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Judgment
The present appeals and Cross Objections have been filed by the Revenue and the assessee against the orders of ld. CIT(A)-29, New Delhi dated 25.11.2021. Since, the issue involved in all these appeals and Cos are similar, they were heard together and being adjudicated by a common order.
The Revenue has raised the following grounds of appeal in ITA No. 208/Del/2022:
“ 1. That on the facts and in the circumstances of the case, the Ld . CIT (A) has erred in deleting the addition of Rs 2,85,37,640/-made on account of undisclosed sources u/s 68 for unexplained entries in bank account ignoring the fact that assessee has failed to produce any concrete and any additional evidences in support of its contention .
That on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 71,344/ - made on account of unaccounted commission, ignoring the fact that the assessee has failed to disclose the commission earned from providing accommodation entry.
That the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law.”
The assessee has raised the following grounds of appeal in CO No. 181/Del/2022:
“1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.
On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the learned Assessing Officer (AO) under Section 143(3) read with section 153C is without jurisdiction.
On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C and the assessment framed under Section 153C is bad and liable to be quashed in the absence of any satisfaction being recorded by the AO of the searched person that the incriminating material belonging to the assessee was found during the course of the search .
(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the explanations and evidences brought on record by the assessee to prove the identity and creditworthiness of the lenders and genuineness of the transactions.
(ii) That the abovesaid addition has been confirmed ignoring the fact that the addition has been made by the AO without pointing out any defect in the evidences filed by the assessee.
On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in holding that the assessee is involved in providing and taking accommodation entries in the form of share application money or unsecured loans.”
The assessee is a Private Limited company and is engaged in the business of trading. The assessee filed return of income on 28.09.2012 declaring a total income of Rs.1,06,230/-. Thereafter, a search and seizure operation was carried out on the business & residential premises of Anand Jain and Naresh Jain group of cases on 17.12.2015. The case of the assessee company is covered under 153C of the Act, 1961 and satisfaction note were recorded by the AO of searched person on 20.03.2018 and by the AO of the assessee company on 22.03.2018.
The AO has made protective addition of entire credit entries in bank account of Rs.2,85,37,640/- treating as unexplained entries in the hands of the assessee company and also made substantive addition of Rs. 71,344/- on account of unaccounted commission income.The Assessing Officer vide show cause notice dated 10.12.2018, on basis of material seized/ impounded during search alleged that assessee company is only paper/shell company and providing accommodation entries in lieu of cash and required to explain deposits of Rs. 2,85,37,640/- in bank accounts of assessee company.
At the end ,the AO made the protective addition of entire credit entries in bank account of Rs.2,85,37,640/- treating as unexplained entries in the hands of the assessee company and also made substantive addition of Rs. 71,344/- on account of unaccounted commission.
Aggrieved, the assessee filed appeal before the ld. CIT(A) who deleted the commission charged by the AO.
Aggrieved, the Revenue filed appeal before the Tribunal.
Before us, the ld. DR argued that the action of the ld. CIT(A) deleting the commission wrong on the facts as the assessee company has proved to have given accommodation entries to various people and entities.
On the other hand, the ld. AR argued that it is a fact that accommodation entries have been given by Sh. Anand Jain and Sh. Naresh Jain brothers who have floated various concern including the assessee company through which the entries have been routed through. The commission earned by these two brothers already stands adjudicated determining the total commission earned on the entries given through various entities. Hence, no separate commission can be taxed in the hands of the assessee as the commission already stands taxed in the hands of the entry operators in individual capacity.
Heard the arguments of both the parties and perused the material available on record.
