BRENTFORD MERCHANTS PVT. LTD.,KOLKATA vs. ACIT(OSD), WARD-1(4), KOLKATA

order : May 30, 2024 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 13.02.2024 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: “1.

2. For that the Ld. CIT(A) was not justified in upholding the re-opening proceedings in spite of the fact that the reasons to believe were invalid and improper thereby, vitiating the reopening proceedings.

Assessment Year: 2010-11 Brentford Merchants Pvt. Ltd

4. For that the Ld. CITA) ought to have considered that the principles of natural justice was violated by the AO by not confronting the assessee with the alleged adverse materials collected behind its back, as such the additions made are vitiated in law and are liable to be deleted. 5. For that on the facts and in the circumstances of the case, the ld. CIT(A) grossly erred in confirming the addition made by the A.O to the tune of Rs.1,80,50,000/- by wrongly treating the same as unexplained cash credit u/s 68 of the Act. 6. The appellant craves leave to add further grounds of appeal

or alter the grounds at the time of hearing.”

3. The sole issue contended by the assessee before us is relating to the validity of reopening of the assessment.

"Information has been received from Pr. DIT(lnv), Kolkata, that DDIT(Inv), Unit – 4(2), Kolkata, carried investigation of bank accounts which were opened during the F.Y. 2009-10 with ICICI Bank and operated upon for 1 to 2 months. On examination of the bank statements it was observed that unaccounted cash had frequently been deposited in such bank accounts which were immediately transferred to the interlinked bank accounts and then ultimately to the beneficiary's accounts. In this way the beneficiary companies have brought back unaccounted income into their regular books of accounts in the guise of bogus share/unsecured loans etc. It has been further informed that the concerns maintaining the bank accounts are mere paper concerns having no existence and real business activity controlled by Shri Pranab Kumar Modi. Shri Pranab Kr. Modi in his statement under oath before the Directorate has accepted that he was engaged in the business of providing accommodation entry in the form of bogus share capital, unsecured loans etc. to various beneficiaries through concerns controlled and managed by him in lieu of commission in cash.

Assessment Year: 2010-11 Brentford Merchants Pvt. Ltd DDIT(Inv), Unit - 4(2), Kolkata, has prepared a detailed cash trail identifying the fund layering trail and the ultimate beneficiaries. It has been observed that the assessee M/s Brentford Merchants Private Limited was a beneficiary, and it received accommodation entries of Rs.1,80,50,000/- " 4.1 The ld. Counsel referring to the aforesaid reasons recorded has submitted that in the first two paras, the Assessing Officer has mentioned about the information received from the investigation wing that certain parties were involved in providing accommodation entries. That only in the last three lines, it has been mentioned that ‘DDIT(Inv.), Kolkata has prepared a detailed cash trail identifying the fund layering trail and the ultimate beneficiaries’. That it has been further noted that it has been observed that the assessee was a beneficiary as it had received accommodation entries of Rs.1,80,50,000/-. The ld. Counsel has further referred to the objections filed by the assessee against the reopening of the assessment, wherein, the assessee had duly contested the aforesaid reasons recorded and claimed that the assessee is not the beneficiary of any such amount as alleged by the Assessing Officer, the relevant part of the objections in this respect is reproduced as under:

“Further it can be seen from the Balance Sheet of our company that the company is not beneficiary of any such amounts alleged by you. It is very clear from the audited accounts that there is neither any increase in capital by way of issue of fresh shares nor the company has taken any unsecured loans. We fail to understand how the company becomes beneficiary without actually having any increase in capital or liability. Thus it is very clear that your belief that the company have brought back unaccounted income into their regular books of accounts in the guise of bogus shares/unsecured loans is not supported by any material facts.” 4.2 The ld. Counsel has also referred to the bank statement of the assessee for the financial year under consideration, which is placed at page 8-9 of the paper-book to demonstrate that no such cash deposits have been received by the assessee in its bank account during the financial year under consideration. The ld. Counsel has referred to the Assessment Year: 2010-11 Brentford Merchants Pvt. Ltd assessment order to submit that even the Assessing Officer has not mentioned in the assessment order about any transaction made by the assessee of any such amount and neither referred to the nature of the transaction nor any method of receipt of the amount and even did not mention any bank account of the assessee in which the said amount of Rs.1,80,50,000/- was allegedly received by the assessee. The submission of the ld. Counsel at this stage is two-fold. Firstly, that there was no sufficient information in the possession of the Assessing Officer to form belief that the income of the assessee has escaped assessment and further that the satisfaction arrived by the Assessing Officer in forming the belief of the escapement of income was based on borrowed satisfaction. Secondly, even on merits, there is nothing on record that the assessee has received any such amount as alleged by the Assessing Officer. That the entire additions were made on assumptions, surmises and conjecture.