TaxTMI 
TaxTMI 
2021 (10) TMI 910
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.... taken accommodation entries from one Shri Surendra Kumar Jain through dummy companies. In the details of the beneficiaries, name of the middleman, date of the cheque, the company from whom the accommodation entries are taken, name of the assessee, the bank from which accommodation entries routed through, cheque number, the amount of cheques and the name of the middleman was mentioned. According to the information assessee received two cheques on 10th March, 2010 from Axis Bank of Rs. 10,00,000/- each through middleman 'Goyal Sahab' from M/s. Zenith Automotive Pvt. Ltd. and Shalini Holdings Ltd. The reasons were recorded on 9.04.2013. Therefore, Assessment order u/s. 143 read with Section 147 assessment order was passed by the ld. Income Tax Officer, Ward 5(1), New Delhi, on 25th of August, 2014 passing a cryptic order and accepted the returned income. 3. On examination of the record, the ld. PCIT noted that there was detailed information available with the Assessing Officer about accommodation entries obtained by the assessee from M/s. Jain Brothers i.e. Mr. S.K. Jain, the name of the middleman is mentioned. The documents were also found where assessee is mentioned as a b....
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....is, it was submitted that the issue is squarely covered against the assessee. 8. We have carefully considered the orders of the lower authorities as well as the contention of the ld. DR. The first ground of appeal raised by the assessee is that the Assessing Officer should have initiated proceedings under Section 153C of the Act instead of Section 148 of the Act. Therefore, the assessment order, which is sought to be revised, is itself void ab initio. Therefore, the subsequent proceedings of revising that order are invalid. On careful consideration of the above argument, we find that on the search on Mr. S.K. Jain, no material pertaining to or belonging to this assessee was found. From the material an information was available that assessee is beneficiary of accommodation entries taken from Mr. S.K. Jain. We also found that all the material belonging to and pertaining to Mr. S.K. Jain was used as information in case of assessee. In view of this, according to us, the ld. Assessing Officer has correctly assumed jurisdiction under Section 148 of the Act. Therefore, ground No. 1 is dismissed. 9. The second ground relates to some infirmity in the reasons recorded. However, on perusal ....
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....y cover the issue against the assessee. Even otherwise on earlier occasions the assessee has merely submitted the judicial precedents. However, no evidence was produced to show that what kind of enquiry and information the Assessing Officer was supplied during the course of re-assessment proceedings. On identical facts and circumstances, Hon Supreme court in case of Daniel Merchants Pvt. Ltd. has dismissed the SLP against the order of the Hon. Calcutta High court holding that:- "In all these cases, we find that the Commissioner of Income Tax had passed an order under Section 263 of the Income Tax Act, 1961 with the observations that the Assessing Officer did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry thorough and detailed inquiry. It is this order which is upheld by the High Court. We see no reason to interfere with the order of the High Court. The Special Leave Petitions are dismissed." 14. Further honourabl....
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....e the real owners of the money through the bank secrecy laws and attorney-client privilege. The techniques used for the purpose are to lend the proceeds back to the owner as loans, gifts and, etc., under invoicing the items exported to the real owner or, etc. In some cases, the transfers may be disguised as payments for goods or services, thus giving them a legitimate appearance. 3. Integration This involves investment in the legitimate economy so that the money gets the colour of legitimacy. This is achieved by techniques such as lending the money through 'front' companies, etc. The money may be invested in real estates, business and, etc. The stages at which money-laundering could be easily detected are those where cash enters into the domestic financial system, either formally or informally, where it is sent abroad to be integrated into the financial systems of tax haven countries and where it is repatriated in the form of transfers." The role of the revenue authorities in tackling the menace of laundering black money was commented by the learned author as follows: "It has to be kept in view that India has a problem of black economy, which is unaccounted and ma....
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.... favour of the assessee honoured, matching amounts were credited to the accounts of the subscribers shortly before the cheques issued in favour of the assessee were presented for collection. (f) 19 applicants of shares within a period of less than six months had money contributed to their share capital which in their turn they contributed to the share capital of the assessee. So that, the 19 companies which contributed to the share capital of the assessee in the name of assets were left merely with the share-scrips of the assessee. The other lot of 15 subscribers in substance had the share-scrips held by them substituted by the share-scrips of the assessee. (g) Though, Mr. Poddar made extensive submissions scanning the order under section 263 in between the lines, he did not criticize the finding of the Commissioner that "the Assessing Officer did not examine a single director of the assessee-company or of the subscribing company" which goes to show that correctness of this assertion is not in dispute. (24) From the aforesaid evidence the following, prima facie, inferences can safely be drawn: (a) The promoter/directors of the assessee and their close relatives and friends ....
