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TMI Blog2021 (3) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... d advances given for the business purpose was at ₹ 2.43 crore and cash and bank balance of approximately ₹ 10 lakhs. The interest income has been shown at ₹ 19.65 lakhs. Same is the position in all the subsequent years balance-sheets. Thus, it cannot be held that it is non-existing company having no real business. Admittedly, during the course of search nothing incriminating or any iota of document has been found or seized from the possession of the assessee company - as per the assessment order itself nothing was found from the possession of assessee as no one was present at the premises. The entire premise has been drawn on the basis of certain information in possession with the Department from the search and seizure of group companies of Shri Sanjay Bhandari and from there it has been gathered that the assessee-company was engaged in some accommodation entry. If that is the case, then what information or material pertaining to the Assessee Company was found or unearthed which was handed over the Assessing Officer. Assessee has clarified that neither Shri Deepak Agarwal nor Shri Vishnu Agrawal are related to the assessee-company nor they were directors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid appeals have been filed by the assessee against the common order dated 27.09.2019 passed by Ld. CIT (Appeals)-XXXI, New Delhi for the quantum of assessment passed under section 153A r.w.s. 143(3) for the assessment years 2011-12 to 2016-17; and separate order for the assessment year 2017-18 of even date which is passed under section 143(3). Since common issues are involved in all the appeals arising out of identical set of facts and same reasoning given by the Ld. CIT(A), therefore, same were heard together and are disposed of by way of this consolidated order. In nutshell following additions have been confirmed by the Ld. CIT (A):- AY ITA No. Quantum of Addition (Rs.) Addition on a/c of commission 2011-12 9215/Del/2019 19,46,054/- @ 2% on ₹ 9,73,02,862/- 2012-13 9216/Del/2019 18,31,396/- @ 2% on ₹ 9,15,69,783/- 2013-14 9217/Del/2019 8,89,278/- @ 2% on ₹ 44,4,63,915/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs Private Limited and several other companies at G-10/ 66, ground floor, Sector-15, Rohini, which was a residential premise and no company, was found to be running from the said address. Thus, the activities of these companies could not be verified. The Assessing Officer thus deduced that the assessee-company has been found to be non-existent at the address given and is merely a paper/shell company. Further this company is controlled by Shri Deepak Agarwal, Shri Vishnu Kumar Agarwal and Sri Bal Kishan Singhania who are entry operators and this company is indulged in taking accommodation entries in lieu of cash from various paper/ shell company of Shri Deepak Agarwal and Shri Vishnu Agrawal who have provided accommodation entries of unsecured loans and share capital to various beneficiaries in lieu of cash. However, nowhere his allegation in the assessment order is substantiated by any material or information or any enquiry conducted. There is no whisper how he has come to this conclusion. Assessing Officer has further noted that, Assessee Company has also provided accommodation entries to Shri Sanjay Bhandari and his group companies, however, again his premise for drawing this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red loan which were inferred that Shri Sanjay Bhandari had given cash against share capital and secured loan received by his company which are nothing but accommodation entries taken from the assessee, another group shell companies of Shri Deepak Agarwal and Shri Vishnu Agarwal and others. He also scanned a sample copy of sale receipt of shares and deduced the following inference. 3. From the above it is established that - 1. The assessee is only a paper company, no real business done by the assesses, 2. The assessee company is nonexistent at the given address. 3. The assessee is indulged in providing accommodation entries to Sh. Sanjay Bhandari and his companies. 4. Overall control on the assessee is of Sh. Vishnu Kumar Aggarwal, Sh. Bal Krtshan Singhania and Sh. Deepak Aggarwal. 5. The assessee had given blank signed receipt to M/s. Micromet ATI Pvt. Ltd. for sale proceed of shares. Though assessee has not received payment by cheque, it means the assessee has received cash against entry provided to M/s. Micromet ATI. Pvt. Ltd. group company of Sh. Sanjay Bhandari. 7. Based on this inference, he had made an addition of unaccounted commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, Rohini Delhi. The same address was mentioned in the PAN database and IT Return of the appellant. I find that the copy of bank statement of appellant company with DCS Bank placed on record for the period from 01.04.2015 to 21.03.2016 also shows address of appellant company as 6- 10/66,. Ground Floor, Sector-15, Rohini, Delhi, The warrant was duly executed, on 27.04,2016 as is evident from copy of Panchnama placed on record. Both the search warrant and panchnama were provided to the appellant and the same were not controverted in the rejoinder by the Ld. AR, Therefore, I hold that there was conduct, of a search u/s 132 in the name and at the premises of the appellant. Accordingly I further hold that the AO had rightly initiated the proceedings u /s 1.53A, 4.1.1. As regards the claim of appellant that no incriminating material was found as a result of search conducted on appellant, I find, that as result of search and seizure action in the ease of Sh. Sanjay Bhandari/OIS Group, the department was in possession of information that the appellant being a shell entity was engaged in providing accommodation entries of share capital/.loans etc. As a matter of fact, entities providi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd., M/s. Santech IT Services Pvt. Ltd., M/s. Santech Investments Pvt. Ltd.. M/s. OIS Aerospace Pvt. Ltd., M/s. OIS Advanced Technology Pvt. Ltd., M/s. Micromet ATI India. Pvt Ltd., M/s. Offest India Solutions Pvt. Ltd., M/s. Himalayan Helicorp Pvt. Ltd., M/s. S B Hospitality Services Pvt Ltd. and M/s. Santech Energy System 8s Services Pvt Ltd. The addition on account of unexplained investment has been made by the AO in the hands of these beneficiaries. It is also noticed that certain blank receipts duly signed by the appellant