TaxTMI 
TaxTMI 
2017 (2) TMI 267
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....of the case are that the assessee returned an income of Rs. 30,290/-. It was processed u/s 143(1) and was subsequently re-opened on the basis of information received from the Investigation Wing of the Income Tax Department, New Delhi after issuance of notice u/s 148 of the Income Tax Act, 1961. The AO required the assessee to explain the receipt of accommodation entries amounting to Rs. 40,00,000/- from the following parties:- Cheque Date From Company Bank Cheque No. Cheque Date Amount 21.04.2008 Lotus Realcon Pvt. Ltd. Axis 120422 21.04.2008 5,00,000 21.04.2008 Humtum Marketing P. Ltd. Axis 120202 21.04.2008 5,00,000 21.04.2008 Eagle Infratech Pvt.Ltd. Axis 094043 21.04.2008 5,00,000 21.04.2008 Victory Software Pvt.Ltd. Axis 094043 21.04.2008 5,00,000 26.04.2008 AD Fin Capital Services Pvt.Ltd. Axis 230842 26.04.2008 5,00,000 26.04.2008 Mani Mala Delhi Pro. Pvt. Ltd. Axis 098297 26.04.2008 5,00,000 26.04.2008 Virgin Capital Services Pvt.Ltd. Axis 102489 26.04.2008 5,00,000 26.04.2008 Euro Asia mercantile P. Ltd. Axis 229825 26.04.2008 5,00,000 2.1. In the course of the assessment proceedings, the AO required the....
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....rd it was emphasized the Assessing Officer has issued summons to these 8 parties on 24.01.2014 and thereafter provided the assessee 4 or 5 opportunities to produce the Directors. The direction to do so was based on the reasoning to verify the genuineness of the transactions which as per record evidently consisted of a mere paper trail. Despite this fact and conclusion drawn by the AO available on record, the assessee did not chose to produce them consciously and merely sought adjournments. It was submitted that it was never stated that these parties could not be produced by the assessee and the CIT(A) on the other hand accepting the paper Trail created by the assessee as genuine and correct granted relief. The fallacy of the conclusion it was submitted is itself shattered by the CIT(A) who acknowledging the realities that money is transferred from Balance sheet to Balance sheet without paying any taxes in the form of loan on equity requires the AOs in the cases of these companies to examine. The issue it was submitted has been considered superficially by the CIT(A) failing to notice the money laundering indulged into and bringing black money to books of accounts by clandestine and ....
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.... record. Reliance was also placed upon the decision of the Apex Court in the case of Navodaya Castle Private Ltd vs CIT(A) (2015) 56 Taxmann.com 18 (SC) wherein upholding the finding of the Hon'ble High Court the SLP of the assessee had been dismissed. The finding of the Hon'ble High Court that certificate of incorporation, PAN etc were not sufficient for the purposes of identification of subscriber company when there was material to show that subscriber was a paper company and not a genuine investor was thereby upheld. Accordingly it was her prayer that the impugned order be set aside and the addition made by the Assessing Officer be upheld. 6. The Ld. AR on the other hand, inviting attention to the impugned order submitted that all the evidences were available before the AO. Despite the same, the Assessing Officer insisted the directors be produced. It was questioned by him that what can the Assessing Officer ask from the directors which was not available on record. The Ld. AR was required to address what is the nature of the assessee's business. The Ld.AR submitted that the assessee is in the fashion business and in garments. The nature of business conducted by the companies wh....
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....g of the CIT(A) under challenge in the present proceedings. A perusal of the impugned 5 paged order shows that in the first three and a half pages the written submissions of the assessee are reproduced considering which the CIT(A) deleted the addition on the following reasoning:- My findings: "I have perused the assessment order, written submission and paper book evidences produced by the AR and discussed the matter with her very carefully. The AR argued that the addition made by the AO on genuine share application money received from eight companies through banking channel of Rs. 5 lakhs each treated as bogus accommodation entry is not proper and justified by the Assessing Officer. The Assessing Officer made the addition on the ground that no information was received from these companies nor their Directors appeared for personal deposition. The AO passed the order on 13.03.2014 but the share applicant companies and their Directors have given their information to the AO in writing before this date. The A.O vide para- 3/page-2 of his order admits that appellant company and his share applicants, provided confirmation, bank statement. ITR and balance sheet of all 8 share applicants....
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.... by CIT(A) at his level are not additional evidences, if not enquired by A.O. Since my findings are based on informations collected by me, the sources stand ' satisfactorily explained." 9. On a reading of the above, it is seen that the Ld.CIT(A) has not cared to address the repeated opportunities given to the assessee to produce the director's of the 8 companies for their deposition. This patent and obvious shortcoming in the face of the departmental case that these were mere paper companies and the paper trail available to the AO by itself was not sufficient and in order to verify genuineness a further enquiry was required. Opportunity was provided to the assessee. No effort was made as per record by the CIT(A) himself to examine the fact whether these companies were engaged in genuine business or were these created solely to launder black money. There is no reference in its order on the business conducted by these companies. Discussion on facts merely referring to paper trail created does not address the issue of genuineness.The facts/reasons leading these private limited allegedly dummy companies to invest in the assessee would be the crucial aspects for determining the ge....