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TMI Blog2016 (6) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITA No. 175 & 176/JP/2015, C.O. No. 15 & 16/JP/2015 @ITA No. 175 & 176/JP/2015), ITA No. 179/JP/2015 - - - Dated:- 22-6-2016 - SHRI KUL BHARAT, JM SHRI T.R.MEENA, AM Revenue by : Shri R.S. Dangur (Addl.CIT) Assessee by : Shri P.C. Parwal (CA) ORDER PER T.R. MEENA, A.M. The appeals filed by the revenue and cross objections filed by the assessee arise against the order dated 30/12/2014 passed by the ld. CIT(A)-I, Jaipur for the assessment year 2005-06 2006-07 wherein the Revenue as well as the assessee have raised following grounds:- Common Grounds of ITA No. 175 176/JP/2015 Revenue s appeal On the facts and in the circumstances of the cases and in law the ld.CIT(Appeal)-I, Jaipur has erred in:- 1. Whether on the facts and in the circumstances of the case and in law the ld.CIT(A) has erred in deleting the addition of ₹ 55,00,000/- for the A.Y. 2005-06 and ₹ 51,00,000/- for the A.Y. 2006-07 made u/s 68 on account of unexplained cash credits in the form of share capital issued by the assessee. 2. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in holding that assessee has d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... together and common identical facts have arisen, therefore, for the sake of convenience, common order is being passed in all the cases. 3. The revenue s appeals in the case of M/s Ganga Projects Pvt. Ltd. is against deleting the addition of ₹ 55.00 lacs in A.Y. 2005-06 and ₹ 51.00 lacs in A.Y. 2006-07 and in the case of M/s B.S. Traders Pvt. Ltd., the revenue is against deleting the addition of ₹ 60.00 lacs. M/s Ganga Projects Pvt. Ltd. in A.Y. 2005-06 filed return on 11/5/2007 declaring NIL income and in A.Y. 2006-07 return was filed on 13/3/2008 declaring NIL income. In the case of M/s B.S. Traders Pvt. Ltd. for return for A.Y. 2005- 06 was filed on 04/6/2007 at Nil income. In all the cases, the ld Assessing Officer observed that on the basis of information gathered by the department that it had come to notice that the assessee had indulged in taking accommodation entries from a racket operating in Delhi. As per material gathered by the department during the course of search conducted in the case of Shri Suresh Kumar Jain Group of cases by the Investigation Wing, New Delhi. The assessee had taken accommodation entries of ₹ 30 lacs from the said racket ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad drawn a long trail of bank transactions to impart a color of genuineness on these transactions. Survey actions were also carried out by the Investigation Wing at the given addresses of these dummy companies and at many places, no proper offices were found functioning and the evidences gathered from the name sake offices also establish that the books of accounts of these companies were at the residence of Shri V.K Jain and S.K. Jain. It was also gathered that some of the office addresses were used by both these brothers only for communication purpose for their various paper companies. He further observed that the post search inquiries conducted by the Investigation wing on the basis of various documents including cash book and bank pass book pertaining to many companies seized from the residence of both these brothers revealed that from a single address a number of companies were shown to have registered and these addresses were mostly the residential addresses of directors of different dummy companies / proprietors of various firms. He also observed that from the seized hand written cash book and other documents revealed that Shri S.K Jain and Shri V.K Jain received cash from va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was in constant touch with Shri Surendra Kumar Jain and Shri Virendra Jain. He further admitted on specific query put to him that he knew Shri Surendra Kumar Jain and Shri Virendra Jain are known accommodation entry operators who provide cheques against payment of cash after deducting specific premium from the parties. All these evidences further established the dubious method of accommodation entry provided by Shri S.K. Jain as was found in search operations as well as survey conducted in case as discussed in the foregoing paragraphs. The seized cash books, bank cheques revealed the names of a number of companies floated by these two brothers for providing accommodation entries and the names of intermediaries have also come up. It is pertinent to mention that there are four other companies of the same group assessed to tax in this Ward have also re-opened for scrutiny on the ground of obtaining accommodation entries from the companies of Shri S.K. Jain and his brother. On examination of records of these four group cases and on corelating the information / details obtained from the Inv. Wing, New Delhi during the course of assessment proceeds revealed that apart from M/s Avail F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Finance Pvt. Ltd. 5,00,000/- M/s KMC Portfolio Pvt. Ltd. 10,00,000/- Total 51,00,000/- Similar identical findings has also been given by the ld Assessing Officer in the case of M/s B.S. Traders Pvt. Ltd. for the A.Y. 2005-06, but name of the bogus companies are as under. Name of the company floated by S.K. Jain group for providing accommodation entry Name of the beneficiary company of assessee group. M/s Lehra Investment Pvt. Ltd. M/s Chirag Fiscal Services Pvt. Ltd. M/s Ganga Projects Pvt. Ltd. M/s Alok Fintrade Pvt. Ltd. M/s Lovely Securities Pvt. Ltd. M/s Anchal Fintrade Pvt. Ltd. M/s B.S. Traders Pvt. Ltd. M/s Sam Portfolio Pvt. Ltd. M/s Ganga Projects Pvt. Ltd. M/s Alok Fintrade Pvt. Ltd. M/s Avail Financial Services Pvt. Ltd. M/s Ganga Projects Pvt. Ltd. \ M/s Smartest corporate Services P. Ltd. M/s Ganga Proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion money received from all six concerns whereas in respect of all concerns, assessee has provided confirmation and bank statement confirming the no. of shore