TMI Blog2017 (6) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, ground No. 1 challenging the validity of reassessment is dismissed. Objections raised by the assessee agitating the jurisdiction were not disposed off by the Assessing Officer, before passing the impugned order - HELD THAT:- Assessing Officer issued notice u/s. 143(2) 142(1) on 14.08.2007, after a gap of almost one year from issue of notice u/s 148 of the Act, but the assessee didn t comply said notice. The Assessing Officer issued a final show cause notice on 04.12.2007 proposing to assessee the income as mentioned in the notice. The assessment was to be completed on 31.12.2007 and the assessee asked reasons recorded on 20.12.2007, which were provided. The assessee vide letter dt. 24.12.2007 furnished reply of the queries raised about income of the assessee and in that letter the assessee raised the issue that reason were not acceptable. In the facts circumstances, we find that the assessee raised objections not as per the decision of the Hon ble Supreme Court in GKN Driveshaft India Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] . Since in the year under consideration, no objections have been filed effectively by the assessee, therefore, disposing off such objections spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , ACCOUNTANT MEMBER For the Appellant : S/sh. Deepak Ostwal, CA Rishab Ostwal, Adv. For the Respondent : Sh. Amrit Lal, Sr.DR ORDER PER O.P. KANT, A.M.: These two appeals by the assessee are directed against two separate orders dated 17/03/2010 and 16/03/2012 of the Ld. Commissioner of Income Tax (Appeals) for assessment year 2000-01 and 2001-02 respectively. The facts and circumstances and the grounds raised in both the appeals are identical except amount of addition and therefore both the appeals were heard together and disposed off by this consolidated order for brevity and convenience. ITA No. 3777/Del/2010 for AY: 2000-01 2. First we take up the appeal in ITA No. 3777/Del/2010 for assessment year 2000-01. The concise grounds of appeal filed by the assessee vide letter dated 01/12/2016 are reproduced as under: On the facts and in the circumstances of the case, the CIT(A)-XI, New Delhi has erred both on facts and in law, in upholding the illegal order of the respondent on the following grounds and hence liable to be quashed because: 1. Reasons recorded are vague and scanty, without application of his own mind by Assessing Officer an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 1,44,55,500/- received from 91 persons. The Ld. CIT-(A) rejected the contention of the assessee and upheld the validity of the reassessment proceedings. On merits also, the Ld. CIT-(A) upheld the finding of the Assessing Officer in absence of establishing, the identity and creditworthiness of the investors. Aggrieved, the assessee is in appeal before the Tribunal, raising the grounds as reproduced above. 4. In the ground No. 1, the assessee has challenged the reasons recorded on three parameters. According to the assessee, the reassessment proceedings are not in terms of section 147 to 151 of the Act because, the reasons recorded are, (a)vague and scanty, (b) without application of mind by the Assessing Officer, and (c) without necessary approval of the Joint Commissioner of Income-tax. 4.1 Before us, the Ld. counsel, filed a paper book containing pages 1 to 131 and submitted that the Assessing Officer merely referred to some DIT information and Annexure -A in mechanical manner without making any independent enquiry, even prima facie seeing correctness of the information and alleged escapement without even quantifying the income, he sought and even without identification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- (S. No. 33,34,35 of AO Order) Less: Previous year duplicate Entries ₹ 5,80,000/- (S. No. 71,72,73 of AO order) Less: Next year Entries ₹ 6,75,000/- (S. No. 24,54,56,57,58 of AO order) Less: Duplicate Credit Entries Less: ₹ 17,57,500/- Triplicate Credit Entries Less: ₹ 11,62,500/- Duplicate Debit Entries Less: ₹ 19,69,000/- Triplicate Credit Entries Balance Out of which: ₹ 11,62,500/- Balance ₹ 52,46,500/- Out of which: Credit Transactions ₹ 25,37,500/- Less: Cash deposited out of cash in hand ₹ 2,75,000/- Balance Credit transactions are only ₹ 22,62,500/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee or to the assessee? How he reached to the conclusion that the transactions are undisclosed and unaccounted money of the assessee? Nothing is coming out from the alleged reasons. 4.3 On the other hand, the Ld. Senior DR referred to the paper book filed by the Revenue containing pages 1 to 58 and submitted that the Assessing Officer has recorded reasons running into three pages incorporating the specific material relied upon, mentioning the income escaped assessment in the case of the assessee. He submitted that the Assessing Officer has duly applied his mind and not acted on the direction of any higher authorities. Further, the Ld. Senior DR relied on the decision of the Hon ble Supreme Court in the case of Raymond Woollen Mills Ltd., 236 ITR 34 (SC) and submitted that while reopening there should be a prima facie material and sufficiency and correctness of the material is not to be considered at the stage of recording reasons. He further submitted that in the instant case the return of income was only processed under section 143(1) of the Act and there was no information available on the record, with which the information received from the DIT (Investigation) could be reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e wake of the information gathered by the Directorate of Income tax (Inv.), New Delhi that the assessee was involved in giving and taking accommodation entries only and represented unsecured money of the assessee company is actually unexplained income of the assessee company. The assessee company has failed to disclosed fully and truly all the material facts and the sources of these funds routed through bank accounts of the assessee company. I, therefore, have reasons to believe that the income has escaped assessment within the meaning of the Sec. 147 of the I.T. Act, 1961 for the A.Y. 19992000. In view of the provisions of sec. 149(1)(b) necessary approval for the issue of the notice u/s 148 may kindly be accorded for the A.Y. 1999-2000, if approved. 