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Income Tax Appellate Tribunal, CHANDIGARH BENCHES, ‘A’ CHANDIGARH
Before: SHRI SANJAY GARG & Ms. ANNAPURNA GUPTA
Per Sanjay Garg, Judicial Member :
The captioned appeal preferred by the Revenue and Cross Objections by the assessee are against the order of the Commissioner of Income Tax (A), Patiala [hereinafter referred to as ‘CIT(A)’] dated 04.03.2016 .
2 ITA Nos.697/Chd/2016 & C.O.26/Chd/2016- Kraishna Karishna Jeawellers and Investment (P) Ltd.,
The Revenue in this appeal has taken the following grounds:-
In the facts and circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 1,10,00,000/- on account of introduction of share application / share capital by the persons/entities, as genuineness of these transactions was not established by the assessee.
In the facts and circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs.5,50,000/-made on account of commission paid to middlemen for getting accommodation entries/bogus share capital.
In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in following the Hon'ble ITAT's decision dated 22.06.2012 in the case of ACIT Vs. KISCO Casting Pvt. Ltd. in ITA No.685/Chd/2011 for the A.Y. 2006-07 for deleting the addition, particularly when the Department is already in appeal before the Hon'ble High Court against the said decision, which is pending for adjudication.
In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not following the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Nova Promoters & Finlease Pvt. Ltd. reported at 342 ITR 369.
It is prayed that the order of Ld. CIT(A) be set aside and that of the Assessing officer restored.
The appellant craves leave to add or amend any grounds of appeal before the appeal is heard and finally disposed of.
The assessee has also filed the following cross objections:- 1. That the Ld. Appellate Authority has wrongly and illegally confirmed the action of the Ld. Assessing officer in initiating the proceedings u/s 147/148 without any reasons to believe, without any relevant material and merely based upon conjecture, guess, surmises, assumption and presumption.
3 ITA Nos.697/Chd/2016 & C.O.26/Chd/2016- Kraishna Karishna Jeawellers and Investment (P) Ltd.,
That the respondent craves permission to elucidate, amend, later add or delete any ground of cross objection at the time of hearing. 3. It is therefore, prayed that the cross objections may kindly be accepted and the assessment may kindly be cancelled / set aside or any other relief to which the resplendent may be found entitled may kindly be granted.
Since the assessee in his Cross objections has raised the legal issue
regarding validity of the reopening of the assessment, hence, at the
request of both the parties, the legal issue has been taken first for
adjudication.
The brief facts relating to the issue are that the reopening of the
assessment in the case of the assessee was made by the Assessing officer
by recording that the income of the assessee for the year under
consideration had escaped assessment. The reasons recorded by the
Assessing officer are reproduced as under:-
“Return of income for the assessment year 2007-08 was filed on 31.10.2017 declaring total income of Rs. 17.72,7800/- and the same was processed u/s 143(1) of the Income-tax Act, 1961.
As per information available, a search was conducted in the case of Shri Surinder Kumar Jain, Group of cases (Entry operator).the assessee M/s Krishna and Krishna Jewellers & Investments Pvt Ltd.,) has taken accommodation entries amounting to Rs. 1,10,000/- from Shri Surinder Kumar Jain group in FY 2006-07 relevant to assessment year 2007-08.
4 ITA Nos.697/Chd/2016 & C.O.26/Chd/2016- Kraishna Karishna Jeawellers and Investment (P) Ltd.,
Keeping in view all the above facts I have reason to believe that the income chargeable to tax to the extent of Rs. 1,10,000/- have escaped assessment for assessment year 2007-08 within the meaning of explanation 2(b) of section 147 of the Income-tax Act, 1961.
Proceedings u/s 147 read with explanation 2 (b) of the Income-tax Act, 1961 are proposed to be imitated.
Approval as required under proviso to section 151(2) of the Income-tax Act, 1961 to issue the notice u/s 148 for the assessment year 2007-08 is sought.”
The Ld. counsel for the assessee pointing out to the above reasons
recorded by the Assessing officer has submitted that there was no
material available with the Assessing officer either from the record of
the case or from any information received from Investigation Wing or
otherwise to point out that the assessee had taken alleged
accommodation entries from Shri Surinder Kumar Jain for the year under
consideration. The only information before the Assessing officer was
that search was conducted in the case of Shri Suridner Kumar Jain group.
The Ld. Counsel for the assessee has referred to the case record to show
that even during or after the assessment, what to say before the
reopening of the assessment, the Assessing officer could not gather any
evidence to link the companies who had invested in the assessee’s
company with Shri Surinder Kumar Jain. Even, there is no reference in
the reasons recorded by the Assessing officer to the name of any
company who allegedly provided accommodation entries to the assessee
company. There is no reference to the nature of transaction whether it
5 ITA Nos.697/Chd/2016 & C.O.26/Chd/2016- Kraishna Karishna Jeawellers and Investment (P) Ltd.,
was a loan transaction, share application amount, gift amount or any sale
and purchase transaction. The reasons recorded by the Assessing officer
are vague and did not point out to any material or information in his
possession on the basis of which he could form the belief that income of
the assessee had escaped assessment. The Assessing officer in this case
has reopened the assessment merely on assumption and presumption
basis and without any information about the nature of transaction, the
name of the companies with whom the assessee dealt with or any other
basis that the said transaction was bogus. There was absolutely no
reason with the Assessing officer to form belief that the income of the
assessee had escaped assessment. In view of this, the reopening of the
assessment in this case cannot be held legally valid and the same is
accordingly set aside. The cross objection of the assessee is hereby
allowed.
Even on the merits of the appeal of Revenue, as discussed above,
the Ld. CIT(A) while dismissing the appeal of the Revenue has
categorically held that Shri S.K.Jain and Shri V.K.Jain in their
assessment proceedings have specifically denied having provided any
accommodation entries to any company. That the name of the assessee
or the companies who had invested / purchased shares of these
companies had not ever cropped up during the assessment proceedings of
Shri S.K.Jain and Shri V.K.Jain. Further, the Assessing officer could not
link those companies with Suridner Kumar Jain Group companies. The
Ld. CIT(A) has further given a categorical findings that the six
companies from whom the assessee had received share application money
were still active companies duly registered under Indian Companies Act
6 ITA Nos.697/Chd/2016 & C.O.26/Chd/2016- Kraishna Karishna Jeawellers and Investment (P) Ltd.,
and even filing income tax returns and these companies were having
large huge paid up share capital and reserves at the time of investment.
That there was no material available to the Assessing officer to hold
that the transactions entered by these companies with the assessee
company were bogus. That the Assessing officer despite having made
enquiries failed to bring on record any specific material either linking
those six companies with Jain group companies or to show that these
companies were paper companies. There was no specific material or oral
statements pointing out that any money had been paid by the assessee to
the investor against the cheques received. The Ld. CIT(A), therefore, has
given a factual finding that there was no material available before the
Assessing officer to hold that the transactions entered into by the
assessee company were bogus or that the same were accommodation
entries.
After considering the oral arguments of the Ld. representatives of
the parties as well as going through the written arguments, we do not
find any reason to interfere with the above factual findings of the
CIT(A) on merits as well. There is no merit in the appeal of the Revenue
and the same is accordingly dismissed.
In the result, the appeal of the Revenue is dismissed whereas the
Cross objections of the assessee are allowed.
Order pronounced in the Open Court on 07.09.2018
Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 07.09.2018 Rkk
7 ITA Nos.697/Chd/2016 & C.O.26/Chd/2016- Kraishna Karishna Jeawellers and Investment (P) Ltd.,
Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR