TaxTMI 
TaxTMI 
2022 (7) TMI 848
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..... Brief facts of the case are that the consequent to the search and seizure operations under section 132 of the Act, on 18.12.2012 in the residential premises of Shri Pankaj Agarwal, Managing Director of M/s. Suryadev Alloys and Power Pvt. Ltd., documents belonging to the assessee were seized and a notice under section 153A of the Act dated 13.08.2013 was served on the assessee. In response to the notice, the assessee filed a letter dated 22.07.2014, duly acknowledging the receipt of the said notice and filed a copy of the return of income filed on 31.07.2011 admitting income of Rs..29,64,800/- with a request to treat the same as the return of income filed in response to the said notice. Notices under section 143(2) and 142(1) of the Act were also duly served on the assessee. Thereafter, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 153A of the Act dated 31.03.2015 by making addition of Rs..1,25,00,000/- under section 68 of the Act. On appeal, the ld. CIT(A) confirmed the addition made under section 68 of the Act. 3. On being aggrieved, the assessee is in appeal before the Tribunal. By relying upon the grounds of appeal, the ld. Counsel for the a....
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.... From the said documents, it would be evident that M/s. Echolac Vinimay Pvt Ltd is an entity having PAN and regularly filing the returns with ROC and Income Tax. Accordingly, there is no dispute as to the identity of the Company. Further, from the Balance Sheet it would be apparent that the Company had sufficient funds to extend the Loan. The said transactions have only* taken place through banking channels clearly evidencing the source. Accordingly, your assessee humbly wishes to state that there is no doubt about the identity of the Company's, their creditworthiness and genuineness of the transactions. I would further like to state that the loan is given by the company out of its known and valid source like Sale of their Investments in Shares etc., details of the same is enclosed herewith along with this reply. There is no question of doubt about their identities and these companies had sufficient capital & funds to extend the Loan to me and the amounts have been received through proper banking channels. Your kind authority have made general statement about entry operators and their modus operandi like - Operation of many bank accounts in the....
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.... time to time basis during the assessment proceedings to negate the proposed additions. Sir we have produced all the relevant information & evidences about the moneys received by me and the same are received through proper banking channels. Sir I have been subjected to a search under the Income Tax Act & At this juncture it would not be out of place to mention that there was no incriminating evidence/ documents with regards to the transactions mentioned in your show cause notice, were found during the search. Based on the above, I have provided the identity of the Loan Creditor and also the credit worthiness and genuineness of the transaction, request your honour not to be prejudiced based on general statements & it is humbly submitted that no addition is warranted in my hands." 5.1 On perusal of the statement of account of M/s. Echolac Vinimay Pvt. Ltd., the Assessing Officer has observed that the said company had minimum balance on various dates before using the cheque to any loan debtor, namely the assessee. It received amount equal to cheques to be used, i.e., Rs..1,25,00,000/- and it was deposited into the bank only for the purpose of issuing cheq....
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....rded from Shri Navnit Singhania also explains the nature of these transactions. The assessee's reply that only the Directors are responsible and the accommodation entry operator's are not known to them at all do not have any relevance due to lack of realism, as based on the facts of the case, the roles of the dummy directors and the accommodation entry operators are interspersed and cannot be looked in isolation. 5.4 After analyzing the submissions made by the assessee, bank account statements and other relevant evidences, the Assessing Officer has noted that the above sum of Rs..1,10,00,000/- represents sum credited in the books of the assessee as explained in previous paragraphs and is assessee's unaccounted money routed through channels provided by the accommodation entry operator by way of various Jama Kharachi/Shell/Paper Companies utilizing regular banking modes. The assessee's contention that these are genuine transactions received from the lender whose identity is genuine and that it is creditworthy does not hold good as this company's operations have already been investigated by the Investigation Directorate, Kolkata and have been proven well beyond doub....
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....sides challenging the addition made under section 68 of the Act. After considering the submissions of the assessee with regard to the jurisdiction in concluding the assessment under section 143(3) r.w.s. 153A of the Act, the ld. CIT(A) has observed and held as under: 6.26. In view of the foregoing discussions, the following position emerges: (i) The Hon'ble Supreme Court has not yet laid down the law on the subject as to whether it is justified in holding that in cases where the income has already been assessed, the assessment u/s 153A of the Act will be made only on the basis of incriminating material found during the course of search proceedings u/s 132 of the Act. (ii) SLPs have been preferred by the Revenue before the Hon'ble Supreme Court in the case of Continental Warehousing and the same was also admitted{(2015]235 Taxman 568(SC)} Similarly SLPS filed by the PCIT, Central III, Delhi in the case of Meeta Gutgutia for AYs 2000-01 to 2003-04 that involve the question of law on the bone of contention with reference to scope of S.153A of the Act in cases of absence of incriminating materials recovered during search proceedings are still pending. ....
