TaxTMI 
TaxTMI 
2018 (11) TMI 203
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....ee years by filing the cross objections. 3. The revenue has raised the following grounds of appeal for the Assessment Year 2007-08:- "(i) That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting Rs. 3,95,32,500/-which was added to the income of the assessee on account of as unexplained deposits. (ii) That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting Rs. 15,35,000/- which was added to the income of the assessee on account of as unexplained liabilities. (iii) That the commissioner of Income Tax(Appeal) has erred in law and on facts in relying on the submissions filed by the assessee which were inadequate, incomplete, not genuine, not reliable and already rejected by AO during the assessment stage. (iv) (a) The order of the CIT(Appeals) is erroneous and not tenable in law and on facts." 4. The assessee has raised the following grounds in cross objection for the Assessment Year 2007-08:- "1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing impug....
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....he Assessment Year 2009-10:- "(i) That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting Rs. 12,10,33,910/-which was added to the income of the assessee on account of as unexplained deposits. (ii) That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting Rs. 3,10,500/- which was added to the income of the assessee on account of as unexplained profit on sale investment. (iii) That the commissioner of Income Tax(Appeal) has erred in law and on facts of the case in not discussing the issue of unexplained profit on sale investment raised by the AO in his assessment order on basis of which addition of Rs. 3,10,500/- was added to the income of the assessee. (iv) That the commissioner of Income Tax (appeal) has erred in law and on facts in relying on the submissions filed by the assessee which were inadequate, incomplete, not genuine, not reliable and already rejected by AO during the assessment stage. (v) (a) The order of the CIT(Appeals) is erroneous and not tenable in law and on facts." 8. The assessee has raised the following grounds in cross objection....
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....the Act. Mr. Asheem Gupta who is an accommodation entry provider himself appeared during the course of assessment proceedings. The ld AO dealt with the issue vide para No. 4.1 to 8 as under:- "4.1 The assessee company is engaged in providing accommodation entries to the companies which are in need of the accommodation entries. It is worthwhile to mention here that in his statement recorded on oath u/s 133(d) on 26.03.2010 Shri Aseem Kumar Gupta has admitted that he is director in eight such companies which are engaged in providing the accommodation entries; namely M/s Jiwan Realtors Ltd, M/s. Ganpati Fincap Services Pvt Ltd., M/s SAM Portfolio Pvt. Ltd., Moderate Credit Corporations Pvt. Ltd., M/s Chotti Leasing & Finance Pvt. Ltd., M/s S.G. Portfolio Pvt. Ltd., M/s Sushre Securities Pvt. Ltd and M/s Shrey Infradevelopers Pvt. Ltd. The assessee company is one of them. 5. During the course of assessment proceedings the company has furnished the copy profit & loss account, balance sheet and schedules forming parts of balance sheet only. But no books of account was produced for examination inspite of the repeated requests. Vide reply dated 15.12.2014 it has been cont....
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.... the bank. But assessee failed to give an iota of evidence in the matter. Therefore, I hold that these deposits are unexplained money of the company and as such the same will added towards income of the company. This addition will cover the unexplained cash credit found/reflected in the financial statement. Unexplained other current liabilities:- 8. Further, on perusal of the balance sheet it is found that in schedule-VI the assessee has shown an amount of Rs. 15,35,000/- under the head other current liabilities. The assessee was required to explain the nature and source of this liability but inspite of the repeated request assessee failed to establish the identity and genuineness of the persons and purpose. Therefore, this liabilities to the tune of Rs. 15,35,000/- is being disallowed to be added as income of the company." 10. Consequently the order u/s 147 read with section 143(3) of the Act was passed on 02.03.2015, wherein, the total income of the assessee was assessed at Rs. 41072610/- against the returned income of Rs. 5110/-. The assessee preferred appeal before the ld CIT(A) challenging the reopening proceedings as well as the quantum addition. Before t....