applied/allotted, share capital raised etc. The immediate source in the bank account of the shareholders is through transfers and not by cash. Further, it is also noted that in the assessment order, AO has incorrectly noted that in all cases, money has been routed by these companies through the same bank whereas out of six companies for which addition is made by AO, only three (3) concerns (i) M/s Lehra Investment Pvt. Ltd., (ii) M/s Avail Financial Servicers Pvt. Ltd., (iii) M/s Smartest Corporate Services Pvt. Ltd. has bank account with the given bank i.e, ABN AMRO Bank. Even from the assessment order, it is also not discernible that any of these person had stated that investment made by these companies in the share capital of appellant company is bogus/ accommodation entries. AO has merely collected details/documents by which it can't be demonstrate that these companies are not in existence. As against this, assessee company has provide all the best possible evidences. The observations made by the AO are very ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, he prayed to confirm the order of the ld CIT(A) on reopening in all the cases. 6. At the outset, the ld AR of the assessee has reiterated the arguments made before the ld CIT(A). He further argued that in A.Y. 2005-06, the reopening was made on the basis of accommodation entries by considering the amount of ₹ 30.00 lacs whereas the ld Assessing Officer made the addition at ₹ 55.00 lacs. In A.Y. 2006-07, reasons were recorded for reopening by considering the amount of ₹ 41.00 lacs whereas the addition was made by the ld Assessing Officer at ₹ 51.00 lacs. In the case of B.S. Traders, the reopening on the basis of accommodation entries for ₹ 15.00 lacs whereas the ld Assessing Officer had made addition of ₹ 60.00 lacs in A.Y. 2005-06. During the year, in the case of M/s Ganga Projects Pvt. Ltd. raised share capital at ₹ 3,11,25,000/- from various parties as per details available in Form No. 2 being return of allotment filed with ROC. In the course of original assessment proceedings U/s 143(3), the ld Assessing Officer vide letter dated 19/3/2007 required the assessee to file the copy of account of share holders with a complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. Vs ITO (2016) 46 CCH 0546 (Del)(Trib) decision dated 22/4/2016. (8) Rasalika Trading and Investment Co.(P) Ltd. Vs ITO 45 CCH 0361 (Del)(Trib) decision dated 27/11/2015. (9) M/s Surbhi Minchem Pvt. Ltd. Vs ITO order dated 16/5/2014 in ITA No. 102 103/Jodh/2014. (10) Vinayak Shyam Enterprises Pvt. Ltd. Vs. ITO order dated 21/5/2014 in ITA No. 104/Jodh/2014. (11) CIT Vs SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del.)(HC). (12) CIT Vs Kamdhenu Steel Alloys Ltd. ors. (2012) 68 DTR 38 (Del)(HC). The various case laws relied upon by the ld Assessing Officer/CIT(A) are distinguishable and are not applicable. The decision in the case of M/s Rajat Export and Import Ltd. 341 ITR 135 relied upon by the ld Assessing Officer in remand proceedings is also not applicable inasmuch as, in that case, the ld Assessing Officer at the time of issue of notice U/s 148 specifically noted that the petitioner therein has taken an accommodation entry from Shivam Softech Ltd. but in the assessee s case the reasons recorded nowhere mentions any name from whom the alleged accommodation entry is taken. Further, the decision of Hon'ble Supreme Court in the case of Raymond Woollen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sole information available in the return which has been accepted by the ld Assessing Officer U/s 143(3). On same information, he has reopened the case, therefore, it is change of opinion, which is not permitted under the law. Accordingly, he prayed to quash the notice issued U/s 148 of the Act. On merit also, it is submitted that the onus casted on the assessee, has been discharged by establishing the identity, creditworthiness and genuineness as regards the transaction concerning the allotment of shares ignoring the fact that contrary evidence in the form of cash paid and cheques received were found and seized during the course of search proceedings in the SKG group. The assessee has not confronted with the evidences collected and ignoring the fact that the necessary evidence and details in the form of statement recorded during the course of search operation as well as copies of bank account and related documents were provided to the assessee. In show cause notice, it is stated that the amount of ₹ 30.00 lacs received by the assessee is stated to be fromM/s Avail Financial Services Pvt. Ltd., M/s Smartest Corporate Services Pvt. Ltd. and M/s Lehra Investments Pvt. Ltd. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfaction that on what basis he has reason to believe that the assessee s cash money has been routed through these companies as no incriminating document has been referred in the satisfaction as well as confirmation of the addition by the ld Assessing Officer. As such, there is no reference of the statement either recorded U/s 132(4) or 133A of the Act specifically with reference to these assessees. It is general reason to believe but has not been correlated with material/information available with the ld Assessing Officer. It is also fact that the reopening is after expiry of four years from the end of the relevant year in all the cases and there is no lapse on the part of the assessee to disclose fully and truly material for his assessment. The ld CIT(A) has relied upon the Hon'ble Supreme Court s decision in the case of RAYMOND WOOLLEN MILLS LTD. vs. INCOME-TAX OFFICER AND OTHERS (supra) but the Hon'ble Supreme Court has considered the issue of sufficiency of the reason to believe, therefore, the case laws referred by the ld CIT(A) is not squarely applicable. In the present case, the issue is different as reopening is after expiry of four years, the assessment already m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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