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TMI Blog2024 (2) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... s merely based on change of opinion which is not permissible as per law. 3. Under the facts and circumstances of the case, the re-assessment proceedings u/s 147 of the Act by the Id. Assessing Authority is bad at law as the said proceedings has been initiated without any independent application of mind. 4. Under the facts and circumstances of the case, the re-assessment order passed u/s 147 of the Act by the Id. Assessing Authority is bad at law as the order is passed without providing an opportunity to cross examine the statements on which Id. A.O. has relied upon. 5. Under the facts and circumstances of the case, the orders passed under section 147 by the Id. Assessing Authority is arbitrary, injudicious and bad at law as the orders has been passed by the Id. Assessing Authority without appreciating the facts of the case . 6. Under the facts and circumstances of the case, the Id. Assessing Authority has erred in making additions to the returned income amounting to Rs. 2,34,60,000/- u/s 68 of the act as unexplained cash credits which is arbitrary, injudicious and against the facts of the case . 7. Under the facts and circumstances of the case, the ld. Assessing Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Attractive Finlease Pvt. Ltd Axis Bank 40,00,000/- P.O. No. 031278 dated 22/12/2009 2. M/s Shalini Holdings Ltd Axis Bank 40,00,000/- P.O. No. 031279 dated 22/12/2009 3. M/s Victory Software Pvt Ltd. Axis Bank 50,00,000/- P.O.No. 031741 dated 19/01/2010 4. M/s Aasheesh Capital Services Pvt. Ltd Axis Bank 50,00,000/- P.O.No. 031739 dated 19/01/2010 5. M/s Zenith Automotive Pvt Ltd. Axis Bank 50,00,000/- P.O.No. 031742 dated 19/01/2010 I have therefore, reason to believe that the taxable income of Rs. 2,30,00,000/- represented by Share Application Money/ Loans/ Advance/ Share Capital from the companies as aforesaid escaped assessment due to failure of the assessee company to disclose facts truly & fully necessary to make assessment for A.Y. 2010-11. In view of the findings of the investigation report, the case of the assessee company needs scrutiny, in view of the fact the above entries have been obtained through the entry operator, investigated and reported by the investigation wing. I therefore have reasons to believe that this amount of Rs. 2,30,00,000/- represents income of the assessee chargeable to tax and which has escaped assessment for A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the SFIO, Ministry of Corporate Affairs, Govt. of India dated 31.3.2016. The report has been examined carefully and its contents, annexures, statements and other documents have been perused. These have also examined with reference to the return filed by the assessee and earlier proceedings u/s 147/148 of the Income tax Act, 1961. The information received from investigation wing was not considered while finalizing the assessment and the assessment was completed at returned income. 2.1 Report and extracts of important documents including hand written cash books, names of intermediaries, amounts of cash received from intermediaries and the amounts of accommodation entries given to the beneficiaries including cheque nos., names of entry providing entities controlled by Jain brothers, etc., seized from the residence and offices of Shri Surender Kumar Jain and his family members and office premises of related persons/entities, was also received from the office of the Director of Income-tax (Investigation-Il) Jhandewalan Ext. New Delhi vide letter No. F. No. DIT(Inv)-II/U/s. 148/2012-13/197, dated 12.03.2013 mentioning therein that a search operation was carried out in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these companies. (ii) The seized records include blank unsigned as well as blank signed cheque book, acknowledgement of filing of return of these companies, user ID and password of all companies of e-filing of their return, bank account opening and closing letters, authorization letters for attending assessment proceedings, book of account in tally format as well as format for filing the return, proof of use of mobile numbers of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain in bank account opening forms where option of mobile banking was required. The companies were used in business of providing accommodation entries: (iii) The investigation wing has listed 99 companies which were controlled by S.K. Jain Group. 