TMI Blog2011 (2) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 & A-21 of party M-5 - Decided against the assessee As regards delay in issuing notice to the assessee, we find merit in the contention that it was a case which involved a huge fraud of tax evasion where business of searched person was to give accommodation entries resulting in tax evasion to the extent of Rs.132 Crores in total, spread over the cases of various assesses in all over India - Decided in favor of the Revenue - 147 of 2010 - - - Dated:- 14-2-2011 - MR.JUSTICE ADARSH KUMAR GOEL, MR.JUSTICE AJAY KUMAR MITTAL, JJ. Ms. Urvashi Dhugga, Sr. Standing Counsel for the appellant. Mr. S.K.Mukhi, Advocate with Ms. Jyoti, Advocate for the respondent. ADARSH KUMAR GOEL, J ( Oral) . 1. This order will dispose of Income Tax Appeals No.147 and 158 of 2010 as both relate to same assessee and questions raised are inter-connected. 2. ITA No.147 of 2010 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (for short the Act ) against the order dated 25.5.2009 of the Income Tax Appellate Tribunal, Delhi Bench 'F', Delhi in I.T.A. No.3550/Del/08 for the assessment year 2000-01 raising following substantial questions of law:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s found that the assessee had received accommodation entries in the form of a cheque for Rs.16 lacs in lieu of cash paid to Manoj Aggarwal. In addition thereto, the assessee had shown receipt of consideration for sale of shares through M/s Aggarwal Stock Broker and M/s JRD Stock Brokers in respect of sale of shares of M/s B.S.Holdings Credit (P) Ltd. The said receipt was claimed to be income from long term capital gain which was invested in construction of house and declared to be exempt under Section 54F and some amount was declared to have been deposited in ICICI bonds and was claimed to be exempt under Section 54EA. By way of reassessment additions of Rs.13,82,375/- was made to the declared income as income from undisclosed sources on substantive basis with the following findings:- During the course of instant proceedings also, the assessee was required to furnish evidences of genuineness of sale transaction of shares but the assessee has not furnished any such evidence. Only copies of contract notes of brokers have been filed. The assessee has failed to furnish any other independence evidence regarding genuineness of rate and sale transactions, market quotations, compara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit Ltd. during the block period through other brokers. It is claimed that out of sale proceeds of shares amounting to Rs.29,44,120/-, the amount of Rs.15,61,745/- was received from M/s Friends Portfolio (P) Ltd. and the remaining amount of Rs.13,82,375/- represented the sale of shares through other brokers. On examining the facts of the case, it is found the average rate of share shown to have been sold through M/s Friends Portfolio (P) Ltd. comes to Rs.78/- per share approx. Similarly, average rate of share claimed to have been sold through other brokers comes to Rs.70/- approximately per share. However, no evidence has been filed to establish the genuineness of rate and supporting evidences of genuineness of sale transactions of shares as well as ownership of shares. Since the alleged sale receipts of shares amounting to Rs.13,82,375/- are not connected to M/s Friends Portfolio (P) Ltd., Delhi and the block assessment proceedings, these are added to the income of the assessee on protective basis as income from undisclosed sources for the block period and separate proceedings u/s 147/148 of the I.T. Act, 1961 are to be initiated for assessment of these receipts of Rs.13,82,37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are transaction relating to the sale consideration of Rs.13,82,375/- has deleted the addition. Even before us, the learned DR has not been able toproduce any evidence contrary to the finding as recorded by the learned CIT(A). In the circumstances, we are of the view that the learned CIT(A) has taken a correct view and no interference is called for in his order. 7. We have heard learned counsel for the parties. 8. Learned counsel for the revenue submitted that the CIT (A) as well as the Tribunal have erred in law in deleting the additions. The findings recorded by the CIT(A) as well as the Tribunal are perverse. The burden of proving genuineness of the transactions of sale of shares through M/s JRD Stock Brokers was on the assessee. Having regard to the fact that the assessee was found having bogus transactions to conceal undisclosed income, the circumstances relied upon by the assessing officer in respect of bogus transactions justify drawing of inference against the assessee. The assessee was required to show genuineness of the sale transactions of shares. Even though reasons for which the transactions through M/s Friends Portfolio (P) Ltd. were held to be bogus may not str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to furnish material in support of genuineness of the transactions but it failed to do so. 10. Learned counsel for the assessee has not been able to show any material which may have been furnished by it to justify genuineness of the transactions and merely submitted that it was for the revenue to lead evidence to show that the transactions were not genuine as held by the CIT(A) as well as the Tribunal. This plea cannot be accepted as the circumstances relied upon in the order of the assessing officer placed the burden on the assessee to explain the genuineness of the transactions. Thus, the questions raised on behalf of the revenue have to be answered in its favour and against the assessee. Though in view of this finding the matter could have been decided against the assessee, with a view to give further opportunity to the assessee, we set aside the impugned orders and remand the matter to the CIT(A) for fresh decision in accordance with law. The assessee may appear before the CIT(A) for further proceedings on 25.4.2011. 