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TMI Blog2020 (5) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation and inquiry carried out in the case of entry provider, Shri S.K. Jain that assessee is also one of the beneficiaries of accommodation entries aggregating to Rs. 30 lac in the impugned assessment year through three entities vide following cheques as incorporated in the assessment order. "Three entities vide Cheques No. 310950 & 310953 dated 15.09.2009 from M/s Victory Software P. Ltd. Rs. 20,00,000/- , M/s. Cheque No. 3 10555 dated 18.09.09 from M/s. Zenith Automotive P. Ltd. Rs. 5,00,000/- and Cheque No 310843 dated 21.10.2009 from M/s Humtum Marketing Pvt. Ltd. Rs. 5,00,000/-, managed and controlled by Shri Surendra Kumar Jain and his brother Shri Virendra Kumar Jain." Based on this information following 'reasons' were recorded:- "M/s. Minal Systems (P) Ltd. (previously Tulip Systems P. Ltd.) is assessed to tax with Circle-16(1), New Delhi. Enquiries of Investigation Wing, Delhi of the Department have unearthed huge accommodation entry racket being operated by accommodation entry operator Shri Surender Kumar Jain by way of more than 100 companies/firms etc. The Investigation Wing has complied a report & data of the beneficiaries of such entries. The name of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: "11. The first contention of the appellant is that the reason to believe is based on surmises and conjectures. I disagree with the contention. The basis of the reason was findings of the investigation wing which are duly recorded in the Assessment Order and the reasons were duly communicated to the appellant on 26.06.14. The reasons have been reproduced in Para 5 above. After carefully considering the reasons, I hold that the reason to believe has been formed after careful consideration and sound analysis of highly incriminating and self- explanatory material in possession of the Assessing Officer. 11.1 The second contention is that the A.O. did not apply mind. In this era of effortless cut- copy-paste, to decisively discern from reading a few paragraphs whether mind was applied or not may require a perception well beyond the cognitive powers and analytical skills of a judicial mind. The appellant's contention that Assessing officer borrowed the belief without applying independent judicial mind also gives rise to the question as to how much mind is the Assessing Officer expected to apply before issuing a notice u/s 148 when certain authenticated, categorical and specific in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion either before the Assessing Officer or before any other authority before the reassessment proceedings. 11.3 During the appellate proceedings the appellant did bring to the attention of the Assessing Officer vide letter dated 26.12.14 (i.e. 10 months after the issue of notice u/s 147 and about 3 months before the passing of the Assessment Order) the information regarding change of name. The information was communicated to the Assessing Officer just before the conclusion of the assessment proceedings. It is imperative that non communication of change of name to the Assessing Officer for 7 long years and racking up the issue just before the conclusion of the assessment proceedings were due to self serving design of the appellant. It is also possible that for earlier assessment years also the assessment was completed by the same Assessing Officer to which any objection raised by the appellant is not visible anywhere. 11.3.1 The Assessing Officer has passed the order in the name of 'M/s Minal systems (previously known as Tulip Systems Pvt. Ltd.)' which is the correct way to do it by taking into a/c the late information about name change. 11.4 The appellant has also contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot reflect and indicate unascertained liability. Thus, the assumption drawn by the Assessing Officer in the "reasons to believe" is farfetched, vague, and a mere pretense. It is also extraneous and irrelevant to the issue and formation of belief that "unascertained liability" had been claimed and allowed as expenditure." 5. In the present case also A.O has merely acted on the report received from investigation wing and has not investigated further before reopening the assessment. This is evident from the fact that the documentary evidence supporting the contention of A.O. that there are accommodation entries taken by assessee has never been supplied and confronted with assessee. More so we are enclosing herewith copy of ITR, computation sheet and confirmation of those entities who have given this money as unsecured loan to the assessee. As the assessee has discharged it's onus to prove the identity and credit worthiness of the lenders, the A.O. is with in his power to investigate the lenders under Income Tax Act. This clearly shows that "reasons to believe" has been formed in a very mechanical and casual manner and rightly pointed out as above by Ld. Delhi High Court: that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 30 lakhs. The 'observations' and 'advices' contained in Para 2 of letter dated 23.1.15 and vide Para 2 and 4 of letter dated 5.12.14 are not the focus of the letters and are at best routine rhetoric in nature. I have also noted that these letters were written after 11 months of issue of notice u/s 147 and merely 2 months before the completion of the reassessment proceedings. 11.4.7 The motive for including these submissions in a letter primarily requesting for supply of copies of documents could be to divert the focus of the Assessing Officer away from the substantial issue. In fact the contention raised vide Para 2 and 4 of the letter dated 23.01.15 that the action of the A.O. in reopening the assessment is bad in law because the reasons for reopening have not been confronted with the assessee, is at best a wrong description of the circumstances. In fact, on 26.06.14, that is 5 months before the said letter, the copy of the reasons recorded was duly supplied by the Assessing Officer to the appellant. Clearly, for 5 months after seeing the reasons the appellant raised no objection to reopening of the assessment proceedings. In fact, in the assessment order as well as in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant amounts/ Cash deposits of equivalent amounts just before the issue of the cheque by the creditor company. (g) The balance sheet and profit and loss accounts of these companies reveal that effectively there is no business carried out by the company and the companies are used only for the purpose of providing accommodation entries. (h) Summons served to the creditor companies either returned unserved or were not complied with. The unserved summons raise a doubt about the very existence of the concerned company and the uncomplied summons shift the onus of proving the genuineness & credit worthiness of the transaction on to the assessee. (i) The appellant refused to produce the creditors before the A.O. expressing its inability to do so thus in effect absolving itself from the onus cast upon it under Section 68. (j) No collateral security/ guarantee was furnished for obtaining the above loan. (k) The loan has neither been returned till date nor is any interest ever paid on it for last 7 years thereby implying that the motive of the creditor companies was not earning of interest on investment. (1) The Assessing Officer did not provide an opportunity to the appellant to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only based on correct facts but also had correct appreciation of law and we do not find any reason to deviate from such a conclusion and absence of any rebuttal from the side of the assessee. Accordingly, the validity of reopening is upheld. 7. In so far as issue on merits is concerned, apart from fact that the details of the transaction of the assessee were unearthed during the investigation carried out in the case of Shri S.K. Jain who admitted that he was an entry provider but assessee was found to be beneficiary in the inquiry conducted in the case of Mr. S.K. Jain. Not only that, Assessing Officer has asked for further details from the assessee which could not be provided as noted by the Assessing Officer. Thereafter, the Assessing Officer has conducted his inquiry and issued summons and notices to the three entities. However, none of the parties responded on the notices sent came back unserved. When assessee was confronted with this fact and was asked to produce the Director/Principal Officer of the company who have given loan, the assessee could not comply with such a requisition by the Assessing Officer. Thus, genuineness of the transaction and the creditworthiness could ..... X X X X Extracts X X X X X X X X Extracts X X X X
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