TMI Blog2012 (12) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... rd Court of fact and examine the concurrent findings. - Decided against the assessee. - W.P.(C) No. 7538/2012, ITA No. 307/2012 - - - Dated:- 5-12-2012 - S. Ravindra Bhat And R.V. Easwar, JJ. Appellant Rep. by : Sh. K.R. Manjani, Adv Respondent Rep. by : Sh. Karan Khanna, Sr. Standing Counsel. JUDGEMENT Per : S. Ravindra Bhat, J : 1. The assessee is aggrieved by an order of the Income Tax Appellate Tribunal (ITAT) dated 10.01.2011; it seeks to appeal under Section 260A of the Income Tax Act. The question of law sought to be urged in the said appeal is: Whether the Tribunal fell into error in upholding the addition of Rs.1,10,896/- as income earned by way of commission for providing accommodation entries? 2. In the writ petition, the order of the ITAT, refusing to entertain the appellant s application under Section 254(2) and rectify its order made in the appeal, has been impugned. 3. The brief facts of the case are that pursuant to search operations conducted on certain third parties, characterized as accommodation entry providers / bogus share applicants , a report was furnished by the Investigation Wing of the Income Tax Department to v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions on the basis of report of the Investigation Wing and has not applied his own mind. For the sake of convenience, the relevant portion of the AR s submission is reproduced below: ..so far as transaction of Rs.5,08,687/- as mentioned in the reasons recorded is concerned, in this connection as already been submitted on the date of last hearing that appellant company is a NBFC company and is engaged in the business of financing activity and purchase and sale of shares. During the year under consideration assessee company has sold the 5000 equity shares of Patel Care India Pvt. Ltd to a stock broker namely M/s. H.B. RELAN Co. Copy of contract note and bill issued by the broker, filed with AO during the course of hearing is enclosed herewith for your honour ready reference. No defect is pointed out. On the sale of these shares appellant company has earned the profit of Rs.8,687/-. Shares were acquired by the assessee company in the year f.y. 1997- 98. Acquisition of shares is also not disputed by AO and the transaction has been accepted by AO. Regarding the addition made by AO as an alleged entry operator @ 2% commission earned on the basis of deposits of Rs.55,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation Wing the assessee was one of such entry operator. Accordingly, notice u/s 148 was issued for the year under consideration, after obtaining prior approval of the Addl. CIT, Range-14, New Delhi. Form the bank statement it was noticed that the assessee has a credit balance of Rs.55,44,816/- in his bank account. Further it was noticed that the assessee has deposited cash on various dates in his bank account during the period under consideration. The assessee could not substantiate its claim with supporting documentary evidence during the assessment proceedings. As the assessee was an entry operator, as per information received, an amount of 2% of the credit in the bank account amount to Rs.55,44,816/- was treated as income towards providing accommodation entries during the period under consideration. The assessee has not asked for copy of the reasons recorded during the assessment proceeding and it was only on 20.10.2009 that the assessee has asked for reasons for reopening which were provided to him. There is no calculation mistake as pointed out by the AR of the assessee with regard to the credits in the bank account. Since the assessee was completed on the basis of inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not brought any material on record to prove that the deposits of the amounts in the bank account of of H.B. Relan belonged to the assessee company or that the cash/clearing had been deposited by a person hired by the assessee company or its related person; that nothing had also been brought on record to prove that cash had been paid by the assessee company in lieu of cheques received; that neither the nature of business of the assessee company, nor the old shares held by it had been disputed by the AO; that the credit in the bank account was in respect of interest income received or received back by the assessee s own money advanced to the parties in the normal course of its business; that no material or evidence or documents or statement had been confronted by the AO to the assessee company; and that the AO had not verified the correctness of the information of the Inv. Wing. 22. The matter was remanded by the CIT(A) to the file of the AO for his comments. 23. In the remand report dated 22.2.10, the AO had rebutted the assessee s claim stating, inter alia, that the assessee had deposited cash in its bank account on various dates during the period under consideration; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. It is contended on behalf of the appellant that the Tribunal and the lower authorities completely misdirected themselves and overlooked the materials, which included the supporting documentary evidence in respect of each entry and transactions reflected in the books. It was submitted that the appellant had, during the reassessment proceedings, entirely submitted its records and disclosed the same to the AO. It is, therefore, urged that the findings of the ITAT as well as the CIT(A) are perverse as they have not even adverted to the materials produced. 8. The assessee had lastly contended that the additions made by the AO and sustained by the Commissioner(A) and later by the ITAT cannot be upheld because they do not form part of the reasons to believe , which in the first instance, impelled the Department to reopen the proceedings. In this regard, the assessee relies upon the decision of this Court in Ranbaxy Laboratories Ltd. v. CIT 336 ITR 136. In that case, the Court had held that once the assessing officer assumes jurisdiction to reopen proceedings under Section 148, he cannot, in the absence of any material with regard to the rationale for the reopening, independently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice. To hold such a view would be to impinge on the concededly wide power conferred upon the Revenue in Section 147/148 and undermine its objective. Consequently, the appellant s contentions in this regard are rejected. 10. This Court has carefully considered the submissions. As regards the challenge to the reopening of proceedings is concerned, the Court is satisfied that the notice under Section 147 reflected due application of mind to objective material furnished to the AO, i.e. by way of Investigation Report which could have given rise to a bonafide belief, legitimately falling within Section 147. As regards other issue, i.e. addition of Rs.1,10,896/- is concerned, this Court notices that this question was again gone into elaborately by the CIT(A), who, however, sought for remand report. A careful reading of the paras 4.1 to 4.3 of the appellate Commissioner s order would reveal that the materials produced before the AO and also discussed by the AO in the remand report were taken into consideration. Furthermore, it is not as if the entire amount of Rs.55,44,816/- which was shown to be the balance in the bank account of the appellant is sought to be added back. In that reg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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