TaxTMI 
TaxTMI 
2022 (1) TMI 476
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....016 [Revenue] 2. Facts of the case, in brief, are that the assessee is a Company incorporated on 19.04.1993 and is engaged in the business of Finance being NBFC Registered Company. It filed its return of income on 15.10.2010 declaring total income of Rs. 1,06,610/-. Subsequently, on the basis of information received from the Investigation Wing, the A.O. reopened the assessment as per the provisions of Section 147 of the I.T. Act, 1961 on the ground that assessee has taken accommodation entry of Rs. 17,32,00,000/- from companies controlled by Shri S.K. Jain and Shri Virender Kumar Jain Group of Companies. The A.O. accordingly issued notice under section 148 of the I.T. Act, 1961 on 15.04.2013. The assessee-company vide letter dated 14.10.2013 stated that the return filed under section 139 on 15.10.2010 declaring taxable income of Rs. 1,06,610/- may be treated as return in response to notice under section 148 of the I.T. Act, 1961. 2.1. During the course of assessment proceedings the A.O. called for information under section 133(6) from all the parties from whom the assessee-company has received accommodation entries in shape of share application money and share premium fixing ....
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....with Rule 8D made disallowance of Rs. 90,745/-. 2.5. The A.O. further noted that assessee-company has shown receipt of Rs. 21,69,49,267/- from sale of securities. The assessee has claimed salary expenses of Rs. 1,92,000/- which was shown as payable. He, held that there is no employer-employee relationship and the expenses were shown to reduce the tax liability. In absence of any satisfactory explanation given by the assessee, the A.O. made addition of the same to the total income of the assessee. Thus, the A.O. determined the total income of the assessee at Rs. 17,70,53,360/-. 3. Before the Ld. CIT(A), the assessee apart from challenging the addition on merit, challenged the validity of the reopening of the assessment. However, the Ld. CIT(A) upheld the action of the A.O. in reopening of the assessment. While doing so, he noted that the Hon'ble Delhi High Court in the case of Ambica Steel Ltd., vs., DCIT 118 TTJ 116 (Del.) has held that reopening of the assessment on the basis of information received from the Investigation Wing is valid. Further the A.O. in the instant case has noted that the assessee-company was beneficiary of receiving Rs. 17,32,00,000/-. This according to ....
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....e case is that Sh. Deepak Tyagi, S/o Sh. Suresh Chand Tyagi, Director of 6 Companies had appeared before the AO on 30.06.2014 in response to the above said summons. The AO recorded his statement on 30.06.2014 wherein he had confirmed that the above companies had made investment in the shares of the appellant. This fact is missing in the assessment order. 6.6.4. The other documents filed by the appellant, in support of the arguments, have also been examined and it was found that:- • All the investors are companies incorporated by law. • Unique identification no, named as Company Identity Number (CIN) is allotted to all the investors by the MCA. • CIN is allotted on the basis of certain set of documents duly certified by CA or CS. • PAN is allotted to all the investors by the department. • Being artificial persons, companies work through their directors, towhom identity (DIN) is allotted by the MCA. • Again DIN is allotted on the basis of certain set of documents duly certified by CA or CS. • Appellant had issued shares to all the investors. Copy of Form 2, filed with the ROC has been ....
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.... the aspect that there are contrary pronouncements, by the Hon'ble jurisdictional Delhi High Court, on this issue, subsequent to the judgments relied upon by the A.O. as cited by the AR on page A19-A20 of the PB Vol. I. 6.6.7. Before proceeding to make addition with regard to sec 68, the AO was required to discharge his burden as laid upon him under the law by bringing sufficient material on record to disbelieve the claim of the appellant. However, the AO has failed to bring any material on record that the amount of Rs. 17,32,00,000/- is nothing but the appellant's own unaccounted money which was routed through the alleged company. Therefore; the addition made by the AO without any evidence deserves to be deleted. 6.6.8. The action of the AO clearly establishes that there was no adverse material with him other than the information from the Investigation Wing (which was not sufficient in the face of the evidences furnished by the A.O. during assessment proceedings) and the addition has been made contrary to the facts and circumstances of the case and against the settled propositions of law and thus the addition of Rs. 17,32,00,000/- is hereby deleted. 6.6.....
