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TMI Blog2022 (12) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... one through the reasons recorded by the Assessing Officer and noted that assessing officer has recorded the reasons after getting the information from the Directorate of Information New Delhi and applied his own mind in respect of the information received by him. The assessing officer examined the information received from the Directorate of Information and satisfied himself and applied his own mind to issue notice under section 147/148 of the Act. Therefore, assessing officer did not accept the information from the Directorate of Information blindly and without application of mind. We note that in the reasons recorded the figure mentioned at Rs.1,57,00,055/- is part of the total amount of Rs.2,40,00,000/-, therefore, reasons recorded by the assessing officer can not vitiate on account of arithmetical figure. Thus, the reasons recorded, by the Assessing Officer, are prima facie in accordance with law. In the reasons so recorded, there should not be any final adjudication of the issue involved, by the assessing officer, in fact the reasons are recorded prima facie as per the scheme of the Act. Therefore, we do not find any infirmity in the order of ld. CIT(A) in holding that rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation and was not allowed set off against income added - HELD THAT:- We have heard both the parties and note that depreciation claim of the assessee and claim of set off, if any, should be allowed as per the provisions of law, therefore, we direct the ld. CIT(A) to examine the claim of the assessee and adjudicate the issue in accordance with law. The ground no. 5 raised by the assessee is allowed for statistical purposes. - ITA No. 698/AHD/2019 - - - Dated:- 28-11-2022 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Pavan Ved, AR For the Respondent : Shri Vinod Kumar, Sr. DR ORDER PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2010-11, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-9, Ahmedabad [in short the ld. CIT(A) ], in Appeal No. CIT(A)-9/10354/DCIT(E) Cir-2/17-18 dated 08.04.2019, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 29.12.2017. 2. The grounds of appeal raised by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. After that, assessing officer issued show cause notice to the assessee. The assessee has complied with the show cause notice dated 01.11.2017 and 10.11.2017 vide its letters dated 23.11.2017 and 26.12.2017 which have also been reproduced in the assessment order. As per the information provided by the Joint Director of Income-tax (Inv.),Unit-1, New Delhi who carried out the search and seizure Operation u/s 132 of the Act in the case of Jain Brothers and during the course of this search seizure operation, it was noticed that the assessee trust had obtained accommodation entries under the garb of unsecured loans of Rs.2,40,00,000/- from various companies. The A.O. has reproduced the information so provided by the Investigation Wing of New Delhi in para 5.1 of the assessment order which runs into pages 10 to 114 which described the modus operandi of providing accommodation entries to various beneficiaries including the assessee trust. In para 5.2, the A.O. has observed that the assessee has obtained unsecured loans amounting to Rs.2,40,00,000/- from 9 different companies, the details of which were also reproduced in this para of the assessment order. All these nine companies we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es is already explained in detail in preceding para. Further, it is also stated that name of the bogus concern from whom assessee had availed accommodation entries amounting to Rs.2,40,00,000/- are found in the seized material seized during the course of search and was also cross verified with the employees and related parties of the Jain Brothers and it was proved that these concern are operated by the: Jain brothers. Hence, contention of the assessee that amount provided by department of Rs.1,57,00,005/- regarding unsecured loan are not found in the books of account of the assessee, cannot be accepted. Further, when the parties are proved to be bogus and identification of parties had been made during the course of the post search investigation than there is no question remains to specify the amount of entry. In simple words, in the case of assessee bogus concerns operated by the Jain brothers had been identified and it is also proved that it is the accommodation entries of unsecured loan thus, nature of accommodation entries had also been specified and Assessment year in which said entries have been taken had also been specified than what remains to do is to verify the books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UCATION FOUNDATION By (as per details) Journal 1487 15,92,000.00 5,57,039.00 Dr ANJ 15,00,000.00 Dr AJ1 92,000.00 Dr CASH AZAD PUR By AJ Journal 1493 4,08,000.00 1,49,039.00 Dr CASH AZADPUR ON 02/03/2010 PAYMENT MADE BY BHAGWAN MAHAVIR EDUCATION FOUNDATION TO NEW ING AND CASH PAID BY JAINS