TMI Blog2018 (11) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... ion entry provider and unless the real beneficiaries are named by it, it cannot escape the taxation of the sum credited in its books of account. As assessee’s director has confessed that assessee company is providing accommodation entries, then, CIT(A) even did not care to verify that who are the beneficiaries and what is the amount of commission received by assessee from the beneficiaries from providing accommodation entries. Without even calling for all these details, the ld CIT(A) has deleted the addition. In view of this, we reverse the finding of the ld CIT(A) and confirm the order of the ld Assessing Officer with respect to the addition - Decided in favour of revenue. Current liabilities unexplained - Held that:- The assessee submitted before the ld CIT(A) that it received sum of ₹ 14 lakhs from Shreys Infradevelopers Pvt. Ltd and San Portfolio Pvt Ltd of ₹ 135000/-, however, no confirmation was provided of these parties. In view of this the addition has been made by the ld AO. The ld CIT(A) deleted the addition without even asking for the confirmation. We find that unless the assessee submits the confirmation of these parties the addition cannot be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that too without assuming jurisdiction as per law and without complying the mandatory conditions of section 147 to 151 of the Act. 2. T hat in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in framing impugned reassessment order u/s 147/143(3) is beyond jurisdiction, bad in law and against the facts and circumstances of the case. 3. In any view of the matter and in any case, impugned assessment order could not have been passed under the law, more so when original assessment was annulled. 5. The revenue has raised the following grounds of appeal for the Assessment Year 2008-09:- ( i) That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting ₹ 6,85,31,671/-which was added to the income of the assessee on account of as unexplained deposits. ( ii) That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting ₹ 4,35,320/- which was added to the income of the assessee on account of as unexplained liabilities. ( iii) That the commissioner of Income Tax(Appeal) has erred in law and on facts in relying on the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09-10:- 1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing impugned reassessment order and that too without assuming jurisdiction as per law and without complying the mandatory conditions of section 147 to 151 of the Act. 2. T hat in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in framing impugned reassessment order u/s 147/143(3) is beyond jurisdiction, bad in law and against the facts and circumstances of the case. 3. In any view of the matter and in any case, impugned assessment order could not have been passed under the law, more so when original assessment was annulled. 9. We briefly state the facts for AY 2007-08. The assessee is a company who filed its return of income on 17.03.2008 declaring income of ₹ 5130/-. The assessment u/s 143(3) was made on an income of ₹ 41107800/- wherein, protective addition of ₹ 39332500/- was made on account of unexplained deposits and ₹ 1535000/- was made on account of unexplained liabilities. The assessee preferred an application u/s 264 before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount has been added to the income of one assessee in the chain of transactions, no further addition on the same can be made in the hands 6f subsequent assessee in the-chain. Since cash deposit has been taxed in the hands of Mr. Manoj Kumar and Mr. Virender Ram by way of Substantive Addition, the taxed amount, when transferred to another company should be treated as explained credit. The transfer/introduction of this amount should also be treated as explained. Alongwith explanation the order passed in the case of Shri Manoj Kumar by the Commissioner of Income Tax, Appeal-XXXII, New Delhi has been filed. 6. I have thoroughly considered the reply furnished, appellate order passed and the other papers furnished by the company. But find no force because of the fact that in the case of shri Manoj Kumar addition was made protectively which was the right step as the accommodation entries were provided by by Shri Manoj Kumar who works with Shri Aseem Kumar Gupta or on his behalf as has been admitted by Shri Aseem Kumar Gupta himself in his statement recorded in the case of Shri Manoj Kumar vide question No. 5. On this point the assessee has mis-presented the facts as assessment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) Shri Asheem Gupta, CA appeared. 