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TMI Blog2016 (9) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the AO to prove that these are the shell companies and not to fasten the liability of the assessee on the ground that assessee has failed to produce the aforesaid six investor companies, moreso assessee cannot be called upon to prove negative. Thus forming an opinion merely on the basis of information supplied by Investigation Wing of the revenue that such and such company has provided an accommodation entries to the assessee to the tune of ₹ 54,00,000/- does not amount to the satisfaction of the AO in any manner whatsoever to reopen the case u/s 147 of the Act; - Decided in favour of assessee - ITA No. 4613/Del./2010, CO No. 366/Del/2010 - - - Dated:- 24-8-2016 - J. S. Reddy (Accountant Member) And Kuldip Singh (Judicial Member) For the Assessee : Ved Jain, Advocate For the Revenue : F. R. Meena, Senior DR ORDER Kuldip Singh (Judicial Member) Since common questions of facts and law have been raised in both the aforesaid appeal and cross objection, the same are being disposed off by way of consolidated order to avoid repetition of discussion. 2. Present appeal is the outcome of order dated 25.08.2014 passed by the Hon ble jurisdictional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome tax Act, 1961 on account of share application money 2. That on the facts and circumstances of the case and in law the Ld. CIT(A) erred in ignoring the fact that the assessee failed to produce directors/authorized representative of the alleged applicants even after specifically being asked to do so by the A.O. and, thus failed to discharge its onus to establish the identity and creditworthiness of the share applicants and the genuineness of transaction. 3. That on the facts and circumstances of the case and in law the Ld. CIT(A) erred in relying upon the decision given in the case of Lovely Exports (P) Ltd. In the case of Lovely Exports P.Ltd., the A.O. did not ask the assessee to produce any of the investor shareholders. However, in the instant case the assessee was specifically asked and given a number of opportunities to produce the directors/authorized representatives of the investing companies, but yet none could be produced before the A.O. by the taxpayer. 4. The appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal. 4. The Objector, by filing the present cross objection, sought to set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -do- 1200000 14.3.02 Dinanath Luhariwal Spinning Mills Ltd. SBP -do- 50103 HDFC -do- 850000 33834 16.3.02 Technocom Associates P.Ltd. Innovative Wazirpur 220 HDFC -do- 1000000 18.3.02 Chintpuri Credits SBP DG 50058 Total 5400000 6. On the basis of material placed before the AO, AO came to the conclusion that the assessee has failed to disclose fully and truly all the material facts qua the assessment of income of ₹ 54,00,000/- received on account of share application money, consequently assessment was reopened u/s 147 of the Act and service of notice u/s 148 of the Act was effected on 25.03.2009. 7. Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beneficiary of accommodation entries received from certain established entry operators identified by the Wing during the period relevant to A.Y. 2002-03. A comprehensive investigation was carried out by the Investigation wing for identification of entry operators engaged in the business of money laundering for the beneficiaries and on the basis of investigation carried out and evidences collected, a report has been forwarded. The Assessing Officer has perused the information contained in the report and the evidences gathered. The report providers details of the modus operandi of the money laundering scam and explain how the unaccounted money of the beneficiaries are ploughed back in its books of account in various forms including the form of bogus share capital / capital gains etc. after routing the same through the bank account(s) of the entry operators. Entry operators were identified after thorough investigation on the basis of definite analysis of their identity, creditworthiness and the source of the money ultimately received by the beneficiaries. These entry operators are found to be mostly absconding / non-complying after the unearthing of the Money Laundering Scam leavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50000 33834 16- Mar-02 Technocom Associates P.Ltd. Innova tive Wazirpur 220 HDFC Old Rajender Nagar 850000 33834 16- Mar-02 Technocom Associates P.Ltd. Innova tive Wazirpur 220 HDFC Old Rajender Nagar 1000000 18- Mar-02 Chintpuri Credits SBP DG 50058 HDFC Old Rajender Nagar 1000000 18- Mar-02 Chintpuri Credits SBP DG 50058 The assessee has received unexplained sums from the entry operators as per the above details as per information available with the undersigned. As explained above, the identity, creditworthiness and genuineness of transactions with the persons found to be entry operators cannot be established. The Assessing Officer therefore have rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court concluded that it was not satisfied that the ITO had any material before him which could satisfy the requirements under Section 147 and therefore could not have issued notice under Section 148. 14. Identical issue has also come up before Hon ble jurisdictional High Court in judgment cited as G G Pharma India Ltd. (supra) wherein Hon ble High Court, by following the judgment delivered by Hon ble Supreme Court, entitled Chhugamal Rajpal vs. S.P. Chaliha (supra) held as under :- 12. In the present case, after setting out four entries, stated to have been received by the Assessee on a single date i.e. 10 th February 2003, from four entities which were termed as accommodation entries, which information was given to him by the Directorate of Investigation, the AO stated: I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation entries. The above conclusion is unhelpful in understanding whether the AO applied his mind to the materials that he talks about particularly since he did not describe what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been provided with copies of share application forms containing names, addresses, PAN, bank details and confirmation of the investors, he was required to conduct the independent investigation to satisfy himself that such and such income has escaped assessment before assuming jurisdiction u/s 147 of the Act; (iv) that even on merits when the assessee had provided copies of share application forms containing names, addresses, PAN, bank details and confirmation of the investors, the onus stood shifted to the AO to prove that these are the shell companies and not to fasten the liability of the assessee on the ground that assessee has failed to produce the aforesaid six investor companies, moreso assessee cannot be called upon to prove negative; (v) that forming an opinion merely on the basis of information supplied by Investigation Wing of the revenue that such and such company has provided an accommodation entries to the assessee to the tune of ₹ 54,00,000/- does not amount to the satisfaction of the AO in any manner whatsoever to reopen the case u/s 147 of the Act; (vi) that when the AO has sufficient material to conduct the independent investigation to assume the jur ..... 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