TaxTMI 
TaxTMI 
2016 (2) TMI 1075
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....hat the details of beneficiaries to whom payments were made by the assessee were not appearing in the seized material, though this had been clearly demonstrated through bank particulars themselves; 3) Not appreciating that the assessee company was only a conduit for funds transfer and hence, the credits in the assessee's books could not have been treated as its income under section 68 of the Income-tax Act, 1961; 4) Not appreciating the complete import of the proceedings in Shri S.K. Gupta's case, ignoring that such evidence is deemed to be correct as per Section 292(C) of the Act; 5) Not returning a cogent finding on the aspect of credits in the assessee's books also having been taxed in the hands of the other intermediaries; 6) Not accepting the findings given in the order u/s 245(D) (4) of the Act dated 22.06.2012 passed by the Hon'ble Settlement Commission in the case of Shri S.K. Gupta; 7) Ignoring that in respect of A.Y. 2004-05, the Ld. Addl CIT had issued directions u/s 144A of the Act on identical facts, to the effect that no addition was to be made in the hands of the assessee, since it was only a conduit compan....
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....ank of Baroda 13830200000336 12,55,000 Grand Total 3,44,46,937 77,50,000 3. The AO determined the total income at Rs. 2,79,57,660/- after making addition of the unexplained deposits u/s 68. Ld. CIT(A), while partly allowing the assessee's appeal, dismissed the assessee's appeal on the addition made u/s 68. 4. At the outset ld. counsel for the assessee submitted that this issue is covered in assessee's favour by the decision of the Tribunal in the case of other group concerns M/s Omni Farms Pvt. Ltd. & others. Ld. counsel further submitted that the Tribunal's order has now been confirmed by the Hon'ble Delhi High Court in the cases of Vijay Conductors India Pvt. Ltd. (ITA 683/2015), Namrata Marketing Pvt. Ltd. (ITA 684/2015), Vishrut Marketing Pvt. Ltd. (ITA 685/2015) and Beriwal Investment & Chit Fund Pvt. Ltd. (ITA 686/2015), which group concerns were before the ITAT also. He further pointed out that in the case of M/s KSA Chits Pvt. Ltd. Vs. DCIT (ITA no. 4647/Del/2013- order dated 20.3.2015), the Tribunal has followed the decision in the case of M/s Omni Farms Pvt. Ltd. Vs. DCIT (ITA no. 3477/Del/2013 - dated 28.01.201....
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.... by him. Thus, we do not agree with the" elT's contentions that there are one evidence/material brought out by the applicant to prove that he Was an entry provider and that he had deposited his Own cash 'Which was used to issue cheques to the beneficiaries. The reasons recorded for " issue of notice u/s .148 clearly state that the applicant is an entry provider. Further, the report of the A.D. that the beneficiaries disclosed RS.l06.33 crores against the cheques received by them from the applicant, further strengthen applicant's case that he was only entry provider and cash deposited in the bank accounts for issuing cheques are not his money but moneys of the beneficiaries to whom cheques were issued. 27. After examining the facts of the case, weare of the considered view that the applicant is an entry provider. Therefore, in his case, only, the amount of premium/commission received by the applicant after reducing expenses incurred will be his additional income. " 6. Further, it is not disputed that the order of the Settlement Commission has been accepted by the revenue as it has not been challenged by the revenue before the Hon'ble High Court. The order of ....
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....tries appearing in bank account of assessee in A Y 2008-09. The AO may decide the issue on merit after examining the material produced before him. This issue does not seem to arise from impounded documents. 13. The Assessing Officer has informed that information pertaining to beneficiaries has been passed on to the concerned Assessing Officer. He should ensure that there is no deficiency in this regard. On the basis of modus operandi and material impounded, it is clear that there is a very strong case to bring to tax the accommodation entries obtained by beneficiaries. The information with . relevant records should be communicated to the concerned AOs. 14. To tax the cash received by SK. Gupta in the hands of conduit companies also, wherein the same finds. reflection as credit entries in bank accounts, would make the stand of the department ambiguous vis-a-vis beneficiaries. It will dilute the case of the department against beneficiaries. Additions made in the case of conduit entities shall confuse the stand of the department and shall jeopardize the efforts of the . department to bring to tax these transactions in the . hands of beneficiaries and Sh. S.K. Gupta .....
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....nd do other work like collection of cash etc. most of the other persons involved are on part time basis. The part time employees are called as and when required to sign documents, cheque books etc. Sh. S./( Gupta has also roped in his own relatives for operation of various bank accounts and for filing the income tax returns. It was seen that Sh. S.K. Gupta was controlling more than 35 companies from a small office premises without sufficient infrastructure or employees to carry out meaningful business activity in so many companies. Further, from the perusal of ledger accounts maintained in one of the laptops impounded during survey, it is noticed that a large amount of cash Is deposited end cheques are issued on the same day/within few days to various parties tram the accounts of the company - controlled by him. As per enquiries . carried out by the Investigation wing the assessee was found to have been using the bank accounts opened indifferent banks to route the entries through two to four accounts to vie the color of genuineness to these transactions. " . 13. Thus, the Assessing Officer himself has recorded the finding that' the assessee company is one of t....
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....ited in the bank account of various companies which we~ the conduit companies cannot be said to be unexplained cash credit because the source of cash is from the beneficiary who wanted to avail the accommodation entry and to whom cheques for accommodation . entries were issued almost of the similar amount. The order of the \ Settlement Commission has become final because the Revenue has not challenged the order of the Settlement Commission before the Hon'ble Jurisdictional High Court. . 14. That Hon'ble Jurisdictional High Court has considered the binding nature of the decision of the Settlement Commission in the case of Omaxe Ltd. & Anr. (supra) and held as under:- "Orders of Settlement Commission are final and conclusive as to matters stated therein. The "metters" necessarily could comprehend disputed questions, items or heads of income, disallowance, ete. or variants of it, but always with reference to a particular assessment year. In this case, the Setttement Commission was seized of asst. yr. 2006-07. Whilst exercising its authority over the application, the Commission concededly exercised the vast plenitude of its power or -jt!risdiction. The petitio....
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....ent and all the logical consequences of the said order are to. be given effect to. 16. We also find that the Additional CIT has issued direction under Section 144A in this regard. The Assessing Officer had asked for the "specific direction of the Additional CIT in respect of the group companies which has been mentioned by the Additional CIT 's paragraph 2 of his order under Section 144A. After considering all the facts, the Additional Commissioner held "it would be in the best interest of revenue to tax these transactions in the hands of beneficiaries and also Sh. S.K. Gupta, individual without making any additions on this account in the hands of conduit entities". We may point out that the direction of the Additional CIT is for various years running from AY 2004-05 to 2007-08. However, the ratio of the said direction would continue to be applicable for AY 2008-09 also because the facts remain the same. The Additional CIT has discussed in detail that when the Revenue is taking action in the hands of the beneficiaries, if the addition is made in the case of conduit entities, it will dilute the case of the Department against the beneficiaries. The order of the Additional....