4.5.1 In background of the above reasons recorded, the Tribunal (supra) held as under: 9. In our considered opinion the aforesaid reason does not satisfy the requirement of section 147 of the Act The reasons and the information referred to is extremely scanty and vague. There is no reference to any document or statement. In the present case, we find that AO has recorded about certain investigation in a very generalized man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te) alongwith the names of persons concerns through them they have operated alongwith the names of banks/branch in which they had accounts and the most frequent addresses used by the group. b) The network has been utilized for the purpose of defrauding the revenue in massive scale. Wherever cheques for different kinds of expenses entries have been received, they have been routed through a web of bank accounts and withdrawn finally in cash for payment to the issuer. c) In some cases since the group is involving in providing accommodation entries of share application etc. instead of withdrawing cash, cheques / payorder / D.D.s are issued to the beneficiaries. d) Vishal Aggarwal operated from Sangali Bank, Karol Bagh, Federal Bank, Karol Bagh, State Bank of Bikaner Jaipur, New Rohtak Road, Keshav Sehkari Bank, Karol Bagh, and Standard chartered Bank, Karol Bagh using the name of entities Vee Kay Co., Aggarwal Sales Corporation, Hopewin Admark Counseltancy Services Pvt. Ltd., Shivam Softech, Han Kumar Sons HUF, Arpit Sales, P.K. Investment and S.G. Packers and individuals Harish Kumar Aggarwal, Manju Agarwal, Amit aggarwal, Mukesh Jain and Parmanand Bhardwaj. The add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The last year the Share application money of 1,52,500 equity shares of ₹ 10/- each was shown as ₹ 15,25,000/- No details whatsoever in respect of introduction of ₹ 5,000/- by way of share application money has been given in any schedule attached with the return. In the AY. 1999-2000 the case was reopened u/s 147/148 of the basis of the information received from DIT (Inv.) New Delhi and verifying the facts from the retun of the filed for A.Y. 1999-2000 and after getting approval from the Addl. CIT. Range 12, New Delhi. The assessee was given proper opportunities to furnish the details /documents to prove the details furnished in A.Y. 1999-2000. The assessee could not furnish the details / documents which could prove the genuineness of transactions shown in the return of income filed. The following additions were made in the Assessment order in A.Y. 1999-2000. 1. Receipts shown as business receipts treated as Income from other sources (as discussed above): ₹ 22,17,679/- 2. On a/c of share application money u/s 68 : ₹ 12,40,000/- 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur opinion, the facts and circumstances of the instant case are different from the facts and circumstances for assessment year 19992000. In the present case there is a specific reference of the assessee company of having engaged in providing accommodation entries. The Assessing Officer has relied on the statement of the Director of the company and her son who was looking after the affairs of the company. These statements are part of the report of the DIT(Investigation). Smt. Manju Aggarwal, who was director in the assessee company during relevant period, in her statement dated 05/04/2005, which is available on page 5o to 52 of the Revenue s paper book, stated that she used to give blank signed papers to Sh. Vishal Aggarwal, her son. She also said that any questions regarding accounts should be made to her son Sh. Vishal. Statement of Sh. Vishal Aggarwal is available on page 54 to 56 of the Revenue s paper book. The answers given in response to question 10 to question 14 during statements are reproduced as under: Q. No. 10 - Please give in detail, what type of business is done is above companies? Ans. The above accounts were used for giving accommodation entries to differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g reasons before the Hon ble Delhi High Court. In those circumstances, the Hon ble Delhi High Court observed that the basic requirement that the Assessing Officer must apply his mind to the materials in order to have the reasons to believe that income escaped assessment, is missing. 4.5.6 But in present case, on perusal of the reasons recorded above and the material available with the Assessing Officer , we do not agree with the arguments of the Ld. counsel that the reasons recorded are vague and scanty and recorded in mechanical manner. 