M/s. Viagra Trading Co. Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 3422/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3679 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMPURNANAND
• Keywords: Search and seizure; Accommodation entries
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SH.N.K.SAINI, ACCOUNTANT MEMBER AND SH.K.N.CHARY, JUDICIAL MEMBER ITA NO. 3422/DEL/2014 (ASSESSMENT YEAR: 2008 -09) APPELLANT BY SH. R.S.SINGHVI & SH. SATYAJIT GOYAL, CA RESPONDENT BY SH. SAMPURNANAND, SR.DR DATE OF HEARING 28 .0 9 .2017 DATE OF PRONOUNCEMENT . 1 1 .2017 ORDER PER K.N.CHARY, JUDICIAL MEMBER AGGRIEVED BY THE ORDER DATED 29.01.2014 IN APPEAL N O.380/10-11/352 PASSING BY THE COMMISSIONER OF INCOME TAX (APPEAL) [IN SHORT CIT(A)]-XXXIII, NEW DELHI FOR 2008-09 ASSESSMENT YEAR, THE ASSESSEE FILED THIS APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A COMPANY AND ONE OF THE GROUP CONCERNS OF SH. S.K.GUPTA GROUP. FOR 2008-09 AY, T HEY HAVE FILED RETURN OF INCOME ON 18.09.2008 DECLARING TOTAL INCOME OF RS.8 ,104/-. THERE WAS A SURVEY OPERATION ON 20.11.2007 IN SH. S.K. GUPTA GROUP OF CASES. DURING THE SURVEY AND ASSESSMENT PROCEEDINGS ONE SH. S.K.GUPTA ADMITTED T HAT HE HAD BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS THROUGH A LARGE NUMBER OF CONCERNS EFFECTIVELY CONTROLLED BY HIM. FROM PERUSAL OF THE LEDGER ACCOUNTS MAINTAINED IN VIAGRA TRADING CO. PVT. LTD., 308, ARUNACHAL BLDG., 19, BARAKHAMBA ROAD, NEW DELHI-110001. PAN-AABCV9360N VS DCIT, CENTRAL CIRCLE-III, NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 3422/DEL/2014 2 ONE OF THE LAPTOPS IMPOUNDED UNDER THE SURVEY, IT W AS NOTICED THAT A LARGE AMOUNT OF CASH WAS DEPOSITED AND CHEQUE ARE ISSUED ON VARI OUS PARTIES ON THE SAME DAY OR WITHIN A FEW DAYS. IN VIEW OF THE ADMISSION OF SH. S.K.GUPTA THAT HE HAS BEEN PROVIDING ACCOMMODATION ENTRIES THROUGH VARIOUS CO NDUCT COMPANIES, AND ON THE APPLICATION FILED BEFORE THE INCOME TAX SETTLEMENT COMMISSION (IN SHORT ITSC), THE ITSC DIRECTED COMPUTATION OF THE TOTAL UNDISCLO SED INCOME IN RELATION TO VARIOUS CONDUCT COMPANIES CONTROLLED BY SH. S.K.GUP TA, IN THE HANDS OF SH. S.K.GUPTA ONLY. AO INITIATED ACTION IN THE CASE OF ALL 34 COMPANIES INCLUDING THE ASSESSEE AND PASSED ORDERS IN ALL THE CASES MAKING ADDITIONS. IN CASE ON HAND, THE AO MADE AN ADDITION OF RS.1,44,23,220/- AS AGAI NST THE RETURNED INCOME OF RS.8,104/-. WHEN NINE OUT OF SUCH 34 CONDUIT COMPA NIES CARRIED THE MATTER IN APPEAL WHICH REACHED THE LEVEL OF INCOME TAX APPELL ATE TRIBUNAL, A BENCH OF THE TRIBUNAL BY WAY OF ORDER DATED 21.01.2015 IN A BATC H OF CASES IN ITA NO.3477/DEL/2013 PASSED AN ORDER HOLDING THAT SINC E CREDIT ENTRIES IN THE CASE OF CONDUIT COMPANIES HAVE BEEN CONSIDERED IN THE HANDS OF SH. S.K.GUPTA, NO SEPARATE ADDITION U/S 68 OF THE ACT REQUIRED TO BE MADE IN THE HANDS OF CONDUCT COMPANIES WHICH WERE MERELY USED FOR PROVIDING ACCO MMODATION ENTRIES. THE ASSESSEE PREFERRED APPEAL TO THE LD. CIT(A), AND TH E LD. CIT(A) BY WAY OF THE IMPUGNED ORDER DID NOT AGREE WITH THE ASSESSEE AND DISMISSED THE APPEAL STATING THAT THE ASSESSEE IS NOT ENTITLED TO ANY RELIEF BEC AUSE,- 1. DEPOSIT FROM INTER-COMPANY HAS ALREADY BEEN TAX ED U/S 68 OF I.T.ACT, 1961 IN PARA 5.2 OF THE ORDER. 