We have examined the ratio of the ld. CIT(A). The ld. CIT(A) held that the AO in the assessment order has claimed to have identified the names of beneficiaries and already disseminated the information to the assessing officers of the beneficiaries and hence the credits received by the appellant cannot be treated as unexplained credit in its hands since, the said transactions are mere arrangement of funds/routing of unaccounted income of the beneficiaries to whom the said funds were transferred through the bank of the appellant company in lieu of commission. The ld. CIT(A) has also made note of the beneficiaries of the entries given by the assessee company. For the sake of ready reference, a few entries and the beneficiaries are reproduced below:
Date of Receipt
Receipt / Credits from
Amoun t
Payment Made To
Date of
payment
Amount
05.04.2011
Macro IT System Pvt Ltd
1,500,000
Bhagwan Mandir Education Trust
05.04.2011
1,500,000
07.04.2011
Karara Mujassme ( India )
18,000
Shakuntla
15.04.2011
18,000
13.04.2011
Sai Info web pvt ltd
500,000
Shakuntla
15.04.2011
38 5,100
13.04.2011
Sai Info web pvt ltd
Dipesh
15.04.2011
101,400
13.04.2011
Sai Info web pvt ltd
Anil Kumar Singla
29.04.2011
13,5 00
15.04.2011
Sai Info web pvt ltd
300,000
Dipesh
15.04.2011
300,000
15.04.2011
H. J Books Agency
34 1,206
Zen Trad ex Pvt Ltd
15.04.2011
100,000
15.04.2011
H. J Books Agency
Reena
25.04.2011
23 6,500
15.04.2011
H. J Books Agency
Anil Kumar Singla
29.04.2011
4,706
28.04.2011
H. J Books Agency
1,44 6,701
Anil Kumar Singla
29.04.2011
1,44 6,701
17.06.2011
Santosh Welfare Trust
23,7 67
Anil Kumar Singla
29.04.2011
23,7 67
02.07.2011
Jagriti Overseas Pvt Ltd
12 7,726
Anil Kumar Singla
29.04.2011
24,8 26
02.07.2011
Jagriti Overseas Pvt Ltd
Haryana
Institute of Technology
10.08.2011
102,900
10.08.2011
S R Buildcon Pvt Ltd
3,000,000
Yuga Estate Pvt. Ltd .
10.08.2011
2,500,000
10.08.2011
S R Buildcon Pvt Ltd
Haryana Institute of Technology
10.08.2011
500,000
10.08.2011
Macro IT System Pvt Ltd
300,000
Haryana Institute of Technology
10.08.2011
300,000
11.08.2011
Sai Info web pvt ltd
500,000
Haryana Institute of Technology
10.08.2011
97,1 00
Sai Info web pvt ltd
J.P. Art
11.08.2011
402,900
11.08.2011
H. J Books Agency
1,75 4,162
J.P. Art
11.08.2011
1,754,162
11.08.2011
Ganesha Investment
2,35 0,000
J.P. Art
11.08.2011
23,42,938
11.08.2011
Ganesha Investment
Prodip Overseas
05.09.2011
7,06 2
25.08.2011
New India Publishing Agency
207,942
Prodip Overseas
05.09.2011
207,942
From the above, the ld. CIT(A) held that the assessee company has received funds from various concerns as mentioned above and thereafter amounts were transferred to the above mentioned companies/concerns immediately, thus the appellant company is not beneficiary company. The ld. CIT(A) also obtained the remand report from the AO and held that the AO has verified the fund flow statement depicting the source of funds and utilization of the same for payments to beneficiaries submitted by the assessee. The ld. CIT(A) held that it was found which established that the Sh. Anand Jain and Sh. Naresh Kumar Jain were operating bank accounts in the names of various concerns/companies through which accommodation entries were being provided and the appellant company was one of such shell concerns. Further the beneficiaries of such accommodation entries were also identified and information to their respective AOs was also disseminated as mentioned in the assessment order as well as the remand report.
Having observed so, the ld. CIT(A) held that as far as charging of commission is concerned in the case of the assessee, it has been held by the AO in the assessment order that Sh. Anand Jain and Sh. Naresh Jain were entry operators who were managing and controlling various shell concerns including the appellant for providing accommodation entries in lieu of commission and taking that logic there is no question of charging of commission income in the hands of the appellant company arises, since nothing has been earned by the company, being the shell concern.
Since, the commission already stands taxed in the hands of the entry operators in their individual capacity, no separate commission can be charged in the hands of the pass through/ companies floated by the entry operators. As the assessee is found to be one of such pass-through entity, we decline to interfere with the order of the ld. CIT(A) in deleting the commission charged.
Cross Objections are not pressed.
In the result, the appeals of the Revenue as well as the Cross Objections of the assessee are dismissed.