company, a sample of which is placed in para 12 of the assessment order, were found and seized in the case of Sh. Sanjay Bhandari Group. Through, these receipts, the appellant company had discharged its claim on shares/loans given to the beneficiaries namely Micromet ATI India Pvt Ltd, HB Hospitality and Services Pvt Ltd etc. These facts clearly establish that the appellant has provided only the accommodation entries of share capital/loans to the beneficiaries through its bank accounts. As a prevailing practice, commission on accommodation entries a charged by the entry provider and accordingly the AO has assessed 2% commission income on accommodati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of Hon ble Delhi High Court in the cases of; PCIT versus Meeta Gutgutiya, 395 ITR526; and CIT vs. Kabul Chawla, 380 ITR 573. The entire observation of the Assessing Officer is based on presumptions and surmises that assessee is a shell company and at the same time non-existing. The addition which has been made by the Assessing Officer is by taking 2% of alleged notional commission on the entire deposit, which is wholly unjustified and without any basis or material on record. 11. Further, in the assessment order, the Assessing Officer has named 10 companies whereas the assessee-company had no dealing with 7 of these companies. Out of said companies, assessee company had following transaction during the year:- S.No. Name of the Company Amount (Rs.) Remark 1. Avaana Software Solutions Pvt. Ltd. 5,50,000/- Investment Sold 2. Micromet ATI India Pvt. Ltd. 50,00,000/- Investment made in unquoted shares 3. SB Hospitility Services Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found nonexistent at the registered address. Also, incriminating documents like signed but blank shares transfer issued from S.B, Hospitality and services Pvt Lid (company of Sanjay Bhandari) was found. Further, in his statement on oath Sh Sanjay Bhandari admitted to have taken bogus entries of share capital with huge premium from the assessee company. 3. What was the co-relation of the Sanjay Bhandari Group with that of the assessee/premises belonging to the assessee for which, if it was covered during the search? The group companies of Sanjay Bhandari (namely SB j Hospitality Srvices Pvt Ltd, Avaana Software : Services Pvt Ltd, Micromct ATI India Pvt Ltd etc) have | taken bogus entries of share capital along with huge I premium from the assesses company. Sh Sanjay j Bhandari has routed his unaccounted income through the 1 assessec company and brought back into the books of his group company in the form of investments. 4. What was the basis of assessment in case of the assessee for Assessment Years 2015- 16, 2016-17 and 2017- 18? The assessee company is onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any is an incriminating information gathered during the search seizure action. The spirit behind the decision of Delhi High Court in the case of Kabul Chawla (supra) is that these has to be some incriminating document/ finding/ information which would not have come to light in the absence of search seizure action. In the present case, the finding of fact of appellant entity as non-existent entity/paper company is incriminating finding based on search action. Thus, addition can be made in this case based on the observation made during search for abated as well as unabated assessments. It may be relevant to add that this company is in the list of high risk NBFC as per https://centrik.in/wp-content/uploads/2018/03/Listof- High-Risk-NBFCs-as-on-31.01.2018 pdf. DECISION 14. We have heard that rival submissions and also perused the relevant finding given in the impugned orders as well as the material referred to before us. The entire basis of the additions which has been made in the impugned appeals are that; firstly, the assessee was found to be non-existing company at the time of search; secondly, it is a paper/ shell company of Shri Deepak Agarwal, Shri V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been shown at ₹ 19.65 lakhs. Same is the position in all the subsequent years balance-sheets. Thus, it cannot be held that it is non-existing company having no real business. 17. Admittedly, during the course of search nothing incriminating or any iota of document has been found or seized from the possession of the assessee company. In fact, as per the assessment order itself nothing was found from the possession of assessee as no one was present at the premises. The entire premise has been drawn on the basis of certain information in possession with the Department from the search and seizure of group companies of Shri Sanjay Bhandari and from there it has been gathered that the assessee-company was engaged in some accommodation entry. If that is the case, then what information or material pertaining to the Assessee Company was found or unearthed which was handed over the Assessing Officer. Another allegation is that this company is controlled and used for accommodation entry purposes by Shri Deepak Agarwal and Shri Vishnu Agarwal. The learned counsel has clarified that neither Shri Deepak Agarwal nor Shri Vishnu Agrawal are related to the assessee-company nor they we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015-16 and 2016-17 nothing has been found from any enquiry or carried out in the case of the assessee that assessee was providing any accommodation entry and the business carry on by the assessee is sham or paper transaction, hence the addition cannot be made on the basis of any hypothesis presumption albeit it has to be based on evidences or material or enquiry conducted. The addition here in this case has purely been made on surmises and presumption that assessee might have earned 2% commission on accommodation entry. This approach is unsustainable in law and on facts. At least, there has to be a concrete finding with material that assessee was found to be carrying out shady accommodation entry transaction. Accordingly, we do not find any reason to uphold the alleged commission income in all the years. 19. Apart from that, we find from the records as referred to at the time of hearing that the assessee was having regular income and revenue from operation in its return of income and audited accounts which for the year under appeal have been given as under:- Asstt. Year Intt. Income Sales Turnover Total Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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