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Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI
ASSESSEE BY : None REVENUE BY : Shri Jitender Chand, Sr. DR Date of Hearing : 02.02.2023 Date of Order : 02.02.2023
ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee arises out of the order of ld. CIT (A)- 37, New Delhi dated 14.03.2019 and pertains to assessment year 2010-11. 2. The grounds of appeal taken by the assessee read as under :-
1. That on the facts and circumstances of the case, the Learned CIT (A) has erred both on facts and in law in confirming the addition of an amount of Rs.30,00,000/- made by Assessing Officer holding the receipt of share capital to be not genuine particularly when there is no link between the date of deposit of cash by the mediators on 20.10.2007 as alleged by the AO and the receipt of capital whereas the capital amount of Rs.30,00,000 by the appellant through banking channels on 02.04.2009.
2. That on the facts and circumstances of the case, the Learned CIT (A) has erred both on facts and in law in confirming the addition of Rs.54,000/- made by the Assessing Officer on account of alleged commission merely on the basis of suspicion and without any material on record.
Brief facts of the case are that in this case, assessment was reopened on information received from the Directorate of Income-tax, Investigation Wing regarding search operation carried out in the case of Shri Surendra Kumar Jain group of cases. In the case of assessee, AO noted that assessee has received share capital and share premium fund of Rs.30,00,000/-. As per information provided by the Investigation Wing, the assessee has obtained accommodation entries of Rs.30,00,000/- from S.K. Jain group of companies. Elaborating the modus operandi in this regard, the AO made addition of the above sum. The AO also made addition @ 1.8% on account of commission paid for obtaining these accommodation entries. The conclusion of the AO in this regard read as under :-
“11.1 To sum up, a sum of Rs. 30,00,0001- has been found credited in the books of account of the assessee. The immediate source of this amount has been found to be credited out of the entities controlled by Jain brothers as discussed above.
11.2 It is indeed surprising that the assessee has been attempting to pass off these transactions as genuine. It is quite possible that the assessee could have succeeded in its design but for the search in the case of Jain Brothers where complete evidence of colorable mechanism used by the assessee has been seized. The documents are self-speaking and giving graphic ./2019 picture of the modus operandi adopted by the parties involved. It is quite disturbing to note the ease with which the assessee has been conducting its affair transforming its unaccounted money into regular transactions. The law allows the Assessing Officer to lift the corporate veil to unmask the real from the apparent and also to go behind the transaction to understand their true import. The law also allows the authorities to test the transactions on a touches tone of human probability to arrive at a conclusion which the rationale mind would arrive at. After going behind the transactions on paper and after lifting the corporate veil, as discussed in earlier paragraphs, it has been proved that the apparent was not real.
11.3 I conclude therefore in view of the foregoing discussion that a sum of Rs.30,00,000/- credited in the books of account of the assessee fails to pass the test of genuineness within the meaning of Section 68 of the Act and is held to be the income of the assessee u/s 68 of the Income Tax Act, 1961 and is added to its income. (Addition of Rs. 30,00,000/-)
11.4. Since it has been approved that the aforesaid amount of Rs. 30,00,0001- was the accommodation entries taken by the assessee from SK Jain group of companies in the grab of share capital/share premium, therefore addition @ 1.8% on account of commission paid for obtaining these accommodation entries is also added into the income of the assessee u/s 69C of the Act which comes to Rs. 54,000/- (Addition of Rs. 54,000/-)”
Against the above order, assessee went in appeal before the ld. CIT(A). Ld. CIT (A) considered the submissions of the assessee. He elaborately referred to the submissions and case laws in this regard and finally confirmed the addition by concluding as under :-
