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TMI Blog2024 (2) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... s Date 28.03.2013 REASONS FOR ISSUE OF NOTICE U/S 148 OF THE I.T.ACT The DIT(INV.), Delhi his letter No. F.No. DIT(INV)-I/u/s/148/2012-12/196 dated 12/03/2013 informed that a search and seizure action was taken in the business and residential premises of Shri Surender Kumar Jain (Entry Operator ) group of cases and particulars of accommodation entries provides to large number of companies through bogus & fictitious companies controlled by Sh Jain was detected. It has been reported that M/s Sanyukta Developers Pvt. Ltd. has obtained Rs. 2,30,00,000/- during the F.Y. 2009-10 from five companies namely as under controlled by said Sh S.K.Jain. It was discovered that one Sh Y. Sharma acted as a broker/middleman these transactions are on paper marked A-15-16 at page-71 & 35 mentioned in the list enclosed as annexure-"A" of the said report. These paper companies did not have genuine business activities as disclosed in the search. S. No Name of the Company Name of Bank Amount DD/Cheque No./Dt. 1 M/s Attractive Finlease Pvt. Ltd Axis Bank 40,00,000/- P.O. No. 031278 dated 22/12/2009 2. M/s Shalini Holdings Ltd Axis Bank 40,00,000/- P.O. No. 031279 dated 22/12/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heque nos. name of entry the residence and offices of Shri Surender Kuma Jain brothers, etc., seized from the resident and offices of Shri Surendra Kumar Jain and his family members and office premises of related persons /entities. (iii) Detailed investigation report of the Serious Fraud Investigation Office (SFIO) of the Ministry of Corporate Affairs, Govt. of India dated 31.3.2016 (Report of 418 pages supported by thousands of pages of related documents, statements, supporting extracts from seized documents etc.). This report has established a case of large scale money laundering to the tune of Rs. 3,800 Crores against these persons/groups, large scale tax evasion, fraud, cheating, criminal conspiracy and violation of various statues/laws and has recommended strong action to the SIT on Black Money appointed by Hon'ble Supreme Court of India, RBI, Enforcement Directorate (ED), SEBI, Income tax Department, ICAI, ICSI, Bar Council of India and other agencies. 2. Detailed report of the SFIO was received from the SFIO, Ministry of Corporate Affairs, Govt. of India dated 31.3.2016. The report has been examined carefully and its contents, annexures, statements and other docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich have been summarized which had proved that Sh. Surendra Kumar Jain and his brother Sh. Virendra Jain were engaged in the business of providing accommodation entries. The modus operandi for providing accommodation entries in lieu of cash as adopted by the Jain Brothers have been discussed below in brief: (i) During the course of search proceedings in the Sh. S.K. Jain Group it was found that a number of companies were running from the residential as well as other premises related to Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain. However, all the books of accounts and other relevant papers of these companies were found at the residence of Sr. Surendra Kumar Jain and Sh. Virendra Kumar Jain itself and no documents was found at the other addresses which were mentioned in the statutory records of these companies. The above facts and result of post search enquiries have revealed Shri Surendra Kumar Jain and Shri Virendra Kumar Jain companies are controlled by through dummy directors / Principal officers of these companies. (ii) The seized records include blank unsigned as well as blank signed cheque book, acknowledgement of filing of return of these companies, user ID an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the residence of Sh. Surendra Kumar Jain and Sh. Virendra Kumar. ii. Undated blank cheque and signed by entities engaged in providing accommodation entries were also seized from custody and control of Jain. iii. That computer hard discs seized from the residence of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain contained confidential details like user name, passwords and IDs of the various companies engaged in providing accommodation entries required for filing of e-returns of these companies, authority letter of these companies authorizing to represent these companies in various Govt. Department. These companies were used to provide accommodation entries of beneficiary including assessee company. iv. That details of funds transferred through cheque/RTGS/pay