2. AMOUNT RECEIVED FROM BENEFICIARY HAS ALREADY BEE N ADJUDICATED BY HIM IN PARA 4.3 OF THE ORDER TREATING THEM NON GENUINEN ESS THE TRANSACTIONS. 3. BOOKS OF ACCOUNTS OF THE APPELLANT DO NOT REFLEC T GENUINE TRANSACTION THEREFORE SOURCE OF CASH DEPOSIT REMAINED UNEXPLAIN ED, AND ITA NO. 3422/DEL/2014 3 4. THE CLAIM OF HDFC BANK WAS REMANDED TO THE ASSES SING OFFICER, WHERE HE HAS GIVEN THE FINDING THAT THE APPELLANT COULD N OT PROVE ITS STAND THAT HDFC BANK A/C DOES NOT BELONG TO IT. 3. HENCE, CHALLENGING THE FINDINGS OF THE LD. CIT( A), ASSESSEE PREFERRED THIS APPEAL. 4. IT IS THE SUBMISSION OF THE LD.AR THAT EVEN ACCO RDING TO THE ASSESSMENT ORDER, THE ASSESSEE IS ONE OF THE GROUP CONCERNS OF SH. S.K.GUPTA GROUP, SURVEY WAS CONDUCTED IN THE SH. S.K.GUPTA GROUP OF CASES O N 20.11.2007, DURING THAT TIME AND ALSO DURING THE ASSESSMENT PROCEEDINGS, S H. S.K.GUPTA ADMITTED THAT HE HAD BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS INCLUDING THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT PURSUANT T O THE APPLICATION OF SH. S.K.GUPTA BEFORE THE INCOME TAX SETTLEMENT COMMISSION (IN SHO RT ITSC), ITSC WAS PLEASED TO DIRECT COMPUTATION OF THIS INCOME IN THE CASE OF SH. S.K.GUPTA. IT IS FURTHER SUBMITTED THAT OUT OF 34 COMPANIES IN RESPECT OF WH ICH THE AO MADE ADDITION U/S 68 OF THE ACT, NINE COMPANIES WERE GRANTED RELIEF B Y A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ABOVE BATCH OF CASES AND PAGE NO.7 OF THE ORDER OF THE TRIBUNAL READS THE NAMES OF ALL THE 34 COMPANIES WHEREIN VID E ENTRY NO.31, THE ASSESSEE IS ALSO TO BE FOUND. ACCORDING TO THE LD. AR IN VIEW OF THE FINDING OF THE TRIBUNAL - TO THE EFFECT THAT SINCE CREDIT ENTRIES IN THE CASE OF CONDUIT COMPANIES HAS BEEN CONSIDERED IN THE HANDS OF SH.S.K.GUPTA BY THE ORDE R OF INCOME TAX SETTLEMENT COMMISSION, NO SEPARATE ADDITION U/S 68 IS REQUIRED TO ME MADE IN THE HANDS OF CONDUIT COMPANIES WHICH WERE MERELY USED FOR PROVID ING ACCOMMODATION ENTRIES - THE ASSESSEE IS ALSO ENTITLED TO THE RELIEF OF DELE TION OF THE ADDITION. HE SUBMITTED A COPY OF THE ORDER DATED 28.01.2015 IN ITA NO.3477/D EL/2013. 5. LD. DR HEAVILY RELIED UPON THE AUTHORITIES BELOW . ITA NO. 3422/DEL/2014 4 6. WE HAVE GONE THROUGH THE RECORD. IT IS AN ADMIT TED FACT THAT THE ASSESSEE IS ALSO ONE OF THE GROUP CONCERNS OF SH. S.K.GUPTA AND ON THE APPLICATION OF THE SH. S.K.GUPTA BEFORE THE ITSC, ITSC WAS PLEASED TO DIRE CT THE COMPUTATION OF THE ENTIRE UNDISCLOSED INCOME RELATING TO VARIOUS CONDU CT COMPANIES CONTROLLED BY SH. S.K.GUPTA SHALL BE IN THE HANDS OF SH. S.K.GUPTA. THIS FACT IS RECORDED BY A CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE ORDER DATED 28.01.2015. RELEVANT PORTION OF THE ORDER DATED 28.01.2015 OF THE CO-ORDINATE BENCH IN THE CASE OF NINE COMPANIES IN M/S OMNI FARMS PVT. LTD. IS AS FOLLOWS :- 11. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. THE FACTS IN T HE CASE OF ALL THE COMPANIES ARE SIMILAR. THEREFORE, THEY ARE BEING TAKEN UP TOGETH ER FOR ADJUDICATION. FOR THE SAKE OF BREVITY, WE SHALL DISCUSS THE FACTS IN THE CASE OF M/S OMNI FARMS PVT. LTD. INSTEAD OF ALL THE NINE COMPANIES. 12. IN THE CASE OF M/S OMNI FARMS PVT.LTD., THE ASS ESSING OFFICER, AT PARAGRAPH 2, HAS RECORDED THE FOLLOWING FINDING:- 2. A SURVEY OPERATION WAS CONDUCTED IN THE S K GUP TA GROUP OF CASES ON 20/11/2007 AT 308, ARUNACHAL BUILDING, 19, BARAKHAMBA ROAD, NEW DELHI 110001 AND 1007-1008, ARUNACHAL B UILDING, 19, BARAKHAMBA ROAD, NEW DELHI 110001. THE ASSESSEE COMPANY IS ONE OF THE GROUP CONCERNS OF S K GUPTA GROUP. DURI NG THE COURSE OF SURVEY PROCEEDINGS AND ASSESSMENT PROCEEDINGS, SH.S K GUPTA ADMITTED THAT HE HAD BEEN PROVIDING ACCOMMODATION E NTRIES TO VARIOUS PERSONS THROUGH A LARGE NO. OF CONCERNS EFF ECTIVELY CONTROLLED BY HIM. FURTHER, IT WAS SEEN THAT SH. S.K. GUPTA O PERATES A NUMBER OF ACCOUNTS IN THE SAME BANK/BRANCH OR IN DIFFERENT BRANCHES IN THE NAMES OF COMPANIES/FIRMS/PROPRIETARY CONCERNS AND I NDIVIDUALS. FOR THE OPERATION OF THESE BANK ACCOUNTS, PERSONS WHO A RE FILING INCOME TAX RETURNS ARE ROPED 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 A ND DO OTHER WORK LIKE COLLECTION OF CASH ETC. MOST OF THE OTHER PERS ONS INVOLVED ARE ON PART TIME BASIS. THE PART TIME EMPLOYEES ARE CALLE D AS AND WHEN REQUIRED TO SIGN DOCUMENTS, CHEQUE BOOKS ETC. SH. S.K. GUPTA HAS ALSO ROPED IN HIS OWN RELATIVES FOR OPERATION OF VA RIOUS BANK ACCOUNTS AND FOR FILING THE INCOME TAX RETURNS. IT WAS SEEN THAT SH. S.K. GUPTA WAS CONTROLLING MORE THAN 35 COMPANIES FROM A SMALL OFFICE PREMISES WITHOUT SUFFICIENT INFRASTRUCTURE OR EMPLOYEES TO C ARRY OUT MEANINGFUL BUSINESS ACTIVITY IN SO MANY COMPANIES. FURTHER, FROM THE PERUSAL OF LEDGER ACCOUNTS MAINTA INED IN ONE OF THE LAPTOPS IMPOUNDED DURING SURVEY, IT IS NOTICED THAT A LARGE AMOUNT OF ITA NO. 3422/DEL/2014 5 CASH IS DEPOSITED AND CHEQUES ARE ISSUED ON THE SAM E DAY/WITHIN FEW DAYS TO VARIOUS PARTIES FROM THE ACCOUNTS OF TH E COMPANY CONTROLLED BY HIM. AS PER ENQUIRIES CARRIED OUT BY THE INVESTIGATION WING THE ASSESSEE WAS FOUND TO HAVE BEEN USING THE BANK ACCOUNTS OPENED IN DIFFERENT BANKS TO ROUTE THE ENTRIES THRO UGH TWO TO FOUR ACCOUNTS TO VIE THE COLOR OF GENUINENESS TO THESE T RANSACTIONS. 