M/s. Zenith Estate Ltd., New Delhi V. DCIT, New Delhi

ITA 3419/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91434 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 06-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries
• Section: 143(3); 133A; 148; 68

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC - 2 : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3419 /DEL/201 4 A.Y. : 200 8 - 0 9 M/S ZENITH ESTATE LTD., VS. DCIT, CC - 22, 308, ARUNACHAL BLDG., E - BLOCK, JHANDEWALAN, 19, BARAKHAMBA ROAD, NEW DELHI 110 0 \ 55 NEW DELHI 110 001 (PAN : AAACZ0028Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. R.S. SINGHVI, CA DEPARTMENT BY : SH. ROBIN RAWAL, SR. DR DATE OF HEARING : 07 - 07 - 2015 DATE OF ORDER : 20 - 07 - 2015 O R D E R PER H.S. SIDHU, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - X XXIII , NEW DELHI DATED 29 . 1 .201 4 PERTAINING TO ASSESSMENT YEAR 200 8 - 0 9 . 2. T HE GROUNDS OF APPEAL READ AS UNDER: - 1. THAT THE ORDER OF THE LD. CIT (A) DATED 29.01.2014 IS BAD IN LAW AND ON FACTS. 2(A). THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 8, 94,250/ - MADE U/S 68 OF THE INCOME - TAX ACT, 1961 2 REPRESENTING DEPOSITS IN APPELLANT'S BANK ACCOUNTS RECEIVED FROM VARIOUS INTERMEDIARIES OPERATED BY SHRI S.K. GUPTA TO PROVIDE ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES AGAINST CASH RECEIVED FROM THEM. 2(B). THAT THE APPELLANT COMPANY BEING ONE OF 32 CONDUIT COMPANIES OPERATED BY SHRI S.K. GUPTA TO PROVIDE BOGUS CAPITAL TO THE BENEFICIARIES AGAINST CASH RECEIVED FROM THEM, THE ADDITION MADE BY THE LD. AO AND SUSTAINED BY LD. CIT (A) IS UNJUSTIFIED AND UNCALLED FOR, AS THE LAPTOP IMPOUNDED DURING THE SURVEY U/S 133A CONDUCTED ON 20.11.2007 AT THE BUSINESS PREMISES OF SHRI S.K. GUPTA CONTAINED COMPLETE DETAILS OF INTERMEDIARIES, BENEFICIARIES, CASH RECEIVED AND CHEQUE ISSUED ETC. WHICH ARE PRESUMED T O BE CORRECT U/S 292C OF THE I.T. ACT. 2(C). THAT THE ID. CIT (A) HAS ERRED IN LAW BY FAILING TO APPRECIATE THE FACT THAT THE COMPLETE LIST OF BENEFICIARIES FOUND IN THE SEIZED RECORDS AND AVAILABLE WITH THE DEPARTMENT WERE FILED DURING THE COURSE' OF ASSESSM ENT PROCEEDINGS. THE ID. CIT (A) HAS WRONGLY OBSERVED THAT THE LIST OF BENEFICIARIES DID NOT EXIST. 2(D). THAT THE ID. CIT (A) HAS IGNORED THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT AND THE TRIBUNALS SQUARELY ON THE ISSUE EVEN THOUGH THE SAME WERE CIT ED AND FORM PART OF THE WRITTEN STATEMENTS REPRODUCED BY THE ID. CIT(A) IN THE ASSESSMENT ORDER. 2(E) THAT THE ID. CIT (A) HAS ERRED IN IGNORING THE SETTLED LEGAL PRINCIPLE THAT THE SAME AMOUNT CANNOT BE TAXED 3 DOUBLY UNLESS THE LOSS OR PROFIT AND THE NAT URE OF THE SAME CHANGES. IN THE CASE OF THE APPELLANT THE AMOUNT RECEIVED BY IT HAS BEEN TAXED AND THE SAME AMOUNT HAS ADMITTEDLY BEEN TAXED IN THE HANDS OF THE BENEFICIARIES WHO WERE THE ACTUAL REAL OWNERS OF THE SAID SUM. 2(F). THAT THE ID. CIT (A) HAS ERRED IN LAW AND ON FACTS IN MAKING THE ADDITION ON CONJECTURES AND SURMISES AND FOR REASONS UNWARRANTED IN LAW. THE ID. CIT (A) HAS STATED THE ADDITION SHOULD BE MADE IN THE HANDS OF THE APPELLANT COMPANY SO THAT THE BENEFICIARIES SHOULD NOT BE ABLE TO S TATE THAT THE MONEY DOES NOT BELONG TO THEM. 2(G). THAT THE ID. CIT (A) HAS ERRED IN IGNORING THE FACT THAT INCOME CAN BE TAXED ONLY IF THE ACT SO PROVIDES AND THE TAXABILITY OF INCOME CANNOT BE DETERMINED ON THE BASIS OF THE SUBJECTIVE FEELING AND THE A TTITUDE OF THE APPELLATE AUTHORITY. 3 . THAT THE LD. CIT (A) HAS FURTHER ERRED IN NOT ACCEPTING THE FINDINGS GIVEN IN THE ORDER U/S 245 D (4) DATED 22.6.2012 PASSED BY HON'BLE SETTLEMENT COMMISSION IN THE CASE OF SHRI S.K. GUPTA AS WELL AS DIRECTIONS OF THE ADDL. CIT U/S 144A DATED 23.11.2011 FOR A. Y. 2004 - 05 DIRECTING THE LD. AO NOT TO MAKE ADDITION IN THE HANDS OF CONDUIT COMPANIES INCLUDING APPELLANT COMPANY. 4. THAT THE CIT (A) HAS ERRED IN ISSUING ENHANCEMENT NOTICE U/S 251(2) AND DIRECTING THE AO TO ENHANCE WITHOUT APPRECIATING THE APPELLANT'S REPLY DATED 14.03.2013 FILED IN 4 RESPONSE TO THE ENHANCEMENT NOTICE AND ALSO IGNORING THE FACT THAT THE SAME TANTAMOUNT TO DOUBLE ADDITION OF THE SAME AMOUNT. 5. THAT THE CIT (A) HAS ERRED IN NOT ALLOWING RELIE F ON THE FOLLOWING ISSUES RAISED AS ADDITIONAL GROUND HAVING EFFECT OF INCOME BEING TAXED TWICE: A) RS. 3,94,450/ - TWICE ADDED IN THE HANDS OF THE APPELLANT AS WELL AS IN THE HANDS OF THE VARIOUS OTHER CONDUIT COMPANIES FROM WHOM THE AMOUNTS WERE RECEIVE D THROUGH ACCOUNT PAYEE CHEQUES DETAILS WHICH ARE GIVEN IN PAPER BOOK. B) CASH DEPOSITED INTO BANK ACCOUNT OUT OF THE CASH AVAILABLE WITH THE COMPANY . 