TaxTMI 
TaxTMI 
2026 (1) TMI 1475
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....6,02,021/-. The case was selected for scrutiny and notice under Section 143(2) of the Act was issued on 25.09.2017. Notice under Section 142(1) of the Act along with questionnaire was issued on 13.09.2018 asking the assessee company to furnish certain details. In response to the above notice, Sh. Lalit JR Sharma, C.A. & A.R. of the assessee company appeared and furnished details which have been placed on record after examination. In this case, information has been received from DDIT(Inv.), Unit- 5(4), New Delhi. During the course of inquiry in the case of Shri Surendra Kumar Jain, it has been found that he is an entry operator and has provided accommodation entries to various entities including assessee company. Appellant Company was issued show-cause-notice dated 30.11.2018. No response was filed by the assessee company. On completion of proceedings, Ld. AO vide order dated 10.12.2018, made addition of Rs. 9,94,000/- Rs. 2,75,00,000/- and Rs. 11,55,000/- respectively. 3. Against order dated 10.12.2018 of Ld. AO, the appellant/assessee filed appeal before Ld. CIT(A) which was partly allowed vide order dated 07.07.2022. 4. Being aggrieved, Department of Revenue, preferred pres....
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....CIT(A) placed undue reliance on the audited financials and the status of the assessee as a registered NBFC to draw a conclusion of genuineness. However, merely being a registered entity or filing audited accounts does not preclude the possibility of being used as a conduit for providing accommodation entries, a fact that has been recognized in NRA Iron & Steel Pvt. Ltd. v. PCI (2019) 103 taxmann.com 48 (SC). * Moreover, the nature of the financial transactions and the pattern observed were entirely inconsistent with ordinary lending activity expected of an NBFC, thereby justifying the AO's suspicion and assessment. 5.3 Statements of Directors - Part of Evidentiary Matrix: * The Ld. CIT(A)'s outright dismissal of the statements of directors as "uncorroborated" is unwarranted. The statements recorded under oath form a relevant piece of evidence, particularly when considered alongwith the transactional patterns and absence of actual business substance in the financial dealings. * In this case, the directors' statements were not retracted and were not shown to have been obtained under duress. In absence of retraction, and in light of suspicious....
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....ory requisitions and provide verifiable documentation amounts to gross procedural default and justifies the disallowance, in accordance with section 143(3) read with section 144 of the Act. 6.3 Debt Not Arising in the Course of Business Capital in Nature: The AO has categorically found that no interest income or revenue recognition was made in respect of the said amount in any previous year. Therefore, the purported debt: * Did not arise from the regular course of business; * Does not satisfy the character of a trading loss; * Is clearly capital in nature, and hence, not eligible for deduction under section 36(1)(vii). 6.4 Inapplicability of Section 36(1)(vila)(d): The Assessee has not claimed the benefit under section 36(1)(viia)(d), nor is it eligible, as it was inserted via the Finance Act, 2016 and became operative from 01.04.2017. Hence, the general provision under section 36(1)(vii) alone governs the issue, and the deduction has rightly been denied. 7. Learned Authorized Representative for the assessee submitted that Hon'ble Income Tax Appellate Tribunal, Delhi in ITA No.4224/Del/2019 titled as "Ankita Aggarwal Vs. ITO" in order dated 06.08....
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....11-12 28.3.2013 Returned income plus 14A disallowance 2012-13 18.3.2015 Returned income accepted 2013-14 21.3.2016 Returned income accepted 2014-15 29.11.2016 Returned income accepted All this facts clearly show that appellant was earning huge revenues on account of its business activity, these are audited results with all compliances of TDS on loan/FDR receipts and the business results were accepted in most of the years. 6.4 The A.O. received the Information and statements of directors of the appellant company, on the basis of which it was concluded that the directors Sh. Vinod kumar Taneja and Smt. Chanchal Taneja are only in name and do not know about the affairs of the company. 6.5 On perusal of the assessment order, it is observed that AO finally concluded that Sh. Sant Lal Aggarwal and Sh. Satish Kumar Pawa are actually operating the company. 6.6 On perusal of the share holding pattern of the appellant company, it is observed that Sh. Sant Lal Aggarwal, Sh. Satish Kumar Pawa and their family members are the major shareholders of the company. The directors Sh. Vinod kumar Taneja and Smt. Chanchal Taneja are m....
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....thority has stated that in course of search and seizure operation conducted in case of Jagat Group, certain incriminating materials were found indicating that M/s. Vidya Shankar Investments Pvt. Ltd. and M/s. Index Securities & Research Pvt. Ltd. are paper companies providing accommodation entries. However, the nature of the incriminating material has neither been discussed in detail, nor it is forthcoming whether such incriminating materials were forwarded to the Assessing Officer for his analysis. 13. In fact, in the assessment order, the Assessing Officer, except referring to the communications/letters from DCIT, Central Circle, has not discussed anything about the incriminating materials referred to in the said communications. It is quite clear from the observations of the Assessing Officer that he has treated M/s. Vidya Shankar Investments Pvt. Ltd. and M/s. Index Securities & Research Ltd. as paper companies/entities providing accommodation entries, mainly adopting the opinion expressed by DCIT, Central Circle in the communications sent to the Assessing Officer. Interestingly, though, the assessee had invested in shares of M/s. Vidya Shankar Investments Pvt. Ltd. and....
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....assed in ITA No. 430 to 432/Del/2014 upheld the decision of learned first appellate authority. It is noteworthy, the aforesaid decision of the Tribunal was challenged by the Revenue before the Hon'ble Jurisdictional High Court. However, in order dated 04.09.2017 passed in ITA No. 566/2017 and Ors., Hon'ble Jurisdiction High Court dismissed the appeals of the Revenue. It is further relevant to observe, in case of M/s. Vidya Shankar Investments Pvt. Ltd., relying upon the information gathered in course of search and seizure operation conducted in case of Jagat Group, assessments were completed in assessment years 200708, 2008-09 and 2009-10 making huge additions towards unexplained cash credit under section 68 of the Act by treating the share application money and share premium as bogus. While deciding the appeals of the assessee, learned first appellate authority deleted the additions. Being aggrieved, Revenue came in appeal before the Tribunal. While deciding the appeals of the Revenue, the Tribunal in ITA No.6569/Del/2013 and Ors., dated 28.09.2016 examined the issue in great detail and recorded the following findings: "17. AO also proceeded on the premise that it is beyo....
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....d by the assessee company and has not minced a word to question the validity of those documents nor the AO has given any findings regarding the summons issued u/s 131 of the Act for personal deposition and furnishing of details by the investors in the assessee company. Even no statement of these investors was recorded by the AO. 22. So, when all the shareholders appear before the AO and filed confirmations, bank statements, copy of ITRs for the AY 2007-08 to 2011-12, copy of PAN, name of directors, copy of audited accounts, etc. to establish the investment made by them in the assessee's company, their identity cannot be questioned on the basis of conjectures and surmises. In the absence of any adverse material on record that cash receipt/deposits were noticed in the bank accounts of these companies in question, the capacity of these investors cannot be questioned. Moreover, the assessee company has received the subscription of these shareholders through banking transactions. 23. So, the assessee company has duly discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants who have subscribed to the shares during the years....