AND TRANSFERRED TO AZADPUR Thus, in view of the facts mentioned above, contention of the assessee that assessee trust had received genuine unsecured loan, is not acceptable. Further, in the submission, assessee has provided the confirmation of parties from which assessee trust had received unsecured loan. In this regard, it is stated that mere confirmation of party on paper cannot prove the genuineness of the transaction. Further, A.O. is not denying the fact that transactions of unsecured loans was taken place with the bogus concern operated by the Jain Brothers. Here, the contention of the A.O is said transactions are accommodation entries provided by the Jain brothers to introduced unaccounted income of the trust in the books of account of the trust. Hence, mere confirmation of unsecured loan given by respective party cannot prove the genuineness of transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aints, cannot be denied the fact that the transactions done by assessee trust for unsecured loans are accommodation entries in nature, because in para 5.1 mentioned above, it is very well established by the department that how assessee trust has converted its black income into white income by taking the help of professional entry providers. 5.3.5 The assessee trust failed to explain satisfactorily genuineness of transaction of unsecured loans received from the bogus concern operated by the Jain Brothers. As per the section 68 of the act, the explanation given by assessee about nature and source of credit entries in books, is not satisfactory in the opinion of the A.O, the sum may be charged to income tax as the income of the assessee of that previous year. In this regard reliance is placed on following judgement. In the case of Khandelwal Constructions v. CIT 227 ITR 900 (Guj.) It has been held that Section 68 of the I.T. Act, 1961, empowers the A.O. to make inquiry regarding cash credit. If he is satisfied that these entries are not genuine he has every right to add these as income from other sources. 5.3.6 The provisions of the Section 68 are also applied to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is derived from the property held by the trust will be exempted under section 11 to 13 of the Act. In the instant case, unsecured loan amounting to Rs. 2,40,00,000/- credited in the books of account of the assessee was received as accommodation entries from the bogus concerns run by the Jain Brothers to covert the black income of the trust into white. Hence, same is not the income of the trust which was derived from the property held by the trust. Hence, on the said amount of Rs.2,40,00,000/- assessee will not be eligible to claim exemptions as per the provisions of section 11 to 13 of the Act . 6. Therefore, after considering the reply of the assessee and judicial pronouncements relied on by the assessee, as referred to in the assessment order vide para 5.3 to 5.3.8, the addition of Rs.2,40,00,000/- was made by the assessing officer u/s 68 of the Act. 7. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the action of the assessing officer. The ld CIT(A) noted that reasons recorded by the assessing officer were valid and sanction for reopening the case was given by appropriate authority and noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 15. So far reasons of reopening is concerned, the Ld.DR submitted that the Department can reopen the assessment based on the information from the Investigation Wing/Directorate of information. Further, the reasons were recorded by the assessing officer as per the provisions of law. 16. The Ld.DR further submitted that notice under section 143(2) was served on the assessee within the prescribed time limit under the Act. The ld DR also submitted written submission before the Bench, which is reproduced below: Sub: Submission of relevant documents in the case of Bhagwan Mahavir Education Foundation in ITA No. 698/Ahd/2019 for A.Y. 2010-2011 - reg. Kindly refer to the above. 2. During the course of hearing, the Hon'ble Bench has directed the department to file copy of approval granted by Id. CIT u/s. 148 and copy of notice issued u/s. 143(2) of the Act. 3. In this connection, a report has been received from the o/o. the CIT(Exemption) which is self-explanatory is enclosed for your kind perusal. 4. The notice u/s 148 was issued after grant of approval of the competent authority i.e. CIT(E), Ahmedabad. The proposal for reopening assessment was submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hannels, and TDS deducted thereon, does not mean that transactions are genuine. No doubt, the part payment of loan was made by assessee in same year or subsequent year, however, the said money again came back to the assessee, as noted by the assessing officer, therefore, ld Counsel contended that addition made by the Assessing Officer may be upheld. 18. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that satisfaction recorded by the Income Tax Authority is in accordance with law. We have also gone through the online approval given by the CIT and noted that approval given by CIT is in accordance with law, therefore plea taken by the ld Counsel to the effect that approval was not given in accordance with law, hence it is not acceptable. 