TMI Blog2012 (12) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... f any of the provisions of the Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in the notice provided that such notice is in substance and effect in conformity with or according to the intent and purpose of this Act. - Decided against the assessee. Addition u/s 68 - accommodation entries - held that:- latest decision [COMMISSIONER OF INCOME TAX VERSUS NOVA PROMOTERS & FINLEASE (P) LTD (2012 (2) TMI 194 - DELHI HIGH COURT)] covers plethora of cases on the subject. It does appear to us that this case makes a distinction between credits simplicitor and credits received through hawala operators, the bank accounts of which are spurious in the sense that most of the entries are in respect of debits and credits of the same amount with very little balance staying in the account at any other point of time. - Decided against the assessee. - IT APPEAL NO. 231 (DELHI) OF 2011 - - - Dated:- 27-4-2012 - I.P. BANSAL AND K.G. BANSAL, JJ. For the Appellant: Shri R.S. Negi for the Respondent. Shri U.S. Kochar ORDER K.G. Bansal, Accountant Member - The only substantive ground taken by the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors in the companies, partners in the firms and proprietors of a number of proprietary concerns. The whole situation was managed by Shri Mukesh Gupta along with his confidant, Shri Ranjan Jassal and Shri Surinder Pal Singh. A mention of 14 bank accounts so operated has been made on page no. 2 of the assessment order. A large number of beneficiaries of these accounts have also been mentioned on page nos. 3 and 4 of the assessment order. The addresses used by these persons have also been mentioned on page nos. 5 and 6 of the assessment order. Coming to the specifics of this case, the information was that the assessee has taken 18 entries aggregating to ₹ 14.45 lakh from such persons. Acting on this information, reasons were recorded for reopening assessment and a notice u/s 148 was issued. 2.1 The findings of the ld. CIT (Appeals) in the matter are that the AO had before him specific and precise information in respect of entry providers, dates of entry, amounts received from each individual, cheque or draft nos. and name and address of the branch. He made a limited verification to ensure that the information was related to the assessee. On this basis, he formed a prima fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese entries. The officers in the directorate are authorities under the Act and, therefore, they are respectable sources of information. The information was quite detailed in terms of entry provider, bank account, cheque number, date and the account in which these cheques were deposited by the assessee. The information was prima facie believable. The AO compared the information with the original return of income filed by the assessee and came to the conclusion that although capital has increased from ₹ 1.80 lakh to ₹ 16.20 lakh, the information cannot be tallied with the information in the return as the details did not exist in the return. This is a case where no assessment had earlier been made and the return had only been processed. Thereafter, it has been recorded by the AO that income of ₹ 14.45 lakh has escaped assessment. Thus, it is case in which not only reliable information was received but also in which the AO applied his mind to the information after verifying the same with the details furnished in the return and recorded the reasons that income escaped assessment. In such a case, there was no necessity for him to make direct enquiry with the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the name and address of the contributors were not available in the return and no assessment had been earlier made u/s 143(3). 2.7 In the case of Sarthak Securities Co. (P.) Ltd. (supra), the facts are that the return was filed declaring total income of ₹ 15,360/-. The return was processed u/s 143(1). In this year four private limited companies had invested in the shares of the assessee company. After observing all legal formalities, shares were allotted to these companies. Thereafter, a notice u/s 148 was issued on 25.03.2010. It was informed that the earlier return may be taken as return u/s 148. The assessee requested that the reasons recorded for issuing notice u/s 148 may be supplied to it. This was done. The assessee raised objection to the initiation of proceedings. These objections were rejected. The case of the ld. counsel before the Hon'ble Court was that the order of the AO does not reflect any independent application of mind to the information so received and that he had not taken into account the decision in the case of CIT v. Lovely Exports (P.) Ltd. [Application No. 11993 of 2007, dated 11-1-2008]. The Hon'ble Court came to the conclusion that al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent u/s 143(3) had not been made earlier. Nonetheless, it may be mentioned that the information was not vague, indefinite, distant, remote or far fetched. It was a definite information which had a direct bearing on escapement of income. In the case of ITO v. Dwarka Dass Bros. [1981] 131 ITR 571/[1982] 8 Taxman 99 (Delhi) the question was regarding failure to disclose fully and truly all material facts in the course of original assessment. Thus, the ratio of these decisions is not applicable. 