TMI Blog2014 (10) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Kejriwal of having provided any accommodation entry to the assessee - the reopening is liable to be held to be bad in law. Relying upon Income-Tax Officer, I Ward, Distt. VI, Calcutta, And Others Versus Lakhmani Mewal Das [1976 (3) TMI 1 - SUPREME Court] - reopening of assessment in the case of the assessee for both the assessment years stand cancelled and the assessment orders passed for both the assessment years as a consequence of such reopening also stand cancelled - revenue has not been able to produce any evidence to show that the loan taken by the assessee is an accommodation entry - There is neither any statement nor documentary evidence to question the genuineness of the loan taken and repaid by the assessee – there is no reason to accept the submissions of the department that the additions are required to be made, as suggested by the department - the genuineness of the loan transaction of the assessee with M/s. Saket Vinimay Pvt. Ltd. is liable to be treated as a genuine transaction and the additions upheld by the CIT(A) are to be set aside – Decided in favour of assessee. - I.T.A. No.1443 & 1444/Kol/2014 - - - Dated:- 9-9-2014 - Shri Shamim Yahya Shri Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. CIT(A) for his comments. 3. Shri Sajjan Kr. Tulsiyan, Advocate represented on behalf of the assessee and Shri Ajoy Kr. Singh, CIT(DR) represented on behalf of the Revenue. 4. It was submitted by the ld. A.R., representing on behalf of the assessee, that the assessee is a company which is doing the business of real estate. It was a submission that the assessee had filed its return of income on 30.11.2006 originally. It was the submission that notice under section 148 had been issued for the purpose of reopening on 25.03.2013. It was a submission that the assessee had requested for the copy of the reasons recorded. The reasons recorded had been provided to the assessee vide a letter dated 20.05.2013. the ld. AR drew our attention to the reasons recorded which was shown at pages 43 44 of the paper book. It was a submission that the reasons recorded were also extracted in the assessment order at pages 1 to 3 of the assessment order. It was a submission that on perusal of the reasons recorded showed that the reasons drawn by the AO showed that there was a search and seizure operation on the group and in the course of the assessment proceedings under section 153A, an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing I.D. mark.ANSPL/4 in respect of Saket Vjnimay Pvt., Ltd. were found in which there is a file maintained as Saket Hisab which consists the year-wise calculation of accommodation entries provided to several parties. The rate of Jama Kharchi received for providing such entries is 30 paise. However, you have disclosed 1.25 crore vide disclosure petition dated 26.02.2010 as unaccounted income on the basis of received commission on such entries on behalf of Director of Saket vinimay Pvt. Ltd. and one firm and two other companies namely Ayush Enterprises, Subham Fan (India) Pvt. Ltd., and Oliver Moulds and Plastics Pvt. Ltd. respectively. Since you have stated that these two companies and one firm other than Saket Vinimay Pvt. Ltd. are being run by you, the remaining amount of ₹ 4,85,53,249/- has not been considered for disclosure by you. Comments please. Ans. The remaining amount of ₹ 4,85,53,249/- has not been received from the parties to whom financial arrangements have been made. Actually this computer print out consists of calculation of financial charges received and receivable from different parties. It is also evident from the documents where consolidat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the above 13 parties. Q.4. What are the nature of financial arrangements made to the parties as mentioned in Q. No.13 by your concerns as per Saket Hisab of ANSPL/4? Ans. The nature of financial arrangement to the above parties are in the form of loan accommodation entries. Q.5. From the Saket Hisab of impounded CPU ANSPL/4 it is evident that there is details of sale from Saket Vinimay Pvt. Ltd. from F.Y. 2002-03 to 2006-07 to three different companies please explain the nature of sales and transactions recorded therein. Ans. These are the said transactions to various parties from Saket Vinimay Pvt. Ltd. I cannot remember right now these transactions. The details of the same will be furnished on 10.03.2010 along with books of account and document. Q.6. Do you want to add or alter anything? Ans. Yes, I am voluntarily disclosing ₹ 1.25 crore as unaccounted income on account of commission on financial arrangement made by Saket Vinimay Pvt. Ltd., Subham Fan (India) Pvt. Ltd. and Oliver Moulds and Plastics Pvt. Ltd. and one firm Ayush enterprises. I have read the above recorded statement carefully and understand its contents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the view of the Hon ble Supreme Court in the case of Lakhmani Mewal Das reported in 103 ITR 437. It was a further submission that the so-called improvement to the reasons recorded for reopening could not be considered in so far as only such reasons recorded for obtaining the sanction for the purpose of reopening could only be considered and none other, in view of the decision of the Hon ble Kolkata High Court in the case of Equitable Investment Co. (P) Ltd. reported in 174 ITR 714. The ld. AR further submitted that identical reasons had been recorded for the purpose of reopening