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....round it is most humbly submitted that reasons to form the belief that the income had escaped assessment by the A.O. are not proper and erroneous. The assessee disclosed all the material facts truly during the assessment made U/s 143(3) r.w.s. 153C of the I.T. Act 1961. The assessment made U/s 143(3) r.w.s. 153C was quashed by the CIT Central - II ,New Delhi on the fact that the AO had no jurisdiction U/s 153C . The A.O stated in the reasons for opening re-assessment U/s 147 that the assessee challenged assumption of jurisdiction U/s 153C on the grounds, that the satisfaction arrived by the A.O. is not based on documents from the premises of other person in whom action u/s 132 is initiated, whereas it is evident enough from the order passed by the CIT Central -II that the assessee has challenged the assessment proceedings U/s 143(3) r.w.s. 153C on various grounds of principles of natural justice, equity and fair play, tempering of assessment records by the assessing officer. A.O. has no fresh tangible material other than the assessment proceedings held U/s 143(3) r.w.s. 153C which were quashed on the technical and factual grounds by the CIT Central-II. Importance of fresh ....
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....urt has held that where the assessee had made full and true disclosure and also there was a note by the auditor in his audit report, reopening of assessment beyond the period of four years was held to be not valid notwithstanding the fact that for subsequent assessment year a similar addition had be made by the assessing officer. Assessment cannot be reopened on the basis of a mere change of opinion. There should be some tangible material with the assessing officer to come to the conclusion that there is an escapement of income. A mere change of opinion on the part of the assessing officer in the course of assessment for a subsequent year cannot justify the reopening of an assessment. Hon‟ble Delhi high court in the case ofTechspan India (P) Ltd & Anr vs. ITO (2006) 283 ITR 212 (Del) has held that an asst, order passed after detailed discussion cannot be reopened within a period of 4 years unless the AO has reason to believe that there is to some inherent defect in the assessment. The A.O. stated in his impugned order that the "after recording reasons proceedings u/s 147 were taken in hand after receipt of the approval of the Commissioner of Income Tax, Central-II, N....
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.... on 27/12/2011 whereby the same has been annulled by the CIT Central-II in the order passed U/s 264 of the act on 20.03.2014. The Ld AO in his assessment order stated that "During the course of assessment proceedings the company has furnished the copy of profit loss account, balance sheet and schedules forming parts of balance sheet only. But no books of account was produced for examination inspite of the repeated requests" whereas the assessee company has provided the books of accounts for A. Y. 2007-2008 in form tally data as maintained by the company vide reply dated 30/10/2014 same can be verified from the submissions filed by the assessee company. 9.2 Adverse observations of Ld. A.O. are met as under:- "1. The Ld AO stated in his order stated that "Notice u/s 148 dated 27.03.2014 was issued and duly served on 28.03.2014. The assessee vide application dated 09.04.2014 requested for copy of reasons alongwith approval for initiation of proceeding which was provided to it. In reply to the notice u/s 148 issued assessee has given in writing that original return filed may kindly be treated as filed in reply to the notice u/s 148. In reply thereof ....
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....etails of the parties from whom the credit in bank accounts has been received by the assessee during the year. All the persons/ parties from whom the assessee has received credits in bank are being assessed to tax and PAN and other details were being provide to the Ld. A.O. but no acceptance of same was made by the Ld. A.O. According to Section 68 of Income Tax Act 1961, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of the same or the explanation offered by him is not satisfactory in the opinion of A.O., the sum so credited may be charged to income tax as the income of the assessee of that previous year. The basic precondition for the Section 68 is that the assessee should file a valid confirmation. Valid confirmation has no specific format but it must contain name, complete address of the lender. It is better if PAN of the lender is also obtained as, if no PAN given then ambit of doubt is far more for the AO. With the confirmation the AO must insist on some identity proof like copy of driving license, copy of passport, copy of ration card or election....
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....pear in the accounts of an assessee, whether in his own name or in the name of third parties, the Income-tax Officer is entitled to satisfy himself as to the true nature and source of the amounts entered therein, and if after investigation or inquiry he is satisfied that there is no satisfactory explanation as to the said entries, he would be entitled to regard them as representing the undisclosed income of the assessee. When these credit entries stand in the name of the assessee himself, the burden is undoubtedly on him to prove satisfactorily the nature and source of these entries and to show that they do not constitute a part of his business income liable to tax. When, however, entries stand, not in the assessee‟s own name, but in the name of third parties, there has been some divergence of opinion expressed as to the question of the burden of proof. The Income-tax Officer‟s rejection not of the explanation of the assessee, but of the explanation regarding the source of income of the depositors, cannot by itself lead to any inference regarding the non-genuine or fictitious character of the entries in the assessee‟s books of account." It has been held u....
