UMA STRIPS LTD,NEW DELHI vs. DCIT CIRCLE 27(1), NEW DELHI

ORDER

Per Dr. B. R. R. Kumar, Accountant Member:

2. Following grounds have been raised by the assessee:

“(1) That the order of the Learned Commissioner of Income Tax (Appeals)-9, New Delhi is arbitrary, biased and bad in law and in facts and circumstances of the case in so far as it confirms the addition made by the Assessing Officer. (2) That the Learned Commissioner of Income Tax, (Appeals) has grossly erred in confirming the assumption of jurisdiction u/s 147/148 of the Act, by the AO which jurisdiction is illegal and bad in law. (3) That the order passed pursuant to illegal assumption of jurisdiction u/s 147/148 of the Act is void ab initio and deserves to be quashed.

Uma Strips Ltd. (4) That the Learned Commissioner of Income Tax, (Appeals) has grossly erred in confirming an addition of Rs.57,39,306/- for alleged bogus purchase made from M/s. Naman Exports without appreciating the fact that the purchased diamonds had been exported out of India and an independent government agency had verified the fact of exports. (5) That the Learned Commissioner of Income Tax, (Appeals) has grossly erred in summarily brushing aside the submission of the appellant and in confirming the addition of Rs.57,39,306/- ignoring even the remand report of the Assessing Officer wherein the Assessing Officer had stated that no adverse finding was recorded by him on inquiry during the remand proceedings on account of appellant’s dealing with M/s for Uma Strips Ltd. (6) That the Learned Commissioner of Income Tax, (Appeals) has grossly erred in confirming the addition made by the AO without appreciating the fact that the AO had not provided an opportunity to the appellant to cross examine the said Shri Bhanwar Lal Jain on the basis of whose retraced statement the case had been reopened ignoring the settled judicial precedents on the issue and in confirming the assessment of income on the basis of mere allegations. (7) That the Learned Commissioner of Income Tax, (Appeals) has grossly erred in confirming the addition of Rs. 57,39,306/- by treating the same as bogus purchases in spite of the complete quantitative tally of material purchased and sold/ exported furnished during the course of assessment proceedings. (8) That the Learned Commissioner of Income Tax, (Appeals) has grossly erred in confirming a hypothetical addition of Rs. 1,14,786/- towards alleged commission paid for arranging the alleged bogus purchases under section 69C of the Act.”

Reasons recorded for re-opening the case of 147/148 of Income Tax Act “M/s Uma Strips. Ltd. is assessed to tax with Circle 27(1), New Delhi. The assessee company e-filed its Return of income on 28.09.2010 declaring total income of Rs. 3,74,820/-. The case was processed ids 143(1) of Income tax Act-1961.

I have gone through the report and data sent by the investigation wing. The report clearly indicates that accommodation entries have been taken to plough back uncounted black money for the purpose of business or for personal needs such as purchase of assets etc., in the form accommodation entries of bogus purchases and even describes the modus operandi of this scam.

Uma Strips Ltd. The Investigation Wing's list of Beneficiaries (of such accommodation entries), gives comprehensive details of Beneficiaries Name, Entity from where entry received, even the person through which such entry is received.

This list contains the name of M/s. Uma Strips Ltd. which has taken such accommodation entries as under:

Company Name PAN Company Name PAN Amount (Entry’ Giver) (Entry taken) Naman Exports AGWPC1001D Uma Strips Ltd. AAACU2078B 57,39,306/- Thus, the assessee has ploughed back unaccounted money of Rs. 57.39 Lakhs in its business through the channel of accommodation entry. The assessee has also paid commission on the same. Therefore, it is failure on the part of the assessee to disclose fully arid truly all material facts necessary for its assessment, for the assessment year 2010-11. In view of the above facts, I have reasons to believe that income to the tune of Rs.57.39 Lakhs of the assessee company for A. Y. 2010-11, has escaped assessment.”

Uma Strips Ltd.

Uma Strips Ltd. item or on account of bogus sales or purchases on account of revenue account. As per the record and the reasons recorded, no enquiries have been conducted by the Assessing Officer to come to a conclusion or reasons to belief with regard to evasion of tax which has escaped assessment.