TaxTMI 
TaxTMI 
2017 (1) TMI 1484
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....d both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned A.O. are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are vague. 4. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 20,50,000/- made by the AO on account of share capital money under section 68 of the Act. 5(i) On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the above addition rejecting the explanation and evidences brought on record by the assessee to prove the identity, creditworthiness of the shareholder and genuineness of the transaction. (ii) That the addition had been made without pointing out any defect or irregularity in the evidences filed by the assessee. 6. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the said addition despite the fact that the same has been made on the basis of material and evidences collected at the back of the assesse....
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....d from the following six parties have been made available to the AO in the re-assessment proceedings. Considering the evidences and the facts the addition it was submitted could not have been made nor sustained. Addressing the facts, the Ld.AR invited attention to the assessment order wherein the AO has concluded that the assessee has received accommodation entries from the following parties:- Date on which entry taken Name of the A/c holder of entry giving account Bank from which entry given Branch of entry giving Bank A/c No. of entry giving account Instrument no by which entry taken Value of entry taken 21.10.03 Techno Com Associates Pvt.Ltd. SBBJ New Rohtak Road 24589 5,00,000 22.01.04 Virdi Travel Pvt.Ltd. Jai Laxmi Coop Bank Fatehpuri 3472 385329 3,00,000 22.01.04 Lokesh Tools & Trading Pvt.Ltd. Jai Laxmi Coop Bank Fatehpuri 3568 405868 2,50,000 22.01.04 Suraj Cycle Mart Pvt.Ltd. Jai Laxmi Coop Bank Fatehpuri 3450 517394 2,50,000 06.02.04 Natraj Communication Pvt.Ltd. Jai Laxmi Coop Bank Fatehpuri 3033 257445 2,50,000 05.11.03 V R Traders ....
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....d. It was reiterated that replies have been received from four shareholders which factual position has been confirmed by the AO himself in the Remand Report dated 10.02.2014. The relevant extract of page 356 which is a copy of the Remand Report was heavily relied upon. The same is reproduced hereunder for ready-reference:- "As per the direction notice u/s 133(6) were issued to the above six companies on 08.01.2013 for 22.01.2013. But no reply was received on 22.01.2013. But later on, on receiving the reminder letter no.F.No.CIT(A)- XIII/2013-14/223 dated 13.01.2014 letter from this office no.612 dated 20.01.2014 was issued to the assessee for 28.01.2014 wherein he was informed of the above facts. Meanwhile on 27.28-01-2014 the reply from four creditors out of six has filed the reply in response to notice u/s 133(6) which are given as below:- 1. Techno Com Associates Pvt.ltd. 205, Delhi Chambers, Delhi Gate, Delhi-02. 2. Virdi Travels Pvt.ltd. 2250, Naya Bazar, Delhi-06. 3. V.R.Traders Pvt.Ltd. 1930, Gali Durga mandir, Lal Kuan, Delhi-06. 4. Natraj Communication Pvt.ltd. B-2, Kiran Garden, uttam Nagar, New Delhi-59." The copy of ....
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....criteria itself is not fulfilled nor is there any nexus of the reasons recorded with the formation of any belief that income has escaped assessment, the re-opening in the circumstances it was submitted is bad in law. The power it was submitted has been mechanically exercised by the AO based only on the report received from Investigation Wing. The information forwarded by the Investigation Wing, it was submitted has been blindly accepted by the AO and no reference to any independent exercise has been made which may indicate that there is any independent application of mind of the AO. On a reading of the reasons, it was submitted that it is not possible to understand how the AO termed the receipt of money as bogus accommodation entries as there is no investigation carried out by the AO, no witnesses has been examined by him who implicated the assessee. It was argued that solely on the basis of information of the Investigation Wing and relying upon some statements recorded in some other case by the Investigation Wing the AO has blindly accepted them as gospel truth. It was his submission that the law postulates that it is the AO who is to form a belief and not the DIT (Investigation).....
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....[1986] 159 ITR 78 (SC). 5.2. It was also submitted that despite having the Remand Report before him the CIT(A) also proceeded to conclude the issue in haste against the assessee referring to facts which are not relatable to the present case. Accordingly, it was argued that the impugned order also fortifies the fact that the action has been sustained by upholding the jurisdiction and the addition without any application of mind even at the stage of the First Appellate Authority. In support of the said argument, attention was invited to the following finding of fact recorded at page 11 of the impugned order:- "The Assessing Officer on receipt of the affidavits from the Assessee called for the information under Section 133(6) from the 6 parties, who had executed the affidavits. The letters were received back unserved." (emphasis provided) 5.3. The said finding it was submitted is contrary to facts on record as in the Remand Report there is no allegation that letters were received back un-served. The AO only notes that initially no reply was filed thereafter replies have been received in the remand proceedings from four shareholders. 5.4. The above wrong factual....
