TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1951
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....tice U/s 148 of the Act by recording the reasons and finalized the assessment proceedings U/s 148/143(3) of the Act and assessed total income of Rs. 75,16,250/-. The ld. CIT(A) has confirmed the action of the Assessing Officer. 3. Now the assessee is in appeal before the ITAT by taking following rounds of appeal: "1. The ld. CIT(A) has erred on facts and in law in upholding the validity of the order passed by A.O. U/s 147 of the IT Act, 1961. 2. The ld. CIT(A) has erred on facts and in law in confirming an addition of Rs. 75 lakhs U/s 68 by treating the share capital money received from the following parties as unexplained: S. No. Name of the company Amount 1. Alka Diamond Industries Ltd. Rs. 15 lacs 2. Javda India Impex Ltd. Rs. 15 lacs 3. Kush Hindustan Entertainment Ltd. Rs. 15 lacs 4. Vanguard Jewels Ltd. Rs. 15 lacs 5. Yash-V Jewels Ltd. Rs. 15 lacs Total Rs. 75 lacs 2.1. The ld. CIT(A) has erred on facts and in law in confirming the above addition ignoring that Sh. Praveen Jain whose statement is made the basis for making addition has retracted from his statement and opportunity to cross examine him was not provided. 3. The asse....
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....ntimation u/s 143(1)was issued accepting the return. Notice u/s 148 was issued for the following reason:- "Information was received from the office of the Addl. Director of IT (Inv.) Unit V that M/s Sarthak Securities (P) Ltd. had received bogus accommodation entries during the financial year 2002-03 relevant to the asst. yr. 2003-04 as per details placed contra. ........................ According to the information received from the Director of IT (Inv.), the accommodation entries are received as share application money or as unsecured loan. The assessee's balance sheet as on 31st March, 2003 showed that there is introduction of share capital of Rs. 2,84,800 and share premium of Rs. 8,65,000. In this case return of income for the asst. yr. 2003-04 was filed on declaring income of Rs. 15,360 and as per records assessment has not been completed under s. 143(3) of the IT Act. As the assessee had received bogus accommodation entry of Rs. 10,50,000 during the asst. yr. 2003-04, I have reason to believe that income chargeable to tax has escaped assessment." Findings of the case:- The AO was aware of the existence of four companies with whom the assessee had entered into transa....
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....7. In the report it has further been stated that all the entry giving companies are operating from the office of Shri Tarun Goyal addressed at 13/34, WEA Arya Sarns Road, Karol Bagh, New Delhi and his earlier office at 203- Dhaka Chambers, 2069/39, Naiwala, Karol Sa'gn, New Delhi. It has also been stated that the directors of these companies are former and present employees of Shri Tarun Goyal who were used merely for signing the documents, bank cheques etc. I have perused the information contained in the report and the evidences gathered. The report provides details of the modus operandi and explain show the unaccounted money of the beneficiaries are ploughed back in its books of account in the form of bogus share capital/capital gains, unsecured loans etc. after routing the same through the bank account (s) of the entry operators floated by Shri Tarun Goyal. Entry operators were identified after thorough investigation on the basis of definitive analysis of their identity, creditworthiness and the source of the money ultimately received by the beneficiaries, In the instant case, the assessee is found to be the beneficiary of accommodation entry from such entry operator control....
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....arma India Ltd. in ITA No. 545/2015 dated 8.10.2015 of Delhi High Court ITO vs. M/s NC Cables Ltd. in ITA No. 4122/Del/2009 dated 22.10.2014 Amarlal Bajaj vs. ACIT reported in (2013) 37 taxmann.com 7 (Mum.) (Trib.) CIT vs. S. Goyanka Lime & Chemicals Ltd. reported in (2015) 56 taxmann.com 390(MP) (HC) CIT vs. S. Goyanka Lime & Chemical Ltd. reported in (2015) 64 taxmann.com 313(SC) V.S. Capital Services Pvt. Ltd. Vs. ITO 46 CCH 0224 (Del.) (Trib.) decision dt.03.03.2016 Facts of the case The assessee filed return of income on 31.10.2002 declaring income of Rs. 3,811/-.The return was processed u/s 143(1) of the Income-tax Act, 1961 on 27.1.2003. The case was reopened u/s. 147 of the Income Tax Act after recording the following reasons:- "The Information has been received by the Directors of income tax (Inv)-I New Delhi vide letter no DIT (Inv)-I/2006-07/AE/258 at 16/6/2006 that the above said company have received accommodation entries as above:- Rs. 100000/- on 31.03.2002 from M/s. Rabik Exports Limited Through Corporation Bank Paschim Vihar A/c No.-52199 and Rs. 100000/- on 31.03.2002 from Mis. Shashi Sales & Marketing Pvt. Limited Through Corporation Bank Paschi....
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....ring scam' and explains how the unaccounted money of the beneficiaries are ploughed back in its books of account in various forms including the form of bogus share capital/capital gains etc after routing the same through the bank account (s) of the entry operators. Entry operators were identified after thorough investigation on the basis of definite analysis of their identity, creditworthiness and the source of the money ultimately received by beneficiaries. These entry operators are found to be mostly absconding/ non-complying after the unearthing of the 'Money Laundering Scam' leaving the said money at the disposal of the beneficiaries without any associated cost or liability. In the instant case, the assessee is found to be the beneficiary of accommodation entry from such entry operators as per the following specific details of transaction:- ......... The assessee has received unexplained sums from the entry operators as per the above details as per information available with the undersigned. As explained above, the identity, creditworthiness and genuineness of transactions with the persons found to be entry operators cannot be established. I therefore have reaso....
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....not justified in invoking the provision of section 147 of the Act by issuing notice u/s 148 of the Act. Similar view was taken by Jodhpur Tribunal Bench in case of Vinayak Shyam Enterprises Pvt. Ltd. Vs. ITO vide its order dt. 21.05.2014 in ITA No.104/Jodh/2014 wherein it was held that on receipt of information from DDIT (Inv) the AO has issued notice u/s 148 of the Act. The investigation done in a third party's case was never confronted to the assessee. The ld. DDIT has even given direction to the AO to issue a notice u/s 148, which the AO has treated as a valid reason for initiating action u/s 147/148. Therefore, the AO has not applied his mind to this information to independently arrive at a belief that on the basis of material before him income had escaped assessment. CIT vs. SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del.) (HC) The assessee's return was processed u/s 143(1). Subsequently, the DDIT (Inv.)informed the AO of the assessee that during the course of investigation, one SG, proprietor of M/s RK had stated on oath that the transactions through certain bank account were only paper transactions in which the party was intending to take bills paid in cash and issue ....
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.... Import India Pvt. Ltd. relied by the CIT(A) is not applicable in as much as in that case the AO in the notice issued u/s 148 has given all the details like instrument number, date, name of the bank and the branch as well as account number of entry provider. The High Court at Para 11 of the order held that the material present before the AO at the time of recording reasons for reopening the assessment also disclosed the date on which the entry was taken, the cheque or DD number, the name of the bank and branch & the account number and with such precise material before the AO, the existence of which is beyond challenge, it can hardly be said that the AO could not have a prima facie belief that income chargeable to tax had escaped assessment in the hands of the assessee. But in the assessee's case the reasons recorded does not provide any such details. Further, the reasons state that the amount is of bogus purchases and thereby assessee suppressed the profit whereas the AO himself has accepted while passing the order that these amounts are not in respect of bogus purchases. Thus, the issue is not of sufficiency or correctness of material but it is a case of vague/irrelevant material ....