TaxTMI 
TaxTMI 
2020 (1) TMI 1047
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....ting to Rs. 41,52,000/-". 3. Briefly stated relevant facts include that the assesseecompany, engaged in the business of steel trading, filed its return of income for the AY.2006-07 on 06-11-2001 declaring NIL income. In the scrutiny assessment, the Assessing Officer (AO) made an addition of Rs. 68,52,000/- u/s.68 of the Income Tax Act [Act] on account of share application money, without premium. During the course of scrutiny proceedings, the AO noted that there is a share application money of Rs. 80,52,000/-. The following companies/persons subscribed to the share application money for shares of Rs. 1,000/- face value with a premium of Rs. 9,000/-. The details are as under: S.No Name (M/s. S/Shri/Smt) Rs. 1. Kasturi Reddy 8,00,000 2. P. Sambasiva Rao 27,02,000 3. Buniyad Chemicals Ltd., 20,00,000 4. Talent Infoway Ltd., 20,00,000 5. Durbal Corp. 1,50,000 6. Pawan Kumar Sharma 2,00,000 7. Ratan Sharma 2,00,000 4. During the assessment proceedings, the AO asked the assessee to furnish the background facts of each subscriber and the transactional details of the share capital introduced by each of them. There....
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....s. 1 11-10-2005 Inw. Rtn chgs 276.00 10339.50 2 14-10-2005 Trfr from 627905006598 (Bahety Enterprises) -- 900000.00 910339.50 3 14-10-2005 Trfr from Manasi exim Pvt. Ltd. 276.00 100000.00 1010663.50 4 14-10-2005 Inw. Rtn chgs 276.00 -- 1010063.50 5 17-10-2005 Badrinath Steels Pvt. Ltd. 1000000.00 -- 10063.50 The Bank account of Bahety showed that there was a deposit of cash of Rs. 9,00,000/- on 14.10.2005 which was transferred by cheque to Buniyad's a/c. Similarly, the bank account of Manasi Exim (627905006805) in ICICI Bank, Kolakata showed that there was a credit of Rs. 25,40,000/- with the narration "Trfr from :various" out of which cheques were issued to Buniyad and one other party. The striking similarity in the transactions in the Bank accounts of the above entities which are the immediate and next to immediate source of the share application money is not a coincidence. This appears to be a well organized activity of providing accommodation entries to bring unaccounted monies into the system in a circuitous way to escape the tax radar. 2. Mr. Mukesh ....
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....Rs. 10,00,000/-) totaling Rs. 68,52,000/- is treated as unexplained cash credits u/s.68 in the hands of the assessee and is assessed accordingly". 5. Aggrieved with the above findings of AO, the assessee preferred an appeal before the CIT(A). 6. In the initial paras of the CIT(A)'s order, there was a discussion of the companies of Shri Mukesh Choksi, search proceedings and the outcome of the said search proceedings. There was also a discussion about fraudulent transaction among the said accommodation entries, nature of shell company of Shri Mukesh Choksi. The CIT(A) extracted the statement of Shri Mukesh Choksi in his order. In para 3.2, there was a discussion about the reopening of the assessment and the present assessee to his transactional nexus with the company of Shri Choksi. The CIT(A) analysed each of the subscribers, contributed the said sum of Rs. 68,52,000/- in para 4 onwards. At the end of the proceedings, the CIT(A) allowed assessee's claim so far as the subscription by Shri Sambasiva Rao is concerned. Rest of the share application subscriptions in favoaur of M/s.Talent Infoway Ltd., M/s.Buniyad Chemicals, Shri Pawan Kumar Sharma, Shri Ratan Kumar Sharma and Shri ....
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....share application money. Referring to rest of the three subscribers, Ld.Counsel for the assessee argued vehemently that the order of the CIT(A) is to be reversed and relied heavily on the submissions made by the assessee before the First Appellate Authority. 9. On the other hand, Ld.DR for the Revenue relied on the orders of the AO and the CIT(A). 10. We shall now take up each of the subscribers and the decision thereof in the following paragraphs: M/s.Talent Infoway Ltd., and M/s.Buniyad Chemicals: It is an undisputed fact that these two companies belonging to Shri Mukesh Choksi Group of Companies and M/s.Mahasagar Securities Private Limited. Much amount of litigation existed relating to these companies and the accommodation entries provided by the Group of companies of Shri Choksi. Number of orders are in existence as on date. However, both the Counsels failed to file any of such orders of the Tribunal on similar facts. It is a settled legal proposition laid down by the Hon'ble High Court of Delhi in the case of CIT Vs. N.R.Portfolio (P) Ltd., [264 CTR 258] (Delhi). The relevant lines at para 31 of the Hon'ble High Court's order are as under: "31. ....
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....of income of Shri Pavan Kumar Sharma is only the commission income. Shri Pavan Kumar Sharma was summoned and his statement was recorded. The CIT(A) noted that that are cash deposits made just before the cheques were issued. Returned income for the AY.2006-07 is only Rs. 97,180/-. The same is the pattern in the cases of Shri Ratan Kumar Sharma and Shri Anil Kumar Sharma. In the case of Shri Anil Kumar Sharma, though the assessee relied on various decisions such as CIT Vs. Lovely Exports Pvt Ltd., (2008) [216 CTR 195] (SC), the CIT(A) held that the said decision is not applicable to the facts of the present case and relied on the decision of the Hon'ble High Court of Delhi in the case of CIT Vs. Titan Securities Ltd., (2013) [84 CCH 184] (Delhi HC). 11.1. Finally, the CIT(A) confirmed the additions made by the AO in favour of these three persons i.e., Shri Pavan Kumar Shar, Shri Ratan Kumar Sharma and Shri Anil Kumar Sharma. Relevant para of the CIT(A)'s order is extracted here under: "10.4. Going by the above amendment it is must for the share subscribers to offer the explanation about the nature and sources of share capital to the satisfaction of the Assessing....