2.4 The investigation wing has sent relevant details of accommodation entries to the Assessing Officers having jurisdiction over beneficiaries which had obtained accommodation entries from S.K. Jain Group. The report has also included the name of companies controlled by S.K. Jain and used for providing accommodation entries to the beneficiaries. Scanned copy of the relevant documents seized from S.K. Jain Group wherein the relevant details of accommodation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in tally format as well as in the format required for preparing Income Tax Return of these companies in the computer Hard Discs found and seized from the residence of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain. vi. That daily cash books, balance sheet and cheque books found and seized from Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain wherein details of cash received from different beneficiary companies/ persons through various middleman/ agents in lieu of accommodation entries provided to them on different dates have been recorded. vii. That one of the mediators Sh. Rajesh Aggarwal admitted that he arranged accommodation entries for a group through a person named Sh. Ravinder Goel through various companies directly controlled by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain and also accopted the fact that he knew since long that Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain are engaged in the business of providing the accommodation entries in lieu of cash charging a certain amount of commission for the same. viii. That these dummy companies are running their activities from the residential and the other premises of Sh. Surendra Kumar Jain and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Books of accounts and document of companies registered at this address was not found. c. At the third premises 209, Bhanot Plaza, 3, D.B. Gupta Road, Paharganj, New Delhi, there was single room office occupied by one Sh. Jaikishan Tikku S/o late Sh. Prem Nath Tikku, who was running his courier business from there in the name and style of M/s Linkers Couriers since Aug. 2006. Mr. Tikku had told the survey team that he was a tenant of Sh. Surendra Kumar Jain and was paying him monthly rent of Rs. 3,000/- in cash every month. d. It is evident from the findings of the survey that the companies controlled by Shri S.K. Jain having registered office at the above mentioned three addresses, did not exist at those addresses. Neither books of account, and document relating to business nor was employee of these companies found at those addresses. From a single address a number of companies were registered as well as this address was also declared as the residential address of various directors of different companies and partners/ proprietors of various firms engaged in providing accommodation entries. As mentioned above, during the course of survey operation at these addresses, the premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as accommodation entries pending in lieu of the cash which they had received. However, the cash transactions which were being recorded by them in hand written cash books were not recorded in their regular books of accounts. To introduce and channelize this unexplained cash in their books, they have shown the sales of various items including Rice etc., made through the bogus proprietary /partnerships firms directly controlled by them. b. Thus, the cash received from the recipient parties for providing the accommodation entries was first deposited in the accounts of these: dummy firms/ companies in the disguise of the cash received against the bogus sales, duly shown in the books of accounts. Later, this cash was transferred to different paper companies floated by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain through complex series of transactions, so as to hide the actual sources of funds. c. As part of well devised modus operandi the reserve &, surpluses and the capital account of a specific set of companies were enhanced with the help of the unexplained cash received by Sh. Surendra Kumar Jan and Sh. Virendra Kumar Jain, which was routed to these companies through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;cheque books) issued from the bank accounts of these concerns to various beneficiary parties (in lieu of the cash) that had been regularly received by them over a period time and regularly entered in the cash books maintained by them in their own hand writing.- 9. Summary of evidences relating to the assessee: 9.1 Return of income 9.1.1 The return of income for the assessment year 2010-11 declaring income at Rs. NiL was filed. Thereafter the return was processed under 143(1) of the I.T. Act. Thereafter, the case was reopened u/s 147 of the I.T. act, 1961 but the information received from the Investigation Wing was not taken into consideration while finalizing the assessment order & the income was assessed at returned in case of Rs. 1,91,540/-. 9.1.2 The assessee has declared in its return of income that it has received share capital/loan of Rs. 2,30,00,000/- which matched with the information received from the investigation wing. 9.2 Relevant seized documents:- 9. 2.1 I have also gone through various documents (relevant to the instant case) seized from the premises of Shri S.K. Jain Group during the course of search. These documents have been supplied by the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oftware Pvt. Ltd., M/s Aasheesh Capital Services Pvt. Ltd. and M/s Zenith Automotive Pvt. Ltd. have made investment in the assessee company to the tune of Rs. 2,30,00,000/- Further, a part of cash was used to issue cheques to the assessee i.e. accommodation entries. The difference in the cash received from intermediary and cheques amounts" issued to the assessee company were on account of the intermediary acting on behalf of many beneficiaries including the instant assessce company. 9.2.3. The return of income filed by the assessee has also been analyzed with reference to the information received from the Investigation Wing and keeping in view the findings of the Investigation Wing on the basis of documents seized during the search operation and post search enquiries, as discussed above. Considering all these material in totality there is enough credible material on record to have a reason to believe that share application money/loan received by the assessee company during the year under consideration are merely a accommodation entries for which the assessee company has paid cash from its coffer and commission thereon. 9.3 Details of examination and enquiry after receipt of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies for e-filing of their returns, Bank A/c Opening & Closing letters, Authorization letters for attending the assessment proceedings, books of account in tally format as well as in the format required for filing a return, etc. Further, in the preceding paras, it has also been elaborately discussed that how Sh. Virendra Jain have used these companies to undertake various financial transactions to further their activities of providing accommodation entries to various beneficiaries. Jain Brothers have consistently refused to explain the various documents seized from their premises. It is apparent from seized record that Jain Brothers have been using a large no. of entities for the purpose of accommodation entries. Jain Brothers have also kept a meticulous record of cheques/ RTGS issued from the bank accounts of these concerns to various beneficiary parties(apparently in lieu of the cash) that had been regularly received by them over a period of time and regularly entered in the cash books maintained by them in their own hand writing". The assessment orders of subsequent years were passed u/s 153A r.w.s. 143(3) of the Act on similar lines. 9.5 CIT(A)'s Order in case of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. Accordingly, all the grounds of appeal are here by dismissed in principle. Quantum of addition u/s. 68 and commission income is confirmed on substantive basis. On similar lines the appeal filed by Sh. Virendra Jain for all seven assessment years from A. Y. 2005-06 to A. Y. 2011-12 are also disposed off in ITA ns. 222-228/ 13-14/1373-1379." 9.5.2 It is evident from the above facts that findings of the Investigation Wing were confirmed by the AO and the CIT(A) that Jain Brothers were engaged in the business of providing accommodation entries and earned the commission on provision, accommodation entries. These facts clearly provided that findings of the investigation wing constitute credible information. 10. Reason for formation of belief: 10.1 I have carefully perused and considered the return of income of the assessee, information received from Investigation Wing and SFIO, copies of incriminating documents seized from custody and control of Jain Brothers: copies of assessment order and appeal order as discussed along with evidences related to the assessee and have reached the following conclusion: i. That S.K. Jain Group was engaged in the business of providing accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has revealed that accommodation cntry amounting to Rs. 45,00,000/- by the assessee from S.K. Jain Group Companies were noted on the seized documents. 10.2 A careful scrutiny of information received from the investigation wing and subsequent analysis of report of investigation wing, copies of seized document and verification of assessment and appeal order in case of Jain Brothers lead to an irresistible conclusion that the assessee had received share capital/ loan of Rs. 45,00,000/ - from companies/ entities engaged in business of providing accommodation entries in lieu of cash payment by beneficiary including assessee by charging commission, accordingly, an amount of Rs. 45,00,000/- represents unexplained credit u/s 68 of the Act in books of A/c of the assessee. 11. Income Chargeable to tax escaping assessment:- 11.1 Considering the above referred to credible information, incriminating seized documents u/s 132 of the Act and enquiries and investigation subsequent to the information, I have reason to believe that an amount at least 10 (a of Rs. 2,30,00,000/- has escaped assessment in case the of M/s Saraswati Realtech (P) Ltd for the A.Y 2010-11 within the meaning of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.] Explanation 1.-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (c) where a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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