AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 516
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....ssued statutory notices for completion of the assessment. Reasons for reopening of the assessment were also provided to assessee. The assessee filed written submission objecting the re-assessment proceedings which were disposed off separately by passing speaking order. The assessee stated that the A.O. has failed to give any details about the information and documents which have been relied upon by the A.O. at assessment stage. However, the A.O. noted that for initiation of action under section 148 have been conveyed to the assessee and hence, the allegation of the assessee are incorrect. The assessee was asked to produce the principal officer of the following company from whom the accommodation entries were taken :- 1. Arun Finvest Pvt. Ltd., Rs. 15 lakhs on 17.03.2001. 2. Polo Leasing & Finance P. Ltd., Rs. 10 lakhs on 17.03.2001. 2.1. The assessee did not file any reply on the date fixed. Bank statements of above said companies were called for under section 133(6) of the I.T. Act, 1961 for the financial year under appeal, which were placed on record. The Bank statements of the assessee was also received in response to notice u/s 133(6). On going through t....
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....ng accommodation entries. The A.O. in view of the above facts and looking to the non-cooperation of the assessee, added the amount under section 68 of the I.T. Act, 1961. As per the balancesheet of the assessee, the share application money at Rs. 58,97,200/- was pending for allotment on 31.03.2000. During the year under assessment the assessee allotted shares for Rs. 20 lakhs and Rs. 30,72,200/- was still pending as share application money. It means the balance amount of Rs. 8,25,000/- was refunded to the investors during the relevant A.Y. 2001 -2002. From the Bank Account of the assessee, no such entry of Rs. 8,25,000/- is appeared. It was, therefore, noted that the assessee has refunded the amount in cash, the source of which is not explained. The A.O, therefore, made further addition of Rs. 8,25,000/- on account of unexplained refund of share application money. The assessee challenged the reopening of the assessment as well as addition before the Ld. CIT(A) who has allowed the appeal of the assessee partly. Therefore, we would be dealing with the issues involved in the present appeal. It may also be noted here that assessee filed additional evidences before the Ld. CIT(A), on....
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....the Investigation Wing suggest that there is transaction of Rs. 25,00,000/- as mentioned above, is accommodation entry only. Accordingly the amount of Rs. 25,00,000/- is escaped income and taxable under deeming provisions of the Income-tax Act. Hence, in view of the information received from the Investigation Wing and perusal of the Balance Sheet suggest the Rs. 25,00,000/- is the undisclosed income of the above assessee for A.Y. 2001- 02. On the basis of the information sent by the Investigation wing and accompanying documents, I am satisfied that this transaction of Rs. 25,00,000/- as mentioned above, is accommodation entry only. Accordingly, the amount of Rs. 25,00,000/- is unaccounted money belonging to the assessee which has been utilized for the entry and represents income escaping assessment. Accordingly. I have reasons to believe Rs. 25.00.000/- has escaped assessment and the escapement has been on account of failure on part of assessee to truly and fully disclose all material fact therefore it is a fit case for initiation of proceedings u/s 147 of the IT Act. " 3.1. The Ld. CIT(A) referring to the above reasons noted that A.O. had specific information ....
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....on mentioned the Bank Account no, instrument no. etc of the accommodation entries. The information further mentions that the amounts were found credited in assessee's Bank account with Bank of America. Therefore, the Assessing Officer has correctly initiated the re-assessment proceedings in the matter. The Ld. CIT(A), accordingly, upheld the initiation of the re-assessment proceedings in the matter and rejected this ground of appeal of assessee. 4. The Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that it was only borrowed satisfaction based on information received from Investigation Wing and that A.O. has not applied his mind to the information received from Investigation Wing. The reopening of the assessment is invalid and bad in law. He has relied upon Judgment of Hon'ble Delhi High Court in the cases of Pr. CIT-4 vs., G & G Pharma India Ltd., 2015 (10) TMI 754 (Del.); Pr. CIT-6 vs., M/s. N.C. Cables Ltd., 2017 (1) TMI 1036 (Del.); Pr. CIT vs. Meenakshi Overseas Pvt. Ltd., 2017 (5) TMI 1428 (Del.) (HC) and Pr. CIT-5 vs., Jatin Investment Pvt. Ltd., 2017 (2) TMI 342 (Del.) (HC). 5. On the other hand, Ld. D.R. ....
