Loading judgment…
Facts
The assessee company received accommodation entries amounting to Rs. 2,43,00,000/- from four different private limited companies and another Rs. 13,60,000/- from two other companies. The Assessing Officer (AO) and the Investigation Wing found these companies to be shell entities providing bogus entries. The AO reopened the assessment and made additions of these amounts to the assessee's income.
Held
The Tribunal held that the assessee failed to prove the identity, genuineness, and creditworthiness of the companies from which accommodation entries were received. The AO and the Investigation Wing had made inquiries, but the concerned companies did not respond, and physical verification revealed they did not exist. Therefore, the additions made by the AO were confirmed.
Key Issues
Whether the amounts received from the identified companies were genuine business transactions or bogus accommodation entries, and if bogus, whether the additions made by the AO were justified.
Sections Cited
Section 250, Section 143(1), Section 143(3), Section 147, Section 148, Section 142(1), Section 133(6), Section 271(1)(c), Section 234B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES : G : NEW DELHI
Before: MS MADHUMITA ROY & SHRI NAVEEN CHANDRA
Assessment Year : 2012-13 Park View Automotives P. Ltd., Vs. ITO, S-606, School Block, Ward 19(3), Laxmi Nagar, Delhi. Delhi – 110 092. PAN: AAECP3499H (Appellant) (Respondent) Assessee by : Shri Mukesh Jain, CA & Shri Samyak Jain, Advocate Revenue by : Shri Manish Gupta, Sr. DR Date of Hearing : 05.02.2026 Date of Pronouncement : 13.02.2026 ORDER PER MADHUMITA ROY, JM:
The instant appeal filed by the Assessee is directed against the order dated 22.07.2025 of the ld. Commissioner of Income-tax (Appeals), NFAC, Delhi [hereinafter referred to as the Ld. CIT(A)] u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the assessment order dated 28.11.2019 passed by the ITO, Ward 19(3), Delhi (hereinafter referred to as ‘the ld. AO’) u/s 143(3)/147 of the Act for Assessment Year 2012-13.
The assessee before us has filed its return of income on 29.09.2012 for AY 2012-13 declaring the income at Rs.728/- the return whereof was duly processed u/s 143(1) of the Act. Subsequently, on the basis of the information received from the Investigation Wing, Kolkata by and under its letter dated 12.03.2018 that the assessee company has taken bogus entry amounting to Rs.1,62,40,000/- from m/s Sunrise Dealmark Pvt. Ltd., M/s Shyam Dealtrade Pvt. Ltd., M/s Midpoint Traders Pvt. Ltd., M/s Midway Commercial Pvt. Ltd. and credible information of the Wing in respect of cash/ fund deposit in the account of Union Bank of India maintained at Bhawanipur, Kolkata, reopening of assessment was made by the Ld. AO upon recording of reasons. Relevant to mention that bank statements of those companies were examined and analysed, summons were also issued to the principal officers of those companies through Departmental Inspectors who visited the addresses of the company for physical verification, but, no companies were found thereon. Thus, identity or the genuineness or the credit worthiness of these companies were found to be doubtful by the Investigation Wing and the modus operandi is found to be only providing accommodation entries to the beneficiaries through layering in the guise of bogus share, share premium and unsecured loans, etc. in lieu of commission. Further information was also received that one KCA Allied Services Pvt. Ltd. having suspicious transaction of large amount were conducted through the bank account of the said company and its associate concerns. These are found to be bogus having no existence of business activities and used only for providing 2 accommodation entries in the form of bogus share capital/share premium/pre- arranged bogus LTCG/STCL and unsecured loans to various beneficiaries and parties in lieu of commission. As per the information, the assessee has one beneficiary of accommodation entry of Rs.13,60,000/-. It is the case of the Revnue that the assessee has not disclosed the entire above entries under the income and, therefore, total of Rs.1,76,00,000/- (1,62,40,000 + 13,60,000/-) has escaped assessment. Notice u/s 148 of the Act dated 29.03.2019 upon taking prior approval from the PCIT-7, New Delhi, was issued to the assessee in response thereto the return was filed on 27.04.2019 declaring the total income at Rs.728/-. Further, complying all the formalities issuance of notice u/s 143(2) dated 08.08.2019 followed by notice u/s 142(1) of the Act was issued to the assessee, but without any compliance. Finally, a show cause notice dated 18.11.2019 was issued to the assessee with the following contents:-
