TaxTMI 
TaxTMI 
2020 (1) TMI 856
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....s Total Rs. 45 lacs 2. Briefly, the facts of the case are that a search and survey action was carried out on Sh. Surendra Kumar Jain and his group by Investigation Wing, New Delhi on 14.09.2010 wherein various incriminating documents were found and seized which shows that he was engaged in providing accommodation entry the various concern basis the said information. The Assessing Officer issued notice u/s 148 dated 26.03.2015 stating that the assessee company has obtained bogus accommodation entry of share capital/share premium/ loan amounting to Rs. 45,00,000/- which has escaped assessment u/s 147 of the Act. In response, the said notice, the assessee filed its return of income on 22.12.2015 declaring total income at Nil during the course of assessment proceedings. The assessee company was asked to justification share capital money receipt during the year. In absence of any response receipt from the assessee company and relying on the statement of the Sh. Surendra Kumar Jain. It was held by the Assessing Officer. The assessee has introduced accounting cash amounting to Rs. 45,000,00/- in the form share capital the source of which could not be explained and the s....
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....diction of assessee company lies with Income Tax Officer, Ward 1(1), Jaipur as per PAN jurisdiction and assessee company is filing its return of income with Income Tax Officer, Ward 1(1), Jaipur. Thus any correspondence or notice issued by your good self to company is without jurisdiction and therefore void abinitio..." 4. In this connection, it is relevant to refer to the binding decision of the Hon'ble Rajasthan High Court in the case of CIT v. Poonam Chand Surana [2014] 221 Taxman 0151 (Raj.) in which notice u/s 148 issued from a wrong jurisdiction was struck down as invalid. That even if the AO was not aware of the correct address earlier, he was made aware of the same vide letter dated 18.11.2015. A perusal of the address on the assessment order would show that it has been sent on 31.03.2016 on the following address: "M/s Shree Silica Products Pvt. Ltd (now M/s Badaya Ispat Pvt. Ltd.) F-947, Road No. 14, VKI Area, Jaipur " Hence, the assessment order was passed in the name of a non-existent company and with wrong address. 5. The CIT(A) has dealt with this issue in the following words: " 3.2 I have considered the facts of the case, gone through the as....
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.... DGIT (Inv.) the assessee M/ s Shree Silica Products Pvt. ltd. has also obtained bogus accommodation entries of share capital/ Share premium/ loan as per the following details: Entry providing company Nature of entry Amount VIP Leasing & Finance P. Ltd. Bogus share capital/share premium/loan 15,00,000/- Singhal Securities P. Ltd. Bogus share capital/ share premium/ loan 15,00,000/- Finage Lease & Finance India Ltd. Bogus share capital/share premium/loan 15,00,000/- Total 45,00,000/- The above details regarding the accommodation entries have been forwarded by the DIT (Inv.)-II, New Delhi through his office letter F.No. DIT/(Inv.)-II/ U/ s 148/ 2012-13/ 293 dated 15th March, 2013. Therefore , looking to the facts mention above, it is seen that the above person is liable to pay tax on bogus accommodation entries of share capital/ Share premium/ loan. Hence, I have reason to believe that income of Rs. 45,00,000/ - has escaped from assessment within the meaning of section 147 of the I.T. Act, 1961. Therefore, it is a fit case for issue notice u/ s 148 of the I.T. Act, 1961." 8. It is clear from the language of the ....
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....ome-Tax -5 v. Shodiman Investments (P.) Ltd. [2018] 93 taxmann.com 153 (Bombay); (ii) by the Calcutta High Court in the case of Principal Commissioner of Income-Tax, Kolkata v. More Overseas [2018] 97 taxmann.com 657 (Calcutta); (iii) and by the Delhi High Court in the case of Sabh Infrastructure Ltd. v. Asst. CIT, WP(C) 1357/2016 delivered on 25.09.2017. 10. It was submitted that a perusal of the reasons recorded, as reproduced above, shows that the AO has completely relied on the letter of the DIT(Inv.), Delhi mechanically. In the assessment order, the AO states that in his statement recorded during the course of search Shri Surendra Kumar Jain have explained his modus operandi (see page 7 of the assessment order). Further, he has also stated in the last para on page 8 that statement of Shri Ravinder Goel, one of the brokers, was also recorded. None of this finds mention in the reasons recorded. Moreover, it is clear that copies of statements were not with the AO. The AO has also mentioned about enquiries made before and during search. This also does not find mention in the reasons recorded. Hence, it is clear from the reasons recorded, that except for the letter of the DIT(In....
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.... of Account * Director's confirmation * ITR Acknowledgment * Financial statements * List of Directors * Form no. 32 * Assessment orders for A.Y. 2005-06 to 2011-12 passed u/s 153C/ 153A Thus, the following facts which emerge from the case need to be highlighted: 1. There is enough evidence in the nature of share application form, ITR acknowledgment, bank accounts etc. to prove that the creditors were genuine, their identity was proved, and that they had the financial wherewithal to advance the credits, and that such a credit was indeed given. 2. The assessment of these companies were framed u/s 153C/ 153A on 28.03.2013 wherein their genuineness was accepted and no addition or adverse finding was recorded in their cases. A perusal of the assessment orders passed after the search prove this fact. The notices u/s 148 were issued on 26.03.2015 full 2 years after the said companies had been accepted as genuine. Once, the companies are treated as genuine, their financial capability is proved, and they are assessed to tax even after the search, the credits given by them cannot be doubted. 3. The payment of the credits w....
