TaxTMI 
TaxTMI 
2018 (12) TMI 808
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....ns for initiating proceedings u/s 148 r.w.s. 147 of the I.T. Act, 1961. A search u/s 132 of the Act was carried out on 15.10.2013 SRM group of companies on the basis of information that the SRM group has introduced its own unaccounted income in the books of its companies in the guise of share capital and share premium shown to have been received from various entry providing non-descript companies. 2. Accordingly, information was received from the Investigation Wing of Income Tax Department, New Delhi that during F.Y. 2011-12 relevant to A Y 2012-13, M/s Bhavya Gold Pvt. Limited, has received total amount of Rs. 6.0 Crore in the form of share capital and share premium from various paper/shell companies mainly based in Kolkata and Mumbai. During the assessment proceedings for A.Y. 2012-13 the assessee has submitted that Rs. 6 crores was introduced in the F. Y. 2010-11 relevant to A. Y. 2011-12. 3. Further, it has been gathered the director of M/s SRM group namely Shri Ashok Kumar Goel and Shri Pradeep Kumar Goel are also directors in this company. The paper/shell companies who have invested in M/s Bhavya Gold Private Limited are among 133 investing companies who have invested....
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....ctivities and are engaged in providing accommodation entry. He, therefore, asked the assessee to explain that the share capital and share premium received to the tune of Rs. 6,00,00,000/- be not treated as unexplained cash credit within the meaning of section 68 of the I.T. Act. 6. The assessee, in response to the same, submitted that it belongs to Shree Raj Mahal Jewellers Group (SRM Group) and the group has filed an application dated 11.07.2016 before Income Tax Settlement Commission (ITSC) which has been duly admitted u/s 245D(2) of the I.T. Act. In the statement of facts (SoF) attached to ITSC it has been clearly stated that stock found short at the time of search in various group entities was utilized for making sales outside books of accounts and the cash so generated was utilized for making investment in properties and introducing the money in the books of the group concern through share capital. The amount of Rs. 6,00,00,000/- allegedly received as share capital by the assessee company is also part of the same procedure as explained above. It may also be pointed out that the utilization of cash is mentioned in details in Annexure-F forming part of the settlement applicati....
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....AO, on basis of search carried out in case of another person, came to know that loan transaction of assessee with a finance company were bogus as said company was engaged in providing accommodation entries, it being a fresh information, he was justified in initiating reassessment proceeding in case of assessee" (iii) Hon'ble Delhi High Court in the case of Acorus Unitech Wireless P. Lid. Vs. ACIT has held:- "In terms of section 148, law only requires that information or material on which AO record his or her satisfaction has to be communicated to assessee, without mandating disclosure of any specific document. (iv) Hon'ble Delhi High court in the case of PCIT vs. Paramount Communication P. Ltd. has held : "Information regarding bogus purchase by assessee received by DRI from CCE which was passed on to revenue authorities was tangible material outside record to initiate valid reassessment proceedings." (v) Hon'ble Supreme Court in the case of Paramount Communication P. Ltd. vs. PCIT has held:- " .... SLP of assessee dismissed. Information regarding bogus purchase by assessee received by DRI from CCE which was passed onto revenue authorities was tangible mater....
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....ement for reopening of the assessment u/s 147/148 of the I.T. Act. 3. That on the facts and circumstances of the case and in law the CIT (A) was not justified in upholding the action of AO in initiating reassessment proceedings which are invalid and illegal being void-ab-initio as there was no mention about existence of any tangible material in the reasons to believe formed by the A.O. hence the reassessment proceedings were not validly initiated. 4. That on the facts and circumstances of the case and in law the CIT (A) was not justified in upholding the action of AO in making an addition of Rs. 6,00,00,000/- by treating the share capital and share premium received during the assessment year under consideration as unexplained cash credit u/s 68 of the Income Tax Act. 5. That on facts and circumstances of the case and in law, the notice u/s 148 of the IT is invalid as the alleged satisfaction recorded by the AO is the borrowed satisfaction and reproduction of conclusion drawn in the investigation report and not on the basis of further enquiry by the AO for the formation of the reasons to believe that income had escaped assessment in the appellant case. 6. That on the facts a....
