INCOME TAX OFFICER WARD-1 JHUNJHUNU, JHUNJHUNU vs. BAGARIA TRADE IMPEX, CHURU

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"clean_text": "IN THE INCOME TAX APPELLATE TRIBUNAL\nJAIPUR BENCH “A”, JAIPUR\nBEFORE Dr. S. SEETHALAKSHMI, JUDICIAL MEMBER AND\nSHRI GAGAN GOYAL, ACCOUNTANT MEMBER\nITA Nos. 696, 697 & 705/JPR/2025 (A. Y. 2013-14 & 2014-15)\nIncome Tax Officer,\nWard-01,\nJhunjhunu\nVs.\nAppellant\nBagaria Trade Impex,\nNear, State Bank of India,\nChuru 331 001\nRespondent\nPAN No.: AALFB 6581E\nAppellant by\n: Mr. Sandeep Goel, Adv., Ld. AR\nRespondent by\n: Mrs. Anita Rinesh, JCIT-DR\nDate of hearing\n: 11/09/2025\nDate of pronouncement : 29/09/2025\nORDER\nPER GAGAN GOYAL, A.M:\nThese three appeals by revenue are directed against the order of NFAC,\nDelhi dated 27.02.2025 & 25.02.2025 passed u/s. 250 of the Income Tax Act,\n1961 (in short ‘the Act'). The revenue has raised the following grounds of\nappeal: -\nThe revenue has raised the following grounds of appeal vide ITA No.\n695/JPR/2025 for A.Y 2013-14 as under:\n1. Whether on the facts and in the circumstances of the case and in law\nthe Ld. CIT (A) (NFAC) is justified in quashing the entire reassessment\nproceedings u/s 147.\n2. Whether on the facts and in the circumstances of the case and in law\nthe Ld. CIT (A) (NFAC) is justified in ignoring the facts that credible\ninformation regarding accommodation entry is available on record.\n3. The appellant craves leave or reserves right to amend, modify, alter,\nadd or forego any ground(s) of appeal at any time before or during the\nhearing of this appeal.\nThe revenue has raised the following grounds of appeal vide ITA No.\n697/JPR/2025 for A.Y 2014-15 as under:\n1. Whether on the facts and circumstances of the case and in law, the Ld.\nCIT (A) was justified in allowing assessee's appeal without appreciating\nthe fact that the AO has recorded reasons after analysing the\ninformation available on records?\n2. Whether on the facts and circumstances of the case and in law, the Ld.\nCIT (A) was justified in quashing the entire reassessment proceedings\nu/s. 147?\n3. Whether on the facts and circumstances of the case and in law, the Ld.\nCIT (A) was justified in ignoring the facts that credible information\nregarding accommodation entry is available on record?\n4. The appellant craves leave or reserves right to amend, modify, alter,\nadd or forego any ground(s) of appeal at any time before or during the\nhearing of this appeal.\nThe revenue has raised the following grounds of appeal vide ITA No.\n705/JPR/2025 for A.Y 2013-14 as under:\n1. Whether on the facts and in the circumstances of the case and in law\nthe Ld. CIT(A)(NFAC) is justified in quashing the entire assessment\nproceedings by quashing Notice u/s. 143(2) of the Act issued by ITO,\nWard-1, Churu where subsequently juri iction transferred to the ACIT,\nCircle, Jhunjhunu, having juri iction over the case, based on the income\ndeclared by the assessee without appreciating the fact that the PAN was\noriginally allotted in the juri iction of the ITO, Ward-1, Churu on\n10/04/2012. The assessee has filed its first ITR for A.Y. 2013-14 declaring\ntotal income of Rs. 18.49 Crore in the juri iction of ITO, Ward-1, Churu\nwhich was subsequently transferred to the correct juri iction i.e. ACIT,\nCircle, Jhunjhunu, having juri iction over the cases having income 15\nLacs and above. In fact the assessment u/s 143(3) was completed by the\nACIT. Circle-Jhunjhunu having juri iction over the case.\n2. Whether on the facts and in the circumstances of the case and in law\nthe Ld. CIT(A)(NFAC) is justified in deleting the addition of Rs.\n5,05,77,100/- made u/s. 68 of the Act on account of unsecured loans in\nthe order passed by the AO u/s. 143(3) of the Act.\n3. The appellant craves leave or reserves right to amend, modify, alter,\nadd or forego any ground(s) of appeal at any time before or during the\nhearing of this appeal.\nThe brief facts of the case are that for the year under consideration the\nassessee firm filed its return of income at Rs. 18,49,16,450/- on 25.09.2013 u/s.\n139 of the Act. The case of the assessee was selected for scrutiny through CASS\nand notice u/s. 143(2) of the Act was issued. The assessee deals in wholesale\ntrading in Galla Kirana items and also derives income from commodity trading\nin MCX/NCDEX. During the assessment proceedings, it was noticed that the\nassessee firm has obtained unsecured loans from various\nparties/firms/companies and the same were also squared up during the year\nunder consideration with interest. Ultimately, the case of the assessee was\nassessed u/s. 143(3) of the Act making addition of Rs. 5, 05, 77, 100/- u/s. 68 of\nthe Act. The assessee being aggrieved with the same preferred an appeal\nbefore the Ld. CIT (A), who in turn allowed the appeal of the assessee on\njuri ictional issue without going into the merits of the case. Now, the revenue\nbeing aggrieved with the same preferred the present appeal before us.\n3. We have gone through the order of the Ld. CIT (A), order of the AO and\nsubmissions of the assessee filed before us alongwith the arguments taken by\nboth the sides to the dispute. It is observed that during the year under\nconsideration the assessee firm received following amounts from different\nparties as under:\nS. No.\nName of Parties\nPrinciple Amount\nInterest\n01.\nKarda Traders\nRs. 11 Lacs\nRs. 39,060/-\n02.\nKeshav Trading Co.\nRs. 1.45 Cr.\nRs. 4.97 Lacs\n03.\nMacro IT Systems Pvt. Ltd.\nRs. 30 Lacs\nRs. 1,00,600/-\n04.\nMahadev Investments\nRs. 1.53 Cr.\nRs. 5.26 Lacs\n05.\nMahalaxmi Trading Co.\nRs. 4 Lacs\nRs. 14,470/-\n06.\nSai Infoweb Pvt. Ltd.\nRs. 10 Lacs\nRs. 35,510/-\n07.\nShree Kant Bagaria\nRs. 1.2 Cr.\nRs. 12,30,480/-\n08.\nShubh Labh Traders\nRs. 76 Lacs\nRs. 2,59,960/-\n09.\nSubhadra Securities\nRs. 27 Lacs\nRs. 93,210/-\n10.\nZen Tradex Pvt. Ltd.\nRs. 15 Lacs\nRs. 52,770/-\n11\nNine Corporate Inceptions Pvt.\nLtd.\nRs. 18 Lacs\nRs. 58,920/-\nTotal\nRs. 6.09 Cr.\nRs. 29,07,580/-\n4. Out of these 11 parties mentioned (supra), the AO accepted the amount\nreceived from party no. 7, i.e. Shree Kant Bagaria and consequently made an\naddition of Rs. 5,05,77,100/-. Now, here it is imperative to analyse section 68 of\nthe Act, which has been applied in the case of the assessee as under:\nSection - 68, Income-tax Act, 1961 - FA, 2025\nCash credits.\n68. Where any sum is found credited in the books of an assessee maintained for any\nprevious year, and the assessee offers no explanation about the nature and source thereof\nor the explanation offered by him is not, in the opinion of the Assessing Officer,\nsatisfactory, the sum so credited may be charged to income-tax as the income of the\nassessee of that previous year:\nProvided that where the sum so credited consists of loan or borrowing or any such amount,\nby whatever name called, any explanation offered by such assessee shall be deemed to be\nnot satisfactory, unless, -\n(a)\nthe person in whose name such credit is recorded in the books of such assessee\nalso offers an explanation about the nature and source of such sum so credited;\nand\n(b)\nsuch explanation in the opinion of the Assessing Officer aforesaid has been found to\nbe satisfactory:\nProvided further that where the assessee is a company (not being a company in which the\npublic are substantially interested), and the sum so credited consists of share application\nmoney, share capital, share premium or any such amount by whatever name called, any\nexplanation offered by such assessee-company shall be deemed to be not satisfactory,\nunless-\n(a)\n(b)\nthe person, being a resident in whose name such credit is recorded in the books of\nsuch company also offers an explanation about the nature and source of such sum\nso credited; and\nsuch explanation in the opinion of the Assessing Officer aforesaid has been found to\nbe satisfactory:\nProvided also that nothing contained in the first proviso or second proviso shall apply if the\nperson, in whose name the sum referred to therein is recorded, is a venture capital fund or a\nventure capital company as referred to in clause (23FB) of section 10.\n5. In view of the above provisions of section 68 of the Act and specifically\nreferring the first proviso reads as under:\n\"The person in whose name such credit is recorded in the books of such assessee also\noffers an explanation about the nature and source of such sum so credited.\"\nIn view of the above, the proviso specifically, made the person accountable and\nincluded in the enquiry to explain the nature and source of the sum so credited\nin his/her name in the books of the assessee. The provision contained in\nsection 68 of the Act, read with proviso mentioned (supra) do not leave any\nroom for the argument, that the amount received during the year and\nsimultaneously squared up also during the same Financial Year can't be\ncharged to tax and there is no need to fulfill the conditions pertaining to\nsection 68 of the Act as under:\nA).\nIdentity of the Creditors;\nB).\nGenuineness of the Transaction and\nC).\nCreditworthiness of the Party.\n6. These three elements are the basic pillars/conditions to be fulfilled by\nthe assessee to avoid the chargeability of tax u/s. 68 of the Act. Rather, now\nthe proviso went one step ahead by including the creditors also in the list of\nproving the transaction alongwith the assessee. On this aspect, we referred the\norder of the AO, as there is no finding in the order of the Ld. CIT (A) on this\nissue (As the matter was decided by him on legal issue only). Vide para 3 of the\nassessment order, the AO dealt with this issue vide para 3.1 to 3.10 and the\nsame are reproduced below for ready reference as under:\nInsert para 3.1 to 3.10\n7. In view of the above, it is observed that, there is a categorical denial by\nthe parties mentioned at serial no. 2, 3, 6 and 8 (supra) and about remaining 6\nparties either the letter is un-served or no reply has been received. This fact\nwas confronted to the assessee alongwith the fact that even in the case of the\nparties responded, signatures were not matched. Thereafter, the assessee\ncame forward with a new story by introducing some Mr. Naveen Agarwal, S/o.\nMr. Murari Lal Agarwal, Aged 40 Years, Resident of H-19/143, Sector 7, Delhi -\n110 085 as mediator for arranging loans for the assessee, without any\ncorroborative evidence about the role of Mr. Naveen Agarwal, e.g. his ITR\nconfirming his profession as mediator to arrange the loans and corresponding\nincome from this activity.