SECUNDERABAD HEALTHCARE LTD.,HYDERABAD vs. DCIT, CC-2(2), MUMBAI

In its appeal, the assessee has raised the following grounds:–

During the hearing, the learned Authorised Representative (“learned AR”) wishes not to press grounds no.1 and 2. Accordingly, the said grounds are dismissed as not pressed.

The issue arising in ground no.3, raised in assessee’s appeal, is pertaining to the disallowance of purchases.

The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee filed an original return of income, for the year under consideration, on 25/09/2009 declaring a loss of Rs.87,62,265. Pursuant to the search under section 132 as well as the survey under section 133A of the Act at various premises of Shri Shirish C Shah, proceedings under section 153C of the Act were initiated in the case of the assessee by the issuance of notice for the assessment years 2008-09 to 2013-14 on 13/02/2015. The assessee filed its return of income on 21/12/2015 in response to the aforesaid notice declaring the same income as was declared in the original return of income. During the assessment proceedings, notice under section 133(6) of the Act were issued to some of the parties on the basis of details available in assessee’s Form 26AS. However, these parties did not respond or notices were received unserved. During the survey at the premises of the assessee, it was Secunderabad Healthcare Ltd. ITA no.680/Mum./2023 found that there was no business activity carried out by the assessee. During the assessment proceedings, the assessee was asked to explain the source of funds brought in as fresh capital by the assessee and its further deployment. On the basis of the reply filed by the assessee, it was noticed that the assessee has allowed its bank account to Shri Shirish C Shah who brought the funds in the guise of preferential allotment and subsequently deployed them as share capital/loan, etc., which was actually bogus accommodation entries to various persons. The Assessing Officer (“AO”) vide order dated 28/03/2016 passed under section 143(3) read with section 153C of the Act came to the conclusion that the assessee in collaboration with Shri Shirish C Shah brought the share capital through preferential allotment and invested the amount with ultimate beneficiaries in the share capital with huge share premium. The AO further held that the assessee has failed to establish the genuineness of the transaction reflected in the profit and loss account and the assessee was engaged in the business of providing accommodation entries to various parties in association with Shri Shirish C Shah. During the assessment proceedings, it was observed that the assessee has debited purchase of Rs.6,87,64,162 from M/s Jurong Labs Private Ltd and M/s Jasmine Healthcare Private Ltd. During the course of an investigation before the DDIT Investigation Unit-1(3), Hyderabad, the assessee simply submitted Ledger account of these parties and failed to establish the genuineness of the transaction with these parties. In the absence of any details regarding the genuineness of the purchase so debited, the AO, vide assessment order, treated the purchases as bogus and added the same to the total income of the assessee.

The learned CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue and held that the assessee is not doing any actual business and has inflated the purchases by getting bogus accommodation entries from the other entities controlled by Shri Shirish C Shah. The learned CIT(A) further held that the assessee has failed to prove the identity of the parties with whom purchases were made and no supporting documentary evidence was produced by the assessee and the transaction remains unexplained and unconfirmed by the parties. Being aggrieved, the assessee is in appeal before us.

We have considered the submissions of both sides and perused the material available on record. It is the plea of the assessee that the Revenue has not invoked the provisions of section 145 of the Act and assessee’s books of accounts are not rejected. Further, the assessee has placed reliance upon the purchase invoices and stock registers along with a copy of Ledger accounts, wherein the details of payments made for purchases are shown. As per the assessee, it has sold the entire material purchased from the stated parties and sale proceeds thereof are credited to the books of accounts of the assessee company.

It is evident from the record that the assessee is one of the companies which is either associated with or under the direct or indirect control of Shri Shirish C Shah. Further, during the course of the search and the statements of Shri Shirish C Shah, it was revealed that he had been engaged in providing accommodation entries to various parties through such entities which were directly or indirectly either associated or controlled by him. No material has Page | 4

In the result, the appeal by the assessee is partly allowed. Order pronounced in the open Court on 23/06/2023