assessee failed to establish creditworthiness of cash creditors and genuineness of transaction. He accordingly upheld the additions made under s. 68 of the Act. The assessee is in further appeal before us. 5. Learned counsel for assessee Shri S.P. Agarwal submitted that there was no material much less valid material for the reason to believe that income of the assessee has escaped assessment. In the original assessment proceedings, the assessee had filed confirmation, balance sheet, assessment orders of both the companies. Thus, in the original assessment, there was complete disclosure by the assessee by filing necessary evidence. The reason to believe reveals that the same is primarily based on information received from Addl. Director of IT (Inv.) which in turn is based on statement of Shri Sanjay Rastogi, who is chartered accountant and auditor of the said company M/s Hallmark Healthcare Ltd. There is no nexus or live link between the information and the material on record and the reasons to believe that can provide fo....
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....to consider the additions on merit. Thus, this decision is on identical facts as to the present case wherein also the assessment is reopened based on the statement of Shri Sanjay Rastogi. It is also seen that one of the beneficiaries mentioned in the statement of Sanjay Rastogi is the appellant company, which is at serial No. 17 of the various companies mentioned in the statement. Even the names of M/s Hallmark Healthcare Ltd. and M/s Finorg Chemicals Ltd. appear in the said statement in the list of companies involved in giving bogus entries. The modus operandi was also explained by Shri Sanjay Rastogi. Learned Departmental Representative relied upon the portion of statement of Sanjay Rastogi extracted herein : "Dt. 17th April, 2003 : I am authorized signatory in all the above concerns excluding M/s M.S. Leasing (P) Ltd. Apart from the above, I was also authorized signatory in M/s Hallmark Healthcare Ltd. and M/s Nimantaran Leasing Ltd. to the best of my knowledge and memory. I will let you know the bank account from the records of these companies. Dt. 20th April, 2003 : (a) Apart from the proper professional work, I was also providing certain services in connection wi....
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....orthiness of the creditor and genuineness of transaction. This was in spite of several opportunities afforded. A cash credit even in the form of share capital can be added if the assessee fails to prove the identity and creditworthiness of the shareholder. This has been so upheld by the Full Bench of Delhi High Court in case of CIT vs. Sophia Finance Ltd. (1993) 113 CTR (Del)(FB) 472: (1994) 205 ITR 98(Del)(FB). She accordingly pleaded that the order of learned CIT(A) needs to be upheld. 9. We have considered rival submissions. As regards validity of reassessment, the basic criteria is that for assuming jurisdiction under s. 147, the AO shall record reasons for doing so. The AO has recorded the reasons in this regard. The same is based on the information received from Investigation Wing. The information from Investigation Wing is specific and contains the name not only of the assessee having involved in the bogus transaction but also the name of the creditor, who is also involved. The assessee was afforded opportunity to cross-examine Shri Rastogi but the situation did not change. So long as information is authentic or not a make-belief, the AO can definitely rely upon the same. A....
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....e that income had escaped assessment. On a perusal of the reasons recorded by the AO, it is clear that he had relied upon information received by him to the effect that a survey operation was conducted at the office premises of Sanjay Rastogi. Information was given by Sanjay Rastogi that at least in respect of one cheque bearing No. 305002 dt. 18th Nov., 1996, a transaction had taken place which related to a bogus entry concerning M/s Mehram Exports (P) Ltd. The bank and the account number relating to the bogus entry/transaction was also mentioned. This, in our opinion, was adequate and specific material to come to the conclusion that income had escaped assessment because of a bogus transaction having been entered into between the assessee and M/s Mehram Exports (P) Ltd. Whether eventually the information is correct or not cannot be decided at this stage as held in Raymond Woollen Mills Ltd.'s case (supra). 11. In ITO vs. Lakhmani Mewal Das 1976 CTR (SC) 220: (1976) 103 ITR 437(SC), it has been held that there is a duty cast upon the assessee to make a full and true disclosure of the primary facts at the time of original assessment. The ITO can issue a notice under s. 148 of ....
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....i extracted hereinabove. The names of companies involved in giving entries include names of the companies from whom assessee has received share capital. The name of assessee is finding place in the information relied for framing reassessment under s. 147. Thus, there is specific and reliable information so as to assume jurisdiction for framing reassessment. Time and again, the Courts have held that sufficiency of reasons is not to be looked into at the time of assuming jurisdiction under s. 147. 10. As regards contention that in the original assessment proceedings, the matter has been examined. The present assessment is beyond a period of 4 years from the end of the relevant assessment year and hence, in terms of proviso the assessment could not have been reopened. We are unable to accept such contention. Under the proviso to s. 147, the assessment cannot be reopened beyond a period of 4 years provided there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. Thus, if in the original assessment proceedings the AO has merely accepted the contention of assessee which itself was not full and true, the powers of AO are....