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.... simple reason Ravnet Solutions (P) Ltd. A.Y.2007-08 Appeal No. 233/09-10 that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the department is free to proceed to re-open their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment. Subject to the above, Special Leave Petition is dismissed. " Bhav Shakti Steel Mines Pvt. Ltd., vs. CIT (High Court of Delhi) -16.12.2008- "Since the Commissioner of Income Tax (A) has not only found that the identity of each of the share holders/ creditor stood established, but has also examined the fact that each of them were income tax assessees and had disclosed the share application money or amount paid in their accounts which were duly reflected in their income tax return as well as in their balance sheets. In these circumstances we see merit in what the learned counsel for the appellant has submitted and we feel that the Tribunal was unjustified in coming to the conclusion that the CIT(A) had not considered the matter in the right perspective. Consequently we decide the question in favour of t....
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....ts in providing accommodation entry but he failed to disclose the nature of that information and how it is related to the assessee. His observations are just general in nature without specifying any material. With such type of general information, he cannot treat the share application received by the assessee as bogus in a sweeping way. " In the case of CIT v. Kamdhenu Steel & Allioys Ltd. (2012) 68 DTR 38 / 248 CTR 33/ 206 Taxman 254 Hon'ble High Court held that :- Once the assessee produces adequate evidence which prima facie discharge the burden of proving identity, creditworthiness of the shareholders and genuineness of transaction, in facts of such a case if the Revenue authorities want to discard these evidences as 'created evidences' the Revenue should make through probe so as to nail the assessee under section 68 of the I.T. Act. In the case of CIT .u. Bhaval Synthetics (2013) 35 taxmann.com 83 Hon'ble Rajasthan High Court dismissed the appeal of the department following the decision of the Hon'ble. Supreme Court in the case of CIT Steller Investment Ltd.[2001J 251 ITR 263 (SC). In this case Hon'ble High Court observed that....
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....for demand of information to place reliance on the submissions made by the assessee. The Ld. A.O. has passed the impugned order in a hurry on 02.03.2015 without issuing to a show cause notice to the assessee and providing the assessee a final opportunity of being heard and making the assessment in a haphazard manner and making genuine hardship on the assessee by assessing an income which is not real in any manner. If the Ld AO has any doubt about the credit entries, he should have asked for further clarification from the appellant or confirmation from concerned parties. But the Ld Ao has passed the order on 02/03/2015 without issuing a show cause notice to the assessee for the addition made. The Ld AO has not even considered the confirmations and other evidences provided by the assessee company and simply copied paste the assessment order passed U/s 153C which was annulled by the CIT Central-II in the order U/s 264 of the Act. Probably whole of the above additions are already made in the hands of Mr. Manoj Kumar and Mr. Virender Ram by ACITCC 09 and confirmed by CIT Appeals.As once additions have been confirmed in the hands of one assessee same additions cannot sustained i....
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..... Has stated in his impugned order that "on perusal of balance sheet it is found that in schedule-VI the assessee has shown an amount of Rs. 15,35,000/- under the head current liabilities. The assessee was required to explain the nature and source of this liability but in spite of the repeated request assessee failed to establish the identity and genuiness of pesrons and purpose. Therefore, the liabilities to the tune of Rs. 15,35,000/- is being disallowed to be added as income of the company." 11.1 That the Assessing Officer, erred in law and fact of the case in making assessment on the issue of other liabilities, as reflected in the Balance Sheet of the assesse, without considering the fact and submission available on record and also without providing sufficient and reasonable opportunity to the assessee. The amount of Rs. 15,35,000/- is the amount received by the assessee from Shrey Infradevelopers Private Limited (Rs. 14,00,000/-) and Sam Portfolio Private Limited ( received Rs. 3,35,000/- returned back Rs. 2,00,000/- during the year) which is clearly mentioned in the summary sheet and detailed narration sheet of the bank entries submitted by the assessee. The Ld A.O. ....
