AI Insights
The case involves Lokenath Investment Consultants Pvt. Ltd., which appealed against the order of the CIT(A)-24, New Delhi, concerning the assessment year 2009-10. The primary issue was the addition of Rs. 80,00,000 as share application money under section 68 of the Income Tax Act, 1961. The AO and CIT(A) found that the company was part of a scheme used by the Priya Gold Group to introduce unaccounted money into their books through layers of bogus companies. The Tribunal's decision was based on extensive investigations and evidence showing that the companies involved were merely 'entry providers' and not engaged in any substantial business activities.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 116332 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
4 year(s) 5 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-07-2023
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
E
Next Hearing Date
05-06-2023
Assessment Year
2009-2010
Appeal Filed On
11-02-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar US, Judicial Member ITA No. 1097/Del/2019 : Asstt. Year: 2009-10 Lokenath Investment Consultants Pvt. Ltd., 2 nd Floor, 19-Loca Complex, Near pushpa Bhawan, Madangir, New Delhi-110062 Vs. ACIT, Central Circle-8, New Delhi-110055 (APPELLANT) (RESPONDENT) PAN No. AABCL5792L Assessee by : None Revenue by : Ms. Sarita Kumari, CIT DR Date of Hearing: 06.06.2023 Date of Pronouncement: 31.07.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of ld. CIT(A)-24, New Delhi dated 31.12.2018. 2. The assessee filed appeal on 12.02.2019 declaring total income of Rs. NIL. Hearings have been conducted on 20.06.2022, 21.09.2022, 26.12.2022, 21.03.2023 and 06.06.2023. Nobody attended during the hearings. Hence, it is proposed to pass the order based on the material available on record. 3. We have gone through the Assessment Order consisting of 56 pages and the order of the ld. CIT(A) consisting of 26 pages. The relevant part of the order of the ld. CIT(A) giving the ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 2 details of the entire facts and rationale of the addition is as under: “3.1 In the instant case, the return of income was originally filed on 28.03.2010 declaring NIL income. A search and seizure operation was carried out in the case of Priya Gold Group & its promoters on 16.12.2014. During the proceedings of search and seizure action at the head office of the group, substantial documents were found and seized. The information contained in these documents related to the appellant company also. Although notice u/s 148 was issued to the appellant company on 22.03.2016 assessment proceedings were abated as per proviso to section 153C r.w.s. 153A of the Act. 3.2 After recording satisfaction, notice u/s 153A r.w.s. 153C was issued to the appellant on 01.09.2016. Vide letter dated 25.10.2016 the appellant requested to treat the original return of income filed for AY 2009-10 u/s 139 of the Act on 28.03.2010 as return of income filed in compliance to notice u/s 153C of the Act. 3.3 The AO noted that the appellant company has received share application money including share premium of Rs. 490 per share for an amount of Rs. 80,00,000/-from the following companies: S. No. No. of shares allotted No. of shares Amount of share application money including share premium money for an amount of Rs. 490 per share 1. Bonanza Financial Consultants Pvt. Ltd. 4000 20,00,000 Mangalam Financial Consultants Pvt. Ltd. 4000 20,00,000 Subhdhan Financial Advisory Pvt. Ltd. 4000 20,00,000 Swastick Investment Management Pvt. Ltd. 4000 20,00,000 Sub Total 16000 80,00,000 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 3 3.4 In para 6:1 of the assessment order the AO has noted that during search and post- search inquiries conducted by the Department, the appellant company was found to be a paper company utilized by Priya Gold Group for rotating its own unaccounted fund as share capital. The AO has recorded detailed findings of search and post-search inquiries in Priya Gold Group in paras 6.1.1 to 6.1.26. It has been explained that Priya Gold Group has taken accommodation entries in the form of share capital and share premium by following modus operandi: By first acquiring control of some non-existent Kolkata based companies (which have heavy premium in their books without actual funds and have no creditworthiness for making investments) by swapping their directors and shareholders with relatives and persons of their own group and then issuing shares of their group companies to these paper companies. 