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2015 (7) TMI 841 - ITAT DELHI

2015 (7) TMI 841 - ITAT DELHI - TMI - Unexplained cash credits in assessee's bank account - addition u/s 68 of the Act, on the ground that the assessee was not able to furnish the explanation regarding the nature and source of cash and other deposits and held the amount as unexplained - CIT(A) deleted the addition - Held that:- CIT(A) after going through the written submissions of the assessee, without seeking a remand report from AO, comes to the conclusion that modus-operandi of the assessee w .....

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s operandi does not come out of the written submission or emerge from the records before us. We are unable to understand how the CIT (A) accepted the modus simply accepting the version of the assessee without at least calling for the bank statement of the two companies wherein he is the Director to verify whether the contention of the assessee saying that he is only an accommodation entry provider is correct or not; or by calling for remand report and find out to whom accommodation entries were .....

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he Commissioner of Income-tax (Appeals)-XXX, New Delhi dated 28.10.2011. The relevant assessment year is 2008-09. 2. The effective grounds of appeal taken by the revenue read as under : On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in:- 1. Reducing the addition of ₹ 4,29,98,561/- to ₹ 4,39,985/- rightly made by the A.O. on account of unexplained cash credits in assessee's bank account. 2. Directing the A.O. to compute the income of the asse .....

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case for 01.02.2010. In response to the notice, the assessee himself appeared and was asked to file the details of his income and financial transaction during the financial year. Subsequenlty, notices u/s 142(1) of the Act along with the detailed questionnaire were served on the assessee but these notices were remained uncomplied with. In view of the non-compliance of the notices, the AO issued show cause notice u/s 271(1)(b) and the assessee replied the same with partial details as per the que .....

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ash transactions. However, the assessee did not give any reply to the said question and sought for time to provide the details about the nature and source of cash deposits. The AO recorded the statement of the assessee and the matter was adjourned to 09.11.2010 and later on, adjourned to 22.11.2010 on the request of the assessee. Meanwhile, the AO verified the cash transactions from the Punjab National Bank and the Bank informed that the said account was maintained by Shri Sandeep Sharma in the .....

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every deposit entry was followed by withdrawal of identical amounts. On 22.11.2010 when the statement u/s 131 of the assessee was resumed, the AO again asked the assessee to provide the details of transactions and source and nature of deposits in the said account maintained with Punjab National Bank and the assessee accepted that he was proprietor of M/s. Om Weighting India and Director of two companies i.e. M/s. Prolon Marketing Pvt. Ltd. and M/s. Ja Gang Plastics (India) Private Limited. Howe .....

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ttended nor any written reply was submitted by the assessee. The AO observed that assessee was not having any details in his possession about the huge amounts of deposits totaling to ₹ 4,29,98,561/- and the assessee was also not filing any supportive evidences or explanations regarding nature and source of deposits appearing in the bank account of the assessee. The AO, after going through the banks details and the statement recorded by the assessee, observed as follows :- (i) Sh. Sandeep S .....

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by him in the name of M/s Om Weighing India, his proprietary concern. The evidence is obtained from the bank and is placed on records. (iii) He has transferred almost whole of the amount by cheques to M/s Prolon Marketing Pvt. Ltd. and M/s Ja Gang Plastics (India) Private Limited in which he is director. (iv) Despite providing with more than sufficient opportunities the assessee didn't reveal the source of funds amounting to ₹ 4,29,98,561/- in his account in the PNB. (v) He has no exp .....

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of ₹ 4,29,98,561/- found deposited in his account in the PNB during the F. Y. 2007-08 is unexplained income for A.Y. 2008- 09 and the same has not been offered for tax as per the provisions of the Income Tax Act 1961. The AO, in view of the above mentioned facts, observed that the assessee did not come forward to give any explanation regarding the nature and source of cash and other deposits to the tune of ₹ 4,29,98,561/- in his bank account with PNB and held that this amount stood .....

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as been reproduced by the CIT (A) in his order was pleased to partly allow the appeal of the assessee and directed the AO to estimate the assessee s income as commission business for providing entries to parties @ ₹ 1/per ₹ 100/- and thus calculated assessee s income as ₹ 4,39,985/- in addition to his other income returned by him. . The relevant finding of the CIT (A) is reproduced as under :- 3. I have considered the written submissions of the AR, assessment order of A.O., gro .....

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eting Pvt Ltd. and M/s Ja Gang Plastics (India) Pvt. Ltd. These two companies then give cheques to beneficiaries, who have given cash to the appellant for getting entry through banking channel. In the process, the appellant gets commission @ 0.25% to 0.5% or more in cash, which is his profit or income from business of providing entry to those people. The issue involved here is identical with the issue of Shri Manoj Agrawal & Bemco Jewellers Private Ltd (BJPL) which had been decided by ITAT S .....

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f, traveling to bank and others place and other office expenses. I have discussed the matter with the appellant and his AR, persuaded them to estimate the commission income at Re.1 per 100 for estimation of his income from providing entry operations through banking channel under the head business income. These operations are bogus and accommodation entry to give relief to beneficiaries by treating such entries as loan / gift / investment and reducing tax burden in their hands. The AR of the asse .....

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ant's figure with that obtained by A.O. from bank and reconcile the total cash credit in appellant's a/c, on which cheques have been issued. Since the appellant admits bonafidely to have given such cheques to parties through two of his companies, I estimate appellant's income from commission business on providing entries to parties @ Re.1/- per ₹ 100/- and calculate his income at ₹ 4,39,98,561 x 1/100 = ₹ 4,39,985/- in addition to his other incomes returned and asse .....

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evidences against the findings of the AO that the amount under dispute was unexplained income of the assessee. He also pointed out that even the alternate prayer before the Ld CIT(A) was to consider the peak-credit, but the Ld CIT(A) has gulped whatever the assessee said and treated the income as from commission for providing accommodation entry, which, according to Ld DR, is erroneous. He pleaded that the order of the CIT (A) may be set aside and that of the AO upheld. 6. On the other hand, ld .....

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commodation entry for commission @ 0.25% to 0.50% or more in cash and that being his profit or income should only be taxed and not the entire amount deposited in his bank account. Ex-consequenti, ld. CIT (A) estimated the income of the assessee @ ₹ 1/- per ₹ 100/- and calculated the income as ₹ 4,39,985/- along with other income of assessee which is reflected in his return. The Revenue is aggrieved by the said impugned order of the ld. CIT (A). In this case, we find that the AO .....

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r further examination, he did not turn up. Thereafter, we find that the AO completed the assessment on 16.12.2010, u/s 144 of the Act by stating the noncooperation conduct of assessee. Later, we find that the assessee contended before the ld. CIT (A) that he had sent a letter dated 16.12.2010, wherein he has explained and admitted his business of providing accommodation entries, which could not have been acted upon by the AO because he passed the order on 16.12.2010, so the assessee wanted the s .....

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n Punjab & National Bank; and (c) He does not divulge anything about providing accommodation entries etc before the AO till the assessment order is passed. So, we find that the AO felt helpless because assessee did not disclose anything before him, so he resorted to section 144 assessment, without resorting to any investigation as to where the money deposited in assesse s bank account is being transferred and where the money trail ends. Whereas, we find that CIT(A) after going through the wr .....

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