TaxTMI 
TaxTMI 
2023 (5) TMI 1100
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.... circumstances of the case and in law, the Ld. CIT (A), has erred in not appreciating the reliance was placed on the charge sheet filed by the Enforcement Directorate regards to bogus purchases made by the assessee from various parties without supply of actual goods. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A), has erred in deleting the disallowance of commission as alleged to bogus." 03. Assessee is a company engaged in the business of trading, manufacturing, import and export of diamonds. It filed its return of income on 31/11/2012 declaring a total income of Rs. 378,440,970/-. Assessment under section 143 (3) of the act was made on 30/3/2016 determining total income of the assessee at Rs. 397,039,090. 04. Subsequently information was received From Investigation Directorate surat on 19/3/2019 that assessee company has made bogus payment of Rs. 10.32 crores to M/s R A Distributors private limited and M/S Ram Shyam exports private limited which are paper companies without having any business activities. These companies are engaged in providing accommodation entries or sending bogus foreign remittances to entities based in Hong Ko....
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....rts private limited. The learned AO held that the assessee has entered into a transaction with level four entities and subsequently the money was transferred to Ram Shyam exports private limited. Thus, it was noted by the learned assessing officer that after the level of four - six layers, Ram Shyam exports private limited ultimately has received the money. Thereafter the learned AO asked the assessee to produce the Ledger account, the invoices and bank statement of all the intermediary companies up to level VI and 1 to 1 mapping of corresponding purchases and sales. Assessee submitted the same. However, the learned that assessing officer did not believe the explanation and noted that that assessee has transacted with entities at level four and six as in the fund trail by the investigation wing Surat. The funds have moved out to entities based in Hong Kong and UAE in the form of remittance received by these entities in the guise of payment for import of diamonds. The customs authorities have found that the bills of entries of bogus and there was no such import made by 12 companies which included Ram Shyam exports private limited. Therefore, the learned assessing officer held that R....
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....awn. Assessee submitted the copy of Ledger account, copy of the bills invoices debit notes and also the bank statement to show the payment. The learned AO issued notices under section 133 (6) of the act to the various parties calling for information. In response to that notice one party submitted reply, however other three parties did not respond. Accordingly, the learned AO disallowed the payment of commission of Rs. 8,315,201/- to all the 4 parties. 011. Accordingly the assessment order under section 143 (3) read with section 147 of the act was passed on 30/12/2019 making the addition of Rs. 116,624,231 with respect to the purchase transaction and disallowance of commission expenditure of Rs. 8,315,211, determining the total income of the assessee at Rs. 521,978,532/-. 012. Assessee aggrieved with assessment order preferred appeal before the learned CIT - A, who passed a consolidated order on 1/8/2022 four assessment year 2012 - 13, 2014 - 15, 2017 - 18, 2018 - 19 and 2019 - 20. Though the issue in other assessment year from the impugned assessment year i.e. 2012 - 13. Assessee challenged the reopening of the assessment, the learned CIT - A dismissed this ground of appeal. ....
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....stated that the assessee maintained proper books of accounts including purchase register, since register, stock register, Ledger, daybook, bankbook et cetera and no defect or irregularity was found. He further held that as there is no finding of the assessing officer about the sales made by the appellant against the purchases the addition cannot be made. With respect to RA Distributors private limited, the learned CIT further held that with respect to the purchases the assessee has submitted the invoices, bank statement, sales and purchase register, account confirmation of the transactions, which have been entered into before eight years. According to him, the assessee has discharged his onus of proving the genuineness of the purchases. The goods purchased from this entity were also sold and quantity Delhi thereof is given in the tax audit report which is not been rejected by the learned assessing officer. Alternatively, he held that even if the purchases of Rs. 11.66 crores is found to be doubtful there is no scope for any addition in the instant case following the decision of honourable Bombay High Court Muhammad Haji Adam & co (ITA 1004 of 2016) wherein it has been held that the....
