TaxTMI 
TaxTMI 
2016 (1) TMI 1442
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....facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making aggregate addition of Rs. 9,36,328/- (as per details given in the assessment order) on 'account of alleged unexplained entries in bank account and that too by recording incorrect facts and findings and without considering the submissions/evidences of the assessee. 3. That in any case and in any view of the matter, impugned addition and impugned assessment order are bad in law, illegal, unjustified, barred by limitation, contrary to facts & law and based upon recording of incorrect facts and finding, without giving adequate opportunity of hearing, in violation of principles of natural justice and the same deserves to be quashed. 4. That the appellant craves to leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 3. The grounds raised in the Revenue's Appeal No. 2999/Del/2013 read as under:- "The CIT(A) has erred in deleting the addition of Rs. 10,00,000/- made by AO u/s. 68 of the I.T. Act, 1961 on account of accommodation ....
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....cted. On the basis of this bank statement, the Assessing Officer again besides asking the assessee to explain the credit entries of Rs. 10,00,000/-, also required the assessee to explain all the other credit entries in the bank accounts and simultaneously also asked the assessee to explain why all the credit entries appearing in his bank account be not added in his returned income u/s 68 as income from undisclosed sources for the assessment year under consideration. 4.3 In response, the AR of the assessee has filed the reply vide letter dated 14.11.2011. After considering the reply of the AR, the AO observed that as per the information of the DIT(Inv.) since Sh. Satish Kumar Sharma was involved in giving bogus accommodation entries, the receipts of Rs. 10,00,000/- from him cannot be held to be reliable and genuine. He, accordingly, added the amount of credit entries aggregating to Rs. 10,00,000/- to the income of the assessee u/s. 68 of the Income Tax Act, 1961. 5. Against the Order of the Ld. AO, assessee appealed before the Ld. CIT(A), challenging the validity of reassessment as well as the addition of Rs. 10,00,000/-. Ld. CIT(A) who vide impugned order dated 27.2.2013 has ....
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....ers of the revenue authorities and the case laws cited by the assessee's counsel as well as Departmental Representative on the issue in dispute. For the sake of clarity, we would like to discuss the reasons for initiation of proceedings u/s. 147 and for obtaining the approval of the Addl. CIT/CIT as under:- "The Directorate of Income Tax (Investigation), New Delhi has carried out investigation in the cases of certain group of persons who were engaged in providing accommodation entries. These enquiries were initiated to probe into some bank accounts which were used by these persons to issue cheques to entry seekers or beneficiaries against cash paid by them to the entry providers. Such a camouflaged transaction came to light during the course of survey in the case of M/s Gurcharan Jewellers whose proprietor Sh. Ashok Kumar Chaudhary had admitted to have taken cheques under the garb of gifts after giving cash to the entry operator. Probe was initiated into the accounts which were used to provide these accommodation entries. These investigations led to revealing of many more bank accounts which were being used by the entry operators for the purpose of giving bogus ac....
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....r only concern was with the few thousand rupees given to them by the entry operators. Summing up, the report as a result of these extensive enquiries carried out by the DIT(Inv.), New Delhi has assailed genuineness of transactions, whether shown by beneficiaries as inflow of share capital / loan or receipt of gifts or consideration for sale purchase. It has also dealt a body blow to the creditworthiness of the persons controlling the concerns who have given these credit entries/ share capital / gifts / sale consideration as they have been found to be men of no means. In the instant case of the assessee, the following credits have been shown in the bank account. Bank of the assessee Branch of the Bank Amount Instrument No. Date Credit entry coming from the account of Bank a/c of entry provider BOR New Rohtak Road 25,00,000 5.8.2003 Satish Kumar Sharma 15447, SBBJ, NRR BOR New Rohtak Road 25,00,000 5.8.2003 Satish Kumar Sharma 15447, SBBJ, NRR BOR New Rohtak Road 25,00,000 5.8.2003 Satish Kumar Sharma 15447, SBBJ, NRR BOR New Rohtak Road 25,00,000 &nb....
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....n fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: "it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries". In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show 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 t....
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....ssessee was the beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. (iv) Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid up capital of Rs. 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to the quashed." 10. In view of above, we are of the considered view that the aforesaid issue in dispute is exactly the similar and identical to the issue involved in the present appeal and is squarely covered by the aforesaid decisions of the Hon'ble High Court of Delhi in the case of G&G Pharma (supra) & Signatures Hotels (P) Ltd. (Supra). How....