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....iew has been taken by Allahabad High court in the case of CIT (Central) v Vijay Kumar Jain 221 Taxman 180(All) Assessee had taken a loan from company 'B' - Assessing Officer noticed that a raid was conducted in case of 'B' wherein it was found that said company was engaged in providing accommodation entries - Assessing Officer thus added amount of loan taken from said company in assessee's taxable income under section 68 - Commissioner (Appeals) found that lenders were regular income-tax assessee and their PANs were on record - Further, amount had been advanced through account payee cheques and before issuing cheques, lenders had got balance in their accounts - Amount of loan had also been repaid through account payee cheques - In aforesaid circumstances, Commissioner (Appeals) opined that identity and creditworthiness of lenders had duly been proved - Accordingly, addition made by Assessing Officer was deleted -Tribunal confirmed order of Commissioner (Appeals) - Whether on facts, impugned order passed by appellate authorities did not suffer from any infirmity and, thus, revenue's appeal was to be dismissed - Held, yes [Para 6] [In favour of assessee] ....
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....een able to discharge its onus and the AO's action in making addition of the above said amount was contrary to law and facts of the case. Therefore, keeping in view the entire facts of the case and the position of law discussed above, this ground of appeal is decided in favour of the appellant and the addition of Rs. 17,32,00,000/- is hereby deleted. Ground no. 4 of the appeal is allowed." 4. So far as the addition of Rs. 34,64,000/- towards Commission is concerned, the Ld. CIT(A) also deleted the same on the ground that the substantive addition has been deleted. 5. As regards disallowance of Rs. 90,745/- under section 14A of the I.T. Act, 1961 is concerned, the Ld. CIT(A) deleted the addition on the ground that assessee has invested a sum of Rs. 3,47,17,000/- as advance against the property. None of the amounts represents investment in shares. Therefore, the action of the A.O. is contrary to the facts, for which, the Ld. CIT(A) deleted the addition. 6. So far as the addition of Rs. 1,92,000/- on account of disallowance of salary expenses is concerned, the Ld. CIT(A) deleted the same on the ground that A.O. made the addition without raising any query. Further bein....
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....he addition of Rs. 34,64,000/- u/s 69C of the Act made by the Assessing Officer ignoring finding of the Assessing Officer as recorded in the assessment order ? 6. Whether in facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the disallowance amounting to Rs. 90,745/- u/s 14A r.w. Rule 8D of the Income Tax Act 1961 by ignoring findings recorded by the AO and by admitting additional evidence under Rule 46A of the Income Tax Rule 1961 without giving an opportunity of being heard to the A.O. ? 7. Whether in facts and circumstances of the case and in law, the Ld. CIT(A) is legally justified in deleting the disallowance of 'salary expenses' amounting to Rs. 1,92,000/- even when the assessee has failed to discharge its onus u/s 37 of the Act during assessment proceedings and also at appellate stage that it had actually received any services in lieu of payment of Rs. 1,92,000 ? 8. That the appellant craves leave to add, alter, amend or forgo any ground(s) of appeal either before or at the time of hearing of the appeal." 8. The assessee has filed Appeal [ITA.No.5318/Del./ 2016 - A.Y. 2010-2011] challenging the order of the L....
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....tted for adjudication. 9. Learned Counsel for the Assessee at the outset drew the attention of the Bench to the reasons recorded, copies of which are placed at Page-286 to 290 of the PB and submitted that a perusal of the reasons recorded would show that the A.O. has acted solely on the communication received from the Director of Income Tax (Inv.)-2, dated 12.03.2013 recording alleged entry operator racket run by Shri S.K. Jain group and has not applied his independent mind. 9.1. Learned Counsel for the Assessee referring to following decisions, submitted that assessment cannot be reopened without application of mind by the A.O. 1. Basesar Properties Pvt. Ltd., [2017] 88 taxmann.com 634 (Del.) (HC). 2. Kelvinator of India Ltd., [2010] 187 Taxman 312 (SC). 3. Chugmal Rajput vs., S.P. Chellaiah 79 ITR 603 (SC). 4. Sheonath Singh [1971] 82 ITR 147 (SC). 5. Lakhmali Mewaldas [1976] 103 ITR 437 (SC). 6. Kishanchand Chellaram vs., CIT [1980] 4 Taxman 29 (SC). 7. CIT vs., PV Kalyana Sundaram 164 Taxman 78 (SC). 8. CIT vs., Viniyas Finance & Inv. Pvt. Ltd., 33 Taxman 86 (Del.) (HC).. 9. CIT vs., Living M....
