TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 475
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....he Department on 15.09.2008. During the course of post search investigation, it had emerged that Shri Tarun Goyal was engaged in the business of providing accommodation entries in lieu of cash to a large number of beneficiaries through numerous dummy companies floated and controlled by him. He pointed out that it was unearthed that Shri Tarun Goyal was providing accommodation entries through more than 90 companies/proprietary concerns/ partnership firms. 3. The A.O had recorded the following reasons for initiating the proceedings u/s 148 of the Act: "It has been reported by the Addl. Director of income tax (Inv.), Unit-iy, New Delhi that a search u/s 132 of I.T. Act was conducted at the premises no 13/34, WEA Arya Samaj Road, Karolbagh, New Delhi in the case of Shri Tarun Goyal CA on 15.09.2008. During the course of search proceedings/ post search investigations, it is revealed that Shri Tarun Goyal created a number of private limited companies and firms for providing accommodation entries. The directors of these companies were his employees who worked in his office as peon, receptionist etc. All the documents were got signed from these employees. A number of bank accounts in var....
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.... High Court in the case of Brij Mohan Agarwal Vs. ACIT reported in 268 ITR 400 held that the report of the Investigation Wing was sufficient material on the basis of which notice under section 148 could be issued. He, accordingly, held that the proceedings had validly been initiated. 5. Before the ld. CIT(A), the assessee had requested for admission of the following additional grounds of appeal: "1. Under the facts and circumstances of the case, the A.O has grossly erred in assuming the jurisdiction of reopening the concluded assessment after the expiry of four years from the end of the relevant A.Y which is grossly injudicious, unwarranted, against the facts of the case and bad in law. 2. Under the facts and circumstances of the case, the A.O has grossly erred in opening the assessment merely on the basis of change of opinion which is not permissible as per law." 6. The ld. CIT(A) admitted both the additional grounds of appeal and upheld the reassessment proceedings, inter alia, by observing as under: "The notice u/s 148 of the Act was issued on 27.03.2014 which is well within the time limit of six years from the end of the A.Y. 2007-08 under appeal. As mentioned in the impu....
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....respective share holding as on 31.03.2007. The ld. counsel for the assessee referred to page 58 of the paper book wherein notice u/s 143(2) of the Act dated 17.07.2009 is contained wherein again the A.O, inter alia, had required the assessee to furnish complete list of share holders with their respective share holding as on 31.03.2007. 9. The ld. counsel for the assessee referred to pages 60 to 64 of the paper book wherein the reply of the assessee for A.Y 2007-08 is contained in response to notice issued u/s 142(1) of the Act and pointed out that the assessee had furnished complete details of share holders with their respective share holding as on 31.03.2007 which is reproduced hereunder: Sr. No. Name Number of Equity shares held % of total 1. Sukesh Kumar Gupta 50000 01.90 2. Shobha Gupta 30000 01.14 3. Sukesh Kumar Gupta HUF 1320000 50.20 4. Ashok Kumar Gupta 10000 00.38 5 Rubai chemicals (P) Ltd. 50000 01.90 6 K.B. Lai & Co. (P.) Ltd. 50000 01.90 7 Thar Steel (P) Ltd. 2 50000 09.52 8 Jai Baba Traders (P.) Ltd. 60000 02.28 9 PMP Farms (P) Ltd. 120000 04.56 10 R.M. Electricals (P) Ltd. 120000 04.56 11 B.P. Entertainment (P) Lt....
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....s. 1 each at a premium of Rs. 9/ each of M/s Commitment Commodities Pvt. Ltd vide cheque No. 51278 dated 08.09.2006 alongwith PAN. Copy of bank statement of Sadguru Finman [P] is also contained at page 33 of the paper book depicting withdrawal of Rs. 10 lakhs from their account. The ld. counsel for the assessee further referred to the Annual Report of Sadguru Finman [P] contained from page 40 onwards and pointed out at page 51 where the details of share holding of Sadguru Finman [P] is contained, the name of the assessee appears. The ld. counsel for the assessee submitted that after considering all these details, the information furnished by the assessee, the A.O completed assessment u/s 143(3) of the Act without making any additions on this count. 13. The ld. Counsel relied on the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Multiplex Treading and Industrial Co. Ltd reported in [2015] 63 Taxmann.Com 170 [Delhi] which is contained at pages 72 to 82 of the paper book and the decision in the case of Allied Strips Ltd Vs. ACIT [2016] 69 Taxmann.Com 444 [Del]. The ld. counsel for the assessee pointed out that identical queries were raised by the A.O in the case ....
