TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 539
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....in law in confirming addition made beyond what was recorded in the reasons for reopening, without any fresh information. 4. The ld. CIT(A) erred on facts and in law in not giving benefit of the amount added for application of income. 5. The ld. CIT(A) erred both on facts and in law in not allowing claim of depreciation on the ground that Hon'ble SC decision was prospective. He also erred in not allowing set off against income added. 6. The assessee reserves the right to add amend or alter any of the Grounds of appeals as above." 3. In ground Nos. 1 and 3, the assessee has challenged the validity of reassessment proceeding under section147/ 148 of the Act. 4. The relevant material facts, as culled out from the material on record, are as follows. The assessee had filed its original return of income on 08.10.2010 declaring total income at Rs.NIL, which was also accepted at the same figure vide assessment order passed u/s 143(3) of the Act on 30.03.2013. Thereafter, the case has been re-opened u/s 147 of the Act for the reason that the assessee trust had received accommodation entries from Shri Arvind Kumar Jain and Shri Naresh Kumar Jain (hereinafter referred to as "Jain B....
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....ecured loans amounting to Rs. 2,40,00,000/- from the bogus concern run by the Jain Brothers. In para 5.1 it is already proved by the Investigation wing after making deep analysis and investigations that entities which have provided unsecured loans to the assessee trust, are bogus concern run by the Jain Brothers and are shell companies which were created by entry providers to provide the accommodation entries. Details of unsecured loan taken by the assessee trust during the F.Y. 2009-10 is as below: Sr No. Name of the concern Amount in Rs. 1. Binary Network Solutions Pvt. Ltd. 30,00,000/- 2. Danodia Consultants Pvt. Ltd. 10,00,000/- 3. Danodia Impex (P) Ltd. 85,00,000/- 4. Gallant Computech (P) Ltd. 25,00,000/- 5. Macro It(P) Ltd. 10,00,000/- 6. New Era Trade Expo (P) Ltd 20,00,000/- 7. Sai Infower (P) Ltd. 20,00,000/- 8. Techno Soft Info Systems (P) Ltd. 20,00,000/- 9. Vardhman Network Solution 20,00,000/- Total 2,40,00,000/- 5.3 In view of the facts mentioned above, it is clear that unsecured loans received by the assessee trust amounting to Rs.2,40,00,000/- is nothing but the accommodation entries provided by the Jai....
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....secured loan taken by the trust from the bogus concern operated by the Jain brothers which is reflected in the books of account of the assessee. Thus, claim of the assessee that A.O. had not provided specific amount of unsecured loan is wrong, in actual assessee is in better position to calculate the total amount of the accommodation entries because amount is already reflected in the books of account of the assessee. 5.3.1 The Unsecured loans received amounting to Rs.2,40,00,000/- during the year was bogus and crediting in the books for sake of only crediting and to bring the unaccounted fund in the books. Therefore, from the above discussion it is proved that the unsecured loan received by the assessee trust is bogus unsecured loans. 5.3.2 Further, it is also stated that during the course of post search investigation in the case of the Shri Anand Kumar Jain and Shri Naresh Kumar Jain, it was also gathered that assessee trust, Bhagwan Mahavir Education Trust had received cash from the Jain Brothers after repayment of unsecured loan in cheque. It can be proved from the following facts ascertained from the tally data seized during the search. BHAGWAN MAHAVEER EDUCATION FOUNDATIO....
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....from the party who is involved in accommodation entry business, it cannot be assumed that these loan is also bogus, cannot be accepted because every time it cannot be possible to happen coincident with the assessee trust that bogus parties operated by the entry provider from whom assessee is taking donation/unsecured loan are genuine in the case of the assessee and bogus/ entry providers in the case of others. 5.3.4 Regarding the request of the assessee to provide opportunity to cross examine the said parties and to provide the copies of statements given by the Jain Brothers, it is stated that assessee had made request to cross examine the parties at the last juncture of the assessment proceedings. Further, it was found that parties with whom cross examination was requested were based in Delhi. Hence, practically, it was not possible for A.O. to provide an opportunity for cross examination to the assessee. With regard to statement of income of parties, it is stated that said statements were received by the A.O. on the last day of assessment proceedings from the concerned A.O. Hence, practically, it was not possible for A.O to provide the copy of bank statements to the assessee. F....