3.5 During the pre-search verifications, it was revealed that following two companies of the group had shown to have received share capital and premium from non-descript companies based in Kolkata as under: S.No. Name of Priya Gold Group Company Name of the allottee Company Date of Allotment No. of Shares Face Amount of value/Pr share Capital & premium shown to have been received 1. M/s Surya Processed Food Private Limited Subhshree Investment Management Private Limited 30.03.2013 42,22,973 10/27 15,62,50,001 Surya Vincome Private Limited [Neelkant 30.03.2013 41,56,757 10/27 15,38,00,009 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 4 Vincom Pvt. Ltd.] Total 83,79,730 31,00,50,001 2. M/s Surya Agrotech Infrastructure Limited Garima Commerce Private Limited 16.12.2013 3,10,000 10 31,00,000 28.03.2014 50,000 10 5,00,000 Sub total 3,60,000 36,00,000 Surya Vanijya Pvt. Ltd. [Labhdhan Mercantile Pvt. Ltd.] 16.12.2013 1,52,00,000 10 15,20,00,000 Sub total 1,52,30,000 15,23,00,000 Lokenath Investment Consultants Pvt. Ltd. 16.12.2013 3,00,000 10 30,00,000 28.03.2014 25,000 10 2,50,000 Sub total 3,25,000 32,50,000 Total 1,59,15,000 15,91,50,000 3.6 It was revealed that there was no business activity in the cases of first layer of alleged investor companies and the profit shown by them was insignificant in FY 2007-08 to 2012-13. Verification further revealed that the above referred alleged investor companies have in turn shown to have received share capital with exorbitant premium from large number of apparently entry providing Kolkata based companies on 31.03.2009 in their books. It was noticed that there was no business activity or profit in such companies also. Also, there is hardly any profit in any of the above said companies. During verification the addresses of some of the investor companies were also verified through discreet on the spot enquiries which revealed that none of such companies exists at the given addresses. It was observed the Priya Gold Group have acquired these companies based in Kolkata in a suspicious manner by first introducing its own ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 5 relatives as shareholders in these Kolkata based so-called investor companies replacing old shareholders in FY 2012-13 and thereafter, the directorship of such investor companies also changed hands in the names of companies/relatives of Priya Gold Group during the FY 2013-14. 3.7 During the proceedings of search and seizure action at the head Office of the group at D-1 Sector-2, Noida, incriminating documents in the form of unsigned/signed Share certificates of shares of M/s Surya Processed Food Private Limited and M/s Surya Agrotech Infrastructure Private Limited issued to so called Kolkata based investor companies, M/s Subhshree Investment Management Private Limited, M/s Surya Vincom Private Limited, M/s Surya Vanijya Private Limited, M/s Garima Commerce Private Limited and M/s Lokenath Investment Consultants Private Limited were found and seized as Annexures A-1, A-2, A-3, A-4, A-13 which established the allegations that unaccounted funds of the group have been routed through entry providing companies of Kolkata into the main companies of the group. In course of search action the statement recorded u/s 132(4) of the Act of Shri Shekhar Agarwal established beyond doubt that Priya Gold group had unaccounted funds which were introduced into main companies of the group by routing of these funds through layers of bogus(jama kharchi) accommodation providing companies. This submission was reconfirmed by Mr. Shekhar Agarwal in his statement recorded during post-search proceedings on 29.01.15. 3.8 The AO observed that summons were issued to the following so- called investor companies (first layer companies) at their registered addresses in Kolkata and details regarding investments made in Priya Gold companies were asked for: M/s Subbishree Investment Management Pvt. Ltd. Surya Vincom Private Limited (Earlier known as Neelkanth Vincom Pvt. Ltd) ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 6 Surya Vanijya Private Limited (Earlier known as Labhdhan mercantile Pvt. Ltd) Garima Commerce Private Limited Lokenath Investments Consultants Private Limited However, no reply was received from them. Since the above mentioned companies had been acquired by the Priya Gold Group, the current directors of these companies- Smt. Beena Agarwal, Smt. Chhavi Agarwal, Smt. Nidhi Agarwal were summoned to furnish details about bank accounts of these companies as well as details of share capital premium received by