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2015 (3) TMI 881 - ITAT DELHI

2015 (3) TMI 881 - ITAT DELHI - TMI - Unexplained credits received - deposits in appellant's bank accounts received from various intermediaries operated by Sh. SK Gupta to provide accommodation entries to various beneficiaries against cash received from them - CIT(A) confirming the addition made u/s 68 - Held that:- there is an order of the Settlement Commission as well as the Additional Commissioner of Income Tax under Section 144A holding that Shri S.K. Gupta was providing accommodation en .....

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onsidering the totality of these facts and the logical consequences of the order of the Settlement Commission as well as of Additional CIT under Section 144A, we have no hesitation to hold that the addition under Section 68 cannot be made in the case of the conduit companies. Therefore, we delete the addition made under Section 68 in the case of all the nine companies, which are admittedly conduit companies of Shri S.K. Gupta. See M/s Omni Farms Pvt. Ltd. & Anr. vs. DCIT [2015 (1) TMI 1119 - ITA .....

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03.2013 is bad in law and on facts. 2(a). That on the facts and in the circumstances of the case the ld. CIT(A) is not justified in confirming the addition of ₹ 2,48,65,600/- made u/s 68 of the Income-tax Act, 1961 representing deposits in appellant's bank accounts received from various intermediaries operated by Sh. SK Gupta to provide accommodation entries to various beneficiaries against cash received from them. 2(b) That the appellant company being one of 32 conduit companies opera .....

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as erred in law by failing to appreciate the fact that the complete list of beneficiaries found in the seized records and available with the Department were filed during the course of assessment proceedings. The Ld. CIT(A) has wrongly observed that the list of beneficiaries did not exist. 2(d). That the Id. CIT (A) has ignored the judgment of the jurisdictional High Court and the Tribunals squarely on the issue even though the same were cited and form part of the written statements reproduced by .....

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and for reasons unwarranted in law. The Ld. CIT(A) has stated the addition should be made in the hands of the appellant company so that the beneficiaries should not be able to state that the money does not belong to them. 2(g) That the Ld. CIT(A) has erred in ignoring the fact that income can be taxed only if the Act so provides and the taxability of income cannot be determined on the basis of the subjective feeling and the attitude of the appellate authority. 3. That the Ld. CIT (A) has further .....

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in response to the enhancement notice. 5. That the Ld. CIT(A) has erred in not allowing relief on the following issues raised as additional ground having effect of income being taxed twice. a) ₹ 2,41,57,800/- twice added in the hands of the appellant as well as in the hands of the various other conduit companies from whom the amounts were received through account payee cheques details which are given in the paper book. b) Cash deposited into bank account out of the cash available with the .....

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cided in favor of the assessee by the ITAT, E Bench, New Delhi in the case of M/s Omni Farms Pvt. Ltd. & Anr. vs. DCIT vide Order dated 28.1.2015 passed in ITA No. 3477/Del/2013 (A.Y. 2008-09) & Others. Therefore, he requested that the present appeal filed by the Assessee may be allowed in the same terms. 4. On the contrary, Shri Gaurav Dudeja, Sr. Departmental Representative relied upon the impugned order passed by the Ld. CIT(A). 5. We have heard both the parties and perused the releva .....

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in which there are 27 companies and assessee company name is at Serial No. 14 of the said Annexure-A. For the sake of convenience, the contents of AnnexureITA A attached by the AO alongwith his assessment order, which is reproduced as under S.No. Name of Company Unexplained deposits in the Bank (in Rs.) (C) Prorata Disallowance (on protective basis) 1 AGM Holding Ltd 627019448 95544190 2 Advantage Software Pvt. Ltd. 361243 117652 3 Anda Industries Limited 1501200 468162 4 Anjali Gupta 18725676 .....

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KSA Chits (P) Ltd. 24865600 7754543 15 Namrata Marketing Pvt. Ltd. 108251085 33758994 16 Omini Farms Pvt. Ltd. 21118716 6586046 17 Optimum Credits Limited 46579934 14526337 18 Passion Chits Co. Pvt. Ltd. 4009850 1250505 19 Rapid Packaging Limited 11491500 3583719 20 SJ Securities Pvt. Ltd. 54572124 17074902 21 Sino Credits & Leasing 902726445 281522692 22 VA Foods Pvt. Ltd. 17013266 5305727 23 Vasudeva Farms Pvt. Ltd. 101662000 31704134 24 Viagra Trading Co. Pvt. Ltd. 14415117 4495473 25 Vij .....

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1 After perusing the above mentioned Annexure-A, we find that the name of the assessee company is at Serial No. 14. After going through the order dated 28.1.2015 passed by the ITAT E Bench in ITA No. 3477/Del/2013 (A.Y. 2008-09) M/s Omni Farms Pvt. Ltd. is at Serial No. 16; M/s Passion Chits Pvt. Ltd. vs. DCIT who filed ITA No. 3478/Del/2013 (A.Y. 2008-09) is at Serial No. 18; M/s Katson Hotel and Developers Pvt. Ltd. (formerly known as Falcon Freight Pvt. Ltd.) vs. DCIT who filed ITA No. 3480De .....