13. THUS, THE ASSESSING OFFICER HIMSELF HAS RECORDE D 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 E NTRIES TO VARIOUS PERSONS THROUGH A LARGE NUMBER OF CONCERNS EFFECTIVELY CONT ROLLED BY HIM. THE SETTLEMENT COMMISSION ALSO HAS RECORDED THE SIMILAR FINDING TH AT SHRI S.K. GUPTA WAS PROVIDING ENTRIES TO VARIOUS BENEFICIARIES BY USING VARIOUS F IRMS/COMPANIES. ADMITTEDLY, THE COMPANIES UNDER APPEAL BEFORE US ARE THE PART OF CO MPANIES WHICH 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 RECEIV ED FROM THE MEDIATORS, THE CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF INTERMEDIATOR IES AND CHEQUES WERE ISSUED TO THE BENEFICIARIES OF ALMOST THE SAME AMOUNTS. THU S, AFTER EXAMINING THE FACTS, THE SETTLEMENT COMMISSION HAS RECORDED THE FINDING THAT THE CASH DEPOSITED 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 I S 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 EN TRY PROVIDER AND HE HAD ISSUED CHEQUES AFTER RECEIVING CASH FROM MEDIATORS AND DEP OSITED THE SAME IN THE BANK ACCOUNT CONTROLLED BY HIM. THEREAFTER, THE SETTLE MENT COMMISSION NOTED FURTHER, THE REPORT OF THE A.O. THAT THE BENEFICIARIES DISCL OSED RS.106.33 CRORES AGAINST THE CHEQUES RECEIVED BY THEM FROM THE APPLICANT, FURTHE R STRENGTHEN APPLICANTS CASE THAT HE WAS ONLY ENTRY PROVIDER AND CASH DEPOSITED IN TH E BANK ACCOUNTS FOR ISSUING CHEQUES ARE NOT HIS MONEY BUT MONEYS OF THE BENEFIC IARIES TO WHOM CHEQUES WERE ISSUED. THUS, THE SETTLEMENT COMMISSION HAS RECOR DED THE CLEAR CUT FINDING THAT SHRI S.K. GUPTA WAS ONLY ENTRY PROVIDER AND FOR THE PURP OSE 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 BE NEFICIARIES WHO WANTED TO AVAIL THE ACCOMMODATION ENTRIES AND AFTER DEPOSITING THE SAME IN THE BANK ACCOUNT OF VARIOUS COMPANIES, HE ISSUED THE CHEQUES TO THE BENEFICIARI ES. IN VIEW OF THIS FINDING, THE CASH DEPOSITED IN THE BANK ACCOUNT OF VARIOUS COMPA NIES WHICH WERE THE CONDUIT COMPANIES CANNOT BE SAID TO BE UNEXPLAINED CASH CRE DIT BECAUSE THE SOURCE OF CASH IS FROM THE BENEFICIARY WHO WANTED TO AVAIL THE ACCOMM ODATION ENTRY AND TO WHOM CHEQUES FOR ACCOMMODATION ENTRIES WERE ISSUED ALMOS T OF THE SIMILAR AMOUNT. THE ORDER OF THE SETTLEMENT COMMISSION HAS BECOME FINAL BECAUSE THE REVENUE HAS NOT CHALLENGED THE ORDER OF THE SETTLEMENT COMMISSION B EFORE THE HON'BLE JURISDICTIONAL HIGH COURT. 14. THAT HON'BLE JURISDICTIONAL HIGH COURT HAS CONS IDERED THE BINDING NATURE OF THE DECISION OF THE SETTLEMENT COMMISSION IN THE CASE O F OMAXE LTD. & ANR. (SUPRA) AND HELD AS UNDER:- ORDERS OF SETTLEMENT COMMISSION ARE FINAL AND CONC LUSIVE AS TO MATTERS STATED THEREIN. THE MATTERS NECESSARILY COULD COMPREHEND DISPUTED QUESTIONS, ITEMS OR HEADS OF INCOME, DISAL LOWANCE, ETC. OR ITA NO. 3422/DEL/2014 6 VARIANTS OF IT, BUT ALWAYS WITH REFERENCE TO A PART ICULAR 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 TO DAY IS THAT THE SUBSEQUENT EVENT OF SEARCH AND SEIZURE OPERATION CO NDUCTED IN THE PREMISES OF M AND THE CONTENTION OF THE REVENUE H AVE THROWN LIGHT ON MATERIAL THAT HAD BEEN SUPPRESSED FROM THE COMMI SSION. IF SUCH IS THE CASE, IT WOULD BE ONLY LOGICAL THAT THE COMM ISSION ITSELF SHOULD BE APPROACHED FOR A DECLARATION THAT ITS ORDER OF 1 7 TH MARCH, 2008 IS A NULLITY. ALLOWING 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 C ONCERNED AUTHORITIES IS AKIN TO FRAUD AND IF IT HAS A MATERIAL BEARING O N THE OUTCOME OF THE ASSESSMENT, IT WOULD MOST CERTAINLY BE MISREPRESENT ATION. 