2.9 On the other hand, the decision of the jurisdictional High Court in the case of CIT v. Nova Promoters Finlease (P.) Ltd. relied upon by the ld. Sr. D.R., supports the case of the revenue. In this case, the return for assessment year 2000-01 was only processed and no assessment was made. Thereafter, proceedings u/s 147 were initiated on the basis of information received from Directorate of Investigation to the effect that the assessee was one of the beneficiaries of accommodation entries given by 16 entry operators through which it received share application monies of ₹ 1,18,50,000/-. The Hon'ble Court upheld the action of issuance of notice u/s 148. The entry operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings of your case for the A.Y. 2002-03 and hence is valid. A notice u/s 142(1) along with a questionnaire on which you are required to file details is also enclosed herewith. In this regard you are hereby requested to attend the proceedings before me either directly or through authorized representatively duly authorized in writing on 09.12.2009. 3.1 It is submitted that a notice u/s 143(2) has to conform to the statutory language which means that the assessee has to be called upon to produce or caused to be produced any evidence on which the assessee may rely in support of the return, on the date specified therein. The objection of the ld. counsel is that he has not been given an opportunity to produce or caused to be produced evidence in support of the return. 3.2 In reply, the ld. senior DR submitted that such a ground had not been taken up by the assessee before the ld. CIT (Appeals). The assessee has also not objected to the notice in the course of assessment proceedings. The instant notice is issued u/s 143(2) as seen from the subject mentioned therein. The reading of the notice shows that two notices were issued on 30.11.2009, one u/s 143(2) and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad High Court reported Rajmani Devi v. CIT [1937] ITR 631, the ingredients of a notice u/s 143(2) have been mentioned, which also find a place in the statutory language. For the sake of ready reference, the statutory provision is reproduced below:- notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not under-stated the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return: 3.5 We may now examine the notice in the light of the statutory provisions in the light of aforesaid decisions. It is obvious that the main heading of the notice is Notice u/s 143(2) for assessment year 2002-03 . Therefore, the intent and purpose is to issue a notice u/s 143(2). A notice u/s 142(1) has been appended to this notice calling for certain details as per enclosed questionnaire. Thereafter, it is mentioned that the assessee is requested to attend the proceedings before h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and given either on the same day or on the subsequent day. All the accounts had minimum credit balance in thousands at the beginning and at the end of the year. This disproves the theory that all these investors were carrying on independent businesses. The assessee filed copies of confirmation from the investors, share application form and PAN. It is further mentioned that the face value of the share was ₹ 10/- but it has been issued at a premium of ₹ 90/- per share. The profit and loss account shows profit of ₹ 2.52 lakh on account of sale of shares and profit of ₹ 2.21 lakh on account of interest. This state of affairs does not justify the premium of ₹ 90/-. It is also mentioned that the returns of the shareholders show income between ₹ 1.00 lakh and ₹ 3.00 lakh. Thereafter, he has referred to statements of Mukesh Gupta, Rajan Jassal, Manju Gupta and Surender Pal Singh recorded by the officers of Investigation Wing on 11.04.2005, 04.02.2004, 15.04.2004 and 24.12.2003 respectively. Shri Mukesh Gupta has also filed a sworn affidavit dated 12.04.2005. All these depositions show that all these accounts have been used for providing only accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidences have been filed by the assessee before the AO and that the assessee is merely required to establish the identity of the contributors. It has also been mentioned by him that the incriminating material gathered by the AO has not been brought to the notice of the assessee and it has not been allowed to cross-examine the deponents. The case of the ld. senior DR is that the assessee never asked for cross-examination of these persons. The acceptance of the case of the assessee would amount to accepting a large number of coincidences bordering on impossibility. 4.4 In reply, it is submitted that the evidence filed by the assessee before the AO has not been impeached. Thus, it is a case where documentary evidences filed by the contributors have to be weighed against the oral evidence of entry operators. In such a situation, the documentary evidence has to be given more credence than the oral evidence of third parties. The assessee has discharged its initial onus by producing relevant evidence and, therefore, the ld. CIT (Appeals) was right in deleting the addition as no further adverse evidence was brought on record. 4.5 In the rejoinder reply, the ld. senior DR referre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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