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Viagra Trading Co. Pvt. Ltd. Versus DCIT, Central Circle-III, New Delhi

2017 (11) TMI 672 - ITAT DELHI

Addition u/s 68 - addition in the hands of conduit companies which were merely used for providing accommodation entries - Shri S.K. Gupta was providing accommodation entries - Held that:- It is an admitted fact that the assessee is also one of the group concerns of Sh. S.K.Gupta and on the application of the Sh. S.K.Gupta before the ITSC, ITSC was pleased to direct the computation of the entire undisclosed income relating to various conduct companies controlled by Sh. S.K.Gupta shall be in the h .....

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h.S.K.Gupta by the order of Income Tax Settlement Commission, no separate addition u/s 68 is required to me made in the hands of conduit companies which were merely used for providing accommodation entries - Decided in favour of assessee. - ITA No. 3422/Del/2014 - Dated:- 9-11-2017 - SH.N.K.SAINI, ACCOUNTANT MEMBER AND SH. K.N.CHARY, JUDICIAL MEMBER For The Appellant : Sh. R.S.Singhvi & Sh. Satyajit Goyal, CA For The Respondent : Sh. Sampurnanand, Sr.DR ORDER PER K.N.CHARY, JUDICIAL MEMBER A .....

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of cases. During the survey and assessment proceedings one Sh. S.K.Gupta admitted that he had been providing accommodation entries to various persons through a large number of concerns effectively controlled by him. From perusal of the ledger accounts maintained in one of the laptops impounded under the survey, it was noticed that a large amount of cash was deposited and cheque are issued on various parties on the same day or within a few days. In view of the admission of Sh. S.K.Gupta that he .....

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ion of ₹ 1,44,23,220/- as against the returned income of ₹ 8,104/-. When nine out of such 34 conduit companies carried the matter in appeal which reached the level of Income Tax Appellate Tribunal, a Bench of the Tribunal by way of order dated 21.01.2015 in a batch of cases in ITA No.3477/Del/2013 passed an order holding that since credit entries in the case of conduit companies have been considered in the hands of Sh. S.K.Gupta, no separate addition u/s 68 of the Act required to be .....

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a 4.3 of the order treating them non genuineness the transactions. 3. Books of accounts of the appellant do not reflect genuine transaction therefore source of cash deposit remained unexplained, and 4. The claim of HDFC Bank was remanded to the assessing officer, where he has given the finding that the appellant could not prove its stand that HDFC Bank A/c does not belong to it. 3. Hence, challenging the findings of the Ld. CIT(A), assessee preferred this appeal. 4. It is the submission of the L .....

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, ITSC was pleased to direct computation of this income in the case of Sh. S.K.Gupta. It is further submitted that out of 34 companies in respect of which the AO made addition u/s 68 of the Act, nine companies were granted relief by a Co-ordinate Bench of this Tribunal in the above batch of cases and page No.7 of the order of the Tribunal reads the names of all the 34 companies wherein vide Entry No.31, the assessee is also to be found. According to the Ld. AR in view of the finding of the Tribu .....

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n the authorities below. 6. We have gone through the record. It is an admitted fact that the assessee is also one of the group concerns of Sh. S.K.Gupta and on the application of the Sh. S.K.Gupta before the ITSC, ITSC was pleased to direct the computation of the entire undisclosed income relating to various conduct companies controlled by Sh. S.K.Gupta shall be in the hands of Sh. S.K.Gupta. This fact is recorded by a Coordinate Bench of this Tribunal in the order dated 28.01.2015. Relevant por .....

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he case of M/s Omni Farms Pvt.Ltd., the Assessing Officer, at paragraph 2, has recorded the following finding:- 2. A survey operation was conducted in the S K Gupta group of cases on 20/11/2007 at 308, Arunachal Building, 19, Barakhamba Road, New Delhi - 110001 and 1007-1008, Arunachal Building, 19, Barakhamba Road, New Delhi - 110001. The assessee company is one of the group concerns of S K Gupta Group. During the course of survey proceedings and assessment proceedings, Sh.S K Gupta admitted th .....