19. The notice under section 143(2) of the Act, has been served on the assessee. The ld Counsel provided vague information before the Bench and contended that notice under section 143(3) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng balances or the figures as available in the balance-sheet and schedules therein. She might have committed some mistake in taking the figures while re-opening the assessment. However, at the same time, the assessee did not come with comparison of the figures as per the accounts as appearing in its books of accounts and also the contra accounts so as to identify that the remaining difference was not the amounts of unsecured loans taken from these shell companies. Therefore, this contention of the assessee is rejected considering the fact that in the re-opened assessment, the core issue of taking unsecured loans from the accommodation entries providers has been examined in depth with the help of the Investigation report reproduced in the assessment order, to which the assessee did not raise any comments or objections with regard to its contents and findings. Thus, the reasons recorded, by the Assessing Officer, are prima facie in accordance with law. In the reasons so recorded, there should not be any final adjudication of the issue involved, by the assessing officer, in fact the reasons are recorded prima facie as per the scheme of the Act. Therefore, we do not find any infir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of non-filing of the return by the assessee or failure on his part to disclose fully and truly all material facts necessary for assessment would not be conclusive. Nor, absence of any such statement would be fatal, if on the basis of reasons recorded, it can be culled out that there were sufficient grounds for the Assessing Officer to hold such beliefs. 24. A three Judges bench of Hon'ble Gujarat High Court in the case of A.L.A. Firm v. CIT, 189 (1991) ITR 285, after an elaborate discussion of the subject opined that the jurisdiction of the Income Tax Officer to reassess income arises if he has in consequence of specific and relevant information coming into his possession subsequent to the previous concluded assessment, reason to believe, that income chargeable to tax and had escaped assessment. It was held that even if the information be such that it could have been obtained by the I.T.O. during the previous assessment proceedings by conducting an investigation or an enquiry but was not in fact so obtained, it would not affect the jurisdiction of the Income Tax Officer to initiate reassessment proceedings, if the twin conditions prescribed under Section 147 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of another wing, whether reopening is permissible or not. While dealing with said issue this Court has examined the said aspect and has come to the conclusion that reopening is permissible. In the said group of appeals, the substantial question of law posed before the Court, whether the (ITAT was justified in setting aside the reassessment orders on the ground that reopening of assessment under Section 147 of the Act was bad in law. In that particular group of matters, the reopening was initiated by the authority based upon the show cause notice along with accompanied material forwarded by the Excise Department to the Income-Tax Department and on the basis of said material provided by the Excise Department, the Assessing Officer has reopened the assessment of the assessee by issuing notice under Section 148 of the Act. The assessee of that case in the similar manner in this case has contended that the information provided by a different Investigating Team may not be ipso facto utilized to reopen the assessment which has become final by the Income-tax authority. It was also contended by the assessee that there was no independent application of mind on the part of Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... director of M/s Gropone Information Services (Pvt.) Ltd. as per the rubber stamp affixed on this. The signature on these two pages also differs from each other. The bank account reflected that prior to clearance of cheque of Rs.10,00,000/-, there were credits through transfer for the Rs.21,00,000/- in this bank through fund transferred to this bank account. Similarly, for clearance of cheque of Rs.20,00,000/- on 08.03.2010, the amounts were received through fund transfer. The copy of ITR-V filed in respect of by this company reflected the income of Rs.1,20,669/- and the return of income has been signed by one Shri Nitin Chhaddha. Thus, there is no creditworthiness of this company which provided the loan of Rs.30,00,000/- to the assessee-trust. Further, the copy of bank statement maintained with State Bank of Patiala in Sonepat (Haryana) reflected the immediate cash withdrawal of Rs.20,00,000/- on 18.03.2010 and except these two entries, no major amounts are found. Since the bank book has not been furnished