15. THUS, HON'BLE JURISDICTIONAL HIGH COURT HAS HEL D THAT THE ORDER OF THE SETTLEMENT COMMISSION IS FINAL AND CONCLUSIVE AS TO THE MATTER STATED THEREIN FOR THE ASSESSMENT YEAR DECIDED BY THE SETTLEMENT COMMISSIO N. ADMITTEDLY, THE ORDER OF THE SETTLEMENT COMMISSION IN THE CASE OF SHRI S.K. GUPT A IS FOR AY 2008-09 AND ALL THE APPEALS UNDER CONSIDERATION BEFORE US ARE FOR AY 20 08-09. THE CIT(A) DENIED TO FOLLOW THE ORDER OF THE SETTLEMENT COMMISSION REMAR KING 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 WERE NOT PLACED BEFORE THE SETTLEMENT COMMISSION. ON THE OTHER HAND, READING OF THE ORDER OF THE SETTLEMENT COMMISSION SHOWS THAT ALL THE RELEVANT MATERIAL INC LUDING THE SEIZED MATERIAL WERE DULY CONSIDERED BY THE SETTLEMENT COMMISSION. MORE OVER, HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT EVEN IF SOME MATERIAL HAS BEEN SUPPRESSED FROM THE SETTLEMENT COMMISSION, THE ONLY COURSE AVAILABLE TO THE REVENU E IS TO APPROACH THE SETTLEMENT COMMISSION FOR DECLARING ITS ORDER AS NULLITY. IN 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 COMMI SSION FOR DECLARING ITS ORDER AS NULLITY. THEREFORE, RESPECTFULLY FOLLOWING THE DEC ISION OF HON'BLE JURISDICTIONAL 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 DIRECTION UNDER SECTION 144A IN THIS REGARD. THE ASSESSING OFFICER HAD ASKED FOR T HE SPECIFIC DIRECTION OF THE ADDITIONAL CIT IN RESPECT OF THE GROUP COMPANIES WH ICH HAS BEEN MENTIONED BY THE ADDITIONAL CIT IN PARAGRAPH 2 OF HIS ORDER UNDER SE CTION 144A. AFTER CONSIDERING ALL THE FACTS, THE ADDITIONAL COMMISSIONER HELD IT WOU LD BE IN THE BEST INTEREST OF REVENUE TO TAX THESE TRANSACTIONS IN THE HANDS OF B ENEFICIARIES AND ALSO SH. S.K. GUPTA, INDIVIDUAL WITHOUT MAKING ANY ADDITIONS ON T HIS ACCOUNT IN THE HANDS OF CONDUIT ENTITIES. WE MAY POINT OUT THAT THE DIREC TION 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 20 08-09 ALSO BECAUSE THE FACTS REMAIN THE 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 DE PARTMENT AGAINST THE BENEFICIARIES. ITA NO. 3422/DEL/2014 7 THE ORDER OF THE ADDITIONAL CIT UNDER SECTION 144A IS BINDING ON THE ASSESSING OFFICER WHICH IS EVIDENT FROM SECTION 144A WHICH RE ADS AS UNDER:- 144A. A JOINT COMMISSIONER MAY, ON HIS OWN MOTION OR ON A REFERENCE BEING MADE TO HIM BY THE ASSESSING OFFICE R OR ON THE APPLICATION OF AN ASSESSEE, CALL FOR AND EXAMINE TH E RECORD OF ANY PROCEEDING IN WHICH AN ASSESSMENT IS PENDING AND, I F HE CONSIDERS THAT, HAVING REGARD TO THE NATURE OF THE CASE OR TH E AMOUNT INVOLVED OR FOR ANY OTHER REASON, IT IS NECESSARY OR EXPEDIE NT SO TO DO, HE MAY ISSUE SUCH DIRECTIONS AS HE THINKS FIT FOR THE GUID ANCE OF THE ASSESSING OFFICER TO ENABLE HIM TO COMPLETE THE ASS ESSMENT AND