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ons. Except for two or three persons who are required regularly to visit banks and do other work like collection of cash etc. most of the other persons involved are on part time basis. The part time employees are called as and when required to sign documents, cheque books etc. Sh. S.K. Gupta has also roped in his own relatives for operation of various bank accounts and for filing the income tax returns. It was seen that Sh. S.K. Gupta was controlling more than 35 companies from a small office pr .....

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he bank accounts opened in different banks to route the entries through two to four accounts to vie the color of genuineness to these transactions. 13. Thus, the Assessing Officer himself has recorded the finding that the assessee company is one of the group concerns of S.K. Gupta group and Shri S.K. Gupta admitted that he had been providing accommodation entries to various persons through a large number of concerns effectively controlled by him. The Settlement Commission also has recorded the s .....

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ts of intermediatories and cheques were issued to the beneficiaries of almost the same amounts . Thus, after examining the facts, the Settlement Commission has recorded the finding that the cash deposited in the bank account of the intermediary companies was the cash received from mediators on behalf of the beneficiaries who wanted to avail the accommodation entries. It is further observed by the Settlement Commission It is further noted that there are overwhelming evidence in the impounded mate .....

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ited in the bank accounts for issuing cheques are not his money but moneys of the beneficiaries to whom cheques were issued . Thus, the Settlement Commission has recorded the clear cut finding that Shri S.K. Gupta was only entry provider and for the purpose of providing entries, he utilized the various group companies which included the companies under appeal before us. He used to receive the cash from the beneficiaries who wanted to avail the accommodation entries and after depositing the same .....

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Revenue has not challenged the order of the Settlement Commission before the Hon'ble Jurisdictional High Court. 14. That Hon'ble Jurisdictional High Court has considered the binding nature of the decision of the Settlement Commission in the case of Omaxe Ltd. & Anr. (supra) and held as under:- Orders of Settlement Commission are final and conclusive as to matters stated therein. The matters necessarily could comprehend disputed questions, items or heads of income, disallowance, etc. .....

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e contention of the Revenue - have thrown light on material that had been suppressed from the Commission. If such is the case, it would be only logical that the Commission itself should be approached for a declaration that its order of 17th March, 2008 is a nullity. Allowing any other authority, even by way of a notice under s. 153C, would be to permit multiple jurisdictions which can result in chaos. After all non-disclosure or suppression of information in respect of what is required to be rev .....

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als under consideration before us are for AY 2008-09. The CIT(A) denied to follow the order of the Settlement Commission remarking that all the relevant facts might not have been produced before the Settlement Commission. However, learned CIT(A) has not pointed out any specific facts which were not placed before the Settlement Commission. On the other hand, reading of the order of the Settlement Commission shows that all the relevant material including the seized material were duly considered by .....

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refore, respectfully following the decision of Hon'ble Jurisdictional High Court, in our opinion, the order of the Settlement Commission is binding on the Income Tax Department and all the logical consequences of the said order are to be given effect to. 16. We also find that the Additional CIT has issued direction under Section 144A in this regard. The Assessing Officer had asked for the specific direction of the Additional CIT in respect of the group companies which has been mentioned by t .....

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ion would continue to be applicable for AY 2008-09 also because the facts remain the same. The Additional CIT has discussed in detail that when the Revenue is taking action in the hands of the beneficiaries, if the addition is made in the case of conduit entities, it will dilute the case of the Department against the beneficiaries. The order of the Additional CIT under Section 144A is binding on the Assessing Officer which is evident from Section 144A which reads as under:- 144A. A Joint Commiss .....

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uch directions shall be binding on the Assessing Officer : Provided that no directions which are prejudicial to the assessee shall be issued before an opportunity is given to the assessee to be heard. Explanation. - For the purposes of this section no direction as to the lines on which an investigation connected with the assessment should be made, shall be deemed to be a direction prejudicial to the assessee. (emphasis by underlining supplied by us) 17. Thus, there is an order of the Settlement .....

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