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....td. (1991) 187 ITR 596 (Cal). 5.3.8 In the case of Shankar Industries vs. CIT (1978) 114 6890 (Cal.), the Calcutta High Court held that it is necessary for the assessee to prove prima facie the transaction which results in a cash credit in his books of accounts. Such proof includes proof of the identity of person, Creditworthiness of person capacity of person and lastly the genuineness of the transactions. Only after the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts to the department, Similar view has been taken in C. Kant & Co. v/s. CIT [1980] 126 JTR 63 (Cal.) 5.3.9 In addition to the above, the case laws quoted by the assessee trust are not applicable in this case as the facts of those cases are different to that of the present case. 5.3.10 From the above discussion, it is crystal clear that the unsecured loan of Rs.2,40,00,000/- shown as received by assessee trust from the bogus concern run by the Jain brothers is bogus and crediting in the books for sake of only crediting and to bring the unaccounted fund in the books and thereby the same is added to the total income of the assessee trust as an unexplained cash credit U/s. 68 of th....
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.... approved by ld. JCIT, the approval for initiating the reassessment proceedings in the assessee's case should be given by the ld CIT which is absent and therefore, the approval for initiating the proceedings under section 147/148 of the Act is itself defective. 11. The Ld. Counsel further submitted that notice under section 143(2) of the Act has not been served on the assessee. 12. Therefore, ld Counsel contended that on these technical grounds itself, as narrated above, the reassessment proceedings may be quashed. 13. On merits, ld Counsel submitted that all the amounts were paid through account payee cheque and TDS has been deducted. Some of the loans were paid in same year and some loan amounts were paid in subsequent years. Therefore, ld Counsel stated that addition should be deleted and for that ld Counsel relied on the judgment of the Co-ordinate Bench of this Tribunal in the case of Rajhans Construction in ITA No.1450/AHD/2016 for AY.2007-08, order dated 14.03.2022. 14. On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue submitted that approval for initiation of proceedings under section 148 has been given by the CIT through online. The proof ....
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....approval has to be mandatorily granted online on the system by the competent authority and to enable generation of a notice u/s 148 on the system and then issue thereof. In this case, notice u/s 148 was generated vide letter No. ITBS/AST/S/148/2016-17/1003770877(1) after grant of online approval by the competent authority i.e. CIT(E), Ahmedabad. 5. As per case records available in this office for A.Y. 2010-2011 it is to submit that notice u/s 143(2) was issued to the assessee on 19.06.2017 (Copy enclosed). Assessee has also given reply to these notices vide its letter dated 01.07.2017. It is also to bring to your kind notice that during the course of appellate proceedings, Id. CIT(A) vide its letter dated 25.03.2019 has called for the case records of the assessee which was submitted before Id. CIT(A) by AO vide its letter dated 26.03.2019 (copy enclosed). After going through the case records Id. CIT(A) has decided the matter in favour of revenue and rejected the plea of assessee on validity of reopening and assessment." 17. On merits, Ld. DR submitted that the assessee trust is engaged in providing accommodation entries and this has been proved by many evidentiary documents and ....