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....banking channels. The investigation wing of the Income tax department had carried out the necessary investigation and the appellant has been found to be one of the beneficiaries of the unsecured loans arranged from the accommodation entry operators. It is observed that the appellant has been confronted with the statement recorded of the operators of the racket wherein they have clearly admitted that the entire operation is a sham and is used only for the purpose of giving accommodation entries against the receipt of some commission. They have dummy directors of the various companies who sign the cheques to the beneficiaries as per their requirement. 6.30. The appellant is still insisting on the genuineness of the transaction, The appellant had credited certain amounts in his books and the department has challenged the same based on investigations carried out and has confronted the same to the appellant but appellant has not been able to rebut the charge of non genuineness made by the department against him. Mr. Jai Prakash Roy who is Director of the EcholacVinimay private limited stated that he is a mere dummy director and is on the payroll of the entry operators by the na....
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....sing Officer may harbour any doubts. Upon the assessee furnishing the explanation, it is incumbent on the Assessing Officer to undertake an exercise to ascertain the veracity thereof. It is precisely such exercise that was required of the Assessing Officer in this case. The assessing officer found the explanation of the Appellant not satisfactory in the present case because of the following reasons: 1) The Director of the company from which amount is stated to be taken states that he is a dummy directors and is involved in action in concert with accommodation entry providers. 2) The accommodation entry provider, namely Beni Prasad Lahoti, has specifically taken the name of the company M/s. Echolac Vinimay as a company used for providing accommodation entry by using Jagdish Prasad Roy as Dummy Director. 3) The modus operandi of accommodation entry is explained by the Entry providers as routing the cash received from beneficiaries through various bank accounts and then issuing cheques to them, mostly on the same day, meaning thereby that there would be credit entry in the bank account of Echolac Vinimay before the cheque is issued to the beneficiar....
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....ed cross examination but in fact the case does not deserve any cross examination. The third party was always the appellant witness, an onus that was not performed by the appellant and in the absence of same the department has carried out the necessary verification and found that to be false. In the case of the honourable Supreme Court cited by the appellant the investigation was carried out at the back of the assessee and the assessee was not asked to give confirmations and independent enquiries were done and statements recorded whereas in the present case the assessee was making unsubstantiated claim Therefore necessary verification had to be carried out and that turned out to be false as it was stated that the credit entry was an accommodation entry. That means the explanation of the credit given by the appellant was not correct. The right of cross examination is not absolute. In the case of Soman Sun Citi Vs JT. CIT (ITAT Mumbai), Appeal Number I.T.A. No.2960/Mum/2016 (Date of Judgement/Order 23/10/2018) it has been held that "Had assessee discharged its primary onus, but still the authorities proceed to prejudice assessee based solely on the incriminating statements/af....
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....essee that no addition can be made in the absence of incriminating material found during the course of search. It was further submitted that once the search took place, the Assessing Officer is bound to assess or reassess the total income with respect to each assessment year falling within the six assessment years in which search took place on the basis of regular books of account and other materials found during the course of search. In this regard, he relied upon the decision of the Hon'ble Kerala High Court in the case of E.N. Gopakumar v. CIT [2016] 390 ITR 131 (Ker.). 9. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The facts born out from the record are that in this case, search operation under section 132 of the Act was conducted on 18.12.2012. It is an admitted fact on record that the assessment for the impugned assessment year in question in all these appeals is unabated/concluded as on the date of search, because, the time limit for issue of notice under section 143(2) expires on 30.09.2012 i.e., before the date of search on 18.12.2012. Thus, from the above facts, it is very clear that the asse....
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....using Development Co. v. CIT [2014] 49 taxmann.com 98 (Kar) and argued that there is no requirement of incriminating material to make addition in search assessment, because, the provisions of section 143A/153C of the Act does not require any incriminating material to make assessment consequent to search proceedings, we find that although, the Hon'ble Kerala High Court and the Hon'ble Karnataka High Court have taken a contrary view, but, the Hon'ble Supreme Court has affirmed the decision of the Hon'ble Delhi High court in the case of PCIT v. Meeta Gutgutia (supra) and thus, we prefer to follow the decision of the Hon'ble Delhi High Court, which decided the issue in favour of the assessee. 11. In this case, there is no dispute with regard to the fact that the search was conducted on 18.12.2012 and as on date of search assessment for the assessment year 2011-12 is unabated and thus in the absence of any incriminating material, no addition can be made including the addition of share capital under section 68 of the Act. In this case, if we go through the addition made under section 68 of the Act, we find that there is no reference to any incriminating material and thus, we are of th....