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....same should be quashed. 10. So far as the merits of the case is concerned, Learned Counsel for the Assessee while heavily supporting the order of the Ld. CIT(A) submitted that assessee has filed complete details of the transactions before the A.O. which include copies of return of income for the A.Y. 2010-11 of all the applicants, copies of audited balance-sheets as on 31.03.2010 containing the names of the assessees in the Schedule to the audited balance-sheets, confirmation of transactions by the share applicants, copies of the bank statements of all the applicants and copies of the assessment order for A.Y. 2010-11 passed under section 143(3) by the jurisdictional Assessing Officers of the respective applicants. He submitted that all the share applicants are income tax assessees and their orders were passed under sections 143(3)/153A/153C of the I.T. Act, 1961. Therefore, their existence is established. Further the Director of 06 Companies namely Shri Deepak Tyagi had appeared before the A.O. on 30.03.2014 in response to the summons issued by the A.O. and his statement was recorded on oath wherein he had confirmed that the above companies have made investment in the shares of....
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....f Shri Surender Kumar Jain Group of cases {entry operator) and further inquiries the DDIT (Inv.) has suggested that notice u/s 148 following cases for the assessment year 2006-07 to 2011-12 is required to be issued to tax the undisclosed income regarding the accommodation entries obtained from these persons; (Table containing several names including the name of the assessee) As you are aware that notice u/s 148 for AY 2006-07 can be issued only till 31.03.2013. It is therefore, requested that all the Assessing Officer concerned may be directed to immediately consider the matter and issue notice u/s 148, if required. Jurisdiction over the above assesses lies in your charge as per the information gathered by name querry from ITD. However, in case any of these of cases are assessed to tax in some other charge, it is required that the cases may be transferred to the CIT concerned for immediate action. Yours Sincerely Sd/-M.V. Bhanumathi Director of Income Tax (Inv.)-II New Delhi 12.2. Thus, a perusal of the communication received from the Investigation Wing and reasons recorded for reopening of the assessment shows that the A.O. has acted solely on the ....
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....paper book. M/s. Sunny Cast and Forge Ltd., M/s. Finage Leasing & Finance India Ltd., M/s. Victory Software Pvt. Ltd., M/s. Nandal Finance and Leasing Pvt. Ltd., M/s. Singhal Securities Pvt. Ltd., M/s. Edoptica Developers India Ltd., M/s. Attractive Fin Lease Limited are all assessed to tax under sections 153C/153A of the I.T. Act, 1961 on 28.03.2013 for the A.Y. 2010-11 by the ACIT, CC-23, New Delhi, copies of which are placed at Pages 242-254 of the paper book. However, the A.O. before recording satisfaction and issue of notice under section 148 of the I.T. Act, 1961 on 15.04.2013 has not at all considered, the assessments completed under sections 153C/153A of the I.T. Act, 1961 on 28.03.2013 of the share applicants/investor companies. All these investor companies were assessed to tax under sections 153C/153A of the I.T. Act, 1961 due to the very same search and seizure operation at the premises of Shri S.K. Jain group of companies. We, therefore, find merit in the arguments of the Learned Counsel for the Assessee that had the A.O. applied his mind to the facts on record, he would have come to a different conclusion especially when all the investor companies are assessed to tax u....
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....at the Assessing Officer should have finally ascertained the said fact by legal evidence or reached a conclusion, as this is determined and decided in the assessment order, which is the final stage before the Assessing Officer. The Assessing Officer reopened assessment of the assessee on the basis of information received from the DIT (Investigation) that amount received by the assessee from company 'S' was nothing but accommodation entry and the assessee was the beneficiary. Held that the reason given by the assessee did not satisfy the requirements of section 147. The reasons and the information referred to were extremely scanty and vague. There was no reference to any document or statement except an 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. Further, it was apparent that the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. The Assessing Officer accepted the plea on the basis of vague information in a mec....
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.... enquiry being undertaken by the A.O. to establish the link between the tangible material and formation of reason to believe that income had escaped assessment. The various other decisions relied on by Ld. A.R. to the proposition that in absence of independent application of mind by the A.O, assessment cannot be reopened on the basis of report of Investigation Wing also support his case. 12.8. Further, a perusal of the letter issued by the Director of Income Tax (Inv.)-2, New Delhi to the Commissioner of Income Tax, New Delhi, contents of which has already been reproduced at para 12.1 of this order shows that reopening of the assessment was made basically at the direction/suggestion of the Investigation Wing of the Department. It has been held in various decisions that assessment cannot be reopened on the basis of mechanical acceptance of information/opinion/advise received from some other authorities. The A.O. has to apply his independent mind for exercising the jurisdiction under section 147 of the I.T. Act, 1961. The Hon'ble Delhi High Court in the case of SPL Siddharth Ltd., reported in [2012] 17 taxmann.com 138 (Del.) has held that "if an authority is given expressly by aff....