SUCH DIRECTIONS SHALL BE BINDING ON THE ASSESSING OFFICE R : PROVIDED THAT NO DIRECTIONS WHICH ARE PREJUDICIAL T O THE ASSESSEE SHALL BE ISSUED BEFORE AN OPPORTUNITY IS GIVEN TO THE ASS ESSEE 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 P REJUDICIAL TO THE ASSESSEE. (EMPHASIS BY UNDERLINING SUPPLIED BY US) 17. THUS, THERE IS AN ORDER OF THE SETTLEMENT COMMI SSION AS WELL AS THE ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SECTION 144A HOLDI NG THAT SHRI S.K. GUPTA WAS PROVIDING ACCOMMODATION ENTRIES, HE USED VARIOUS CO MPANIES AS CONDUIT FOR PROVIDING THE ACCOMMODATION ENTRIES, CASH WAS RECEIVED THROUG H MEDIATORS FROM THE PERSONS WHO WANTED TO AVAIL THE ACCOMMODATION ENTRIES, SUCH CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE CONDUIT COMPANIES AND THEREAFTE R, CHEQUE OF THE SIMILAR AMOUNT WAS BEING ISSUED TO THE BENEFICIARIES (I.E. THE PER SON WHO WANTED TO AVAIL THE ACCOMMODATION ENTRY) WITHIN A DAY OR SO. THE ASSES SING OFFICER HIMSELF IN THE ASSESSMENT ORDER HAS ACCEPTED THESE FACTS. CONSIDE RING THE TOTALITY OF THESE FACTS AND THE LOGICAL CONSEQUENCES OF THE ORDER OF THE SE TTLEMENT COMMISSION AS WELL AS OF ADDITIONAL CIT UNDER SECTION 144A, WE HAVE NO HESIT ATION TO HOLD THAT THE ADDITION UNDER SECTION 68 CANNOT BE MADE IN THE CASE OF THE CONDUIT COMPANIES. THEREFORE, WE DELETE THE ADDITION MADE UNDER SECTION 68 IN THE CA SE OF ALL THE NINE COMPANIES, WHICH ARE ADMITTEDLY CONDUIT COMPANIES OF SHRI S.K. GUPTA. 7. IT IS, THEREFORE, CLEAR THAT THE ASSESSEE IS ONE OF THE 34 CONDUIT COMPANIES, 09 OUT OF WHOM APPROACHED THE TRIBUNAL IN ITA NO.34 77/DEL/2013 AND BATCH OF CASES WHEREIN THE TRIBUNAL NOTICED THAT PURSUANT TO THE COMPUTATION OF UNDISCLOSED INCOME BY THE ITSC IN RELATION TO VARIO US CONDUIT COMPANIES CONTROLLED BY SH.S.K.GUPTA, IN THE HANDS OF SH. S.K .GUPTA HIMSELF AND HELD THAT SINCE CREDIT ENTRIES IN THE CASE OF CONDUIT COMPANI ES HAS BEEN CONSIDERED IN THE HANDS OF SH.S.K.GUPTA BY THE ORDER OF INCOME TAX SE TTLEMENT COMMISSION, NO ITA NO. 3422/DEL/2014 8 SEPARATE ADDITION U/S 68 IS REQUIRED TO ME MADE IN THE HANDS OF CONDUIT COMPANIES WHICH WERE MERELY USED FOR PROVIDING ACC OMMODATION ENTRIES. SINCE THE CONTENTS OF THE ASSESSMENT ORDER, APPELLATE ORD ER AND GROUNDS RAISED BEFORE AND CONSIDERED BY THE TRIBUNAL IN THE CASE OF M/S BERIWAL INVESTMENT CHIT FUND PVT. LTD. IN ITA NO.3481/DEL/2013 ARE SIMILAR TO THE CASE OF THE ASSESSEE, WHILE RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH OF THIS TRIBUNAL, WE HOLD THAT THE ADDITION U/S 68 OF THE ACT CANNOT BE MADE IN THE CASE OF CONDUIT COMPANIES INCLUDING THE ASSESSEE AS SUCH WHILE ALLO WING THIS APPEAL, WE DIRECT THE AO TO DELETE THE ADDITION MADE U/S 68 OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 TH NOVEMBER, 2017. SD/- SD/- (N.K.SAINI) (K.N.CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* DATE:- 09.11.2017 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI