TMI Blog2022 (3) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... dation entries and on the basis of which the AO initiated re-assessment proceedings. The Hon ble High Court dismissed the assessee s writ petition challenging the initiation of re-assessment. CIT(A) has also referred to another judgment of the Hon ble Gujarat High Court in Pushpak Bullion Pvt. Ltd. [ 2016 (7) TMI 69 - GUJARAT HIGH COURT] in which case again, that assessee was one of the beneficiaries of Mr. Praveen Kumar Jain group of cases, who had allegedly received accommodation entries from M/s. Mohit International, being the same concern and the same A.Y., from whom the assessee under consideration received the alleged loan. The writ petition filed by that assessee also came to be dismissed. There is a reference in the impugned order to still another judgment of the Hon ble High Court in Ankit Financial Services Ltd. Vs. DCIT[ 2017 (1) TMI 1041 - GUJARAT HIGH COURT] . That case also involved one of the beneficiaries of Mr. Praveen Kumar Jain group of cases, who approached the Hon ble High Court challenging the issuance of notice u/s.148 but without success. In view of the above overwhelming legal position settled in favour of the Revenue we are of the considered opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain from the stage of the initiation of the reassessment proceedings and the argument of it being unaware to the statements, is nothing but a shield to defend an undefendable case. It is pertinent to mention that the assessee in its last reply dated 21-03-2015 submitted personally to the AO on 24.3.2015, stated all that it was to state by mentioning in para 3 that: we have already filed with you all the relevant papers as Annexure 1 to 5 of our letter dated 27-06-2014. You have also acknowledged the same in Para 3 of your aforesaid letter. Under the circumstances, we fully explained the said loan . There is no reference to any socalled violation of principles of natural justice by the AO not supplying the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain. In view of the foregoing discussion, we are satisfied that the authorities below were justified in deciding the issue against the assessee. - ITA No. 1961/PUN/2017 - - - Dated:- 7-3-2022 - SHRI R.S. SYAL, VICE PRESIDENT Appellant by : Shri V.L. Jain Respondent by : Shri Piyush Kumar Singh Yadav ORDER PER R.S.SYAL, VP : This appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rits. In the instant appeal, the assessee has challenged the impugned order on the question of jurisdiction u/s.148 of the Income-tax Act, 1961 (hereinafter also called `the Act ); on merits; and on the violation of principles of natural justice. 3. I have heard the rival submissions and gone through the relevant material on record. I espouse the three issues raised by the assessee in seriatim. I. INITIATION OF REASSESSMENT 4. The first issue is against the assumption of jurisdiction u/s.148 of the tax Act. The Reasons recorded for issuing notice u/s.148 read as under: REASONS RECORDED FOR ISSUING NOTICE U/s.148 OF THE I.T. ACT, 1961 In this case information received from the DGIT (Inv.) Pune vide letter dated 11.3.14, regarding the assessee who are beneficiaries of accommodation entries (loans, advances entries, sales entries, share capital entries etc.). On going through the table following details are available in r/o. above named assessee : Bogus Loans Advances F.Y. Name of concerncontrolled managed by Praveen Kumar Jain Name address of the beneficiary Date of trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unmistakably included the assessee s name with its address and also that of M/s. Mohit International, a concern controlled by Praveen Kumar Jain which was admitted to be engaged in providing accommodation entries. It is equally undisputed that such loan appeared in the accounts of the assessee. The condition precedent for issuing notice u/s.148 is that the AO should have reason to believe that any income chargeable to tax has escaped assessment in any assessment year. The reasons to believe do not contemplate making out a fool-proof case at the stage of initiation of re-assessment only. When the search on Mr. Praveen Kumar Jain transpired that he was engaged in the business of providing accommodation entries and the list of beneficiaries submitted by him included the name of the assessee, there remains no doubt about the AO genuinely and lawfully entertaining reason to believe about the escapement of income in the hands of the assessee, who had, in fact, religiously shown such loan in its accounts. 7. It is trite that the AO should have prima facie grounds for forming a belief that there is some escapement of income, which is a condition precedent for initiating reassessment. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s challenge to the initiation of reassessment proceedings by holding that the AO at that stage was required only to form a prima facie opinion about the escapement of income, which condition stood satisfied. In an earlier decision, the Hon ble Delhi High Court in Reach Cable Networks Ltd. vs. DDIT (2008) 299 ITR 316 (Del) dismissed the writ petition challenging the initiation of reassessment proceedings in which the assessee had not originally filed the return of income. In the words of the Hon ble Delhi High Court in Convergys Customer Management vs. Asstt. DIT (2013) 357 ITR 177 (Delhi) : `at the time of issuance of notices under section 148, the Assessing Officer is not expected to form any definite or conclusive opinion about the taxability of the disputed amounts and that he is only expected to form a tentative or prima facie belief regarding the escapement of income chargeable to tax . 8. A cursory glance at the proposition laid down in the above judgments fairly brings out that the initiation of reassessment proceedings requires the AO to form a prima facie view about the escapement of income. There is no need to conclusively establish at that stage itself that such and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Om Vinyls Pvt. Ltd. Vs. ITO wherein the same Mr. Praveen Kumar Jain group of cases was involved for providing accommodation entries and on the basis of which the AO initiated re-assessment proceedings. The Hon ble High Court dismissed the assessee s writ petition challenging the initiation of re-assessment. The ld. CIT(A) has also referred to another judgment of the Hon ble Gujarat High Court in Pushpak Bullion Pvt. Ltd. Vs. DCIT, in which case again, that assessee was one of the beneficiaries of Mr. Praveen Kumar Jain group of cases, who had allegedly received accommodation entries from M/s. Mohit International, being the same concern and the same A.Y., from whom the assessee under consideration received the alleged loan. The writ petition filed by that assessee also came to be dismissed. There is a reference in the impugned order to still another judgment of the Hon ble High Court in Ankit Financial Services Ltd. Vs. DCIT. That case also involved one of the beneficiaries of Mr. Praveen Kumar Jain group of cases, who approached the Hon ble High Court challenging the issuance of notice u/s.148 but without success. 11. In view of the above overwhelming legal position set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his entire transaction is the commission on the accommodation entry given to the beneficiary company/builder 0.15% to 0.20% per month . It was on the basis of such statements, that the AO recorded the above reasons for reassessment and dealt with the objections raised by the assessee through a separate order, which was not challenged by the assessee before the Hon ble High Court. In support of the genuineness of the transaction, the assessee furnished before the AO - Ledger extracts of M/s. Mohit International from its books of account; Bank statement; Confirmation from lender; Audited Statement of accounts of lender; his PAN card; his Income-tax return etc., which did not convince the AO as well as the ld. first appellate authority. 13. In order to appreciate the genuineness or otherwise of the transaction, I, firstly, deal with the above referred material supplied by the assessee to the authorities below. The first and the foremost thing to be noted is that M/s. Mohit International is a proprietorship concern of Mr. Nilesh Parmar, whose PAN and Income-tax return have been placed on record by the ld. AR. At this stage, it is relevant to mention that the statement of Mr. Nilesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account and Balance sheet of this concern de hors the other relevant details, I have no doubt that the Annual accounts not only lack credence but also prove nongenuineness of the transaction thereby destroying the assessee s fa ade of authenticity. Though the assessee placed on record a copy of ledger extract, bank statements, incometax returns, PAN of Mr. Nilesh Parmar and TDS certificates etc., but Schedules to the Profit and loss account and the Balance sheet, which could have illuminated the issue further, have not been made available. On a specific query, the ld. AR denied to have possession of the Tax Audit Report which could have thrown further light on the nature of activities carried out by M/s. Mohit International. When the assessee had such an easy access to the Annual accounts, Income tax return and PAN along with the bank statements of M/s Mohit International etc., I fail to comprehend as to what prevented it from getting Schedules to the Annual accounts and its Tax audit report, which could have indicated the nature of business carried on by M/s. Mohit International and other crucial details having bearing on the transaction with the assessee. 15. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 56.00 lakh and one debit transaction of ₹ 12.70 lakh. Opening balance on 28.2.2007 as per the bank statement is ₹ 37.54 lakh and closing balance is ₹ 59.18 lakh. Similar is the position about several debit and credit entries on all the dates and the balance in the bank account running into crores. For example, on 16.3.2017, being the last date on two pages given, there is a closing balance of ₹ 1.87 crore. It is not understandable as to how Mr. Nilesh Parmar, who was working just as an Accountant with Mr. Praveen Kumar Jain, could have managed to have bank transactions running into crores of rupees. No answer could be given by the ld. AR to this during the course of hearing before the Tribunal. 17. When the above factual scenario is examined in the light of the statement given by Mr. Nilesh Parmar himself that M/s. Mohit International was one of the concerns which was apparently engaged in the business of Diamonds trading but actually providing accommodation entries, there remains no doubt that the transaction of loan of ₹ 25.00 lakh received by the assessee is nothing but a bogus loan received from M/s. Mohit International, through a proprie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons to believe that the apparent is not real, as is the case under consideration as well, then the apparent should be ignored to unearth the harsh reality. 