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2019 (11) TMI 210

..... ation provided by the assessee at re-assessment proceedings stated that details of accounts as reflected in the statement provided showing transaction in bank account of ₹ 10,24,42,961/-. Therefore, contention of the Assessee is correct that this is the amount which has appeared at credit side of the bank account of the assessee. A.O. has taken the entire amount deposited in the Bank account of the assessee as accommodation entry without verifying any fact. The assessee explained before A.O. that the amount in his Bank account reflected on credit side pertain to sales, share application money, income and amount received back from the parties i.e., paid for purchases. Therefore, A.O. did not apply his mind to the information received from Investigation Wing. Assessee also explained before the authorities below that ₹ 80,50,000/- in respect of 16 parties have not been mentioned in the information supplied by the Investigation Wing, then there were no reason for the A.O. to say that both these amounts are accommodation entries received by the assessee in assessment year under appeal. These facts clearly show that A.O. recorded incorrect facts in the reasons recorded for re .....

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..... atement provided showing transaction in bank account of ₹ 10,24,42,961/- as under: Credit Amounts : On account of sales On account share application received Income (Profit on sale of shares) Amounts received back from parties i.e., paid for purchases. Debit Amounts : On account of purchases On account of shares application received, amounts returned on non-allotment. Sales advance returned. 3.1. The assessee has further submitted the details of investments/shares, loan advances and paid up capital and share premium. The gist of the same is reproduced in the assessment order. The assessee company has also filed details of paid-up capital and share premium for the year under consideration along with complete address PAN details and amount of share capital allotted to them and also filed confirmation of share holders, copies of their Income Tax Ack. receipt and share application forms and copy of the bank statement showing amounts have been given through cheques. It was submitted that all the share applicants are income tax assessees and in all cases amounts have been received through the account payee cheques only. The assessee relied upon Judgment of Hon ble Supreme Court in .....

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..... assessee has explained source and credit of ₹ 80,50,000/- which was not included in information received from Investigation Wing which pertain to allotment of shares by assessee. The assessee filed complete details to show that assessee entered into genuine transaction. Since Investors did not appear before A.O. is no ground to make the addition. The assessee filed complete details and share applications. Therefore, on mere non-appearance of the Investors, no addition could be made against the assessee because A.O. did not make further enquiry into the matter on the documentary evidences filed by assessee. The assessee relied upon Judgments of Hon ble Delhi High Court in the cases of CIT vs., Victor Electrodes Ltd., [2010] 42 DTR 152 (Del.) and CIT vs., Winstral Petrochemicals (P) Ltd., [2010] 233 CTR 392 (Del.) as well as CIT vs., Dwarkadhish Investment (P) Ltd., [2010] 45 DTR 281 (Del.). Several other case Law were also relied upon. The Ld. CIT(A) asked the A.O. to file remand report. However, no remand report was furnished. Reminder was further issued and ultimately, remand report Dated 13.12.2013 was received from the A.O. In the remand report A.O. has reproduced the cont .....

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..... the Cross Objections challenged the reopening of the assessment under section 147/148 of the I.T. Act and addition of ₹ 5 lakhs in respect of M/s. Kuldeep Textiles (P) Ltd., under section 68 of the I.T. Act, 1961. 7. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and referred to PB-16 which is reasons for reopening of the assessment. He has submitted that perusal of the reasons recorded by the A.O. clearly show that A.O. has simply acted upon the information received from Investigation Wing and did not apply his own mind to the said information. The contents of the reasons recorded by the A.O. for reopening of the assessment proceedings are summarized as under : i. Introduction about the Investigation carried by Investigation Wing. ii. Modus operandi of entry providers. iii. Summing-up enquiry of Investigation Wing iv. Information received from Investigation Wing. v. Conclusion reached by the A.O. that assessee has taken accommodation entries vi. Statement that income of assessee has escaped assessment. 7.1. The perusal of above reasons would show that A.O. has straightaway concluded that assessee had taken accommodation entries .....

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..... sheet recorded by the A.O. and Annexure-A attached to the reasons recorded for reopening of the assessment. The Ld. D.R. after going through the record have stated that the letter dated 13.03.2006 referred to in the reasons is not available on record. The Ld. D.R. placed on record copies of statements recorded by A.O. at remand proceedings as well as filed copy of statement of Shri Govind Ram Saini referred to in the reasons Dated 13.05.2005. The Ld. D.R. submitted that specific information was received that income chargeable to tax has escaped assessment. In this case return is only processed under section 143(1), therefore, reopening of the assessment is justified. The Ld. D.R. relied upon following decisions : i. Judgment of Hon ble Supreme Court in the case of ACIT vs., Rajesh Jhaveri Stock Brokers Pvt. Ltd., [2007] 291 ITR 500 (SC). ii. Central Provindes Manganese Ore Co. Ltd., vs. JTO [1991] 191 ITR 662 (SC) iii. Raymond Woollen Mills Ltd., vs. ITO [1999] 236 ITR 34 (SC) iv. Phool Chand Bajrang Lal vs., ITO [1003] 203 ITR 456 (SC) v. Calcutta Discount Co., Ltd., vs. ITO [1961] 41 ITR 191 (SC). 8.1. The Ld. D.R, therefore, submitted that reopening of the assessment is justifie .....

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..... uments in his bank accounts and the money came to his regular books of account in the form of gift, share application money, loan etc through banking channels. 2.3. The operators gave the account holders amounts ranging from ₹ 1000 to 2000 per month. These account holders were masons, plumbers, electricians, peons, drivers etc, whose earnings are not sufficient for a living. They earned normally ₹ 3 to 5 thousand per month in their normal work and by working for the entry operators earned extra income of ₹ 2 to 4 thousand per month. Their signatures were taken on blank gift deeds, cheque books, share application money etc. In fact these persons signed all types of papers they were asked to sign. They were made directors of companies, partners of firms and proprietor of different concerns solely for operation of these accounts. Actually, many of them were not even aware of the tax implications etc. Their only concern was with the few thousand rupees given to them by the entry operators. 3. Summing up, the report as a result of these extensive enquiries carried out by the D.I.T. (Inv.), New Delhi has established the non-genuineness of transactions, whether shown by .....

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..... in his statement there is no reference to the assessee for providing any accommodation entry. The A.O. in the re-assessment order also mentioned that information provided by the assessee at re-assessment proceedings stated that details of accounts as reflected in the statement provided showing transaction in bank account of ₹ 10,24,42,961/-. Therefore, contention of Learned Counsel for the Assessee is correct that this is the amount which has appeared at credit side of the bank account of the assessee. The A.O. has taken the entire amount deposited in the Bank account of the assessee as accommodation entry without verifying any fact. The assessee explained before A.O. that the amount in his Bank account reflected on credit side pertain to sales, share application money, income and amount received back from the parties i.e., paid for purchases. Therefore, A.O. did not apply his mind to the information received from Investigation Wing. vide letter Dated 13.03.2006 which is also not produced before the Tribunal for examination as it was not part of the record. It has also shown that the credit side of the assessee Bank account contain several items, therefore, entire amount coul .....

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