order to various entities / persons through these dummy companies maintained by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain in excel sheets found and seized during the course of search on them. v. That maintenance of books of accounts in tally format as well as in the format required for preparing Income Tax Return of these companies in the computer Hard Discs found and seized from the residence of Sh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tel Road, Patel Nagar, Delhi, the survey party found only one person named Sh. Mukesh Kumar, S/o Sh. Satyender Kumar, R/o Village Guzera. Distt. PauriGadhwal in this premises. Ie deposed before the survey party that his employer and owner of that place is one Sh. Virenaru Jain R/o somewhere in Rajender Nagar, Delhi and provided his telephone No. as 9891095232. It was already proved from the call records that this telephone number pertained to Sh. Virendra Jain. resident of 221/, New Rajinder Nagar, New Delhi. He also disclosed that Sh. Virendra Jain used to visil the place once in a while. Sh. Mukesh Kumar also told that no books of account of companies registered on this address was available in the premises i.e. 106, Palco House, T-10, Main Patel road, Patel Nagar, Delhi. b. During the course of the survey at premise no. 3198-15, 4th Floor, Gali No. 1, Sangatrashan, Paharganj, New Delhi, it was found that this premise was a small room, which was incapable of accommodating so many companies and persons. Books of accounts and document of companies registered at this address was not found. c. At the third premises 209, Bhanot Plaza, 3, D.B. Gupta Road, Paharganj, New Delhi, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. 9310395235 Surendra Kumar Jain Axis Bank 224010200006989 Erode Clothing Empire 9310395235 Surendra Kumar Jain 5.1 The above facts prove beyond doubts that the 200 odd entities, data pertaining to which were found and seized from the premises of S.K. Jain Group, were controlled and used by Shri S.K. Jain his brother Shri Virendra Kumar Jain for providing accommodation entries. 6. It is also noticed from the following finding as recorded in the report of investigation wing that incriminating documents in the form of hand written cash books were also seized from the residence of Shri S.K. Jain showing the receipts of cash by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain to provide accommodation entries. Finding in this regards may be summarized as under: a. Cash books seized during search operation were maintained on daily basis to keep a record of their daily transactions of receipts and payments of cash as well as to keep them updated in respect of accommodation entries provided as well as accommodation entries pending in lieu of the cash which they had received. However, the cash transactions which were being recorded by them in hand written cash books w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of commission on an aggregate amount of accommodation entries of Rs. 81,67,02,000/- provided to different companies through this above mentioned person Satish Garg was calculated at Rs. 14292285/- @ 1.75%. (b). Out of this total amount of commission of Rs. 14292285/- on the accommodation entries provided till 31.03.2010 an amount of Rs. 10159000/ - was reduced apparently being paid, and an amount of Rs. 342343/- was added to the balance of Rs. 4133285/- recording new bofore it. Below these calculations three more amounts were recorded against three different dates which were apparently reccived by Sh. Surendra Kumar Jain and Sh. Virendra kumar Jain apart from the amount of Rs. 10159000/- shown as received till 31.03.2010. The date wise and amount wise breakup of the receipts of Rs 10159000/- is given in a printed table on page no. I of this seized annexure A-150. 8. It is further noted out that Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain kept a meticulous record of cheque/ RTGS(handwritten 'cheque books) issued from the bank accounts of these concerns to various beneficiary parties (in lieu of the cash) that had been regularly received by them over a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19/01/2010 It has been noticed from this table that S.K. Jain Group had received Rs. 2,30,00,000/- from the intermediary Shri Y. Sharma during the period from 01/04/2009 to 31/03/2010 and after that following cheques. (i) Rs. 40,00,000/-vide P.O.No. 031278 through Axis Bank dated 22/12/2009 (ii) Rs. 40,00,000/- Vidc P.O.No. 031279 dated 22/12/2009. (ii) Rs. 50,00,000/ - Vide PO.No. 031741 dated 19/01/2010. (iv) Rs. 50,00,000/- Vide PO. No. 031739 dated 19/01/2010. (v) Rs. 50,00,000/ - Vide P.O.No 031742 dated 19/01/2010. were issued through intermediary Shri Y. Sharma through following companies. M/s Attractive Fin Lease Pvt. Ltd., M/s Shalini Holidays Ltd., M/s Victory Software Pvt. Ltd., M/s Aasheesh Capital Services Pvt. Ltd. and M/s Zenith Automotive Pvt. Ltd. through the Axis Bank to the assessee Company. The said information is corroborated with the income tax return of the assessee company and it is found that M/s Attractive Fin lease Pvt. Ltd., M/s Shalini Holidays Ltd., Ms Victory Software Pvt. Ltd., M/s Aasheesh Capital Services Pvt. Ltd. and M/s Zenith Automotive Pvt. Ltd. have made investment in the assessee company to the tune of Rs. 2,30,00,000/- F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h received by Sh. Virendra Kumar Jain during the different financial years is reproduced year wise in a tabular form along with the average yearly commission income as below: S.No Financial Year Assessment Year Amount (Rs.) Average Yearly commission income of the average rate of commission i.e. @ 1.8% of cash receipt 1 2004-05 2005-06 697,521,969 12375395 2 2005-06 2006-07 43558725.58 43558725.58 3 2006-07 2007-08 92924977.73 92924977.73 4 2007-08 2008-09 872355.31 872355.31 5 2008-09 2009-10 156366375 156366375 6 2009-10 2010-11 223800570.6 223800570.6 7 2010-11 2011-12 67454026.2 67454026.2 Total 3798,78,42,911 68,37,81,172.40 To sum up, various documents pertaining to various concerns (Companies as well as Firms) were seized from the premises of Sh. Virendra Jain during the course of search. These seized documents include blank unsigned as well as blank signed cheque books, acknowledgement of filing of returns of these companies, User Ids and password of these companies for e-filing of their returns, Bank A/c Opening & Closing letters, Authorization letters for attending the assessment proceedings, books of account in tally format as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the statement, namely, Sh. Rajesh Agarwal has stated that it is known that Jain Brothers are in the business of entry operation. Seized documents are in the hand writing of Sh. Surendra Kumar Jain. This has not been denied by Sh. Surendra Kumar Jain while recording the statement even after receiving the photocopy of seized documents. Sh. Surendra Kumar Jain is the authorized representative of various concerns used for the purpose of accommodation entries for income tax proceedings. Search warrant was issued in the name of both the brothers. Therefore, in my view, the entire entry operation and seized document belong to both the brothers. Accordingly, addition u/s. 68 and commission income pertains to both the Jain Brothers. Accordingly, addition u/s. 68 and commission income for all assessment years are equally divided between Sh. Surendra Kumar Jain and Sh. Virendra Jain for all assessment years as both the brothers are equally involved in the accommodation entry business and maintaining documents and records unitedly. Accordingly, all the grounds of appeal are here by dismissed in principle. Quantum of addition u/s. 68 and commission income is confirmed on substantive basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Surendra Kumar Jain and Sh. Virendra Kumar Jain through entry provider companies. * That third party correspondence with entry provider companies were seized from the custody of Sh. Surendra Kumar Jain and through entry provider companies. * That third party correspondence with entry provider companies were seized from the custody of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain. * That S.K. Jain / Virendra Jain and there close associates were directors of these entry provider companies during relevant but different time period. * Seizure of documents had revealed that commission income were earned by Jain Brothers and mediator. iv. It was further proved that evidence relating to all the steps involved in providing accommodation entries by entry provider companies in lieu of cash payment to Jain Brothers on charging commission were seized from custody and control of Jain Brothers. v. A perusal of documents as seized from the premises of Shri S.K. Jain Group and enclosed along with this note as Annexure has revealed that accommodation cntry amounting to Rs. 45,00,000/- by the assessee from S.K. Jain Group Companies were noted on the seized documents. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: [Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is char ..... 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