4.5.7 The Hon ble Supreme Court in the case of Raymond Woollen Mills Ltd. (supra) has held that there should be prima facie material for reopening the assessment and sufficiency or correctness of the material is not to be examined at the stage of recording reasons. Thus, in our opinion, the contention of the Ld. counsel of the assessee that Assessing Officer has referred to DIT(Information) and Annexure -A in mechanical manner, without making any independent inquiry and even prima facie seeing correctness of the information and without quantifying the amount formed the belief, is not correct and we reject the said contention. We may also like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the parties with respect to the merits are reserved. 4.5.8 Thus, the Hon ble High Court has concluded that mentioning of the source of information as from Directorate of Revenue Intelligence would be sufficient compliance of law and no further conditions as to nature of documents or contents could be attached to the reasons recorded. 4.6 The second argument, which was taken by the Ld. counsel of the assessee that the Assessing Officer has not applied mind while recording the reasons in view of no totaling of amount, duplication of transactions, transactions not belonging to the assessee, debit entries etc. In our opinion, not making the total of the amounts does not in any way can be non application of mind. It is merely an arithmetic exercise. The amount in question are prima facie more than the minimum amount for invoking provisions of section 147 of the Act. Totaling of amount becomes relevant at the time of final assessment of income and not at the stage of recording reasons. The Ld. counsel further contended duplication of transactions in the list of 91 transactions. We do not agree with the said contention because it may be possible that on one day, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... might have received two or more entries of same amount on a particular day. Thus, the facts of the decision in the case of Comero Leasing and Financial Private Limited(supra) are distinguishable from the facts of the present case. 4.7 Next argument taken by the Ld. counsel of the assessee is that the approval of Addl. CIT under section 151 of the Act is missing in the present case. We find that in the paper book filed by the Revenue the said approval is available on page 47 of the paper book. It is evident from the said approval that the Addl. CIT has seen records and after perusal of records, he was satisfied that it was a fit case for issue of notice under section 148 of the Act and accordingly , he granted the approval to the Assessing Officer for issue of notice under section 148 of the Act. Thus the contention of the Ld. counsel that approval is conspicuously missing is not correct. In the instant case, the son of the director who was looking after the affairs of the assessee company, admitted in clear terms that bank accounts of the assessee company were used for accommodation entries. We note that the approval has been granted by the Addl.CIT keeping in view of the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2007, which is available on page 16 of the assessee s paper book, the assessee company sought cross-examination of the Authority, who prepared the report and took statements on oath of Sh. Vishal Agrawal etc. The assessee has not specified any objection and made a general statement as reasons are not acceptable. In the letter dated 24/12/2007, the assessee filed the submission in response to queries raised by the Assessing Officer, and thus, it was not objections to re-assessment proceedings effectively. Moreover, this letter is also filed at the fag end of period of limitation of assessments process. The notice u/s. 148 of the Act was issued on 21.09.2006 and thereafter the assessee filed letter that return filed earlier u/s 139(1) might be treated as return filed in response to notice u/s 148. No reasons were asked after filing the letter. The Assessing Officer issued notice u/s. 143(2) 142(1) on 14.08.2007, after a gap of almost one year from issue of notice u/s 148 of the Act, but the assessee didn t comply said notice. The Assessing Officer issued a final show cause notice on 04.12.2007 proposing to assessee the income as mentioned in the notice. The assessment was to be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer again issued a letter to the assessee company requesting compliance of the notices issued earlier, but this opportunity was also not availed by the assessee. On 04/12/2007, the Assessing Officer issued a final show cause notice to furnish evidence in support of claim of share capital, loans etc appearing in the balance sheet. The assessee filed a letter dated 17/12/2007 for providing copy of reasons recorded for reopening the assessment. The Assessing Officer provided the reasons recorded on 20/12/2007. On 24/12/2007, the assessee provided only part information and in absence of discharging its onus under section 68 of the Act, the Assessing Officer made the addition in respect of the amount received during the year. We find that assessee has nowhere asked for copy of the statements of the directors recorded by the investigation wing. In the reasons recorded, there was a clear reference of the statements of, Sh Harish Agrawal, Smt. Manju Aggarwal and Sh. Vishal Aggarwal, wherein sh. Vishal Aggarwal admitted of providing accommodation entry by the assessee company. The Ld. senior DR submitted that a copy of statements of the concerned persons was also made available to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a India Ltd. was given. None of the documents submitted was disproved by the AO but rejected/ignored without any enquiry whatsoever or without adducing anything contrary to the claim of the assessee or in support of his allegation of giving and taking accommodation entries. CIT, Vs. Gangeshwari Metal Pvt. Ltd. ITA 597/2012 Dated 21.01.2013 (DHC) (Case Laws P 144-153) last para on page 152. 