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....that 22 out of 40 companies controlled and managed by him had made investments in share capital in group companies of SRM. He had stated that he provided entries to various companies like Ginni Gold, Goel Exim India Pvt. Ltd., PLB Infrastructure Pvt. Ltd., SRM Diamond Pvt. Ltd., Goel Impex Pvt. Ltd., SRM Securities Pvt. Ltd. and Bhavya Gold Pvt. Ltd.. Further, according to the Assessing Officer, all the 15 companies have been established as paper/shell companies who have no business activities and are engaged in providing accommodation entries to different company. 11. Referring to the statement of Shri Rajesh Kumar Aggarwal recorded u/s 131 of the I.T. Act by the DDIT (Investigation) on 22.01.2014, he drew the attention of the Bench to the Question No.9 wherein Shri Rajesh Kumar Aggarwal has given the list of the 22 companies which are controlled by him. Referring to the same, he submitted that the assessee has not received any share application money from any of the 22 companies controlled by Shri Rajesh Kumar Aggarwal. Therefore, the reasons recorded by the Assessing Officer are very vague, scanty, sketchy and, therefore, the re-assessment proceedings should be quashed. He subm....
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....rastructure Ltd. vs. ACIT vide W.P.(C) 1357/2016 order dated 25.09.2017, he submitted that the Hon'ble High Court in the said decision has held that there has to be reasons to believe and not merely reasons to suspect that income has escaped assessment. 17. Relying on various decisions, he submitted that the re-assessment proceedings initiated by the Assessing Officer and upheld by the ld. CIT(A) being void ab-initio has to be quashed. 18. Ld. DR on the other hand heavily relied on the order of the ld. CIT(A). He submitted that ld. CIT(A) after carefully going through the reasons recorded by the Assessing Officer had upheld such re-assessment proceedings. He submitted that it is very clear from the details/documents filed by the assessee that the share applicants were not having business activities and were having meager income which clearly proves that those paper/shell companies were engaged in giving accommodation entries. Since the case was not reopened in a mechanical manner but was reopened after proper application of mind, therefore, the various decisions relied on by the ld. counsel for the assessee are distinguishable and are not applicable to the facts of the prese....
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....The directors of those companies are as under :- Sl.No. Name of the company Directors 1. Festino Agro Pvt. Ltd. Palat Mandal Ajay Sharma 2. Immortal Vinimay Pvt. Ltd. Mritnunjay Pal Saheb Ghosal 3. Active Suppliers Pvt. Ltd. Mritnunjay Pal Saheb Ghosal 4. Kushal Infotech Pvt. Ltd. Palat Mandal Saheb Ghoshal 5. Mahadhan Vyapar Pvt. Ltd. Saheb Ghosh Ajay Sharma 6. Gajanand Agrotech Ltd. Palat Mandal Saheb Ghoshal 7. Titanic Chemical Pvt. Ltd. Palat Mandal Saheb Ghoshal 8. Parijat Commodeal Pvt. Ltd. Mrituyanjay Pal Saheb Ghoshal 9. Goodfaith Pharmaceutical Pvt. Ltd. Mrituyanjay Pal Saheb Ghosal 10. Mayur Vanijya Pvt. Ltd. Mrityunjay Pal Saheb Ghosal 11. Monalisa Commercial Pvt. Ltd. Saheb Ghoshal Ajay Sharma 12. Navrekha Commotrade Pvt. Ltd. Saheb Ghoshal Ajay Sharma 13. Octal Commodities Pvt. Ltd. Palat Mandal Saheb Ghoshal 14. Mukul Mills Pvt. Ltd. Mrityunjay Pal Saheb Ghoshal 15. Gajeshwar Sales Pvt. Ltd. Palat Mandal Ajay Sharma 16. Exotica Commodity Pvt. Ltd. Mrityunjay Pal Saheb Ghoshal 17. Bhavtarani Sales Pvt. Ltd. Saheb Ghoshal Ajay Sharma 18. Eversite Commodity Pvt. Ltd. Saheb Ghoshal Ajay Sharma 19....
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....said to be tangible material. 20. Coming to the second part, this tells us what the AO did with the information so received. He says: "The information so received has been gone through." One would have expected him to point out what he found when he went through the information. In other words, what in such information led him to form the belief that income escaped assessment. But this is absent. He straightaway records the conclusion that "the abovesaid instruments are in the nature of accommodation entry which the Assessee had taken after paying unaccounted cash to the accommodation entry given (sic giver)". The AO adds that the said accommodation was "a known entry operator" the source being "the report of the Investigation Wing". 21. The third and last part contains the conclusion drawn by the AO that in view of these facts, "the alleged transaction is not the bonafide one. Therefore, I have reason to be believe that an income of Rs. 5,00,000 has escaped assessment in the AY 2004- 05 due to the failure on the part of the Assessee to disclose fully and truly all material facts necessary for its assessment... " 22. As rightly pointed out by the ITAT, the 'reasons to b....