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DCIT, Central Circle-13, New Delhi Versus Esha Securities Pvt. Ltd.

2017 (9) TMI 1027 - ITAT DELHI

Unexplained credits received by the assessee company from Shri SK Gupta - Held that:- The facts of the relevant issue involved in the appeal are similar to the facts discussed in the appeal of the assessee for assessment year 2004 05. During the year the information found from the laptop of Mr. S. K. Gupta was that assessee has obtained and accommodation entry of ₹ 5 255000 from that particular person. The assessee could not produce the basic details before the Ld. assessing officer on t .....

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eal of the revenue for assessment year 2005 06 reversing the finding of the Ld. CIT appeal in deleting the addition of ₹ 52555000/-on account of unexplained income with respect to accommodation entries provided by Sh. S. K. Gupta, who is beneficiary is assessee. - ITA No. 3357 And 3358/Del/2013 - Dated:- 13-9-2017 - SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Revenue : Ms. Rachna Singh, CIT DR For The Assessee : None ORDER PER PRASHANT MAHARISH .....

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company from Shri SK Gupta and the various companies controlled by him without appreciating the fact that Shri SK Gupta is an established entry provider. 3. The Revenue has raised the following grounds of appeal for Assessment Year 2005-06:- 1. The order of the ld CIT(A) is not correct in law and facts. 2. On the facts and circumstances of the case the ld CIT(A) has erred in law in deleting the addition of ₹ 5077250/- on account of unexplained credits received by the assessee company from .....

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007, and assessment was passed on the income of ₹ 2 060 4010 under section 143 (3) read with section 147 of the income tax act on 31/ 12/ 2007. Subsequently search was conducted under section 132 of the income tax act on M/s Bhushan steel group of cases on 03/03/2010. During the search, documents belonging to the assessee company have been found and seized. Therefore, notice under section 150 3C was issued on 23/11/2010 recording the satisfaction on 23/11/2010 and copy of the satisfaction .....

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paper companies where his family members or acquaintances or the directors and major shareholders. In the top was also impounded during the course of survey with the detailed accounts of such accommodation entry was recorded in tally software. In that, particular software date was details of cash received and issuance of checks with the dates, check numbers name of issuing entities etc were mentioned. It also recorded the amount of commission warned by the Sh. S. K. Gupta will stop his statemen .....

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ount of ₹ 2 036 5000 was recorded. Therefore, the Ld. assessing officer proceeded to determine the correct nature of these entries. 6. During the assessment proceedings, the assessee was provided with the details of entry provided stating that date and the amount with respect to various parties from whom the accommodation entries were obtained. These parties were also named by S K. Gupta, as the entreaties from whom he used to provide the accommodation entries. The assessee tried to explai .....

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the reason that Mr. S. K. Gupta categorically admitted in statement before the investigation wing that the various companies manage and control by him did not have any actual business activity but are paper companies. Further assessee did not produce any documentary evidence regarding the purpose of lending the money to Sh. S. K. Gupta and other companies controlled by him as claimed by the assessee. Before the Ld. assessing officer, assessee has not produced the contract notes of sale and purch .....

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A and 153C, however he deleted the addition of ₹ 2 100 7350/- despite recording the facts are simply in his order that Sh. S. K. Gupta is an entry operator. He merely believed the confirmation of the statement of Sino securities and mutual benefit trust, S. K. Gupta and Mitsui securities for deleting the above addition. He also deleted the above addition for the simple reason that capital gains offered to tax on the sale is transaction have been charged to tax in the original assessments p .....

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assessee remained non-responsive to the dates of hearing. Therefore, the issue in this appeal is to be decided on the merits of the case. 10. The Ld. CIT (DR) vehemently supported the order of the Ld. Assessing officer. Her main argument was that the accounts revealed that the assessee has obtained accommodation entries. She submitted that all the three names matched with the transaction shown by the assessee. She further submitted that these are the shell companies operated by Mr. S. K. Gupta, .....

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ty, creditworthiness, and genuineness of these transactions are not proved and shall of shares are proved bogus and no evidences were supported by assessee before the Ld. assessing officer, the Ld. CIT appeal crossly erred in deleting the addition. She also stated that Ld. CIT appeal was grossly erred in stating that no opportunity of cross-examination was given by the Ld AO to the assessee. See submitted that a specific opportunity was given to the assessee, but it was not availed by the assess .....

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ven the assessee has not denied entering into the transaction with Mr. S. K. Gupta, or all those entities, which are named by the Ld. assessing officer as accommodation entry providers. The only claim of the assessee was that the transactions entered into with these parties are the transaction of purchase and sale of shares, which are recorded in the books of accounts. However, assessee has not produced contract notes of sale and purchase of such securities, which have been claimed to be purchas .....

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en collected from the laptop, which was found during the course of survey at his office showing that these are accommodation entries. The assessee was named as one of the beneficiary of the transactions of accommodation entries provided by Sh. S. K. Gupta. This was undisputedly confessed by the Shri S K Gupta and confirmed by both the lower authorities. During the course of appellate proceedings on the direction of Ld. CIT (A), an opportunity of cross-examination of Mr. S. K. Gupta was granted t .....

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rally the assessee will offer them as a sale purchase transaction offering capital gain amount thereon. However, it is for the first appellate authority who is the highest authority under the income tax act to decide the dispute of the assessee, decided this issue in such a blindfolded manner that he accepted such as shallow argument of the assessee. We are of the opinion that even transaction of purchase and sale of shares can also be part of accommodation entries, irrespective of the fact that .....

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odation entry providers are involved in such transaction. The Ld. CIT A was also swayed by the fact mentioned by the assessee before him that all the transactions are entered by him through account payee cheques or banking channel. We are also surprised that despite there was an allegation of accommodation entry provider providing those entries to the assessee, the Ld. CIT A, believed them to be genuine transactions. The accommodation entries itself shows that the cheques are to be provided. Obv .....

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does not have material difference except that when the entries are passed through banking channel. It has some level of KYC compliance. Use of banking channel makes an entry neither genuine nor ingenuine. With respect to the opportunity of cross-examination of Mr. S. K. Gupta to the assessee was not availed by the assessee for obvious reasons. Therefore, the Ld. CIT appeal has grossly erred in holding that AO did not offer cross-examination of the entry provider. Even otherwise, also when the a .....

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ase of the assessee that he provided the complete details and Ld. assessing officer did not make any effort in proving those details as false. In the present case, the assessee could not even produce the basic details to prove the entries recorded in its books of accounts are true and correct. Therefore, it is incorrect for the Ld. CIT appeal to say that assessee officer has obtained certain information through private enquiries and which have not been confronted to the assessee. In the present .....

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that if entries are through banking channel they are necessarily genuine in nature. We are sorry to say that such a statement. Therefore, in the overall circumstances of the facts of this case, we are not of the opinion that Ld. that CIT A was correct in deleting the above addition. On the order of the Ld. CIT A, less we comment is better. In view of the above facts and circumstances of the case, we reverse the finding of the Ld. CIT (A) and confirmed the addition of ₹ 2 100 7350/- made by .....

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IT A dated 13/03/2013 wherein the addition of ₹ 5 077250/- with respect to the unexplained credit received by the assessee from Sh. S. K. Gupta was deleted. 15. The facts of the relevant issue involved in the appeal are similar to the facts discussed in the appeal of the assessee for assessment year 2004 - 05. During the year the information found from the laptop of Mr. S. K. Gupta was that assessee has obtained and accommodation entry of ₹ 5 255000 from that particular person. The a .....

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