“As you are aware that your case was reopened u/s 147 of the Act and subsequently a notice u/s 148 of the Act dated 29.03.2019 was issued to you. Notice u/s 143(2) was issued on 08.08.2019. Further, notice u/s 142(1) along with specific questionnaire was also issued on 08.08.2019 & 0.11.2019. The objections filed by you have also been disposed off. Further, you are requested to comply with the notices issued to you, which remained un-complied with as on date. In such circumstances, as per information received in this office as mentioned in the reasons recorded u/s 147 of Act 1961 your company is one of the beneficiary of accommodation entries of Rs 13,60,000/- through paper/shell companies of Rajesh kr. Bhutoria & Lalit Kr. Periwal and your company is also one of the beneficiaries with regard to the entries taken from m/s Sunrise Dealmark Pvt. Ltd, M/s Shyam Dealtrade Pvt. Ltd., m/s Midpoint Traders Pvt Ltd. and M/s midway commercial Pvt. Ltd of Rs.1,62,40,000/- during the FY 2011-12. On perusal of your ITR for A Y 2012-13 it has been noticed that you have shown gross receipt of Rs.30000/- and declared an income of Rs. 730/- only. Therefore the amount 3 of Rs. 1,76,00,000/ (1,62,40,000+13,60,000) has remained undisclosed/ unexplained by your company in absence of any details explaining the above mentioned unexplained entries of Rs.1,76,00,000/-, the undersigned is left with no option but to resort to best judgment assessment u/s 144 of the I.T Act 1961. You are again hereby issued final show cause notice by giving last and final opportunity that as to why said entries of Rs. 1,76,00,000/- may not be added to your income.”
2.1 The assessee has submitted as follows:- “Company has received total amount of Rs.2,43,00,000/- from M/s Sunrise Dealmark Pvt. Ltd., M/s Shyam Dealtrade Pvt. Ltd., M/s Midpoint Traders Pvt etc and M/s Midway Commercial Pvt. Ltd. instead of Rs.1,62,40,000/- as mentioned by Learned AO in show cause notice... In show cause notice learned assessing office has also mentioned that Rs.13,60,000/- has been received from one of the beneficiary of accommodation entries through paper and shell companies of Mr. Rajesh Kumar Bhutoria & Mr. Lalit Kumar Periwal but you have not mentioned the details of the transaction such as Name of the company/companies, date of transaction etc.”
In response to the said show cause notice, it was alleged that no details of transaction was specified by the Ld. AO while recording reasons. The assessee further submitted a reply dated 27.11.2019 stating that the assessee received Rs.2,43,00,000/- from those four companies mentioned hereinabove as the case made out by the Revenue. In order to verify the identity, genuineness and credit worthiness of those companies notice u/s 133(6) was issued, but, without any result. On the other hand, the assessee submitted only the ledger account of the payments made in lieu of share issued as the assessee made out a case of share sold to those four companies out of which the amount of Rs.2,43,00,000/- was received. As the PAN or the ledger accounts are not sufficient to prove the credit worthiness or the genuineness of the entity and further that where no 4 response was received by the assessee from the said four companies in respect of which notices were issued u/s 133(6) of the Act, these companies, according to the Ld. AO were found to be bogus companies providing accommodation entries in the form of bogus share, share premium, unsecured loans, etc. and the entire receipt of Rs.2,43,00,000/- was added in the hands of the assessee. Relevant to mention that further amount of Rs.13,60,000/- received by the assessee company from M/s Beauty Suppliers Pvt. Ltd. and from M/s Deepsikha Suppliers were also added as no response was received upon notice to those parties u/s 133(6) of the Act and, ultimately, the said amount of Rs.13,60,000/- was added in the hands of the assessee. In appeal, these two additions were further confirmed by the first appellate authority. Hence, the instant appeal before us.
At the time of hearing of the instant appeal, the Ld. counsel appearing for the assessee submitted before us that this receipt is nothing but a sale of investment. The shares lying with the assessee was sold to those four companies. In this regard, he has drawn our attention to page 7 of the paper book filed before us where a reply was made to the AO against the notice u/s 148 of the Act. The Ld. AR further relied upon the details of the share investment made by the assessee company appearing at page 10 of the paper book filed before us where the list of shares and the corresponding amount is mentioned. He has further drawn our attention to the reply filed by the assessee dated 23.11.2019, i.e., to the reply to the show cause dated 18.11.2019 wherein the fact of selling the shares held by the company in earlier years which has been shown in investment made in shares in the balance sheet as on 31.03.2011 to all those companies and received sale consideration against the sale of shares. The sale of invoices were also relied upon by the Ld. AR. Surprisingly, the shares purchased by the assessee was of Rs.400/-, remained Rs.400/- at the time of sale of those shares to the concerned parties as it is evident from the sale invoices. It is the case of the assessee as also argued before us that the Ld. AO has not verified and only relied upon the Investigation Wing’s report and neither considered the reply to the show cause notice filed by the assessee. He simply relied upon the order passed by the Ld. AO and the addition was confirmed. It was therefore argued by the Ld. AR that in the absence of any inquiry made by the Ld. AO the entire order is vitiated and therefore, liable to be quashed.
On the other hand, the Ld. DR relied upon the order of the authorities below. Further it has been submitted by him that the inquiry u/s 133(6) of the Act was duly done by the Ld. AO, but, no response was forthcoming from the buyers, namely, the four companies mentioned hereinabove. He further added that even the Investigation Wing sent their officers to the concerned office addresses of those four companies, but, on physical verification done by the Investigation Wing, it was found that no such company existed. Further, when the AO has tried to investigate into the matter by issuing notice u/s 133(6) of the Act, no response was made by either of the companies. Furthermore, the assessee also failed to substantiate the credit worthiness of those companies, the identity or genuineness of those transactions were also remained doubtful. He, thus, supports the orders passed by the authorities below.
Heard the rival submissions made by the respective parties. We have also perused the relevant material available on record. We find that the Ld. AO while making the addition has observed as under:-
“5.1 Further, assessee has submitted its reply vide letter dated 27.11.2019. As per the reply of the assessee and on perusal of the records available in this office it has been noticed that the assessee company has received Rs.2,43,00,000/- from M/s Sunrise Dealmark Pvt. Ltd., M/s Shyam Dealtrade Pvt, Ltd., M/s Midpoint Traders Pvt. Ltd. and M/s Midway Commercial Pvt. Ltd. which remained escaped for taxation purposes. In order to verify the genuineness/creditworthiness of the transactions, notice u/s 133(6) of the act was issue to all the concerned companies but no response received till date. This shows that these companies are not in existent and are only paper concerns. The investigation wing as well has made exhaustive enquiry and proved that these are only paper concerns and are only providing accommodation entries. The assessee has submitted only the ledger accounts of the payments made in lieu of share issued. Mere providing the PAN, ledger accounts of the party does not prove the creditworthiness/genuineness of the entity. Hence the assessee was unable to discharge its onus. Hence, all these above mentioned companies are bogus companies which provide accommodation entry in the form of bogus share, share premium, unsecured loans etc. the assessee failed to provide any cogent explanation with regard to the said entries received from the parties. Therefore, the said entry i.e. of Rs.2,43,00, 000/- is hereby treated as bogus and added to the income of the assessee as per the income tax act, 1961. (Addition of Rs.2, 43,00,000) 5.2 I am satisfied that assessee has concealed particulars of his income. Penalty proceedings u/s 271(l)(c) of the Income Tax Act, 1961 for concealment of income as aforesaid within the meaning of explanation 1 to the sub section (1) of the section 271(1)(c) of the Income Tax Act, 1961 are initiated. 7