\n8. This new character introduced by the assessee further submits that\nparties arranged by him for the assessee's loan requirement are not telling the\ntruth about the transactions with the assessee for the reasons best known to\nthem. It is observed on the one hand the copies of the ITR of following parties\nwere furnished as under:\n(i)\nKarda Traders\n(ii)\nMacro IT Systems Pvt. Ltd.\n(iii)\nSai Infoweb Pvt. Ltd.\n(iv)\nSai Infoweb Pvt. Ltd.\n(v)\nShubh Labh Traders\n(v)\nZen Tradex Pvt. Ltd.\nOn the other hand, the so-called mediator is claiming that he has no control\nover the parties and why are they giving adverse confirmations/ denial of the\ntransaction with the assessee. We have examined the ITRs of the parties\nfurnished before us vide paper book dated: 11.09.2025 page nos. 15 to 24 and\nfollowing information relevant to the matter emerged out of that as under:\nS. No.\nName of the Party\nReturned Income\nAmount of loan\nGiven to the\nAssessee\nAmount\nof\ninterest Received\nfrom the Assessee\n01.\nKarda Traders\nRs.\n3,22,866/-\nRs. 11,00,000/-\nRs. 39,060/-\n(Amount\nof\nRefund claimed\nRs. 28,620/-)\n02.\nRavinder Kumar\nRs.\n1,94,407/-\nRs. 1,45,00,000/-\nRs. 4,97,000/-\n03.\nMacro IT System\n(Tax Payable NIL)\nRs.\n1,74,596/-\nRs. 30,00,000/-\nRs. 1,00,600/-\n(Amount of\nRefund claimed\nRs. 70,940/-)\n04.\nMahadev Investment\nRs. 5,455/-\nRs. 1,53,00,000/-\nRs. 5,26,000/-\n(Copy of A.Υ. 2014-\n15)\n05.\nRekha Jain\nRs. 5,20,220/-\nRs. 4,00,000/-\nRs. 14,470/-\n(Amount\nof\nRefund claimed\nRs. 300/-)\n06.\nSai Infoweb\nRs.\n2,15,013/-\nRs. 10,00,000/-\nRs. 35,510/-\n(Amount\nof\nRefund claimed\nRs. 3,720/-)\n07.\nShubh Labh Traders\nRs.\n78,986/-\nRs. 76,00,000/-\nRs. 2,59,560/-\n(Amount\nof\nRefund claimed\nRs. 1,550/-)\n08.\nSubhadra Securities\nRs. 4,139/- (Tax Rs. 27,00,000/-\nRs. 93,210/-\nPayable NIL)\n09.\nZen Tradex\nRs.\n1,44,992/-\nRs. 15,00,000/-\nRs. 52,770/-\n(Amount\nof\nRefund claimed\nRs. 49,900/-)\n10.\nNine Corporate\nRs. 2,24,333/-\nRs. 18,00,000/-\nRs. 58,920/-\n(Amount of\nRefund claimed\nRs. 78,050/-)\n9. The table prepared (supra) clearly demonstrates the doubtful nature and\nabesnce of creditworthiness of the parties concerned. It's a typical model of\nentry operators where they either file return of income below taxable or\nalways claim the refund of T.D.S. deducted out of such transactions. Uptil, the\nbench is trying to analyse the facts of the matter in the light of documents not\nunder challenge and produced by the assessee himself. It is pertinent to\nmention here that the Ld. Counsel of the assessee flooded the bench with legal\narguments and various judicial pronouncements of coordinate benches,\nHon'ble High Courts and Hon'ble Supreme Court also without addressing the\nspecific queries of the bench. So that, the bench can discharges its utmost duty\nof analyzing the facts and law applicable in the present case. The behaviour of\nthe Ld. Counsel was totally unprofessional and unwarranted and rather was to\ncreate an obstacle in the working of the bench by taking hyper technical pleas\nto cover up the weak factual position of the case.\n10. A total chaos and anarchy were created by the Ld. Counsel of the\nassessee during the conduct of the bench, despite of several warnings by the\nbench and request by the Ld. DR. Rather, he tried to hijack the bench with\nloud voice in a shouting mode by creating a pressure on the Ld. Lady DR. and\nultimately she requested him to lower down the voice or she may not be able\nto persuade the matter with the bench.\n11. Coming back to the facts of the case, despite of several reminders by the\nbench, the Ld. Counsel ignored the demand that the balance-sheet and bank\nstatements of the parties are required to analyse the element of credit\nworthiness. Intentionally, the bank statement of the assessee was submitted\nalongwith its return, which was not required at all and asked for by the bench\nand what exactly, was asked for and required never delivered to the bench.\nThis act of intentional omission confirms the finding of the AO that the\nassessee has not anything to say over the strength of the facts of the case.\n12. [1963] 50 ITR 1 (SC) Kale Khan Mohammad Hanif vs. CIT it was observed\nby the Hon'ble Apex Court that “It is well established that the onus of proving the\nsource of a sum of money found to have been received by the assessee is on him. If he\ndisputes liability for tax, it is for him to show either that the receipt was not income or that if\nit was, it was exempt from taxation under the provisions of the Act. In the absence of such\nproof, the ITO is entitled to treat it as taxable income. In the instant case, the ITO held the\nincome represented by the credit entries to be income from undisclosed sources, that is,\nneither from the manihari (general merchandise) nor from the bidi business of the assessee\nwhich he had disclosed. It was open to the assessee to raise the question that the finding\nthat those amounts were income received from undisclosed sources was not based on any\nevidence or was, for other reasons, perverse. He did raise some questions of this type before\nthe Tribunal for reference to the High Court but the Tribunal did not think that those\nquestions legitimately arose and did not refer them to the High Court. The assessee accepted\nthe decision of the Tribunal and did not move the High Court to direct a reference in regard\nto those questions under section 66(2). Those questions, therefore, could not be raised at this\nstage." In the instant case also, the assessee primarily relying on technical issues\nand effectively has nothing to say on merits of the case.\n13. [1977] 107 ITR 938 (SC) Roshan Di Hatti vs. CIT\n“Now, the law is well settled that the onus of proving the source of a sum of money found to\nhave been received by an assessee is on him. If he disputes the liability for tax, it is for him to\nshow either that the receipt was not income or that if it was, it was exempt from taxation\nunder the provisions of the Act. In the absence of such proof, the revenue is entitled to treat\nit as taxable income. To put it differently, where the nature and source of a receipt whether it\nbe of money or of other property, cannot be satisfactorily explained by the assessee, it is\nopen to the revenue to hold that it is the income of the assessee and no further burden lies\non the revenue to show that that income is from any particular source.”\n[2018] 96 taxmann.com 255 (SC) Konark Structural Engineers (P.) Ltd. vs. DCIT\n“Assessee-company was carrying on business as builders and developers – During relevant\nyear, assessee received certain amount as share capital from different parties - Assessing\nOfficer taking a view that assessee failed to prove identity and creditworthiness of\nshareholders, added amount in question to assessee's income under section 68 – High court\nin impugned order noted that summons to shareholders under section 131 could not be\nserved with remark that addresses were not available and that shareholders were first time\nAssessees and were not earning enough income to make deposits in question and held that\nsince assessee did not offer to procure presence of shareholders, assessee failed to prove\ngenuniness of share transactions and, thus, impugned addition was to be confirmed\nWhether SLP against said decision was to be dismissed - Held, yes [Paras 11 and 12]\nIn the case of the assessee also, as narrated (supra), notices issued u/s. 133(6)\nof the Act were not complied with or categorical denial was there about the\ntransaction with the assessee [Para 7]. Now, it can be reasonably presumed in\nfavour of the Revenue, that even if notices would have been issued u/s. 131 of\nthe Act, fate of the story will remain the same.\n14. We draw strength to arrive at a reasonable conclusion from the following\njudicial pronouncements by the Hon'ble Apex Court as under:\n[2021] 127 taxmann.com 275 (SC) Sunil Thomasvs.ITO, Ward No. 2(1)\n[2021] 129 taxmann.com 44 (SC) C.V Ravi vs. Income-tax Officer\n“Assessee had claimed to have taken loan of huge amount from an entity, namely, ARC – A\nsurvey had taken place at premises of assessee during which statement of assessee was\nrecorded wherein he admitted to not know said creditor ARC, from whom he had claimed to\nhave taken loan of such huge amount - Thus, Assessing Officer held that said loan received\nby assessee was bogus and, accordingly, made additions under section 68 to income of\nassessee - High Court by impugned order held that since assessee had failed to produce any\nconfirmation from said alleged creditor ARC or produce its owner in person for cross\nexamination and also failed to establish identity of creditor and genuineness of alleged loan\ntransaction, impugned additions under section 68 was justified - Whether Special Leave\nPetition against said impugned order was to be dismissed - Held, yes [Para 2]\"\n[2024] 159 taxmann.com 28 (SC) Virendra Behari Aggarwal vs. CIT\n“Section 68 of the Income-tax Act, 1961- Cash credits (Loan) - Assessment year 2001-02-\nHigh Court by impugned order held that where assessee claimed to have taken loans from\nhis two minor sons and source of loan was stated to be gift received by assessee's sons from\ntheir uncle i.e., brother of assessee, since assessee's brother categorically stated that they\nhad not given any gifts to anybody, impugned addition made by Assessing Officer in respect\nof loan amount was to be confirmed - Whether SLP filed by assessee against said impugned\norder was to be dismissed - Held, yes [Para 2]\n[2019] 103 taxmann.com 48 (SC) PCIT (Central)-1 vs. NRA Iron & Steel (P.) Ltd.\nThe use of the words 'any sum found credited in the books' in section 68 indicates that the\nsection is widely worded, and includes investments made by the introduction of share capital\nor share premium.[Para 8.1]\n■ as per settled law, the initial onus is on the assessee to establish by cogent evidence, the\ngenuniness of the transaction, and creditworthiness of the investors under section 68.\n■ the assessee is expected to establish to the satisfaction of the Assessing Officer:\nProof of identity of the creditors;\nCapacity of creditors to advance money; and\nGenuineness of transaction\n■ This Court in the land mark case of Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC)\nand, Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) laid down that the onus of proving the\nsource of a sum of money found to have been received by an assessee, is on the assessee.\nOnce the assessee has submitted the documents relating to identity, genuineness of the\ntransaction, and creditworthiness, then the Assessing Officer must conduct an inquiry, and\ncall for more details before invoking section 68. If the assessee is not able to provide a\nsatisfactory explanation of the nature and source, of the investments made, it is open to\nthe revenue to hold that it is the income of the assessee, and there would be no further\nburden on the revenue to show that the income is from any particular source. [Para 8.2]\n■ With respect to the issue of genuineness of transaction, it is for the assessee to prove by\ncogent and credible evidence, that the investments made in share capital are genuine\nborrowings, since the facts are exclusively within the assessee's knowledge. Merely,\nproving the identity of the investors does not discharge the onus of the assessee, if the\ncapacity or credit-worthiness has not been established. [Para 8.3]\n■ The Assessing Officer ought to conduct an independent enquiry to verify the genuineness\nof the credit entries. In the instant case, the Assessing Officer made an independent and\ndetailed enquiry, including survey of the so-called investor companies from Mumbai, Kolkata\nand Guwahati to verify the creditworthiness of the parties, the source of funds invested, and\nthe genuineness of the transactions. The field reports revealed that the shareholders were\neither non-existent, or lacked creditworthiness. [Para 9]\n15. Since the assessee did not give the details of the credits appearing in its\naccounts, those entries stand unexplained and therefore, the addition made\nunder section 68 of the Act is justified. The CIT (A) finding on the issue of\napplicability of section 68 of the Act was not expressly there by the assessee\nbefore the tribunal and therefore, no fresh submissions on this count could be\nentertained by us and that is too it's Revenue's appeal. The key takeaways\ncould be listed as under:\n(i) When there is credit in the books of account and such credit being loan or\nborrowing it has to pass the test of section 68 of the Act;\n(ii) Even if the loan or borrowing is squared up in the year, it could be tested\nfor the purposes of section 68 of the Act. Obviously, in accommodation\nentries the lending or borrowing may be squared up and therefore, it is also\ncaught in the net of verification of its veracity. The assessee's arguments and\nreliance on various judicial precedents will also be dealt in this order later in\nrelevant paras.\n16. Considering the above discussion on facts and law pronounced by the\nHon'ble Apex Court, as discussed (supra), action of the AO on this count is\nsustained and the order of the Ld. CIT (A) is set-aside, as the same is silent on\nsame and simply relied on the technicalities of the matter. Whereas, in such\ntype of the cases, considering the cotemporary situation, the Hon'ble Courts\nalso emphasised on the principle of Substance over Form in their decisions.\nThe entities involved in the malpractice of providing accommodation entry\nand beneficiary entities can't simply come out of the glitches of the law, in\nthe guise of some technical issue here and there. [2012] 17 taxmann.com 202\n(SC)Vodafone International Holdings B.V. vs. Union of India\n\"It is generally accepted that the group parent company is involved in giving principal\nguidance to group companies by providing general policy guidelines to group subsidiaries.\nHowever, the fact that a parent company exercises shareholder's influence on its subsidiaries\ndoes not generally imply that the subsidiaries are to be deemed residents of the State in\nwhich the parent company resides. Further, if a company is a parent company, that\ncompany's executive director(s) should lead the group and the company's shareholder's\ninfluence will generally be employed to that end. This obviously implies a restriction on the\nautonomy of the subsidiary's executive directors. Such a restriction, which is the inevitable\nconsequences of any group structure, is generally accepted, both in corporate and tax laws.\nHowever, where the subsidiary's executive directors' competences are transferred to other\npersons/bodies or where the subsidiary's executive directors' decision making has become\nfully subordinate to the Holding Company with the consequence that the subsidiary's\nexecutive directors are no more than puppets then the turning point in respect of the\nsubsidiary's place of residence comes about. Similarly, if an actual controlling Non-Resident\nEnterprise (NRE) makes an indirect transfer through \"abuse of\norganisation form/legal form and without reasonable business purpose\" which results in tax\navoidance or avoidance of withholding tax, then the Revenue may disregard the form of the\narrangement or the impugned action through use of Non-Resident Holding Company,\nrecharacterize the equity transfer according to its economic substance and impose the tax on\nthe actual controlling Non-Resident Enterprise. Thus, whether a transaction is used\nprincipally as a colourable device for the distribution of earnings, profits and gains, is\ndetermined by a review of all the facts and circumstances surrounding the transaction. It is\nin the above cases that the principle of lifting the corporate veil or the doctrine\nof substance over form or the concept of beneficial ownership or the concept of alter ego\narises. There are many circumstances, apart from the one given above, where separate\nexistence of different companies, that are part of the same group, will be totally or partly\nignored as a device or a conduit (in the pejorative sense). [Para 67]”\n17. Courts have evolved doctrines like piercing the\ncorporate\nveil, substance over form etc. enabling taxation of underlying assets in cases of\nfraud, sham, tax avoidant, etc. However, genuine strategic tax planning is not\nruled out. Lifting the corporate veil doctrine can, therefore, be applied in tax\nmatters even in the absence of any statutory authorisation to that effect.\n18. Next issue before us is juri ictional ground raised under Rule 27 of the\nITAT, Rules referring CBDT Instruction No. 7/2014. For ready reference we are\nreproducing CBDT Instruction No. 7/2014 as under:\nSECTION 143, READ WITH SECTION 142 OF THE INCOME-TAX ACT, 1961\nASSESSMENT SCOPE OF ENQUIRY IN CASES SELECTED FOR SCRUTINY\nDURING FINANCIAL YEAR 2014-15 ON BASIS OF AIR/CIB/26AS\nMISMATCHINSTRUCTION NO.7/2014 [F.NO.225/229/2014-ITA.II], DATED 26-9-\n2014\nIt has come to the notice of the Board that during the scrutiny assessment\nproceedings some of the AOs are routinely calling for information which is not\nrelevant, for enquiry into the issues to be considered. This has been causing\nundue harassment to the taxpayers and has also drawn adverse criticism from\nseveral quarters. Further, feedback and analysis of such orders indicates that\nmany times the core issues, which formed the basis of selection of the case for\nscrutiny were not examined properly. Such instances primarily occurred in\ncases selected for scrutiny under Computer Aided Scrutiny Selection ('CASS')\nfor verification of specific information obtained from third party sources which\napparently did not match with the details submitted by the taxpayer in the\nreturn- of-income.\n2. Therefore, for proper administration of the Income-tax Act, 1961 ('Act'),\nCentral Board of Direct Taxes, by virtue of its powers under section 119 of the\nAct, in supersession of earlier instructions/guidelines on this subject, hereby\ndirects that the cases selected for scrutiny during the Financial Year 2014-2015\nunder CASS, on the basis of either AIR data or CIB information or for non-re-\nconciliation with 26AS data, the scope of enquiry should be limited to\nverification of these particular aspects only. Therefore, in such cases, an\nAssessing Officer shall confine the questionnaire and subsequent enquiry or\nverification only to the specific point(s) on the basis of which the particular\nreturn has been selected for scrutiny.\n3. The reason(s) for selection of cases under CASS are displayed to the\nAssessing Officer in AST application and notice u/s. 143(2), after generation\nfrom AST, is issued to the taxpayer with the remark \"Selected under Computer\nAided Scrutiny Selection (CASS)\". The functionality in AST is being modified\nsuitably to flag the reasons for scrutiny selection in AIR/CIB/26AS cases. This\nfunctionality is expected to be operationalised by 15th October, 2014. Further,\nthe Assessing Officer while issuing notice under section 142(1) of the Act which\nis enclosed with the first questionnaire would proceed to verify only the\nspecific aspects requiring examination/verification. In such cases, all efforts\nwould be made to ensure that assessment proceedings are completed\nexpeditiously in minimum possible number of hearings without unnecessarily\ndragging the case till the time-barring date.\n4. In case, during the course of assessment proceedings, it is found that there is\npotential escapement of income exceeding Rs. 10 lakhs (for non-metro\ncharges, the monetary limit shall be Rs. 5 lakhs) on any other issue(s) apart\nfrom the AIR/CIB/26AS information based on which the case was selected\nunder CASS requiring substantial verification, the case may be taken up for\ncomprehensive scrutiny with the approval of the Pr. CIT/DIT concerned.\nHowever, such an approval shall be accorded by the Pr. CIT/DIT in writing after\nbeing satisfied about merits of the issue(s) necessitating wider and detailed\nscrutiny in the case. Cases so taken up for detailed scrutiny shall be monitored\nby the Jt. CIT/Addl. CIT concerned.\n5. The contents of this Instruction should be immediately brought to the notice\nof all concerned for strict compliance.\n19. Arguments taken by the Ld. Counsel of the assessee is an attempt to\ncreate a smoke screen, to deviate the attention of this bench from material. i.e.\nthe taxability of accommodation entry u/s. 68 of the Act. The CBDT's\ninstruction reproduced (supra) is not applicable to the matter of the assessee.