TMI Blog2022 (12) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in the case of Hon ble Supreme Court in the case of Friends Trading Co. [ 2022 (9) TMI 1076 - SUPREME COURT] with other several decisions, additions confirmed - ITA Nos. 447 to 452/PUN/2020 - - - Dated:- 22-11-2022 - SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER Assessee by : None Revenue by : Shri Ramnath P Murkunde ORDER PER INTURI RAMA RAO, A M: These are the appeals filed by the assessee directed against the common order of ld. Commissioner of Income Tax (Appeals)-2, Pune [ the CIT(A) ] dated 20.01.2020 for the assessment years 2007-08 to 2012-13 respectively. 2. Since the identical facts and common issues are involved in all the above captioned six appeals, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.447/PUN/2020 for the assessment year 2007-08 are stated herein. ITA No.447/PUN/2020, A.Y. 2007-08 : 4. The appellant raised the following grounds of appeal :- 1. The LD ITO, Ward 1 Ahmednagar has wrongly made the additions of Rs 15,00,000 to the returned income for AY 2007-08 tow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case was taken for scrutiny assessment. Despite several notices of hearing, the appellant only provided a bald explanation stating that the loans and advances were booking advance of the flats. He only filed copies of Balance Sheet, Deed of Partnership of appellant and confirmation letters of closing balance as on 31.12.2012 in his books of account. The assessee had not discharged the onus of proving the genuineness of the transactions, identity of creditors and creditworthiness of the investors to make the investment in question to the satisfaction of the Assessing Officer. Therefore, the Assessing Officer had brought to tax the accommodation entries and completed the assessment vide order dated 31.03.2015 passed u/s 144 r.w.s. 147 of the Act. 7. Being aggrieved by the above assessment order, an appeal was filed before the ld. CIT(A) contending that the loans and advances were obtained through crossed account payee cheques and the appellant had discharged the onus by filing the confirmations. Before the ld. CIT(A), the assessee also contested the very validity of the re-assessment and filed certain additional evidence in the form of cash receipts issued to the appellant by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was suffering from viral fever etc and also taking into consideration, this matter was adjourned at the request of the assessee on several occasions, earlier, the issue in the appeal is no more res integra, we proceed to dispose of this appeal on merits. 11. The appellant had filed the written submissions contending that reopening of assessment is bad in law as the Assessing Officer had reopened the assessment on borrowed satisfaction and placed reliance on the following decisions :- (i) PCIT vs. hodiman Investments (P.) Ltd., 422 ITR 337 (Bom.). (ii) PCIT vs. Meenakshi Overseas (P.) Ltd., 395 ITR 677 (Delhi). And also by raising the following additional grounds of appeal :- Gr. No. 5 : The Hon ble CIT(A) is not justified in upholding and confirming the additions made by the Ld. Assessing Officer without considering the fact that there was mechanical approval of the Joint CIT with regard to reopening of the case under section 148 and as such, proceedings are liable to be quashed in view of the judgment of Hon'ble Apex Court in the case of S. Goyanka Lime and Chemical Ltd. as reported in 237 Taxman 0378 (SC). Thus, the assessment order becomes bad in law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed several opportunities had failed to discharge the onus of proving by cogent and reliable evidence of identity of the creditors, creditworthiness of the creditors/investors and genuineness of the transactions to the satisfaction of the Assessing Officer. Needless to say that the onus lies upon the assessee to establish these factors and mere furnishing of list of persons, who claimed to have advanced money to the appellant would not constitute sufficient compliance with the onus placed on the assessee. The Hon ble Supreme Court in the case of PCIT vs. NRA Iron Steel (P.) Ltd., 412 ITR 161 (SC) referring to its earlier precedent on the subject and summarized the principles on the issue vide para 11 of the said judgment is reproduced hereunder :- 11. The principles which emerge where sums of money are credited as Share Capital/Premium are : i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and creditworthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed DEPB under the Customs Act, wherein, it was found DEPB licenses were forged and it was held that the exemption benefit availed on such forged DEPB is void ab initio on the principle that fraud vitiate everything and the period of limitation was held to have no application and the Department was held to be justified in invoking the extended period of limitation and the fact that whether the beneficiary had no knowledge of about the fraud/forged and fake DEPB licenses have no bearing the imposition of custom duty. The ratio of judgement is squarely applicable to the transaction under consideration before us. Further, the application of principle of the fraud under judicial Acts was considered by the Hon ble Supreme Court in the case of Smt. Badami (Deceased) By her L.R. vs. Bhali in Civil Appeal No.1723 of 2008 dated 22.05.2012, wherein, the Hon ble Apex Court held as follows :- 20. In S. P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and others [AIR 1994 SC 853] this court commenced the verdict with the following words:- Fraud-avoids all judicial acts, ecclesiastical or temporal observed Chief Justice Edward Coke of England about three centuries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o enjoy the fruits thereof. 17. In the present case also, the appellant deliberately withheld the information from the Assessing Officer as well as the ld. CIT(A) which is within exclusive knowledge of appellant to establish the genuineness of transactions of purchase of shares of that company. It is nothing but a fraud played by the appellant against the Assessing Officer as well as the ld. CIT(A) who are quasi judicial authorities employed for execution of the provisions of the Income Tax Act. Therefore, the principle of fraud can be squarely applied to the facts of the present case and principles of natural justice have no application. Applying the said doctrine, we have no hesitation to hold that the transaction of purchase and sale of shares of SRK Industries under consideration before us is void ab-initio, this is nothing but sham, make believe and colourful device adopted with excellent paper work with intention bringing the undisclosed income into books of account. Accordingly, we confirm the orders of the Assessing Officer as well as the ld. CIT(A) and find no merits in the appeal preferred by the assessee before us. Hence, the grounds of appeal filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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