11. The ld CIT(A) decided the issue of the reopening of the assessment vide para No. 5 an 6 of the appellate order as under:- 5. Ground no. 1 is against that Id assessing officer without appreciating the correct facts of the case is not justified in law and facts and circumstances of the case in reopening the assessments under section 147 of the I.T. Act, without complying with the provision of section 147 to 151 of the I.T. Act. 5.1 The Appellant during the course of appeal proceedings submitted as Ground no. 1 of appeal relates that the Ld A.O. without appreciating the correct facts of the case is not justified in law and circumstances of the case in reopening of assessment U/s 147 of the I.T. Act without complying the provisions of section 147 to 151 of the I.T. Act 1961. A.O. has stated in his impugned order that ‟‟After recording reasons proceedings u/s 147 were taken in hand after receipt of the approval of the Commissioner of Income Tax, Central- 11, New Delhi accorded on 26.03.2014 u/s 151. While submitting the proposal for approval for initiation of proceeding u/s 147 the A.O. recorded his s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al for re-assessment U/s 147 of the I.T. Act 1961 has been emphasized by Bombay High Cout in the case of CIT. V/s Ambitabh Bachan whereby it was held that Reopening in the absence of fresh tangible material is invalid . For AY 2002-03, the assessee filed a ROI declaring income of ₹ 14.99 crores. A revised ROI was then filed claiming 30% adhoc expenses (Rs. 6.31 crores) and offering income of ₹ 8.11 crores. When the AO asked the assessee to substantiate the expenses, he withdrew the claim. The AO passed a s. 143(3) assessment determining the income at ₹ 56.41 crores. The AO then issued notice under section 148 notice (within 4 years) to reopen the assessment on the ground that the claim for expenses (which was withdrawn) had to be assessed as unexplained expenditure u/s 69. The CIT (A) Tribunal struck down the reassessment order on the ground that the material on the basis of which the assessment was sought to be reopened was always available at the time of the original proceeding and there was no new material. On appeal by the department to the High Court, HELD dismissing the appeal. The reopening on the basis that the said adhoc expenditure constituted une ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 26.03.2014 u/s 151 whereas it is humbly and respectfully submitted to your goodself that as per section 151 of I.T. Act 1961 the A.O. can initiate proceedings after taking approval for JC and CIT both. Briefly description of section 151 of the I.T. Act 1961 is as follows: Section 151 of the I.T. Act 1961 - Sanctions for issue of notice U/sl48 Upto 4 years from the end of the relevant assessment year Beyond 4 years but up to 6 years from the end of the relevant AY In cases subject to scrutiny by way of assessment u/sl43(3) or 147 By an AO not below the rank of AC/DC . Any AO below the rank of AC/DC will require prior approval of the JO before issuing the notice 1 ) Same approval, And 2)Notice can be issued only after obtaining the prior approval of CCIT or CIT In other cases By any AO By an AO not below the rank of JC . Any officer below the rank of JC can issue the notice with the prior approval of JC In the light of the above judicial decisions and provisions of the section 151 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that original return filed may kindly be treated as filed in reply to the notice u/s 148. In reply thereof Shri Aseem Gupta F.C.A. appeared from time to time with whom case discussed. During the course of assessment proceeding assessee has furnish bank reconciliation statement which shows credit entry of ₹ 3,03,87,500/-. Whereas as per bank statement total deposit reflects ₹ 3,95,32,500/-. Thus it is seen that the reconciliation statement filed by the assessee do not tally with that of bank statements. This fact leads to the impression that the accounts submitted by the assessee company is fabricated one and cannot be relied upon. The Id Ao has failed to appreciate the fact that the asseessee company has vide its reply dated 05/12/2014 has provided the Ld AO the summary and detailed narrations of all debit and credit entries of bank accounts .The summary of detailed bank narrations submitted to the Ld Ao totaled to 3,95,23,500/- and detailed narration sheet totaled to 3,03,87,500/-. The Ld Ao never pursued the summary and detailed narrations filed with him and passed the order in hurry without making further inquiry and verifying the correct facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the AO must insist on some identity proof like copy of driving license, copy of passport, copy of ration card or election ID card etc. The confirmation so filed must indicate complete details of transactions (like mode- cash or cheque, with number date of cheque with bank details). The AO have right to demand the copy of bank account of the lender evidencing such transactions and the same needs to be filed. In case transaction is in cash then AO must demand cash flow statement of the lender, preferably containing details of opening balance and its source thereof. As far as the creditworthiness or financial strength of the creditor/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharged the onus cast upon him. Thereafter, it is for the Assessing Officer to scrutinize the same and in case he nurtures any doubt about the veracity of these documents, to probe the matter further. However, to discredit the documents produced by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tious character of the entries in the assessee‟s books of account. It has been held under noted judicial decision that additions cannot be made U/s 68 if the assessee has provided confirmation, Pan, Address and bank statements of the persons from whom the credit in the bank accounts