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TMI Blog2022 (3) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015, the assessee submitted in para 3 thereof that all the relevant information was already filed as per Annexure 1 to 5 of its letter dated 27-06-2014 and as such, the case was fully explained. The AO noticed that Mr. Nilesh Parmar, who was looking after the accounts of 33 concerns managed and controlled by Mr. Praveen K. Jain, in his statement recorded u/s.131 of the Act on 02-01-2013 admitted that Mr. Praveen K. Jain was engaged in providing accommodation entries of sale, purchase and bogus loans and advances to various parties through his fictitious concerns and further one of the concerns was M/s. Mohit International. In response to question nos. 31 and 32, Mr. Nilesh Parmar stated that he was the Accountant of all the 33 concerns which were merely engaged in providing accommodation entries. Mr. Praveen K. Jain himself, in his statement recorded during the course of search, explained the modus operandi of providing accommodation entries. The relevant extracts of his statement recorded u/s.132(4) have been reproduced in the assessment order, through which he explained the entire mechanism of giving accommodation entries of unsecured loans/advances etc. through companies/partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciary and the name of the alleged lender, M/s Mohit International, a concern controlled and managed by Mr. Praveen Kumar Jain also figured with the date of transaction on 26-02-2007 and the amount of alleged loan of Rs. 25.00 lakh. The ld. AR contended that the AO did not record proper satisfaction before issuing notice u/s 148 of the Act. He submitted that the AO acted on a borrowed satisfaction from the letter of DGIT(Inv.), Pune and did not conduct any further enquiry to demonstrate that the assessee had escaped income before issuing the notice. The AO's action, in the words of the ld. AR, was based on `reason to suspect' and not 'reason to believe' as is statutorily mandated. In support of his contention, he relied on the judgment of the Hon'ble Delhi High Court in Pr. CIT Vs. RMG Polyvinyl (I) Ltd. (2017) 396 ITR 5 (Delhi). He further buttressed the argument by relying on the judgment of Hon'ble jurisdictional High Court in CIT Vs. Shodiman Investments Pvt. Ltd. (2018) 167 DTR 290 (Bom.). 6. In my considered opinion, the contention of the ld. AR does not hold water because the AO got tangible material in the shape of information from DGIT (Inv.), Pune giving list of the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage." The Hon'ble Delhi High Court has also laid down similar proposition in several judgments including Areva T & D, SA vs. Asstt. DIT (2012) 349 ITR 127. In that case also, no return of income was filed by the petitioner. Upholding the initiation of reassessment proceedings, the Hon'ble High Court held that: "in any case, it is well settled that at this stage only prima facie view is to be taken to determine and decide whether there are reasons to believe that income has escaped assessment. Whether or not any income of the petitioner is chargeable to tax in India, whether the petitioner has a permanent establishment in India, etc., are matters of merits which are to be decided in the assessment proceedings." Similar view has been taken by the Hon'ble Delhi High Court in Rolls Royce PLC vs. DIT (International Taxation) (2011) 339 ITR 147 (Del) upholding the view of the Tribunal in Rolls Royce PLC vs. DIT 2007-TII-32-ITAT-DL-INTL, in which case, the assessee had not filed its return of income prior to issue of not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hit International on 26-02-2007. It is the exact amount of the alleged loan which was recorded by the assessee in its books of account as having been received from M/s. Mohit International on that date itself. There is hardly any need to emphasize that the decision of a case primarily depends upon the facts obtaining in that case. A slight change in the factual panorama in another case possibly dents the applicability of its conclusion in the later case. It can be seen that there is a significant difference in the facts of the extant case and that which were obtaining in the case before the Hon'ble Delhi High Court. The second decision in the case of Shodiman Investments Pvt. Ltd. (supra) is again distinguishable. The Hon'ble Bombay High Court discussed the reasons recorded by the AO before issuing notice u/s.148 in para 4 of its judgment. Such reasons did not indicate the amount, which according to the AO, had escaped assessment. It was on the basis of this uncertainty that the Hon'ble High Court held the re-assessment to be invalidly initiated. Such facts are absent in the instant case. 10. Per contra, the ld. CIT(A) in the impugned order has referred to the