11. Coming to ITA NO.158 of 2010, finding recorded by the assessing officer has already been reproduced above to the effect that transaction through M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion even after the order u/s 158BC had been passed, which is not the position as is clear from the reasons recorded on 23.9.2004. The proceedings u/s 158BD were initiated only on some sketchy information supplied by the AO having assessed M/s Friends Portfolio (P) Ltd. u/s 158BC. 14. In view of the above findings, therefore, the assessment of the appellant has been made without satisfying the mandatory conditions precedent for section 158BD. 15. The next question addressed by the ld.Jurisdictional Tribunal in the above order was whether the notice u/s 158BD was required to be issued within a reasonable time and if it was not so issued, whether the assessment made pursuing to the notice liable to be set aside on that ground. 16. The ld. Tribunal relied upon the Hon'ble Gujarat High Court's decision in the case of Khandubhai Vasanji Oesai and others Vs. DCIT another (1999) 236 ITR 73, where it has been held that the notice should be issued within 15 days from the date of computation of block assessment in the case of the searched person or at any rate within 60 days from that date, the sanctity behind this period being the provisions of section 132(9A). 15 days is a rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed from BM-I, Dilkhush Indl.Area, Azadpur, Delhi. xxx xxx xx c) Summons were issued to M/s Abhipra Capital Ltd. and various details were called for. The Director of the company, Sh. Pratap Gupta, categorically stated that no transactions of any other client has been done by M/s Friends Portfolio P Ltd. on the ticket of DSE upto August, 2000 other than the trading done by M/s Abhipra Capital Ltd. M/s Abhipra Capital Ltd. had done the trading on the ticket of M/s Friends Portfolio P Ltd. on DSE for its own client and bills regarding these have been issued by M/s Abhipra Capital Ltd. The cheques issued and collected for and by the client of M/s Abhipra Capital Ltd. have been done from the bank accounts of M/s Abhipra Capital Ltd. Various details to establish this fact have been furnished by him and the client account of M/s Friends Portfolio P. Ltd. has been seen wherein M/s Abhipra Capital Ltd. appears as the sole client. No service tax has been paid by M/s Friends Portfolio P Ltd. The service tax on the transactions on its ticket have been paid by M/s Abhipra Capital Ltd. d) Enquiries were also conducted from the Delhi Stock Exchange Association Ltd. and the party wise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he address is written subsequently and the mediator Bengani is mentioned. vi) Pages 45 and 48 are bills of Mamta Devi on which address is written subsequently and the mediator Bengani is mentioned. f) Annexure A-40, A-43, A-44, A-45 A-51 seized from 5A/12, Ansari Road, Daryaganj, Delhi are sale biulls, contract note and statement of accounts of M/s J.N.Anju Co. add. H-22 G, Saket, N. Delhi. These books have been accepted by Sh. Manoj Aggarwal to be used for the purpose of accommodation entries and have been used for showing back dated acquisition of share for long term share profit. Local enquiries conducted by this office have also proved that this concern never existed at the mentioned premises. Some of the beneficiaries of accommodation entries of M/s Friends Portfolio P Ltd. namely Sh. C.P.Khanna, Sh. Punit Khanna, Sh. Raghav Bahl, Sh.Rajiv Aggarwal, M/s Vulcan Electro Controls (India), M/s Target Chemical P. Ltd. M/s Instronics Ltd., Dhanraj Singh, Harjoot Singh, Harinder Kaur, have accepted that they had taken accommodation entries from M/s Friends Portfolio P Ltd. 32. All these facts clearly establish that the transactions of M/s Friends Portfolio P Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number 304, 3025, 30231814019, 30021002, 101018 have been used by Manoj Aggarwal our director for his accommodation entry business. So far as identity, credit worthiness and genuineness of credit entries is concerned, we have to clarify that it is not possible to give identity and creditworthiness of the parties who were the beneficiaries and actually the amount has been received from various mediators as is evident from the Annexure A-16, A-18, A-19, A-20 A-21 of party M-5. These amount were first deposited in various supporting accounts of Manoj Aggarwal and subsequently transferred to company's bank accounts from where the final cheque has been issued to the actual beneficiaries. Credit entries comprise of transfers from other supporting accounts as well as profit cheques received from various beneficiaries to whom the cash was refunded back by Manoj Aggarwal. Further most of these mediators of Sh. Manoj Aggarwal has also confirmed this positions. Keeping in view of the above there is no justification for treating the credit entries in our various bank accounts as our unexplained cash credit. It has also come to our knowledge that beneficiaries of Rs.80 crores app. have alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment of searched person. This Court did not hold that law required any particular form in which the same should be recorded. In the present case such satisfaction having been duly formed, learned counsel for the revenue rightly relies upon the judgment of this Court in Commissioner of Income Tax Vs. Pearey Lal and sons (EP) Ltd. (2009) 308 ITR 438 (P H) to submit that requirement of law was met. As regards delay in issuing notice to the assessee, we find merit in the contention that it was a case which involved a huge fraud of tax evasion where business of searched person was to give accommodation entries resulting in tax evasion to the extent of Rs.132 Crores in total, spread over the cases of various assesses in all over India. The coordination by the assessing officer of the searched person was time consuming affair. In these circumstances, delay cannot be held to be unreasonable and cannot be held to vitiate the assessment. No doubt once satisfaction is formed during block assessment of searched person, action must be promptly taken as submitted on behalf of the assessee and as held by the Gujarat High Court in Khandubhai Vasanji Desai and others Vs. DCIT and another (1999) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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