during the course of appellate proceedings, the veracity of this cash fund so withdrawn could not be explained or proved beyond doubt. (b) The next evidence filed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of appellate proceedings, the veracity of this cash fund so withdrawn could not be explained or proved beyond doubt. (d) The next evidence is the copy of account of M/s Vardhman Network Solution Pvt. Ltd. from which the amount of Rs.20,00,000/- has been claimed to be received. The bank account of this company reflected that prior to clearance of this cheque of Rs.20,00,000/-, different cheques were deposited so as to clear this cheque along with other cheque of Rs.20,00,000/- given to somebody else. This account also reflected frequent transfer of the funds. The copy of ITR-V filed in respect of this company reflected the total income of Rs.3,10,627/- and this return is verified by one Shri Nitin Chaddha, a person managed and controlled by Jain Brothers. The copy of bank account filed by the assessee showed that the amount of Rs.20,00,000/- has been credited on 23.02.2010 and on the same date, the amount of Rs.20,00,000/- has been withdrawn. Since the bank book has not been furnished during the course of appellate proceedings, the veracity of this cash fund so withdrawn could not explained or proved beyond doubt. (e) The next evidence is the copy of account of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R-V filed in respect of this company have been filed as filed in the other cases as mentioned above. Further, the copy of bank account filed by the assessee showed that the amount of Rs.10,00,000/- has been credited on 14.07.2009 and it reflected the cash withdrawn from this bank account prior to receiving of the cheque. Since the bank book has not been furnished during the course of appellate proceedings, the veracity of this cash fund so withdrawn could not be explained or proved beyond doubt. (h) The next evidence is the copy of account of M/s New Era Tradexpo (Pvt.) Ltd. for the amount of Rs.20,00,000/- through one cheque credited on 02.03.2010 which has been claimed to be received from this company. The bank account of this company has not been filed. Therefore, the transactions remained unverified with reference to the bank account of this company. No details in the form of copy of ITR-V filed in respect of this company have been filed as filed in the other cases as mentioned above. Further, the copy of bank account filed by the assessee showed that the amount of Rs.20,00,000/- has been credited on 02.03.2010 and it reflected there were cash withdrawn on the same date th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. (d) The names of all the nine companies are found to be included in the Investigation report of the Investigation Wing of Delhi which carried out the search seizure operation. In this report, the modus operandi of the Jain brothers for floating shell/dummy companies in the different names with dummy directors who were mainly the persons themselves or their employees/relatives etc. there have also been confessional statements of the persons and reproduced by the A.O. in the assessment order stating that they had floated the dummy/shell companies for the purpose of providing accommodation entries to the beneficiaries. The assessee-trust was also found to be included in the list of such beneficiaries. The A.O. has explained how the assessee-trust managed to provide the cash by citing one example on page 117 of the assessment order for the transactions with one M/s New Era Trade Expo (Pvt.) Ltd. (e) There has been confession of Shri Naresh Kumar Jain and Shri Anand Kumar Jain that these two Jain brothers used to receive the cash back after repayment of unsecured loans to the above-mentioned companies so as to settle the accounts. (f) The assessee adopted this modus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KRIS KRISHAN CA 02-03-10 2-3-2010 To NEW ING Payment 1037 20,00,000.00 21,49,039.00 Dr Cheque 2-3-2010 20,00,000.00 Cr Ch. No. BHAGWAN MAHAVEER EDUCATION FOUNDATION By (as per details) Journal 1487 15,92,000.00 5,57,039.00 Dr ANJ 15,00,000.00 Dr AJ1 92,000.00 Dr CASH AZAD PUR By AJ Journal 1493 4,08,000.00 1,49,039.00 Dr CASH AZADPUR ON 02/03/2010 PAYMENT MADE BY BHAGWAN MAHAVIR EDUCATION FOUNDATION TO NEW ING AND CASH PAID BY JAINS AND TRANSFERRED TO AZADPUR Thus, in view of the facts mentioned above, contention of the assessee that assessee trust had received genuine unsecured loan, is not acceptable. Further, in the submission, assessee has provided the confirmation of parties from which assessee trust had received unsecured loan. In this regard, it is stated that mere confirmation of party on paper cannot prove the genuineness of the transaction. Further, A.O. is not denying the fact that transactions of unsecured loans was taken place with the bogus concern operated by the Jain Brothers. Here, the contention of the A.O is said transactions are accommodation entries provided by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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