judgment of Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerns mentioned above are merely engaged in providing accommodation entries of sale, purchase and bogus loans and advances to various parties". He further stated in answer to question no.32 that one: "Sandeep Maloo supervises the work of giving accommodation entries of bogus sale, purchase and bogus loans and advances. He advises Praveen Jain as to how the accommodation entries are to be given". Then the statement of Mr. Praveen Kumar Jain was recorded during the course of search, who, in answer to question No.65, as reproduced in the assessment order, gave the list of his employees, which included Mr. Nilesh Parmar who was looking after the accounts. In answer to question no.66, which has been reproduced at para 7 of the assessment order, he admitted of being engaged: "basically in the business of giving accommodation entries which are routed through the companies under my control". All the companies were admitted to be either owned by him or directly/indirectly under his control and were only paper companies with no real business transactions except providing accommodation entries of bogus unsecured loan, bogus LTCG etc. In answer to question no.67, he admitted that: "I have e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suffered a loss of more than Rs. 23.00 lakh on sale of Rs. 127.87 crore. What is the nature of the transactions of purchase and sale is not borne out from any material provided by the assessee. An interesting fact to be noted is that there is no Opening stock or Closing stock of M/s. Mohit International, despite such a huge turnover. It is further important to note that the value of Fixed assets in the balance sheet of M/s. Mohit International is Rs. 3,17,856/-, which shows that M/s. Mohit International carried out business of Rs. 127.00 crore with the fixed assets of Rs. 3.17 lakh only. This concern has shown Loans/advances on the asset side of its Balance sheet at Rs. 13.95 crore with Sundry Debtors at Rs. 37.30 crore. Though there is reference to Schedule No.4 giving details of Current assets, loans and advances, but such Schedule is unfortunately again missing from the details filed by the assessee. As against that, balance in the Proprietor's capital is only Rs. 14,91,014/-. In fact, none of the Schedules referred to either in the Profit and loss account or the Balance sheet have been made available. On an examination of the Profit and loss account and Balance sheet of this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im in Mumbai and on top of it, Mr. Nilesh Parmar was working as an Accountant with Mr. Praveen Kumar Jain as admitted by himself and Mr. Praveen Kumar Jain. 16. It is not the end of the matter. In order to prove the genuineness of the alleged loan transaction, the assessee furnished a copy of bank account of M/s. Mohit International from 25-11-2006 to 13.12.2006 at page 58 and from 27.2.2007 to 16-03-2007 at pages 59 of the paper book. The alleged loan entry of Rs. 25.00 lakh dated 28.2.2007 has been debited to the Axis Bank account and in the Description column mentions "KASTURI RASHI", i.e. the name of the assessee. On a perusal of these two pages of the bank account provided by the assessee itself, it can be seen that there are transactions running into lakhs and crores in such a bank account. The transaction with the assessee is dated 28-02-2007. On that date itself, there are 14 transactions. First six transactions are Cancellation of DDs worth Rs. 2.50 lakh approximately. Then there is a transaction with the assessee amounting to Rs. 25.00 lakh. On that date itself, there are six credit transactions worth more than Rs. 56.00 lakh and one debit transaction of Rs. 12.70 lakh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer to the judgment of the Hon'ble Supreme Court in CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC), in which the assessee claimed before the ITO that income of certain property should not be taxed in his hands as it was a trust property. The ITO rejected the claim and included the income in the hands of the assessee. The Tribunal affirmed the decision of the ITO, which was reversed by the Hon'ble High Court. Reversing the verdict of the Hon'ble High Court, their Lordships noticed that though the assessee made a claim that income of the property was not his and produced conveyance executed in his favour and the deed of settlement executed by his wife, nearly about a year after the conveyance, however, when the ITO asked the assessee about the source from which his wife got the amount, apart from saying that it was 'sthridhan' property, he failed to disclose any source from which his wife could have got the amount for purchasing the premises. In this backdrop of facts, the Hon'ble Supreme Court held that although the apparent must be considered as real, but, if there are reasons to believe that the apparent is not real, as is the case under consideration as well, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also the loan transaction is from the same party, namely, M/s. Mohit International, I am convinced to go with the decision of the Ahmedabad Bench of the Tribunal. 