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....A the learned assessing officer is in appeal. The only ground is taken by the learned assessing officer is deletion of disallowance of bogus purchases and commission. The learned departmental representative referred to the assessment order with respect to the addition of bogus purchases it was submitted that assessee has failed to produce the party and therefore the addition is made with respect to RA distributors private limited. She further referred to the statement submitted by the assessee showing 1 -to 1 mapping and stated that the purchases are shown in carrats but not in quantity. Therefore, the statement does not have any validity. It was further stated that assessee could not show any proof of delivery. It was further stated that purchase invoices does not have any direction. It was further the claim that there is no identification of the material purchased are sold. Accordingly, the argument of mapping of purchases with the sale is incorrect. It was further claimed that the learned and CIT - A has merely accepted the submission of the assessee and did not carry out any information from the assessee with respect to correlation of purchases with sales. It was further stated....
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....honourable Calcutta High Court relied upon by the learned departmental representative related to the penny stock companies but same does not apply in the case of the assessee. It was stated that the decision of the honourable Gujarat High Court relied upon by the learned departmental representative is distinguishable on the fact and in that decision there was nothing to suggest that the recipient of such commission payment has rendered any services to the assessee and the onus was on the assessee claiming such deduction to establish that such payments were made for services rendered. It was submitted that it is not only the order of the Benami transaction act but also the order in case of the parties were rendered the services in whose hands the commission income has already been taxed was relied upon by the learned CIT - A. When the income is taxed in the hands of the parties who have rendered the services to the assessee and those parties were also assessed by the same assessing officer, the revenue now cannot contest that the income though offered in the hands of the recipient of the commission as commission income which they have earned on rendition of the services, but the sam....
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....bills of entries were bogus and there was no such import made by these 12 companies related with Afroz Mohamed Hasanfatta as mentioned in the bill of entry. On receipt of the confirmation of bogus import, the Enforcement Directorate conducted investigation and filed a charge sheet against some persons on 18.07.2014 related with Afroz Mohamed Hasanfatta. On verification in the case of 12 companies related with Afroz Mohamed Hasanfatta, it appears that the account of the foreign based entities, wherein funds were funded in guise of import payment from Indian based entities. These companies are proved to be bogus and have disguised fund transferred in form of bogus purchases or bogus loan transactions. The identification of source of fund received by the said 12 entities are mentioned in the interim report forwarded by this office. 1. The fund trail was undertaken from the starting point of the bank account of above 12 parties and traced back to the source of deposits entities. The activity for tracing the potential source resulted in analysis from Level 2 to Level 9 which were mentioned in the report forwarded along with its annexure to the jurisdictional AO. Segregation of ....
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....ors Pvt. Ltd. had taken place on 29.02.2012 and M/s Asian Star Company Ltd. transferred the amount mentioned above in the table to the A/c No. 910020011061761 (this is the A/c of M/s. M.B. Offshore Distributors Pvt. Ltd.) which was subsequently transferred to M/s. Ram Shyam Exports Pvt. Ltd, as described in Para 3 & Para 4 of this letter. 1. M/s. Asian Star Company Ltd. had transactions with Level 6 entities namely M/s. Riddhi Exim Pvt. Ltd. Subsequently, M/s. Riddhi Exim Pvt. Ltd has transferred funds to the above-mentioned company Le. M/s Ram Shyam Exports Pvt. Ltd. On perusal of the report furnished by the agency involved in the analysis of the fund trail, it is found that the transaction between M/s. Asian Star Company Ltd. & M/s. Riddhi Exim Pvt. Ltd. had taken place on 29.02.2012 and M/s. Asian Star Company Ltd. transferred the amount mentioned above in the table to the A/c. No. 910020011100833 (this is the A/c of Riddhi Edm Pvt. Ltd.) which was subsequently transferred to M/s. Ram Shyam Exports Pvt. Ltd, as described in Para 3 & Para 4 of this letter. 7.3 Thus the genesis of information was the bogus foreign outward remittances made by the 12 companies/enti....
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....tted 1. Ledger account, invoices and bank statement of M/s Nayan Exim Pvt Ltd, M/s M B Offshore Distributors Pvt Ltd and M/s Riddhi Exim Pvt Ltd. 2. One to one mapping of corresponding purchases and sales. 7.6 In my considered view, the only issue to be decided here is whether M/s Nayan Exim Pvt Ltd, M/s M B Offshore Distributors Pvt Ltd and M/s Riddhi Exim Pvt Ltd. can be termed as bogus entities whose names appear at the 4 or 6 layer only on the basis of said transactions (related to the appellant of Rs. 2.49 crore, Rs. 2.19 Crore and Rs. 1.58 Crore) flowing downwards, crossing 4 or 6 more layers and ultimately landing to the accounts of M/s. Ram Shyam Exports Pvt. Ltd., a company connected with Afroz Mohamed Hasanfatta? This issue is further analysed in the light of evidences on record, surrounding circumstances and the judicial precedence. 7.7 Upon further analysis I find that, neither M/s Nayan Exim Pvt Ltd, M/s MB Offshore Distributors Pvt Ltd and M/s Riddhi Exim Pvt Ltd. can be considered as bogus entities providing accommodation entries nor the said payments made by the appellant of Rs. 2.49 crore, Rs. 2.19 Crore and Rs. 1.58 Crore to the....
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....n entirety and not partially. As is evident from above, the appellant has purchased 2x to 5x from these concerns than the purchases for which information was received and disallowances were made. What about the balance purchases? The AO has not touched upon it. Once the AO has accepted the balance purchases as genuine, only conclusion that can be drawn is that in the opinion of the AO goods were actually received from these entities. In such circumstances, there is no reason to consider these concerns as non-genuine, paper entity or bogus. 7.7.3 No Connection established. If the purchases treated as bogus, from these entities are further examined, I find that while M/s. Nayan Exim Pvt. Ltd. is a level 4 entity, M/s M B Offshore Distributors Pvt Ltd and M/s Riddhi Exim Pvt Ltd. are level 6 entities. Initial trigger entity (Level 1 entity) was M/s. Ram Shyam Exports Pvt. Ltd., which was investigated by the Custom Authorities. As per the information received, the Custom Authorities found that the bills of entries were bogus and there was no such import made by the companies related with Afroz Mohamed Hasanfatta. M/s. Ram Shyam Exports Pvt. Ltd. was one of such companies. The ....
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....e mapping of corresponding purchases and sales. Neither any adverse comment nor defect has been pointed out by the A.O. regarding the quantitative details and purchase-sales details provided. The appellant maintains proper books of accounts including purchase register, sales register, stock register, ledger, day book, bank book etc and no specific defect or irregularity was found or observed by the auditors. The A.O. has also not rejected the sales of the appellant. 7.7.3.4 I find merit in the above arguments of the appellant. The A.O. has not doubted the sales made by the appellant against the purchases (which are disallowed in the assessment order) but at the same time, disallowed the payments made for such purchases. The AO's action is solely based on the information received from Investigation Wing. Surat. As stated above, the Information does not reveal direct connection of these three parties with the concerns controlled by Mohammed Afroze Hassan Fatta and as to how the payments made by the appellant have turned into hawala transaction. On the other hand, the appellant has submitted overwhelming evidences which have not been contradicted by the AO. 7.7.8....
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....ributors Pvt Ltd. and their corresponding sales. There is no adverse comment and no defect has been pointed out by the A.O. regarding the quantitative details and purchase-sales details provided by the appellant. The sales figure has not been disturbed. However, the A.O. has completely disregarded these evidences and resorted to disallowance of entire purchases from M/s R.A. Distributors Pvt Ltd. The action of the A.O. cannot be justified. 7.9 Considering the totality of facts and circumstances of the issue involved and evidences on record, in my considered view, the addition of Rs. 11,66,24,231/- (Rs. 6,27,31,343/- from M/s Nayan Exim Private Limited, M/s M.B. Offshore Distributors Private Limited, & M/s Riddhi Exim Private Limited and Rs.5,38,92,888/- from M/s R.A. Distributors Private Limited.) deserved to be deleted. 8.0 Alternatively even if, it is considered that the purchases of Rs. 11,66,24,231/-, as identified by the AO, are doubtful, still there is no scope for any addition in the instant case as per the ratio laid down by Hon'ble Bombay High Court in case of PCIT vs. M/s Mohommad Haji Adam & Co. [ITA NO. 1004 OF 2016 (Bombay High Court)! wherein it ....