these companies since their inception, from which they had further shown so-called investment in Priya Gold Group, supported by documentary evidence in the form of share application forms and counterfoils of share certificates issued. The directors furnished the bank accounts of the above mentioned companies and summary details of share capital/premium received by these companies but did not furnish any documentary evidence to prove the genuineness of the transactions. Enquiries were also conducted from the banks in this connection which revealed that the tractions in these accounts reflected immediate introduction and withdrawal of funds, which is the characteristic feature of bank transactions of entry providing companies. The above facts along with pre search verifications clearly establish that the companies from which Priya Gold Group has shown to have received investments i.e. the first layer companies are nothing but typical entry providing companies with no creditworthiness to invest such huge amounts. The investigations were taken one step further and enquiries were done in the case of second layer companies which had shown investments of share capital and huge premium in first layer companies. Enquiries revealed that first and second layer companies were entry providing companies which have been formed to route unaccounted money and were used by the Priya Gold Group for the same purpose. ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 7 3.9 It is observed from the assessment order that commission was issued to the Investigation Wing, Kolkata to examine Shri Sudhir Satnaliwala who was the contact person for arranging entries for the Priya Gold Group in Kolkata. However, Shri Sudhir Satnaliwala never complied with any summon and evaded the post search proceedings. Another commission was issued by Investigation Wing, Kolkata for conducting enquiries about the dummy directors in first and second layer companies through which accommodation entries had been given to Priya Gold Group Companies and also the entry operators of these companies. The Investigation Wing, Kolkata was able to examine entry operator named Shri Debashish Dutta, who admitted the fact that two of the first layer Kolkata based investor companies namely M/s Garima Commerce Private Limited and M/s Surya Vanitya Private Limited were managed and controlled by him and these companies were used to provide accommodation entry to Priya Gold Group of Companies. He also admitted to have managed six of the second layer companies namely M/s Shivam Financial Management Pvt. Ltd., M/s Subhdhan Financial Advisory Pvt. Ltd., M/s Swastick Investment Management Pvt. Ltd., M/s Vinavak Investment Advisory Pvt. Ltd., Ms Mangalam Financial Consultants Pvt. Ltd. and M/s Subhdhan Vincom Pvt. Ltd. who have provided entries to some of the first layer companies i.e. M/s Lokenath Investments Consultants Private Limited, M/s Subhshree Investment Management Private Limited and Ms Surya Vincom Private Limited. The statement of two of the dummy directors namely Shri Bijay Kumar Aggarwal and Shri Prakash Joshi of the above mentioned companies was also recorded and they admitted the fact that they became directors on directions of entry operator Shri Debashish Dutta and for earning commission. They further accepted that the above mentioned companies were being run by Shin Debashish Dutta, and that these companies are not doing any regular business and are just providing accommodation entries in different forms to other companies. Through persistent efforts the Kolkata wing was further able to locate another entry ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 8 operator named Shri Pankaj Agarwal and one of the dummy directors of second layer entry providing companies controlled by him. He also confirmed the same facts. 3.10 On the basis of the above mentioned exhaustive enquiries, incriminating documents seized and in view of the fact that most of the Kolkata based so called investor companies have shown their addresses at places which are known for being used by accommodation entry providers and the same has been proved time and again during many searches conducted earlier by the Investigation Wing, and in view of the admission of the assessee of the fact that unaccounted funds amounting to Rs. 46.91 crores of the group were routed back into main group companies in the form of share capital/premium from various Kolkata based companies and further the acquisition of these companies was also done with the purpose of controlling them, it is proved beyond any iota of doubt that this investment of over Rs 46.91 crores in the form of share capital/premium in various companies of Priya Gold Group is nothing but an accommodation entry which has been obtained by routing its own unaccounted money in its books. 3.11 The AO observed that in view of above findings, it was evident that the appellant company is a paper company and has been used by Priya Gold Group for routing their own funds, in the form of share application money in AY 2014-15. In para 7.1 of the assessment order, the AO has noted further enquiries were conducted and notices u/s 133(6) were issued to the banks to provide the bank account statements of Lokenath Investments Consultants Private Limited. On perusal of the bank statements of the above said entity, it was noticed that in its bank account credit entries have been received from various Kolkata based Companies which were immediately followed by debit entries in favour of M/s. Surya Agrotech Infrastructure Pvt. Ltd. to verify the genuineness of the ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 9 source of funds and creditworthiness of these second layer companies, notices u/s 133(6) were again issued to the banks to provide the details of the transferee parties. On perusal of the reply received from the banks, it was noticed that M/s. Loknath Investment Consultants Pvt. Ltd. was getting funds transferred from the entity named Aluva kolkata/shakespere sarani'. Thereafter, notices u/s 133(6) were again issued to the banks to provide the bank statement of "Aluva". On perusal of the statement of ‘Aluva Kolkata/shakespere sarani' it was noticed that immediately before the transfer of funds to M/s. Loknath Investment Consultants Pvt. Ltd, this party has received cash and deposits from Esquire Enclave Pvt. Ltd. It is important to note here that all these 2nd and 3rd layer companies are known entry-operating companies of Kolkata. 3.12 It is evident from the bank statements of the 2 layer and 3rd layer companies/ entities that they were not engaged in any regular business activity. Their bank statements reflect huge credit which are immediately transferred to some or the other parties. This indicates that these parties do not have any profit-generating apparatus and consequent creditworthiness to explain such huge investments. 3.13 Enquiries were also made by the Investigation Wing Kolkata in respect of 2nd & 3d layer investor companies which were found to be controlled by Kolkata based accommodation entry providers. In this connection, statement of Sh. Dinesh Kumar Pandey was also recorded, wherein he accepted that the companies in which he or his wife is director are paper companies and these companies were used for the sole of purpose of accommodation entry only. 3.14 In the light of the findings of the enquiries stated above, the AO treated the appellant company as paper company used by Priya Gold Group to introduce their own unaccounted funds.” ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 10 4. Further, the ld. CIT(A) held that, “The appellant has contested addition of Rs. 80,00,000/- on account of share application money u/s 68 of the Act without appreciating the fact the applicant company has no assets except paper entries showing investment in other shell companies. The appellant has contended that if these were actual assets in these shell companies then these would have been taken over by the Priya Gold Group Companies, which would be the recipient of these assets. On due consideration, I find that the AO conducted enquiries to identify whether the companies from whom the appellant had received share application money during the year under consideration were genuine or not. The AO rightly issued notices u/s 133(6) of the Act to all the share applicants at the addresses registered on the Ministry of Corporate Affairs. Even the AO issued summons to all these parties. As stated in the assessment order all the notices returned un-served. Thereafter, the AO perused the bank statement of the appellant company and noticed that there are numerous debit & credit entries of the same amount on the same day. 5.3 Subsequently the AO vide order sheet entry dated 19.12.2016 asked the appellant to provide details of debit entries of bank account and prove the genuineness of these transactions. The appellant in his reply vide letter dated 23.12.2016 did not provide details of debit entries of bank account and also made no effort to prove the genuineness of the transactions. Neither before the AO nor before the undersigned the appellant submitted documentary evidences to prove the identity and creditworthiness of the so called share applicants and genuineness of the transactions. The appellant just contended that the appellant company is a shell company. It has no assets except paper entries showing investment in other shell companies. In fact if there were actual assets in these shell companies then these would have been taken over by the Priya Gold ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 11 Group and in that case the Group would be the recipient of these assets. The appellant further submitted that the total amount of Rs. 80,00,000 received by the appellant is only by way of book entries. It further claimed that the investments shown in the Balance Sheet are in other shell companies which are mere paper entries and do not have intrinsic value. It was also claimed that the appellant acted as intermediary and was merely a conduit for introducing share capital for Priya Gold Group of companies. 5.4 The contention of the appellant was not accepted by the AO. In my considered view the AO has rightly not accepted the reply of the appellant. The appellant simply stated that the total amount of Rs. 80,00,000/- received on account of share application money is only by way of book entries but did not provide the name of the beneficiary. The appellant company did not provide the details of the debit entries of its bank account. The appellant company knows its affairs and its transactions. The appellant company knows the sources of the amounts credited in its bank account. The appellant company also knows the beneficiaries in respect of debit entries in its bank account. In such situation, to make things more clear and transparent, the appellant was required to provide the requisitioned details to the AO to lend credence to its contention. 5.5 The AO has rightly noted that Priya Gold Group is beneficiary of funds from AY 2013-14 onwards and definitely was not beneficiary during the period relevant to AY 2009-10. The appellant company should have provided details of beneficiary during the period relevant to AY 2009-10 in support of its contention. The appellant company cannot shirk from its legal obligation to prove the identity and credit worthiness of the so called stare applicants and genuineness of transactions by adjudging itself as shell comрапу. 5.6 The contention of the AR of the appellant in his written submission dated 22.11.2018 that the investments shown in the ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 12 Balance Sheet are in other shell companies which are mere paper entries and have no intrinsic value is contrary to his own assertion made in the same submission that the appellant company had made investments in various companies in AY 2009-10 which were sold in AY 2011-12 and further reinvested the same amount in M's Surya Agrotech Infrastructure Ltd and in three other shell companies namely M's Surya Vincom Pvt. Ltd. M/s Subhshree Investment Management Pvt. Ltd. and M/s Surya Vanijya Pvt. Ltd. for making further investment in M's Surya Agrotech Infrastructure Ltd and M/s Surya Processed Food Pvt. Ltd., which are part of the Priyagold Group. If the investments made in other shell companies are mere paper entries then it is bewildering to note how such paper entries were sold in AY 2011-12 for further reinvestment. 5.7 At this stage it is relevant to examine the provisions of section 68 of the Act which is reproduced hereunder for easy reference: "Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year: Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 13 (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person in whose name the sum referred to therein is recorded is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." 5.8 Thus, as per section 68 of the Act, the primary onus is on the appellant to prove to the satisfaction of the AO that sum credited in its books of accounts is genuine. The appellant has to prove to the satisfaction of the AO, the identity and creditworthiness of the creditor and genuineness of the transaction. The appellant company by self proclaiming itself as a shell company cannot shirk and avoid its legal obligation to prove the identity and creditworthiness of the so called share applicants and genuineness of transactions as mandated by various Courts of law in respect of application of the provisions of section 68 of the Act. 5.9 It has been held in various judgments that the assessee must prove identity and creditworthiness of creditor and genuineness of transaction