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....ormation blindly and without application of mind. We note that in the reasons recorded the figure mentioned at Rs.1,57,00,055/- is part of the total amount of Rs.2,40,00,000/-, therefore, reasons recorded by the assessing officer can not vitiate on account of arithmetical figure. The findings of ld CIT(A) in this regard is reproduced below for better appreciation of facts: "6.1 After dealing with the above contentions which are mainly raised on technicality of the issue of re-opening the assessment, now I deal with the issue on merit for which the assessee had made submissions vide para 2 of the submissions. The first contention raised against the addition of Rs.2,40,00,000/- as against the amount of Rs.1,57,00,055/- for which the reasons were recorded and the A.O. has exceeded her authority by adding more amount than the amount recorded in the reasons for re-opening and in absence of new information which has come to her notice in the course of re-assessment proceedings. To this contention, it has to be stated that the issue was obtaining accommodation entries during the year under consideration for which the assessment had been re-opened by the A.O. For the purpose of recording....
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....annot be said to be true and full disclosure and the Income-tax Officer would have jurisdiction to reopen the concluded assessment. The Apex Court in the case of Phul Ghand Bajrang Lal (supra), observed as following: "...one has to look to the purpose and intent of the provisions. One of the purposes of Section 147 appears to be to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice to turn around and say 'you accepted my lie, now your hands are tied and you can do nothing'. It would, be travesty of justice to allow the assessee that latitude." 23. The Hon'ble Gujarat High Court in the case of Dishman Pharmaceuticals and Chemicals Ltd. vs. DCIT (OSD), Ahmedabad (2012) 346 ITR 228 (Guj) has summed up the requirements of the law, in such circumstances and has held as following: "There is no set format in which such reasons must be recorded. It is not the language but the contents of such recorded reasons which assumes importance. In other words, a mere statement that the Assessing Officer had reason to believe that certain income has escaped assessment and such es....
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....e Court in the case of Purushottam Das Bangur & Another, 224 ITR 362 (SC) held as under: "Assessee claiming long-term capital loss on sale of shares. Income-Tax Officer accepts the claim. Later on receipt of a letter from DDI that the fair market value of the share on the date of sale is much more than the Official Quotation due to the fact that the company was prospering at the time, the Income-tax Officer issued notice for reopening assessment u/s 147(b). The High Court held the notice not valid. Whether the notice u/s147(b) is valid and the assessment could be re-opened? Yes, on the basis of the facts & information contained in the DDI's letter, the Income-tax Officer without further investigation could have formed the opinion that there was reason to believe that the income of the assesses chargeable to tax has escaped assessment. Hence the notice u/s. 147 (b) was valid." 28. The Hon`ble Gujarat High Court in some of the recent judgments has held that reopening on the basis of the information of the Investigation Wing, is valid. In the case of Peass Industrial Engineers Pvt. Ltd 73 taxmannn.com 185(2016) (Gujarat), it was held that whether at the instance of same materia....
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.... facts and circumstances, ground No.1 and 3 raised by the assessee are dismissed. 31. The grounds Nos. 2, 4 and 5 raised by the assessee are on merits. We note that so far ground no.2 and 4 are concerned, the assessee has not submitted entire documents and evidences before the lower authorities. The conclusion reached by ld CIT(A) in respect of ground No. 2 and 4 are reproduced below: "6.2 The evidences filed by the assessee which were also examined by the A.O. during the course of assessment proceedings have also been considered afresh one by one and commented upon as under:- (a) The assessee has filed the copy of account as appearing in the books of accounts M/s. Danodia Consultants (Pvt.) Ltd. As per this ledger account, the assessee has received two cheques of Rs.10,00,000/- and Rs.20,00,000/- on 21.07.2009 and 08.03.2010. However, as per the copy of account as appearing in the books of accounts, the entry of cheque of Rs.20,00,000/-had been shown as credited in the account of M/s. Danodia Consultants (Pvt.) Ltd. along with other entry of Rs.5,00,000/- through bank on 28.03.2011 and interest provided @ 6% of Rs.1,08,295/-. This confirmation has been signed by one director ....