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....al High Court; DCIT vs M/s G.S.Control I.P.Ltd. [ITA No.1560/Del/2010 dated 13.03.2015]; and Jurisdictional High Court in the case of CIT vs Goel Sons Golden Estate P.Ltd. [ITA No.212/2012 dated 11.04.2012]. 6. The Ld. Sr. DR in reply addressing the decision relied upon by the Ld.AR submitted that reliance placed upon the various decisions of the ITAT or the High Court is not of any relevance in the facts of the present case as it is a case of a Private Limited Company and not of a Public Limited Company. This differentiation it was submitted has been brought out by the CIT(A) at page 30 of his order and the Revenue would want to heavily rely upon the same. The relevant extract from the impugned order is reproduced hereunder:- "In contrast to the above judgements, in the present case, the assessee is a private limited company and in the factual matrix, I have held that the assessee has not been able to discharge the initial onus and has not been able to establish the identity, creditworthiness of the share applicants and the genuineness of the transaction. Though, in my considered opinion, none of the above judgements, referred to by the assessee respondent, are applica....
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....ancial products like credit cards, personal loans, insurance policies, car loans etc. of Standard Chartered Bank and this factual finding by the AO, it was submitted remains unrebutted on record. Accordingly, it was his prayer that the addition deserved to be deleted. 8. I have heard the rival submissions and perused the material available on record. I note from the record that the AO addressing the nature of assessee's business has noted as under:- "The assessee company was engaged in the business of market financial products like credit cards, personal loans, insurance policies, car loans etc. of Standard Chartered Bank and earned commission thereon. During the year, the assessee has shown total receipts of Rs. 73,12,079/- as compared to preceding year's receipts of Nil rupees." 8.1. It is seen that the assessment was re-opened on the basis of some information that Sh. Mahesh Garg, Entry Operator had provided accommodation entries to some bogus concerns. The statement allegedly recorded and relied upon were not confronted to the assessee. The assessee as per replies on record claimed the transaction to be genuine relying on evidence filed before the AO. However, th....
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....i Gate. Delhi-02. 2. Virdi Travels Pvt. Ltd. 2250, Naya Bazar, Delhi-06. 3. V R Traders Pvt. Ltd. 1930, Gali Durga Mandir, Lal Kaun, Delhi-06. 4. Natraj Communication Pvt. Ltd. B-2, Kiran Garden, Uttam Nagar, New Delhi-59. However as per our record of submissions, it is very clear that Appellant has duly submitted the evidences of all the six share subscribers at the time of assessment proceedings before the Ld. A.O. vide letter dated 16.11.2011 in which said six share subscribers details is also submitted alongwith following evidences. A photocopy of our letter dated 16.11.2011 is enclosed herewith alongwith evidence are submitted. Date on which entry taken Name of the a/c holder of entry giving account Bank from which entry is given Branch of entry giving bank A/c no. of entry giving account Instrument no.by which entry taken Value entry taken 21.10.03 Techno Com Associates Pvt.Ltd. SBBJ New Rohtak Road 24589 5,00,000 22.01.04 Virdi Travels Pvt.Ltd. Jai Laxmi Coop Bank Fatehpuri 3472 385329 3,00,000 22.01.04 Lokesh Tools & Trading Pvt. Ltd. Jai Laxmi Coop Bank ....
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....ons. Reopening of the case u/s 148 is not legally valid. Hence, it is prayed that addition u/s 68 of Rs. 2050000/- be deleted or any other order may be justified with appellant." (emphasis provided) 8.2. Accordingly, in the circumstances admittedly the repeated factual inaccuracies made in the impugned order that notices could not be served on the six parties and replies could not be received are patently incorrect and is not even the case of the AO. For the record, the glaring fact that the notices were served upon all the six parties and replied were received from four of these, is evident from the Remand Report of the AO itself (copy of which has been placed at Paper Book page 354-357). A perusal of the same shows that the replies have been received from following four parties:- 1. Techno Com Associates Pvt.Ltd., 205, Delhi Chambers, Delhi Gate, Delhi-02. 2. Virdi Travels Pvt.ltd., 2250, Naya Bazar, Delhi-06. 3. V R Traders Pvt.ltd. 1930, Gali Durega Mandir, Lal Kuan, Delhi-06. 4. Natraj Communication Pvt.Ltd., B-2, Kiran Garden, Uttam Nagar, New Delhi-59. 8.3. It has been argued by the Ld.AR that these were not cash deposits and were....
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....eir evidences remain unassailed per se cannot be the reason for sustaining the addition in the facts and circumstances of the present case. In the facts where all details are available notice u/s 133(6) have been served, four have replied thus, if the department still had any further doubts about their existence or genuineness then their presence should have been enforced as the whereabouts of these two concerns were known to the department as notices were served upon these parties at the address given is a fact on record. In the afore-mentioned peculiar facts and circumstances, the request of the Revenue to direct yet another remand does not make any sense. It is seen that when the evidences on record are considered qua the stated business of the assessee, I find that the addition on merits cannot be sustained. Though the Ld.AR has also argued the jurisdictional issue relying upon various propositions of law, however finding thereon may not be so relevant as the decisions proceed on facts peculiar to their own. In the facts of the present case the ld.AR necessarily had to refer to the facts on record in order to demonstrate that jurisdiction on facts was lacking. Thus while consid....