TMI Blog2019 (6) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... nt after thorough investigation and enquiries and the AO after due application of mind has recorded the reasons for reopening of the assessment, therefore, in view of the detailed reasoning given by CIT(A), no infirmity in the same. Accordingly, grounds relating to validity of reassessment proceedings are dismissed. Addition u/s 68 - share application money - commission u/s 69C - HELD THAT:- It is an admitted fact that due to non-production of the Directors of the Investment Companies in the shares of assessee company and non-fulfillment of conditions laid down in terms of provisions of S.68, the AO made addition of ₹ 30 lakhs u/s 68 in respect of the share application money received from the five investing companies and further made addition of ₹ 60,000/- u/s 69C being the commission expenses incurred for arranging the accommodation entries. Subsequent to passing of the order of CIT(A) two decisions have come viz., the decision of Hon ble Delhi High Court in the case of PCIT vs. NDR Promoters P.Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] and the decision of PCIT vs. NRA Iron Steel P. Ltd. [ 2019 (1) TMI 1089 - DELHI HIGH COURT] . Neither the assessee nor the AO/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.12.2007 Lotus Realcon P. Ltd. Namah Shivaya Marketing P.Ltd. Axis 094139 26.12.2007 500000 26.12.2007 Mega Top Promoters P Ltd. Namah Shivaya Marketing P.Ltd. Axis 094319 26.12.2007 500000 14.01.8 Hum Tum Marketing P.Ltd. Namah Shivaya Marketing P.Ltd. Axis 094526 14.01.2007 1000000 Total: 30,00,000 He noted that the above Companies are floated by Shri Surendra Kumar Jain/Virendra Kumar Jain, who have admitted during the course of sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contrary to provisions of law. b) The mandatory procedure laid downin the Act has not been followed. c ) The information has been collected behind the back of the assessee and the assessee was never confronted with the same nor an opportunity provided for cross-examination of Jain brothers, copies of the orders of Jain Brothers and the relevant seized material relied upon has not been provided to the assessee. d) The assessment has been made on the basis of conjecture surmises without any cogent evidence. 4. The learned CIT(A) has erred on facts and in law in upholding the addition of ₹ 30,00,000/- u/s.68 on account of share capital, treating the same as an accommodation entry. 5. The learned CIT(A) has erred on facts and in law in upholding the addition of ₹ 60,000/- u/s 69 as alleged commission paid for obtaining accommodation entries. 6. The learned CIT(A) has erred on facts and in law by not adjudicating ground of initiation of penalty proceedings u/s 271(l)(c) without any material on record. PRAYER 6. The appellant craves leave and sanction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e merits of the case is concerned, he submitted that various details such as PAN number of the company, bank account details, assessment particulars etc. were filed before the AO to discharge the initial onus cast on the assessee. Referring to the decision of Hon ble Supreme Court in the case of PCIT vs. NRA Iron Steel P. Ltd. reported in 103 Taxmann.com 48, he drew attention of the Bench to para 11 of the said order which reads as under. 11. The principles which emerge where sums of money are credited as Share Capital/Premium are : i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee have already been disposed off by this office and the relevant information / details pertaining to the assessee have already been provided, therefore, the same stands disposed off. 7.1. He submitted that despite repeated opportunities granted by AO to produce the Principal Officer/Director of the subscriber companies, the assessee failed to produce those Directors for examination of the AO. He submitted that the Tribunal in the case of SK Jain Group of Companies had clearly held that they are indulged in providing accommodation entries. Referring to the decision of Hon ble Supreme Court in the case of NRA Iron Steel (P) Ltd. (supra) the Ld.DR drew attention of the Bench to para 14 page 1 of the said order which reads as under: 14. The practice of conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares, where a I higher onus is required to be placed on the Assessee since the information is within the personal knowledge of the Assessee. The Assessee is under a legal obligation to prove the receipt o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued at correct postal address mentioning the correct addresses. Therefore, I concur with the finding of Ld.CIT(A) that it was a bonafide mistake or small irregularity which was immediately corrected/rectified by the AO within the time available and without hampering the legality of the reassessment proceedings. Since the assessment was reopened on the basis of specific information received that the assessee is a beneficiary of taking accommodation entry of ₹ 30 lakhs in the garb of share application money from entry providers Shri Surendra Kumar Jain / Virendra Kumar Jain which was identified by Investigation Wing of the department after thorough investigation and enquiries and the AO after due application of mind has recorded the reasons for reopening of the assessment, therefore, in view of the detailed reasoning given by Ld.CIT(A), I find no infirmity in the same. Accordingly, grounds relating to validity of reassessment proceedings are dismissed. 10. Now coming to the merits of the case, it is an admitted fact that due to non-production of the Directors of the Investment Companies in the shares of assessee company and non-fulfillment of cond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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