ACIT, CENTRAL CIRCLE-26, DELHI vs. ZEN TRADEX PVT. LTD. , DELHI

5. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time of hearing of the appeal.” C.O. No. 11/Del/2023, A.Y. 2012-13:

“1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye and on facts.

2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the learned Assessing Officer (AO) under section 143(3) read with section 153C is without jurisdiction.

3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C and the assessment framed under section 153C is bad and liable to be quashed in the absence of any satisfaction being recorded by the AO of the searched person that the incriminating material belonging to the assessee was found during the course of the search.

4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order was passed by the learned Assessing Officer (AO) without disposing off the objections raised by the assessee company against the satisfaction note recorded. 5. (i) On the facts and circumstances of the case, the learned CIT(A) haserred both on facts and in law in rejecting the explanations and evidences brought on record by the assessee to prove the identity and creditworthiness of the lenders and genuineness of the transactions. (ii) That the abovesaid addition has been confirmed ignoring the fact that the addition has been made by the AO without pointing out any defect in the evidences filed by the assessee.

6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in holding that the assessee is involved in to 374/Del/2022 C.O. No. 11 to 14/Del/2023 Zen Tradex Pvt. Ltd. providing and taking accommodation entries in the form of share application money or unsecured loans.

4.1 These original ITRs were processed under section 143(1) of the Income Tax Act, 1961 (hereinafter, the ‘Act’). Later on, the Assessing Officer (hereinafter, the ‘AO’), based on information received from the AO of the searched person, recorded satisfaction and issued notices, under section 153C of the Act, for the above-mentioned AYs. In response to these notices, the assessee filed ITRs of the relevant years, on 04.12.2018, declaring the same income as shown in original ITRs. to 374/Del/2022 C.O. No. 11 to 14/Del/2023 Zen Tradex Pvt. Ltd. 4.2 Shri Anand Kumar Jain and Shri Naresh Kumar Jain along with their business concerns & associates (Anand Kumar Jain & Naresh Kumar Jain Entry Operator Group) were searched, on 17.08.2018, under section 132 of the Act. The assessee is one of the companies promoted, controlled and managed by Shri Anand Kumar Jain and Shri Naresh Kumar Jain, Entry Operators, for providing accommodation entries in the garb of share capital, share premium, loans, etc. The search operations revealed that this Group was engaged in providing accommodation entries, on commission basis, to various beneficiaries. The above captioned assessee is one of the entities/ concerns through which money/transactions have been routed/passed through before providing accommodation entries to the real beneficiaries. The assessee was used as an intermediary through which money/transactions had been routed/passed through for providing accommodation entries to beneficiaries. The AO after holding the assessee as conduit concern of Shri Anand Kumar Jain and Shri Naresh Kumar Jain, Entry Operators, assessed the entire bank credits of Rs.5,06,28,300/-, Rs.8,62,00,764/-, Rs.4,06,67,346/- and Rs.16,91,50,500/-of the assessee as unexplained under section 68 of the Act, in the hands of the assessee on protective basis, in AYs 2012-13, 2013-14, 2014-15 & 2017-18 respectively. The to 374/Del/2022 C.O. No. 11 to 14/Del/2023 Zen Tradex Pvt. Ltd. AO, in para 10 of the assessment orders, has categorically mentioned that the information relating to beneficiaries have already been passed on to the respective AOs of all the beneficiaries for doing needful at their end. Further, the AO worked out commission income @ 0.25% of the above- mentioned bank credits of Rs.5,06,28,300/-, Rs.8,62,00,764/-, Rs.4,06,67,346/- and Rs.16,91,50,500/- in AYs 2012-13, 2013-14, 2014- 15 & 2017-18 respectively and taxed the samein the hands of the assessee on substantive basis. Aggrieved, the assessee filed appeals before the Ld. CIT(A) who allowed appeals of the assessee, for AYs 2012- 13, 2013-14, 2014-15 & 2017-18 by deleting the entire additions either made on protective basis or substantive basis.

7. We have heard both the parties at length. We find merit in the submission of the Ld. AR.The Tribunal, in the case of Zed Enterprises (P) Ltd., to 212/Del/2022 for AY 2012-13 to 2016-17, has held as under: 7 to 374/Del/2022 C.O. No. 11 to 14/Del/2023 Zen Tradex Pvt. Ltd. “12. We have examined the ratio of the ld. CIT(A). The ld. CIT(A) held that the AO in the assessment order has claimed to have identified the names of beneficiaries and already disseminated the information to the assessing officers of the beneficiaries and hence the credits received by the appellant cannot be treated as unexplained credit in its hands since, the said transactions are mere arrangement of funds/routing of unaccounted income o f the beneficiaries to whom the said funds were transferred through the bank of the appellant company in lieu of commission. The ld. CIT(A) has also made note of the beneficiaries of the entries given by the assessee company. For the sake of ready reference, a few entries and the beneficiaries are reproduced below: …… …… 13. From the above, the ld. CIT(A) held that the assessee company has received funds from various concerns as mentioned above and thereafter amounts were transferred to the above-mentioned companies/concerns immediately, thus the appellant company is not beneficiary company. The ld. CIT(A) also obtained the remand report from the AO and held that the AO has verified the fund flow statement depicting the source of funds and utilization of the same for payments to beneficiaries submitted by the assessee. The ld. CIT(A) held that it was found which established that the Sh. Anand Jain and Sh. Naresh Kumar Jain were operating bank accounts in the names of various concerns/companies through which accommodation entries were being provided and the appellant company was one of such shell concerns. Further the beneficiariesof such accommodation entries were also identified and information to to 374/Del/2022 C.O. No. 11 to 14/Del/2023 Zen Tradex Pvt. Ltd. their respective AOs was also disseminated as mentioned in the assessment order as well as the remand report.

Order pronounced in open Court on 13th September, 2024.