e.g. as in Shankar Industries Vs. CIT (Cal) 114 ITR 689, Nanak Chandra Laxman Das Vs. CIT (Cal) 140 ITR 151, Hari Chand Virender Paul Vs. CIT (P&H) 140 ITR 148, CIT Vs. BijuPatnaik (SC) 160 ITR 674, ITO Vs. Skyjet Aviation (P) Ltd. (ITAT, Ahd-TM) 71 ITD 95, CIT Vs. Precision Finance P. Ltd. (Cal) 208 ITR 465, Oriental Wire Industries (P) Ltd. Vs. CIT (Cal) 131 ITR 688, Malabar Agricultural Co. Ltd. Vs. CIT (Ker) 229 ITR 548, Roshan De Hatti Vs. CIT (SC) 107 ITR 938, C. Kant & Co. Vs. CIT (Cal) 126 ITR 63, ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 14 Bharat P. Ltd. Vs. CIT (Cal) 111 ITR 951, Dhanalakshmi Steel Re- rolling Mills Vs. CIT (AP) 228 ITR 780, Prakash Textile Agency Vs. CIT (Cal) 121 ITR 890, Northern Bengal Jute Trading Co Ltd. Vs. CIT (Cal) 70 ITR 407, Sanil K.M.P. Vs. CIT (Ker) 177 Taxman 481.” 5. The ld. CIT(A) after considering the judgments in the case of CIT Vs. M/s N.R. Portfolio Pvt. Ltd. dated 21.12.2012 (Del. HC), Onassis Axles Pvt. Ltd. Vs. CIT in ITA 31/2013 (Del. HC), CIT Vs. Nipun Builders & Developers Pvt. Ltd. and CIT Vs. Nova Promoters & Finlease (P) Ltd. 342 ITR 169 (Del.) affirm the addition of the Assessing Officer. 6. The ld. CIT DR submitted the decisions in support of the order of the AO which are as under: “1. [2022] 139 taxmann.com 352 (Calcutta)- Principal Commissioner of Income-tax vs. Swati Bajaj- Where assessee earned LTCG on sale of shares and AO denied said claim and made additions under section 68 on ground that assessee invested in shares of penny stock companies which provided bogus LTCG, since assessee failed to establish genuineness of rise of price of shares within a short period of time that too when general market trend was recessive, additions made under section 68 were justified. Where Assessing Officers were fully aware of investigation which was being done on penny stock companies and failed to take note of such report to put assessee on notice and commence an enquiry by calling upon assessee to justify genuineness of claim of LTCG/STCL and merely accepted submission that stock broker was a public sector company in such case assumption of jurisdiction under section 263 by Commissioners was fully justified. ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 15 2. Bhag Chand Chhabra vs. Principal Commissioner of Income-tax- [2022] 138 taxmann.com 33 (SC)- SLP dismissed against High Court ruling that where assessee-HUF had claimed speculation profit earned through a broker from purchase and sales of commodities made in a stock exchange under head of income from business and profession, but said stock exchange was unable to prove genuineness of such transactions, such income was to be treated as unexplained cash credit in terms of section 68. 3. Priya Blue Industries (P.) Ltd. vs. Assistant Commissioner of Income- tax [2022] 138 taxmann.com 69 (SC)- SLP dismissed against High Court ruling that where Assessing Officer had reason to believe that income chargeable to tax had escaped assessment as assessee was beneficiary of accommodation entries and basis for formation of such belief were several inquiries and investigation by Investigation Wing that there had been escapement of income of assessee from assessment because of his failure to disclose fully and truly all material facts, reopening of assessment was justified. 4. Vishwatej Developers (P.) Ltd. Vs. Assistant Commissioner of Income- tax, Company Circle V(2), Chennai-[2021] 130 taxmann.com 9 (Madras) -Where addition under section 68 was made to income of assessee on ground that share capital of more than Rs. 316 crores was invested by foreign company in assessee, onus to prove identity, creditworthiness and genuineness of transaction was solely on assessee and merely because statutory approvals had been obtained by assessee, it did not sanctify transaction. 5. Amar Jewellers Ltd. Vs. Assistant Commissioner of Income-tax- [2022] 139 taxmann.com 198 (Gujarat)- Where pursuant to survey under section 133A conducted by Investigating Wing on BAS, he admitted on oath that he was engaged in business of providing accommodation entries to beneficiaries in lieu of commission and had named applicant as one of recipients of accommodation entries and ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 16 Assessing Officer after examining facts formed belief that income chargeable to tax had escaped assessment, proceedings of reassessment initiated in cases of applicant were justified. 6. Income-tax Officer vs. Sai Everest Building & Developers- [2022] 142 taxmann.com 383 (Mumbai Trib.)-Where assessee-firm claimed to have received unsecured loans during relevant years, however, it could not prove genuineness of unsecured loan taken and underneath sources for making these investments, addition made by Assessing Officer under section 68 was justified. 7. C.V Ravi vs. Income-tax Officer- [2021] 129 taxmann.com 44 (SC)- SLP dismissed against High Court ruling that where assessee took loan from an entity, however, failed to produce any confirmation from such entity or produce its owner in person for cross-examination and also failed to produce any document to establish identity of such creditor or genuineness of alleged loan transaction, impugned addition made under section 68 in respect of such loan amount was justified. 8. NDR Promoters (P.) Ltd. Vs. Principal Commissioner of Income- tax- [2019] 109 taxmann.com 53 (SC) SLP dismissed against High Court ruling that where Assessing Officer made additions to assessee's income under section 68 in respect of amount received as share capital from several companies, in view of fact that all of these companies were maintained by one person who was engaged in providing accommodation entries through paper companies and all such companies were located at same address, impugned addition was justified. 9. Balbir Chand Virmani Vs. Commissioner of Income-tax- [2019] 112 taxmann.com 214 (Punjab & Haryana)- Where additions were made in case of assessee on basis of entries which were found in books of account seized during search and seizure and assessee accepted that ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 17 documents were seized from his premises and he had owned entries and undertook to explain them in next financial year, however failed to do so, said amounts had rightly been added to other income of assessee. 10. Par Excellence Leasing and Financial Services (P.) Ltd. Vs. Assistant Commissioner of Income Tax, Central Circle-21, New Delhi- [2020] 115 taxmann.com 38 (Delhi Trib.) - Where assessee failed to produce controlling persons of share applicant companies along with supportive documentary evidence for examination and field enquiries in respect of share applicant companies revealed that such companies never existed in given addresses, Assessing Officer rightly inferred that assessee had rooted its own money in books of account through fictitious and bogus companies, and rightly made additions under section 68. 11. Commissioner of Income-tax, Central-II, Chennai Vs. Midas Golden Distelleries (P.) Ltd. - [2021] 130 taxmann.com 206 (Madras)-Where share capital of assessee-company had been routed through two companies, existence and operation of which remained only on paper and enquires conducted showed that huge amounts were brought in assessee's books as share application money through said companies by shareholders, who could not properly explain their source, provisions of section 68 got attracted.” 7. On going through the record, we find no mistake in the factual matrix and the legal proposition and hence, the addition made by the AO is hereby confirmed. ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd. 18 8. In the result, the appeal of the assessee is dismissed. Order Pronounced in the Open Court on 31/07/2023. Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 31/07/2023 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR
Other Referred Cases
Shankar Industries Vs. CIT, Nanak Chandra Laxman Das Vs. CIT, Hari Chand Virender Paul Vs. CIT, CIT Vs. Biju Patnaik, ITO Vs. Skyjet Aviation (P) Ltd., CIT Vs. Precision Finance P. Ltd., Oriental Wire Industries (P) Ltd. Vs. CIT, Malabar Agricultural Co. Ltd. Vs. CIT, Roshan De Hatti Vs. CIT, C. Kant & Co. Vs. CIT, Bharat P. Ltd. Vs. CIT, Dhanalakshmi Steel Re-rolling Mills Vs. CIT, Prakash Textile Agency Vs. CIT, Northern Bengal Jute Trading Co Ltd. Vs. CIT, Sanil K.M.P. Vs. CIT, CIT Vs. M/s N.R. Portfolio Pvt. Ltd., Onassis Axles Pvt. Ltd. Vs. CIT, CIT Vs. Nipun Builders & Developers Pvt. Ltd., CIT Vs. Nova Promoters & Finlease (P) Ltd., Vishwatej Developers (P.) Ltd. Vs. Assistant Commissioner of Income-tax, Amar Jewellers Ltd. Vs. Assistant Commissioner of Income-tax, Income-tax Officer vs. Sai Everest Building & Developers, C.V Ravi vs. Income-tax Officer, NDR Promoters (P.) Ltd. Vs. Principal Commissioner of Income-tax, Par Excellence Leasing and Financial Services (P.) Ltd. Vs. Assistant Commissioner of Income Tax, Central Circle-21, New Delhi, Commissioner of Income-tax, Central-II, Chennai Vs. Midas Golden Distelleries (P.) Ltd.
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