9911796707
TMI Blog2020 (1) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... at a search and survey action was carried out on Sh. Surendra Kumar Jain and his group by Investigation Wing, New Delhi on 14.09.2010 wherein various incriminating documents were found and seized which shows that he was engaged in providing accommodation entry the various concern basis the said information. The Assessing Officer issued notice u/s 148 dated 26.03.2015 stating that the assessee company has obtained bogus accommodation entry of share capital/share premium/ loan amounting to Rs. 45,00,000/- which has escaped assessment u/s 147 of the Act. In response, the said notice, the assessee filed its return of income on 22.12.2015 declaring total income at Nil during the course of assessment proceedings. The assessee company was asked to justification share capital money receipt during the year. In absence of any response receipt from the assessee company and relying on the statement of the Sh. Surendra Kumar Jain. It was held by the Assessing Officer. The assessee has introduced accounting cash amounting to Rs. 45,000,00/- in the form share capital the source of which could not be explained and the same was treated as unexplained cash credit u/s 68 of the Act. On appeal, the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income with Income Tax Officer, Ward 1(1), Jaipur. Thus any correspondence or notice issued by your good self to company is without jurisdiction and therefore void abinitio..." 4. In this connection, it is relevant to refer to the binding decision of the Hon'ble Rajasthan High Court in the case of CIT v. Poonam Chand Surana [2014] 221 Taxman 0151 (Raj.) in which notice u/s 148 issued from a wrong jurisdiction was struck down as invalid. That even if the AO was not aware of the correct address earlier, he was made aware of the same vide letter dated 18.11.2015. A perusal of the address on the assessment order would show that it has been sent on 31.03.2016 on the following address: "M/s Shree Silica Products Pvt. Ltd (now M/s Badaya Ispat Pvt. Ltd.) F-947, Road No. 14, VKI Area, Jaipur " Hence, the assessment order was passed in the name of a non-existent company and with wrong address. 5. The CIT(A) has dealt with this issue in the following words: " 3.2 I have considered the facts of the case, gone through the assessment order and the submission of the appellant. It is seen that both are the name of the assessee company and therefore on this procedural defect, the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry providing company Nature of entry Amount VIP Leasing & Finance P. Ltd. Bogus share capital/share premium/loan 15,00,000/- Singhal Securities P. Ltd. Bogus share capital/ share premium/ loan 15,00,000/- Finage Lease & Finance India Ltd. Bogus share capital/share premium/loan 15,00,000/- Total 45,00,000/- The above details regarding the accommodation entries have been forwarded by the DIT (Inv.)-II, New Delhi through his office letter F.No. DIT/(Inv.)-II/ U/ s 148/ 2012-13/ 293 dated 15th March, 2013. Therefore , looking to the facts mention above, it is seen that the above person is liable to pay tax on bogus accommodation entries of share capital/ Share premium/ loan. Hence, I have reason to believe that income of Rs. 45,00,000/ - has escaped from assessment within the meaning of section 147 of the I.T. Act, 1961. Therefore, it is a fit case for issue notice u/ s 148 of the I.T. Act, 1961." 8. It is clear from the language of the reasons recorded that the Assessing Officer did not have in his possession any material other than a letter of the DIT(Inv.) dated 15.03.2013. Hence, he carried out no independent verification at his end, but blindly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and by the Delhi High Court in the case of Sabh Infrastructure Ltd. v. Asst. CIT, WP(C) 1357/2016 delivered on 25.09.2017. 10. It was submitted that a perusal of the reasons recorded, as reproduced above, shows that the AO has completely relied on the letter of the DIT(Inv.), Delhi mechanically. In the assessment order, the AO states that in his statement recorded during the course of search Shri Surendra Kumar Jain have explained his modus operandi (see page 7 of the assessment order). Further, he has also stated in the last para on page 8 that statement of Shri Ravinder Goel, one of the brokers, was also recorded. None of this finds mention in the reasons recorded. Moreover, it is clear that copies of statements were not with the AO. The AO has also mentioned about enquiries made before and during search. This also does not find mention in the reasons recorded. Hence, it is clear from the reasons recorded, that except for the letter of the DIT(Inv.), Delhi, the AO did not have any other evidence with him to support or authenticate what was written in the letter of the DIT(Inv.), Delhi. The Hon'ble Delhi High Court in the case of Sabh Infrastructure Ltd. has stated as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prove that the creditors were genuine, their identity was proved, and that they had the financial wherewithal to advance the credits, and that such a credit was indeed given. 