7.1 The Ld. Senior DR, on the other hand, submitted that assessee company failed to discharge its onus under section 68 of the Act in respect of the amount received during the year not only before the Assessing Officer but also before the Ld. CIT-(A). The assessee only placed reliance on the various decisions of the Hon ble Court, but did not file any documentary evidence in support of identity, creditworthiness and genuineness of the transaction and therefore the Assessing Officer was justified in making addition under section 68 of the Act. 7.2 We have heard the rival submissions and perused the relevant material on record. The Ld. CIT-(A) in para-2.12 of the impugned order has observed as under: 2.12 The appellant admittedly received the credit from 91 person totaling ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the genuineness of the transaction could not be established, neither the creditworthiness nor financial strength could be established. No correct address of all such persons was given and whether the said persons are filing the return on regular basis could not be stated by the Ld AR before me and with this submission, no fruitful enquiry could be caused by the Department. Since the Department has established that such person does not have sufficient creditworthiness as such identity itself remains to be verified, the onus automatically shifts from the Department to the appellant and now it is the appellant to establish before the Department such creditworthiness of creditors who have invested such fund. Non furnishing of correct address, failure of the appellant to produce necessary evidence before the Assessing Officer and also before the Appellate authority, which are peculiar to the case in hand. 7.4 Further, in para-2.25, the Ld. CIT-(A) has observed as under: 2.25 It is admitted that the identity of the subscriber was not established and also the genuineness of the transaction could not be established, neither the creditworthiness nor financial strength could be establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page 35 to 36 of the paper book) (ii) Copy of confirmation of accounts duly signed by the payer.(page 37 paper book) (iii) Copy of Letter admitting the transactions( page 38 of the paper book) (iv) Copy of affidavit by the director of the company( page 39 of the paper book) (v) Copy of certificate of PAN( page 40 of the paper book) (vi) Copy of acknowledgement of return( page 41 of the paper book) (vii) Copy of balance sheet and profit and loss account ( page 42to 43 of paper book). 2. Aggarwal sales Corporation (i) Copy of Ledger accounts in the books of assessee( page 44 of the paper book) (ii) Copy of letter admitting transactions( page 45 of the paper book) (iii) Copy of affidavit of the director ( page 46 of the paper book) 3. Swastik Advertising Agency (i) Copy of Ledger account in the books of the assessee( page 47 of the paper book) (ii) Copy of confirmation( page 48 of the paper book (iii) Copy of acknowledgement of return 4. Krishna Cinema India Ltd. (i) Copy of Ledger account in the books of the assessee( page 50 of the paper book) (ii) Copy of confirmation of accounts(page 51 of the paper book) (iii) Copy of lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st and penalties illegally raised. 6. The appellant craves leave to raise further/additional grounds and documents and file paper book before the hearing of the appeal and prays for the appeal to be allowed after hearing both sides. 10. The facts and circumstances of the case in the year under consideration are identical to the facts and circumstances in assessment year 2001-02 except the amount of addition made. 11. In ground No. 1, the assessee has raised objections identical to the ground No. 1 of the appeal for assessment year 2000-01. Thus following our finding in ITA No. 3777/Del/2012 in para number 4 to 4.11, we dismiss the ground of the appeal. 12. In ground No. 2, the assessee has raised issue of objections specifically raised, not disposed off before passing the impugned order. 12.1 The Ld. counsel submitted that lack of jurisdiction was agitated by the assessee vide letter dated 12/12/2008, a copy of which is placed on page 161-169 of the assesses paper book, but no order resolving the issue of jurisdiction was passed by the Assessing Officer, which is violation of the directions of the Hon ble Supreme Court in the case of GKN Driveshaft India Ltd Vs. Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made, only ₹ 27,50,500/- was amount of credit entries. The list of the credit entries provided by the learned counsel of the assessee in his written submission is as under: 1. SK investment (share broker) received on sale of investment ₹ 3,00,000 2. Harish Kumar and sons( received on sale of investment) ₹ 9,30,500 3. Vee Aay company(received on sale of investment) ₹ 3,75,000 4. Graduate United services( refund of money advanced earlier) ₹ 6,00,000 5. M/s Aggarwal sales Corporation( refund of money advanced earlier) ₹ 3,45,000 6. Mukesh Jain(share application money) ₹ 1,00,000 7. Amit Jain(share application money) ₹ 1,00,000 14.2 The Ld. counsel further submitted that following amounts are debit and which cannot be treated as unexplained cash credit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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