ITO, Jaipur V. GANGA PRODUCTS P LTD, Jaipur

ITA 175/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5163 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 23-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S DANGUR
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Unexplained cash credit; Principle of natural justice; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 133A; 147; 68; 148; 132; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI T.R.MEENA, AM VK;DJ VIHY LA -@ ITA NO. 175 & 176/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2005-06 & 2006-07 INCOME TAX OFFICER, WARD 2(2), JAIPUR. CUKE VS. M/S GANGA PROJECTS (P) LTD., 411, 3 RD FLOOR, SHALIMAR COMPLEX, CHURCH ROAD, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAACG 9623 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT IZR;K{KSI.K @ C.O. NO. 15 & 16/JP/2015 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 175 & 176/JP/2015) FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2005-06 & 2006-07 M/S GANGA PROJECTS (P) LTD., 411, 3 RD FLOOR, SHALIMAR COMPLEX, CHURCH ROAD, M.I. ROAD, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD 2(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA- @ PAN/GIR NO.: AAACG 9623 L IZR;K{KSID @ OBJECTOR IZR;FKHZ @ RESPONDENT VK;DJ VIHY LA -@ ITA NO. 179/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER, WARD 2(2), JAIPUR. CUKE VS. M/S B.S. TRADERS (P) LTD., 411, 3 RD FLOOR, SHALIMAR COMPLEX, CHURCH ROAD, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABCB 0108 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 2 IZR;K{KSI.K @ C.O. NO. 19/JP/2015 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 179/JP/2015) FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2005-06 M/S B.S. TRADERS (P) LTD., 411, 3 RD FLOOR, SHALIMAR COMPLEX, CHURCH ROAD, M.I. ROAD, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD 2(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA- @ PAN/GIR NO.: AABCB 0108 L IZR;K{KSID @ OBJECTOR IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.S. DANGUR (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20/06/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 22/06/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. THE APPEALS FILED BY THE REVENUE AND CROSS OBJECTIO NS FILED BY THE ASSESSEE ARISE AGAINST THE ORDER DATED 30/12/2014 P ASSED BY THE LD. CIT(A)-I, JAIPUR FOR THE ASSESSMENT YEAR 2005-06 & 2 006-07 WHEREIN THE REVENUE AS WELL AS THE ASSESSEE HAVE RAISED FOLLOWING GROUNDS:- COMMON GROUNDS OF ITA NO. 175 & 176/JP/2015 REVENUE S APPEAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASES AND IN LAW THE LD.CIT(APPEAL)-I, JAIPUR HAS ERRED IN:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING T HE ADDITION OF RS. 55,00,000/- FOR THE A.Y. 2005-06 AN D RS. 51,00,000/- FOR THE A.Y. 2006-07 MADE U/S 68 ON ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 3 ACCOUNT OF UNEXPLAINED CASH CREDITS IN THE FORM OF SHARE CAPITAL ISSUED BY THE ASSESSEE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING T HAT ASSESSEE HAS DISCHARGED ITS ONUS OF ESTABLISHING TH E IDENTITY, CREDITWORTHINESS AND GENUINENESS AS REGARD S THE TRANSACTIONS CONCERNING THE ALLOTMENT OF SHARES IGNORING THE FACTS THAT CONTRARY EVIDENCES IN THE F ORM OF CASH PAID AND CHEQUES RECEIVED WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS IN T HE SKJ GROUP. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN HOLDING TH AT THE ASSESSEE WAS NOT CONFRONTED WITH THE EVIDENCES COLLECTED AND IGNORING THE FACT THAT NECESSARY EVIDENCES AND DETAILS IN THE FORM OF STATEMENTS REC ORDS DURING THE COURSE OF SEARCH OPERATION AS WELL AS COP IES OF BANK ACCOUNTS AND RELATED DOCUMENTS WERE PROVIDED TO THE ASSESSEE. COMMON GROUNDS OF ASSESSEES C.O. NO. 15 & 16/JP/2 015 1. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE VALIDITY OF THE ORDER PASSED U/S 148 . GROUNDS OF ITA NO. 179/JP/2015 REVENUES APPEAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASES AND IN LAW THE LD.CIT(APPEAL)-I, JAIPUR HAS ERRED IN:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING T HE ADDITION OF RS. 60,00,000/- FOR THE A.Y. 2005-06 MA DE U/S 68 ON ACCOUNT OF UNEXPLAINED CASH CREDITS IN TH E FORM OF SHARE CAPITAL ISSUED BY THE ASSESSEE. ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 4 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING T HAT ASSESSEE HAS DISCHARGED ITS ONUS OF ESTABLISHING TH E IDENTITY, CREDITWORTHINESS AND GENUINENESS AS REGARD S THE TRANSACTIONS CONCERNING THE ALLOTMENT OF SHARES IGNORING THE FACTS THAT CONTRARY EVIDENCES IN THE F ORM OF CASH PAID AND CHEQUES RECEIVED WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS IN T HE SKJ GROUP. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN HOLDING TH AT THE ASSESSEE WAS NOT CONFRONTED WITH THE EVIDENCES COLLECTED AND IGNORING THE FACT THAT NECESSARY EVIDENCES AND DETAILS IN THE FORM OF STATEMENTS REC ORDS DURING THE COURSE OF SEARCH OPERATION AS WELL AS COP IES OF BANK ACCOUNTS AND RELATED DOCUMENTS WERE PROVIDED TO THE ASSESSEE. GROUNDS OF ASSESSEES C.O. NO. 19/JP/2015 1. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE VALIDITY OF THE ORDER PASSED U/S 148 . 2. ALL THE THREE APPEALS FILED BY THE REVENUE AS WEL L AS C.OS OF THE ASSESSEES ARE HEARD TOGETHER AND COMMON IDENTICAL F ACTS HAVE ARISEN, THEREFORE, FOR THE SAKE OF CONVENIENCE, COMMON ORDE R IS BEING PASSED IN ALL THE CASES. 3. THE REVENUES APPEALS IN THE CASE OF M/S GANGA PR OJECTS PVT. LTD. IS AGAINST DELETING THE ADDITION OF RS. 55.00 LACS IN A.Y. 2005-06 AND RS. ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 5 51.00 LACS IN A.Y. 2006-07 AND IN THE CASE OF M/S B .S. TRADERS PVT. LTD., THE REVENUE IS AGAINST DELETING THE ADDITION OF RS. 60.00 LACS. M/S GANGA PROJECTS PVT. LTD. IN A.Y. 2005-06 FILED RETURN ON 11/5/2007 DECLARING NIL INCOME AND IN A.Y. 2006-07 RETURN WAS FILED ON 13/3/ 2008 DECLARING NIL INCOME. IN THE CASE OF M/S B.S. TRADERS PVT. LTD. FO R RETURN FOR A.Y. 2005- 06 WAS FILED ON 04/6/2007 AT NIL INCOME. IN ALL THE CASES, THE LD ASSESSING OFFICER OBSERVED THAT ON THE BASIS OF INFORMATION G ATHERED BY THE DEPARTMENT THAT IT HAD COME TO NOTICE THAT THE ASSE SSEE HAD INDULGED IN TAKING ACCOMMODATION ENTRIES FROM A RACKET OPERATIN G IN DELHI. AS PER MATERIAL GATHERED BY THE DEPARTMENT DURING THE COUR SE OF SEARCH CONDUCTED IN THE CASE OF SHRI SURESH KUMAR JAIN GRO UP OF CASES BY THE INVESTIGATION WING, NEW DELHI. THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES OF RS. 30 LACS FROM THE SAID RACKET IN THE CASE OF M/S GANGA PROJECTS PVT. LTD.. THEREAFTER THE LD ASSESSING OFFI CER RECORDED THE REASONS U/S 147 OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT) AND ISSUED NOTICE U/S 148 OF THE ACT ON 28/3/2012 FOR A .Y. 2005-06. SIMILARLY IN THE CASE OF M/S GANGA PROJECTS PVT. LTD. FOR A.Y . 2006-07, THE LD ASSESSING OFFICER REOPENED THE CASE ON THE BASIS OF SAME REASONING BUT AMOUNT WAS RS. 41.00 LACS AND NOTICE WAS DATED 25/3/2 013 U/S 148 OF THE ACT. IN THE CASE OF M/S B.S. TRADERS PVT. LTD., THE ACCOMMODATION ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 6 ENTRIES WERE RS. 15.00 LACS FOR A.Y. 2005-06 AND NOT ICE U/S 148 WAS ISSUED ON 28/3/2012. THE ASSESSEE RAISED OBJECTIONS AGAINST THE REOPENING WHICH HAS BEEN DISPOSED OF BY THE LD ASSE SSING OFFICER. THE LD ASSESSING OFFICER, FURTHER OBSERVED THAT ON THE BAS IS OF INFORMATION RECEIVED FROM INVESTIGATION WING, NEW DELHI WHEREIN IT WAS FOUND THAT THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF ACCOMMO DATION ENTRY PROVIDED BY SHRI SURESH KUMAR JAIN GROUP WHO OPERAT ED RACKET OF ACCEPTING CASH FROM THE BENEFICIARIES AND AFTER INT RODUCING CASH THROUGH VARIOUS BANK ACCOUNTS IN THE NAMES OF VARIOUS PROPR IETARY CONCERNS OF HIS EMPLOYEES, ISSUED CHEQUES FROM ONE OF THE HIS INTER MEDIARY COMPANY AFTER ROUTING THE FUNDS THROUGH SEVERAL INTERMEDIAR IES. DURING THE SEARCH OPERATION, THE EVIDENCES FOUND ON RECORD ESTABLISH THAT SHRI S.K. JAIN AND HIS BROTHER SHRI VIRENDRA JAIN WERE KNOWN ENTRY PROVI DERS. IT WAS ALSO FOUND THAT A NUMBER OF COMPANIES WERE RUNNING FROM T HE RESIDENTIAL AS WELL AS BUSINESS ADDRESSES RELATED TO SHRI SURENDRA KUMAR JAIN AND SHRI VIRENDRA KUMAR JAIN. ALL THE BOOKS OF ACCOUNTS AND OTHER RELEVANT PAPERS OF A LOT OF PAPER FIRMS / COMPANIES WERE FOUND FROM THE RESIDENCE OF THESE/ TWO BROTHERS. IT WAS ALSO FOUND THAT THESE COM PANIES WERE RUN AND CONTROLLED BY THESE TWO PERSONS THROUGH DUMMY DI RECTORS / PRINCIPAL OFFICERS OF THESE COMPANIES. THE SEIZED MATERIALS IN CLUDE BLANK UNSIGNED ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 7 AS WELL AS BLANK SIGNED CHEQUE BOOKS, ACKNOWLEDGEMENT OF FILING OF RETURN OF THESE COMPANIES, BANK ACCOUNT OPENING AND CLOSING LETTERS, AUTHORIZATION LETTERS FOR ATTENDING THE ASSESSMENT PROCEEDINGS, BOOKS OF ACCOUNT IN TALLY FORMAT AS WELL AS IN THE FORMAT REQ UIRED FOR FLING A RETURN, PROOF OF THE USE OF MOBILE NUMBERS OF SHRI S.K JAIN AND V K JAIN IN BANK ACCOUNT OPENING FORM WHERE OPTION OF PROVIDING ACCOM MODATION ENTRIES IN LIEU OF CASH / CHEQUE THROUGH WHICH THEY HAD DRAWN A LONG TRAIL OF BANK TRANSACTIONS TO IMPART A COLOR OF GENUINENESS ON THESE TRANSACTIONS. SURVEY ACTIONS WERE ALSO CARRIED OUT BY THE INVESTIG ATION WING AT THE GIVEN ADDRESSES OF THESE DUMMY COMPANIES AND AT MAN Y PLACES, NO PROPER OFFICES WERE FOUND FUNCTIONING AND THE EVIDEN CES GATHERED FROM THE NAME SAKE OFFICES ALSO ESTABLISH THAT THE BOOKS OF ACCOUNTS OF THESE COMPANIES WERE AT THE RESIDENCE OF SHRI V.K JAIN AND S.K. JAIN. IT WAS ALSO GATHERED THAT SOME OF THE OFFICE ADDRESSES WERE USED BY BOTH THESE BROTHERS ONLY FOR COMMUNICATION PURPOSE FOR THEIR V ARIOUS PAPER COMPANIES. HE FURTHER OBSERVED THAT THE POST SEARCH INQUIRIES CONDUCTED BY THE INVESTIGATION WING ON THE BASIS OF VARIOUS DO CUMENTS INCLUDING CASH BOOK AND BANK PASS BOOK PERTAINING TO MANY COM PANIES SEIZED FROM THE RESIDENCE OF BOTH THESE BROTHERS REVEALED THAT FROM A SINGLE ADDRESS A NUMBER OF COMPANIES WERE SHOWN TO HAVE REGISTERED A ND THESE ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 8 ADDRESSES WERE MOSTLY THE RESIDENTIAL ADDRESSES OF D IRECTORS OF DIFFERENT DUMMY COMPANIES / PROPRIETORS OF VARIOUS FIRMS. HE ALSO OBSERVED THAT FROM THE SEIZED HAND WRITTEN CASH BOOK AND OTHER DOC UMENTS REVEALED THAT SHRI S.K JAIN AND SHRI V.K JAIN RECEIVED CASH FROM VARIOUS PARTIES FOR PROVIDING ACCOMMODATION ENTRIES AND THEN DEPOSITED IN THE ACCOUNTS OF VARIOUS DUMMY FIRMS / COMPANIES IN THE DISGUISE OF THE CASH RECEIVED AGAINST BOGUS SALES. FROM THESE ACCOUNTS, THE CASH WAS TRANSFERRED TO THE DIFFERENT PAPER COMPANIES FLOATED BY THEM THROU GH A COMPLEX TRAIL OF TRANSACTIONS SO AS TO HIDE THE ACTUAL SOURCES OF FU NDS OF THE RECIPIENT COMPANY OF THESE BROTHERS. IN THIS WAY THE CAPITAL A CCOUNT, RESERVE & SURPLUS FUNDS OF A SPECIFIC SET OF COMPANIES ARE EN HANCED WITH THE HELP OF UNEXPLAINED CASH RECEIVED BY THEM WHICH WAS ROUTED TO THESE COMPANIES THROUGH THEIR DUMMY FIRM / COMPANIES. ONC E THE FUNDS OF THESE COMPANIES HAVE BEEN ENHANCED SUFFICIENTLY, AC COMMODATION ENTRIES THROUGH RTGS/ CHEUQE IN THE SHAPE OF SHARE C APITAL , CAPITAL GAINS OR LOANS AS PER THE SPECIFIC REQUIREMENT OF T HE RECIPIENTS WERE PROVIDED THEM IN LIEU OF CASH RECEIVED FROM THEM. TH E LD ASSESSING OFFICER FURTHER OBSERVED THAT DURING THE COURSE OF SURVEY U/S 133A CONDUCTED BY THE DEPARTMENT IN DELHI AT THE OFFICE PREMISES OF ONE SHRI ASSEM KUMAR GUTA, 2-D, MIG DDA FLAT, GULABI BAGH, T HE STATEMENT OF ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 9 SHRI ASSEM KUMAR GUPTA WAS RECORDED ON OATH. IN HIS STATEMENTS, HE HAD CLEARLY STATED THAT HE WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AS PER THE REQUISITION OF THE BENEFICIARIES . ON SPECIFIC QUESTION ASKED TO HIM, IT WAS EXPLAINED BY HIM THAT THE WORK O F ACCOMMODATION ENTIY IS BROUGHT TO HIM BY SHRI RAJ AN GUPTA,C A, S HRI RAJESH GUPTA, CA, SHRI SUNIL KANSAL, CA AND SHRI S.K. JAIN. HE HAS FU RTHER STATED THAT THE ACCOMMODATION ENTRIES HAVE BEEN PROVIDED IN THE FOR M OF BOGUS EXPENSES AND SHARE APPLICATION MONEY/UNSECURED LOAN S. FOR THIS CASH WAS RECEIVED IN LIEU OF CHEQUES AND VICE VERSA AND T HE COMMISSION CHARGE BY HIM WAS IN THE RANGE OF 25 PAISE PER HUNDR ED RUPEES. HE HAS EVEN PROVIDED THE LIST OF COMPANIES THROUGH THEIR B ANK ACCOUNTS PROVIDING ACCOMMODATION ENTRY WAS FACILITATED. THE PR ACTICE WAS SUCH THAT HE USED TO ISSUE BLANK CHEQUES TO THESE COMPAN IES AND THESE COMPANIES ISSUE CHEQUES TO THE BENEFICIARY COMPANY. THE NAME OF THE SOME OF THE COMPANIES USED BY SHRI S.K. JAIN IS ALS O APPEARING IN THE LIST PROVIDED BY SHRI ASSEM KUMAR GUPTA. FURTHER DURING THE COURSE OF SEARCH OPERATIONS CARRIED OUT U/S 132 BY THE INVEST IGATION WING IN NEW DELHI ON 18/1/2011 AT THE RESIDENTIAL AND OFFICE PR EMISES OF SHRI RAJESH AGGARWAL, SHRI AGGARWAL STATED ON OATH THAT HE WAS IN CONSTANT TOUCH WITH SHRI SURENDRA KUMAR JAIN AND SHRI VIRENDRA JAIN . HE FURTHER ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 10 ADMITTED ON SPECIFIC QUERY PUT TO HIM THAT HE KNEW S HRI SURENDRA KUMAR JAIN AND SHRI VIRENDRA JAIN ARE KNOWN ACCOMMODATION ENTRY OPERATORS WHO PROVIDE CHEQUES AGAINST PAYMENT OF CASH AFTER DE DUCTING SPECIFIC PREMIUM FROM THE PARTIES. ALL THESE EVIDENCES FURTH ER ESTABLISHED THE DUBIOUS METHOD OF ACCOMMODATION ENTRY PROVIDED BY S HRI S.K. JAIN AS WAS FOUND IN SEARCH OPERATIONS AS WELL AS SURVEY CON DUCTED IN CASE AS DISCUSSED IN THE FOREGOING PARAGRAPHS. THE SEIZED CA SH BOOKS, BANK CHEQUES REVEALED THE NAMES OF A NUMBER OF COMPANIES FLOATED BY THESE TWO BROTHERS FOR PROVIDING ACCOMMODATION ENTRIES AND THE NAMES OF INTERMEDIARIES HAVE ALSO COME UP. IT IS PERTINENT T O MENTION THAT THERE ARE FOUR OTHER COMPANIES OF THE SAME GROUP ASSESSED TO TAX IN THIS WARD HAVE ALSO RE-OPENED FOR SCRUTINY ON THE GROUND OF O BTAINING ACCOMMODATION ENTRIES FROM THE COMPANIES OF SHRI S. K. JAIN AND HIS BROTHER. ON EXAMINATION OF RECORDS OF THESE FOUR GR OUP CASES AND ON CO- RELATING THE INFORMATION / DETAILS OBTAINED FROM TH E INV. WING, NEW DELHI DURING THE COURSE OF ASSESSMENT PROCEEDS REVEALED T HAT APART FROM M/S AVAIL FINANCE PVT. LTD, M/S SMARTEST PORTFOLIO PVT. LTD & LEHRA INVESTMENT PVT. LTD, THE ASSESSEE GROUP HAS ALSO TAKEN ACCOMMO DATION ENTRIES FROM THE BELOW MENTIONED BOGUS COMPANIES. ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 11 NAME OF THE COMPANY FLOATED BY S.K. JAIN GROUP FOR PROVIDING ACCOMMODATION ENTRY NAME OF THE BENEFICIARY COMPANY OF ASSESSEE GROUP. M/S LEHRA INVESTMENT PVT. LTD. M/S CHIRAG FISCAL SE RVICES PVT. LTD. M/S GANGA PROJECTS PVT. LTD. M/S ALOK FINTRADE PVT. LTD. M/S LOVELY SECURITIES PVT. LTD. M/S ANCHAL FINTRADE PVT. LTD. M/S B.S. TRADERS PVT. LTD. M/S SAM PORTFOLIO PVT. LTD. M/S GANGA PROJECTS PVT. LTD. M/S ALOK FINTRADE PVT. LTD. M/S AVAIL FINANCIAL SERVICES PVT. LTD. M/S GANGA PR OJECTS PVT. LTD. M/S SMARTEST CORPORATE SERVICES P. LTD. M/S GANGA PROJECTS PVT. LTD. M/S ALOK FINTRADE PVT. LTD. M/S FINE FINANCE & LEASING P. LTD. M/S ALOK FINTRAD E PVT. LTD. M/S CREATIVE CAPITAL SERVICES P. LTD. M/S ALOK FINT RADE PVT. LTD. M/S RAVNET SOLUTION PVT. LTD. M/S GANGA PROJECTS PV T. LTD. M/S ALOK FINTRADE PVT. LTD. M/S SUMA FINANCE & INVEST PVT. LTD. M/S GANGA PROJE CT PVT. LTD. M/S ALOK FINTRADE PVT. LTD. M/S S.G. PORTFOLIO PVT. LTD. M/S ALOK FINTRADE PVT. LTD. M/S CHOTTI LEASING & FINANCE PVT. LTD. M/S ALOK FIN TRADE PVT. LTD. SIMILAR IDENTICAL FINDINGS HAS ALSO BEEN GIVEN BY T HE LD ASSESSING OFFICER IN THE A.Y. 2006-07. FOR THE A.Y. 2006-07, ON VERIFICATION OF THE RECOR D, IT WAS FOUND THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES F ROM THE BOGUS COMPANIES OF SHRI S.K. JAIN AND SHRI VIRENDRA JAIN TO THE EXTENT OF AMOUNT MENTIONED IN THE TABLE GIVEN HEREUNDER:- ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 12 NAME OF THE COMPANY FLOATED BY S.K. JAIN AMOUNT OF ACCOMMODATION ENTRY TAKEN BY THE ASSESSEE. M/S MODERATE CREDIT CORP. LTD. 30,00,000/- M/S S.G. PORTFOLIO PVT. LTD. 6,00,000/- M/S CHOTTI LEASING & FINANCE PVT. LTD. 5,00,000/- M/S KMC PORTFOLIO PVT. LTD. 10,00,000/- TOTAL 51,00,000/- SIMILAR IDENTICAL FINDINGS HAS ALSO BEEN GIVEN BY T HE LD ASSESSING OFFICER IN THE CASE OF M/S B.S. TRADERS PVT. LTD. FOR THE A. Y. 2005-06, BUT NAME OF THE BOGUS COMPANIES ARE AS UNDER. NAME OF THE COMPANY FLOATED BY S.K. JAIN GROUP FOR PROVIDING ACCOMMODATION ENTRY NAME OF THE BENEFICIARY COMPANY OF ASSESSEE GROUP. M/S LEHRA INVESTMENT PVT. LTD. M/S CHIRAG FISCAL SE RVICES PVT. LTD. M/S GANGA PROJECTS PVT. LTD. M/S ALOK FINTRADE PVT. LTD. M/S LOVELY SECURITIES PVT. LTD. M/S ANCHAL FINTRADE PVT. LTD. M/S B.S. TRADERS PVT. LTD. M/S SAM PORTFOLIO PVT. LTD. M/S GANGA PROJECTS PVT. LTD. M/S ALOK FINTRADE PVT. LTD. M/S AVAIL FINANCIAL SERVICES PVT. LTD. M/S GANGA PR OJECTS PVT. LTD. M/S SMARTEST CORPORATE SERVICES P. LTD. M/S GANGA PROJECTS PVT. LTD. M/S ALOK FINTRADE PVT. LTD. M/S FINE FINANCE & LEASING P. LTD. M/S ALOK FINTRAD E PVT. LTD. M/S CREATIVE CAPITAL SERVICES P. LTD. M/S ALOK FINT RADE PVT. LTD. M/S RAVNET SOLUTION PVT. LTD. M/S GANGA PROJECTS PV T. LTD. M/S ALOK FINTRADE PVT. LTD. M/S SUMA FINANCE & INVEST PVT. LTD. M/S GANGA PROJE CT PVT. LTD. M/S ALOK FINTRADE PVT. LTD. M/S S.G. PORTFOLIO PVT. LTD. M/S ALOK FINTRADE PVT. LTD. M/S CHOTTI LEASING & FINANCE PVT. LTD. M/S ALOK FIN TRADE PVT. LTD. M/S SUSHREE SECURITIES PVT. LTD. M/S B.S. TRADERS PV T. LTD. ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 13 THE LD ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD PASSED ON THE CASH TO THE S.K. JAIN AND HIS BROTHERS AND THIS CAS H HAS BEEN RECEIVED BACK THROUGH FICTITIOUS COMPANY AS IN FORM OF SHARE CAPITAL, THEREFORE, HE MADE ADDITION OF RS. 55.00 LACS IN A.Y. 2005-06 AND RS. 51.00 LACS IN A.Y. 2006-07. IN THE CASE OF B.S. TRADERS, ADDITION OF RS . 60.00 LACS WAS MADE BY THE LD ASSESSING OFFICER. 4. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD ALL OWED THE APPEAL BY OBSERVING AS UNDER:- 3.2.2.4 IN THE PRESENT CASE, SHARE APPLICATIONS A RE RECEIVED FROM SIX DIFFERENT CONCERNS ACCOMPANIED WITH SHARE APPLICATION MONEY, NO PRESUMPTION CAN BE DRAWN THAT SAME BELONG TO ASSESSED; THESE APPLICATION MONEYS CANNOT BE ASSESSED IN. HIS HANDS AS HIS UNDISCLOSED INCOME UNLESS SOME NEXUS IS ESTABLISHED THAT SHARE APPLICATION MONEY FOR AUGMENTING INVESTMENT IN BUSINESS HAS FLOWN FROM ASSESSEE'S OWN MONEY. IN THE REASON RECORDED FOR RE-OPENING OF ASSESSMEN T, AO HAS MADE GENERAL REFERENCE WITH REGARD TO INFORMATION RECEIVED FROM INVESTIGATION WING DELHI BUT HE HAS NOT REFERRED ANY OF THE SIX CONCERNS. ON PERUSAL OF CASE RECORD, IT IS NOTED THAT DURING RE- ASSESSMENT PROCEEDING, NO ADVERSE EVIDENCE WAS ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 14 FOUND IN COURSE OF REASSESSMENT PROCEEDINGS WHEREAS DURING ORIGINAL ASSESSMENT, ASSESSEE HAD FILED THE CONFIRMATION AND BANK STATEMENT OF THESE CONCERNS. WITHOUT FINDING ANY ADVERSE EVIDENCE IN THE DOCUMENTS FILED, AO MADE ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM ALL SIX CONCE RNS WHEREAS IN RESPECT OF ALL CONCERNS, ASSESSEE HAS PROVIDED CONFIRMATION AND BANK STATEMENT CONFIRMING THE NO. OF SHORE APPLIED/ALLOTTED, SHARE CAPITAL RA ISED ETC. THE IMMEDIATE SOURCE IN THE BANK ACCOUNT OF THE SHAREHOLDERS IS THROUGH TRANSFERS AND NOT BY CASH. FURTHER, IT IS ALSO NOTED THAT IN THE ASSESSMENT O RDER, AO HAS INCORRECTLY NOTED THAT IN ALL CASES, MONEY H AS BEEN ROUTED BY THESE COMPANIES THROUGH THE SAME BANK WHEREAS OUT OF SIX COMPANIES FOR WHICH ADDITION IS MADE BY AO, ONLY THREE (3) CONCERNS (I) M/S LEHRA INVESTMENT PVT. LTD., (II) M/S AVAIL FINANCIAL SERV ICERS PVT. LTD., (III) M/S SMARTEST CORPORATE SERVICES PVT. LTD. HAS BANK ACCOUNT WITH THE GIVEN BANK I.E, ABN AMRO BANK. EVEN FROM THE ASSESSMENT ORDER, IT IS ALSO NOT DISCERNIBLE THAT ANY OF THESE PERSON HAD STATED THA T INVESTMENT MADE BY THESE COMPANIES IN THE SHARE CAPITAL OF APPELLANT COMPANY IS BOGUS/ ACCOMMODATIO N ENTRIES. ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 15 AO HAS MERELY COLLECTED DETAILS/DOCUMENTS BY WHICH IT CAN'T BE DEMONSTRATE THAT THESE COMPANIES ARE NOT I N EXISTENCE. AS AGAINST THIS, ASSESSEE COMPANY HAS PROVIDE ALL THE BEST POSSIBLE EVIDENCES. THE OBSERVATIONS MADE BY THE AO ARE VERY CASUAL AND IT CLEARLY SHOWS THAT HE HAS COMPLETED RE-ASSESSMENT WITH A PRECONCEIVED NOTION BY INDULGING INTO SURMISE S AND CONJECTURES. FURTHER, IN VIEW OF THE DECISIONS OF THE JURISDICTI ONAL RAJASTHAN HIGH COURT IN BARKHA SYNTHETICS LTD. V. ASSTT. CIT [2005] 197 CTR (RAJ.) 432 & CIT VS. AKJ GRANITES P LTD 301 ITR 298, WHERE THE SHARE APPLICATIONS ARE RECEIVED FROM DIFFERENT PLACES ACCOMPANIED WITH SHARE APPLICATION MONEY, NO PRESUMPTION CAN BE DRAWN THAT THE SAME BELONG TO THE ASSESSEE; AND THE APPLICATION MONEYS CANNOT BE ASSESSED IN ASSESSEES HANDS AS ITS UNDISCLOSED INC OME UNLESS SOME NEXUS IS ESTABLISHED THAT SHARE APPLICATION MONEY FOR AUGMENTING THE INVESTMENT IN BUSINESS HAS FLOWN FROM THE ASSESSEES OWN MONEY. IN VIEW OF FACTS AND CIRCUMSTANCES AS DISCUSSED AND ALSO RATIO OF THE ABOVE DECISIONS IN FAVOUR OF APPE LLANT AS DISCUSSED IN ABOVE PARA 3.2.2.2, THE ADDITION OF RS. 55,00,000/- MADE U/S 68 OF THE ACT CANNOT BE JUSTIFIED, HENCE DELETED. ASSESSEE GETS A RELIEF OF RS. 55,00,000/-. ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 16 BUT THE LD CIT(A) HAD CONFIRMED THE REOPENING U/S 14 8 OF THE ACT IN ALL THE CASES. SIMILAR FINDINGS HAS BEEN GIVEN BY THE LD CIT(A) IN THE CASE OF M/S GANGA PROJECTS PVT. LTD. FOR A.Y. 2006-07. IN THE CASE M/S B.S. TRADERS PVT. LTD., THE LD CIT(A ) ALSO DELETED THE ADDITION ON SIMILAR FINDINGS GIVEN IN THE CASE OF M/S GANGA PROJECTS PVT. LTD. FOR A.Y. 2005-06. 5. NOW THE REVENUE IS IN APPEALS AND THE ASSESSEE IS IN C.OS. BEFORE US. THE REVENUE IN APPEALS HAS CHALLENGED THE DELETI ON OF ADDITIONS WHEREAS THE ASSESSEE IN C.O. HAS CHALLENGED THE REOP ENING U/S 148 OF THE ACT IN ALL THE YEARS. THE LD DR HAS VEHEMENTLY S UPPORTED THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT IT IS CLEAR F ROM THE MATERIAL GATHERED DURING THE COURSE OF SURVEY/SEARCH IN THE CASE OF S.K. JAIN GROUP, DELHI THAT HE HAD PROVIDED ACCOMMODATION ENT RIES TO VARIOUS PERSONS. THE ASSESSEE WAS ONE OF THE PERSONS WHO GOT THE ACCOMMODATION ENTRIES FROM THE SAID GROUP, THEREFOR E, ADDITION DELETED BY THE LD CIT(A) MAY PLEASE BE REVERSED. IT IS FURTH ER ARGUED THAT THE LD ASSESSING OFFICER HAD RECORDED THE REASONS FOR REOP ENING ON THE BASIS OF INFORMATION RECEIVED AND HE FULLY SUPPORTED THE ORD ER OF THE LD CIT(A). THE LD CIT(A) HAD FOLLOWED THE HON'BLE SUPREME COURT D ECISION CASE OF ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 17 RAYMOND WOOLLEN MILLS LTD. VS. INCOME-TAX OFFICER AN D OTHERS [1999] 236 ITR 34 (SC) ON REOPENING. ACCORDING LY, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A) ON REOPENING IN A LL THE CASES. 6. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS REI TERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A). HE FURTHER ARGU ED THAT IN A.Y. 2005-06, THE REOPENING WAS MADE ON THE BASIS OF ACCO MMODATION ENTRIES BY CONSIDERING THE AMOUNT OF RS. 30.00 LACS WHEREAS THE LD ASSESSING OFFICER MADE THE ADDITION AT RS. 55.00 LACS. IN A.Y . 