ACIT, SANGRUR vs. M/S KRISHNA KRISHNA JEWELLERS AND INVESTMENT (P) LTD., SANGRUR

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.,

3 ITA Nos.697/Chd/2016 & C.O.26/Chd/2016- Kraishna Karishna Jeawellers and Investment (P) Ltd.,

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.

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.”

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.

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.

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