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2015 (11) TMI 1800

..... 5 lakhs from M/s Zenith Estates Ltd. on 7.8.2004 vide cheque as advance against sale of property vide agreement on sale dt. 4.8.2004. This fact was recorded in the books of accounts of the assessee and the original return of income contained the audited accounts. This advance received was returned to M/s Zenith Estates Ltd. on 21.03.2009, consequent to cancellation of the agreement to sell. All these documents were with the Assessing Officer. In fact the assessee filed his objections also Copies of all the documents were filed. In the reasons recorded, the Assessing Officer states that, the assessee has received credit of ₹ 5 lakhs and has not reflected it in the books of accounts. This is against the facts of the case. The AO also records that the assessee has accepted that it had taken an accommodation entry. This is also incorrect fact. This is not a case where the share capital is introduced by the company. The amount received as advance was returned. The assessee in his letter dt. 7.12.2011 has specifically asked for the statements of Mr.D.N.Taneja and Shri SK Gupta and ledger account of Sh.G.Taneja and copy of appraisal report in the case of TDS proof. It was specifical .....

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..... proceedings in the Taneja Group of cases, the main controlling person of the group Shri D.N. Taneja in his statement recorded on 07.01.2009 offered the entries (transactions) done with Mr. S.K. Gupta's Companies amounting to ₹ 6.23 crores as additional income in the respective financial years in respective companies of his group (there are 15 such companies and includes your assessee M/s Hitashi Estate Ltd. in which accommodation entries of ₹ 5 lacs for A.Y. 2005-06 have been offered as additional income by Shri D.N. Taneja in his above mentioned statement). In view of the above facts, you are requested to please examine the assessment records in the case of your above mentioned assessee and take necessary action. The following documents are enclosed herewith in this regard. 1. Copy of statement of Shri DN Taneja recorded on 7.1.2009. 2. Copy of statement of Shri SK Gupta recorded on 5.1.2009 during the course of survey u/s 133A of the I.T.Act, 1961 in the case of M/s Omni Farms Pvt.Ltd. in which he has admitted regarding providing of accommodation entries to various group, including Taneja Group. 3. Copy of ledger account which includes accommodation entries of  .....

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..... e of the assessee in respect of entry of ₹ 5 Lakh received from M/s Zenith Estates Ltd. as this annexure assessee has been duly signed by Shri D.N. Taneja on 07.01.2009 itself. The fact was further reaffirmed upon perusal of the statement of Shri S.K. Gupta which was recorded on oath on 05.01.2009 during the course of survey operation. Shri S. K. Gupta while answering Q. No. 7 has stated that we give the loans & advances and share capital through cheques after receiving of cash from them and take the premium on those cheques. Shri S. K. Gupta while answering to Q.No. 8 further pointed out the fact that Taneja Group of Companies are such beneficiaries. While answering to Q. No. 17 Shri S.K. Gupta has admitted that he is controlling M/s Zenith Estates Ltd. and the same is running from the premises controlled by Shri S.K. Gupta. The part of the appraised report was also perused. The appraised report discussed in details the modus operandi of the entry given by Shri SK Gupta and taken by Taneja Group through Shri AS Aneja : A survey action u/s 133A of the I.T. Act, 1961 was conducted by Unit-VI of Investigation Wing (Income Tax), Delhi on 20.11.2007, at the business premises .....

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..... S.K. Gupta urns established to be an entry broker. * List of the companies being controlled by Shri S.K. Gupta are as under:- The list includes the name of M/s Zenith Estates Pvt. Ltd. S. No. 38. The statement of Shri S.K. Gupta recorded on 05/01/2009 which give the complete insight of the modus operandi of entries business of Shri S.K. Gupta. From the above discussion it is very clear and admitted fact that M/s Hiteshi Estates Ltd. has received credits of ₹ 5,00,000/- and which does not stand the contours of the law defined by various courts in respect of section 68 of the Act. It is clear that assessee has earned an income of ₹ 5,00,000/- and has not reflected it in its books of account. The statements of Shri S.K, Gupta and Shri D.N. Taneja clubbed with the evidences collected during the course of survey/search operation has provided the sufficient reasons to believe that income of ₹ 5,00,000/- has escaped assessment in the case of M/s Hiteshi Estates Ltd. for A.Y. 2005-06 and thus there is clear cut case of reopening the assessment u/s 1₹ 48 of the Act. At this outset it is relevant to point out the fact that the assessee is duty bound to disclose fully .....

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..... sed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries . In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to .....

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