9911796707
TMI Blog2024 (10) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... established by the appellant/assessee as the burden of proof of these is on the appellant/assessee. Following the ratio laid down by the Hon ble Supreme Court in the case of N. R. Iron and Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT ] and Oasis Hospitalities Pvt. Ltd. [ 2011 (1) TMI 194 - DELHI HIGH COURT ] it is hereby held that the appellant/assessee has failed to prove and establish the creditworthiness and genuineness of transaction which resulted credits in the books of account of the appellant/assessee. In view of the above, we decline to interfere with the finding of the Ld. CIT(A). Appeal of the assessee is dismissed. - Shri Kul Bharat, Judicial Member And Shri Avdhesh Kumar Mishra, Accountant Member For the Appellant : None For the Respondent : Sh. P.N. Barnwal, CIT DR ORDER PER AVDHESH KUMAR MISHRA, AM This appeal of the Assessment Year [In short, the AY ] 2013-14 preferred by the assessee is directed against the order dated 29.12.2017 passed by the Commissioner of Income Tax (Appeals)-20, New Delhi [In short, the CIT(A) ]. 2. Following grounds have been raised in this appeal:- 1. On the facts and in the circumstances of the case as well as in law the Ld. Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (after post search) are completed U/s 143(3) of the Income Tax Act, 1961 where in state of affair of the appellant was accepted after detail scrutiny. 5. The assessee craves right to alter/modify/amend/add/delete any or all grounds of appeal. These action of Ld. Commissioner of Income Tax (Appeals) -XX, New Delhi., and Ld. Assessing officer being Arbitrary, unjust, Illegal and invalid in law are liable to quashed and it is prayed to Your Honor that they please be quashed and/or any other relief just deem fit and proper please be directed. Appellant Pray accordingly 2.1 In nutshell, the appellant/assessee has challenged the disallowance of loss of Rs. 20,59,93,500/- holding that the loss on the sale of share is nothing but sham transaction and the sham loss. Further, the share sale consideration of Rs. 1,85,68,96,500/- has also been held as sham transactions and treated it as unexplained credits under section 68 of the Income Tax Act, 1961 (In short, the Act ). 3. The relevant facts giving rise to this appeal, in brief, are that, the appellant/assessee is a company under control management of Sh. Surender Kumar Jain (S.K.Jain) and his brother; namely, Sh. Virender Kumar Jain (V.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal Officers of these companies but no compliance was ever made by these companies. As per MCA Website, the Directors of these companies were Shri Krishna Kumar, Shri Anil Kumar Bansal, Shri Rajesh Kumar Mishra and Shri Prem Kumar Mahato as detailed in Para 3.2 (xviii) of the assessment order. The addresses mentioned in respect of these persons were found non-existent by the AO and these persons were Directors in various other companies of Sh. S.K.Jain group, engaged in providing the accommodation entries. Neither the Bilberry Securities Pvt. Ltd. nor S.K.P.J. Finance Pvt. Ltd. had shown any loss or gain from the purchase and sale of the shares in their ITRs of the respective AYs. There is no mentioned of any asset as a share claim to have been purchased by the appellant/assessee. All these facts and findings of the AO and Ld. CIT(A) were not controverted at all before the Tribunal. 4.1 Similarly, the assessee traded in the shares of various companies who were found to be bogus in the nature and therefore, the sum of Rs. 185,,68,96,500/- credited in the books of accounts through purchases sales of shares of various companies found bogus/unverifiable were taxed in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received funds of Rs. 62 crores in defence from M/s Jagat projects Ltd. through Sh. Rajesh Aggarwal, Chartered Accountant and these facts is also mentioned on page 26 of the assessment order that one of the mediator Sh. Rajesh Aggarwal admitted that he arranged accommodation entry for a group through person named Sh. Ravinder Goel through various companies directly controlled by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain. Recently, in the Hon'ble Delhi High Court Bench order dated 20.07.2017 in Bail Application 113/2017 CRL.M.A. 10245/2017 in Bail Application 114/2017 CRL.M.A. 10232/2017 has rejected the Bail application by observing the following which is relevant on the facts and circumstances of the case in support of the claim of the Assessing Officer that the transactions are sham transactions and Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain are involved in these sham transactions. The relevant para 21 to 39 of the order is reproduced here as under:- 21. On the other hand, learned ASG Mr. Sanjay Jain has submitted that in the light of the investigation conducted so far, it is clearly established that petitioners, ie. (1) Virendra Jain and (2) Surendra Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh their companies for converting unaccounted money of Rs. 62.20 Crore belonging to M/s Jagat Projects Ltd. into their share capital/premium. So the amount of Rs. 1,11,96,000/- received as commission is the proceeds of crime of Jain Brothers. He has further submitted that the proceeds of crime are inseparable between both brothers (petitioners herein) as they were involved in the accommodation entry business and were maintaining documents and records unitedly. 24. The learned ASG has further submitted that from the statements of petitioners, Le. (1) Virendra Jain and (2) Surendra Kumar Jain, and other evidences collected during investigation, it is established that Surendera Kumar Jain and Virendera Jain and the companies/firms controlled and managed by Surendera Kumar Jain and Virendera Jain (Jain Brothers) were involved in the offence of money laundering punishable under Section 4 of PMLA ibid. He has further submitted that investigation has revealed that the modus operandi of Jain brother was to launder the unaccounted money through the companies controlled and managed by them by process of placement of funds, layering of transactions and the final integration of laundered mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t guilty of the offence of Money Laundering and that he is not likely to commit any offence while on bail. We would submit that the ordinary law pertaining to grant or refusal of bail or as canvassed by learned counsel for the petitioners that only reasonable satisfaction is required, could not be the correct law to be applied in PMLA case. The learned counsel for the petitioners has urged that mainly because the provisions which constitute the Scheduled Offence have been migrated to Part-A only in 2013 and, therefore, the twin rigours would not apply because the offending act on behalf of the petitioners as per the case of the respondent/department had commenced prior to 2013 is also incorrect. 