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SUBSTITUTE, DELETE AND MODIFY ANY OR ALL THE GROUNDS OF APPEAL, WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER, BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. AT THE TIME OF HEARING SH. R.S. SINGHVI, LD. AR OF THE ASSESSEE STATED THAT THE ISSUE IS IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT, DELHI E BENCH IN ITA NO. 3427/DEL/2013 (A.Y. 2008 - 09) IN THE CASE OF M/S OMNI FARM S PVT. LTD. AND ANOTHER DECIDED ON 28.1.2015. HE FURTHER STATED THAT ONE SH. S.K. GUPTA WAS CARRYING ON THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. HE CONTROLLED THE NUMBER OF PROPRIETORSHIP CONCERNS, COMPANIES AND BANK ACCOUNTS AT VARIOUS PLACES. A SURVEY U/S. 133A OF THE I.T. ACT, 1961 WAS CONDUCTED AT THE OFFICE PREMISES OF SH. SK 5 GUPTA AND THE COMPANY/CONCERN CONTROLLED BY HIM ON 20.11.2007. DURING THE COURSE OF SURVEY, SEVERAL DOCUMENTS, PAPERS, LAPTOP CONTAINING ACCOUNTS OF SEVERAL PARTIES IN CLUDING CASH BOOK, BANK BOOK, LEDGER ACCOUNT AND SOME CHEQUE BOOKS WERE IMPOUNDED. SH. SK GUPTA FILED AN APPLICATION BEFORE THE SETTLEMENT COMMISSION AND THE SETTLEMENT COMMISSION VIDE ITS ORDER DATED 28. 12.2007 HAS ACCEPTED THAT HE WAS CARRYING ON THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES ON WHICH COMMISSION / BROKERAGE WAS BEING RECEIVED BY HIM. HE FURTHER SUBMITTED THAT IN THE ORDER OF THE SETTLEMENT COMMISSION THERE IS A LIST OF CONCERN WHICH WAS BEING CONTROLLED BY SH. SK GUPTA. THE NAME OF SH. SK GUPTA IS APPEARING AT SERIAL NO. 25 AND THE ASSESSEE COMPANY S NAME IS APPEARING AT SERIAL NO. 34. SH. SK GUPTA USED THE ASSESSEE COMPANY HAS A CONDUIT / ROUTE OF ISSUING OF CHEQUE TO THE BENEFICIARY. HE FURTHER STATED THAT THE ORDER OF THE SETT LEMENT COMMISSION HAS BEEN ACCEPTED BY THE REVENUE HAS IT HAS NOT BEEN CHALLENGED BY THE REVENUE AUTHORITIES BEFORE THE HON BLE HIGH COURT. THE AO DETERMINED THE INCOME OF SH. SK GUPTA WITHOUT MAKING ANY ADDITION FOR UNEXPLAINED CASH CREDIT. HE FURTHER POINTED OUT DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE INTERMEDIARIES COMPANIES WHICH INCLUDE THE ASSESSEE COMPANY THE AO VIZ. ACIT, CENTRAL CIRCLE - 22, NEW DELHI SOUGHT FOR DIRECTION OF ADDITIONAL COMMISSIONER OF INCOME TAX U/S. 144A OF THE IT A CT AND THE LD. ADDITIONAL COMMISSIONER OF INCOME TAX HAS HELD THAT IT WOULD BE IN THE INTEREST OF JUSTICE OF REVENUE TO TAX THESE TRANSACTIONS IN THE HANDS OF THE BENEFICIARY AND ALSO SH. SK GUPTA WITHOUT MAKING ANY ADDITIONS ON THIS ACCOUNT IN THE CASE OF CONDUIT ENTRIES. THE ADDITIONAL COMMISSIONER OF INCOME TAX HAS ISSUED DIRECTIONS U/S. 144A OF THE I.T. 6 ACT, 1961 TO ALL THE ENTRIES REFERRED TO BY THE AO VIDE OFFICE LETTER NO. 261 DATED 7.12.2011. 3.1 LD. COUNSEL OF THE ASSESSEE FINALLY SUBMITTE D THAT ALL THESE FACTS BROUGHT TO THE NOTICE OF THE AO AS WELL AS LD. CIT(A). THE FACTS AND EVIDENCE HAS NOT BEEN APPRECIATED BY THEM AND MADE THE ADDITION IN DISPUTE. HE REQUESTED THAT THE ISSUE IN DISPUTE INVOLVED IN THE PRESENT APPEAL HAS ALREADY BEE N ADJUDICATED AND DECIDED BY THE ITAT, DELHI E BENCH, NEW DELHI IN ITA NO. 3427/DEL/2013 (A.Y. 2008 - 09) IN THE CASE OF M/S OMNI FARMS PVT. LTD. AND ANOTHER DECIDED ON 28.1.2015. BY RESPECTFULLY FOLLOWING THE SAME REASONING, THE ADDITIONS INVOLVED IN THE PRESENT APPEAL MAY ALSO BE DELETED. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THAT ALL THE ARGUMENTS OF THE LD. COUNSEL OF THE ASSESSEE HAVE ALREADY BEEN CONSIDERED BY THE LD. CIT(A) AND THE LD. CIT(A) H AS RIGHTLY DECIDED THE ISSUE IN DISPUTE AGAINST THE ASSESSEE. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES AND THE ORDERS PASSED BY THE ITAT DELHI E BENCH, NEW DELHI IN ITA NO. 34 27/DEL/2013 (A.Y. 2008 - 09) IN THE CASE OF M/S OMNI FARMS PVT. LTD. AND ANOTHER DECIDED ON 28.1.2015. I AM OF THE CONSIDERED VIEW THAT THE FACTS IN THE CASE OF THE ASSESSEE COMPANY ARE SIMILAR AND IDENTICAL TO THAT OF THE FACTS AND CIRCUMSTANCES OF THE CA SE RELIED UPON BY THE LD. COUNSEL OF THE ASSESSEE IN THE CASE OF OMNI FARMS PVT. LTD. (SUPRA). THE RELEVANT PARAS NO. 3 TO 18 AT PAGES NO. 4 TO 19 OF THE ITAT DECISION PASSED IN 7 ITA NO. 3427/DEL/2013 (A.Y. 2008 - 09) IN THE CASE OF M/S OMNI FARMS PVT. LTD . AND ANOTHER DECIDED ON 28.1.2015 IS REPRODUCED BELOW FOR THE SAKE OF CONVENIENCE. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED BY THE LEARNED COUNSEL THAT ONE SHRI S.K. GUPTA WAS CARRYING ON THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. HE CON TROLLED A NUMBER OF PROPRIETARY CONCERNS, COMPANIES AND BANK ACCOUNTS AT VARIOUS PLACES. A SURVEY UNDER SECTION 133A OF THE INCOME - TAX ACT, 1961 WAS CONDUCTED AT THE OFFICE PREMISES OF SHRI S.K. GUPTA AND THE COMPANIES/CONCERNS CONTROLLED BY HIM ON 20 TH NOVEMBER, 2007. DURING THE COURSE OF SURVEY, SEVERAL DOCUMENTS, PAPERS, LAPTOPS CONTAINING ACCOUNTS OF SEVERAL PARTIES INCLUDING CASH BOOK, BANK BOOKS, LEDGER ACCOUNTS AND SOME CHEQUE BOOKS WERE IMPOUNDED. SHRI S.K. GUPTA FILED APPLICATION BEFORE THE SE TTLEMENT COMMISSION AND THE SETTLEMENT COMMISSION, VIDE ORDER DATED 28 TH DECEMBER, 2010, ACCEPTED THAT HE WAS CARRYING ON THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES ON WHICH COMMISSION/BROKERAGE WAS BEING RECEIVED BY HIM. THE STATEMENT OF FACTS AS RE CORDED IN PARAGRAPH 4.1 OF THE ORDER OF THE SETTLEMENT COMMISSION READ AS UNDER: - 4.1 THE APPLICANT SUBMITTED THAT HE CONTROLLED A NUMBER OF PROPRIETORSHIP CONCERNS, COMPANIES AND BANK ACCOUNTS AT VARIOUS PLACES. HE HAD OPENED A NUMBER OF PROPRIETORSHIP BANK ACCOUNTS IN BENAMI NAMES. CASH FROM CUSTOMERS/BENEFICIARIES OF 8 ACCOMMODATION ENTRIES USED TO BE RECEIVED AND DEPOSITED IN THESE PROPRIETARY BANK ACCOUNTS. FROM THESE BANK ACCOUNTS, CHEQUES USED TO BE ISSUED TO INTERMEDIATE COMPANIES NUMBERING THIRTY ONE AND TWO INDIVIDUALS. FROM THESE INTERMEDIATES, CHEQUES OF ACCOMMODATION ENTRIES USED TO BE ISSUED TO THE BENEFICIARIES/CUSTOMERS. FOR THESE ACCOMMODATION ENTRIES, THE APPLICANT WAS PAID COMMISSION/BROKERAGE/PREMIUM BY THE BENEFICIARIES OUT OF WHICH HE WOULD PAY/PART WITH SUBSTANTIAL AMOUNTS TO THE MEDIATORS/FACILITATORS I.E. THE PERSONS WHO WOULD BRING THE BENEFICIARIES/CUSTOMERS TO HIM. 4. HE SUBMITTED THAT THE CONCLUSION OF THE SETTLEMENT COMMISSION IS AT PARAGRAPH 26 & 27 OF ITS ORDER WHICH READ AS UNDER: - 26. THE FACTS ON RECORD ARE CONSIDERED. IT IS OBSERVED THAT VARIOUS DOCUMENTS IMPOUNDED AND EXTRACTS TAKEN FROM THE IMPOUNDED LAPTOP ARE ENCLOSED BY THE APPLICANT IN PAPER BOOKS OF FIVE VOLUMES WITH ABOUT 1200 PAGES. IT IS FURTHER OBSERVED TH AT THE PAPER BOOKS GIVE COMPLETE DETAILS AS TO HOW AND WHEN CASH WAS RECEIVED FROM THE MEDIATORS, THE CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF INTERMEDIATORIES AND CHEQUES WERE ISSUED TO THE BENEFICIARIES OF ALMOST THE SAME AMOUNTS. IT IS SEEN FROM THE REASONS RECORDED BY THE A.O. FOR ISSUE OF NOTICE UNDER SECTION 148 FOR THE A.Y. 2006 - 07 (THE FACTS ARE SAME FOR A.Y. 2008 - 09 WHICH IS UNDER CONSIDERATION) THAT THE A.O. HAS STATED THAT THE APPLICANT HAS PROVIDED ACCOMMODATION ENTRY AND CHARGED 9 PREMIUM VARY ING FROM 4% TO 8%. AFTER DISCUSSING VARIOUS FACTS, THE A.O. HAS STATED THAT THE APPLICANT HAS BEEN PROVIDING THE ACCOMMODATION ENTRIES TO DIFFERENT PARTIES BY ISSUING THE CHEQUES AFTER OBTAINING THE CASH AND THE AMOUNT OF PREMIUM CHARGED ON GIVING SUCH EN TRY HAS NOT BEEN REFLECTED AS INCOME BY THE APPLICANT. IT IS FURTHER SEEN THAT THE APPLICANT HAS GIVEN LIST OF MEDIATORS AND BENEFICIARIES WITH ADDRESS AND TELEPHONE NUMBERS. IT IS NOTED THAT THE CIT IN RULE 9 REPORT OR DURING THE HEARING HAS NOT PRODUCE D ANY MATERIAL/EVIDENCE TO REBUT THE PRESUMPTION U/S. 292C IN RESPECT OF CORRECTNESS OF THE MATERIAL IMPOUNDED DURING THE SURVEY. IT IS FURTHER NOTED THAT THERE ARE OVERWHELMING EVIDENCE IN THE IMPOUNDED MATERIAL AS ENCLOSED BY THE APPLICANT IN THE PAPER BOOK WHICH SHOW THAT THE APPLICANT IS ONLY ENTRY PROVIDER AND HE HAD ISSUED CHEQUES AFTER RECEIVING CASH FROM MEDIATORS AND DEPOSITED THE SAME IN THE BANK ACCOUNT CONTROLLED BY HIM. THUS, WE DO NOT AGREE WITH THE CIT S CONTENTIONS THAT THERE ARE NO EVIDEN CE/MATERIAL BROUGHT OUT BY THE APPLICANT TO PROVE THAT HE WAS AN ENTRY PROVIDER AND THAT HE HAD DEPOSITED HIS OWN CASH WHICH WAS USED TO ISSUE CHEQUES TO THE BENEFICIARIES. THE REASONS RECORDED FOR ISSUE OF NOTICE U/S 148 CLEARLY STATE THAT THE APPLICANT IS AN ENTRY PROVIDER. FURTHER, THE REPORT OF THE A.O. THAT THE BENEFICIARIES DISCLOSED RS.106.33 CRORES AGAINST THE CHEQUES RECEIVED BY THEM FROM THE APPLICANT, FURTHER STRENGTHEN APPLICANT S CASE THAT HE WAS ONLY ENTRY PROVIDER AND CASH DEPOSITED IN THE BANK ACCOUNTS FOR ISSUING CHEQUES ARE NOT 10 HIS MONEY BUT MONEYS OF THE BENEFICIARIES TO WHOM CHEQUES WERE ISSUED. 27. AFTER EXAMINING THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE APPLICANT IS AN ENTRY PROVIDER. THEREFORE, IN HIS CASE, ONLY , THE AMOUNT OF PREMIUM/COMMISSION RECEIVED BY THE APPLICANT AFTER REDUCING EXPENSES INCURRED WILL BE HIS ADDITIONAL INCOME. 5. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER POINTED OUT THAT IN THE ORDER OF THE SETTLEMENT COMMISSION, THERE IS THE LIST OF T HE CONCERNS WHICH WERE BEING CONTROLLED BY SHRI S.K. GUPTA. AT PARAGRAPH 4.6, THE LIST OF SUCH COMPANIES IS GIVEN WHICH IS REPRODUCED FOR READY REFERENCE: - 4.6 THERE ARE 32 COMPANIES AND TWO INDIVIDUALS WHICH WERE USED AS CONDUITS/ROUTES FROM WHERE THE CH EQUES USED TO BE GIVEN TO THE BENEFICIARIES. THESE 32 COMPANIES/TWO INDIVIDUALS WERE MERELY CONDUITS AND WERE USED BY THE APPLICANT IN A BID TO GIVE LEGITIMACY/CREDIBILITY TO THE TRANSACTION. THE NAMES OF THESE 32 COMPANIES AND TWO INDIVIDUALS ARE AS UND ER: S.NO. NAME OF COMPANIES 1 AGM HOLDING LTD. 2 ADVANTAGE SOFTWARE PVT LTD 3 ANILA INDUSTRIES LTD 4 ANJALI GUPTA 5 BELIEF CHITS PVT.LTD. 6 BERIWAL INVESTMENTS & CHITS FUNDS 11 7 CENTRAL GUM & CHEMICAL INDUSTRIES 8 CHAMP FINVEST PVT LTD 9 CHANDER PRABHU FINANCIAL SERVICES LTD 10 CUBIC COMMERCIAL RESOURCES 11 DHAMAKA TRADING & CONSTRUCTIONS 12 FALCON FREIGHT (P) LTD 13 GALAXY MINES & STONES PVT.LTD. 14 GIRIASHO COMPANY PVT LTD 15 IDS INVESTMENT PVT.LTD. 16 KSA CHITS (P) LTD 17 MITSU SECURITIES MANAGEMENT (P) LTD 18 NAMRATA MARKETING PVT LTD 19 NEW STAR INFORMATION SYSTEM (I) LTD 20 OMNI FARMS PVT LTD 21 OPTIMUM CREDITS LTD 22 PASSION CHITS CO PVT LTD 23 RAPID PACKAGING LTD 24 SJ SECURITIES PVT LTD 25 SK GUPTA 26 SAFE N SECURE HYGIENE PRODUCTS PVT LTD 27 SHIKHAR FINCAP PVT LTD 28 SINO CREDITS & LEASING LTD 29 VA FOODS PVT LTD 30 VASUDEVA FARMS PVT LTD 31 VIAGRA TRADING CO.PVT.LTD. 32 VIJAY CONDUCTORS PVT LTD 33 VISRUT MARKETING PVT LTD 12 34 ZENITH ESTATES LTD. 6. HE POINTED OUT THAT THE NAMES OF ALL THE NINE COMPANIES UNDER APPEAL IS IN THE LIST OF 34 ENTITIES WHICH WERE CONTROLLED BY SHRI S.K. GUPTA AND USED AS CONDUIT/ROUTE FOR ISSUE OF CHEQUE TO THE BENEFICIARIES. HE POINTED OUT THAT ALL THE NINE COMPANIES UNDER C ONSIDERATION ARE IN SUCH LIST AS ITEM NOS.6, 8, 10, 12, 18, 20, 22, 32 & 33. HE STATED THAT THIS ORDER OF THE SETTLEMENT COMMISSION HAS BEEN ACCEPTED BY THE REVENUE AS IT HAS NOT BEEN CHALLENGED BY THE REVENUE BEFORE THE HON BLE HIGH COURT. HE REFERRED T O THE ORDER OF THE ASSESSING OFFICER WHEREIN HE HAS GIVEN EFFECT TO THE ORDER OF THE SETTLEMENT COMMISSION AND POINTED OUT THAT AFTER THE ORDER OF THE SETTLEMENT COMMISSION, THE ASSESSING OFFICER DETERMINED THE INCOME OF SHRI S.K. GUPTA WITHOUT MAKING ANY ADDITION FOR UNEXPLAINED CASH CREDIT. HE FURTHER POINTED OUT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE INTERMEDIARY COMPANIES, WHICH INCLUDED THE ASSESSEE COMPANY, THE ASSESSING OFFICER VIZ., ACIT, CENTRAL CIRCLE - 22, NEW DELHI SOUGHT FOR THE DIRECTION OF THE ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SECTION 144A OF THE INCOME - TAX ACT. AT PAGE 1 & 2 OF THE ORDER, THE ADDITIONAL COMMISSIONER GAVE THE LIST OF THE COMPANIES CONTROLLED BY SHRI S.K. GUPTA WHICH INCLUDED ALL THE NINE COMPANIES UN DER CONSIDERATION. THE ADDITIONAL COMMISSIONER HELD AS UNDER: - 12. IN VIEW OF THESE FACTS, IT IS CLEAR THAT CASH HAS BEEN RECEIVED BY SH. S.K. GUPTA AND 13 ROUTED THROUGH VARIOUS ENTITIES TO BE PASSED ON ULTIMATELY TO THE BENEFICIARIES IN THE FORM OF CHEQUE S. IN SUCH A SCENARIO WHEN IT IS CLEAR THAT THESE OTHER ENTITIES ARE MERE CONDUIT FOR CONVERTING CASH TO CHEQUE, IT WOULD BE APPROPRIATE TO TAX THESE TRANSACTIONS IN THE HANDS OF BENEFICIARIES AND ALSO IN THE HANDS OF SH. S.K. GUPTA. THE JUSTIFICATION FO R BRINGING TO TAX THE CASH RECEIVED (AS PER LAPTOP) IN THE HANDS OF SH. S.K. GUPTA (INDIVIDUAL) WOULD BE THAT HE HAS NOT BEEN ABLE TO PRODUCE THESE PERSONS BEFORE THE DEPARTMENT TO OWN UP THIS CASH AND AS SUCH REMAINS UNEXPLAINED CASH AS HELD IN THE ORDER U/S 143(3) FOR THE ASSESSMENT YEAR 2008 - 09. IN THE ABSENCE OF OWNING UP OF CASH BY MEDIATORS/BENEFICIARY, IT IS NOT POSSIBLE TO ALLOW ASSESSEE THE BENEFIT OF ARGUMENT THAT THE CASH BELONGS TO BENEFICIARY AND ONCE THE DEPARTMENT IS TAKING ACTION AGAINST BE NEFICIARIES, NO ACTION CAN BE TAKEN IN THE HANDS OF THE SH. S.K. GUPTA. IT IS CLEAR THAT CASH HAS BEEN RECEIVED BY S.K. GUPTA IN DIFFERENT YEARS UNDER CONSIDERATION AND NONE OF THE MEDIATORS/BENEFICIARY HAVE COME FORWARD TO OWN THIS CASH. AS TO THE CASE LAWS CITED BY ASSESSEE, THEY ARE NOT DIRECTLY APPLICABLE TO THE FACTS OF THE CASE AND ARE DISTINGUISHABLE. NONE OF THE CASES CITED BY ASSESSEE DEAL WITH A CLEAR EVIDENCE IMPOUNDED DURING THE COURSE OF SURVEY OPERATION U/S 133A, DETAILING RECEIPT F CASH ON A DAY TO DAY BASIS. THE RECEIPT OF CASH IS NOT A CONJECTURE OR FIGMENT OF IMAGINATION ON THE PART OF ASSESSING OFFICER. IN VIEW OF THIS, IT SHALL BE MOST APPROPRIATE THAT CASH IS BROUGHT TO TAX IN THE HANDS OF SH. S.K. GUPTA. 14 ADDITION HAS ALSO BEEN MADE ON ACCOUNT OF PREMIUM INCOME RECEIVED BY ASSESSEE ON ACCOUNT OF THESE TRANSACTIONS FOR AY 2008 - 09. ASSESSEE S CONTENTION THAT HE SHOULD BE ALLOWED CERTAIN EXPENDITURE FROM THE PREMIUM RECEIVED BY IT, ALSO CANNOT BE ENTERTAINED AS ASSESSEE HAS BROUGHT NOT HING ON RECORD TO PROVE THAT EXPENSES WERE PAID TO OTHER PERSONS AND NEITHER THERE IS ANYTHING ON RECORD TO SHOW THAT THESE OTHER PERSONS HAVE ACKNOWLEDGED THIS INCOME IN THIS REGARD. CERTAIN ADDITIONS WERE MADE U/S 68 FOR CREDIT ENTRIES APPEARING IN BANK ACCOUNT OF ASSESSEE IN AY 2008 - 09. THE AO MAY DECIDE THE ISSUE ON MERIT AFTER EXAMINING THE MATERIAL PRODUCED BEFORE HIM. THIS ISSUE DOES NOT SEEM TO ARISE FROM IMPOUNDED DOCUMENTS. 