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....as per the audited books of accounts is 6.73% [Rs. 102,92,33,000/Rs. 15,29,08,86,000/- (turnover of FY 2011-12) Page no. 42 of the Paper book]. Once the G.P. related to bogus purchase exceeds the G.P. from genuine purchase, there remains no scope for any disallowance, if the sales figures are not disturbed. 9.0 Respectfully following the above binding decision of the Hon'ble Jurisdictional High Court and discussion made in the preceding paragraphs, the AO is directed to delete the addition of Rs. 11,66,24,231/ made on account of abovesaid purchases made from M/s Nayan Exim Private Limited, M/s M.B. Offshore Distributors Private Limited, M/s Riddhi Exim Private Limited and M/s R.A. Distributors Private Limited. Thus, ground of appeal no. 3 is Allowed." 021. The learned CIT - A has categorically noted that assessee has submitted the evidences with respect to the Ledger accounts of the transactions with purchase parties, purchase invoices and bank statements of the appellant showing the payment made to the parties. Assessee has also shown the mapping of corresponding purchases and sales. The argument of the learned DR is that one-to-one mapping shown by the assessee is....
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....ook. No specific defect or irregularity was recorded by the AO. With respect to the gross profit computed by the assessee from bogus sales is based on the number of carats purchased by the assessee and the same number of carats sold by the assessee. With respect to purchases from three different entities, the learned CIT - A has computed gross profit of Rs. 44.49 Lacs and purchases from our A Distributors private limited gross profit is computed at Rs. 40.72 lakhs. Thus, the average gross profit earned by the assessee on total purchases of Rs. 11.66 crores; assessee has earned gross profit of Rs. 85.21 lakhs, which is 6.81%. Gross profit as per the regular books of account is 6.73%. Thus, no infirmity can be found in the finding of the learned CIT - A whereas assessee has shown higher gross profit from alleged bogus purchases compared to its regular transaction. The honourable Bombay High Court in 103 taxmann.com 459 has dealt with identical issue in case of Mohammad Haji Adam & co [ Supra] as under:- "8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that t....
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....de, carrat wise stock maintenance would be the sufficient compliance; therefore, the assessee cannot be further burdened to show the colour and number of diamonds. When bills of purchases from other parties and from the same parties where part of the purchase consideration is accepted as genuine, no such details are available in the sale bill, we do not find any reason to deviate from the finding of the learned CIT - A. 024. In view of the above facts, we find that the learned CIT - A has correctly considered that the purchases from these parties is genuine when part of purchases from the same parties is not disputed, even otherwise, even if it is held that the purchases from these parties are bogus, then also, the proper course would be to determine the profit arising from the purchases by looking at corresponding sales and what amount of gross profit is earned on alleged bogus purchases. If the alleged bogus purchases show gross profit higher than the regular gross profit shown by the assessee, no further addition is required to be made in the hands of the assessee. The logic behind this is that sale is already accounted for on the credit side of the profit and loss account. I....
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.... were issued by the AO to the four parties in order to find their identity and genuineness of transaction. It is mentioned in the assessment order that only M/s Shloka Traders Pvt Ltd. furnished its reply vide letter dated 09.12.2019, while no response was received from M/s Flora Impex, M/s Nishant Impex and M/s Rahil Impex. Considering the above, the AO has drawn the following conclusion- 6.7 In view of the facts and in absence of any evidences/ submissions/ details from M/s Flora Impex Pvt. Ltd., M/s. Rahil Impex Pvt. Ltd. and M/s Nishant Impex Pvt. Ltd. the information received from investigation are seems to be correct that the above companies are only the paper/shell companies and do not having any business activity is being carried out. Since the assessee fails to prove genuineness of the transactions, the commission expenses made to the following parties is need to be disallowed. Sr No. Name of Company A.Y. 2012-13 (Amt.) 1. Flora Impex Pvt. Ltd. 20,54,691/- 2. Nishant Impex Pvt Ltd. 5,99,225/- 3. Rahil Impex Pvt. Ltd. 24,70,750/- 4. Shloka Traders Pvt. Ltd. 31,90,545/- 83,15,211/- In the i....
