TaxTMI 
TaxTMI 
2016 (2) TMI 985
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....003, declared a total income of Rs. 1,850. Subsequently, the Assessing Officer proposed to reopen the assessment on the basis of the information received from the Investigation Wing of the Department that the assessee-company received an amount of Rs. 73 lakhs during the previous assessment year 2002-03 in the form of cheques/DD as accommodation entries from various persons/ concerns. Accordingly, the Assessing Officer reopened the assessment by issuing a notice under section 148 on March 29, 2010, by recording the reasons as under : "It is observed from the details provided by the Investigation Wing that M/s. Soft Line Creations Pvt. Ltd. had received the amount of Rs. 73,00,000 during the financial year 2002-03 relevant to the assessment year 2003-04 from the concerns shown hereunder, which were found by the Investigation Wing to be the companies which were non-genuine entities and were giving only accommodation entries. The companies from which entries were received belong to Mahesh Garg group. This group has operated accounts in various banks and branches. The above entries have been received from the State Bank of Patiala, Darya Ganj, New Delhi and State Bank of Bikaner and....
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....ons. Pvt. Ltd.) to assess the income escaped assessment as stated, hereinabove." 3. The assessee submitted before the Assessing Officer that it has not received the notice under section 148 and made a request, vide letter dated November 8, 2010. In response to the notice the Assessing Officer supplied the copies of the statement of Mahesh Garg dated September 10, 2003, September 22, 2003, along with a declaration as well as the copies of the notice issued under section 148 along with the reasons recorded by the Assessing Officer for reopening of the assessment. The Assessing Officer while passing the reassessment order dated December 31, 2010, made an addition of Rs. 78,39,000 on account of accommodation entries being unexplained cash credit under section 68 to the tune of Rs. 78,00,000 along with commission at the rate of 0.5 per cent. amounting to Rs. 39,000. The assessee challenged the action of the Assessing Officer before the learned Commissioner of Income-tax (Appeals) and also challenged the validity of reopening. The learned Commissioner of Income-tax (Appeals) allowed the appeal of the assessee by holding that the reopening is not valid as well as deleted the addition m....
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....dgment of the hon'ble High Court by holding that the certificate of incorporation, permanent account number, etc., were not sufficient for the purpose of identification of subscriber company when there was material to show that the subscriber is a paper company and not a genuine investor. She has relied upon the order of the Assessing Officer. 6. On the other hand, the learned authorised representative of the assessee submitted that the Assessing Officer has not made any enquiry to ascertain whether alleged transaction entered into by the assessee are genuine or not. During the course of assessment proceedings, the assessee duly discharged the onus cast on it by submitting various documentary evidence which proved the identity, creditworthiness of the creditors and the genuineness of the transactions. However, the Assessing Officer relied upon the statement of Shri Mahesh Garg which was recorded by the Director of Income-tax (Investigation) and did not examine the said person himself. Even the Assessing Officer has not given the assessee an opportunity to cross-examine the said party despite the fact that specific request in this regard was made by the assessee during the co....
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....directors of the subscribers companies, copies of share transfer register and also record from the Registrar of Companies in respect of all the share applicants. However, the Assessing Officer has not pointed out any defect or any error in the said evidence filed by the assessee. The Assessing Officer raised only objection with the signatures of Shri Trilok Chand Bansal, Bharat Bhusan Bansal and Ajay Mittal, Narender Kumar Gupta, Anil Kumar Sharma and Vinod Garg on their affidavits filed by the assessee do not match with their signature on statement recorded by the Investigating Wing. The learned authorised representative has pointed out that the assessee, vide its letter dated December 27, 2010, explain that the signature are identical and there can be some difference in the signature after a gap of 7 years. When the assessee filed all the relevant material/ evidence it was the duty of the Assessing Officer to make proper enquiry, which has not been done in the case of the assessee. The Assessing Officer did not choose to summon or issue notice to the parties for examination and verification of the genuineness of the signature which was doubted by the Assessing Officer. The learne....
