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2016 (7) TMI 664 - ITAT DELHI

2016 (7) TMI 664 - ITAT DELHI - TMI - Allowability of expenditure - mere accommodation entry or not - Held that:- As there being no change in facts and circumstances of these cases respectfully following the order of the Tribunal in Konichiva Builders Ltd. [2014 (4) TMI 533 - ITAT DELHI ] the issue of allowability of expenses in similar lines is restored to the AO herein also requiring the assessee to prove its claim with cogent material the limited plea of the assessee is accepted - ITA No. 307 .....

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as facts, circumstances and the submissions of the parties before the Bench remained identical in all these appeals. 2. Before these appeals are taken up for consideration it is seen that the Registry has pointed out a delay of 30 days in the filing of these two appeals. Addressing the delay the Ld. AR inviting attention to the condonation of delay petition in filing each of these appeals submitted that the impugned order had been received by the assessee when the father of Sh. S.K.Gupta who is .....

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t was submitted that the delay may be condoned. The Ld. DR considering the order of the Tribunal and the petition of the assessee had no objection if the appeal is decided on merits by condoning the delay in each of the appeals. 3. Considering the facts on record and the submission of the parties we are of the view that the delay pointed out by the Registry deserves to be condoned. Respectfully following the order of the Co-ordinate Bench the delay in the appeals is condoned. 4. Ld. AR inviting .....

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t order by the Tribunal which has been extracted by the AO in the present proceedings also. Accordingly it was his submission that similar prayer was made in these two appeals. 5. The Ld. CIT DR considering the order of the Tribunal in Konichiva Builders Ltd. had no objection if identical direction is given herein also. 6. Before we proceed to decide the limited plea of the assessee, we deem it appropriate to first refer to the facts on record. The facts of the case as emanating from the assessm .....

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u/s 132 of IT Act, 1961 was conducted in the case of various companies owned or controlled by him and also in the case of different individuals connected with the said companies. This is one of such cases covered under search & seizure action. Consequent to search action the case was centralized with this office and as such notice u/s 153A of IT Act 1961 was issued to the assessee on 25-2-2008. 1.1.Background of the case . While conducting discreet inquiries, the investigation wing gathered .....

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s main office premises at H-108, Connaught Place. The list of these Companies is as under:- 1. Konichiva Builders Ltd. 2. B.T.Technet Ltd. 3. Swen Television Ltd. 4. T & G Quality management consultants Ltd. 5. Hitech Computech Pvt. Ltd. 6. Centenary software pvt. Ltd 7. Trump and Gates 8. T & G Quality Servrces 9. GTM Konichiva Builders 10. Gupta Rakesh Associates 11. Era Advertising and Marketing Coy Pvt Ltd 12. PG Travels Hindustan Com 13. Shark Communication Pvt Ltd 14. Spg Finvest P .....

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td 32. J.A. Financial & Marketing Consultants Pvt. Ltd. 33. Saksham Infocom Pvt Ltd 6.1. Considering the following facts which have been summed up in the impugned order the AO in the year under consideration made an addition of ₹ 1,97,938/-. The relevant extract is reproduced from the impugned order:- 2.1.1. The AO has given various findings about these companies including the appellant company based on the reports from the Investigation Wing and his own proceedings during the impugned .....

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ctive beneficiaries. (ii). Shri. S.K. Gupta did not possess the necessary infrastructure or the required man power to render such variety of services through these companies. (iii). These companies were merely issuing accommodation bills for various expenditure to various entities for the sake of tax evasion. Such biils and invoices were found and seized from the premises covered u/s 132 of the Act. (iv). No other evidence was found during search indicating any such actual services rendered by t .....

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ccounts, hand written cash books and ledger accounts, various cheque books and blank cheques signed by various authorized signatories/Directors of the appellant company and other companies were found and seized from Shri. S.K. Gupta's premises. Some of these Directors/Authorized Signatories were found to be employees, relatives or friends of Sh. S.K.Gupta. (vii) The Assessing Officer has given elaborate and adequate opportunities to the appellant company to explain their matter during the as .....

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ng the state of affairs of the assessee. Husband of Smt. Saroj Gupta, director of the assessee company and results of the assessment that assessee is engaged in the accommodation entry business and not doing any genuine sale & purchase as claimed in the final account statements annexed with return of income. ii. Since assessee has failed to produce any regular books of account, sale & purchase and expenses vouchers the book results shown by the assessee are liable to be rejected by takin .....