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....notice u/s 133(6) of the Act to the A.O. supplying copies of ledger confirmations reflecting the details of transaction with the appellant, copy of debit note showing the working of commission and copies of their ITRS. These evidences have again been submitted during the appellate proceedings. I find that the AO has not pointed out any lacuna in these evidences nor rejected it. In my considered view, without examining the merit of the evidences, one cannot simply reject it or ignore it. Any documentary evidence submitted during assessment proceedings has got some evidentiary value which needs to be commented upon by the AO. 10.4.4 In para 6.3 of the assessment order, the A.O. has made a reference to statements under oath recorded by directors regarding commission paid. In this regard, Ld. AR submitted that earlier a search action u/s 132 of the Act was carried out in the case of the appellant in the year 2010 and assessment was completed u/s 153A of the Act wherein all the transactions of the appellant with above mentioned four companies were held to be genuine. 10.4.5 It is further observed that all the four concerns Le, M/s Flora Impex, M/s Nishant Impex, M/s Ra....
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.... M/s Flora Impex, M/s Nishant Impex, M/s Rahil Impex and M/s Shloka Traders, and 1 alleged beneficial owner. Further reference u/s 24(5) of the PBPT Act was made to the Adjudicating Authority for adjudication of alleged benami property u/s 26 of the PBPT Act. The Ld. Adjudicating Authority (AA) under the Prohibition of Benami Properties Act, 1988, passed order u/s 26(3) of the PEPT Act, dated 11.10.2021 vide Order Number 24/AA/MUM/PBIT/2021-22, wherein it is held that there is no evidence against the alleged Benami concerns. The relevant portion of the said order of AA is reproduced as under. "Discussions and Findings 8. I have carefully gone through the submissions, both written and oral, from both the sides including the facts recorded in the SCN, orders under section 24(3), 24 (4), reference u/s replies by the defendants and the rejoinders by the Initiating Officer, the documents in the RUDs etc. On perusal of these documents and submissions and after considering the output of the lengthy discussion held during the hearing with the advocates of both the sides, following observations are made out. 8.1. The contention of the defending parties that the ac....
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....#39;ble Supreme Court, 8.2. The defendants have further contented that the action taken by the Initiating Officer by issuing show cause notice u/s 24(1) and orders passed by it u/s 24(3), 24(4) and the reference made u/s 24(5) are all barred by Limitation as order was passed on the 918! day the date of SCN this regard, the Initiating Officer has placed reliance. On the Provisions of the Section 9 of the General Clauses Act 1897 and agree with him. The said provision says that in any Central Act or Regulation made after the commencement of this Act, it shall be sufficient for the purpose of excluding the first in series of days or any other period of time to use the word 'from and for the purpose of including the last series of days or any other period of time, to use the word 'to Thus the first day is the date of notice which should be excluded and the days should be counted starting from the next day, Thus this allegation is not maintainable. 8.3. Another contention of the defendants is that the Initiating Officer failed to establish any nexus in the transaction for purchase of the subject properly as benami when examined on the touchstone of the crucial ....
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....e from Shree Vipul P Shah his family members and his group concern. But no evidence, whatsoever, brought on record by him to show or establish from where and how did the consideration flow from the alleged sole beneficial Owner for all) of the investments made by the DI-D8 over the years starting 1995 to 2098. The best case as per the Initiating Officer is that the answering defendant lent funds of Rs. 1 crore each to two of the 'defendant companies in the year 2009. There is clear mismatch in the amounts invested and funded and timing of the investment. There cannot be any nexus between funds received in 2009 and used for investments made in 1995 to 2008. He has not even examined the flow of funds breach of the times the DI-D8 invested in the shares they held in it's DEMAT account. Therefore, the Initiating Officer has failed to prove with any cogent evidence that the subject properties had been acquired and the consideration amounts ever paid by the alleged beneficial owner. Again there is allegation that funds of family members of the alleged beneficial owner and the group company ASCL have been used by the benami companies, but no effort has been taken to include these ....
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....e-requisite and sine qua non for issuance of SCN u/s 24(1). According to Section 24(1) of PBPT Act, if the Initiating Officer on the basis of material in his possession has reason to believe that any person is a benamidar in respect of a property he may, after recording reasons in writing, issue a notice to the person to show cause why the property should not treated as benami property. In the scheme of the Act, the SCN is issued after recording the reasons and the SCN in the instant case do contain details of reason framed by the Initiating Officer. Further it has been communicated to the Defendants albeit not separately. But in essence the Initiating Officer has fulfilled the basic obligation. It could have been better worded or could have been communicated separately but in my opinion Such deficiency would not make this proceeding invalid. The fact is that the Initiating Officer has fulfilled the mandatory requirement of "reason to believe" in the form of SCN in respect of the properties covered by the said notice which is already on record and the sufficiency of the reasons cannot be examined by this authority under statute. 8.7. I do find merit in the submission of th....
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....ction 2(9)(A). (C) & (D) were invoked has got some substance in it. While initiating a proceeding, the Initiating Officer has to be clear as to under which section he is proceedings and how the property, being the centre of action, is covered under the Act, The Initiating Officer initially covered the properties under section 2(9)(A), 2(9)(C) and later while passing order under section 24(4) he himself restricted to section 2(9) (A) and, In my opinion, the initiating Officer should not be vague and confused while initiating and concluding a proceeding under the Act. In the instant case, as the existence and applicability of section .2(9) (A) is already alleged by the Initiating Officer, then further sections cannot hold good for the same set of properties. 8.10. The defendants content that the Initiating Officer passed erroneous and illegal attachment orders, u/s 24(3) and 24(4) as he did not comply with the statut01Y and compulsory procedure for attachment of subject properties as prescribed in the PBPT Act and Rules having regard to Rule 5 of the PBPT Rules, 2016 which states that for the purpose of sub-section (3) of section 24, the Initiating Officer shall provisionall....
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.... the public holding includes the holding by the employees also through the said companies i.e., alleged benamidars and this is violation of law as they have not disclosed these employee holding to the BSE and MCA. In this connection, the initiating Officer has not been able to penal Action by the Bombay Stock Exchange 01 Ministry "Affairs in case of Violations if any. 8.13. The averment of the defendants that the Initiating Officer bas taken reliance of documents which have neither been provided to the Answering Defendant nor have been appended in the relied upon documents which are fatal and incurable legal lapses on his part and violation of principle of natural justice refers to the non-inclusion of the documents like reasons recorded by the. Initiating Officer for issuance of SCN u/s. 24(1); detailed note submitted to the Approving Authority for the approval of order u/s 24(4): Income Tax Return and other forms filed by the companies which are arrayed as party to the reference; shareholding disclosure of the company M/S Asian Star Company Limited 26 AS details of the companies arrayed as party to the reference; details downloaded and analysed from Ministry of Corporate....
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....order whereas in fact there was no provisional attachment order under, 24(3) in place in respect of these bank accounts and the loan amounts. If legally permitted in accordance with lay in all respects. The Initiating Officer sought to have ordered provisional attachment of the accounts, not the continence of provisional attachment which was in fact not existing. Further, mere mentioning of bank account numbers Without mentioning the balance is a total non-application of mind and it is an order without eyen identifying the property. On these grounds itself the entire order in respect of these properties is vitiated in the eyes of law and the attachment ordered therein are not maintainable for total non-application of mind and jeopardizing the statutory provisions. Therefore, these items stand released without any further examination 011 merit. It is apparent from the order U/S 24(3) and 24(4) that proceeding u/s 24(1) had its root in the survey operation undertaken in 2019 when it was gathered. that DI-D4 companies were holding the shares of "Asian Star Company Ltd" and that these 4 companies' entire business are based on the orders tor receipts from the Asian Star com....