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....s on 31.03.2010 containing the names of the assessees in the Schedule to the audited balance-sheets, confirmation of transactions by the share applicants, copies of their bank statements, copies of their assessment order for the impugned assessment year passed under sections 143(3) / 153A/153C of the I.T. Act, 1961 by their jurisdictional Assessing Officers etc. Further Shri Deepak Tyagi, Director of 06 Companies had appeared before the A.O. on 30.03.2014 in response to the summons issued by the A.O. under section 131 of the I.T. Act, 1961 and had confirmed to have made investments by his companies in the shares of the assessee-company in the statement recorded on oath. In view of the above and in view of the detailed reasoning given by the Ld. CIT(A) on this issue, we do not find any infirmity in his order in deleting the addition of Rs. 17,32,00,000/- made by the A.O. under section 68 of the I.T. Act, 1961. We, therefore, uphold the same and the grounds of appeal numbers 1 to 4 by the Revenue are dismissed. 14. So far as grounds of appeal number.5 is concerned, the same relates to the order of the Ld. CIT(A) in deleting the addition of Rs. 34,64,000/- under section 69C of the ....
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....laring total income of Rs. 11,74,680/-. During the course of assessment proceedings, the A.O. noted that the CIT, Delhi-2, New Delhi has forwarded letter of the Director of Income Tax (Inv.) Dated 12.03.2013 giving information about extensive accommodation entry racket being operated by Shri S.K. Jain Group of entry operators. The name of the assessee M/s. More Credit Securities (P) Ltd., New Delhi appears in the list of beneficiaries who have taken accommodation entries in the garb of share capital. During the course of assessment proceedings, the A.O. noted that assessee has received accommodation entry to the tune of Rs. 9,37,50,244/- from M/s. Transnational Growth Fund Ltd. He, therefore, asked the assessee to explain the above transaction with M/s. Transnational Growth Fund Ltd. by asking the assessee to furnish the following details : 1. "M/s. Transnational Growth Fund Ltd. Copy of TDS return filed for the year. 2. Month wise and Person wise details of Salaries. Also file details of Salaries paid during the year and explanation that why out of total salary of Rs. 25,40,000/-, Rs. 20,17,000/- was outstanding as on 31.03.2011, which reflects that there was no ....
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.... However, the books of account and bank statements were not produced for his examination. During the course of assessment proceedings, the assessee-company again reiterated that the amount received during the year pertains to repayment of loan given to M/s. Transnational Growth Fund Ltd., during the year 2010-11. However, the A.O. was not satisfied with the arguments advanced by the assessee. Relying on various decisions and applying the provisions of Section 68 of the I.T. Act, 1961, the A.O. made addition of Rs. 9,37,50,244/- on the ground that assessee failed to produce the supportive evidence like books of account and bank statements of M/s. Transnational Growth Fund Ltd., 18.4. The A.O. also made addition of Rs. 18,75,005/- under section 69C of the I.T. Act, 1961 being Commission @ 2% incurred for obtaining the accommodation entry. 18.5. The A.O. during the course of assessment proceedings further noted that assessee-company has shown income of Rs. 14,17,438.44 from sale of securities. The A.O. asked the assessee to file month wise and party wise details of sales and justification as to how sales were made without any purchase or opening stock. Rejecting the various explana....
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.... the findings of the Investigation Wing of the department that the Assessee-company has received the accommodation entries from the entry operator Surendra Jain & Group ? 3. Whether on the facts and circumstances of the case & law, the Ld. CIT(A) has erred in deleting the addition amounting to Rs. 8,75,005/- made on account of expenditure made by the assesseecompany to receive the entries ? 4. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in deleting the addition amounting to Rs. 25,40,000/- made by the AO on account of salary expenses although the major amount was shown as payable ? 5. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in deleting the addition amounting to Rs. 11,05,000/- made by the AO on account of other expenses although the major amount was shown as payable ? 6. That the order of the Ld. C1T(A) is erroneous and is not tenable on facts and in law. 7. That the grounds of appeal are without prejudice to each other. 8. That the appellant craves leave to add, alter, amend or forgo any ground(s) of the appeal raised above at the time of th....
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....3/- in preceding assessment year and Rs. 11,31,529/- in the assessment year under consideration. These interest receipts were also subjected to the TDS by M/s Transnational amounting to Rs. 26,625/- and Rs. 1,13,153/-. The AO has not found anything wrong with the aforesaid transactions and has also allowed the credit of TDS. 22.3. He accordingly submitted that the grounds raised by the Revenue on this issue be dismissed. 23. We have considered the rival arguments made by both the sides, perused the orders of the A.O. and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the A.O. in the instant case made addition of Rs. 9,37,50,244/- on the ground that the aforesaid sum belongs to the alleged entry operator Shri S.K. Jain. We find the Ld. CIT(A) deleted the addition, the reasons of which have already reproduced in the preceding paragraph. We do not find any infirmity in the order of the Ld. CIT(A). We find the A.O. at page-6 of the last paragraph of the assessment order has observed as under : "It is important to mention here that amount of Rs. 9,27,31,868/- was given by the assess....
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....leted the addition, the reasons of which, have already been reproduced in the preceding paragraph. We do not find any infirmity in the order of the Ld. CIT(A) on this issue. The grounds raised by the Revenue challenging the order of the Ld. CIT(A) in deleting the addition of Rs. 9,37,50,244/- has already been dismissed in the preceding paragraph. Therefore, the addition made by the A.O. is not sustainable and, therefore, the order of the Ld. CIT(A) on this issue is upheld and grounds of appeal number.3 raised by the Revenue is dismissed. 25. Grounds of appeal number.4 by the Revenue relates to order of the Ld. CIT(A) in deleting the salary expenses of Rs. 25,40,000/- made by the A.O. 25.1. After hearing both the sides, we find the A.O. made addition of Rs. 25,40,000/- on the ground that there is no employer-employee relationship since salary was shown as payable. We find the Ld. CIT(A) deleted the addition, the reasons of which, already been reproduced in the preceding paragraph wherein the Ld. CIT(A) has sustained an amount of Rs. 4,03,400/- being 10% of such unpaid amount and deleted the balance amount. Before deleting the addition the Ld. CIT(A) had directed the assessee t....
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....: IndentationError: expected an indented block after 'if' statement on line 341 Document 2 1. Page 1 of 2 1. Name of the assessee 2. Address of the assessee 238 (241) I.T.N.S. 65 INCOME TAX DEPARTMENT : M/s Shalini Holdings Ltd 209, 2nd Floor, 6/41, Sunder Kiran Building, WEA, Karol Bagh, New Delhi-110005 : AAACS 1912K : Central Circle-23, New Delhi 3. 4. 5. PAN Ward/Circle Status : Company 6. Assessment Year : 2010-11 7. Resident/NOR/Non-resident : Resident 8, Method of Accounting : Mercantile 9. Previous year : 2009-10 i 10. Nature of Business : Dealing in Shares & Securities 11. Dates of hearing : As per order sheet entries 12. Date of order : 28.03.2013 13. Section & Sub-section under which the assessment is done 153C/153A of the Income Tax Act, 1961 ASSESSMENT ORDER A search and seizure operation was carried out at various premises of S. K. Jain Group and its group concerns and associated persons on 14/09/2010. During the course of search and seizure operation at various premises of S. K. Jain ....
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....block after 'if' statement on line 341 Document 4 4.03.This ground relates to the addition of Rs. 25,40,000/- on account of disallowance of salaries. The Ld. Assessing Officer has mentioned in the assessment order that the employer- employee relationship has not been established as sum of Rs. 20,17,000/- was payable. During the appellate proceedings, the assessee filed details of the salaries paid to the employees. The employee wise details of salaries have duly been provided at (pg 7A and 8A of paper book). It has been argued that the Ld. Assessing Officer has mentioned that the employer- employee relationship has not been established solely on the assumptions that out of the total salaries of Rs, 25,40,000/-, a sum of Rs. 20,17,000/- was payable. However he has never made any attempt to verify that the payments of the outstanding amounts. I have gone through the assessment order and the written submission of the appellant and found that assessee has furnished complete details of the salaries to the AO, who has disallowed the total expense claimed by the assessee, without any cogent reasons as well as without making any enquiry about its payme....