TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 1947
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....t Shri Praveen Kumar Jain was proved to be one of leading entry providers opera ting in Mumbai who could not be produced by the assessee as his witness during the assessment proceedings before the A.O. 2. The appellant prays that the order of the ld. CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. 3. The appellant craves leave to add, amend or alter all or any of the grounds of appeal which may be necessary." 2. Briefly stated, the assessee company which is engaged in the business of trading in shares, securities and cloth items had filed its return of income for A.Y. 2007-08 on 30.10.2007, declaring its total loss at (-) Rs. 30,93,251/-. Assessment under Sec. 143(3), dated 24.11.2009 was framed in the hands of the assessee and its loss was assessed at (-) Rs. 29,97,800/-. On the basis of information received by the A.O from the DGIT(Inv.), Mumbai, dated 07.03.2014 that the assessee as a beneficiary had obtained accommodation entries in the garb of share capital and/or share application money amounting to Rs.1,30,00,000/- during the year under consideration viz. A.Y. 2007-08 the case of the assessee was reopened under Sec.....
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....e the A.O in respect of all the 7 investors. As regards the variance that had emerged on the basis of the replies received in respect of investments made by three investor parties viz. (i) M/s Alka Diamond Industries Pvt. Ltd; (ii) M/s Hema Trading Pvt. Ltd.; and (iii) M/s Real Gold Trading Pvt. ltd. as in comparison to that shown by the assessee in its 'books of accounts', it was submitted by the assessee that the said concerns in their confirmations had not mentioned their respective investments and had only attached the share application forms and the bank statements for confirming that they had made investment with the assessee company. The assessee in order to dispel any doubts as regards the genuineness of its aforesaid claim filed the copies of the bank statements and the share application forms for the remaining amount of investment made by the aforesaid three parties. Further, it was submitted by the assessee that shares were allotted to the said investors in respect of both the share applications at the same time. The assessee also filed a 'valuation report' for justifying the share premium charged on the shares which were valued at Rs.103/- per share. However, the A.O wa....
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....itions made by the A.O was not persuaded to subscribe to the same. It was noticed by the CIT(A) that the assessee in the course of the assessment proceedings had duly complied with the directions of the A.O and had submitted the requisite details as were sought by him to support the authenticity of the share capital and share premium received by him from the investor parties viz. (i) copies of the returns of income; (ii) copies of the computation of income filed along with their respective returns of income; and (iii) copies of the bank statements of the share applicants. Apart there from, it was observed by the CIT(A) that the complete addresses of the 7 share applicants under consideration was also submitted with the A.O. Further, the CIT(A) observed that the notices issued under Sec.133(6) by the A.O were also responded by all the parties. As regards the discrepancies pertaining to the actual investments made by three of the share applicants viz. (i) M/s Alka Diamond Industries Ltd; (ii) M/s Hema Trading Pvt. Ltd; and (iii) M/s Real Gold Trading Pvt. Ltd., as had initially emerged, it was observed by the CIT(A) that the assessee had duly explained that the same had arisen for th....
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....nt payee cheques and no cash was found deposited in the bank accounts of either of the said investor party. Also, it was noticed by him that the share certificates had been issued to all the aforesaid parties and the Registrar of Companies was also informed by the assessee. Interestingly, it was noticed by the CIT(A) that all the requisite documentary evidence were filed not only once but twice i.e at the time of the original assessment, and again at the time of the reassessment proceedings. It was observed by the CIT(A) that the A.O had not brought on record any evidence which would reveal that there was any cash trail in respect of the amounts received by the assessee from the aforesaid parties. In fact, it was observed by the CIT(A) that the A.O had not been able to point out any specific evidence which would reveal that the assessee company had received the share application money in lieu of cash paid to the said respective parties. Further, it was noticed by the CIT(A) that the A.O in the course of the original assessment proceedings had himself admitted that all the 10 parties had confirmed of having made investments with the assessee company. Also, it was observed by the CIT....
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....andate of law the registrar of companies was also informed. Interestingly, as observed by us hereinabove, the aforesaid documentary evidences were filed by the assessee not only once but twice i.e at the time of the 'Original' assessment and again in the course of the reassessment proceedings. Further, as is discernible from the orders of the lower authorities, all the aforesaid transactions of receipt of amounts from the aforementioned parties were through account payee cheques and no cash was found to have been deposited in any of the bank accounts of either of the aforementioned investors. A perusal of the order of the CIT(A) reveals that the A.O had not brought on record any 'material' which would show that the transaction of the assessee with the aforementioned parties was not genuine. In fact, we find that even in the course of the 'remand proceedings' the A.O could not place on record any documentary evidence which could dislodge the claim of the assessee that it had entered into genuine transactions with the aforementioned parties. As observed by the CIT(A), we find that no evidence was brought on record by the A.O which could show any cash trail in respect of the amounts t....
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....we find that the A.O had failed to demonstrate on the basis of any irrefutable documentary evidence which could have persuaded us to subscribe to his view that the assessee company had not entered into any genuine transactions with the aforementioned parties and had merely obtained accommodation entries in the garb of the aforementioned transactions. As a matter of fact, we find that the entire addition made by the A.O is on the basis of the information related to the outcome of the search proceedings conducted in the case of Shri Pravin Kumar Jain, an infamous accommodation entry provider. As is discernible from the orders of the lower authorities, the A.O neither in the course of the assessment or the remand proceedings had placed on record any 'material' which would dislodge the claim of the assessee that it had entered into genuine transactions with the aforementioned parties. Accordingly, on the basis of our aforesaid observations, we are of the considered view that the assessee had duly discharged the 'onus' that was cast upon it as regards proving the authenticity of the transactions involving the receipt of share application money from the aforementioned parties. As regards....