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Facts
Two assessees, Vidarbha Mining Private Limited and M/s. Goldstar Metal Solutions Private Limited, filed appeals against orders by the NFAC. The original assessments were completed by accepting returned income. Subsequently, the AO sought to reopen the assessments based on information regarding routing of funds through multiple accounts and suspicious transactions, identifying some companies as shell companies used for accommodation entries.
Held
The Tribunal found that the first piece of information from DDIT (Inv.) did not link the mentioned parties to the assessees. The second piece of information describing fund transfers between related parties was deemed self-explanatory and did not warrant reopening for additions under Section 68 of the Act.
Key Issues
Whether the reopening of assessment based on information about suspicious fund routing and related party transactions, without any direct link to the assessee, is justified?
Sections Cited
143(3), 148, 68
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
Assessee by : Shri Gaurav Kabra, A/R Revenue by : Ms. Kavita P. Kaushik, Sr. D/R सुनवाई की तारीख/Date of Hearing : 10/06/2025 घोषणा की तारीख /Date of Pronouncement: 13/06/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: are two separate appeals by two different assessees preferred against two separate orders by NFAC, Delhi [hereinafter “the ld. CIT(A)”] dated 22/01/2024 and 29/02/2024 respectively.
Since both the appeals have identical set of facts, they are disposed off by this common order for the sake of convenience and brevity.
Since the facts are identical, we heard the representatives on the facts of . Briefly stated the facts of the case are that the assessee filed its return of income on 29/09/2012 declaring total income at Rs. 2,19,09,030/-. The return was selected for scrutiny assessment and, therefore, assessment was framed u/s 143(3) of the Act by accepting the returned income of the assessee. 3.1. Subsequently, vide notice dated 30/03/2019 u/s 148 of the Act, the AO sought to reopen the assessment. The reasons for reopening the assessment read as under:- “In this case, information was received from the office of DDIT (Inv.), Unit-2(3), Kolkata vide letter dated 07.03.2019 which is as under:
2.1. Credible information received stating that the following accounts were opened during the month of May & August in the year 2011 and used for routing of funds in multiple of lacs in a single day regularly through TRGS/transfer leaving minimum opening balance. The funds appear and disappear in the branch mainly through RTGS on the same day, leaving no residual effect. No economic rationale or bonafide purpose found in those transactions.
Sr. No. Name of the Account Holder Account No. with UCO Date of opening Bank Ultimate Share Broking Pvt. 01900210007112 16.05.2011 Ltd. Signature Business Advisors 01900210007105 16.05.2011 Pvt. Ltd. Subhrashi Vayapaar Pvt. Ltd. 01900210007150 17.05.2011 Parag Securities Pvt. Ltd. 01900210008034 03.08.2011 Jagriti Business Solutions 01900210007009 14.05.2011 Pvt. Ltd. Maximum Share Broking Pvt. 01900210007136 16.05.2011 Ltd. Hamsafar Securities Pvt. Ltd. 01900210008041 03.08.2011 2.2. Summons was issued to the concerned bank for relevant bank statements. On analysis of the bank statements it is observed that the funds so received in the accounts were immediately disappeared to other account through RTGS/transfer. Number of summons and queries were made with the concerned bank as the narration i.e. incoming and outgoing entries were not being maintained properly that resulted many hindrance to make the trail to find out the ultimate beneficiaries. About hundreds of accounts are linked to one another. The following bank accounts are found to be involved which were used as a conduit either to transfer the fund to the beneficiaries in the guise of loan/advance/share capital or to provide accommodation entry or otherwise.
2.3. Out of the above, as per database of entry operator, it is seen that the above mentioned companies have already been identified as shell companies during various search and survey operation conducted by the investigation wing from which funds are reaching to the accounts of beneficiaries directly or through other paper companies or have been used for providing accommodation entry.
2.4. On going through the above bank accounts statement, it is observed that the pattern of transaction is of same as layering of funds through multiple conduits having no genuine business activities, no other nature of transactions have been found other than just transferring the fund on the very same day or next day leaving very negligible balance in the account. Most of the companies are sharing same address with common directors. On scrutinising the bank statement fund trail has been prepared for the F.Y. 2011-12 that leads to the ultimate beneficiaries of around 39.00 crores are enclosed as per Annexure A and Annexure B. The entire fund trail showing ultimate fund transfer to all these beneficiaries is enclosed in a CD with this report.
3. In this case, information was also received from the office of DDIT (Inv.), Unit-4(3), Mumbai vide letter dated 15.03.2019 which is as under:
3.1. On verification of information received in the case of Shri Prem Sarodi, it was found that amount of Rs.100 lakhs was credited to the account of Plastica Industries (A/c No. 698705111904 in ICICI Bank Ltd.) from the account of Mr. Prem Sarogi (A/c No. 698701005033 in ICICI Bank Ltd.). Mr Prem Sarogi has got the RTGS from Goldstar Metal Solutions Pvt. Ltd. (A/c No.698705112277 in ICICI Bank Ltd.). On the same day, Rs. 100 lakhs were transferred from the account of M/c Vidarbha Minina Pvt. Ltd. (A/c No. 698705112857 in ICICI Bank Ltd.) to the account of Goldstar Metal Solutions Pvt. Ltd. (A/c No. 698701005033 in ICICI Bank Ltd.). From the account of Mis Vidarbha Mining Pvt. Ltd. (A/c No. 698705112857 in ICICI Bank Ltd.) transferred to the account of Mr. Prem Sarogi (A/c No. 698701005033 in ICIC/ Bank Ltd.). Again, on the same day Rs. 100 lakhs was transferred from Mr. Prem Sarogi (A/c No. 698701005033 in ICICI Bank Ltd.) to M/s Vidarbha Mining Pvt. Ltd. (A/c No. 698705112857 in ICICI Bank Ltd.).”