\nIn this regard, we emphasised on para 2 of the same, again reproduced as\nunder:\n“2. Therefore, for proper administration of the Income-tax Act, 1961 ('Act'), Central Board of\nDirect Taxes, by virtue of its powers under section 119 of the Act, in supersession of\nearlier instructions/guidelines on this subject, hereby directs that the cases selected for\nscrutiny during the Financial Year 2014-2015 under CASS, on the basis of either AIR data or\nCIB information or for non-re-conciliation with 26AS data, the scope of enquiry should be\nlimited to verification of these particular aspects only. Therefore, in such cases, an\nAssessing Officer shall confine the questionnaire and subsequent enquiry or verification only\nto the specific point(s) on the basis of which the particular return has been selected for\nscrutiny.\"\nThe scope of this instruction is categorically applied to the matters where cases\nselected for scrutiny during the Financial Year 2014-2015 under CASS, on the\nbasis of either AIR data or CIB information or for non-re-conciliation with\n26AS data, in these cases, further verification, may be taken up for\ncomprehensive scrutiny with the approval of the Pr. CIT/DIT concerned.\nHowever, such an approval shall be accorded by the Pr. CIT/DIT in writing after\nbeing satisfied about merits of the issue(s) necessitating wider and detailed\nscrutiny in the case. Cases so taken up for detailed scrutiny shall be monitored\nby the Jt. CIT/Addl. CIT concerned.\n20. The case of the assessee was never selected on the ground of either AIR\ndata or CIB information or for non-re-conciliation with 26AS data. Case of the\nassessee was selected in the category of full scrutiny and there is no\nrequirement in the law, which specifies that even the scope of the full scrutiny\nhas to be conveyed to the assessee or any approval is required. [2017] 82\ntaxmann.com 370 (Chennai - Trib.) Parivel Rathnaswamy vs. Income-tax\nOfficer, Ward- 17 (3), Chennai, wherein the coordinate bench also came across\nthe similar matter as before us and held as under:\nThe CBDT has, under section 119(2)(a), the power to issue directions or instructions to the\nIncome-tax authorities (not prejudicial to the assessee) for the purpose of proper and\nefficient management of the work of assessment and collection of the revenue as to the\nguidelines, principles or procedures to be followed by them in the work relating to\nassessment or collection of revenue, and which may be either by way of relaxation of any of\nthe provisions specified therein, which includes section 143, or otherwise. The Instruction F.\nNo. 225/26/2006-ITA.II (Pt), dated 8-9-2010 would, therefore, be binding on the Assessing\nOfficer, an Income-tax authority under section 116. Selection under Computer Assisted\nScrutiny Selection (CASS) is on the basis of various criteria listed for selection of returns of\nincome for scrutiny under the Act, including third party information (i.e., information from a\nparty who is not a party to the transaction, as, for example, a registering authority). It is this\ninformation, which a third party is statutorily obliged to give to the revenue on an annual\nbasis, that is called the 'AIR information', and the prescribed form for the same as the 'AIR\nreturn'. In other words, an AIR case, i.e., a return of income selected for scrutiny on the\nbasis of AIR information is only a sub set of the cases selected on CASS basis. This is\nconfirmed by Instruction No. 7/2014 (F. No. 225/229/2014/ITA.II) dated 26.9.2014 issued\nby the CBDT. It is made abundantly clear therein that the selection under CASS is only on the\nbasis of either AIR data or CASS information or for non-reconciliation of 26AS data, and that\nthe scope of inquiry in such a case should be limited to verification of those aspects/issues\nonly. Further, that such notice would be issued to the tax payer with the remark 'selected\nunder Computer Assisted Scrutiny Selection (CASS)', as indeed stands notified per the notice\nunder section 143(2) under reference. Further, a wider scrutiny of the return, i.e., on aspects\nother than for which it was selected for examination, shall be subject to the approval by the\nhigher authorities, in writing, where the income escaping assessment involved is in excess of\nRs. 10 lakhs (Rs. 5 lakhs for non-metro charges) (para 4). Though the Instruction dated 26-9-\n2014 is after the date of the notice under section 143(2) in the instant case (3-9-2014), the\nsame in fact reiterates what Instruction dated 08.9.2010 states, so that there is no material\ndifference between the two. In fact, the verification commenced only after 26-9-2014, with\nthe assessee being supplied with the requisitions only on 16-1-2015. The non-stamping of the\nnotice as an AIR case, or the Assessing Officer calling for information on other aspects, which\nis thus in violation of the guidelines, would be of no moment inasmuch as the revenue\ncannot take advantage of its own wrong. The same would not in any case impart legitimacy\nto the proceedings.\nThe next question is the validity or otherwise of the impugned notice under section 143(2).\nThe same would critically depend upon the establishment or otherwise of the fact as to\nwhether it is an AIR case, i.e., the notice issued on the basis of AIR data. The notice under\nreference having been issued only on the basis of AIR information, it is clearly an AIR case.\nSure, the assessee is not a party to the transaction in his personal capacity, but it needs to be\nappreciated that at the time of issue of notice it is the information received through the AIR\nreturn/s that is relevant, and there is no scope either for its verification or vetting or\nexplanation at that stage. In fact, it may well be that the assessee, who represents the first\nparty, is liable to be assessed in his representative capacity, treating him as an agent of the\nnon-resident principal under section 163. The 'juri ictional' fact of the notice being in\nrespect of an AIR case stands established, and its legality, therefore, cannot be questioned.\nThe next question is if the assessee having furnished the PAN of his brother, clarifying his role\nto be no more than his representative, the party of the first part in the sale deed, which is the\nsubject matter of AIR information, ought the Assessing Officer to have dropped the\nproceedings. There is no legal mandate for the same. Rather, section 119(1)(a) clearly places\na restriction on the power of the Board to issue any orders, instructions or directions\nrequiring any income tax authority to make a particular assessment or to dispose of a\nparticular case in a particular manner. In other words, proscribes placing a restriction on the\npower of inquiry of the Assessing Officer. It was, therefore, well within the purview of the\nAssessing Officer to call for and verify the information furnished to him. That being so, he\ncould not have proceeded further ignoring or overlooking or without meeting the same.\nFinding the assessee's return as inconsistent with the law, i.e., given the undisputed,\nadmitted facts, he made adjustments to the returned income, to which in fact the assessee\nalso conceded as valid in law and, in any case, are not disputed. The said adjustments,\ntherefore, cannot be challenged on ground of competence or legality.\nThe issue of notice under section 143(2) has been found in order and legally valid. The\nAssessing Officer was, therefore, duty bound to frame assessment under section 143(3) in\naccordance with the law, and which he has done. [Para 3]\n21. In view of the above observations, if scrutiny is being initiated on some\nspecific issues, then certainly to expand the scope, necessary approval of the\nauthorities as mentioned are required. But it is nowhere stated and intended\nalso that full scrutiny can't be done, based on the criteria fixed by the CBDT\nbased on its experience and expectations to collect the tax. Selection of the\nassessee's case for full scrutiny fulfilling the criteria of CBDT instructions never\nchallenged before us. In view of the above, this argument raised under Rule\n27 of the ITAT Rules, found to be not tenable.\n22. The last issue for our consideration is ground no. 1 vide ITA No.\n705/JPR/2025 for A.Y 2013-14. Vide this ground the Revenue challenged the\ndecision of Ld. CIT (A) (NFAC) is justified in quashing the entire assessment\nproceedings by quashing Notice u/s. 143(2) of the Act issued by ITO, Ward-1,\nChuru where subsequently juri iction transferred to the ACIT, Circle,\nJhunjhunu, having juri iction over the case, based on the income declared by\nthe assessee without appreciating the fact that the PAN was originally allotted\nin the juri iction of the ITO, Ward-1, Churu on 10/04/2012. The assessee has\nfiled its first ITR for A.Y. 2013-14 declaring total income of Rs. 18.49 Crore in the\njuri iction of ITO, Ward-1, Churu which was subsequently transferred to the\ncorrect juri iction i.e. ACIT, Circle, Jhunjhunu, having juri iction over the\ncases having income 15 Lacs and above. In fact the assessment u/s. 143(3) of\nthe Act was completed by the ACIT. Circle-Jhunjhunu having juri iction over\nthe case.\n23. On this issue, the bench confronted the Ld. Counsel of the assessee with\nthe judicial pronouncement in the case of [2023] 151 taxmann.com 434\n(SC) DCIT (Exem.) vs. Kalinga Institute of Industrial Technology, wherein the\nHon'ble Apex Court by reversing the decision of the Hon'ble High Court of\nOrissa, held as under:\n“The juri iction had been changed after the returns were filed. However, the records also\nreveals that the assessee had participated pursuant to the notice issued under section 142\n(1) and had not questioned the juri iction of the Assessing Officer. Section 124(3) (α)\nprecludes the assessee from questioning the juri iction of the Assessing Officer, if he does\nnot do so within 30 days of receipt of notice under section 142 (1). [Para 1]\nIn the present case, the facts did not warrant the order made by the High Court. At the same\ntime, this Court notices that the High Court had granted liberty to the concerned authority to\nissue appropriate notice. It is clarified, therefore, that the Assessing Officer is free to\ncomplete the assessment (in case the assessment order has not been issued) within the next\n60 days. In such event, the question of limitation shall not be raised by the assessee. [Para\n2]\"\n24. On this issue, the Ld. Counsel of the assessee asked for adjournment to\ndistinguish the ratio as held in Kalinga Institute of Industrial Technology (supra)\nby Hon'ble Apex Court. Time was granted and matter was left as part heard for\nthe convenience of the assessee. On next, hearing also, the Ld. Counsel of the\nassessee instead of distinguishing the ratio as held by the Hon'ble Apex Court\nin the case of Kalinga Institute of Industrial Technology, tried to mislead the\nbench by raising additional ground pursuant to Rule 27 of the ITAT Rules and on\nmerits by relying on the ratio of following pronouncements by the coordinate\nbench/Hon'ble High Courts as under:\n1. DCIT, Jaipur v. Shri Dulhe Ram Meena (ITAT Jaipur)\nIn this case, the Tribunal deleted addition under Section 68 of the\nIncome-tax Act, 1961 as the assessee had furnished complete\ndocumentary evidence to establish the identity, creditworthiness,\nand genuineness of the creditors.