TaxTMI 
TaxTMI 
2025 (3) TMI 77
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....Revenue and pertain to same assessee, they were heard together and are disposed of by this common order for the sake of convenience and brevity. 3. Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules. Relevant judicial decisions considered wherever necessary. 4. At the very outset, the ld. counsel for the assessee submitted that it did not want to press the cross objections filed for A.Ys A.Y 2014-15, 2013-14, 2016-17 and 2015-16. The same are, accordingly, dismissed as not pressed. ITA No. 227/DEL/2022 [A.Y 2015-16] 5. The appeals of the Revenue for all the four appeals are identical. We however, take up the Revenue's appeal for A.Y 2015-16 first, the adjudication of which shall be applicable for the other three appeals. The grounds raised in AY 2015-16 read as under: "1. That on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 6,93,50,000/- made on account of undisclosed sources u/s 68 for unexplained entries in bank account ignoring the fact that assessee has failed ....
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....he ld. DR submitted that during search operations on the entry operators, it was found that Shri Anand Jain was giving accommodation entry to various persons through its shell companies. The Assessing Officer has also added commission in the hands of the assessee on account of accommodation entries provided and that such commission income has been finally added in the hands of the entry operator Shri Anand Jain and another. 12. The ld DR submitted that the Assessing Officer has made additions in the case of the instant assessee u/s 68 of the Act as protective assessments and substantive additions are to be made in the hands of the real beneficiaries. It is also the say of the ld. DR that the ultimate beneficiaries are yet to be found, hence the protective addition made in the hands of the assessee may be continued. 13. Per contra, the ld. counsel for the assessee submitted that in the case of other conduit companies of same entry operator, ITAT has deleted the protective assessments as the assessee has only been considered as conduit shell company. The ld. counsel for the assessee relied on the following decisions: (i) ACIT, Central Circle-26, New Delhi Vs Zed Enterprises (P) L....
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....ank account in the hands of the assessee being the entry operator/conduit concern under section 68 of the Act treating it as unexplained cash credit. 9.2 Further it is noted that the addition of credits is made on protective basis in the hands of the appellant based on the finding that the appellant company acted as conduit and information to the real/actual beneficiaries/actual owners of the money/funds in the bank account of the assessee has already been disseminated to their respective assessing officer to take appropriate action as per law in their cases. In this regard, it is relevant to note here that protective assessment is a kind of assessment whereby the assessing officer, not knowing the true ownership of the asset/income therefrom, assesses the incomes in the hands of more than one person. However, in the present case of the appellant it is evident from the observations of the AO in the assessment order and the facts on record that the appellant being a conduit/shell company was not the real owner of the credits in its bank account and the real beneficiaries/owners of the money have already been identified by the department in this regard. Accordingly, when the benefi....
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....n income of Rs. 1,65,375/-@ 0.25% on the total credits of Rs. 6,61,50,000/- received from various parties. 10.1 As discussed in para 9.4 above, Sh. Anand Jain and Sh. Naresh Jain were entry operators who were managing and controlling various shell concerns including the appellant for providing accommodation entries in lieu of commission. Thus, taking that logic there is no question of charging of commission income in the hands of the appellant company, since nothing has been earned by the company in this regard. I am of the view that no addition on account of commission is warranted in the hands of appellant company under the facts as discussed above. Therefore, the addition made on account of commission of Rs. 1,65,375/-is directed to be deleted. The appellant gets relief on this ground of appeal. 11. In the result, the appeal of the appellant is partly allowed' . 15. The CIT (A) has found that the assessee is not the real owner of funds and the funds in the bank of the assessee is for the use of ultimate beneficiaries and it acted only as a conduit. In such circumstances, we find that the protective additions have no leg to stand. Such decision of the CIT(A), ....
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....o of the ld. CIT(A). The ld. CIT (A) held that the AO in the assessment order has claimed to have identified the names of beneficiaries and already disseminated the information to the assessing officers of the beneficiaries and hence the credits received by the appellant cannot be treated as unexplained credit in its hands since, the said transactions are mere arrangement of funds/routing of unaccounted income of the beneficiaries to whom the said funds were transferred through the bank of the appellant company in lieu of commission. The ld. CIT (A) has also made note of the beneficiaries of the entries given by the assessee company. For the sake of ready reference, a few entries and the beneficiaries are reproduced below: ...... ...... 13. From the above, the ld. CIT (A) held that the assessee company has received funds from various concerns as mentioned above and thereafter amounts were transferred to the abovementioned companies/concerns immediately, thus the appellant company is not beneficiary company. The ld. CIT (A) also obtained the remand report from the AO and held that the AO has verified the fund flow statement depicting the source of funds and utilization of the same....