TaxTMI 
TaxTMI 
2017 (10) TMI 1208
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....case and in law, the Commissioner of Income Tax (Appeal) erred in confirming the addition made by the Assessing Officer of share application money/share capital of Rs. 20,00,000/- as alleged unexplained income u/s 68 of the Income Tax Act, 1961. The addition made by the Assessing Officer is not sustainable and Commissioner of Income Tax (Appeals) should have deleted the same. 3. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeal) erred in confirming the addition of Rs. 40,000/- made by the Assessing Officer as alleged commission paid. The addition made by the Assessing Officer is not sustainable and Commissioner of Income Tax (Appeal) should have deleted the same. 4. The alleged reasons given by Assessing Officer and CIT (A) for making/confirming the additions of Rs. 20,00,000/- and Rs. 40,000/- are erroneous, both on facts and in law and, therefore, the additions of Rs. 20,00,000/- and Rs. 40,000/- made by the Assessing Officer and confirmed by CIT (A) are liable to be deleted. The appellant craves leave to add, alter, modify or delete one or more ground of appeal before or at the time of hearing of appeal. ....
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.... Therefore, I have reason to believe that an income of Rs. 20,00,000/- plus commission @ 2%, thereon amounting to Rs. 40,000/- totaling to Rs. 20,40,000/- has escaped assessment during the assessment year. On the basis of this information, I have reason to believe that the incomes described above have escaped assessment and the case is fit for issuing. Notice u/s 148 of Income Tax Act, 1961." Assessment was completed by making addition of Rs. 20,40,000/- being the unexplained credits in the books of the assessee and commission at 2% thereon. In appeal assessee challenged the reopening of the assessment and also the additions. Ld. Commissioner of Income Tax held that the AO followed the procedure by issuing a notice u/s 148 of the Act, as such, there is nothing to vitiate the reopening of the proceedings. In so far as the additions are concerned, Ld. CIT (A) held that in reality all the creditors are only paper companies and the creditworthiness and genuineness of the transactions are not proved as all the three attributes required to be proved by the assessee as per the decision in CIT vs. Lovely Exports P. Ltd. (2008) 216 ITR 195 (SC), CIT vs. Sophia Finance Ltd. (1994) 205....
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....thereon. 5. Per contra, Ld. DR heavily relied upon the orders of the authorities below and he submitted that the whole affair of the assessee receiving the share application money of Rs. 20 lacs is a design to create an apparatus to introduce unaccounted money of the assessee. Whether the creditors or the entry providers should be taxed separately leaving the entry taker, i.e. assessee is free from liability or not is a different issue altogether. But the circumstancial evidences and the design of the entry operator gives the benefit to the assessee more than anyone else. The assessee has introduced unaccounted money paying some commission to the entry operator under the grab of share application money taking advantage of some judicial decisions. In the era of high level of professionalism with degredation of ethics, circumstancial evidences have found due importance even in criminal proceedings and hence in the Income Tax proceedings, at the appellate stage it is difficult to do away with it. All the documents filed by the assessee only points towards identity of the creditors. He, therefore, prayed to dismiss the appeal. 6. We have carefully gone through the record, the doc....
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....the 'Money Laundering Scam' leaving the said money at the disposal of the beneficiaries without any associated cost or liability. In the instant case, the assessee is found to be the beneficiary of accommodation entry from such entry operators as per the following specific details of transaction:- Entry Operator Beneficiary's Bank Amount Rs. Instrument No. by which entry taken and date Entry giving bank Account no. from which entry was given Mahesh Garg - 800480 30.11.2000 SBP-DG 4507 Performance Trading & Inv. - 700420 13.11.2000 SBP-DG 4281 Chintpurni Credits - 900540 22.11.2000 SBP-DG 50058 Subhash Chander Singhal - 500300 23.11.2000 SBP-DG 4544 Kuldeep Textiles P. ltd. - 500500 21546 24.03.2001 Innovative Wazipur 239 Sweta Stone P. Ltd. - 500500 23510 24.03.2001 -do- 1200259- CA Division Trading P. Ltd. - 500500 33612 24.3.2001 -do- 225 ....
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....5) (Delhi High Court), ITO vs. N.C. Cables Ltd. (Delhi ITAT) - Judgment dated 22.10.2014 and Pr. CIT vs. Meenakshi Overseas Pvt. Ltd. (2017) (S) TMI 1428 held that the reopening of the assessment without the AO independently undertaking the exercise of examination of facts is bad under law. 8. The Jurisdiction Delhi High Court in the case of Pr. CIT vs. Meenakshi Overseas Pvt. Ltd. (2017) (5) TMI 1428 has held that reopening u/s 147/148 was not justified where reasons were recorded merely on the basis of information received from investigation using and without independent application of mind by the AO. The Hon'ble Court held that it was indeed a "borrowed satisfaction" and reopening was not justified. 9. Now coming to the second limb of challenge made by the assessee to the effect that the reassessment proceedings initiated are bad in as much as the approval/sanction by Addl. CIT is without recording satisfaction and the same is not in accordance with the requirements of Section 151 of the Act, Ld. AR brought it to our notice that vide sl. no. 11 the Addl. CIT, Range 6, New Delhi recorded that "Yes, I am satisfied". On this aspect Ld. AR placed reliance on the decisions repo....