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.... the decision in the case of Lovely Exports P. Ltd. is a decision of the Hon'ble Supreme Court and overrides the decision of the High Court; 15. In addition to the case of Lovely Exports P. Ltd. supra, other cases cited in support are: 1. CIT v. Supertech Diamond Tools Pvt. Ltd. 229 Taxman 62 (Rajasthan); 2. CIT v. Shree Barkha Synthetics Ltd. 270 ITR 477(Raj.); 3. CIT v. Pooja Agarwal [2011] ,D.B.ITA No. 603/2011 delivered on 11.0.2017 4. CIT v. First Point Finance Ltd., 286 ITR 477 (Raj); 5. CIT v. Nipuan Auto (P.) Ltd. [2013] 89 DTR 342(Del HC); 6. CIT v. Vacmet Packaging (India) Pvt. Ltd., 367 ITR 217(A11.). In view of the above, the addition of Rs. 45,00,000/- made by the AO and confirmed by the CIT(A) needs to be deleted both in law and on facts. 16. The ld. DR submitted that the jurisdiction of the assessee M/s Shree Silica Products Pvt. Ltd lies with ITO, Ward-4(1), Jaipur as per the information gathered from the CBN PAN based query-ITD system. Thereafter, the name of the assessee company has been changed as M/s Badaya Ispat Ltd and another PAN of the company is lying with ITO, Ward-1(1), Jaipur. It was subm....
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....anies, Jaipur with corporate identity no. U24117RJ1988PTC004274 with name of Badaya Ispat Private Limited with mailing address of F-947-949, Road No. 14, VKI Area, Jaipur. The assessee company applied for a fresh PAN and was allotted PAN No. AADCB4084H with name and address of Badaya Ispat Private Limited, F-947, Road No. 14, VKI Area, Jaipur. Thereafter, the name of the company was changed to Badaya Ispat Limited and currently, the name of the company is Rajshree Alloys India Ltd with same corporate identity no. U24117RJ1988PTC004274 and mailing address of F-947-949, Road No. 14, VKI Area, Jaipur. We therefore find that there has been only a change in name of the entity and besides that, there is no change in the corporate identity of the assessee company. It is therefore not a case where the assessee company ceases to exist and/or amalgamated with any other existing/new entity. Therefore, it is not a case where the notice u/s 148 has been issued and assessment u/s 143(3) r/w 147 has been completed in the name of non- existent entity. The decisions relied upon by the ld AR therefore doesn't support the case of the assessee company. Further, we find that PAN No. AACCS4046D with ....
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....t income has escaped assessment. At the stage of recording reasons, the Assessing officer has to record his prima facie opinion that the income has escaped assessment. It is not the case of the assessee company that the details of the transaction recorded by the Assessing officer was not correct or false in terms of name of entity, nature of transaction and the amount involved. In the instant case, where the Assessing officer has received information that the assessee has obtained accommodation entries, the same constitute a tangible material and basis examination thereof, where he has held that income has escaped assessment, we donot see any infirmity in the action of the Assessing officer in exercising jurisdiction u/s 148 of the Act. 20. In the result, the ground no. 1 of assessee's appeal is dismissed. 21. Now coming to merits of the case. In this case, the assessment was completed u/s 148 read with 143(3) wherein addition of Rs. 45,00,000/- was made by the Assessing Officer for the reason that the assessee could not satisfactorily explained the source of the money and the same was treated as unexplained cash credit u/s 68 of the Act. In support of the share application m....
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....per ITNS 150 enclosed. Issue requisite documents. 3. This assessment order is being passed after obtaining the approval of the Additional Commissioner of Income Tax, Central Range-6, New Delhi, communicated vide his office letter Addl. CIT/CR-6/2012-13/419 dated 28.3.2013." 23. On similar lines, the assessment orders for AY 2008-09 have been passed in case of other two entities namely, Singhal Securities P. Ltd and Finage lease & Finance India Ltd wherein again, there is no finding recorded by the Assessing officer to the effect that the said companies are involved in providing any accommodation entries. It is relevant to note that in all these three cases, the assessment proceedings were reopened basis the search and seizure operation in case of S.K. Jain Group on 14.09.2010, which is the same search operation basis which, the notice u/s 148 has been issued to the assessee company. In the reasons recorded u/s 148, the Assessing Officer has referred to the communication received from DIT (Inv.)-II, New Delhi through his letter dated 15th March, 2013 wherein the certain details have been given regarding bogus accommodation entries obtained by the assessee company. By the....
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....ed is placed at page no. 8 of the assessee's paper book). It is also noticed that on same date i.e. 28.03.2013, the AO of M/s Singhal Securities Pvt. Ltd., framed the assessment u/s 153C/153A of the Act at the same figure of the loss amounting to Rs. 51,528/- which was declared by the said assessee in its return of income. It is also noticed that Sh. S.K. Jain in whose premises search took place was not a shareholder of M/s Singhal Securities Pvt. Ltd. and was also not connected with the assessee. In the present case, when the assessment of M/s Singhal Securities Pvt. Ltd. from whom the assessee received share application money was assessed at the same figure of the loss which was declared by the said assessee, on the same date when the AO recorded the reasons that the income of the assessee escaped assessment for a sum of Rs. 14,00,000/- i.e. the amount received as share application money from M/s Singhal Securities Pvt. Ltd. In the present case, it cannot be said that the AO was having any material in his possession except the information received from the Investigation Wing. Therefore, the reopening was done by the AO only on the basis of the information received from Investigat....
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....how how the CIT(A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analyzing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity." 10. In the present case also the AO in the reasons recorded mentioned that it had come to his knowledge that the persons from whom amount was received were entry operator and provided the entries to the assessee after receiving the amount in cash, however, nothing was brought on record that how and in what manner the persons from whom the assessee received the loans were entry operator and that as to how the c....