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....en by the assessee, the Income-tax Officer has the jurisdiction to enquire from the assessee the nature and source of the said amount. When an explanation in regard thereto is given by the assessee, then it is for the Income-tax Officer to be satisfied whether the said explanation is correct or not. It is in this regard that enquiries are usually made in order to find out as to whether, firstly, the persons from whom money is alleged to have been received actually existed or not. Secondly, depending upon the facts of each case, the Income-tax Officer may even be justified in trying to ascertain the source of the depositor, assuming he is identified, in order to determine whether that depositor is a mere name-lender or not. Be that as it may, it is clear that the Income-tax Officer has jurisdiction to make enquiries with regard to the nature and source of a sum credited in the books of account of an assessee and it would be immaterial as to whether the amount so credited is given the colour of a loan or a sum representing the sale proceeds or even receipt of share application money. The use of the words 'any sum found credited in the books' in section 68 indicates that the s....
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.... haste. When we consider the above factual matrix, there can be no escape from an axiomatic conclusion that in all these cases the enquiry conducted by the Assessing Officers is exceedingly inadequate and hence fall in the category of 'no enquiry' conducted by the Assessing Officer, what to talk of charactering it as an 'inadequate enquiry'. In our considered opinion, the highly inadequate enquiry conducted by the Assessing Officer resulting in drawing incorrect assumption of facts, makes the orders erroneous and prejudicial to the interests of the Revenue." (27) In the case of Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC), the Tribunal had held as follows (page 327): "The Tribunal further held that if the orders for 1955-56 to 1959-60 were left out and the assessment order for 1960-61 was considered by itself, it could not be said that the assessment order was prejudicial to the interests of the Revenue. It was also observed that the factum of advance of initial capital, realization of amounts by sale of gold ornaments and the carrying on of the money-lending and speculative business had already been accepted and assessed in the previous years, that eve....
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....e Income-tax authorities is liable for the income thereof." The reasoning advanced by their Lordships in respect of an alleged revenue receipt is, according to us, equally applicable to an alleged capital receipt which, in fact, was received only in papers. The attempt of the assessee, it was apprehended in the case of Tara Devi (supra) was to assist someone else. An identical attempt is involved in this case. Who is the per son sought to be assisted by the assessee? This question can only be answered after a thorough enquiry, directed by the Commissioner of Income-tax, is held. The assessee is interested in stalling that investigation on the plea that the order of the Assessing Officer is neither erroneous nor prejudicial to the interests of the Revenue. (28) We have indicated above the pieces of evidence which go to show that the Commissioner had reasons to entertain the belief that this was or could be a case of money laundering which went unnoticed because the Assessing Officer did not hold the requisite investigation except for calling for the records. The evidence which we have tabulated above and the prima facie inference drawn by us is deducible from the documents also ....
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....iness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within the assessee's knowledge. Mere production of incorporation details, PANs or the fact that third persons or company had filed Income-tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take the decisions, control and manage them." The persons behind the assessee-company and the persons behind the subscribing companies were not interrogated which was essential to unearth the truth. Reference may also be made to the judgment of this court in the case of CIT v. Active Traders Pvt. Ltd. (supra). The question for consideration is whether in the presence of materials discussed above the Commissioner was justified in treating the assessment order er....
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....r the proviso to section 68 of the Income- tax Act is retrospective in nature. To that extent the question is kept open. We may however point out that the Special Bench of Delhi High Court in the case of Sophia Finance Ltd. (supra) held that "the Income-tax Officer may even be justified in trying to ascertain the source of the depositor". Therefore, the submission that the source of source is not a relevant enquiry does not appear to be correct. We find no substance in the sub mission that the exercise of power under section 263 by the Commissioner was an act of reactivating stale issues. In the case of Gabriel India Ltd. (supra) the Commissioner of Income-tax was unable to point out any error in the explanation furnished by the assessee. Whereas in the present case we have tabulated the evidence which was before the Assessing Officer which should have provoked him to make further investigation. The Assessing Officer did not attach any importance to that aspect of the matter as discussed above by us. The judgment in the case of Leisure Wear Exports Ltd. (supra) relied upon by Mr. Poddar has no applicability because the evidence furnished by the assessee in this case does suggest a ....