in the cases of various Mani Square Ltd. group which had approached the Hon ble Settlement Commission, which had in its order dated 03.06.2014 in para 38 has held as follows: 38. Jama Kharchi transactions through Entry Operator Sri Suresh Kejriwal: (i) The CIT(DR) submitted, that in course of a survey action conducted in the case of Yuthika Vyapaar Ltd. on 05.11.1999, entry Operator Mr. Suresh Kejriwal had accepted receipt of ₹ 1.25 crore as commission on providing entries to various companies including the applicant company. In his supplementary report, the department has furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the applicant to file the copy of complete accounts along with the details of interest on TDS deducted. The details were filed by the applicant on 3.4.2014. It was submitted by the AR that the applicant and its group is not acquainted with Shri Suresh Kejriwal and they had not entered into any jama kharchi transactions with Shri Suresh Kejriwal. The loan received from them has since been re-paid and many of the repayments are before the date of search. (v) We have gone through the submissions made by the A.R. and the conduct of the applicant. We find there are repayments made to these companies even in the period prior to the date of search. The interest has also been paid to these companies by cheque on which the TDS have been deducted. The submissions of the AR that in case of jama kharchi transactions, normally the entries/funds are carrying for longer durations, while in the case of the applicants the repayments are within short period also. We, therefore, do not find any reason to accept the submissions of the department that the additions are required to be made in this settlement in the manner suggested by the department. 4.2 It was a submission that no evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als available. Reasons had been correctly recorded and the requisite approval obtained. It was a submission that in the statement of Shri Suresh Kejriwal, only the main parties had been referred to. It was further a submission that Shri Suresh Kejriwal had given a disclosure, which the ld. DR pointed out at page 79 of the paper book, which reads as follows: To, Shri Ajay Kumar Keshari, Assistant Director of Income Tax (Inv.) Unit-IV(5), Kolkata, P-13, Chowringhee Square, 5th Floor, Room No.1, Kolkata 700 069. Sir, Reg: Voluntary disclosure of ₹ 1.25 crores in pursuance of survey proceedings u/s.133A in the case of Respect Vyapaar Pvt. Ltd., Akash Net Sales Pvt. Ltd. and Others A survey was conducted at the office premises of Respect Vyapaar Pvt. Ltd., Akash Net Sales Pvt. Ltd. and Others at P-41, Princep Street, 6th Floor, Room No.611 and 612, Kolkata-700 072. Several books of account, CPUs were found and impounded, out of which some incriminating documents in respect, of Ayush Enterprises, Subham India Pvt. Ltd., Saket Vinimay Pvt. Ltd. and Oliver Moulds and Plastics Pvt. Ltd. were found, in whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled statement and disclosure are the foundation along with the appraisal report. At the outset, a perusal of the statement from Shri Kejriwal shows that this is the statement taken in the course of survey. This statement looses its evidentiary value in so far as the statement recorded in the course of survey has no conclusive evidentiary value. It is not recorded under oath. No oath has been administered. The very foundation of the appraisal report and the reopening fail because of this primary defect. Assuming, we are giving evidentiary value to this statement, in question no.3 in the statement as has been specified by the ld. CIT,DR, list of the main parties to whom the said accommodation entries had been provided by Saket Vinimay Pvt. Ltd. has been listed out 13 in number. When these names are compared with the chart in the assessment order, which is specifying the reasons for reopening, shows that many of the names in the list tallied with that in the chart but the assessee s loan amount is the highest. Obviously, assessee s name must be the main person that Shri Suresh Kejriwal would have remembered, as the assessee is the person to whom such a huge loan had been extended. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence to show that the loan taken by the assessee is an accommodation entry. There is neither any statement nor documentary evidence to question the genuineness of the loan taken and repaid by the assessee. Even further, under similar circumstances, one Judicial forum, being the Hon ble Settlement Commission in its order in the case of Mani Square Ltd. group, had reached a specific conclusion that it has not found any reason to accept the submissions of the department that the additions are required to be made, as suggested by the department. One Judicial authority having taken this view and this view having not been dislodged by any superior courts nor this view having been shown to have been obtained through fraud or misrepresentation and the Revenue having failed to dislodge this finding, we are of the view that the genuineness of the loan transaction of the assessee with M/s. Saket Vinimay Pvt. Ltd. is liable to be treated as a genuine transaction and the additions made by the AO for both the assessment years and upheld by the ld. CIT(A) stand deleted. 7. In the result, the appeals filed by the Assessee are allowed. (This Order is pronounced in the Court on 9.9.2014.) ..... 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