19. Similar view has been canvassed in Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC). The question for consideration in that case was whether the assessee purchased winning tickets after the event. It was observed that in all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act, lies upon the assessee. But, in view of section 68, where any sum is found credited in the books of the assessee for any previous year the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In deciding the issue against the assessee, their Lordships held that : `Apparent must be considered real until it is shown that there are reasons to believe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a matter of record that the reasons recorded by the AO clearly indicated that the assessee received alleged loan of ₹ 25.00 lakh from M/s. Mohit International. The assessee raised objections against such reasons which were disposed off by the AO, vide his order dated 21-01-2015, whose copy is available at pages 14 and 15 of the assessment order. In para 3 of such order, the AO has clearly referred to the transactions of the alleged loan accepted by the assessee from M/s. Mohit International, who was a mere accommodation entry provider to various beneficiaries and the assessee was one of such beneficiaries. This shows that the assessee was well aware about the transaction under challenge allegedly entered into with M/s. Mohit International, whose proprietor admitted to be an accommodation entry provider. In support of the genuineness of the transaction, it was the assessee, who placed on record Ledger extracts, Bank statement, Confirmation from lender, PAN card, Income-tax return and Annual accounts of the lender etc. Submission of such documents in support of the genuineness of the transaction pre-empts the argument of ignorance of the case made against him by the AO. It is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted financials of M/s. Mohit International. In such circumstances, it will be too much to contend that the assessee was oblivious of the statements which were used against him. 25. Be that as it may, it is a settled legal position that the first appeal is a continuation of assessment proceedings. When the assessment order containing all the relevant questions from the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain was challenged before the ld. CIT(A), the assessee did nothing more than re-furnishing of the earlier documents viz., incometax returns and PAN card etc. of Mr. Nilesh Parmar, which it had already filed with the AO. The assessee has failed to make its case any better before the Tribunal as well. In view of the above factual matrix, it is apparent that the assessee was in full knowledge of the state of affairs and the transaction of accommodation entry received from M/s. Mohit International, on the basis of which the addition came to be made. 26. The Hon ble Supreme Court in State of U.P. Vs. Sudhir Kumar Singh and others in Civil Appeal No.3498/2020 (arising out of SLP (C) No.5136/2020 vide its judgment dated 16-10-2020 has extensively dealt with the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established twice, firstly, in the statement of Mr. Nilesh Parmar recorded u/s.131 and, secondly, in the statement of Mr. Praveen Kumar Jain recorded u/s.132(4) of the Act. All the attending facts and circumstances flowing from the documents of M/s. Mohit International, furnished by the assessee itself, as discussed hereinabove, abundantly corroborate the version stated by Mr. Nilesh Parmar and Mr. Praveen Kumar Jain in their respective statements about the racket of accommodation entries. In such circumstances, the assessee cannot claim any violation of principles of natural justice. 28. I am reminded of the judgment of the Hon ble Supreme Court delivered by a five Hon ble judges-bench in Managing Director, ECIL and others Vs. B. Karnakumar and others (1993) 4 SCC 727 holding that if after hearing parties, the Court/Tribunal comes to the conclusion that the non-supply of the report would have made no difference to the ultimate findings and the punishment given, the Court/Tribunal should not interfere with the order of punishment by mechanically setting-aside the order of punishment on the ground that the report was not furnished. 29. The Hon ble Delhi High Court in Roger Ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration, my attention has not been drawn towards any specific material indicating that the assessee requested for cross examination of either or both of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain, which was not allowed by the AO. 32. The above discussion boils down that the assessee was very well aware of the contents of the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain from the stage of the initiation of the reassessment proceedings and the argument of it being unaware to the statements, is nothing but a shield to defend an undefendable case. It is pertinent to mention that the assessee in its last reply dated 21-03-2015 submitted personally to the AO on 24.3.2015, stated all that it was to state by mentioning in para 3 that: we have already filed with you all the relevant papers as Annexure 1 to 5 of our letter dated 27-06-2014. You have also acknowledged the same in Para 3 of your aforesaid letter. Under the circumstances, we fully explained the said loan . There is no reference to any socalled violation of principles of natural justice by the AO not supplying the statements of Mr. Nilesh Parmar and Mr. Praveen Kumar Jain. In view of the foregoing discussion, ..... 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