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....bank book has not been furnished during the course of appellate proceedings, the veracity of this cash fund so withdrawn could not be explained or proved beyond doubt. (c) The assessee has filed the copy of account as appearing in its books of accounts in respect of the loan transactions alleged to have been received from M/s Sai Inforwea (Pvt.) Ltd., which reflected that the assessee had received unsecured loan of Rs.20,00,000/- through two different cheques credited on 13.07.2009 and 25.08.2009. As per the copy of the bank account of this company, frequent transfers of funds have been reflected. The copy of ITR-V for the return of income filed for A.Y.2010-11 by this company reflected the income of Rs.12,524/- and the return is verified/signed by Shri Sanjeet, as director and one of the persons controlled/managed by Jain Brothers. As per the bank account of the assessee-trust, the entries of Rs.10,00,000/- have been reflected in this bank account but the assessee has chosen to file the selected pages of bank transactions. Therefore, the utilization of these alleged unsecured loans was not found to be verified. Since the bank book has not been furnished during the course of appe....
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....d not explain as to how the bank balances have been built up in the account of this company. This account also reflected frequent transfer of the funds. No details in the form of copy of ITR-V have been filed in respect of this company as filed in the other cases as mentioned above. Further, the copy of bank account filed by the assessee showed that the amount of Rs.25,00,000/- has been credited on 09.03.2010 and it reflected the only one page showing this transaction. Therefore, the sources of funds built up in this bank account prior to clearance of the cheque have not been found to be verifiable. Since the bank book has not been furnished during the course of appellate proceedings, the veracity of this cash fund so withdrawn could not be explained or proved beyond doubt. (G) The next evidence is the copy of account of M/s Macro IT Systems (Pvt.) Ltd. for the amount of Rs.10,00,000/- through cheque credited on 14.07.2009 which has been claimed to be received from this company. The bank account of this company has not been filed. Therefore, the transaction could not be verified with reference to the bank statement. No details in the form of copy of ITR-V filed in respect of this....
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....aimed to be placed before the A.O. and during the course of assessment proceedings, the following facts are noticed on such analysis:- (a) The assessee enjoys the registration in the state of Gujarat and has opened bank account with State Bank of India in Sonepat of Haryana State and the address of the assessee trust has been shown at village Jagdishpur, Dist. Sonepat. (b) The assessee-trusts is an educational trust running number of colleges and technical institutions in Engineering, Pharmacy and other faculties and the possibility of collection capitation fees in cash from the students cannot be ignored in the case of the assessee-trust. (c) The frequent cash withdrawals from the bank account against the cheques so received either on the same date, some days before the depositing of cheques or after some days are reflected in the bank account maintained with State Bank of India. The assessee did not come forward with bank book and the cash book either during the course of assessment proceedings or in the present appellate proceedings. Therefore, the explanation for utilizing the cash remained unverified in absence of such details. (d) The names of all the nine companies a....
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....ighlighted in bold words, in the above findings of ld CIT(A), about the documents and evidences, which were not furnished by assessee during appellate proceedings. We note that ld Counsel relied on the judgment of the Co-ordinate Bench of this Tribunal in the case of Rajhans Construction in ITA No.1450/AHD/2016 for AY.2007-08, order dated 14.03.2022, however, this judgment does not assist the assessee-trust, as the assessee trust, as per the findings of the assessing officer, had received back the amount, again from the respective parties by way of cheque/cash. The findings of the assessing officer, in this respect, is reproduced below: "5.3.2 Further, it is also stated that during the course of post search investigation in the case of the Shri Anand Kumar Jain and Shri Naresh Kumar Jain, it was also gathered that assessee trust, Bhagwan Mahavir Education Trust had received cash from the Jain Brothers after repayment of unsecured loan in cheque. It can be proved from the following facts ascertained from the tally data seized during the search. BHAGWAN MAHAVEER EDUCATION FOUNDATION TRUST KRIS KRISHAN CA 02-03-10 2-3-2010 To NEW ING Payment 1037 20,00,000.00 21,49,039.00 D....