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2016 (6) TMI 136 - DELHI HIGH COURT

2016 (6) TMI 136 - DELHI HIGH COURT - TMI - Validity of reopening of assessment - accommodation entries - Held that:- The reasons for the reopening of the assessment have been perused by the Court. Mr Manchanda tried to impress upon this Court that since Mr. Gupta was the Director of the Assessee company, he was responsible for the money earned by it as commission for providing accommodation entries and, therefore, it should be taken to be money earned by the Assessee company.

The Cou .....

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AO did not satisfy the requirement of Section 147 (1) of the Act as regards the formation of opinion that the income of the Assessee had escaped assessment. - Decided in favour of assessee - ITA 86/2015 - Dated:- 24-5-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Mr Ashok Kr. Manchanda, Senior Standing Counsel. For the Respondent : Ms Rashmi Chopra, Advocate and Mr Ruchesh Sinha, Advocate. ORDER 1. The question of law framed by this Court while admitting this appeal against the .....

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2008 passed by the Assessing Officer ( AO ). A survey was conducted in the case of one Mr Subodh Gupta, Chartered Accountant ( CA ) on 30th October, 2003. During the course of that survey it transpired that the Director of the Respondent Assessee was involved in providing bogus accommodation entries. Specific reference was made to the reply given by Mr Gupta to question No.24 in which he is said to have admitted that the companies floated by him, including the Assessee company, did not possess .....

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elaborate-suppose entity A requires fund of ₹ 1 crore, it is asked to give ₹ 1,00,50,000/- crore. This amount is then routed in the system by way of selling already acquire shares of other companies. Once, this money of ₹ 1 crore enters the account of my company that entries are parted/given to A . In this way unaccounted money of A goes in his hands as loan/share application money/share money etc. in the name of my company which practically and reality did not have any asset. .....

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tatement of Shri Subodh Gupta that he was charging a premium of 0.50/0 to 1.50/0 on the amount of entry given, it would thus be fair to estimate amount of premium received on such investment at 1% which will be added to the income to the assessee." The AO further held that the amount of investment made by the assessee company during the year would also added to the income of the Assessee company as income from undisclosed sources on protective basis till the amount of the accommodation entr .....

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reby there has to be some substantive assessment/addition first which enables the AO to make a protective assessment/addition. In the present case, the AO proceeded to make protective assessment by way of reopening of assessment of the assessee appellant company without being a substantive assessment on the date of assumption of jurisdiction u/s 147 of the Act which is not permissible as per decision of ITAT, Mumbai in the case of M.P. Ramchandran v DCIT (2009) 32 SOT 592 (Mumbai) and Sursh K Ja .....

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