26. In this regard, the respondent/department would like to rely on the judgment of the Hon'ble Supreme Court in case Gautam Kundu vs. Directorate of Enforcement (Prevention of Money-Laundering Act), Government of India; (2015) 16 SCC 1. In the said judgment it was held by Hon'ble Supreme Court as regards the twin rigours of Section 45 of PMLA, that while there is no doubt that the conditions laid down under Section 45 of PMLA would bind the High Court as the provisions of special l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to come to a satisfaction to the fact that there are reasonable grounds for believing that the petitioners are not guilty of offence of Prevention of Money Laundering Act and that they are not likely to commit any offence while on bail. The respondent/department would like to draw the kind attention of this Court on the seriousness and gravity of the offence as apparently is made out in the facts of the case. The respondent/department would like to draw the kind attention of this Court to the counter affidavit filed by it in which the relevant facts have been set out, particularly as regards the investigation conducted by SFIO. 29. The learned ASG has further submitted that there is a company of M/s Jagat Projects Limited which wanted accommodation entries. The unaccounted money of M/s Jagat Projects Limited was diverted to a mediator called Rajesh Aggarwal, Chartered Accountant for placement of the same through other companies. The said Rajesh Aggarwal, Chartered Accountant placed the unaccounted money of M/s Jagat Projects Limited through the companies managed and controlled by the petitioners. This was a method of layer. The unaccounted money of M/s Jagat Projects Limited pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the submissions made for grant of bail hold good because the investigation under PMLA was undertaken only after SFIO filed a complaint on 29.11.2016 under the schedule offences covered under Part-A; the offences where the Act is continuing un-awaited and in respect of which the starting point was immaterial and since proceeds of crime is not a seriously debatable issue as contended by learned counsel for the petitioners. It is urged by learned counsel for the respondent/department that rigours of Section 45 of PMLA would not permit the grant of bail inasmuch as it is urged that there is no record to contend that there are reasonable ground for believing that the petitioners are not involved in the offence of money laundering or that they are not likely to commit any offence while on bail. It is also urged by counsel for the respondent/department that there is a serious likelihood of tempering with the evidence. Keeping in view the nature of transaction which involves placement and layering of tainted money or the proceeds of crime by falsification of records and arbitrary and illegal enhancement of the share premium in respect of such shares which had no value in the market. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erandi adopted by the petitioners as per the counter affidavit filed by the respondent/department at para 10.16 is as under :- 10.16 The modus operandi adopted by Jain Brothers is to create artificially Reserve Surplus and consequent Investment in a set of private companies controlled by them. A total of approximately Rs. 8000 Crore in the balance sheet of 08 private limited companies was thus created. The second step is to acquire the management control of some listed companies through postal ballot. The subsequent step is to pick up one of the private companies controlled by them, and move an application for amalgamation. One scheme of amalgamation involving Rs. 1000 Crore of Reserve Surplus and Investment, has already been was completed by Jain Brothers. Subsequently, Sh. Surendra Kumar Jain acquired SNLFL through postal ballot and filed an application for scheme of amalgamation between NKS and SNLFL. Jain brothers still left with 06 companies having Reserves Surplus and investment of approximately Rs. 1000 Crore in each of these companies and two (2) listed NBFCs with arrangement control over them. It is through the liquidation of fictitious investment in the merged company, la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mises 3198/15, 4th Floor, Gali No-1, Sangatrahsna, Paharganj, New Delhi-110055 is owned by the petitioner-Virendra Jain and the premises 209, Bhanot Plaza-II, 3 DB Gupta Road, Paharganj, New Delhi-110055 is owned by the petitioner Surendra Kumar Jain and in these companies he himself and his family members, ie. Virendra Jain, Preeti Jain and Babita Jain, are the directors. It indicates that these 95 companies are merely companies on papers for making investments in share premium etc. by various beneficiaries through the mediators. 38. It further reveals that from the statement of the petitioner-Surendra Kumar Jain that an amount of Rs. 1,11,96,000/- was received as profit in the said transaction from M/s Jagat Projects Ltd. Further, the statement of the petitioner-Virendra Jain made under Section 50 of PMLA are also on the same line as that of the petitioner-Surendra Kumar Jain. 39. In totality the petitioners (1) Virendra Jain and (2) Surendra Kumar Jain has created a device of money laundering by making investment in the share capital of M/s Jagat Projects Ltd. through skilled person Rajesh Aggarwal, Chartered Accountant; without putting the business in reality by purchasing shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the Hon ble ITAT has relied upon on the principles laid down in the case of Tarun Goyal. Further, in the case of M/s Vijay Conductors India Pvt. Ltd. Hon ble ITAT has observed that the cash deposited in the bank account of various companies which were conduit companies cannot be said to be unexplained cash credit because the source of cash is from the beneficiary who wanted to avail the accommodation entry and to whom cheques for accommodation entries were issued almost of the similar amount. However, in the case of the appellant no evidence could be produced by the appellant at any stage who are the beneficiary companies for getting accommodation entry and whether the appellant is only a conduit company. On the other hand, the appellant s case is that the share transaction is a genuine transaction. Hence, no benefit of the case of M/s Vijay Conductors India Pvt. Ltd. Is available to the appellant unless this claim of accommodation entry is compiled on the part of the appellant. In this light, there is no reason to interfere in the order of the Assessing Officer to treat the sum of Rs. 185,68,96,500/- u/s 68 of the Act as unexplained and the addition made by the AO of Rs. 185,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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