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....ompanies in the demat accounts, the details of shares are not provided. The demat account itself cannot be held as a property. The real property is the shares kept in the account in a dematerialised form. The proceedings cannot be treated as complete and legal unless and until each share or lot is identified and found attributable to the alleged beneficial owner having regard to the source of acquisition along with the element of immediate or future benefit to the said beneficial owner, The statement of the Initiating Officer in the order in question that firm the balance sheet of the 4 companies, it was found that the promoters and their family members of M/S Asian Star Company Ltd have -issued debentures to the companies is not understood generally companies issue debentures to the public individuals for raising fund from them, but an action of Certain individuals issuing debentures of companies is strange end appears to be a result of application of mind on the part of the Initiating Officer. 12. Another fact in the present case is that the reasons to initiate the proceedings are mainly based on the statements of many persons recorded under section 131 of the Income Tax....
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....Benamidar 4 were all along functioning as separate corporate entity under separate directors. Further, these entities were subjected to scrutiny assessment U/s 143(3) and search assessment u/s 153C and no adverse findings as to bonafide of the transactions and activities of the company is there on record. 14. The audited Balance Sheets of D-1 from the year 1995 to 2017-18 was perused and it is apparent that in initial years loan/ borrowing from Aslan Star group companies were the actual and only source of the investment. made in Asian Star Company Limited, In financial year 2000, loan/ borrowing from group company was substituted by loan from shareholder, family member of the Beneficial Owner of Rs. 2.58 crore which was the main source for share investment of Rs. 3.07 crore. By financial year 2002, the mix of Surplus in Profit and Loss Account" in General Reserve of Rs, 77 Lac and loan of Rs. 4.5 crore was the source of total investment of IRS. 5.18 crore, In financial year 2008-09, Benamidar-1 has declared Total Income at Rs. 21 lacs, General Reserve of Rs, 2.21 crore, unsecured loan crore and the investment' in Asian Star Company Ltd of Rs. 5.57 crore, Thus character....
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....ion involved. The benefits being derived by the beneficial owner and not the benamidar should also be proved beyond doubt. Further, the payments received from the relatives or family members of the alleged beneficial owner, Asian Star or group companies cannot be treated as payment by the beneficial owner as these individuals or company are separate entities/individuals and cannot be legally clubbed with Shri. Vipul Shah. The various debentures issued to Shri. Vipul Shah and other have not been converted into shares and closing and the repayment of debentures are said to be in process, which the Initiating Officer is unable to contradict. Since these debentures are not converted into shares it shows that the benefit of more in the companies is unlikely. Further having regard to the period of issuance of debentures and period of acquisition of shares, it cannot be held that the funds raised out of these debentures have been utilised to acquire these shares. 15. To sum up the findings, it is apparent that the Initiating Officer has made his case of beneficial owner providing the consideration to DI to D8 on the basis of close proximity of all these entities with Asian Star C....
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....me is treated as bogus commission expenditure in the hands of the assessee is a contradictory finding. If the learned assessing officer gives a finding in the hands of the recipient of commission, the respective commission income should have been taxed under the head income from undisclosed sources. This has not happened. The assessment order is in the hence of the recipient of commission are also passed Simon tenuously with the assessment order in the case of the assessee. On consideration of the statement prepared by the learned CIT - A in paragraph number 10.4.5 we find that in case of Nishant impacts private limited the commission income shown in the audited account and accepted in the respective assessment order of that company is Rs. nil whereas the commission paid by the assessee to that party is Rs. 5.99 lakhs. However, it is not the case that the sum has not been shown by that assessee in its profit and loss account, where the appropriate tax deduction at source is made by the assessee. The claim of the assessee recorded at paragraph number 82 at page number 60 of the order clearly shows that all these parties have intimated to email response to the notice issued under sec....