“5.2.17 The legal principles laid down in a number of cases, a few of which have been quoted above, are squarely applicable ./2019 to the facts and circumstances of the present case. It is obvious from these judicial decisions that - • Mere documentary evidences are not sufficient to establish the genuineness of transactions in all situations. • Creditworthiness was not proved by mere issue of a cheque or by furnishing a copy of statement of bank accounts. Circumstance might require that there should be some evidence of positive nature to show cause that the said subscribes had made a genuine investment, acted as angel investors, after due diligence or for personal reasons. • Where there is admission before the investigation wing of the department that the subscribers to share capital had availed accommodation from bogus entry operators creditworthiness must be proved and these factual aspects and circumstances as proved before investigation wing cannot be simple to ignore. • Documents must also stand the tests of human conduct, surrounding circumstances and preponderance of probability. • When surrounding circumstances and attending facts predicate a cover-up, the taxing authorities cannot put on blinkers while looking at documents but are required to go beyond documents to look into surrounding circumstances to segregate the real from apparent 5.2.18 Once the appellant was made aware of the result of investigation which proved that share application money transaction was not genuine, the onus was on the assessee to prove the genuineness of transaction under section 101 of the Indian Evidence Act, 1972 as it is the assessee who is asserting a claim that it has received genuine share money. It is relevant to note here that Hon'ble Supreme Court in the case of Shri Charan Singh versus Chandra Bhan Singh AIR 1988 SC 637 has clarified that the burden of proof lies on the party who substantially asserts the affirmative of the issue and not upon the party who denies it. It has been further held that the party ./2019 cannot, on failure to establish a prima facie case, take advantage of the weakness of his adversary's case. The party must succeed by the strength of his own right and the clearness of his own proof. He cannot be heard to say that it was too difficult or virtually impossible to prove the matter in question. Since in this case the appellant had made the claim that it had received genuine share application money, all the facts were especially within its knowledge.
5.2.19 In the present case, as discussed above, there is overwhelming evidences as discussed in details in the order that the transactions on which adverse views have been taken are pre-arranged transactions under taken with the sole motive to evade tax.
5.2.20 All these above mentioned cases are also applicable to the facts and circumstances of the present case in which the various judicial authorities have decided the cases in favour of revenue after going through the entirety of the facts and circumstances. The case laws relied upon by the by the appellant have been decided with reference to the specific facts and situations present in the context of those distinct cases and cannot be made universally and squarely applicable to all cases where similar issues but in different setting of facts and accompanying circumstances are found to be involved.
5.2.21 In view of the facts and circumstances borne out of the assessment order and legal precedents as discussed above, I am of the view that documents submitted as evidences to prove the genuineness of transaction are themselves found to serve as smoke screen to cover up the true nature of the transactions in the facts and circumstances of the case as it is revealed that amount received by the appellant company as share capital are arranged transactions to introduce its unaccounted income through entry providers with the sole motive to account for the undisclosed income. Accordingly, in view of the above discussion and judicial precedents, it is held that AO was justified in making addition of Rs.30,00,000/- as income of the assessee from undisclosed sources u / s 68 of the Act.
5.2.22 Since arranging such accommodation entry necessarily entails payment of commission to entry providers, the AO's ./2019 action in quantifying and adding such unexplained investment towards procurement of such accommodation entries at Rs.54,000/- is also upheld for the reasons discussed in the assessment order. Accordingly, entire addition amounting to Rs.30,54,000/- is confirmed. The grounds of appeal are dismissed.”
5. Against this order, assessee is in appeal before us. We have heard the ld. DR for the Revenue. Nobody appeared on behalf of the assessee despite several notices. Hence, we proceed to decide the issue after hearing the ld. DR for the Revenue and perusing the records.
6. We find that in this case, assessee has received bogus share capital and share premium from S.K. Jain group of cases. Assessee has not submitted any cogent material to dislodge the findings of the AO and ld. CIT (A). Ld. CIT (A) has passed a very elaborate order considering all facets of the case. In our considered opinion, there is no infirmity in the same, hence we uphold the same. 7. In the result, this appeal filed by the assessee stands dismissed. Order pronounced in the open court on this 2ND day of February, 2023 after the conclusion of the hearing.