TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1418
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....n 22.01.2019. During the course of search and seizure proceedings statement on oath u/s 132(4) of the Act of Shri Suresh Agrawal one of the directors of M/s Rashi Steel and Power Ltd. Was recorded on 22.01.2019, 24.01.2019, 30.01.2019 and 14.03.2019 and Shri Suresh Agrawal has admitted that he used to provide entries to the beneficiaries through bogus share capital premium and unsecured loan in lieu of commission through various companies managed and controlled by him and through his employees. He has also admitted tha he had made arrangements for accommodation entries through shell/paper/jamakharchi companies which are managed and controlled by Shri Praveen Agrawal. There are 86 shell/paper/jamakharchi companies through whom he had provided accommodation entries for share capital and unsecured loan. 3.2. Assessee was requested to submit the following information vide notice u/s 142(1) of the act :- "information received through Insight Portal and further information received from DDIT, Investigation, Kolkata wherein it was informed that you are one of the beneficiary who has taken accommodation entry from Shri Suresh Agrawal through his shell/paper compa....
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....ed share capital or loan of Rs. 81,83,185/- which is not correct. During the year the assessee has not received any amount from the alleged bogus companies as mentioned in the list under annexure recorded with statement of Shri Suresh Agrawal u/s 132 of the Act." The assessee has submitted the copy of ITR, Computation of Income, Bank Statement and other relevant documents. 3.4 Further, in respect of cross examination, the assessee's argument that "The entire case against the assessee appears to have been based on the statement made by a third person. The assessee has not been given the opportunity to cross examine Shri Suresh Agrawal one of the directors of M/s Rashi Steel on the allegations made by him. A necessary ingredient of a fair investigation is missing in the case of Assessee Company. Without an opportunity for cross examination, statement made by third person cannot be accepted as a fact and used against the assessee. Hence, it is hereby requested again to provide an opportunity to cross examine Shri Suresh Agrawal one of the directors of M/s Rashi Steel." is not acceptable as in this regard, it is humanly not possible for persons to be present for O....
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....ted by the State to exercise statutory powers to ascertain the income of a subject and the tax payable by him to the State, but his position cannot be equated to that of a judge or a court deciding a "lis" between a citizen and the State. He is not bound to lead "evidence" on his own account with a view to rebutting the evidence of the assessee. TAX DEP In CIT v. Metal Products of India (1984) 150 ITR 714 (P&H), it was held that the AO may gather information in any manner he likes, behind the back of the assessee and utilize the same against the assessee, even if it does not, in all respects satisfy the requirements of the Indian Evidence Act. What is necessary is that he should have material upon which to base the assessment; "material" as distinguished from "evidence" which includes direct and circumstantial evidence. In Gopinath Naik v. CIT (1936) 4 ITR 1 (All.), the Hon'ble Allahabad High Court held that the very nature of the proceedings for assessing the income tax liability, necessitates the use of such media as the AO chooses for collecting information which he may not like to disclose to the assessee and he would be perfectly within his rights to refu....
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....sessee has undertaken such transactions with shell companies which are in the nature of accommodation entries to route its unaccounted money back into its books of accounts. The assessee has contended that while re-opening the assessment, there must be some material available for formation of belief of escapement, which is necessary condition for invoking section 147. The contention of the assessee is not acceptable. The search proceedings include detailed examination and verification of the modus operandi adopted by the lending companies and the findings have further been supported with tangible evidences such as seized documents, statement given on oath and other documentary evidences. Consequent upon receipt of such information, the assessing officer has examined and analyzed the information before taking remedial action in the case of the assessee. The evidences seized during the search proceedings and the investigation/enquiry made in respect of the findings of the search prove that the assessee has routed its unaccounted money through Kolkata based shell companies and entry operators and finally brought back into books of accounts as unsecured loan. The docu....
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....the shell companies involved and the assessee do not show true and correct matter of affairs. From the outcome of the search and relevant evidences seized, it is found that the assessee company has brought into its books its own unaccounted income in the form of unsecured loan. On the face of it, the transaction appears perfectly legal. The investment has been brought in by way of banking channels which the assessee company relies upon to prove the genuineness of the transaction. The assessee submitted its contention to discharge its onus. However, it is a colorable device adopted by the assessee company to camouflage the real transaction. For an entry to escape the clutches of provisions of section 68 three conditions need to be fulfilled - identity, creditworthiness and genuineness of the transaction and the same remains unexplained in respect of the loan received by the assessee from the shell companies. It is the fact of the case that there has been a mushrooming growth of professional entry operators in Kolkata who provide accommodation entry for share application money/loans for a commission ranging from 2% to 10% of the share application/loan money given. T....
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....r, which the appellant has evidently failed to do. It clearly appears that the appellant's compliance or rather lack of it, the appellant has not even bothered to pursue this appeal in any productive manner. Hence, in view of the aforesaid total non-compliance/non prosecution of the instant appeal on the part of the appellant, the instant appeal is adjudicated and disposed off, as under, ex-parte, primarily on the basis documentation available on record. 5.5 The Appellant had filed his Return of Income for A.Y. 2017-18 on 23.03.2018 declaring total income of Rs. 82,87,080/-. The AO issued notice u/s. 148 of the act on 14.07.2022. In response to the notice issued, the appellant filed return of income on 08.05.2023 declaring total income of Rs. 82,87,080/-. The same was treated as invalid in view of the ordinary delay in filing of return u/s. 148 of the act. The AO completed the assessment proceedings u/s. 144 of the act and made addition of Rs. 1,20,16,408/- and treated the same as unexplained credits u/s. 68 of the act. 5.6 It is pertinent to note that even during the instant appellate proceedings, neither appellant his nor representative filed any submissions....
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....ing the aforesaid order on the same parity of reasoning, we are providing final opportunity to the assessee to represent his case before the first appellate authority. Accordingly, we set-aside the order of the Ld. CIT(Appeals)/NFAC and remand the matter back to its file for denovo adjudication as per law while complying with the principles of natural justice. The Ld. CIT(Appeals)/NFAC is also directed to be particular with regard to the sending of the hearing notices and they should be alert while sending such hearing notices for compliance by the assessee so that it is sent on the correct email id provided by the assessee. 8. Before parting, we may herein observe that this is not simply an ex- parte order. In fact, this is a case where the assessee has received accommodation entries in guise of unsecured loan from Kolkata based shell companies during the period under consideration. The search operation in the cases of RKTC Group and Shri Suresh Agrawal shows that various beneficiaries including the assessee had routed their unaccounted money through Kolkata based shell companies managed and controlled by Shri Suresh Kumar Agrawal and other entry operators. The findings of the ....