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bills have been procured. v. The assessee failed to provide documentary evidences in the form of rent deeds/receipts and other expenses vouchers and bills, which could establish the genuine credentials of the assessee as a genuine software design & development and other IT related services provider to the genuine customers. Even the big corporates like Reliance Industries Ltd, NIIT, HCL Group, FIITJEE. Mothersons Sumi Innovative & Design Ltd, ASL Insurance Brokers Pvt Ltd, Accord Insuran .....

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ourcing, where from it could issue sale bills to these corporates or other desirous companies/concerns. (i) The assessee has failed to correlate its surrender income in different assessment years, with the actual deficiencies of the business relevant to accommodation entry business on account of providing accommodation sale bills, expenses bills in the form of job work charges, advertisement charges. web designing charges-and providing investment entries. (ii) The assessee has intact indulged in .....

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otal income as per 153 A return ₹ 3396/- Add:- Income earned from Accommodation entry Business (a) On the Accommodation Sale Bills/Turnover @ 2% of ₹ 1501913/- Rs.30038/- (b) On account of bogus fresh investment entries @2% of ₹ 83,95,000/- ₹ 167900 ₹ 201334 6.3. In appeal before the First Appellate Authority the CIT(A) held as under:- 2.3.5. Taking into consideration the totality of facts and circumstances of the case as discussed hereinabove, it is held that the a .....

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puted the total income accordingly. This disposes off all the grounds of appeal taken by the appellant against the impugned assessment order. 7. Aggrieved by this the assessee in appeal before us has raised the following grounds:- That on the facts and in the circumstances and in the law the authorities below erred in : 1. Determining taxable income of ₹ 2,01,330/- as against the returned income of ₹ 3,396/-; 2. Passing order U/s 143(3) r.w.s 153A of The Income Tax Act, 1961 relying .....

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n to confine his arguments to the limited plea that the expenditure incurred by the assessee for earning the income by way of providing accommodation entries may be allowed for which purposes the issue may be restored to the AO. A perusal in the decision in Konichiva Builders Ltd. shows that facts have been appreciated in the following manner:- 4. The assessee in this case belongs to a group of about 33 cases of various companies operated and controlled by one Sh. S K Gupta Chartered Accountant .....

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tion Wing and in post search enquiries before the AO, he admitted in detail, his modus operandi of providing accommodation bills through the assessee company and another companies in lieu of cheque received and cash return to the beneficiaries. There was also seizure of duplicate set of books of accounts, cheques signed by various authorised signatories / Directors of the assessee company and other companies (which were found to be employees, relatives or friends of Sh. SK Gupta) from Shri S.K. .....

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in appeal. 8.1. The issue pertaining to books of accounts etc. was considered by the Coordinate Bench in the following manner:- 6. The first issue pertains to rejection of books of accounts. Ld. Counsel of the assessee in this regard submitted that he is not vehemently pressing this issue. We find that in the search and on the basis of material recovered and statements obtained it has been duly established that assessee was indulging in bogus accommodation entries. No actual sale and purchase w .....

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the basis of the addition by way of a estimate of income at the 2%. It is further seen that considering the arguments advanced on behalf of the assessee which are found recorded in the following para 10. The issue has been remitted to the AO in para 11 by way of speaking direction. These specific paras are extracted from the order of the Co-ordinate Bench relied upon by the assessee:- 8. Heard both the parties. On this issue, we find that it is established that assessee was engaged in the busin .....

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ies through your various group companies. Ans. The average commission earned by various group companies in providing different type of accommodation entries was to the tune of 1.5% to 2.0% out of which I have to incur our normal expense on a/c of salary, rent, bank charges, conveyers, telephone, water and electricity. 9. On the basis of statements as well as prevalent market condition, the AO has estimated the income @ 2% without allowing any amount for the expenditure. Ld. CIT(A) has affirmed t .....

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that the commission was to the tune of 1.5% to 2%. Hence, estimation of commission income @ 2% cannot be disputed. However, at the same time it has also been submitted in the same statement that the assessee has to incur the expenditure on account of salary, rent bank charges, conveyers, telephone, water and electricity. However, it is also settled that mere submission that expenditure has been incurred cannot lead to allowance of expenditure. Assessee has to prove with cogent material that the .....

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