TMI Blog2020 (5) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... modation entries in relation to capital and expenses. On merits, the AO has not made any primary, independent enquiry to arrive at a conclusion to tax the amount u/s 68 of the Act. Since the Part A of the reasons recorded are clear and lucid about the method and modus of the entries being forwarded by the assessee company and not accounting the commission received thereof, and owing to the fact that the assessee has refused the opportunity of refuting the evidences gathered by revenue that Sh. Vishal Aggarwal and others has used the company as a conduit to give accommodation entries, the addition made on account of commission income earned by the assessee on the amount of the entries provided is hereby confirmed. Since, the assessee is proven to be a conduit/pass through entity without any business of its own, no other addition in the hands of the assessee company is warranted. Owing to the nature of the allegations and non-application of mind, we hold that Part B of the reasons recorded cannot be held to be valid cease to survive. Consequently, the additions made by the Assessing Officer are liable to be deleted. Appeals of the assessees are partly allowed. - ITA No. 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erous such bank accounts, the account holders, the persons operating these accounts and the persons for whom such account holders were working. These enquiries revealed inter alia the following: - 2.1 Entries were being broadly taken for two purposes: 1. To plough back unaccounted black money for the purpose of business or for personal needs such as purchase of assets etc., in the form of gifts, share application money, loans etc. 2. To inflate expenses in the trading and profit and loss account so as to reduce the real profits and thereby pay less taxes. 2.2 The assessees who had unaccounted money (called as entry1 takers or beneficiaries) and wanted to introduce the same in the books of accounts without paying tax, approached another person (called as entry operator) and handed over the cash (plus commission) and had taken cheques/DDs/POs. The cash was being deposited by the entry operator in a bank account either in his own name or in the name of relatives/friends or other persons hired by him, for the purpose of opening bank account. In most of these bank accounts, the introducer was the main entry operator and the cash deposit slips and other instruments we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G 609052 500000 15.07.2003 PARAM ENTERPRISES CITI BANK SANSAD MARG 609054 400000 19.07.2003 PARAM ENTERPRISES CITI BANK JEEVAN BHARTI BUILDING 884002 500000 09.08.2003 P.K. INVESTMENTS CITI BANK JEEVAN BHARTI BUILDING 884015 200000 04.09.2003 P.K. INVESTMENTS CITI BANK JEEVAN BHARTI BUILDING 874986 250000 28.02.2004 - P.K. INVESTMENTS CITI BANK JEEVAN BHARTIBUILDING 874994 250000 09.03.2004 P.K. INVESTMENTS CITI BANK JEEVAN BHARTI BUILDING 874996 150000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide the accommodation entries to the tune of ₹ 35,50,000/-. On perusal of the return filed by the assessee it has been observed that the assessee has received fresh share application money of ₹ 10.5 Lacs and made a fresh investment of ₹ 10 lacs and shown service charges received of ₹ 6.3 Lacs and sales of ₹ 9.83 Lacs and claimed expenditure of ₹ 16.66 Lacs.. The assessee has also reduced its current liabilities by ₹ 7.09 Lacs. The assessee has thus helps various beneficiaries in providing accommodation entries in relation to capital expenses. Since all these transactions are sham transaction and has been done for providing accommodation entries on which the assessee has earned the commission but has not reflected the same it its books of account. The lenders in these cases have been proved to be men/parties of no creditworthiness. I therefore have reasons to believe that this amount of ₹ 95.88 Lacs represents income of the assessee chargeable to tax and the commission on this amount which has escaped assessment for A.Y. 04-05. The necessary approval u/s 151(2) may kindly be accorded for issue u/s 148 of the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the light of the reasons for reopening recorded by the Assessing Officer. On perusal of para 4.2 of the reasons, we find that the AO initially held that the assessee company has been used to provide accommodation entries to the tune of ₹ 35,50,000/- and the commission received has not been reflected in the books of account. Having said so, the Assessing Officer went ahead with taxing the entire amount in the hands of the assessee which was utilized for providing the entries. Similarly, the addition made by the AO on account of the share capital of ₹ 10,50,000/- received from various individuals namely, Harish Aggarwal, Parmanand Bhardwaj, Suvan Agro Enterprises Pvt. Ltd. and Topchem India Pvt. Ltd. 9. The AO has calculated an amount of ₹ 95.88 lakhs as representing the income of the assessee chargeable to tax and the commission on this amount has escaped assessment (last line of para 4.2 of reasons). This clearly proves that the mind of the Assessing Officer revolved only on the commission income. Even if, it is assumed that the AO has considered an amount of ₹ 95.88 lakhs as income escaped, we find that this has been derived by the AO by adding up am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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