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TMI Blog2015 (11) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 29-03-2011 as under:- "Reasons recorded, for reopening the assessment: The return of income was filed on 20.09.2005 declaring the income of Rs. NIL/. Order u/s!43(3) of the Act was completed on 28.12.2007 making an addition of Rs. 85,005/- on account of excess depreciation and Rs. 73,766/- on account of valuation of work in progress. A search and seizure action u/s. 132 of the Income tax act was conducted in case of M/s. Mahasagar Securities Private Limited by Investigation wing of Income-tax department, Mumbai, on 25-11- 2009. The search was conducted on the basis of information received in an FIU alert from New Delhi regarding suspicious transactions taking place in the bank accounts of this company and its related companies. The directors of these companies were one Mukesh M.Choksi and Jayesh K-Sampat. During the course of the search it was revealed that the Mahasagar Securities private Limited and its related group of 34 odd companies (the prominent ones being Alliance Intermediaries & Network Private Limited, M/s. Mihir Agencies Privat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The assessee preferred appeal on 12-09-2011. The CIT(A) dismissed it on 26-06-2012. The assessee submits that its appeal against the CIT(A)'s order is pending before the tribunal. 4. It is to be seen post facto CIT(A)'s order, the CIT formed an opinion that above stated reassessment framed in assessee's case was erroneous causing prejudice to the interest of Revenue as under:- "1. Please refer to the assessment order for A.Y. 2005-06 passed u/s. 143(3) r.w.s. 147 of the IT Act dated 29.08.2011 by the ITO, Ward-l(2), Surat. In this case, the assessment was reopened on the basis of information that the assessee was a beneficiary of fraudulent tilling entry to the tune of Rs. 11 lakh from M/s. Mahasagar Securities Pvt. Ltd. and its group companies run by Shri Mukesh M. Choksi, Director of the companies. During the course of re-assessment proceedings, the A.O. had found , another company also indulging in-billing entry and total addition of Rs. 26 lakh were made as under: 1) Mihir Agency Pvt. Ltd. Rs. 11,00,000/- 2) Buniyad Chemicals Pvt. Ltd. Rs. 15,00,000/- Total Rs. 26,00,000/- 2. However, from the examination of records it is found that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed its reply pleading therein that the Assessing Officer had made all verifications before framing reassessment sought to be revised in proceedings u/s. 263 of the Act. The CIT has declined the same in the order under challenge reading as follows: "5. The contention of the assessee is that complete details with respect to all the share applicants were submitted even in reassessment proceedings and were verified by the A.O. For this the assessee relied on the order of the A.O, and stated that since all the required details, were submitted and accepted by the A.O, onus in respect of every share applicant with regard to the genuineness and creditworthiness had been discharged. 5.1 It would be pertinent to-mention the fact leading1 to reassessment proceedings and the additions. A search and seizure action U/s.132 of the Act was conducted in the case of M/s. Mahasagar Securities Pvt. Ltd., by the Investigation Wing of Mumbai on 25.11.2009. The search was conducted on the basis of information received in an FIU alert from New Delhi regarding suspicious transactions taking place, in the bank accounts of this company and its related companies. The Directors of these companies were o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emium. However, while finalizing the assessment order, the AO has not verified the genuineness of share application/share premium and the creditworthiness of the above mentioned 11 parties/share applicants in the light of the hew evidence that the assessee was taking bogus share capital entries from various concerns. 5.5. Further, on going through the details filed by the assessee the following facts emerge, which the A.O should have investigated' in the light of fresh evidences that the share capital entries were not genuine but the AO did not independently verify the same. Sr. No. Name of party Amount Remarks 1 M/s. Venus Dealing Pvt. Ltd Rs. 10,00,00,0/- The company has filed its return showing income of Rs. 28,440/- only. The shares of the company is taken by one S. Das and Mrinal Chakraborty by 100 shares each. The company has shown interest income only and sources of fund as share capital and loans. 2 Kashmikal Mercantile Pvt. Ltd Rs. 5,00,000/- The company has filed its return showing income of Rs. 784/- only. The shares of the company is taken by one Ramesh Kedia and Jatan Lai Bhansali by 100 shares each. No other details are filed in respect, of this part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , These share applications therefore required further investigations to be carried out by the A.O., especially in the light of the statement of entry provider, Shri Mukesh Choksi, before deciding on their genuineness. 5.7. M/s Pankaj Enka Pvt Ltd. assessed with 'ITO Ward l(4), Surat had also taken accommodation entries, in the garb of share applications, from the companies mentioned in para 5.5. During the course of assessment proceedings of M/s Pankaj Enka Pvt Ltd, it was noticed by the A.O that M/s Pankaj Enka Pvt Ltd had taken share application money from the following parties in addition to share application money received from M/s Buniyad Chemicals Pvt. Ltd, Mumbai and M/s Mihir Agencies Pvt Ltd:- Sr. no Name of the party. Amount 1 M/s. Hiteshwari Marketing Pvt. Ltd. Kolkata 5,00,000 2 M/s. J.M,D.,Mercantiles Pvt. Ltd., Kolkata 5,00,000 3 M/s. Sunflower Vinimay Pvt. Ltd. Kolkata 5,00,000 4 M/s. Sugam Commercial Pvt. Ltd. 5,00,000 5 M/s Edmond Commercial Pvt Ltd, Kolkata 5,00,000 6 M/s. Bhagya Laimi Mercantile Pvt. Ltd. Kolkata 5,00,000 It can be seen from the above table that 5 of the 6 parties are the same parties who have supposedly given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the list and arrange to supply the Information as required from these parties along with their confirmation(s). In absence, please show-cause as if why an adverse view may not be taken and 'necessary action as per applicable provisions of the act may not be taken and the amount of share application in respect to above mentioned 12 companies of Rs. 85,00,000/- (1,0600,00- 21,00,00) for which no satisfactorily reply as well as creditworthiness, genuineness and identity proved by all the 12 parties should not be treated as unaccounted income within meaning of section 68 of the I.T. Act." 5.7.2. There was no reply to the show cause and the share application money was held as unexplained as to its nature and source and addition was made in the case of M/s. Pankaj Enka Pvt. Ltd. is an associate concern of the assessee, M/s. Harmony Yarn Pvt. Ltd. 5 of the transactions of share application held to be non genuine in the ease of M/s Pankaj Enka Pvt. Ltd are with persons who also appear in the list of 41 persons applying for shares of M/s. Harmony Yarn Pvt. Ltd (the Assessee). 6. In view of the facts narrated above and in the light of fresh evidences, it was the duty of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of no inquiry by the Assessing Officer or not. In view of the above said facts and circumstances and specific inquiry of the Assessing Officer and equally elaborate assessee's reply, we hold that this case does not fall in the above stated category. We notice from the case file that the assessee's details forming part of discussion in reassessment led to addition of Rs. 26 lacs being made on account of bogus share application and premium. We observe in these facts that the Assessing Officer examined this issue and confirmed this addition of Rs. 26 lacs only. The hon'ble Bombay high court in case of CIT vs. Garbiel India (1993) 71 Taxman 585 (Bom) deals with a similar situation wherein the CIT revised an assessment on the ground that the same did not contain discussion in regard to a deduction claim which alleging non application of mind. Their lordship observe that the Assessing Officer had made inquiries in view of all necessary explanation. It is held that the Assessing Officer had allowed the claim on being satisfied with assessee's version and the same cannot be held erroneous merely because the assessment sought to be revised did not contain an elaborate discussion. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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