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2017 (9) TMI 1027

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..... 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 MAHARISHI, A. M. 1. These are the appeals filed by the Revenue against the order of the ld CIT (A)-1, New Delhi dated 13.03.2013 for the Assessment Year 2004-05 and 2005-06. 2. The Revenue has raised the following grounds of appeal for Assessment Year 2004-05:- 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 ₹ 21007350/- on account of unexplained credits received by the assessee 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 .....

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..... on entries by accepting cash. Therefore, there was a search on the Bhushan group of cases and Sh. RK Kedia group. During the course of search several name of the companies were found to be controlled by Sirius K. Gupta, from where he used to provide the accommodation entries. In those names one of the name was the assessee s name, where it was found that in the financial year 2003 04 an amount 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 explain the transaction by saying that the name of the party of Sino securities for financial year 2003 2004 are also in the name of Lee asset management, Surya Ent . It was further stated that with respect to the purchase and sale of the shares tally is with the Ledger account and the big statement of th .....

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..... r 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, from which assessee was obtaining accommodation entries. She submitted that assessee has not produced the basic documents required to support its case therefore, there is no reason for the Ld. CIT appeal to delete the above addition. See submitted that first assessee must support this transaction by producing the basic evidences about the identity of the artiste with whom it is entered into transaction and creditworthiness and genuineness of those transactions. She submitted that when the identity, 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 ass .....

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..... ital gain by the assessee and therefore the addition cannot be made. On this aspect, We are of the opinion that when the sale/ purchase transaction of those shares are bogus or are merely accommodation entries, naturally 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 profit or loss resulting there from are offered by the assessee as a capital gains. Naturally, an accommodation entry provider and the beneficiary would make an effort to sail through the investigating eyes of revenue by offering the result of this transaction under the head capital gain. However, it is for the officers of the revenue to look into the real nature of the transaction and not to brush aside the fact that these are not normal transactions, but highly abnormal transac .....

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..... tain information through private enquiries and which have not been confronted to the assessee. In the present case, the assessee was aware that he has taken and accommodation entry from Sh. S. K. Gupta and the evidences placed before us are so conclusive that they cannot be overlooked on technical and flimsy issue, which CIT appeal did. Over and above, the Ld. AO had the statement of Mr. S. K. Gupta, who confessed that he is merely entry provider, on survey at his premises in laptop was found, where from the amount of beneficial entry taken by the assessee was also found. The Ld. CIT A naively believed 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 the assessing officer as unexplained income of the assessee obtained from one accommodati .....

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