RAJESH JAJODIA,KOLKATA vs. ACIT(IT), CIR-45, KOLKATA, KOLKATA

None अपीलाथ� क� ओर से/By Appellant Shri Supriyo Pal, JCIT, Sr-DR ��यथ� क� ओर से/By Respondent 28-11-2019 सुनवाई क� तार�ख/Date of Hearing 17-01-2020 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER S.S.Godara, Judicial Member:- This assessee’s appeal for assessment year 2013-14 arises against the Commissioner of Income Tax (Appeals)-13, Kolkata’s order dated 16.12.2016 passed in case No.50/CIT(A)-13/Cir-45/Kol/2016-17, involving proceedings 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Case called twice. None appears at the assessee’s behest. The registry has already sent an RPAD notice to the assessee from time to time. The lower co- ordinate bench’s order dated 16.12.2016 had dismissed the instant appeal on account of non-prosecution which stood recalled on 02.04.2019. We therefore Assessment Year 2013-14 Rajesh Jajodia. Vs ACIT(IT), Cir-45, Kol. Page 2 proceed ex parte against the assessee. The case is now taken for adjudication on merits.

Assessment Year 2013-14 Rajesh Jajodia. Vs ACIT(IT), Cir-45, Kol. Page 3 " ... Q.7. Please note that you have admitted in your statements recorded in different occasion that you are engaged in providing accommodation entry in the form of share capital, bogus billing, unsecured loan etc. through different jama-kharchee companies formed by you by appointing different dummy directors, Please also note that different dummy directors such as Prarnod Rarndln . Sharma etc. mentioned by you in your different statements have also confessed that they are mere name lender and appointed by you in your different companies floated by you, Please offer your comment. Ans. Yes. I admit that the statement deposed by me in different occasions are true and in sound statement of mind and health. I have appointed different persons as dummy directors. Some of the persons are Pramod Ramdin Sharma, Umesh Singh, Neeraj Kedia, Pulak Bagchi, Charanjit Mahata, Pinki Agarwal, Vishal Sharma etc. I confirm my earlier statements. Q.13. On verification of list of clients found from your office computer, it is seen that it contains the list of corporate clients registered under Gateway Financial Services Pvt. Ltd. On further verification, it is found that the said list includes different paper companies controlled and managed by you. The details of such companies which are controlled and managed by you are given herewith. Please go through the list and offer your comment. Client Name of paper Add1 Add2 Add- City code companies 3 S045 Suryamukhi c/o Dilip 4A, Madan Kolkata Projects Pvt. Kumar Yadav Mohan Ltd. Burman St. ***Note: The list of companies contains 46 names and M/s Suyamukhi Projects (P) Ltd is reflected in Row-35 of the list. Ans. Yes I admit that all the companies were formed by me by appointing different dummy directors for providing accommodation entry to different beneficiaries. The clients are registered for rigging of price of different scripts for providing bogus long term capital gain……," Apart from the above the AO has observed from the Memorandum & Article of Association of M/s Suryamukhi Projects (P) Ltd. which has been submitted by the A/R of the assessee, that the said company is floated by two promoters i.e. Pramod Ramdin Sharma and Pulak Bagchi whose names prominently features as dummy directors & mere name lenders in the statement of Shri Praveen Kumar Agarwal reproduced above. Further, the certificate of incorporation submitted by the A/R of the assessee in respect of M/s Suryamukhi Projects (P) Ltd, reflects the mailing address as per record available in ROC office as C/o, Dilip Kumar Yadav, 4A, Madan Mohan Burman Street, Kolkata - 07, whereas the address provided in the return of income of M/s Suryamukhi Projects (P) Ltd for Asst Year 2013-14 reflects the address as 1A, Grant Lane, Kolkata - 12. Such companies which are notoriously known as paper companies resort to such practices of keeping multiple addresses to avoid detection by Enforcement Authorities. Further, the assessee had claimed to have paid of commission to two parties but deducted tax at source on payment of commission to the party only i.e. Shri Netai Chandra Das to whom commission Rs.6,00,000/- was paid. Had the commission payment of Rs.31,66,030/- was genuine in respect of M/s Suryamukhi Projects (P) Ltd, the assessee would have deducted tax at source on the said payment also. Further, it is established by the statement of Shri Praveen Kumar Agarwal Assessment Year 2013-14 Rajesh Jajodia. Vs ACIT(IT), Cir-45, Kol. Page 4 recorded under oath that M/s Suryamukhi Projects (P) Ltd is a paper company with dummy directors used for providing accommodation entries to different beneficiaries. Keeping in view of the fact that M/s. Biological E. Ltd. was a government supplier to a government hospital from whom the appellant has stated for receiving of commission and further payment to M/s Suryamukhi Projects (P) Ltd, was made, the appellant was asked to produce the directors of M/s Suryamukhi Projects (P) Ltd, which failed to do so. It is also a matter of record that the appellant could not give the correct correspondence address of the alleged commission agent M/s Suryamukhi Projects (P) Ltd,. it is also seen that the compliance of TDS provision were not made by the appellant particularly when substantive payment was made to M/s Suryamukhi Projects (P) Ltd,. The inspector deputed for the enquiry could not trace out the so-called alleged commission agent namely M/s Suryamukhl Projects (P) Ltd. as the primary onus was not discharged by the appellant which can prove that the services of the so called commission agent were taken by the appellant. The AO concluded it as a fictitious transaction made by the appellant in order to reduce its taxable profit which was further strengthened by the AO's information based on investigation wing that M/s Suryamukhi Projects (P) Ltd, was floated by Mr. Pramod Ramdin Sharrna and Pulak Bagchi which were pointed out by Shri Praveen Kumar Agarwal as a dummy directors and it was also revealed by the statement of Mr. Praveen Kumar Agarwal that M/s Suryamukhi Projects (P) Ltd, is a paper company used for providing accommodation entries to various beneficiaries. The appellant contention is that survey was conducted on Suryamukhi projects Pvt. Ltd and one M/s. Gateway financial services Ltd. and director of Gateway claimed that Suryamukhi is fictitious entity. All these matter was stated in the assessment order but nothing was mentioned during the course of hearing leave apart the cross examination. Even in the order it was nowhere mentioned that the commission obtained from my client is bogus, even the director of Suryamukhi was also not questioned. Some 3rd party who had relation with Suryamukhi stated that Suryamukhi is a fictitious entity and on that basis AO assumed that the transactions made by my client is bogus AO neither felt to ask explanations from my client nor thought fit to inform. Appellant was not given any opportunity of being heard. In this regard it is pertinent to point out that the AO has used the information supported by Investigation Wing and the statement of Mr. Praveen.Kurnar Agrawal as a circumstantial evidences. The conclusion of the AO is not solely based upon the statement rather it is purely and independently concluded by the AO that the appellant failed to discharge its onus of producing the commission agent and proving its services rendered and the statement made by Sri Praveen Kumar Agarwal has only strengthen the conclusion taken by the AO that the expenses under the guise of commissions were only paper entry. The transaction of the appellant is not in substances. The documentary evidences submitted by the appellant have no evidential value as they are neutral on facts. The claim of the appellant that cross examination has not provided, has no bearing because the evidences received from investigation wing has only been used as a circumstantial evidences. Once the appellant failed to produce the persons from whom the services were claimed to be taken, his address were not provided, no TDS was deducted, and the persons were not found at the given address clearly goes to so that it was merely a paper transaction only for which Mls Suryamukhi Projects (P) Ltd has been used in order to reduce the tax ability. Therefore, the action taken by the AO is hereby upheld and the ground of appeal is dismissed.”