of the assessee has received. a) It has been held in the case of Shri Suresh Chandra (Indl.) v. DCIT (ITAT Lucknow) Appeal No:ITA No. 184/LKW/2010, ITA No. 185/LKW/2010, ITA No. 239/LKW/2010 that furnishing of Name, Address, PAN and Bank Statements are Sufficient compliance u/ s 68. b) In the case of CIT Vs. Wellworth Construction Udyog Ltd., (Delhi High Court) the apex court has decided that once assessee has proved identity and creditworthiness of the share applicants , addition U/s 68 cannot be sustained. c) In the case of CIT Vs. Gangeshwari Metal (P.) Ltd. (Delhi High Court) the apex court has decided that no addition U/s 68 if assessee proves the genuineness of transactions. Income-Cash credit-Share application money- If the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht perspective. Consequently we decide the question in favour of the assessee and set aside the order passed by the Tribunal. CIT Vs. Tarun Auto(P) Ltd. in ITA 889/2010, Date of Order 19-07-2010 held as under:- Both the commissioner and ITAT have found that the assessee had filed copies of share applications, share certificate, confirmations/ affidavits and income tax return acknowledgements. The PAN number of the investor had also been furnished to the assessing officer. Both the authorities below have also held that if the share application money had been received by the assessee from alleged bogus shareholders, then the Revenue was free to open the alleged shareholders assessment in accordance with law. IT vs Dwarkadhish Investment (P) Ltd. in ITA 91112010, Date of order 02-08- 2010 held as under:- In any matter, the onus of proof is not a static one. Though in Section 68 proceedings, the initial burden of proof lies on the assessee yet once he proves the identity of the creditors/share applicants by either furnishing their PAN number or income tax assessment number and shows the genuineness of transaction by showing money in his books either by acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case Hon'ble High Court observed that AO made an addition u/s. 68 of the Act, treating an amount of ₹ 58.40 lakhs, received by assessee on account of share application money, as unexplained share capital on the ground that the assessee failed to furnish confirmation from the allottees / shareholders. The CIT(A) and the Tribunal deleted the addition. On appeal filed by the department, the High Court dismissed the departmental appeal following the decision of the Supreme Court as mentioned in supra. Onus is on assessee to discharge that cash creditor is a man of means - The onus is on the assessee to discharge the onus that the cash creditor is a man of means to allow the cash credit. There should be identification of the creditor and he should be a person of means. When the cash creditor is an income-tax assessee, it cannot be said that he is not a man of means - Kamal Motors v. CIT [2003] 131 Taxman 155 (Raj). It has been held by Pune ITAT [2012] 19 taxmann.com 190 (PUNE -ITAT) that unless accounts are rejected for express reasons, and corroborated by conclusive evidence, any decision on estimation of income is unsustainable in law. Supreme Court in Meht ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e already made in the hands of Mr. Manoj Kumar and Mr. Virender Ram by ACITCC 09 and confirmed by CIT Appeals.As once additions have been confirmed in the hands of one assessee same additions cannot sustained in hands of another assessee giving effect to double taxation which is against the law of natural justice and should be deleted. In the light of above judicial decisions and provisions of section 68 of the I.T. Act 1961 it is vehemently contended and prayed to your kind honor that the reassessment proceedings made are against the principles of natural justice , equity and fair play and is bad in law and hereby should be quashed. As it is evident from the above records that the asessee has always provide the requisite information as and when required. If the Ld AO has any doubt about the credit entries, he should have asked for further clarification from the appellant or confirmation from concerned parties. The Ld AO has not even considered the confirmations and other evidences provided by the assessee company and simply copied paste the assessment order passed U/s 153C which was annulled by the CIT Central-II in the order U/s 264 of the Act. Finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited ( received ₹ 3,35,000/- returned back ₹ 2,00,000/- during the year) which is clearly mentioned in the summary sheet and detailed narration sheet of the bank entries submitted by the assessee. The Ld A.O. has erred in considering the fact that once all the additions for the amount received by the assessee in its bank accounts has been added to the income of the assessee than how the amount of liabilities and other additions can be made causing double taxation on the same amount over and over again which is unfair, unjust and bad in law. 11.2 In this regard it is most humbly submit that as demonstrated above the assessment order was finalized without providing any reasonable opportunity to the assessee and without appreciating facts and submission available on records. The books of accounts including Bank book has nowhere being rejected by the Assessing Officer. It has been held by Pune ITAT [2012] 19 taxmann.com 190 (PUNE -ITAT) that unless accounts are rejected for express reasons, and corroborated by conclusive evidence, any decision on estimation of income is unsustainable in law. The protective assessment has been made by the Assessing Officer, without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening. 14. Coming to the appeal of the revenue where ground No. 1 and 2 are with respect to the addition of ₹ 393532500/- and ₹ 1535000/- the ld CIT DR vehemently submitted that it is responsibility of the person who deposits money in his bank account to show that from whom the money is received and his identity, creditworthiness and genuineness of the transaction is required to be proved by the assessee. He stated that assessee has failed to show that from whom the money has been received and whose money is deposited in the bank account. Unless, assessee shows that, addition in the hands of the assessee cannot be deleted. He submitted that merely filing the detail without confirmation of the parties, assessee cannot get away with the addition. He further stated that initial onus u/s 68 of the Act lies upon the assessee. If the AO is not satisfied with the same then only he is required to make further enquiry and then only the onus shifts on the ld Assessing Officer. In the present case the assessee has not discharged the initial onus therefore, the ld CIT(A) has wrongly deleted the addition. He vehemently referred to para No. 10 of the order and stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. He further referred to the decision of the Shri Raj Kumar Chawla Vs ACIT, New Delhi dated 26.09.2018 wherein, the issue with respect to the accommodation entry by Mr Asheem Gupta was discussed. He referred to para No. 11 of that order and stated that in the present case there is no opportunity of cross examination of Shri Asheem Kumar Gupta is required Shri Asheem Kumar Gupta himself appeared before the ld CIT(A) and at no stage he refuted his own statement. Further, before the Assessing Officer assessee has not uttered a word about the cross examination. 18. He further referred to the decision of the coordinate bench in ITA No. 2973/Del/2014 dated 30.01.2018 wherein, the assessee himself have confessed a surrender of ₹ 55 lakhs on account of accommodation entry received from Shri Asheem Kumar Gupta and further the penalty of ₹ 1699500/- was confirmed. He therefore, submitted that now there is no doubt that Mr. Asheem Kumar Gupta is bogus accommodation entry provider and unless he gives the names of beneficiary of the appellant company the addition cannot be deleted in the hands of the company. 19. On the issue of reopening of the assessment in the cross objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of the director of assessee company which was never retracted and in fact by arguing before lower authorities. So in turn, it was his tacit approval of his statement. Hon'ble Bombay High Court in Pebbal Investment and Finance Ltd Vs. ITO has held that statement u/s 133A of the Act can be used for the purpose of making an assessment in the hands of the assessee. Further, when Shri Asheem Kumar Gupta has never retracted his statement, as he appeared before the ld CIT(A), to state that his statement was incorrect. The reasons were provided to the assessee however, no objections were raised before the ld Assessing Officer. With respect to the sanction of the issue of the notice also no infirmity was shown before the ld CIT(A). In view of this, we do not find any infirmity in the order of the ld CIT(A) in confirming the reopening of the assessment made by the ld AO. In view of this the cross objection filed by the assessee is dismissed. 23. On the issue of the merits of the addition, it is apparent that assessee has merely submitted the summary and narrations of the debit and credit entries of the bank, however, it was not shown that from whom the assessee has received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Portfolio Pvt Ltd of ₹ 135000/-, however, no confirmation was provided of these parties. In view of this the addition has been made by the ld AO. The ld CIT(A) deleted the addition without even asking for the confirmation. We find that unless the assessee submits the confirmation of these parties the addition cannot be deleted. In view of this we reverse the finding of the ld CIT(A) and restore the order of the ld AO. Ground No. 2 of the appeal of the revenue is allowed. 25. In view of our above finding we allow ITA No. 6206/Del/2015 filed by the AO and dismiss the Cross objection No. 398/Del/2015 filed by the assessee. 26. The facts of the case for AY 2008-09 and 2009-10 are similar except that for Assessment Year 2008-09 the ld Assessing Officer made the addition of ₹ 68531671/- on account of unexplained deposit and ₹ 435320/- on account of unexplained profit on sale of investments. For Assessment Year 2009-10 the addition is made on account of unexplained deposit of ₹ 121033910/- and on account of unexplained profit on sale of shares of ₹ 310500/-. For Assessment Year 2009-10 the ld Assessing Officer over and above the unexplained deposit foun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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