TaxTMI 
TaxTMI 
2017 (11) TMI 576
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....ribunal was justified in deleting the addition of Rs. 15,19,340/-being commission paid by it to M/s. Mrigiya Electronics Industries Private Limited for giving accommodation entries, when it was deposed by it's Director that the company was involved in providing accommodation entries after charging commission for the same?" 3. The facts of the case are that the appellant is engaged in real estate business and has launched residential scheme at Jodhpur. During the year the land was purchased from various persons for its real estate projects. As per the AO value of land purchased as per registered sale deed comes to Rs. 43560000/- but the appellant has claimed cost of land in its books of accounts at Rs. 119527000/-. It was stated that difference of these two amounts was paid to one M/s. Mrigiya Electronics Inds. Pvt. Ltd. as cost of consolidation. Copies of agreements between M/s. Mrigiya Electronics Pvt. Ltd. and the land owner as well as between the appellant and M/s. Mrigiya Electronics Inds. Pvt. Ltd. were produced. The inference drawn from agreement is that M/s. Mirgya first entered into agreement for purchase of land from 12 owners and then immediately selling the same to th....
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.... activity was reflected in the final accounts. M/s. Mrigiya Electronics Industries P Ltd. showing the business of only sale and purchase of shares. Only Nil income has been shown and a loss of Rs. 12,218.73 is reflected in the P& L a/c. Audit report & ITR-V of M/s. Mrigiya Electronics Industries P Ltd. is annexed with this order as Annexure-A." 4.1. Taking into consideration the above factual position the AO held as under:- 16. The assessee has claimed expenditure under various heads. These expenditures have been charged to project work in progress. During the course of examination of books of accounts it was noticed that the assessee has claimed the under mentioned payments: (i) Commission has been paid to Smt. Nirmala Kedia at Rs. 2,35,000/-, to Smt. Shashi Kedia at Rs. 2,65,000/- and Sh. Surendra Kedia at Rs. 1,45,000/-. The assessee was asked to file the justification of these expenses as these are payments to related parties u/s 40(a)(2)(b). vide reply dated 30.12.2009, the assessee has filed bills of these persons. These bills show that sales commission against sales of plot have been paid by the assessee to these persons for attracting investment. The co....
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.... Office renovation Ghanshyam Jangid 180335 Advertisement Kalarthi 134549 Site office Kaluram Sonel 55230 Advertisement Kushal Global Ltd 24750 Supervision over contractors @ 2% Sudesh Purohit 69317 Advertisement Vikalp Events & Promotion 77000 Advertisement Vyas Enterprises 22448 CD Presentation Sandeep Yadav 75000 Total 728438 Subject to the remarks above, the value of project work in progress as on 31.3.2007 declared by the assessee is re-calculated under: Description Value shoen by the assessee Disallowance as per discussion above Value calculated as per assessment order Land 122689030 75967000 46722030 Site development expenses 16068778 953438 15115340 Preliminary & preoperative expenses 7355345 813600 6541745 Total 68379115 Subject to the remarks above, the total incom....
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....he decision of Bombay High Court in CIT vs Shah Construction Co. Ltd. (1998) 230 ITR 51 (Bom) wherein it has been held as under:- " So far as the assessee was concerned, the amount of Rs. 2,81,331/- was receivable a service charges from Builders International (India) Ltd. in the previous year relevant to the assessment year 1980-81. There was no reason to hold that it was not includible in the assessee's income. The service charges amounting to Rs. 2,81,331/- had accrued to the assessee and was assessable in its hands." 6. As against this, Mr. Jhanwar, counsel for the respondent has taken us to the order of CIT(A) wherein it has been held as under:- "Regarding AO's finding that M/s Mrigiya Electronics Inds. Pvt. Ltd. Was not a genuine entity, statemtns ofthe director of M/s Mrigiya Electronics Inds. Pvt. Ltd. Were recorded in December, 2006 wherein he has admitted that he was involved in providing accommodation entries in respect of shares. The statement was subsequently retracted by Shri Pramod Sharma, director of M/s Mrigiya Electronics Inds. Pvt. Ltd.. The AO in the case of M/s Mrigiya Electronics Inds. Pvt. Ltd. Has made addition of Rs. 75967000/- as he....
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....g profit on sale of land. Once the department has taxed at Rs. 7,59,67,000/- in the hands of M/s Mrigiya Electronics Inds. Pvt. Ltd. Further, disallowance of said sum in the hands of the assessee is not justified. 21. "The total consideration paid by the assessee company to acquire 134.3 bighas of land as per the submission of AR is Rs. 119527000/- which includes Rs. 75967000/- paid to M/s Mrigiya Electronics Inds. Pvt. Ltd. And balance to the land owners direclty. The AO has considered direct such payment of Rs. 43560000/- only and the transactions between assessee and M/s Mrigiya Electronics Inds. Pvt. Ltd. Were considered sham. The AO has come to this conclusion mainly on account of M/s Mrigiya Electronics Inds. Pvt. Ltd. Found to be involved in issuing accommodation entries without actual dealing in shares in earlier year. Also that the Director of M/s Mrigiya Electronics Inds. Pvt. Ltd. Could not be produced before the AO for examination and no books of accounts M/s Mrigiya Electronics Inds. Pvt. Ltd. Were produced. The AO also doubted the genuineness of transactions wherein on investment of Rs. 61 lacs within a month no one can earn profit of Rs. 75967000/-. The AR h....