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.... The report received from the DIT (Inv.) Wing further reveals that enquiries were initiated to probe into some Bank account which were used to issue cheques to entry seeker or beneficiary against cash paid by them to the entry operator. The A.O. has specifically recorded the fact in the assessment order that initially in different account of the Investors, the cash have been deposited from where the amount have been transferred to the another accounts of Investors and then transferred to assessee. These informations are specific to show that against the cash, entry have been provided to the assessee by entry providers. The assessee failed to produce any evidence before the authorities below. Therefore, it is a fit case of escapement of income on account of failure on the part of assessee to disclose fully and truly all material facts. Therefore, reopening of the assessment is wholly justified in the matter. The objections of the assessee have been separately disposed of by the A.O. in which no infirmity have been pointed out by the assessee. At the stage of recording of the reasons for reopening of the assessment, all relevant facts leading to belief are justified. However, the ....
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....e of the assessee filed along with the additional evidence indicates that shares worth Rs. 54,25,000/- were sold at the book value and the assessee had no capital gain from this transaction. Moreover, the additional evidence indicates that money received as accommodation entries were immediately transferred to assessee's sister concern M/s Shiv Cable & Wire Industries on the same date, i.e., 17.3.2001 and, therefore, it appears that the assessee being an investment company had only acted as conduit for transferring the accommodation entries to its sister concern. This explains the assessee's reluctance to furnish proper evidence at appellate stage. The assessee also failed to produce any of the Directors of these 03 accommodation entry provider companies. The A.O. objected to the additional evidence in the remand report. The Ld. CIT(A) noted that during appellate proceedings Counsel for Assessee agreed to produce BLS Polymers Ltd., and M/s. Shiv Cable & Wire Industries for cross-examination. However, the assessee was not prepared to produce the 03 accommodation entry providers namely Suma Finance & Investment Ltd., Arun Finvest (P) Ltd. and Polo Leasing & Finance (P) Ltd., durin....
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....de. 11. On the other hand, Ld. D.R. relied upon the Orders of the authorities below and submitted that these were private transactions and were not listed on any stock exchange. No adequate evidence were furnished. Assessee did not furnish PAN and Bank statements to substantiate genuine transaction. The assessee or other parties did not earn any income and have NIL income only. No business activity have been conducted by them. Therefore, preponderance of probability shows that these were bogus accommodation transactions. The Ld. D.R. relied upon the following decisions : 1. CIT vs., Nipun Builders & Developers (P.) Ltd., 350 ITR 407 (Del.) (HC). 2. CIT vs., N.R. Portfolio Pvt. Ltd., 29 taxmann.com 291 (Del.) (HC). 3. CIT vs., Focus Exports (P.) Ltd., [2015] 228 Taxman 88 (Del.) (HC). 4. CIT vs., Neelkanth Ispat Udyog Pvt. Ltd., [2013] 81 DTR 214 (Del.) (HC). 5. CIT vs., N. Tarika Investment Pvt. Ltd., 40 taxmann.com 225 (Patna) (HC). 6. CIT vs., Titan Securities Ltd., 32 Taxman 306 (Del.) (HC). 7. PCIT vs., Vikram Singh Order of Hon'ble Delhi High Court Dated 25.08.2017. 12. We have considered the rival submission....
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....Further, the balance-sheet of the assessee company is filed which shows that assessee has NIL income, NIL expenditure and only carry forward losses have been shown. Return is filed at NIL income. No business activities have been carried out by the assessee. It is, therefore, difficult to believe that when assessee did nothing in assessment year under appeal as well as in preceding assessment year, how the assessee has been able to sell the shares to such parties who have made cash deposits in their Bank account before giving cheque to the assessee. Therefore, the circumstances clearly show that these were bogus entries received by the assessee in the name of sale of shares. How the investors would show faith in assessee when assessee has no worth at all ? The Ld. CIT(A) has also specifically found on record that the money received as accommodation entries were immediately transferred to assessee's sister concern M/s. Shiv Cable & Wire Industries on the same day on 17.03.2001. It will strengthen the finding of fact recorded by the authorities below that assessee had been acting as a conduit for transferring the accommodation entries to its sister concern. These facts clearly show....