13. THE ASSESSING OFFICER HAS INFORMED THAT INFORMATION PERTAINING TO BENEFICIARIES HAS BEEN PASSED ON TO THE CONCERNED ASSESSING OFFICER. HE SHOULD ENSURE THAT THERE IS NO DEFICIENCY IN THIS REGARD. ON THE BASIS OF MODUS OPERANDI AND MATERIAL IMPOUNDED, IT IS CLEAR THAT THERE IS A VERY STRONG CASE TO BRING TO TAX THE ACCO MMODATION ENTRIES OBTAINED BY BENEFICIARIES. THE INFORMATION WITH RELEVANT RECORDS SHOULD BE COMMUNICATED TO THE CONCERNED AOS. 14. TO TAX THE CASH RECEIVED BY S.K. GUPTA IN THE HANDS OF CONDUIT COMPANIES ALSO, WHEREIN THE SAME FINDS REFLECTION AS CREDIT ENTRIES IN BANK ACCOUNTS, WOULD MAKE THE STAND OF THE DEPARTMENT AMBIGUOUS VIS - A - VIS BENEFICIARIES. 15 IT WILL DILUTE THE CASE OF THE DEPARTMENT AGAINST BENEFICIARIES. ADDITIONS MADE IN THE CASE OF CONDUIT ENTITIES SHALL CONFUSE THE STAND OF THE DEPARTMENT AND SHALL JEOPARDIZE THE EFFORTS OF THE DEPARTMENT TO BRING TO TAX THESE TRANSACTIONS IN THE HANDS OF BENEFICIARIES AND SH. S.K. GUPTA. THIS SHALL ALSO LEAD TO FRIVOLOUS LITIGATION, OF NO SIGNIFICANCE, ONCE WE HAVE BROUGHT THESE TRANSACTIONS TO TAX AS ITS TWO LEGS, FIRSTLY, IN THE CASE OF SH. S.K. GUPTA AND SECONDLY IN THE CASES OF BENEFICIARIES. 15. IN VIEW OF FOREGOING DISCUSSION, IT WOULD BE IN THE BEST INTEREST OF REVENUE TO TAX THESE TRANSACTIONS IN THE HANDS OF BENEFICIARIES (PARA 13) AND ALSO SH. S. K. GUPTA (INDIVIDUAL - SR.NO.1 - 4, AS DISCUSSED IN PARA 12), WITHOUT MAKING ANY ADDITIONS ON THIS ACCOUNT IN THE HANDS OF CONDUIT ENTITIES (SR.NO.5 TO 41 AS DISCUSSED IN PARA 11 & 14). THESE DIRECTIONS ARE ISSUED ACCORDINGLY U/S 144A OF THE INCOME TAX ACT 1961. THESE ARE COMPOSITE DIRECTIONS U/S 144A OF THE ACT WITH RESPECT TO ALL THE ENTITIES REFERRED TO BY THE ASSESSING OFFICER VIDE HIS OFFICE LETTER NO.261 DATED 7.12.2011. 7. THUS, THE ADDITIONAL CIT UNDER SECTION 144A ISSUED DIRECTION FOR NOT MAKING OF ANY ADDITION IN THE CASE OF CONDUIT ENTITIES I.E. COMPANIES WHICH WERE BEING CONTROLLED BY SHRI S.K. GUPTA AND WERE UTILIZED FOR ISSUING CHEQUES TO THE BENEFICIARIES AFTER DEPOSITING THE CASH RECEIVED FROM THE BENEFICIARIES. HE STATED THAT THE DIRECTIO N OF ADDITIONAL CIT UNDER SECTION 144A IS BINDING UPON THE ASSESSING OFFICER. HE ALSO REFERRED TO THE ASSESSMENT ORDER PASSED IN THE CASE 16 OF ONE OF THE BENEFICIARIES I.E. M/S BERIWAL INVESTMENTS & CHIT FUNDS LTD. AND POINTED OUT THAT THE ASSESSING OFFICER AS PER THE DIRECTION OF THE ADDITIONAL CIT DID NOT MAKE ANY ADDITION UNDER SECTION 68. HE SUBMITTED THAT THE ORDER OF THE ADDITIONAL CIT UNDER SECTION 144A IS DATED 23 RD DECEMBER, 2011 WHILE THE ASSESSMENT UNDER CONSIDERATION HAS BEEN COMPLETED ON 27 TH D ECEMBER, 2010 WHICH WAS BEFORE THE DIRECTION OF THE ADDITIONAL CIT UNDER SECTION 144A. EVEN THE ORDER OF THE SETTLEMENT COMMISSION WAS PASSED ON 28 TH DECEMBER, 2010. THUS, THE ASSESSING OFFICER, WHILE PASSING THE ASSESSMENT ORDER FOR THE YEAR UNDER CONSI DERATION, DID NOT HAVE THE BENEFIT OF EITHER THE ORDER OF THE SETTLEMENT COMMISSION OR THE ORDER OF THE ADDITIONAL CIT PASSED UNDER SECTION 144A. HE, THEREFORE, SUBMITTED THAT WHEN THE REVENUE HAS ACCEPTED THE ORDER OF THE SETTLEMENT COMMISSION AS WELL AS THE ORDER OF THE ADDITIONAL CIT UNDER SECTION 144A THAT SHRI S.K. GUPTA WAS ONLY ENTRY PROVIDER, WHO, AFTER THE RECEIPT OF CASH FROM THE BENEFICIARIES, DEPOSITED THE CASH IN VARIOUS GROUP ENTITIES AND ISSUED THE CHEQUE, THERE IS NO JUSTIFICATION FOR TREAT ING THE CASH DEPOSIT IN THE BANK ACCOUNT OF THE INTERMEDIARY COMPANIES AS UNEXPLAINED CASH CREDIT UNDER SECTION 68. 8. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE CIT(A) DID NOT ACCEPT THE ASSESSEE S CONTENTION ON THE GROUND THAT ALL THE FACTS MAY NOT B E AVAILABLE WITH THE SETTLEMENT COMMISSION. THE RELEVANT FINDING OF LEARNED CIT(A) IN THIS REGARD, WHICH IS SIMILAR IN ALL THE CASES BEFORE US, AT PAGE 17 24 OF HIS ORDER IN THE CASE OF OMNI FARMS PVT.LTD. READS AS UNDER: - SECOND MAIN ARGUMENT OF LD. AR IN SUPPORT OF PROVING ITSELF AS CONDUIT, THE LD. AR IS RELYING ON THE ORDER OF THE SETTLEMENT COMMISSION. I HAVE PERUSED THE ORDER OF HON BLE SETTLEMENT COMMISSION. THE HON BLE SETTLEMENT COMMISSION HAS QUANTIFIED THE INCOME OF SH. S.K. GUPTA AS SOME PERCEN TAGE OF TOTAL TURNOVERS. OF COURSE, IN ITS ORDER, HON BLE COMMISSION HAS MENTIONED THAT VARIOUS COMPANIES INCLUDING APPELLANT COMPANY IS USED AS CONDUIT FOR ROUTING THE ENTRIES. HOWEVER, BEFORE SETTLEMENT COMMISSION, ENTIRE FACTS THAT THE APPELLANT COMPA NY IS MAINTAINING ITS BOOKS OF ACCOUNT ON THE BASIS OF SUCH ENTRIES MIGHT NOT BE AVAILABLE. HON BLE SETTLEMENT COMMISSION HAS NOT GIVEN ANY COMMENTS FOR CREDIT IN THE BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY WHICH IS NOT CHANGED AFTER ADMISSION THAT IT AS A CONDUIT COMPANY. THEREFORE, IN NO WAY, THE ORDER OF SETTLEMENT COMMISSION SUPPORT THE IN APPLICABILITY OF SECTION 68 IN APPELLANT S CASE, AS THE ORDER OF HON BLE SETTLEMENT COMMISSION HAS ONLY QUANTIFIED SAME COMMISSION INCOME IN THE HANDS OF SH. S.K . GUPTA. 