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at Serial No. 26 and M/s Namrata Marketing Pvt. Ltd. vs. DCIT who filed ITA No. 3621/Del/2013 is at Serial No. 15. We find that the issues involved in the aforesaid appeals are similar to that of the issue involved in the present appeal and same has been decided in favor of the assessee and the additions were deleted. For the sake of convenience, relevant paragraphs of the ITAT s order dated 28.1.2015 passed by E Bench, New Delhi in the case of M/s Omni Farms Pvt. Ltd. & Anr. vs. DCIT in ITA .....

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paragraph 2, has recorded the following finding:- 2. A survey operation was conducted in the S K Gupta group of cases on 20/11/2007 at 308, Arunachal Building, 19, Barakhamba Road, New Delhi - 110001 and 1007-1008, Arunachal Building, 19, Barakhamba Road, New Delhi - 110001. The assessee company is one of the group concerns of S K Gupta Group. During the course of survey proceedings and assessment proceedings, Sh SK Gupta admitted that he had been providing accommodation entries to various pers .....

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y to visit banks and do other work like collection of cash etc. most of the other persons involved are on part time basis. The part time employees are called as and when required to sign documents, cheque books etc. Sh. S.K. Gupta has also roped in his own relatives for operation of various bank accounts and for filing the income tax returns. It was seen that Sh. S.K. Gupta was controlling more than 35 companies from a small office premises without sufficient infrastructure or employees to carry .....

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s through two to four accounts to vie the color of genuineness to these transactions. 13. Thus, the Assessing Officer himself has recorded the finding that the assessee company is one of the group concerns of S.K. Gupta group and Shri S.K. Gupta admitted that he had been providing accommodation entries to various persons through a large number of concerns effectively controlled by him. The Settlement Commission also has recorded the similar finding that Shri S.K. Gupta was providing entries to v .....

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aries of almost the same amounts . Thus, after examining the facts, the Settlement Commission has recorded the finding that the cash deposited in the bank account of the intermediary companies was the cash received from mediators on behalf of the beneficiaries who wanted to avail the accommodation entries. It is further observed by the Settlement Commission It is further noted that there are overwhelming evidence in the impounded material as enclosed by the applicant in the paper book which show .....

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y but moneys of the beneficiaries to whom cheques were issued . Thus, the Settlement Commission has recorded the clear cut finding that Shri S.K. Gupta was only entry provider and for the purpose of providing entries, he utilized the various group companies which included the companies under appeal before us. He used to receive the cash from the beneficiaries who wanted to avail the accommodation entries and after depositing the same in the bank account of various companies, he issued the cheque .....

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ion before the Hon'ble Jurisdictional High Court. 14. That Hon'ble Jurisdictional High Court has considered the binding nature of the decision of the Settlement Commission in the case of Omaxe Ltd. & Anr. (supra) and held as under:- Orders of Settlement Commission are final and conclusive as to matters stated therein. The matters necessarily could comprehend disputed questions, items or heads of income, disallowance, etc. or variants of it, but always with reference to a particular a .....

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at had been suppressed from the Commission. If such is the case, it would be only logical that the Commission itself should be approached for a declaration that its order of 17th March, 2008 is a nullity. Allowing any other authority, even by way of a notice under s. 153C, would be to permit multiple jurisdictions which can result in chaos. After all non-disclosure or suppression of information in respect of what is required to be revealed to the concerned authorities is akin to fraud and if it .....

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A) denied to follow the order of the Settlement Commission remarking that all the relevant facts might not have been produced before the Settlement Commission. However, learned CIT(A) has not pointed out any specific facts which were not placed before the Settlement Commission. On the other hand, reading of the order of the Settlement Commission shows that all the relevant material including the seized material were duly considered by the Settlement Commission. Moreover, Hon'ble Jurisdiction .....

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isdictional High Court, in our opinion, the order of the Settlement Commission is binding on the Income Tax Department and all the logical consequences of the said order are to be given effect to. 16. We also find that the Additional CIT has issued direction under Section 144A in this regard. The Assessing Officer had asked for the specific direction of the Additional CIT in respect of the group companies which has been mentioned by the Additional CIT in paragraph 2 of his order under Section 14 .....

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e the facts remain the same. The Additional CIT has discussed in detail that when the Revenue is taking action in the hands of the beneficiaries, if the addition is made in the case of conduit entities, it will dilute the case of the Department against the beneficiaries. The order of the Additional CIT under Section 144A is binding on the Assessing Officer which is evident from Section 144A which reads as under:- 144A. A Joint Commissioner may, on his own motion or on a reference being made to h .....

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vided that no directions which are prejudicial to the assessee shall be issued before an opportunity is given to the assessee to be heard. Explanation. - For the purposes of this section no direction as to the lines on which an investigation connected with the assessment should be made, shall be deemed to be a direction prejudicial to the assessee. (emphasis by underlining supplied by us) 17. Thus, there is an order of the Settlement Commission as well as the Additional Commissioner of Income Ta .....

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