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.... any enquiry. There is no material on the basis on which the Assessing Officer can hold the assessee in the collusive arrangement, therefore, the addition made by the Assessing Officer was rightly deleted by the learned Commissioner of Income-tax (Appeals). 9. We have considered the rival submissions as well as the relevant material on record. The Assessing Officer has reopened the assessment of the assessee on the basis of the information received from the Investigation Wing wherein it was pointed out that the assessee has received accommodation entries of Rs. 78 lakhs from various persons/entities which are mentioned in the reasons recorded and reproduced in the foregoing paragraphs. In this connection, the Investigation Wing recorded the statement of Shri Mahesh Garg who was considered as the main person and all these entities were belonging to the said person. It is pertinent to note that in the entire assessment order the Assessing Officer has repeatedly reproduced the report received from the Investigation Wing alleging that the above entities have no creditworthiness whatsoever and no genuine business transaction were carried by these entities. Therefore, the Assessing Of....
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....ducted a separate and independent enquiry and any information received from the Investigation Wing is required to be corroborated and reasserted/reaffirmed during the assessment proceedings by examining the concerned persons who can affirm the statement already recorded by other authority of the Department. There is no dispute that the statement which was relied upon by the Assessing Officer was not recorded by the Assessing Officer in the assessment proceeding but it was the pre-existing statement recorded by the Investigating Wing and the same cannot be a sole basis of assessment without conducting a proper enquiry and examination during the assessment proceeding itself. Further, despite the specific demand of the assessee for cross-examination of Shri Mahesh Garg, the learned Assessing Officer has not given any heed to the request of the assessee for affording any opportunity of cross-examination and used the statement of Shri Mahesh Garg against the assessee which is not permissible under the law. As it is a case of clear violation of the rules of the principles of natural justice and the statement which is recorded at the back of the assessee cannot be used against the assesse....
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.... hon'ble High Court has agreed with the view of the learned Commissioner of Income-tax (Appeals) that the Assessing Officer failed to make any effort in that direction and to take the matter to logical end. In the case of CIT v. Victor Electrodes Ltd. [2010] 329 ITR 271 (Delhi) the hon'ble jurisdictional High Court an identical issue has held in paragraph 9 as under (page 275) : "There was no legal obligation on the assessee to produce some director or other representative of the applicant-companies before the Assessing Officer. Therefore, failure of the assessee to produce them could not, by itself, have justified the additions made by the Assessing Officer, when the assessee had furnished documents, on the basis of which, the Assessing Officer, if he so wanted, could have summoned them for verification. No attempt was made by the Assessing Officer to summon the directors of the applicant-companies. The addresses of these companies must be available on the share applications, memorandum and articles of association and their Income-tax returns. If the Assessing Officer had any doubt about identity of the share applicants, he could have summoned the directors of the....
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....icer did not carry out any inquiry and merely made addition on general basis. The inquiry for arriving at a proper conclusion is a sine qua non and that cannot be dispensed with by making general observations. We find that the decision in the case of Goel Sons Golden Estate P. Ltd. is squarely applicable to the facts of the present case, wherein in paragraphs 2 and 3 it has been observed as under : '2. The learned counsel for the appellant submits that the order passed by the Tribunal is perverse and in fact one S. H. Mallick had given a statement, which is reproduced in the assessment order saying that he had provided accommodation entries and the said statement conclusively proves that share money of Rs. 30,00,000 allegedly received by the respondent-assessee from 5 companies are sham and bogus transactions. 3. We have examined the said contention and find that the asses see during the course of assessment proceedings has filed confirmation letters from the companies, their permanent account number, copy of bank statements, affidavits and balance-sheet. Thereafter, the Assessing Officer had asked the assessee to produce the said directors/parties. The assess....
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....dded fell within the description of section 68. Having regard to the entirety 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 CIT v. Lovely Exports Pvt. Ltd. [2009] 319 ITR (St.) 5 (SC)." 13. In the case in hand it was not mere transfer of money by these share applicants to the assessee but the assessee has produced on record the board's resolution, share applicants form, copy of share transfer deeds and information from the Registrar of Companies in respect of the share applicants. It established the existence of real transaction of transfer of shares and, therefore, it rebuts the case of the Revenue of alleged accommodation entries. Once the assessee has established the existence of the transaction of transfer of shares against the received of share application money then the burden is shifted on the Assessing Officer to conduct the necessary enquiry and investigation to disapprove the evidence produced on record by the assessee. The Assessing Officer did not choose to conduct any enquiry or investigation during the assessment proceeding but relied upon ....