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.... different owners to make it worth developing a township and also by adding strip of land to the said chunk of land M/s Mrigya was entitled to earn profit. This argument of the AR appears to be convincing. 22. As evident from a chart prepared by the AR, Mrigya paid the rates to recorded owners almost one and half time more than DLC rates. Anybody can charge a rate more than the DLC rates and can get the property registered at value much more than the DLC value. Within a short span of time profit may be earned many fold as profit depends on several factors. Unless it is established that the rate claimed was abnormally higher as compared to similar deals registered during almost same time, the value shown by the assessee which is supported by Bank a/c cannot be denied. As the value shown in sale deed registered is more than DLC rates, registering authority is under obligation to register the deed. In such cases value at which property has been registered may not necessarily be the correct value paid by the purchaser and the real consideration may be more than what is appearing in sale deed. When payment is supported by bank account and other agreements, evidences cannot to i....
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....ved at by the AO and primary facts upon which the conclusion is based. Conclusion should be reached on appreciation of number of facts and by assessing the cumulative effect of all the facts as a whole. 24. In the present case except statement of Shri Sharma (Which was subsequently retracted) there is no evidence which can conclusively prove that amount given by the assessee to M/s Mrigya was not a real payment but an accommodation entry. The consideration paid by the assessee for purchase of land is comparable and appears to be reasonable and, therefore, reduction made by the AO in the consideration shown by the appellant is not justified. The AO is therefore, directed to accept the consideration as declared by the assessee. The grounds of appeal are decided in favour of the assessee" 25. The above finding of ld. CIT(A) neither could be controverted nor any material was brought on record to hold otherwise. The ld. CIT(A) has taken each and every objection of the AO and then concluded that explanation of the assessee was acceptable. The contention of the AO that by merely investing Rs. 61,00,000/- no one can earn such a huge profit of Rs. 7 crores or so has been c....
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.... on whether the forward contracts which resulted in these profits were made at Gwalior as contended by the appellant or at Bombay as held by the Tribunal. That would clearly be a question of fact, and the decision of the Tribunal thereon would not be liable to be challenged in these proceedings. Counsel for the appellant does not dispute this position, but he contents that a finding of the Tribunal even on a question of fact would be erroneous in law, if there is no evidence whatsoever to support it or if it is perverse. This question was quite recently considered by this court in Meenakshi Mills v. Commissioner of Income- tax, and the law was thus stated : "The position that emerges on the authorities may thus be summed up : (1) When the point for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the court under section 66(1). (2) When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final in decision as to the legal effect of that finding is a question of law which can be reviewed by t....
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....ing of the Tribunal that the contracts were concluded at Bombay. But to view the matter in its proper perspective, we must look at the picture at the other end, and consider the evidence adduced to prove that the agreements were made in Gwalior. Now, the facts found by the Incometax authorities are these : The three brokers in whose names the contracts stood were, having regard to their means, not likely to have been thought of for contracts of the magnitude which we have. They had not done business in cotton futures prior to the present contracts nor subsequent thereto. They had no bank accounts and large amounts to the tune of Rs. 30 lakhs are supposed to have been paid to them in cash by J. R. Pillani, Gwalior, and turned over by them in cash to the appellant. They produced no accounts for their dealings and the ankdas produced by them at a late stage were found to have been freshly written up. When Durgaprasad Mandalia, the manager of the appellant, was asked as to what securities he held as cover in respect of the huge transactions he entered into with men of such means, he answered that they were men of character. Sagarmal Dingliwala, the manager of J. R. Pillani, Gwalior, at....
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....llant and the three brokers expressly recite that they are as between principals and principals, that there were clauses therein providing for delivery and payment at Gwalior and that there was no reason for not accepting them as correct. But it is pointed out by the Income-tax authorities that the contracts provide for the business being done in accordance with the rules and bye-laws of the East India Cotton Association, Bombay, that according to bye-law No. 44-A of that Association "every contract made subject to these bye-laws shall take effect as contract wholly made in Bombay", and that further under the rules, the delivery of the goods must take place in Bombay. In view of this, the Income-tax Officer was of the opinion that the contracts in question had been got up for the purpose of supporting the present version of the appellant. 14. Mr. Kolah also contended that the evidence of Birlas would have been material in deciding whether they settled the contracts at Bombay as contended for by the Department and that though the order of remand stated that their evidence should be taken, that had not been done and that was a serious irregularity. The portion of the order o....
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....sufficiency of reasons for forming the belief is not for the Court to judge although the assessed can contend that the belief was not bona fide or was based on vague, irrelevant and non-specific information or that the material did not have any rational connection or a live link for the formation of the requisite belief. This is what the Supreme Court said: From a combined review of the judgments of this Court, it follows that an Income-tax Officer acquires jurisdiction to reopen an assessment under Section 147(a) read with Section 148 of the Income-tax Act, 1961, only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons, which he must record, to believe that, by reason of omission or failure on the part of the assessed to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profits or gains chargeable to income-tax has escaped assessment. He may start reassessment proceedings either because some fresh facts had come to light which were not previously disclosed or some information with regard to the facts previously discl....