5.3 As per the reply of the assessee mentioned above, assessee has requested to provide the details of the company from whom accommodation entry of Rs.13,60,000/- received by the assessee company. Accordingly, letter was issued to the assessee in which the details of the companies were provided i.e. Rs.3,60,000/- from M/s Beauty Suppliers Pvt. Ltd. and Rs. 10,00,000/- from M/s Deepsikha Suppliers Pvt. Ltd. In order to verify the genuineness/creditworthiness of the transactions, notice u/s 133(6) of the act was issue to all the concerned companies but no response received till date. This shows that these companies are not in existent and are only paper concerns. The investigation wing as well has made exhaustive enquiry and proved that these are only paper concerns and are only providing accommodation entries the assessee has also not provided the details. Hence, the assessee has not discharged its onus and hence the three limbs necessary for proving the said transactions i.e. genuineness, creditworthiness and identity therefore Rs.1360000 received from M/sBeauty SuppliersPvt. Ltd and m/s Deepsikha Suppliers Pvt..Ltd. is treated as bogus and added to the income of me assessee as per the Income Tax Act, 1961. (Addition of Rs.13,60,000)
6.1 Further, the Ld. CIT(A), while confirming the addition has observed as follows:- “Decision :l have carefully considered the entire submissions of the appellant along with all exhibits , perused the materials on record and carefully gone through the order of the AO passed u/s 143(3) r.w.s 147 of the I.T Act 1961 dated 28-11-2019. I find from the grounds of appeal vis-a-vis statement of facts that the appellant has claimed the AO has made erroneous, unjustified addition based on erroneous findings of facts that the appellant being engaged in accommodation entries and the same proceedings being bad in law . But the appellant is unable to submit any written submission duly supported by documents in support of its claim, for which the said claim of appellant being treated as unacceptable . It is observed from the assessment order that despite availing ample opportunity in assessment stage neither the appellant nor its authorized representative could have provided any acceptable satisfactory evidence or satisfactory explanation against the findings of the AO , so as to establish that the concerned concerns viz. M/s Shyam Dealtrade (P) Ltd., M/s Sunrise Delmark Pvt. Ltd., M/s Midpoint Traders (P) Ltd.and M/s Midway commercial Pvt. Ltd. had ever carried out any genuine business activity. In appeal proceedings also the appellant is unable to file any written submission substantiating their claim corroborating with supporting documents that the transactions carried out with the above four concerns being genuine . It is observed from the case records including assessment order the appellant is unable to prove either the identity or the creditworthiness or the genuineness of transaction of the said parties in as much as the principle Officers of the said concerns remain absent, non compliant and non responsive in case summon issued by the Investigation wing of the department as well as notice issued by the AO u/s 133(6) of the Act in course of scrutiny assessment.
In view of above , I do not find any infirmity in the order of the AO and resultantly, I have no hesitation in holding that the impugned order of the AO dated 28-11-2019 is based on apropos consideration of facts and law and hence the same does not warrant interference. Therefore I am of opinion that AO’s decision of determining total income after addition of 2,56,60,000/- with respect to unexplained cash deposit (money) in respect to the appellant, is justified and in accordance with law. Accordingly additions made by the AO in assessment order of Rs.2,56,60,000/- [2,43,00,000+13,60,000] I- under bogus transaction of the I.T. Act stand confirmed and the grounds relating to these issues are dismissed. Regarding charging of interest u/s 234B , since the same is mandatory and consequential with quantum addition , the said ground need not require separate adjudication and hence dismissed .”
It is the fact that the assessee has neither been able to submit any written submission in respect of the claim nor the identity, genuineness of the transaction or the credit worthiness of those companies were able to be established by the assessee in support of the claim. No satisfactory evidence or explanation against the findings of the AO was able to be placed even before the Ld.CIT(A). It is found that the business activities of those four companies were also not been able to be explained before the authorities below by the assessee. Thus, in the absence of identity, creditworthiness and genuineness of the transaction having been established either by these parties or by the assessee and the principal officers of those concerns, and further that in the absence of any response made by the said companies, the accommodation entry providers against the notice issued u/s 133(6) of the Act, the addition made by the Ld. AO and confirmed by the First Appellate Authority in our considered view is just and proper so as not to warrant any interference.