2. The assessment of these companies were framed u/s 153C/ 153A on 28.03.2013 wherein their genuineness was accepted and no addition or adverse finding was recorded in their cases. A perusal of the assessment orders passed after the search prove this fact. The notices u/s 148 were issued on 26.03.2015 full 2 years after the said companies had been accepted as genuine. Once, the companies are treated as genuine, their financial capability is proved, and they are assessed to tax even after the search, the credits given by them cannot be doubted. 3. The payment of the credits were by cheque and each of the company has enough capital in their financials to have the capacity to advance the credit: i) VIP leasing & Finance Pvt. Ltd. Share capital + reserves 17,14,54,900.00 ii) Singhal Securities Pvt. Ltd. share capital + reserves 10,49,97,000.00 iii) Finage Leasing & Finance India Ltd. Share capital + reserves 14,57,42,032.90 4. Still further there is no evidence of introduction of cash of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86 ITR 477 (Raj); 5. CIT v. Nipuan Auto (P.) Ltd. [2013] 89 DTR 342(Del HC); 6. CIT v. Vacmet Packaging (India) Pvt. Ltd., 367 ITR 217(A11.). In view of the above, the addition of Rs. 45,00,000/- made by the AO and confirmed by the CIT(A) needs to be deleted both in law and on facts. 16. The ld. DR submitted that the jurisdiction of the assessee M/s Shree Silica Products Pvt. Ltd lies with ITO, Ward-4(1), Jaipur as per the information gathered from the CBN PAN based query-ITD system. Thereafter, the name of the assessee company has been changed as M/s Badaya Ispat Ltd and another PAN of the company is lying with ITO, Ward-1(1), Jaipur. It was submitted that the case was selected u/s 148 in the name of M/s Shree Silica Products Pvt. Ltd. and not in the name M/s Badaya Ispat Ltd. Hence, the jurisdiction over this case lies with ITO Ward - 4(1) and not with the ITO, Ward-1(1), Jaipur. It was further submitted that the assessee has raised the similar contentions at the time of filing of objection u/s 148 of the I.T. Act, 1961 and the same was disposed off by the AO vide letter No. 1790 dated 03.12.2015. It was further submitted that the Assessing Officer was having tangible mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d mailing address of F-947-949, Road No. 14, VKI Area, Jaipur. We therefore find that there has been only a change in name of the entity and besides that, there is no change in the corporate identity of the assessee company. It is therefore not a case where the assessee company ceases to exist and/or amalgamated with any other existing/new entity. Therefore, it is not a case where the notice u/s 148 has been issued and assessment u/s 143(3) r/w 147 has been completed in the name of non- existent entity. The decisions relied upon by the ld AR therefore doesn't support the case of the assessee company. Further, we find that PAN No. AACCS4046D with name and address of Shree Silica Products Private Limited, F-947, Road No. 14, VKI Area, Jaipur continue to exist in the Income Tax Department database and the assessee company has been allotted a fresh PAN No. AADCB4084H with name and address of Badaya Ispat Private Limited, F- 947, Road No. 14, VKI Area, Jaipur. The same is apparent from the fact that notice u/s 148 dated 27.03.2015 has been issued in name of Shree Silica Products Private Limited (PAN No. AACCS4046D) and the assessee company had earlier filed its return of income for A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and basis examination thereof, where he has held that income has escaped assessment, we donot see any infirmity in the action of the Assessing officer in exercising jurisdiction u/s 148 of the Act. 20. In the result, the ground no. 1 of assessee's appeal is dismissed. 21. Now coming to merits of the case. In this case, the assessment was completed u/s 148 read with 143(3) wherein addition of Rs. 45,00,000/- was made by the Assessing Officer for the reason that the assessee could not satisfactorily explained the source of the money and the same was treated as unexplained cash credit u/s 68 of the Act. In support of the share application money received from three concerns namely VIP Leasing & Finance P. Ltd., Singhal Securities P. Ltd. and Finage Lease & Finance India ltd, the assessee has submitted Share Application Forms, Confirmation of Accounts, ITR Acknowledgment and Financial Statements, List of Directors, Bank Statement and copy of the assessment orders for A.Y 2005-06 to 2011-12 passed under u/s 153C read with 153A of the Act. 22. We find that in assessment order passed in case of VIP Leasing & Finance P. Ltd. for A.Y 2008-09, the returned income has been accepted and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in providing any accommodation entries. It is relevant to note that in all these three cases, the assessment proceedings were reopened basis the search and seizure operation in case of S.K. Jain Group on 14.09.2010, which is the same search operation basis which, the notice u/s 148 has been issued to the assessee company. In the reasons recorded u/s 148, the Assessing Officer has referred to the communication received from DIT (Inv.)-II, New Delhi through his letter dated 15th March, 2013 wherein the certain details have been given regarding bogus accommodation entries obtained by the assessee company. By the time of issuance of notice u/s 148 on 28.03.2015, the assessment in case of all these three entities were already completed on 28.03.2013 and in the assessment so completed, there is no finding that these entities have provided any accommodation entries to the assessee company. In other words, the investment made by these three entities in the assessee company was accepted as genuine investments. Therefore, once the assessee company has furnished necessary documentation as we noted above and the assessment in case of these share holder entities have been completed whereby the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee received share application money was assessed at the same figure of the loss which was declared by the said assessee, on the same date when the AO recorded the reasons that the income of the assessee escaped assessment for a sum of Rs. 14,00,000/- i.e. the amount received as share application money from M/s Singhal Securities Pvt. Ltd. In the present case, it cannot be said that the AO was having any material in his possession except the information received from the Investigation Wing. Therefore, the reopening was done by the AO only on the basis of the information received from Investigation Wing. 15. An identical issue was a subject matter of the assessee's appeal in the case of M/s Dhanuka Agritech Ltd. Vs ACIT in ITA No. 1003/Del/2014 for the assessment year 2003-04 wherein vide order dated 11.05.2016 this bench of the Tribunal has held as under: "9. On a similar issue, their lordships of the Hon'ble Jurisdictional High Court in the case of Principal Commissioner of Income-tax vs. G. & G. Pharma India Ltd. (supra) observed in para 12 & 13 of the order dated 8th October, 2015 as under : " "12. In the present case, after setting off four entries, stated to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a post mortem exercise of analyzing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity." 10. In the present case also the AO in the reasons recorded mentioned that it had come to his knowledge that the persons from whom amount was received were entry operator and provided the entries to the assessee after receiving the amount in cash, however, nothing was brought on record that how and in what manner the persons from whom the assessee received the loans were entry operator and that as to how the cash was paid by the assessee. In fact the aforesaid conclusion of the A.O. is unhelpful in understanding as to whether the AO applied his mind to the material, particularly when he did not describe how and what manner it came to his knowledge that the assessee receive the accommodation entries. We, therefore, by keeping in view the ratio laid down by the Hon'ble Jurisdictional High Court in the aforesaid referred to case of Principal Commissioner of Income-tax vs. G & G Pharma India Ltd., are of the view that the reopening done by the AO u/s 147 of the Act was not valid and accordingly the ITA No. 491/Del/2016 Layak Fab ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
