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Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI
PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld CIT(A)-38, New Delhi dated 18.09.2017 for the Assessment Year 2008-09, raising following grounds of appeal:-
“1. The learned CIT(A) has erred on facts and in law in upholding the impugned order of the learned assessing officer which is contrary to law, passed without application of mind and without complying with the procedure and rules, is against equity and justice and facts of the assessee and material on record.
2. The appellant denies his liability to tax as upheld by the learned CIT (A) and determined and computed by the learned assessing officer and the manner in which it has been so determined or computed.
3. The learned CIT(A) has erred on facts and in law in upholding the validity of reassessment proceedings ignoring the fact that initiation of the proceedings u/s 148 and the consequent order u/s 147 are bad in law as:
Prakashchand Automobiles Pvt. Ltd Vs. ITO (Assessment Year: 2008-09) a. The initiation of proceedings u/s 148 is contrary to provisions of law. b. The mandatory procedure laid down in the Act has not been followed. c. The information has been collected behind the back of the assessee and the assessee was never confronted with the same nor an opportunity provided for cross- examination of Jain brothers, copies of the orders of Jain Brothers and the relevant seized material relied upon has not been provided to the assessee. d. The assessment has been made on the basis of conjecture & surmises without any cogent evidence.
The learned CIT(A) has erred on facts and in law in upholding the addition of Rs.30,00,000/- u/s.68 on account of share capital, treating the same as an accommodation entry.
The learned CIT(A) has erred on facts and in law in upholding the addition of Rs.54,000/- u/s 68 as alleged commission paid for obtaining accommodation entries.
The learned CIT(A) has erred on facts and in law by not adjudicating ground of initiation of penalty proceedings u/s 271(1)(c) without any material on record.”
Brief facts of this issue involved in this appeal are three as under: a. Whether reopening of assessment u/s 148 is proper, b. Whether addition made u/s 68 of Rs. 30 lakhs is in accordance with law c. Whether the addition of Rs. 54000/- u/s 68 on account of alleged commission paid for accommodation entries is in accordance with law. d.
Brief facts of the case is that the assessee is a company who filed its return of income on 30.09.2008 declaring income of Rs. 45290/-. Subsequently, notice u/s 148 was issued on 28.03.2015. According to information the assessee has obtained accommodation entries from Mr. S.K.Jain as estimated information received from DIT. The accommodation entries is stated to be as share capital etc. the ld AO further noted that the return of income was not available on record filed by the assessee Page | 2 Prakashchand Automobiles Pvt. Ltd Vs. ITO (Assessment Year: 2008-09) and therefore, the ld AO had a reason to believe that income of Rs. 30 lakhs as escaped assessment. The ld AO further noted that he is satisfied that the assessee has not disclosed truly and fully all the materials facts in the return of income. Reasons for reopening were supplied to the assessee on 29.06.2015 and the assessee filed objection on 31.07.2015. The objections were disposed off on 11.08.2015. the assessee filed writ petition before the Hon'ble Delhi High Court against that order and the assessee withdrew the writ petition later on. Consequently, assessment proceedings commenced. The assessee was asked to produce the directors of the company who applied for share of the company. The assessee submitted that share capital has been introduced 8 years ago and directors could not be contacted and further there is change in the directors of the those companies. The ld AO also issued summons u/s 131 of the Act to the company who applied for share capital in the assessee company. None appeared before him. Therefore, the ld AO issued a show cause notice stating that the assessee has not filed the bank statement in case of other companies. The ld AO asked the assessee to produce the relevant information with respect to identity, genuineness of the share capital. The assessee was also asked that why the addition of Rs. 30 lakhs should not be made in the hands of the company. Based on this the ld AO issued another notice on 07.03.2016. in this notice the ld AO mentioned the complete details about the information available about those share holders. The ld AO further issued the list of companies controlled by Mr. S.K. Jain and also evidence in the form of seized material showing the working of the commission. The ld AO did not filed any submission which could rebut the analysis given by the ld AO. Hence, the ld AO made and addition of Rs. 30 lakhs u/s 68 of the Act and further made an addition of commission @1.8% of Rs. 54000/- on the same. Consequently, assessment u/s 143(3) of the Act was passed on 22.03.2016.