\nIt is to mention that this case law does not rest on the issue of\nrepayment of loans by the assessee, or on the fact that no credit\nremained outstanding in the books at the close of the financial\nyear.\n2. CIT v. Rohini Builders [2003] 127 Taxman 523 (Guj.)\nHeld that the assessee is required to prove the identity of\ncreditors, their capacity, and genuineness of the transaction, but\nnot the \"source of source.\"\nSummons not being served or non-appearance of creditors could\nnot by itself make the loans non-genuine when supporting records\nexisted.\nDistinction: This case focuses on the scope of proof required\nunder Section 68 of the Act, not on repayment of loans within\nthe same financial year. Therefore, while relevant on the burden\nof proof, it does not directly cover the issue of repayment of\nloans during the year.\n3. Nimbus (India) Ltd. v. ACIT, ITA Nos. 929 & 930/Del/2019 (ITAT Delhi)\nConcerned with addition of Rs. 20.51 crores on account of share\ncapital/share premium treated as unexplained cash credit under\nSection 68 of the Act.\nThe issue was whether such share capital/share premium could\nbe taxed as unexplained when identity and creditworthiness of\nthe shareholders was in question.\nDistinction: The case relates to share capital/share premium\ntransactions, not loan transactions. It does not address the effect\nof loans being squared off or repaid in the same financial year.\nHence, not directly applicable to the present issue.\n4. Shankar Industries v. CIT [1978] 114 ITR 689 (Cal.)\nLaid down that for cash credits in the books, the assessee must\nprove (i) identity of creditor, (ii) capacity of creditor to advance the\nmoney, and (iii) genuineness of the transaction.\nIn that case, the assessee proved only the identity of the creditor\nand failed to establish the other two elements. Hence, the\naddition was upheld.\nDistinction: In contrast, where the assessee has established all\nthree requirements and has also repaid the loan within the year,\nSection 68 has no application.\nRohini Builders, Nimbus (India) Ltd., and Shankar Industries deal with\ndifferent factual scenarios concerning the scope of proof under Section\n68 of the Act, unexplained share capital, or incomplete evidence of\ncreditors. None of them directly address the specific fact situation of\nrepayment within the same year, making them distinguishable from the\npresent controversy.\nITA Nos. 872 to 875 & 901/JP/2024 Kedia Builders and Colonizers Pvt. Ltd.\nThis case law is factually distinguishable, inasmuch as it does not pertain to a\nsituation where loans were repaid or squared off within the same financial\nyear. The controversy in Kedia Builders was limited to the genuineness of\nalleged accommodation entries and the question of routing unaccounted funds\nthrough intermediary companies, and not to the issue of loan repayment\nresulting in no outstanding balance at year-end.\n25. In all the above pronouncements relied upon by the Ld. Counsel of the\nassessee, rather it was the argument raised by the counsels of the assessees,\nthat in case the loan account is squared up during the same Financial Year,\nthere is no enrichment to the assessee under consideration. It was the\nassessee who has taken this ground and not the coordinate benches or Hon'ble\nHigh Court which observed so as conveyed by the Ld. Counsel of the assessee\nbefore us. This fact of the Ld. Counsel of the assessee has been taken\nseriously by the bench, where he tried to mislead the bench by the wrong\nstatement that the coordinate bench Jaipur and other benches along with\nHon'ble High Courts have held that “if the loan account is squared up during\nthe same F.Y., then on the ground that there is no enrichment to the assessee,\nhence chargeability of the amount u/s. 68 of the Act can't be sustained. It's a\nfit case where, the assessee is liable for cost, but, the bench took a lenient view\nas the assessee should not be suffered with a cost on account of wrong doings\nof its consultant.\n26. The judicial pronouncements relied upon by the assessee to challenge\nthe decision of the Revenue, i.e. transferring the juri iction from existing AO,\nthe AO having PAN No. to the AO, i.e. DCIT, Circle, Jhunjhunu are as under:\n[2023] 151 taxmann.com 70 (Bom.) Ashok Devichand Jain vs. Union of India\n[2024] 468 ITR 18 PCIT vs. Shree Stoppers Ltd.\nPCIT vs. Mohd. Rizwan, ITA No. 100/2015, Dated: 30.03.2017\n[2023] 146 taxmann.com 345 (Mad.) Charu K. Bagadia vs. ACIT\nSapna Rastogi vs. ITO, ITA No. 617/Del./2024, Dated: 28.08.2024\nJ Mitra and Bros. vs. ACIT, ITA No. 3643/Del./2023\nMata Road Carriers vs. DCIT, ITA No. 79/BIL/2016\nIn none of the above citations, the ratio as held by the Hon'ble Apex Court in\nthe case of Kalinga Institute of Industrial Technology (supra) has been referred\nor discussed at all. Once, on similar facts the Hon'ble Apex Court has decided\nthe issue in dispute, there is no further scope for any other interpretation.\n27. The Ld. Counsel flooded the bench with all the material available in the\nIncome Tax commentary on the earth, except the reply to the bench on the\nissue of applicability of the Hon'ble Apex Court decision in the case of\nKalinga Institute of Industrial Technology (supra). In view of the above\ndiscussion on facts and the law applicable, it is observed that the order of the\nLd. CIT (A) is perverse in nature as the same has been passed without\nconsidering the decision of the Hon'ble Apex Court decision in the case of\nKalinga Institute of Industrial Technology (supra). Hence, the same is set-aside\nand the relevant ground raised by the Revenue is allowed by sustaining the\norder of the AO on the issue under consideration.\n28. In the result, the appeal of the Revenue vide ITA No. 705/JPR/2025 is\nallowed and the order of the AO is sustained on the issue under\nconsideration.\nITA No. 695/JPR/2025 for A.Y 2013-14\n29. This appeal also pertains to the assessment year 2013-14, but related to\nthe assessment order passed under section 147 r.w.s. 143(3) of the Act. An\ninformation was received from the office of JDIT(Inv.) Unit 1 New Delhi on\n12.04.2017 i.e. after passing the order u/s. 143(3) of the Act vide dated\n31.03.2016. On perusal of the information, it was noticed that a search and\nseizure operation was conducted on 17.12.2015 in the case of Shri Anand\nKumar Jain and Shri Naresh Kumar Jain (the Jain brothers) who are in the\nbusiness providing accommodation entries to various beneficiaries through\ncheques/DD/RTGS/NEFT in lieu of cash, through various papers and dummy\ncompanies/concerned floated and controlled by them. Both the persons\nmentioned above are practicing Chartered Accountants. However, their main\nbusiness at the point of time is restricted to providing accommodation entries.\n30. For this purpose, they have created certain entities such as companies\nand firms, which are managed and controlled by them. It was established\nduring the investigations, these are only paper companies/entities used to\nroute the unaccounted income and provide bogus accounts for non-existent\ntransactions. In addition, it has been exposed through search and seizure\noperations and the post search action of investigations, that the Jain brothers\ncontrol a number of bank accounts of these shell companies/concerns for\neffectuating the routing of these entries. The 'Jain Brothers' had also accepted\nthat they have charged 2-6% of commission for providing such loan entries.\nFurther, as per information received from the investigation wing, Delhi the\nassessee had taken accommodation entries in the shape of unsecured loans\namounting to Rs. 5,17,00,337/- provided by Sh. Anand Kumar Jain and Sh.\nNaresh Kumar Jain through various paper and dummy companies/concerns\nfloated and controlled by them.\n31. Thereafter, On perusal of Balance Sheet as on 31/03/2013, it was\nnoticed that the assessee has shown unsecured loans received from the\nfollowing companies/person's name of which are reflected in the report of the\nInvestigation Wing of the department as discussed above and made payment\nof interest to them during the year under consideration:-\nS. No.\nName of Parties\nPrinciple Amount\nInterest\n01.\nKarda Traders\nRs. 11 Lacs\nRs. 39,060/-\n02.\nKeshav Trading Co.\nRs. 1.45 Cr.\nRs. 4.97 Lacs\n03.\nMacro IT Systems Pvt. Ltd.\nRs. 30 Lacs\nRs. 1,00,600/-\n04.\nMahadev Investments\nRs. 1.53 Cr.\nRs. 5.26 Lacs\n05.\nMahalaxmi Trading Co.\nRs. 4 Lacs\nRs. 14,470/-\n06.\nSai Infoweb Pvt. Ltd.\nRs. 10 Lacs\nRs. 35,510/-\n07.\nShubh Labh Traders\nRs. 76 Lacs\nRs. 2,59,960/-\n08.\nSubhadra Securities\nRs. 27 Lacs\nRs. 93,210/-\n09.\nZen Tradex Pvt. Ltd.\nRs. 15 Lacs\nRs. 52,770/-\n10\nNine Corporate Inceptions Pvt.\nLtd.\nRs. 18 Lacs\nRs. 58,920/-\nTotal\nRs. 4.89 Cr.\nRs. 16.77 Lacs\n32. Based on the above information a notice u/s. 148 of the Act was issued\non 13.11.2017. In response to the notice the assessee filed its return of income\non 11.04.2018 declaring total income at Rs. 18,49,16,448/-. Ultimately an\naddition of Rs. 9.78 lacs was made @ 2% of Rs. 4.89 Cr. u/s. 69C of the Act. The\nassessee being aggrieved with the same preferred an appeal before the Ld. CIT\n(A) who in term deleted the addition and allowed the appeal of the assessee.\nThe Ld. CIT (A) allowed the present appeal of the assessee on the premise of\nappeal of the assessee filed against the original assessment order, which we\ndecided against the assessee and in favour of department vide ITA No.\n705/JPR/2025 (supra).\n33. We have gone through the order of the AO, order of the Ld. CIT (A) and\nsubmissions of the assessee alongwith grounds raised before us. It is observed\nthat the prime issue was decided on technical ground (juri iction) by the Ld.\nCIT (A) and there was no finding on merits of the case. Before us also the Ld.\nCounsel of the assessee argued based on the premises of the order of the Ld.\nCIT (A) only and has nothing to say on merits of the addition made u/s. 69C of\nthe Act. We have gone through the order of the AO wherein it was discussed\nabout the roles of Jain brothers as well as name of entity they are controlling\nand the assessee dealt with them for accommodation entry.\n34. The AO further referred the statements of various persons related to the\nshell company owned and managed by the Jain brothers. The assessee asked\nfor cross examination of the concerned persons who had given statements, but\nthe same were not allowed by the AO relying on the Hon'ble Juri ictional High\nCourt and Hon'ble Apex Court in the case of Rameshwar Lal Mali vs. CIT 256 ITR\n536 (Raj.) and State of J&K vs. Bakshi Gulam Mohammad, AIR 1967 SC 122\nrespectively.\n35. We have thoroughly considered the submissions of the assessee before\nthe lower authorities and the findings of the AO. In view of the findings of the\nAO, which we found sustainable on the facts of the case and considering the\ndecision of this Bench vide ITA No. 705/JPR/2025 (supra), the order of the Ld.\nCIT(A) is found to be perverse, resultantly, the order of the AO is sustained and\ngrounds raised by the Revenue are allowed.\n36. In the result, the appeal of the Revenue vide ITA No. 696/JPR/2025 is\nallowed and the order of the AO is sustained on the issue under\nconsideration.\nITA No. 697/JPR/2025\n37. The assessee filed its return of income on 31.11.2024 declaring income\nat Rs. 8, 60, 72,470/-. The case of the assessee was assessed u/s. 143(3) at\nreturned income of Rs. 8, 60, 72,470/-. An information was received from the\noffice of JDIT(Inv.) Unit -1, New Delhi on 12.04.2017 i.e. after passing the order\nu/s. 143(3) of the Act vide dated 31.03.2016. On perusal of the information, it\nwas noticed that a search and seizure operation was conducted on 17.12.2015\nin the case of Shri Anand Kumar Jain and Shri Naresh Kumar Jain (the Jain\nbrothers) who are in the business providing accommodation entries to various\nbeneficiaries through cheques/DD/RTGS/NEFT in lieu of cash, through various\npapers and dummy companies/concerned floated and controlled by them.\nBoth the persons mentioned above are practicing Chartered Accountants.\nHowever, their main business at the point of time is restricted to providing\naccommodation entries.\n38. For this purpose, they have created certain entities such as companies\nand firms, which are managed and controlled by them. It was established\nduring the investigations, these are only paper companies/entities used to\nroute the unaccounted income and provide bogus accounts for non-existent\ntransactions. In addition, it has been exposed through search and seizure\noperations and the post search action of investigations, that the Jain brothers\ncontrol a number of bank accounts of these shell companies/concerns for\neffectuating the routing of these entries. The 'Jain Brothers' had also accepted\nthat they have charged 2-6% of commission for providing such loan entries.\nFurther, as per information received from the investigation wing, Delhi the\nassessee had taken accommodation entries in the shape of unsecured loans\namounting to Rs. 3,35,86,356/- provided by Sh. Anand Kumar Jain and Sh.\nNaresh Kumar Jain through various paper and dummy companies/concerns\nfloated and controlled by them.\n39. Thereafter, On perusal of Balance Sheet as on 31/03/2014, it was noticed\nthat the assessee has shown unsecured loans received from the following\ncompanies/person's name of which are reflected in the report of the\nInvestigation Wing of the department as discussed above and made payment\nof interest to them during the year under consideration:-\nS. No.\nName of Parties\nPrinciple Amount\nInterest\n01.\nGroupone Informative Services\nRs. 91 Lacs\nRs. 10,87,627/-\n02.\nKarda Traders, Delhi\nRs. 78 Lacs\nRs. 9,32,515/-\n03.\nMacro IT Systems Pvt. Ltd.\nRs. 41 Lacs\nRs. 4,90,652/-\n04.\nPurus Marketing Pvt. Ltd.\nRs. 90 Lacs\nRs. 5.26 Lacs\nTotal\nRs. 3 Cr.\nRs. 35, 86,356/-\nGrand Total\nRs. 3, 35, 86,356/-\n40. Based on the information mentioned (supra), the case of the assessee\nwas assessed u/s. 147 r.w.s. 143(3) of the Act after making addition of Rs. 3, 35,\n86,356/- u/s. 68 of the Act and Rs. 6 Lacs u/s. 69C of the Act as commission @\n2%, which is consequential in nature, based on the statement of Jain Brothers.\nThe assessee being aggrieved with the same preferred an appeal before the\nLd.CIT (A), who in turn allowed the appeal of the assessee on techno-legal\nground without referring the merits of the case, now the Revenue being\naggrieved with the same filed the present appeal before us.\n41. We have gone through the order of the AO, order of the Ld. CIT (A) and\nsubmissions of the assessee alongwith grounds taken by the Revenue. It is\nobserved that During the course of assessment proceedings, to verify the\ngenuniness of these unsecured loans, the information was called for u/s.\n133(6) of the Income Tax Act, 1961 from Macro IT System Pvt. Ltd. vide this\noffice letter No. 363 dated 13/07/2018, Karda Traders Pvt. Ltd. vide this office\nletter No. 362 dated 13/07/2018, Groupone Informative Services Pvt. Ltd. vide\nthis office letter No. 424 dated 16/07/2018 and Purus Marketing P Ltd. vide this\noffice letter No. 361 dated 13/07/2018 but the letters were received back\nunserved.\n42. Further, an Inspector was deputed to enquire about the whereabouts of\nthe said companies which were alleged to be managed by the Jain Brothers.\nFrom report submitted by the inspector it is gathered that the alleged\ncompanies namely (a) Purus Marketing Pvt. Ltd. (b) Groupone informative\nServices Pvt Ltd. (c) Karda Traders Pvt. Ltd. & (d) Macro IT System Pvt. Ltd. were\nnot working at the given addresses. He had further submitted in his report that\nno person nearby had ever heard about such companies in the locality. The\nenquiry report submitted by the inspector of this office is as under:-\nS. No.\n1.\nName/Address\nM/s. Groupone Informative\nServices Pvt. Ltd., 7B/11A,\nSriniwas Puri, East of Kailash,\nNew Delhi-110065\nRemark\nThe address is not traceable; it means it is not genuine\naddress.\n2.\nM/s. Karda Traders Pvt. Ltd 25,\nH Packet A1, Mayur Vihar,\nPhase-3, New Delhi-110009.\nIt is residential colony and no such office/company\nexists as on date. On local inquiry it is learnt that no\nsuch office was there with this name.\n3.\nM/s. Macro IT System Pvt. Ltd.\n326, LGF Sant Nagar, East of\nKailash, New Delhi-110065\nThere is not office and only residential house. On this\naddress no such company exists.\n4.\nPurvus Marketing Pvt. Ltd/B-87,\n2nd Floor, Block-B Defence\nColony, New Delhi-110024.\nPurus Marketing Pvt. Ltd. House\nNo.-174, Block-D, Pocket-16,\nSector-7, Rohini, Delhi-110085.\nOn this address, Shri Vasisth Advocate Resides and\nthere are two name plates Sh. Raghu Vasisth Advocate\nand K. Kapoor and Associate's office. There does not\nexist any office of M/s. Macro IT System Pvt. Ltd. as\non date.\nThere is office of Agarwal Properties since last 10\nyears. No such office local persons said that they have\nnever heard this company's name in this area.\n43. Further as discussed in above para that the letters sent for seeking\ninformation u/s. 133(6) of the IT Act, 1961 returned back undelivered. Thus it is\nclear that the addresses of the said companies are not genuine. Moreover, as\ndiscussed above, these companies were operated/ managed by Shri Anand\nKumar Jain and Shri Naresh Kumar Jain, who were engaged in providing\naccommodation/ paper entry in the form of unsecured loans. This fact was\nrevealed in the search and seizure proceedings conducted by the Investigation\nWing of the department at the premise of the said Jain Brothers on\n17/12/2015.\n43. We deem it fit to be produced the notice issued u/s. 148 of the Act\nalongwith reasons supplied as under:-\nNotice under Section 148 of the Income Tax Act, 1961\nOffice of the DCIT, Cirle, Jhunjhunu\nD.NO-489\n11-9-2017\nPAN: AALFB6581E\nTo.\nDated: 11/09/2017\nM/S BAGARIA TRADE IMPEX,\nGOVIND RAM BAGARIA,\nNEAR SBI, CHURU (RAJ)\n331001\nSik\nWhereas I have reasons to believe that your income chargeable\nto tax for the assessment year 2014-15 has escaped assessment within\nthe meaning of section 147 of the Income Tax Act, 1961.\n2. I, therefore, propose to assess/re-assess the income for the\nsaid assessment year and I hereby require you to deliver to me within\n30 days from the service of this notice, a return in the prescribed\nform of your income for the said assessment year.\n3. This notice is being issued after obtaining the necessary\nsatisfaction of the Addl. Commissioner of Income Tax, Range Jhunjhunu\nRajasthan.\n(Pooja Marekh)\nDy. Commissioner of Income Tax\nCircle Jhunjhunu\nSeal\nआयकर उपायुक्त\nवृत-मरक्ष\nRead 16.8.17\nGOVERNMENT OF INDIA\nMINISTRY OF FINANCE\nINCOME TAX DEPARTMENT\nOFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX\nCIRCLE, JHUNJHUNU\nTo.\nBAGARIA TRADE IMPEX\nNear, State Bank of India\n331001, Rajasthan\nIndia\nPAN:\nAssessment Year: Dated:\nLetter No:\nAALFB6581E\n2014-15\n06/07/2018\nITBA/AST/F/17/2018-19/1010393413(1)\nSir/Madam/ M/s,\nSubject: Providing copy of reason recorded In case of M/s Bagaria Trade Impex, PAN-\nAALFB6581E, A.Y. 2014-15 -reg.\nas under;\nThe reason recorded for Initialing proceedings u/s 147 of the IT Act in the case mentioned above Is\n\"In this case, the assessee had filed its return of Income for A.Y. 2014-15 on 30/11/2014 declaring\ntotal Income of Rs.8,60,72,470/-. The case of the assessee was selected for limited scrutiny through CASS.