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....nce interest receivable. On perusal of the details of credit entries filed by the appellant during the course of assessment proceedings, IJind that clear narration was given against the credit entries. If the Assessing Officer had any doubt about the credit entries, he could have asked for further clarification from the appellant or confirmation from the concerned party. On perusal of the detail of the credit entries, such an action of the Assessing Officer was not at all justified. In view of the above facts and considering the evidence on record, I see no justification for the Assessing Officer in holding that the above transactions remained unexplained and making the impugned addition. Accordingly, the addition of Rs. 15,35,000/- made by the Assessing Officer is deleted. Ground raised in appeal is allowed." 13. Therefore, the revenue is aggrieved with the order of the ld CIT(A) where the addition is deleted and assessee has filed cross objection on the issue of reopening. 14. Coming to the appeal of the revenue where ground No. 1 and 2 are with respect to the addition of Rs. 393532500/- and Rs. 1535000/- the ld CIT DR vehemently submitted that it is responsibility of the p....
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....ons:- i. PCIT Vs. Paramount Communication (P) Ltd (2017-TIOL-253- HON'BLE SUPREME COURT -IT) ii. PCIT Vs. Paramount Communication (P) Ltd (2017) 79 taxmann.com 409 (Delhi) 392 ITR 444. iii. Aradhna Estate P Ltd Vs. DCIT (2018) 91 taxmann.com 119 iv. Pushpak Bullion P Ltd s. DCIT 85 taxmann.com 84 v. Ankit Financial Services Ltd Vs. DCIT 78 taxmann.com 58 vi. Aaspas Multimedia Ltd Vs. DCIT 83 taxmann.com 82 vii. Ankit Agrochem P Ltd Vs. JCIT (2018) 89 taxmann.com 45 16. He further referred the decision of the Hon'ble Delhi High Court in case of Shri CIT Vs. DK Garg in 404 ITR 757 to state that each debit and credit is required to be explained by the assessee. He further referred to decision of the Hon'ble Delhi High Court in case of Seema Jain Vs. ACIT 406 ITR 411 wherein, taxation of credit as income of assessee is justified. In view of this he submitted that the order passed by the ld CIT(A) required to be vacated. 17. He further referred to the decision of the Shri Raj Kumar Chawla Vs ACIT, New Delhi dated 26.09.2018 wherein, the issue with respect to the accommodation entry by Mr Asheem Gupta was di....
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....eem Gupta, a Chartered Accountant who was engaged in providing accommodation entries. The protective addition was made on account of misrepresentation made by Shri Asheem Kumar Gupta in his statement recorded vide question No. 5 during the course of survey. He mis-represented the fact that assessment in case of Shri Manoj Kumar has been assessed on this income on substantive basis whereas, in fact he was assessed on protective basis. The assessee has claimed before the ld CIT(A) with respect to the reopening of the assessment that the provision to section 147 to 151 of the Act are not complied with, however, no arguments were raised before the ld CIT(A) with evidences. However, it was argued that there was no fresh tangible material for reopening of the assessment was available with the ld AO but in fact the statement of Shri Asheem Kumar Gupta who is a director of the company that he has made the statement that he is providing accommodation entry is a tangible material for reopening of the assessment. It is the statement of the director of assessee company which was never retracted and in fact by arguing before lower authorities. So in turn, it was his tacit approval of his statem....
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....mmodation entries were also not shown before lower authorities by assessee. As assessee's director has confessed that assessee company is providing accommodation entries, then, CIT(A) even did not care to verify that who are the beneficiaries and what is the amount of commission received by assessee from the beneficiaries from providing accommodation entries. Without even calling for all these details, the ld CIT(A) has deleted the addition. In view of this, we reverse the finding of the ld CIT(A) and confirm the order of the ld Assessing Officer with respect to the addition of Rs. 39532500/- for Assessment Year 2007-08. Accordingly, appeal of the ld Assessing Officer and its ground Nos. 1 is allowed accordingly. 24. With respect to ground No. 2 the ld AO noted that assessee has shown current liabilities of Rs. 1535000/- but has not given the confirmation of those parties. The assessee submitted before the ld CIT(A) that it received sum of Rs. 14 lakhs from Shreys Infradevelopers Pvt. Ltd and San Portfolio Pvt Ltd of Rs. 135000/-, however, no confirmation was provided of these parties. In view of this the addition has been made by the ld AO. The ld CIT(A) deleted the addition wi....