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....s more than Rs. 1 lakhs, therefore, in view of the provisions of section 149(1)(b) of the Act, the reassessment proceedings were rightly initiated within six years. The ld. Sr. DR referred to page 20 of the paper book wherein the assessment order passed u/s 143(3) of the Act dated 13.11.2009 in the case of the assessee is contained wherein the A.O had, inter alia, observed as under: "Necessary details and information as called for have been filed and placed on record. Bank details have been called for and examined. Books of accounts consisting of cashbook, bank book, ledger and journal were called for and examined on test check basis." 16. With reference to the above observations of the A.O, the ld. DR submitted that there was no opinion formed by the A.O in respect of findings of the INV Wing. He pointed out that the investigation in the case of Shri Tarun Goyal clearly established the fact that he was running shell companies and the assessee was one of the beneficiaries of accommodation entries. The ld. DR further referred to page 7 of het ld. CIT(A)'s order and pointed out to para 4.1.6 wherein he has observed that in the instant case, after receipt of information from the IN....
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....ons entered into by the assessee with a number of concerns which had made accommodation entries and they were not genuine transactions. It was neither a change of opinion nor did it convey a particular interpretation of a specific provision which was done in a particular manner in the original assessment and sought to be done in a different manner in the proceedings under section 147 of the Act. The reason to believe had been appropriately understood by the Assessing Officer and there was material on the basis of which the notice was issued. In exercise of the jurisdiction under article 226 of the Constitution, the sufficiency of reasons for formation of the belief could not be considered. It was open to the assessee to participate in the reassessment proceedings and put forth its stand in detail to satisfy the Assessing Officer that there was no escapement of taxable income." 20. In this case, the assessee had, inter alia, taken the following objections: "During the year the petitioner has neither received any gift nor any share application money nor any loan. (ii) There was no change in share capital during the year as compared to immediately preceding year. The petitioner b....
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....edger A/c. from the credit or/party including confirmation of mode, date, address and acknowledgement of return etc' from the said party along with source and relevant bank entries. Same information may please be given in respect of squared up loans if any during the year. Please give a detailed note with regard to advance from customer vis-a-vis the policy of company with regards to recognition of income and treatment in accounts. Complete detail of fresh security deposits made by you during the year. File copy of ledger account and purpose of making deposit and of interest earned thereon, if any." In response to the said query raised in the questionnaire, the assessee vide its response dated 07.08.2009 furnished the details of the share capital raised during the year. Alongwith with the response complete details of the shareholders, their addresses, PAN numbers and number of shares were furnished. In addition thereto, a confirmation letter from each of the shareholders was filed, providing the details of the shares, investment made, mode of payment and the bank through which the payment was made. In addition thereto, the acknowledgement of e-returns of each of the....
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....bsp; 1000000 5. The confirmation letters issued by the shareholders are similar and one such letter is extracted herein below. The same reads as under: "TO WHOM SO IT MAY CONCERN This is confirm that we have made investment in shares, the particulars of which are given hereunder, our own declared sources. Name of Company Allied Strips Ltd. No. of Shares No. of Shares 26700 Equity Shares of Rs. 10/- each At a premium of Rs. 20/- per share Amount invested in Rupees 8,01,000/- Particulars of Remittance Cheque /DD/Pay Order No. 453976, 453977 Dated 29/01/2007 Amount 4,00,000/- each and 1,000/- each Bank Particulars PAN/GIR Share Certificate Received The Bank of Rajasthan Ltd. Vikaspuri, Delhi AABCM 7083 P Share Certificate No. Share Distinctive No. I hereby confirm that the information furnished above is correct. For Monisha Granite Ltd. For MONISHA GRANITE LTD. DIRECTOR" 6. After the above-mentioned information was received by the Assessing Officer, the assessment was framed under Section 143(3) of the Act on 07.10.2009. In the assessment order, the....
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....Allied Strips [supra] the Hon'ble Delhi High Court has held as under: "12. Another reason why the impugned notice under Section 148 and the proceedings consequent thereto have to be set aside is that the pre-condition of there being a failure on part of the assessee to fully and truly disclose all the material particulars necessary for assessment has not been made out. 13. Perusal of the reasons for initiating re-assessment shows that there is not even an allegation that there has been failure on the part of the petitioner/assessee to fully and truly disclose all the material particulars necessary for re-assessment. 14. In Haryana Acrylic Manufacturing P. Ltd. Co. Vs. CIT 2009 (308) ITR 38 (Delhi), this Court held as under:- "29. In the reasons supplied to the petitioner, there is no whisper, what to speak of any allegation, that the petitioner had failed to disclose fully and truly all material facts necessary for assessment and that because of this failure there has been an escapement of income chargeable to tax. Merely having a reason to believe that income had escaped assessment is not sufficient to reopen assessments beyond the four year period indicated above. The ....