2006-07, REASONS WERE RECORDED FOR REOPENING BY CONSIDERING THE AMOUN T OF RS. 41.00 LACS WHEREAS THE ADDITION WAS MADE BY THE LD ASSESSING OFF ICER AT RS. 51.00 LACS. IN THE CASE OF B.S. TRADERS, THE REOPENING ON THE BASIS OF ACCOMMODATION ENTRIES FOR RS. 15.00 LACS WHEREAS THE LD ASSESSING OFFICER HAD MADE ADDITION OF RS. 60.00 LACS IN A.Y. 2005-06. DURING THE YEAR, IN THE CASE OF M/S GANGA PROJECTS PVT. LTD. R AISED SHARE CAPITAL AT RS. 3,11,25,000/- FROM VARIOUS PARTIES AS PER DETAI LS AVAILABLE IN FORM NO. 2 BEING RETURN OF ALLOTMENT FILED WITH ROC. IN THE C OURSE OF ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3), THE LD ASSESSING OFFICER VIDE LETTER DATED 19/3/2007 REQUIRED THE ASSESSEE TO FILE THE C OPY OF ACCOUNT OF SHARE HOLDERS WITH A COMPLETE POSTAL ADDRESS ALONGWIT H THEIR HOLDINGS IN ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 18 THE FORM OF SHARE CAPITAL OR SHARE APPLICATION MONE Y. IN RESPONSE TO SAME, THE ASSESSEE VIDE VARIOUS LETTERS FILED COPY OF FORM NO. 2, RETURN OF ALLOTMENT, COPY OF CONFIRMATION OF THE ACCOUNT O F SHAREHOLDERS AND COPY OF THEIR BANK ACCOUNTS. AFTER CONSIDERING ALL THESE DETAILS, THE LD ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143( 3) OF THE ACT ON 11/5/2007 ACCEPTING THE RETURNED INCOME BY STATING AS UNDER:- DURING THE ASSESSMENT PROCEEDINGS, IT WAS FOUND THA T THE ASSESSEE COMPANY HAS RAISED SHARE CAPITAL. NECESSAR Y DETAILS WITH REGARD TO SHARE CAPITAL RAISED AND ITS APPLICATION WERE CALLED FOR. THE DETAILS FURNISHED AND RECORDS PRODUCED HAVE BEEN EXAMINED AND AFTER CONSIDERING THE SAME, THE RETURNED INCOME IS ACCEPTED AS ASSESSED INCOME. THEREAFTER THE LD ASSESSING OFFICER ISSUED NOTICE U/ S 148 OF THE ACT BY RECORDING THE REASONS. HE HAS FURTHER ARGUED THAT T HE LD ASSESSING OFFICER HAS NOT APPLIED HIS MIND OR FORMING HIS BELIEF ON T HE BASIS OF ANY INFORMATION OF INVESTIGATION WING, WHICH WAS IRRELEV ANT FOR THE ASSESSEE BUT SAME INFORMATION WAS THE REASON TO BELIEVE FOR R EOPENING THE CASE IN ALL THE YEARS. THE LD ASSESSING OFFICER IN SCRUTINY ASSESSMENT HAS SPECIFIED HIMSELF BY RAISING THE QUERY AGAINST THE SHAREHOLDERS AND SPECIFIED HIMSELF AND RETURNED INCOME HAS BEEN ACCE PTED BY THE LD ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 19 ASSESSING OFFICER. THE LD ASSESSING OFFICER HAD NOT EXAMINED THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, D ELHI WITH REFERENCE TO RETURN AND FINANCIAL STATEMENT TO VERIFY WHETHER ANY SUCH AMOUNT IS REFLECTED IN THE ACCOUNTS OF THE ASSESSEE OR NOT AN D IF REFLECTED IN WHICH ACCOUNT I.E. AS A LOAN OR SHARE CAPITAL OR OTHERWISE , THEREFORE, THE REOPENING WAS BAD IN LAW. HE RELIED ON THE VARIOUS CA SE LAWS AS UNDER:- (1) ALLIED STRIPS LTD. VS ACIT 96 CCH 0004 (DEL)/(HC ) DECISIONS DATED 12/5/2016. (2) SHRI PARASRAM INDUSTRIES PVT. LTD. VS ITO 94 CCH 0152 (DEL.)(HC) DECISION DATED 11/12/2015. (3) PR. CIT VS G&G PHARMA INDIA LTD. 94 CCH 0039 (DE L)(HC) DECISION DATED 08/10/2015. (4) CHHUGAMAL RAJPAL VS. SP CHALIHA (1971) 79 ITR 60 3 AND ACIT VS DHARIYA CONSTRUCTION CO. (2010) 328 ITR 515. (5) PANKAJ GAS CYLINDERS LTD. VS ACIT 47 CCH 0011 (D EL) (TRIB) DECISION DATED 03/5/2016. (6) SARTHAK SECURITIES CO. (P) LTD. VS. ITO 329 ITR 0 110 (DEL)(HC) DECISION DATED 18/10/2010. (7) BANKE BIHARI PROPERTIES PVT. LTD. VS ITO (2016) 46 CCH 0546 (DEL)(TRIB) DECISION DATED 22/4/2016. (8) RASALIKA TRADING AND INVESTMENT CO.(P) LTD. VS I TO 45 CCH 0361 (DEL)(TRIB) DECISION DATED 27/11/2015. (9) M/S SURBHI MINCHEM PVT. LTD. VS ITO ORDER DATED 16/5/2014 IN ITA NO. 102 & 103/JODH/2014. (10) VINAYAK SHYAM ENTERPRISES PVT. LTD. VS. ITO OR DER DATED 21/5/2014 IN ITA NO. 104/JODH/2014. (11) CIT VS SFIL STOCK BROKING LTD. (2010) 325 ITR 2 85 (DEL.)(HC). (12) CIT VS KAMDHENU STEEL & ALLOYS LTD. & ORS. (201 2) 68 DTR 38 (DEL)(HC). ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 20 THE VARIOUS CASE LAWS RELIED UPON BY THE LD ASSESSIN G OFFICER/CIT(A) ARE DISTINGUISHABLE AND ARE NOT APPLICABLE. THE DECISION IN THE CASE OF M/S RAJAT EXPORT AND IMPORT LTD. 341 ITR 135 RELIED UPON BY THE LD ASSESSING OFFICER IN REMAND PROCEEDINGS IS ALSO NOT APPLICAB LE INASMUCH AS, IN THAT CASE, THE LD ASSESSING OFFICER AT THE TIME OF ISSUE OF NOTICE U/S 148 SPECIFICALLY NOTED THAT THE PETITIONER THEREIN HAS TAKEN AN ACCOMMODATION ENTRY FROM SHIVAM SOFTECH LTD. BUT IN THE ASSESSEE S CASE THE REASONS RECORDED NOWHERE MENTIONS ANY NAME FROM WHOM THE ALLE GED ACCOMMODATION ENTRY IS TAKEN. FURTHER, THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAYMOND WOOLLENS LAID DOWN THE PRINCIPLE THAT THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THE STAGE OF ISSUE OF NOTICE U/S 148 BUT THE PRE SENT CASE IS NOT OF SUFFICIENCY OR CORRECTNESS OF MATERIAL BUT A CASE O F NO MATERIAL/IRRELEVANT MATERIAL INASMUCH AS NOTHING IS MENTIONED IN THE RE ASONS RECORDED AS TO FROM WHOM THE AMOUNT IS RECEIVED, ON WHAT ACCOUNT IT IS RECEIVED AND THE DATE ON WHICH IT IS RECEIVED. THEREFORE, SUCH VAG UE INFORMATION AS MENTIONED IN THE REASONS CANNOT BE EQUATED WITH THE SUFFICIENCY OR CORRECTNESS OR RELEVANCY OF THE MATERIAL. THEREFORE, HE PRAYED TO QUASH THE REOPENING U/S 148 OF THE ACT IN ALL THE CASES. HE FURTHER ARGUED THAT IN A.Y. 2006-07 ALSO, THE LD ASSESSING OFFICER ISSU ED DETAILED SHOW CAUSE ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 21 NOTICE ON SHARE CAPITAL. THE ASSESSEE HAD SUBMITTED REQUISITE DETAILS BEFORE THE LD ASSESSING OFFICER IN SCRUTINY ASSESSM ENT MADE U/S 143(3) OF THE ACT. HE HAS DRAWN OUR ATTENTION ON PAGE NO. 2 1 AND 22 OF THE PAPER BOOK FOR A.Y. 2005-06 AND PAGE NO. 3 AND 18 O F THE PAPER BOOK FOR A.Y. 2006-07. IN THE CASE OF M/S B.S. TRADERS PV T. LTD. SIMILAR DETAILS WERE ALSO FURNISHED BY THE LD ASSESSING OFFICER DURI NG THE SCRUTINY. HE HAS ALSO DRAWN OUR ATTENTION ON PAGE NO. 25 TO 30 OF THE PAPER BOOK, THUS IT IS EVIDENT THAT THE LD ASSESSING OFFICER HA D APPLIED HIS MIND AND PASSED ORDER AND NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE LD ASSESSING OFFICER. IT IS ALSO A FACT THAT IN ALL TH E YEARS THE CASES WERE REOPENED U/S 148 AFTER FOUR YEARS FROM THE END OF T HE RELEVANT ASSESSMENT YEAR. AS PROVIDED THAT WHERE AN ASSESSMEN T UNDER SUB- SECTION (3) OF SECTION 143(3) OR THIS SECTION HAS B EEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVAN T ASSESSMENT YEAR. UNLESS ANY INCOME CHARGEABLE TO TAX AS ESCAPED ASSE SSMENT FOR SUCH ASSESSMENT YEAR BY REASONS OF THE FAILURE ON THE PA RT OF THE ASSESSEE TO MAKE A RETURN U/S 139 OF THE ACT OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 22 ACCORDINGLY, AFTER EXPIRY OF FOUR YEARS, NO ACTION CAN BE TAKEN AGAINST THE ASSESSEE AS THERE IS NO LAPSE ON THE PART OF THE AS SESSEE TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. FURTHE R THE REOPENING IS ALSO ON THE BASIS OF SOLE INFORMATION AVAILABLE IN THE R ETURN WHICH HAS BEEN ACCEPTED BY THE LD ASSESSING OFFICER U/S 143(3). ON SAME INFORMATION, HE HAS REOPENED THE CASE, THEREFORE, IT IS CHANGE OF O PINION, WHICH IS NOT PERMITTED UNDER THE LAW. ACCORDINGLY, HE PRAYED TO Q UASH THE NOTICE ISSUED U/S 148 OF THE ACT. ON MERIT ALSO, IT IS SUB MITTED THAT THE ONUS CASTED ON THE ASSESSEE, HAS BEEN DISCHARGED BY ESTA BLISHING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS AS REGARDS THE TRAN SACTION CONCERNING THE ALLOTMENT OF SHARES IGNORING THE FACT THAT CONT RARY EVIDENCE IN THE FORM OF CASH PAID AND CHEQUES RECEIVED WERE FOUND AN D SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS IN THE SKG GROUP. THE ASSESSEE HAS NOT CONFRONTED WITH THE EVIDENCES COLLECTED AND IGNORING THE FACT THAT THE NECESSARY EVIDENCE AND DETAILS IN THE FORM OF STATE MENT RECORDED DURING THE COURSE OF SEARCH OPERATION AS WELL AS COPIES OF BANK ACCOUNT AND RELATED DOCUMENTS WERE PROVIDED TO THE ASSESSEE. IN SHOW CAUSE NOTICE, IT IS STATED THAT THE AMOUNT OF RS. 30.00 LACS RECE IVED BY THE ASSESSEE IS STATED TO BE FROMM/S AVAIL FINANCIAL SERVICES PVT. LTD., M/S SMARTEST CORPORATE SERVICES PVT. LTD. AND M/S LEHRA INVESTME NTS PVT. LTD. IN THIS ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 23 NOTICE, THE LD ASSESSING OFFICER HAD STATED THAT A S PER INFORMATION AVAILABLE WITH THE DEPARTMENT, IT WAS FOUND THAT THE ASSESSEE HAS ENTERED INTO TRANSACTION WITH THESE COMPANIES WHICH BELONGED TO SKG GROUP, NEW DELHI. HOWEVER, NO INFORMATION HAS BEEN PR OVIDED BY THE LD ASSESSING OFFICER TO THE ASSESSEE, NO OPPORTUNITY H AS BEEN GIVEN TO EXAMINE NAMELY SH. S.K. JAIN OR SH. V.K. JAIN OR SH . ASSEM KUMAR GUPTA OR SH. RAJESH AGGARWAL WHOSE STATEMENTS HAD BEEN RELI ED BY THE LD ASSESSING OFFICER WITHOUT PROVIDING OPPORTUNITY TO T HE ASSESSEE TO REVERT THE SHOW CALLED INFORMATION AVAILABLE WITH THE DEPART MENT, IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND ANY ORDER PASSED IS ILLEGAL AND BAD IN LAW. HE RELIED UPON A RECENT DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS CCE 127 DTR 0241 WHEREIN IT HAS BEEN HELD THAT DENIAL OF OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE WITNESSES WHOSE STATEMENTS WERE MADE THE SOLE BASIS O F THE ASSESSMENT IS A SERIOUS FLAW RENDERING THE ORDER A NULLITY INAS MUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. ALL SHA REHOLDERS ARE ASSESSED TO TAX, THEY HAVE THEIR PAN NUMBER. THE TRANSACTIONS WER E MADE THROUGH BANKING CHANNEL, SHARES HAS BEEN ALLOTTED TO THEM. THEREFORE, IT IS INCORRECT ON THE PART OF THE LD ASSESSING OFFICER T HAT IN ALL THE CASES, ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 24 MONEY HAD BEEN ROUTED THROUGH THESE COMPANIES. THUS, ON MERIT ALSO, THE LD CIT(A) HAS RIGHTLY DELETED THE ADDITION. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN AL L THE CASES SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT HAD BEEN MADE BY T HE LD ASSESSING OFFICER AND HE HAD RAISED SPECIFIC QUERY ON SHARE C APITAL, WHICH HAS BEEN COMPLIED BY THE ASSESSEE VIDE VARIOUS LETTERS REFER RED IN THE ARGUMENT OF THE ASSESSEE. WE HAVE EXAMINED PAPER BOOK AND FOUND THAT THE LD ASSESSING OFFICER HAD RAISED QUERY AND CONSIDERED T HE INFORMATION SUBMITTED BY THE ASSESSEE DURING THE ORIGINAL ASSES SMENT PROCEEDINGS U/S 143(3) OF THE ACT. THEREAFTER, HE HAS NOT MADE A NY ADDITION ON ACCOUNT OF SHARE CAPITAL. IT IS A FACT THAT THE DEP ARTMENT HAD CONDUCTED SEARCH IN THE CASE OF SKG GROUP CASES, NEW DELHI AND CAME TO A CONCLUSION THAT THIS GROUP HAS PROVIDED ACCOMMODATI ON ENTRIES TO VARIOUS PERSONS ON WHICH THE LD ASSESSING OFFICER REOPENED T HE ASSESSEES CASE BUT THERE IS NO MENTION IN THE SATISFACTION THAT ON WHAT BASIS HE HAS REASON TO BELIEVE THAT THE ASSESSEES CASH MONEY HA S BEEN ROUTED THROUGH THESE COMPANIES AS NO INCRIMINATING DOCUME NT HAS BEEN REFERRED IN THE SATISFACTION AS WELL AS CONFIRMATION OF THE ADDITION BY THE ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 25 LD ASSESSING OFFICER. AS SUCH, THERE IS NO REFERENC E OF THE STATEMENT EITHER RECORDED U/S 132(4) OR 133A OF THE ACT SPECI FICALLY WITH REFERENCE TO THESE ASSESSEES. IT IS GENERAL REASON TO BELIEVE BUT HAS NOT BEEN CORRELATED WITH MATERIAL/INFORMATION AVAILABLE WITH T HE LD ASSESSING OFFICER. IT IS ALSO FACT THAT THE REOPENING IS AFTE R EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT YEAR IN ALL THE CASES AND T HERE IS NO LAPSE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MA TERIAL FOR HIS ASSESSMENT. THE LD CIT(A) HAS RELIED UPON THE HON'BLE SUPREME COURTS DECISION IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. VS. INCOME-TAX OFFICER AND OTHERS (SUPRA) BUT THE HON'BLE SUPREME C OURT HAS CONSIDERED THE ISSUE OF SUFFICIENCY OF THE REASON T O BELIEVE, THEREFORE, THE CASE LAWS REFERRED BY THE LD CIT(A) IS NOT SQUARELY A PPLICABLE. IN THE PRESENT CASE, THE ISSUE IS DIFFERENT AS REOPENING I S AFTER EXPIRY OF FOUR YEARS, THE ASSESSMENT ALREADY MADE U/S 143(3) IN AL L THE CASES. THE CONCERNED ISSUE HAS BEEN ENQUIRED BY THE ASSESSING OFFICER BY RAISING THE QUERY LETTER WHICH HAS BEEN RESPONDED WITH SUFFIC IENT EVIDENCES AS REQUIRED U/S 68 OF THE ACT. THE ASSESSEE HAS FURNISH ED NAME AND ADDRESS OF THE SHAREHOLDERS, PAN NUMBER, COPY OF BANK ACCOU NT, ROC DETAILS, ALLOTMENT OF SHARES, PAYMENTS RECEIPTS THROUGH BANK ING CHANNELS, WHICH ARE SUFFICIENT TO DISCHARGE HIS ONUS CASTED ON THE ASSESSEE. THE LD ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 26 ASSESSING OFFICER HAD NOT PROVIDED ANY COPY OF THE SEIZED MATERIAL AND COPY OF STATEMENT TO THE ASSESSEE ON WHICH THE LD AS SESSING OFFICER RELIED UPON. FURTHER NO CROSS EXAMINATION HAS BEEN ALLOWED TO THE ASSESSEE AS THE HON'BLE SUPREME COURT IN THE CASE O F ANDAMAN TIMBER (SUPRA)N HAS HELD THAT NOT PROVIDING CROSS EXAMINAT ION TO THE ASSESSEE IS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. THE CASE LAWS REFERRED BY THE ASSESSEE ARE SQUARELY APPLICABLE, THEREFORE, WE REVE RSE THE ORDER OF THE LD CIT(A) ON REOPENING U/S 147/148 OF THE ACT. ACCOR DINGLY, ASSESSEES CO ARE ALLOWED AND ALSO UPHOLD THE ORDER OF THE LD C IT(A) ON MERIT. 8. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE DI SMISSED AND ASSESSEES C.OS. ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/06/2016. SD/- SD/- DQYHKKJR VH-VKJ-EHUK (KUL BHARAT) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22 ND JUNE, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO WARD 2(2), JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S GANGA PROJECTS (P) LTD./ M/S B.S . TRADERS (P) LTD., JAIPUR. 3. VK;DJ VK;QDR @ CIT ITA NO. 175, 176 & 179/JP/2015 & CO 15,16 & 19/JP/ 2015 ITO VS M/S GANGA PROJECTS & BS TRADERS 27 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 175, 176 & 179/JP/2015 & CO 15, 16 & 19/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR