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TMI Blog2018 (3) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, thousands of such companies have been struck from the register of companies. The assessing officer should also make reference to the action taken by the Finance Ministry in this regard, as to whether names of these companies appear in the list of such struck off companies. The issue stands remitted to the file of the assessing officer. - Decided in favour of revenue for statistical purposes. - I.T.A. No. 3240/Mum/ 2017 - - - Dated:- 23-2-2018 - SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM Appellant by : Ms. Aarjoo Goradia Respondent by : Dr. K. Shivaram Shri Rahul K. Hakani ORDER Per Shamim Yahya, A. M. This appeal by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) and pertains to the assessment year 2012-13. 2. The grounds of appeal read as under: 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of ₹ 70,00,000/- on a/c of unexplained cash credit u/s 68. The Companies from which the assessee has accepted shares application money of ₹ 70,00,000/- were controlled and operated by Shri Praveen Kumar Jain, who admitted in his s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther these concerns have not employed any persons except a few common accountants who manage accounts and banking transactions of all such concerns and all these concerns are indulged in the activity of providing accommodation entries only. 5. The Assessing Officer further noted that subsequent to the search action in the case of Shri Praveen Kumar Jain, search and seizure action was carried out by the Mumbai Investigation Wing in Subhlaxmi Group. Subhalaxmi Group engaged in the business of manufacturing of textiles, had taken accommodation entries of bogus share capital from various entry providers including the concerns of Shri Praveen Kumar Jain. In his statement recorded on oath u/s 132(4), Shri Yogesh Agarwal, promoter of the group admitted that such entries of share capital are in the nature of accommodation entries only. The above search findings corroborate that all the concerns run, controlled and operated by Shri Praveen Kumar Jain are indulged in the activity of providing accommodation entries only. 6. The Assessing Officer further noted that subsequently another letter dt. 07.07.2014 was furnished wherein it was stated that certain enquiries in the case of few b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2250000 2,500,000 Olive Overseas P Ltd (Realgold Trading Co P Ltd) AACCR4512K 25000 250000 2250000 2,500,000 Triangular Infocom Ltd (Lexus Infotech Ltd) AAACL 4646 G 20000 200000 1800000 2,000,000 Total 70000 7000 6300000 7000000 8. During the course of assessment proceedings notice u/s 333(6) vide letter dt. 06.02.2015 was issued to the above mentioned three parties, to verify the genuineness of assessee's contentions. In response to this all the parties have replied to the notice u/s 133(6) and affirmed that they had subscribed to the share capital in the assessee's company. 9. As already stated there was a search and seizure operation in the case of Mr. Praveen Kumar Jain Group and consequent to the search the statement of Shri Praveen Kumar Jain was' recorded and during the course of statement he has confirmed that he and his .groups has not carried out any b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006) 155 Tax 289 (Raj), Delhi High Court in CIT vs. VLS Foods P.lid. (2011) 203 Tax 213/15 taxmann.com 225(Delhi). 3. In view of the information and explanation s given and c. evidences on record merely because the transactions are alleged to be bogus, the amount of share application money received from the investors through banking channels cannot be regarded as undisclosed income u/s.68 of our above client. Reliance is made on the ratio of the judgement of Hon'ble Supreme Court in CIT V/s Lovely Exports P.Ltd. (2008) 216 CTR 195 (SC). 4. Under the circumstances we request you not to make addition u/s 68 of the Act for the share application money received from the above investors . 10. Assessee's above submission has been carefully considered but the same is not acceptable as the statement recorded consequent to action u/s 132, Shri Praveen Kumar Jain has categorically confirmed that he and his company controlled by him did not engage in any business activity and they were providing accommodation entry in purchase, long term capital gain and unsecured loan and share application money. In the information gathered by the Investigation Wing from the premises of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inadequate; (2) failure to make available incriminating material (reports, statements, etc.) forming basis for action by the AO; (3) failure to give due opportunity to the appellant to cross examine witnesses, whose statement might have been relief upon; and (4) failure to recognize the satisfactory nature of the explanation /evidence tendered by the appellant to explain identity of creditors, creditworthiness of the creditors and the genuineness of the loan transactions. Hence the impugned addition cannot be sustained. 13. Against the above order, the assessee is in appeal before the ITAT. 14. We have heard both the counsel and perused the records. Learned departmental representative submitted that the share applicants in this case are bogus companies being operated by Shri Praveen Kumar Jain. He submitted that before the Investigation Department Shri Praveen Kumar Jain has clearly admitted that the share applicants companies were controlled by him and these companies used to indulge in providing bogus accommodation entries, which in the present case is in the form of share application at premium of ₹ 90 for share of ₹ 10. Hence, the learned departmental repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the surrounding circumstances and the theory of preponderance of probability was also upheld. Honourable judicial High Court in the case of Sanjay Bimalchand Jain vs. Pr. CIT [2018] 89 taxmann.com 196 (Bom) has upheld the addition as bogus long-term capital gain in light of huge improbable increase in share prices of little-known companies on the touchstone of preponderance of probability. The Hon ble Apex Court in the case of Security Exchange Board of India vs. Rakhi Trading Pvt. Ltd. in Civil Appeal No. 1969 of 2011 and others vide order dated 08.02.2018 in the context of bogus share market activity has noted in paragraph 42 the Hon ble Apex Court decisions where it was held that in absence of direct proof of meeting of minds elsewhere in synchronized transactions, the case should be one of preponderance of probabilities as far as adjudication of civil liabilities arising out of the violation of the act or the provision of the regulation is concerned. Further Honourable apex court in paragraph 4, 6 of the same decision has observed that it will be too naive to view all such transactions dehorse the surrounding circumstances. 17. On the touchstone of above said honourable a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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