9. THE LEARNED COUNSEL POINTED OUT THAT BEFORE THE SETTLEMENT COMMISSION, ALL THE FACTS WERE PLACED. THE SETTLEMENT COMMISSION HAS RECORDED ALL THE FACTS AND ALSO GIVEN THE LIST OF COMPANIES WHICH WERE USED BY SHRI S.K. GUPTA AS CONDUITS. THE S ETTLEMENT COMMISSION HAS ALSO DISCUSSED THE MODUS - OPERANDI HOW SHRI S.K. GUPTA WAS 18 PROVIDING ACCOMMODATION ENTRIES BY UTILIZING THE CONDUIT COMPANIES. HE FURTHER SUBMITTED THAT THE ORDER OF THE SETTLEMENT COMMISSION IS BINDING UPON THE REVENUE AUTHORITIES . IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF OMAXE LTD. & ANR. VS. DCIT & ANR. [2014] 105 DTR 1 (DEL). HE, THEREFORE, SUBMITTED THAT THE ADDITION UNDER SECTION 68 MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED CIT(A) IN THE CASE OF ALL THE COMPANIES MAY BE DELETED. 10. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF AUTHORITIES BELOW AND STATED THAT ALL THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE HAVE ALRE ADY BEEN CONSIDERED BY THE LEARNED CIT(A). HE HAS ALSO CONSIDERED THE DECISION OF THE SETTLEMENT COMMISSION WHICH IS IN THE CASE OF SHRI S.K. GUPTA AND NOT IN THE CASE OF THE ASSESSEE. HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) IN ALL THESE APPEALS SHOULD BE SUSTAINED. 11. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. THE FACTS IN THE CASE OF ALL THE COMPANIES ARE SIMILAR. THEREFORE, THEY ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. FOR THE SAKE OF BREVITY, W E SHALL DISCUSS THE FACTS IN THE CASE OF M/S OMNI FARMS PVT.LTD. INSTEAD OF ALL THE NINE COMPANIES. 1 2. IN THE CASE OF M/S OMNI FARMS PVT.LTD., THE ASSESSING OFFICER, AT PARAGRAPH 2, HAS RECORDED THE FOLLOWING FINDING: - 19 2. A SURVEY OPERATION WAS CONDUCT ED IN THE S K GUPTA GROUP OF CASES ON 20/11/2007 AT 308, ARUNACHAL BUILDING, 19, BARAKHAMBA ROAD, NEW DELHI 110001 AND 1007 - 1008, ARUNACHAL BUILDING, 19, BARAKHAMBA ROAD, NEW DELHI 110001. THE ASSESSEE COMPANY IS ONE OF THE GROUP CONCERNS OF S K GUPTA GROUP. DURING THE COURSE OF SURVEY PROCEEDINGS AND ASSESSMENT PROCEEDINGS, SH SK GUPTA ADMITTED THAT HE HAD BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS THROUGH A LARGE NO. OF CONCERNS EFFECTIVELY CONTROLLED BY HIM. FURTHER, IT WAS SEEN THAT SH. S.K. GUPTA OPERATES A NUMBER OF ACCOUNTS IN THE SAME BANK/BRANCH OR IN DIFFERENT BRANCHES IN THE NAMES OF COMPANIES/FIRMS/PROPRIETARY CONCERNS AND INDIVIDUALS. FOR THE OPERATION OF THESE BANK ACCOUNTS, PERSONS WHO ARE FILING INCOME TAX RETURNS ARE ROP ED IN. LIKE ANY OTHER BUSINESS IT DOES REQUIRE MAN POWER ACCORDING TO THE SCALE OF OPERATIONS. EXCEPT FOR TWO OR THREE PERSONS WHO ARE REQUIRED REGULARLY TO VISIT BANKS AND DO OTHER WORK LIKE COLLECTION OF CASH ETC. MOST OF THE OTHER PERSONS INVOLVED ARE ON PART TIME BASIS. THE PART TIME EMPLOYEES ARE CALLED AS AND WHEN REQUIRED TO SIGN DOCUMENTS, CHEQUE BOOKS ETC. SH. S.K. GUPTA HAS ALSO ROPED IN HIS OWN RELATIVES FOR OPERATION OF VARIOUS BANK ACCOUNTS AND FOR FILING THE INCOME TAX RETURNS. IT WAS SEE N THAT SH. S.K. GUPTA WAS CONTROLLING MORE THAN 35 COMPANIES FROM A SMALL OFFICE PREMISES WITHOUT SUFFICIENT INFRASTRUCTURE OR EMPLOYEES TO CARRY OUT MEANINGFUL BUSINESS ACTIVITY IN SO MANY COMPANIES. 20 FURTHER, FROM THE PERUSAL OF LEDGER ACCOUNTS MAINTAINED IN ONE OF THE LAPTOPS IMPOUNDED DURING SURVEY, IT IS NOTICED THAT A LARGE AMOUNT OF CASH IS DEPOSITED AND CHEQUES ARE ISSUED ON THE SAME DAY/WITHIN FEW DAYS TO VARIOUS PARTIES FROM THE ACCOUNTS OF THE COMPANY CONTROLLED BY HIM. AS PER ENQUIRIES CARRIED O UT BY THE INVESTIGATION WING THE ASSESSEE WAS FOUND TO HAVE BEEN USING THE BANK ACCOUNTS OPENED IN DIFFERENT BANKS TO ROUTE THE ENTRIES THROUGH TWO TO FOUR ACCOUNTS TO VIE THE COLOR OF GENUINENESS TO THESE TRANSACTIONS. 13. THUS, THE ASSESSING OFFICER HIM SELF HAS RECORDED THE FINDING THAT THE ASSESSEE COMPANY IS ONE OF THE GROUP CONCERNS OF S.K. GUPTA GROUP AND SHRI S.K. GUPTA ADMITTED THAT HE HAD BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS THROUGH A LARGE NUMBER OF CONCERNS EFFECTIVELY CONTROL LED BY HIM. THE SETTLEMENT COMMISSION ALSO HAS RECORDED THE SIMILAR FINDING THAT SHRI S.K. GUPTA WAS PROVIDING ENTRIES TO VARIOUS BENEFICIARIES BY USING VARIOUS FIRMS/COMPANIES. ADMITTEDLY, THE COMPANIES UNDER APPEAL BEFORE US ARE THE PART OF COMPANIES W HICH WERE UTILIZED BY SHRI S.K. GUPTA FOR PROVIDING ACCOMMODATION ENTRIES. IN PARAGRAPH 26, THE SETTLEMENT COMMISSION HAS RECORDED THE FINDING IT IS FURTHER OBSERVED