21. To sum up, in the given facts as discussed supra, I have no hesitation in countenancing the view of the ld. CIT(A) that the assessee received accommodation entry of loan of Rs. 25.00 loan from M/s. Mohit International. III. PRINCIPLES OF NATURAL JUSTICE 22. The assessee has raised an additional ground contending that adequate opportunity of hearing was not provided by the authorities below. It was submitted that the AO wrongly mentioned in para 6 of his order that the copy of the statement was shown to the assessee. The ld. AR contended that in the absence of furnishing of the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain to the assessee, the assessment was vitiated. 23. I have examined the relevant material on record. The entire focus of the assessee in this ground has been on the fact that the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain were not supplied to him. It is a matter of record that the reasons recorded by the AO clearly indicated that the assessee received alleged loan of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... good where the assessee is unaware of the contents of the statements sought to be used against him. If, however, the contents of the statements are very well known to the assessee and the entire factual panorama is very well in the knowledge of the assessee, then he cannot be allowed to argue that he was unaware of the material used against him. Here is a case in which the assessee allegedly received loan of Rs. 25.00 lakh from M/s. Mohit International. This fact was conveyed to the assessee by supplying the reasons for re-assessment against which the assessee filed objections which were disposed off by the AO. Thereafter, during the course of assessment proceedings, the assessee was again informed about the statement of Mr. Nilesh Parmar and shown the relevant excerpts from the statement. The assessee, in support of his submission and genuinely knowing that what was going on against him, did furnish necessary evidence in the shape of Ledger extracts of M/s. Mohit International, Bank statement of M/s. Mohit International, PAN card, Income-tax returns and Audited financials of M/s. Mohit International. In such circumstances, it will be too much to contend that the assessee was obliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r remand when there is, in fact, no prejudice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person. (5) The "prejudice" exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the nonobservance of natural justice. 27. On going through the above principles laid down by the Hon'ble Apex Court, it is clear that when the facts are clear from which only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused. When I examine the facts of the instant case on the touchstone of the above principle enunciated by the Hon'ble Apex Court, it gets manifested that the assessee was very well aware of the entire case against him. The fact that Mr. Praveen Kumar Jain was engaged in the business of providing accommodation entries was established twice, firstly, in the statement of Mr. Nilesh Parmar recorded u/s.131 and, secondly, in the statement of Mr. Praveen Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's case because the AO in that case initiated reassessment proceedings on the ground that the shares of the assessee company were purchased by fictitious companies, which were not in existence. When I turn to the facts of the instant case, it is discernible that the assessee allegedly received bogus loan of Rs. 25.00 lakhs, which position got specifically established by the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain. 31. At this stage, it would be relevant to take note of the judgment of the Hon'ble jurisdictional High Court in Cenzer Industries Ltd. VS. ITO (2016) 385 ITR 58 (Bom). In that case, the assessee, placing reliance on Andaman Timbers (supra), contended that in case the Revenue was relying upon statement of an adverse witness, then the appellant should have been given opportunity and having not done so, rendered the order not sustainable. The Hon'ble High Court rejected the contention of the assessee on finding that the assessee did not seek any cross examination. Turning to the facts of the case under consideration, my attention has not been drawn towards any specific material indicating that the assessee requested for cross examination of either or bot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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