ACIT,CC-26, DELHI V. PURUS MARKETING PVT. LTD., DELHI

ITA 223/DEL/2022

AI Insights

The case involves multiple appeals and cross objections related to the assessment of income under Section 68 and commission income under Section 153C of the Income Tax Act, 1961. The Assistant Commissioner of Income Tax, Central Circle-26, New Delhi, challenged the decision of the CIT(A) which had favored M/s. Purus Marketing Pvt. Ltd., a company implicated in providing accommodation entries. The primary legal contention revolved around whether the additions made under Section 68 for unexplained bank credits and the commission income were justified. The Tribunal examined the role of the assessee as a conduit for laundering black money and providing accommodation entries, and whether double taxation occurred by assessing the commission income in the hands of both the entry operators and the assessee company.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 42252 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Other Referred Cases: Zed Enterprises (P) Ltd.; ITA Nos. 208 to 212/Del/2022, AYs 2012-13 to 2016-17, Holeon Traders Pvt. Ltd.; ITA Nos. 4958 to 4962/Del/2019, for AYs 2012-13 to 2016-17, Naresh Kumar Jain; ITA Nos. 1325 to 1331/Del/2019, for AYs 2010-11 to 2016-17, Shiviji Garments (P) Ltd.; ITA Nos. 208 to 212/Del/2022, for A.Ys. 2012-13 to 2016-17, ZenTradex (P) Ltd.; ITA Nos. 371 to 374/Del/2022 for AYs 2012- 13 to 2014-15 and 2017-18, Third Generation Traders (P) Ltd.; ITA No. 2413 to 2418/Del/2024 for A.Ys. 2012-13 to 2017-18, Shivangi Garments (P) Ltd.; ITA Nos. 2186 to 2188/Del/2024 for AYs 2013-14 to 2015-16, Round Square Exim (P) Ltd.; ITA Nos 8834 to 8837/Del/2019 for AY 2012-13 to 2015-16, Nine Corporate Inception (P) Ltd.; ITA Nos. 189 to 191, 221/Del/2022 for AY 2013-14 to 2016-17
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARVEEN RAWAL
• Assessee Lawyers: SHILPI JAIN
• Keywords: Additional evidence; Unexplained cash credit; Income from undisclosed sources; Accommodation entries; Source of fund
• Section: 143(1); 132; 68; 208; 153C

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMER AND SHRI AVDHESH KUMAR MISHRA,ACCOUNTANT MEMBER ITA No.221 to 225/Del/2022, A.Y. 2012-13, 2013-14, 2014-15, 2015-16&2016-17 Assistant Commissioner of Income Tax, Central Circle-26, Income Tax office, Jhandewala, New Delhi Vs. Purus Marketing Pvt. Ltd. Property No. 194, Shop No. 2, Pocket-26, Sector-24, Rohini, New Delhi-110085 PAN: AAECP2129A (Appellant) (Respondent) C.O. No. 01 to 05/Del/2023, (Arising out of ITA No.221 to 225/Del/2022) A.Y. 2012-13, 2013-14, 2014-15, 2015-16& 2016-17 M/s. Purus Marketing Pvt. Ltd. Property No. 194, Shop No. 2, Pocket-26, Sector-24, Rohini, New Delhi-110085 PAN: AAECP2129A Vs. Assistant Commissioner of Income Tax, Central Circle-26, Income Tax office, Jhandewala, New Delhi (Appellant) (Respondent) Assessee by Ms. Shilpi Jain, CA Revenue by Sh. Parveen Rawal, CIT-DR Date of Hearing 19/02/2025 Date of Pronouncement 27/02/2025 ORDER PER AVDHESH KUMAR MISHRA ITA No.221 to 225/Del/2022 C.O. No. 01 to 05/Del/2023 M/s. Purus Marketing P. Ltd. 2 Common grounds and facts arise in theabove captioned appeals of the Revenue and Cross Objections (hereinafter, the ‘CO’) of the assessee; therefore, these appeals and COs were heard together and are being disposed off by this common order. 2. The above captioned appeals of Assessment Years(hereinafter, the ‘AY’) 2012-13, 2013-14, 2014-15, 2015-16& 2016-17 arise against orders dated 24.11.2021 of the Ld. Commissioner of Income Tax (Appeals)-29, New Delhi [hereinafter, the “CIT(A)”]. The assessee has filed COs against all appeals of the Revenue. 3. Grounds taken by the Revenue in appeal of AY 2012-13 and grounds taken in the CO of AY 2012-13, as lead cases, are extracted here under: ITA No. 221/Del/2022, AY 2012-13: “1. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.13,31,58,724/- made on account of undisclosed sources u/s 68 for unexplained entries in bank account ignoring the fact that assessee has failed to produce any concrete and any additional evidences in support of its contention. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.3,32,897/- made on account of unaccounted commission, ignoring the fact that the assessee has failed to disclose the commission earned from providing accommodation entry. 3. That the order of the Ld. CIT(A) is perverse, erroneous and is not tenable on facts and in law. ITA No.221 to 225/Del/2022 C.O. No. 01 to 05/Del/2023 M/s. Purus Marketing P. Ltd. 3 4. That the grounds of appeal are without prejudice to each other. 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.” CO No. 01/Del/2023, AY 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 additions made under Section 153C are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in ignoring the contention of the assessee that the assessment order was passed alleging that the assessee did not produce director of the assessee company but no such opportunity was provided to the assessee company. 4. (i) On the facts and circumstances of the case, the learned CIT(A) has erred 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. 5. 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 providing and taking accommodation entries in the form of share application money or unsecured loans. ITA No.221 to 225/Del/2022 C.O. No. 01 to 05/Del/2023 M/s. Purus Marketing P. Ltd. 4 6. The respondent craves leave to add amend on alter any of the grounds of cross objection.” 4. The facts of all these cases, in brief, relevant for deciding these appeals and COs are that the assessee has filed its original Income Tax Returns(hereinafter, the ‘ITR’)of these years declaring income as per details below: S. No. AY Income as per original ITR (in Rs.) Date of filing oforiginal ITR Income assessed u/s 153C of the Act (unexplained credits + Commission (in Rs.) 1. 2012-13 32,123/- 28.09.2012 13,35,23,744/- (13,31,58,724 + 3,32,897) 2. 2013-14 1,15,890/- 20.09.2013 19,80,85,571/- (19,74,75,991+4,93,690) 3. 2014-15 23,300/- 17.10.2014 24,56,72,461/- (24,56,49,161+6,14,123) 4. 2015-16 10,43,104/- 30.09.2015 23,24,32,486/- (23,08,12,351+5,77,031) 5. 2016-17 7,66,619/- 15.10.2016 10,49,59,199/- (10,39,32,748+2,59,832) 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 the 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 a letter before the AO requesting to treat the original ITRs as ITRs of the relevant years in compliance to notices under section 153C of the Act. Thus, the income declared in ITA No.221 to 225/Del/2022 C.O. No. 01 to 05/Del/2023 M/s. Purus Marketing P. Ltd. 5 original ITRsremained the same inITRs of the relevant years in compliance to notices under section 153C of the Act. 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, oncommission basis, to various beneficiaries. The above captioned assessee is one of the entities/concerns through which the blackmoney of real beneficiarieshas been laundered/routed/passed through before providing accommodation entries to them.The AO, 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.13,31,58,724/-, Rs.19,74,75,991/-, Rs.24,56,49,161/-, Rs.23,08,12,351/- and Rs.10,39,32,748/-of the assessee as unexplained under section 68 of the Act, in the hands of the assessee on protective ITA No.221 to 225/Del/2022 C.O. No. 01 to 05/Del/2023 M/s. Purus Marketing P. Ltd. 6 basis, in AYs 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17 respectively. 4.3 The AO, in para 09 ofthe assessment orders, has categorically mentioned that the information relating to beneficiaries had already been passed on to the respective AOs of all beneficiariesfor doing needful at their end by the Investigation Wing of the Income Tax Department. Further, the AO has specifically mentioned that “he is also informing the AOs of concerned beneficiaries for taking appropriate action in their respective cases and therefore, protective addition is being made here for the credit entries” in the present cases. Thereafter, the AO has worked out commission income @ 0.25% of the above-mentionedbank credits aggregating to Rs.13,31,58,724/-, Rs.19,74,75,991/-, Rs.24,56,49,161/-, Rs.23,08,12,351/- and Rs.10,39,32,748/-in AYs 2012-13, 2013-14, 2014-15, 2015-16 & 2016-17 respectively and taxed the samein the hands of the assesseeon substantive basis.Aggrieved, the assessee filed appeals before the Ld. CIT(A), who allowedappeals of the assessee of these years. 5. The Ld. CIT-DR, placing emphasis on the finding of the AO, prayed for upholding of the finding of the AO. ITA No.221 to 225/Del/2022 C.O. No. 01 to 05/Del/2023 M/s. Purus Marketing P. Ltd. 7 6. On the other hand, the Ld. Authorized Representative (hereinafter, the ‘AR’) argued that the entire business of providing accommodation entries was controlled and managed by Shri Anand Kumar Jain and Shri Naresh Kumar Jain through their various concerns including the assessee company. It was further submitted that the credits appearing in the bank accounts of the assessee company in these years were nothing but pass through entries for the purpose laundering of black money of real beneficiaries and that was why the AO did not assess these credits in the hands of the assessee on substantive basis. It was contended that the addition of commission income in the hands of intermediary assessee company was not justified on simple reasoning of the AO that the assessee company was a conduit company of Shri Anand Kumar Jain and Shri Naresh Kumar Jain, who used their conduits for providing accommodation entries in lieu of the commission income. Therefore, the commission income already assessed in the hands of Shri Anand Kumar Jain and Shri Naresh Kumar Jain could not be assessed again in the hands of conduits to avoid double taxation. Therefore, the addition of commission incomein the hands of the assessee was claimed to be a case of double taxation. In support of the above contentions, the Ld. AR placed reliance on the following decisions/orders of the Tribunal: ITA No.221 to 225/Del/2022 C.O. No. 01 to 05/Del/2023 M/s. Purus Marketing P. Ltd. 8 1. Zed Enterprises (P) Ltd.; ITA Nos. 208 to 212/Del/2022, AYs 2012-13 to 2016-17 2. Holeon Traders Pvt. Ltd.; ITA Nos. 4958 to 4962/Del/2019, for AYs 2012-13 to 2016-17 3. Naresh Kumar Jain; ITA Nos. 1325 to 1331/Del/2019, for AYs 2010-11 to 2016-17 4. Shiviji Garments (P) Ltd.; ITA Nos. 208 to 212/Del/2022, for A.Ys. 2012-13 to 2016-17 5. ZenTradex (P) Ltd.; ITA Nos. 371 to 374/Del/2022 for AYs 2012- 13 to 2014-15 and 2017-18 6. Third Generation Traders (P) Ltd.; ITA No. 2413 to 2418/Del/2024 for A.Ys. 2012-13 to 2017-18 7. Shivangi Garments (P) Ltd.; ITA Nos. 2186 to 2188/Del/2024 for AYs 2013-14 to 2015-16 8. Round Square Exim (P) Ltd.; ITA Nos 8834 to 8837/Del/2019 for AY 2012-13 to 2015-16 9. Nine Corporate Inception (P) Ltd.; ITA Nos. 189 to 191, 221/Del/2022 for AY 2013-14 to 2016-17 7. We have heard both parties at length and have perused material available on records. We find merit in the submission of the Ld. AR.The Tribunal, in the cases of ZenTradex (P) Ltd. (supra) and Zed Enterprises (P) Ltd. (supra). The coordinate bench of the ITAT, in the case of Zed Enterprises (P) Ltd.: ITA No. 208 to 212/Del/2022 for AY 2012-13 to 2016-17, has held as under: ITA No.221 to 225/Del/2022 C.O. No. 01 to 05/Del/2023 M/s. Purus Marketing P. Ltd. 9 “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 of 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 ITA No.221 to 225/Del/2022 C.O. No. 01 to 05/Del/2023 M/s. Purus Marketing P. Ltd. 10 their respective AOs was also disseminated as mentioned in the assessment order as well as the remand report. 14. Having observed so, the ld. CIT(A) held that as far as charging of commission is concerned in the case of the assessee , it has been held by the AO in the assessment order that Sh. Anand Jain and Sh. Naresh Jain were entry operators who were managing and controlling various shell concerns including the appellant for providing accommodation entries in lieu of commission and taking that logic there is no question of charging of commission income in the hands of the appellant company arises, since nothing has been earned by the company, being the shell concern. 15. Since, the commission already stands taxed in the hands of the entry operators in their individual capacity, no separate commission can be charged in the hands of the pass through/ companies floated by the entry operators. As the assessee is found to be one of such pass-through entity, we decline to interfere with the order of the ld. CIT(A) in deleting the commission charged.” 8. We are of the considered view that the case of the assessee for the above mentioned AYs is squarely covered by the decision in the Tribunal in the case of Zed Enterprises (P) Ltd. (supra). We therefore, are in agreement with the above extracted observations/findings in para-7 as the facts of the present case are squarely covered by this case. In view of the decision& following the reasoning in thecase of Zed Enterprises (P) Ltd. (supra) and considering the facts and circumstances of the instant ITA No.221 to 225/Del/2022 C.O. No. 01 to 05/Del/2023 M/s. Purus Marketing P. Ltd. 11 case, all five appeals of the Revenue are dismissed. Accordingly, various grounds raised in this regard are held devoid of any merit and stand dismissed. 9. The above-mentioned COs of assessee, being not pressed; stand dismissed. 10. In the result, all five appeals of the Revenue as well as all five Cross Objections of the assessee stand dismissed as above. Order pronounced in open Court on 27th February, 2025. Sd/- Sd/- (VIKAS AWASTHY) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:27/02/2025 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(Appeals) 5. CIT-DR ASSISTANT REGISTRAR ITAT, NEW DELHI "