\nConsequently the assessment u/s 143(3) was completed on 08/12/2016 at the declared income\nConsequently, an information was received by this office on 12/04/2017 which says that a search\nand seizure operation was conducted on 17.12.2015 in the case of Shri Anand Kumar Jain and Shri Naresh\nKumar Jain (the Jain brothers) who are in the business providing accommodation entries to various\nbeneficiaries through cheques/DD/RTGS/NEFT in ileu of cash, through various papers and dummy\ncompanies/concerned floated and controlled by them. Both the persons mentioned above are practicing\nChartered Accountants. However, their main business at the point of time is restricted to providing\naccommodation entries. For this purpose they have crealed certain entities such as companies and firms\nwhich are managed and controlled by them. It was established during the investigations, these are only\npaper companies/entities used to route the unaccounted income and provide bogus accounts for non-\nexistent transactions. Also it has been exposed through search and seizure operations and the post search\naction of investigations, that the Jain brothers control a number of bank accounts of these shel!\ncompanies/concems for effectuating the routing of these entries.\nAs per the information/material/details provided by the investigation wings, it is seen that the\nassessee firm has accepted accommodation entries from the companies/ concern managed by Jain\nBrothers 1.e. Shri Anand Kumar Jain and Shri Naresh Kumar Jain in shape of unsecured loan credited in its\nbooks of accounts for the year under consideration. The details of which are as under:-\nSl.No\nName of the company\nAmount\nInterest\n1\nGroupone Informative Services\n91,00,000/-\n10,87,627/-\n2\nKarda Traders\n78,00,000/-\n9,32,515/-\n3\nMacro IT Systems Pvt Ltd\n41,00,000/-\n4,90,652/-\n4\nPurus Marketing Pvt Ltd\n90,00,000/-\n10,75,562/-\n3,00,00,000/-\n35,86,356/-\nit is also worthwhile to mention here that the assessment in the case of above named assosseo\nwas abo completed u's 143(3) for the A.Y. 2013-14 and addition u/s 68 of the Act was made in the total\nxome of the assessee on account of unexplained credits in books of accounts on the same issue of lako\nmpanies. Further it is also very important to mention here that the above named companies are dummy\ncompanies as accepted by the Jain brother during the Investigation proceedings.\nAs mentioned in the above table, the omission has resulted in under computation of income to the\ntune of Rs.3,35,86,356,\nIn view of reasons recorded as above I have reason to belleve that Income chargeable to tax has\nescaped assessment amounting to Rs. 3,35,86,356/- Accordingly, required approval u/s 151 is solicited to\ninitiate proceedings u/s 147 of the Act.\nPOOJA S PAREKH\nCIRCLE, JHUNJHUNU\n(In case the document is digitally signed please\nrefer Digital Signature at the bottom of the page)\n44. We have gone through the above notice issued after receiving the\ninformation from the office of JDIT (Inv.) consequent to search U/s. 132 of the\nAct on 17/12/2015. The assessee filed its return of income U/s. 148 of the Act\non 11/04/2018 and thereafter reasons for the reopening of the matter were\nsupplied to the assessee vide office communication dated 06/07/2018. The\nassessee's argument that the decision of the Hon'ble Apex Court in the case of\nG.K. N. Drive Shaft 259 ITR 19 was not followed found to be untenable. The AO\nwhile disposing the objections raised by the assessee relied upon the decision\nof the Hon'ble Supreme Court in the case of M/s Raymond Woollen Mills Pvt.\nv/s. Income Tax Officer and Others reported in 236 ITR 34-\n“We have only to see whether there was prima facie some material the basis of which\nthe department could re-open the case. The sufficiency or correctness of the material\nis not a thing to be considered at this state that prima facie there should be some\nelement of belief which recording U/s.148.”\n45. The AO further relied upon the Hon'ble Apex Court in 224 ITR 382, The\nHon'ble Madras High Court in 242 ITR 176 and the Hon'ble P&H High Court in\n242 ITR 554, wherein it has been held that even a letter from the DDIT (Inv.)\nconstitutes information for the purposes of re-opening. We have examined the\nITRs of the parties furnished before us vide paper book dated: 11.09.2025 page\nnos. 188 to 191 and following information relevant to the matter emerged out\nof that as under:\nS. No. Name of the Party\nReturned Income\nAmount of loan\nGiven to the\nAssessee\nAmount\nof\ninterest Received\nfrom the Assessee\n01.\nKarda Traders\nRs.\n3,73,333/-\nRs. 78,00,000/-\nRs. 9,32,515/-\n(Amount\nof\nRefund claimed\nRs. 4,35,430/-)\n02.\nMacro IT System\nRs.\n1,97,052/-\nRs. 41,00,000/-\nRs. 4,90,652/-\n(Amount\nof\nRefund claimed\nRs. 57,310/-)\n03.\nPurus Marketing\nRs.\n23,301/-\nRs. 90,00,000/-\nRs. 10,75,562/-\n(Amount\nof\nRefund claimed\nRs. 3,35,100/-)\n04.\nGroupone\nRs. 2,00,330/-\nRs. 91,00,000/-\nRs. 10,87,627/-\nInformative Services\n(Amount\nof\nRefund claimed\nRs.\n2\nLacs/-)\nfigures not legible\n46. The table prepared (supra) clearly demonstrates the doubtful nature and\nabesnce of creditworthiness of the parties concerned. It's a typical model of\nentry operators where they either file return of income below taxable or\nalways claim the refund of T.D.S. deducted out of such transactions. Uptil, the\nbench is trying to analyse the facts of the matter in the light of documents not\nunder challenge and produced by the assessee himself. It is pertinent to\nmention here that the Ld. Counsel of the assessee flooded the bench with legal\narguments and various judicial pronouncements of coordinate benches,\nHon'ble High Courts and Hon'ble Supreme Court also without addressing the\nspecific queries of the bench. So that, the bench can discharges its utmost duty\nof analyzing the facts and law applicable in the present case.\n47. Coming back to the facts of the case, despite of several reminders by the\nbench, the Ld. Counsel ignored the demand that the balance-sheet and bank\nstatements of the parties are required to analyse the element of credit\nworthiness. Intentionally, the bank statement of the assessee was submitted\nalongwith its return, which was not required at all and asked for by the bench\nand what exactly, was asked for and required never delivered to the bench.\nThis act of intentional omission confirms the finding of the AO that the\nassessee has not anything to say over the strength of the facts of the case.\n48. [1963] 50 ITR 1 (SC) Kale Khan Mohammad Hanif vs. CIT it was observed\nby the Hon'ble Apex Court that “It is well established that the onus of proving the\nsource of a sum of money found to have been received by the assessee is on him. If he\ndisputes liability for tax, it is for him to show either that the receipt was not income or that if\nit was, it was exempt from taxation under the provisions of the Act. In the absence of such\nproof, the ITO is entitled to treat it as taxable income. In the instant case, the ITO held the\nincome represented by the credit entries to be income from undisclosed sources, that is,\nneither from the manihari (general merchandise) nor from the bidi business of the assessee\nwhich he had disclosed. It was open to the assessee to raise the question that the finding\nthat those amounts were income received from undisclosed sources was not based on any\nevidence or was, for other reasons, perverse. He did raise some questions of this type before\nthe Tribunal for reference to the High Court but the Tribunal did not think that those\nquestions legitimately arose and did not refer them to the High Court. The assessee accepted\nthe decision of the Tribunal and did not move the High Court to direct a reference in regard\nto those questions under section 66(2). Those questions, therefore, could not be raised at this\nstage.” In the instant case also, the assessee primarily relying on technical issues\nand effectively has nothing to say on merits of the case.\n49. [1977] 107 ITR 938 (SC) Roshan Di Hatti vs. CIT\n“Now, the law is well settled that the onus of proving the source of a sum of money found to\nhave been received by an assessee is on him. If he disputes the liability for tax, it is for him to\nshow either that the receipt was not income or that if it was, it was exempt from taxation\nunder the provisions of the Act. In the absence of such proof, the revenue is entitled to treat\nit as taxable income. To put it differently, where the nature and source of a receipt whether it\nbe of money or of other property, cannot be satisfactorily explained by the assessee, it is\nopen to the revenue to hold that it is the income of the assessee and no further burden lies\non the revenue to show that that income is from any particular source.”\n[2018] 96 taxmann.com 255 (SC) Konark Structural Engineers (P.) Ltd. vs. DCIT\n“Assessee-company was carrying on business as builders and developers – During relevant\nyear, assessee received certain amount as share capital from different parties - Assessing\nOfficer taking a view that assessee failed to prove identity and creditworthiness of\nshareholders, added amount in question to assessee's income under section 68 – High court\nin impugned order noted that summons to shareholders under section 131 could not be\nserved with remark that addresses were not available and that shareholders were first time\nAssessees and were not earning enough income to make deposits in question and held that\nsince assessee did not offer to procure presence of shareholders, assessee failed to prove\ngenuniness of share transactions and, thus, impugned addition was to be confirmed\nWhether SLP against said decision was to be dismissed - Held, yes [Paras 11 and 12]\nIn the case of the assessee also, as narrated (supra), notices issued u/s. 133(6)\nof the Act were not complied with or categorical denial was there about the\ntransaction with the assessee [Para 7]. Now, it can be reasonably presumed in\nfavour of the Revenue, that even if notices would have been issued u/s. 131 of\nthe Act, fate of the story will remain the same.\n50. We draw strength to arrive at a reasonable conclusion from the following\njudicial pronouncements by the Hon'ble Apex Court as under:\n[2021] 127 taxmann.com 275 (SC) Sunil Thomasvs.ITO, Ward No. 2(1)\n[2021] 129 taxmann.com 44 (SC) C.V Ravi vs. Income-tax Officer\n“Assessee had claimed to have taken loan of huge amount from an entity, namely, ARC – A\nsurvey had taken place at premises of assessee during which statement of assessee was\nrecorded wherein he admitted to not know said creditor ARC, from whom he had claimed to\nhave taken loan of such huge amount - Thus, Assessing Officer held that said loan received\nby assessee was bogus and, accordingly, made additions under section 68 to income of\nassessee - High Court by impugned order held that since assessee had failed to produce any\nconfirmation from said alleged creditor ARC or produce its owner in person for cross\nexamination and also failed to establish identity of creditor and genuineness of alleged loan\ntransaction, impugned additions under section 68 was justified - Whether Special Leave\nPetition against said impugned order was to be dismissed - Held, yes [Para 2]\"\n[2024] 159 taxmann.com 28 (SC) Virendra Behari Aggarwal vs. CIT\n“Section 68 of the Income-tax Act, 1961- Cash credits (Loan) - Assessment year 2001-02-\nHigh Court by impugned order held that where assessee claimed to have taken loans from\nhis two minor sons and source of loan was stated to be gift received by assessee's sons from\ntheir uncle i.e., brother of assessee, since assessee's brother categorically stated that they\nhad not given any gifts to anybody, impugned addition made by Assessing Officer in respect\nof loan amount was to be confirmed - Whether SLP filed by assessee against said impugned\norder was to be dismissed - Held, yes [Para 2]\n[2019] 103 taxmann.com 48 (SC) PCIT (Central)-1 vs. NRA Iron & Steel (P.) Ltd.\nThe use of the words 'any sum found credited in the books' in section 68 indicates that the\nsection is widely worded, and includes investments made by the introduction of share capital\nor share premium.[Para 8.1]\n■ as per settled law, the initial onus is on the assessee to establish by cogent evidence, the\ngenuniness of the transaction, and creditworthiness of the investors under section 68.\n■ the assessee is expected to establish to the satisfaction of the Assessing Officer:\nProof of identity of the creditors;\nCapacity of creditors to advance money; and\nGenuineness of transaction\n■ This Court in the land mark case of Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC)\nand, Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) laid down that the onus of proving the\nsource of a sum of money found to have been received by an assessee, is on the assessee.\nOnce the assessee has submitted the documents relating to identity, genuineness of the\ntransaction, and creditworthiness, then the Assessing Officer must conduct an inquiry, and\ncall for more details before invoking section 68. If the assessee is not able to provide a\nsatisfactory explanation of the nature and source, of the investments made, it is open to\nthe revenue to hold that it is the income of the assessee, and there would be no further\nburden on the revenue to show that the income is from any particular source. [Para 8.2]\n■ With respect to the issue of genuineness of transaction, it is for the assessee to prove by\ncogent and credible evidence, that the investments made in share capital are genuine\nborrowings, since the facts are exclusively within the assessee's knowledge. Merely,\nproving the identity of the investors does not discharge the onus of the assessee, if the\ncapacity or credit-worthiness has not been established. [Para 8.3]\n■ The Assessing Officer ought to conduct an independent enquiry to verify the genuineness\nof the credit entries. In the instant case, the Assessing Officer made an independent and\ndetailed enquiry, including survey of the so-called investor companies from Mumbai, Kolkata\nand Guwahati to verify the creditworthiness of the parties, the source of funds invested, and\nthe genuineness of the transactions. The field reports revealed that the shareholders were\neither non-existent, or lacked creditworthiness. [Para 9]\n51. Since the assessee did not give the details of the credits appearing in its\naccounts, those entries stand unexplained and therefore, the addition made\nunder section 68 of the Act is justified. The CIT (A) finding on the issue of\napplicability of section 68 of the Act was not expressly there by the assessee\nbefore the tribunal and therefore, no fresh submissions on this count could be\nentertained by us and that is too it's Revenue's appeal. The key takeaways\ncould be listed as under:\n(i) When there is credit in the books of account and such credit being loan or\nborrowing it has to pass the test of section 68 of the Act;\n(ii) Even if the loan or borrowing is squared up in the year, it could be tested\nfor the purposes of section 68 of the Act. Obviously, in accommodation\nentries the lending or borrowing may be squared up and therefore, it is also\ncaught in the net of verification of its veracity. The assessee's arguments and\nreliance on various judicial precedents will also be dealt in this order later in\nrelevant paras.\n52. Considering the above discussion on facts and law pronounced by the\nHon'ble Apex Court, as discussed (supra), action of the AO on this count is\nsustained and the order of the Ld. CIT (A) is set-aside, as the same is silent on\nsame and simply relied on the technicalities of the matter. Whereas, in such\ntype of the cases, considering the cotemporary situation, the Hon'ble Courts\nalso emphasised on the principle of Substance over Form in their decisions.\nThe entities involved in the malpractice of providing accommodation entry\nand beneficiary entities can't simply come out of the glitches of the law, in\nthe guise of some technical issue here and there.[2012] 17 taxmann.com 202\n(SC)Vodafone International Holdings B.V. vs. Union of India\n“It is generally accepted that the group parent company is involved in giving principal\nguidance to group companies by providing general policy guidelines to group subsidiaries.\nHowever, the fact that a parent company exercises shareholder's influence on its subsidiaries\ndoes not generally imply that the subsidiaries are to be deemed residents of the State in\nwhich the parent company resides. Further, if a company is a parent company, that\ncompany's executive director(s) should lead the group and the company's shareholder's\ninfluence will generally be employed to that end. This obviously implies a restriction on the\nautonomy of the subsidiary's executive directors. Such a restriction, which is the inevitable\nconsequences of any group structure, is generally accepted, both in corporate and tax laws.\nHowever, where the subsidiary's executive directors' competences are transferred to other\npersons/bodies or where the subsidiary's executive directors' decision making has become\nfully subordinate to the Holding Company with the consequence that the subsidiary's\nexecutive directors are no more than puppets then the turning point in respect of the\nsubsidiary's place of residence comes about. Similarly, if an actual controlling Non-Resident\nEnterprise (NRE) makes an indirect transfer through \"abuse of\norganisation form/legal form and without reasonable business purpose\" which results in tax\navoidance or avoidance of withholding tax, then the Revenue may disregard the form of the\narrangement or the impugned action through use of Non-Resident Holding Company,\nrecharacterize the equity transfer according to its economic substance and impose the tax on\nthe actual controlling Non-Resident Enterprise. Thus, whether a transaction is used\nprincipally as a colourable device for the distribution of earnings, profits and gains, is\ndetermined by a review of all the facts and circumstances surrounding the transaction. It is\nin the above cases that the principle of lifting the corporate veil or the doctrine\nof substance over form or the concept of beneficial ownership or the concept of alter ego\narises. There are many circumstances, apart from the one given above, where separate\nexistence of different companies, that are part of the same group, will be totally or partly\nignored as a device or a conduit (in the pejorative sense). [Para 67]\"\n53. Courts have evolved doctrines like piercing the\ncorporate\nveil, substance over form etc. enabling taxation of underlying assets in cases of\nfraud, sham, tax avoidant, etc. However, genuine strategic tax planning is not\nruled out. Lifting the corporate veil doctrine can, therefore, be applied in tax\nmatters even in the absence of any statutory authorisation to that effect.\n54. In view of the above the present Bench do have any hesitation in holding\nthat on merits the assessee has miserably failed to establish the essential three\ningredients as prescribed in section 68 of the Act and dully discussed and\nconfirmed by the various Hon'ble High Courts and Hon'ble Supreme Court as\ndiscussed (supra). As far as the finding of the Ld. CIT (A) that the assessment of\nthe assessee should have been carried out as per the provisions of section\n153C of the Act, We have gone through the order of the Ld. CIT (A) and facts of\nthe case alongwith order of the AO. It is observed that the finding of the Ld. CIT\n(A) is erroneous as the case of the assessee false within the purview of section\n148 of the Act and not in section 153C of the Act. In coming over this\nconclusion the Bench respectfully followed the decision of the Hon'ble Apex\nCourt in the case of [2023] 149 taxmann.Com 399 (SC) PCIT, Central-3 vs.\nAbhisar Buildwell (P.) Ltd.\n55. It is also worthwhile to mention that the case of the assessee was\ndeclared heard on 11/09/2025. But there was a request by the Ld. DR to\nsubmit some additional information pertaining to the matter. The Bench given\ntime to her till 15.09.2025 with a direction that advance copy should be served\nto the Ld. Counsel also (in case she submits any material) and Ld. Counsel has\ntime to respond the same till 25.09.2025. But as nothing submitted by the Ld.\nDR, there is no occasion for the Bench to examine the same and consequently\nmatter get heard for all the legal purposes on 11/09/2025 itself.\n56. In the result, appeal of the Revenue is allowed and order of the AO is\nconfirmed. In the result, three appeals of the revenue are Allowed, with\nabove remarks.\nThe Order is pronounced in the open court on 29th day of September 2025.\n \n \n(Dr. S. SEETHALAKSHMI)\nJUDICIAL MEMBER\n(GAGAN GOYAL)\nACCOUNTANT MEMBER\nJaipur, दिनांक/Dated: 29/09/2025\nCopy of the Order forwarded to:\n1.\n2.\n3.\n4.\n5.\nअपीलार्थी/ The Appellant,\nप्रतिवादी / The Respondent.\nआयकर आयुक्त CIT\nविभागीय प्रतिनिधि, आय. अपी. अधि., Sr.DR., ITAT,\nगार्ड फाइल / Guard file.\n////\nBY ORDER,\n(Asstt.