THAT THE PAPER BOOKS GIVE COMPLETE DETAILS AS TO HOW AND WHEN CASH WAS RECEIVED FROM THE MEDIATORS, THE CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF INTERMEDIATORIES AND CHEQUES WERE ISSUED TO THE BENEFICIARIES OF ALMOST THE SAME AMOUNTS . THUS, AFTER EXAMINING THE FACTS, THE SETTLEMENT COMMISSION HAS 21 RECORDED THE FINDING THAT THE CASH DEPOSIT ED IN THE BANK ACCOUNT OF THE INTERMEDIARY COMPANIES WAS THE CASH RECEIVED FROM MEDIATORS ON BEHALF OF THE BENEFICIARIES WHO WANTED TO AVAIL THE ACCOMMODATION ENTRIES. IT IS FURTHER OBSERVED BY THE SETTLEMENT COMMISSION IT IS FURTHER NOTED THAT THERE ARE OVERWHELMING EVIDENCE IN THE IMPOUNDED MATERIAL AS ENCLOSED BY THE APPLICANT IN THE PAPER BOOK WHICH SHOW THAT THE APPLICANT IS ONLY ENTRY PROVIDER AND HE HAD ISSUED CHEQUES AFTER RECEIVING CASH FROM MEDIATORS AND DEPOSITED THE SAME IN THE BANK ACCOUNT CO NTROLLED BY HIM . THEREAFTER, THE SETTLEMENT COMMISSION NOTED FURTHER, THE REPORT OF THE A.O. THAT THE BENEFICIARIES DISCLOSED RS.106.33 CRORES AGAINST THE CHEQUES RECEIVED BY THEM FROM THE APPLICANT, FURTHER STRENGTHEN APPLICANT S CASE THAT HE WAS ONLY ENTRY PROVIDER AND CASH DEPOSITED IN THE BANK ACCOUNTS FOR ISSUING CHEQUES ARE NOT HIS MONEY BUT MONEYS OF THE BENEFICIARIES TO WHOM CHEQUES WERE ISSUED . THUS, THE SETTLEMENT COMMISSION HAS RECORDED THE CLEAR CUT FINDING THAT SHRI S.K. GUPTA WAS ONLY ENT RY PROVIDER AND FOR THE PURPOSE OF PROVIDING ENTRIES, HE UTILIZED THE VARIOUS GROUP COMPANIES WHICH INCLUDED THE COMPANIES UNDER APPEAL BEFORE US. HE USED TO RECEIVE THE CASH FROM THE BENEFICIARIES WHO WANTED TO AVAIL THE ACCOMMODATION ENTRIES AND AFTER D EPOSITING THE SAME IN THE BANK ACCOUNT OF VARIOUS COMPANIES, HE ISSUED THE CHEQUES TO THE BENEFICIARIES. IN VIEW OF THIS FINDING, THE CASH DEPOSITED IN THE BANK ACCOUNT OF VARIOUS COMPANIES WHICH WERE THE CONDUIT COMPANIES CANNOT BE SAID TO BE UNEXPLAINED CASH 22 CREDIT BECAUSE THE SOURCE OF CASH IS FROM THE BENEFICIARY WHO WANTED TO AVAIL THE ACCOMMODATION ENTRY AND TO WHOM CHEQUES FOR ACCOMMODATION ENTRIES WERE ISSUED ALMOST OF THE SIMILAR AMOUNT. THE ORDER OF THE SETTLEMENT COMMISSION HAS BECOME FINAL BEC AUSE THE REVENUE HAS NOT CHALLENGED THE ORDER OF THE SETTLEMENT COMMISSION BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT. 14. THAT HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDERED THE BINDING NATURE OF THE DECISION OF THE SETTLEMENT COMMISSION IN THE CASE OF OMAXE LTD. & ANR. (SUPRA) AND HELD AS UNDER: - ORDERS OF SETTLEMENT COMMISSION ARE FINAL AND CONCLUSIVE AS TO MATTERS STATED THEREIN. THE MATTERS NECESSARILY COULD COMPREHEND DISPUTED QUESTIONS, ITEMS OR HEADS OF INCOME, DISALLOWANCE, ETC. OR VARIAN TS OF IT, BUT ALWAYS WITH REFERENCE TO A PARTICULAR ASSESSMENT YEAR. IN THIS CASE, THE SETTLEMENT COMMISSION WAS SEIZED OF ASST. YR. 2006 - 07. WHILST EXERCISING ITS AUTHORITY OVER THE APPLICATION, THE COMMISSION CONCEDEDLY EXERCISED THE VAST PLENITUDE OF ITS POWER OR JURISDICTION. THE PETITIONER HAD MADE A DISCLOSURE IN ITS APPLICATION AS IT WAS DUTY - BOUND TO. WHAT IS IN CONTROVERSY TODAY IS THAT THE SUBSEQUENT EVENT OF SEARCH AND SEIZURE OPERATION CONDUCTED IN THE PREMISES OF M AND THE CONTENTION OF T HE REVENUE HAVE THROWN LIGHT ON MATERIAL THAT HAD BEEN SUPPRESSED FROM THE COMMISSION. IF SUCH IS THE CASE, IT WOULD BE ONLY LOGICAL THAT THE COMMISSION ITSELF SHOULD BE APPROACHED FOR A DECLARATION 23 THAT ITS ORDER OF 17 TH MARCH, 2008 IS A NULLITY. ALLO WING ANY OTHER AUTHORITY, EVEN BY WAY OF A NOTICE UNDER S. 153C, WOULD BE TO PERMIT MULTIPLE JURISDICTIONS WHICH CAN RESULT IN CHAOS. AFTER ALL NON - DISCLOSURE OR SUPPRESSION OF INFORMATION IN RESPECT OF WHAT IS REQUIRED TO BE REVEALED TO THE CONCERNED AUT HORITIES IS AKIN TO FRAUD AND IF IT HAS A MATERIAL BEARING ON THE OUTCOME OF THE ASSESSMENT, IT WOULD MOST CERTAINLY BE MISREPRESENTATION. 15. THUS, HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE ORDER OF THE SETTLEMENT COMMISSION IS FINAL AND CONCLU SIVE AS TO THE MATTER STATED THEREIN FOR THE ASSESSMENT YEAR DECIDED BY THE SETTLEMENT COMMISSION. ADMITTEDLY, THE ORDER OF THE SETTLEMENT COMMISSION IN THE CASE OF SHRI S.K. GUPTA IS FOR AY 2008 - 09 AND ALL THE APPEALS UNDER CONSIDERATION BEFORE US ARE FO R AY 2008 - 09. THE CIT(A) DENIED TO FOLLOW THE ORDER OF THE SETTLEMENT COMMISSION REMARKING THAT ALL THE RELEVANT FACTS MIGHT NOT HAVE BEEN PRODUCED BEFORE THE SETTLEMENT COMMISSION. HOWEVER, LEARNED CIT(A) HAS NOT POINTED OUT ANY SPECIFIC FACTS WHICH WER E NOT PLACED BEFORE THE SETTLEMENT COMMISSION. ON THE OTHER HAND, READING OF THE ORDER OF THE SETTLEMENT COMMISSION SHOWS THAT ALL THE RELEVANT MATERIAL INCLUDING THE SEIZED MATERIAL WERE DULY CONSIDERED BY THE SETTLEMENT COMMISSION. MOREOVER, HON'BLE JU RISDICTIONAL HIGH COURT HAS HELD THAT EVEN IF SOME MATERIAL HAS BEEN SUPPRESSED FROM THE SETTLEMENT COMMISSION, THE ONLY COURSE AVAILABLE TO THE REVENUE IS TO APPROACH THE SETTLEMENT COMMISSION FOR DECLARING ITS ORDER AS NULLITY. IN 24 THE CASE UNDER APPEAL BEFORE US, THE ORDER OF THE SETTLEMENT COMMISSION IS OF 2010. IT HAS NOT BEEN POINTED OUT BY THE REVENUE THAT IT HAS APPROACHED THE SETTLEMENT COMMISSION FOR DECLARING ITS ORDER AS NULLITY. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE JURISD ICTIONAL HIGH COURT, IN OUR OPINION, THE ORDER OF THE SETTLEMENT COMMISSION IS BINDING ON THE INCOME TAX DEPARTMENT AND ALL THE LOGICAL CONSEQUENCES OF THE SAID ORDER ARE TO BE GIVEN EFFECT TO. 16. WE ALSO FIND THAT THE ADDITIONAL CIT HAS ISSUED DIRECTIO N UNDER SECTION 144A IN THIS REGARD. THE ASSESSING OFFICER HAD ASKED FOR THE SPECIFIC DIRECTION OF THE ADDITIONAL CIT IN RESPECT OF THE GROUP COMPANIES WHICH HAS BEEN MENTIONED BY THE ADDITIONAL CIT IN PARAGRAPH 2 OF HIS ORDER UNDER SECTION 144A. AFTER C ONSIDERING ALL THE FACTS, THE ADDITIONAL COMMISSIONER HELD IT WOULD BE IN THE BEST INTEREST OF REVENUE TO TAX THESE TRANSACTIONS IN THE HANDS OF BENEFICIARIES AND ALSO SH. S.K. GUPTA, INDIVIDUAL WITHOUT MAKING ANY ADDITIONS ON THIS ACCOUNT IN THE HANDS OF CONDUIT ENTITIES . WE MAY POINT OUT THAT THE DIRECTION OF THE ADDITIONAL CIT IS FOR VARIOUS YEARS RUNNING FROM AY 2004 - 05 TO 2007 - 08. HOWEVER, THE RATIO OF THE SAID DIRECTION WOULD CONTINUE TO BE APPLICABLE FOR AY 2008 - 09 ALSO BECAUSE THE FACTS REMAIN T HE SAME. THE ADDITIONAL CIT HAS DISCUSSED IN DETAIL THAT WHEN THE REVENUE IS TAKING ACTION IN THE HANDS OF THE BENEFICIARIES, IF THE ADDITION IS MADE IN THE CASE OF CONDUIT ENTITIES, IT WILL DILUTE THE CASE OF THE DEPARTMENT AGAINST THE BENEFICIARIES. TH E ORDER OF THE ADDITIONAL CIT 25 UNDER SECTION 144A IS BINDING ON THE ASSESSING OFFICER WHICH IS EVIDENT FROM SECTION 144A WHICH READS AS UNDER: - 144A. A JOINT COMMISSIONER MAY, ON HIS OWN MOTION OR ON A REFERENCE BEING MADE TO HIM BY THE ASSESSING OFFICER OR ON THE APPLICATION OF AN ASSESSEE, CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING IN WHICH AN ASSESSMENT IS PENDING AND, IF HE CONSIDERS THAT, HAVING REGARD TO THE NATURE OF THE CASE OR THE AMOUNT INVOLVED OR FOR ANY OTHER REASON, IT IS NECESSARY OR EXPEDIENT SO TO DO, HE MAY ISSUE SUCH DIRECTIONS AS HE THINKS FIT FOR THE GUIDANCE OF THE ASSESSING OFFICER TO ENABLE HIM TO COMPLETE THE ASSESSMENT AND SUCH DIRECTIONS SHALL BE BINDING ON THE ASSESSING OFFICER : PROVIDED THAT NO DIRECTIONS WHICH ARE PREJU DICIAL TO THE ASSESSEE SHALL BE ISSUED BEFORE AN OPPORTUNITY IS GIVEN TO THE ASSESSEE TO BE HEARD. EXPLANATION. FOR THE PURPOSES OF THIS SECTION NO DIRECTION AS TO THE LINES ON WHICH AN INVESTIGATION CONNECTED WITH THE ASSESSMENT SHOULD BE MADE, SHALL BE DEEMED TO BE A DIRECTION PREJUDICIAL TO THE ASSESSEE. (EMPHASIS BY UNDERLINING SUPPLIED BY US) 17. THUS, THERE IS AN ORDER OF THE SETTLEMENT COMMISSION AS WELL AS THE ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SECTION 144A HOLDING THAT SHRI S.K. GUPTA W AS PROVIDING ACCOMMODATION ENTRIES, HE USED VARIOUS COMPANIES AS 26 CONDUIT FOR PROVIDING THE ACCOMMODATION ENTRIES, CASH WAS RECEIVED THROUGH MEDIATORS FROM THE PERSONS WHO WANTED TO AVAIL THE ACCOMMODATION ENTRIES, SUCH CASH WAS DEPOSITED IN THE BANK ACCOUN T OF THE CONDUIT COMPANIES AND THEREAFTER, CHEQUE OF THE SIMILAR AMOUNT WAS BEING ISSUED TO THE BENEFICIARIES (I.E. THE PERSON WHO WANTED TO AVAIL THE ACCOMMODATION ENTRY) WITHIN A DAY OR SO. THE ASSESSING OFFICER HIMSELF IN THE ASSESSMENT ORDER HAS ACCEP TED THESE FACTS. CONSIDERING THE TOTALITY OF THESE FACTS AND THE LOGICAL CONSEQUENCES OF THE ORDER OF THE SETTLEMENT COMMISSION AS WELL AS OF ADDITIONAL CIT UNDER SECTION 144A, WE HAVE NO HESITATION TO HOLD THAT THE ADDITION UNDER SECTION 68 CANNOT BE MAD E IN THE CASE OF THE CONDUIT COMPANIES. THEREFORE, WE DELETE THE ADDITION MADE UNDER SECTION 68 IN THE CASE OF ALL THE NINE COMPANIES, WHICH ARE ADMITTEDLY CONDUIT COMPANIES OF SHRI S.K. GUPTA. 18. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOW ED. 6. AFTER GOING THROUGH THE ORDERS PASSED BY THE REVENUE AUTHORITIES AS WELL AS THE ITAT ORDER REPRODUCED AS ABOVE, I FIND THAT THE ISSUE IN DISPUTE IS SIMILAR AND THEREFORE, RESPECTFULLY FOLLOWING THE SAME RATIO, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND ACCORDINGLY, I DELETE THE ADDITION IN DISPUTE MADE U/S. 68 OF THE I.T. ACT, 1961 IN THE CASE OF THE ASSESSEE COMPANY WHICH ARE ADMITTED CONDUIT COMPANY OF SH. SK GUPTA. 27 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 /7/201 5 . SD/ - [ H.S. SIDHU ] JUDICIAL MEMBER DATE: 20 /7/201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES