Income Tax Appellate Tribunal - Delhi
Lokenath Investment Consultants ... vs Acit, Central Circle-8, New Delhi on 31 July, 2023
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'E', NEW DELHI
Before Dr. B. R. R. Kumar, Accountant Member
Sh. Yogesh Kumar US, Judicial Member
ITA No. 1097/Del/2019 : Asstt. Year: 2009-10
Lokenath Investment Consultants Vs. ACIT,
Pvt. Ltd., 2nd Floor, 19-Loca Central Circle-8,
Complex, Near pushpa Bhawan, New Delhi-110055
Madangir, New Delhi-110062
(APPELLANT) (RESPONDENT)
PAN No. AABCL5792L
Assessee by : None
Revenue by : Ms. Sarita Kumari, CIT DR
Date of Hearing: 06.06.2023 Date of Pronouncement: 31.07.2023
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the as sessee against the order of ld. CIT(A)-24, New Delhi dated 31.12.2018.
2. The assessee filed appeal on 12.02.2019 declaring total income of R s. NIL. Hearings have been conducte d on 20.06.2022, 21.09.2022, 26.12.2022, 21.03.2023 and 06.06.2023. Nobody a ttended during the hearings. Hence , it is propo sed to pass the order based on the material available on record.
3. We have gone through the Assessment Order consisting of 56 pages and the order of the ld. CIT(A) consisting of 26 pages. The relevant part of the order of the ld. CIT (A) giving the 2 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
details of the entire facts and rationale of the addition is as under:
"3.1 In the instant case, the return of income was originally file d on 28.03.2010 declaring NIL income . A search and seizure o peratio n was car ried out in the case of Priy a Gold Gro up & its promoters on 16.12.2014. During the procee dings of search and seizure ac tio n at the hea d office of the group, substantial documents were found and seized. The inform atio n contained in these doc uments related to the appe llant company also . Although notice u/s 148 was issued to the appe llant company on 22.03.2016 assessment pro ceedings we re abated as pe r proviso to sectio n 153C r.w.s. 153A of the Act.
3.2 After recording sat isfaction, no tice u/s 153A r.w .s. 153C was issued to the a ppellant on 01.09.2016. Vide letter dated 25.10.2016 the appellant re quested to treat the original return of income filed for AY 2009-10 u/s 139 o f the Act on 28.03.2010 as return of income filed in compliance to notice u/s 153C of the Act.
3.3 The AO noted that the appe llant company has received share applic ation money including share premium of Rs. 490 per share for an amount of Rs . 80,00,000/-from the fo llo wing companies:
S. No. of shares No. of shares Amount of share applicatio n money No. allotted including share premium money for an amount of Rs. 49 0 per share
1. Bonanza Financial 4000 20,00,000 Consultants Pvt. Ltd.
Mang alam Financial 4000 20,00,000
Consultants Pvt. Ltd.
Subhdhan Financial 4000 20,00,000
Advisory Pvt. Ltd.
Swastick Investment 4000 20,00,000
Management Pvt.
Ltd.
Sub Total 16000 80,00,000
3 ITA No. 1097/Del/2019
Lokenath Investment Consultants Pvt. Ltd.
3.4 In pa ra 6:1 of the assessment order the AO has noted that during sear ch and post- search inquiries conducted by the Department, the appellant company was fo und to be a pa per company utilize d by Priya Gold Group for rotating its own unacco unted fund as share capital. The A O has rec orded detailed findings o f search and post-search inquiries in Priya Gold Gro up i n par as 6.1.1 to 6.1.26. It has been explained that Priya Gold Group has taken accom modatio n entries in the form of share capital and share premium by following modus o perandi:
By first acquir ing control of so me non-existent Kolkata based companies ( which have he avy premium in the ir books without actua l funds and ha ve no creditwo rthiness for making investments) by swapping the ir directors and sha reholders with relatives and persons of their own gro up and then issuing shares of their gr oup companies to these paper companies.
3.5 During the pre-search verificatio ns, it was reveale d that following two companies o f the group had sho wn to have received share capital a nd premium from non-descript companies based in Kolkata as unde r:
S.No. Name of Priya Name of the Date of No. of Face Capital & Amount Gold Group allottee Allotment Shares premium of Company Company value/Pr shown to share have been received
1. M/s Surya Subhshree 30.03.2013 42,22,973 10/27 15,62,50,001 Processed Investment Food Private Management Limited Private Limited Surya 30.03.2013 41,56,757 10/27 15,38,00,009 Vincome Private Limited [Nee lkant 4 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
Vincom Pvt.
Ltd.]
Tota l 83,79,730 31,00,50,001
2. M/s Surya Garima 16.12.2013 3,10,000 10 31,00,000
Agrotech Commerce
28.03.2014 50,000 10 5,00,000
Infrastructure Private
Limited Limited
Sub total 3,60,000 36,00,000
Surya 16.12.2013 1,52,00,000 10 15,20,00,000
Vanijya Pvt.
Ltd.
[Labhdhan
Mercantile
Pvt. Ltd.]
Sub total 1,52,30,000 15,23,00,000
Lokenath 16.12.2013 3,00,000 10 30,00,000
Investment
28.03.2014 25,000 10 2,50,000
Consultants
Pvt. Ltd.
Sub total 3,25,000 32,50,000
Total 1,59,15,000 15,91,50,000
3.6 It was re veale d that there wa s no business activity in the ca ses of firs t layer of alleged investor companies and the profit show n by them was ins ignificant in FY 2007-08 to 2012- 13. Verific ation further revealed that the above referred alleged investor companies have in turn show n to ha ve received share capita l with exo rbitant premium from large number of appare ntly entr y providing Kolkata based companies on 31.03.2009 in the ir books. It w as no ticed that there was no bus iness activity or profit in such companies also. Also , there is hardly any pro fit in any of the above said com panies. During verification the addresses of some of the inves tor companies were also ve rifie d thro ugh discreet on the spot enquiries which reveale d that none o f such companies exists at the given addresses. It w as observed the Pr iya Gold Group have acquired these co mpanies ba sed in Kolkata in a suspicious manne r by firs t introducing its ow n 5 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
relatives as shareholders in these Kolkata based so-called investor companies replacing old share holders in FY 2012- 13 and there after, the direc tors hip o f such investor c ompanies also changed hands in the names of companies/re latives of Priya Go ld Group during the FY 2013-14.
3.7 During the proceedings of search and seizure action at the hea d Office o f the group at D- 1 Sector-2, Noida, incriminating documents in the fo rm of unsigne d/signed Share certificate s of shares of M/s Sury a Processed Food Pr iva te Limited and M/s Surya Agro tech Infrastruc ture Pri vate Limite d issued to so calle d Kolkata base d inves tor companie s, M/s Subhshree Investment Management Private Limited, M/s Sur ya Vincom Private Limited, M/s Surya Vanij ya Private Limited, M/s Garima Commerce Private L imite d and M/s Lokenath Investment Consultants Private Lim ited were found and se ize d as Annexures A-1, A-2, A-3, A-4, A-13 which established the allegatio ns that unac counted funds of the group have been routed through entry providing companies of Kolkata into the main companies of the group. In co urse o f sea rch ac tion the statement recorded u/s 132(4) of the Ac t o f Shri Shekhar A gar wal establishe d be yond do ubt that Priya Gold group had unaccounted funds which we re i ntro duce d into main compa nies of the gro up by routing o f these funds through laye rs o f bogus(j ama kha rchi) accommodation providing companies. This submiss ion was reco nfirmed by Mr. Shek har Agarwal in his statement recor de d during post-search proceedings on 29.01.15.
3.8 The AO observed that summons were issued to the following so- calle d investo r co mpanies (first lay er companies) at their registe red addresses in Kolkata a nd de tails regarding investments made in Priya Gold companies w ere asked for:
M/s Subbishree I nvestment Manage ment Pvt. Ltd. Sury a Vincom Pr ivate L imite d (Earlie r know n as Neelkanth Vincom Pvt. Ltd) 6 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
Sury a Vanijy a Priva te Limite d (Ea rlie r kno wn as Labhdhan mercantile Pvt. Ltd) Garima Commerce Private Limite d Lokenath Investments Consultants Private L imite d However, no reply was rece ive d from them. Since the above mentioned compa nies had bee n acquired by the Priya Gold Group, the current directors of these companies- Smt. Beena Agarwal, Smt. Chhavi Agarwal, Smt. Nidhi Agar wal were summoned to furnish details about ba nk accounts o f these companies as well as details o f share c apita l pre mium receive d by these companies since their inceptio n, from which they had fur ther shown so-c alled inves tment i n Priya Go ld Group, supporte d by documentary evide nce in the form of share applica tion forms and counterfoils o f share certificates iss ued. The di recto rs furnished the bank accounts of the abo ve mentio ned companies and summary details o f share capital/premium received by these companie s but did not furnish any documentary evidence to prove the genuineness of the transactions. Enquiries were also conducted from the banks in this co nnection which re vealed that the trac tions in these accounts reflected immedi ate introduction and withdrawal of funds, w hich is the character istic fe ature of bank transac tio ns of entr y pro viding co mpanies. The abo ve fac ts alo ng with pre sea rch verifications clearly establish that the companies from which Pri ya Gold Group has shown to have rece ived inves tments i.e. the first la yer companies are no thing but typical e ntry providing companies with no creditwo rthiness to invest suc h huge amounts . The investigations were taken one step further and enquir ies were done in the c ase of seco nd layer companies which had s hown inves tments of share ca pital and huge premium in first layer companies . Enquiries reve ale d that first and second layer compa nies were entry prov iding companies which have been for med to route unacco unted mone y and we re used by the Priya Gold Group fo r the same purpose .7 ITA No. 1097/Del/2019
Lokenath Investment Consultants Pvt. Ltd.
3.9 It is obse rved from the assessment orde r that commission was issued to the Investigation Wing, Kolkata to examine Shri S udhir Satnaliwala who w as the contact per son for ar ranging entr ies for the Priya Gold Group in Kolkata. Ho wever, Shri Sudhir Satnaliwala ne ver complied with any summon and e va ded the pos t search pro ceedings .
Another commission was issued by Investiga tio n Wing, Ko lkata for conducting enquiries abo ut the dummy directo rs in fir st and second laye r companies thro ugh which accommodation e ntries had been give n to Priy a Go ld Group Companies and also the entry o perators of these companies. The Investigation Wing, Kolk ata was able to examine entr y operato r named Shri Debashish Dutta, who admitte d the fact that two of the first layer Kolkata base d investor companies namely M/s Garima Commerce Private Limite d and M/s Surya Vanitya Private Limited w ere manage d and contro lled by him and these companies were used to provide accommodation e ntr y to Priya Gold Group of Companies. He also admitted to ha ve managed six of the second layer companies namely M/s Shivam Financial Management Pvt. Ltd., M/s Subhdhan Fina ncial Adviso ry Pvt. Ltd., M/s Swastick Investment Mana gement Pvt. Ltd., M/s Vinavak Inves tment Adviso ry Pvt. Ltd., Ms Mangalam Financi al Consultants Pvt. Ltd. and M/s Subhdhan Vincom Pv t. Ltd. who have provide d entries to some of the first laye r companies i.e. M/s Lokenath I nvestments Consultants Private Limited, M/s Subhshree Investment Management Private Limited and Ms Sury a Vincom Private Limited. The statement o f two of the dummy directors namely Shri Bijay Kumar Aggarw al and Shri Prakash Joshi of the above mentioned companies was also recorde d and they admi tted the fact that they became direc tor s on directions of entry ope rator Shri Debashish Dutta and for e arning commission. They further acce pted that the above mentio ned companies were being run by Shin Debashish Dutta, and that these companies are not doing any regula r business and are just providing accommodatio n entr ies in different fo rms to othe r companies . Thro ugh pe rsistent effo rts the Kolk ata wing w as further able to locate another entry 8 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
operator named S hri Pa nkaj Agarw al and one o f the dummy directors of second laye r entry providing com panies contro lle d by him. He also confirmed the sam e facts.
3.10 On the basis of the abo ve mentione d exhaustive enquiries , incriminating documents seized a nd in view of the fac t that most of the Kolka ta base d so calle d investor companies have shown their addresses at places which are known fo r be ing used by accommodation entry pro viders and the same has been pro ved time and a ga in dur ing many sea rches conduc ted earlie r by the Investiga tio n W ing, and in view of the a dmission o f the assessee of the fac t that unaccounte d funds amounting to Rs. 46.91 crores o f the group were ro uted back into main group companies in the form of share c apita l/pre mium from various Kolkata based companies and fur ther the ac quisitio n of these companies w as also done with the purpose o f contro lling them, it is proved be yond any iota o f do ubt that this investm ent of over Rs 46.91 cro res in the form of share capital/premium in vario us companies of Priya Gold Group is nothing but an accommodatio n entr y which has been obtained by routing its own unac counted money in its books .
3.11 The AO observed that in vie w of abo ve findings, it was evident that the appe llant company is a paper company and has been used by Priya Gold G ro up for routing their own funds, in the form of s hare applic ation money in AY 2014- 15. In para 7.1 o f the assessment order , the AO has noted further enquiries were conduc ted and notices u/s 133( 6) were issued to the banks to pro vide the bank account st atements of Lokena th Investments Co ns ultants Priva te Limited. On perusal of the bank sta tements of the above said entity, it was noticed that in its bank account credit entries have been receive d from vario us Kolk ata based Companies which were immediate ly follo wed by debit entries in favour of M/s. Surya Agrotec h Infrastructure Pvt. L td. to verify the ge nuineness of the 9 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
source of funds and creditwo rthiness of these second layer companies , no tice s u/s 133( 6) were again iss ued to the banks to provide the deta ils of the trans fere e parties. O n pe rusal o f the reply receive d from the banks, it w as noticed that M/s. Loknath Investment Consultants Pvt. Ltd. wa s gett ing funds transfe rre d from the entity name d Aluva kolkata/shakespere sarani'. There after, notices u/s 133(6) were again issued to the banks to provide the bank statement of "Aluva". On pe rusal of the state ment of 'Aluva Kolkata/sha kesper e sara ni' it was notice d that immediately before the trans fer o f funds to M/s. Loknath Investment Consultants Pvt. Ltd, this party has received cash and depos its from Esquire Enc lave Pvt. Ltd. It is importa nt to note here that all these 2nd and 3rd layer companies a re k no wn e ntr y-ope rating companies of Ko lkata.
3.12 It is evident from the bank statements o f the 2 layer and 3r d laye r companies/ entities that they were not engaged in any regular business activity. Their bank sta te ments re flect huge credit which are immediately tra nsfe rre d to some or the other parties. This indicates that these parties do not have any profit- generating apparatus and co nsequent cre ditw orthiness to explain such huge inves tments .
3.13 Enquiries we re also made by the Investigation Wing Ko lkata in respect o f 2nd & 3d layer investo r co mpanies w hic h were found to be controlle d by Ko lkata based accommodatio n entry provide rs. In this connection, sta te ment of Sh. Dinesh Kumar Pandey was also recorde d, wherein he accepted that the companies in which he or his wife is director a re paper companies and these companies were used for the sole of purpose of accommodatio n e ntry o nly.
3.14 I n the light of the findings o f the enquiries stated above, the AO treated the appellant company as pa per company used by Priya Gold Group to introduce the ir own unaccounted funds."
10 ITA No. 1097/Del/2019Lokenath Investment Consultants Pvt. Ltd.
4. Further, the ld. C IT(A) held that, "The appellant has contested a ddition of Rs. 80,00,000/- o n acco unt of share applica tion money u/s 68 of the Act w ithout apprec iating the fac t the applic ant compa ny has no asse ts except paper entries showing investme nt in other shell companies. The appellant has contended that if these were actual assets in these s hell companies then these wo uld have been taken over by the Priya Gold Group Companies, w hich would be the recipient of these assets. On due conside ra tion, I find that the AO conducted enquiries to identify whether the companies from whom the appellant had receive d share applic ation money during the year under conside ration were genuine or not. The AO rightly issued notices u/s 133(6) o f the Act to all the share applic ants at the addresses registe red on the Ministry of Corpo rate Affa irs . Even the A O issued summons to all these parties . As stated in the assessment order all the notices re tur ned un-se rve d. Thereafter, the AO per used the bank statement of the appe lla nt company and noticed that there are numerous de bit & credit entries of the same amount o n the same day.
5.3 Subse quently the AO vide or de r shee t entry dated 19.12.2016 asked the appellant to provide details of debit e ntries of bank account and pro ve the genuineness of these tr ansactions . The appe llant in his reply vide letter dated 23.12.2016 did no t pro vide details of debit entries o f bank account and also made no e ffo rt to prove the genuine ness of the tra nsactions. Neither before the AO no r before the undersigned the a ppellant submitted documenta ry evide nces to pro ve the identity and creditworthiness of the so called share a pplic ants a nd genuine ness of the tra nsac tio ns. The appellant just contended that the appellant co mpany is a she ll company. It has no assets e xcept pape r entries showing investment in othe r shell companies . In fact if there we re actual assets in these shell companies then these would ha ve be en take n over by the Priya Gold 11 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
Group a nd in that case the Group would be the rec ipient of these assets . The appellant furthe r submitted that the total amount of Rs . 80,00,000 receive d by the appellant is only by way o f book entries. It further cla imed tha t the investments shown in the Balance Sheet are in other shell companies w hich are mere paper entries and do not have intrins ic value. It was a lso cla imed tha t the appellant acte d as intermediary and was mere ly a co nduit for intro ducing share c apital for Priya Gold Gro up o f companies.
5.4 The conte ntio n of the appellant was not accepted by the AO. I n my considered view the AO has rightly no t accepted the re ply o f the appe llant. The appellant s imply stated that the to tal amount o f Rs . 80,00,000/- received on account of share application money is only by way of book entries but did not prov ide the name of the beneficiary. The appellant company did no t pro vide the details of the debit entries o f its bank account. T he appellant company k nows its affairs and its transactions. The appellant company knows the sources of the am ounts cre dited in its bank account. The appellant company also kno ws the be neficiaries in respect of debit entries in its bank acco unt. In such situation, to make things more clear and transparent, the appellant was required to provide the requis itio ned details to the AO to lend credence to its co ntentio n.
5.5 The AO has ri ghtly no ted that Priya Gold G roup is beneficiary of funds from AY 2013- 14 onwards and definitely was not beneficiary during the pe rio d rele vant to AY 2009-10. The appe llant company should have pro vide d details of beneficiary during the pe rio d relev ant to AY 2009-10 in suppo rt of its conte ntion. The appe llant company canno t shirk from its legal obligation to pro ve the identity and cre dit worthiness of the so called stare applicants and genuineness of transactions by adjudging itse lf as she ll comрапу.
5.6 The contention of the AR of the appel lant in his w ritten submiss ion date d 22.11.2018 tha t the investments shown in the 12 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
Balance Sheet ar e in other shell companies which are mere paper entr ies a nd ha ve no intrinsic value is contrary to his own assertion made in the same submission that the appellant company had made inves tments in v arious companies in AY 2009- 10 which were sold in AY 2011- 12 and further re investe d the same amount in M's Sury a Agrotec h Infrastructure L td and in three o ther shell companies namely M's Surya Vincom Pvt. L td. M/s Subhshr ee Investment Management Pvt. Ltd. and M/s Surya Vanijya Pvt. L td. for mak ing fur ther inves tment in M's S urya Agrotech Infrastruc ture L td and M/s Sury a Processed Food Pvt. Ltd., which are part o f the Priyagold Group. If the inv estments made in other shell companies are mere pape r entries the n it is bewilderi ng to note how suc h pape r entries were so ld i n AY 2011- 12 for further reinvestment.
5.7 A t this s tage it is rele vant to e xamine the provis ions o f sectio n 68 of the Ac t which is reproduce d hereunder fo r easy reference:
"Cas h c redits .
68. Where any sum is found credited in the books of an assessee maintained fo r any previous year, and the assessee offers no explanation about the nature and source thereof or the explana tio n offe red by him is not, in the o pinio n of the Ass essing Officer, satisfactor y, the sum so credited may be char ged to income-tax as the income o f the assessee of that previous year:
Pro vide d that whe re the assessee is a company (not be ing a company in whic h the public a re substantia lly inte reste d), and the sum so credited consis ts of share application money, share capital, share premium or any such amount by whate ver name called, any explanation o ffe re d by such assesse e-company shall be deemed to be not s atisfacto ry, unless-13 ITA No. 1097/Del/2019
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(a) the person, be ing a resident in whose name such c r edit is recorde d in the books of such company also o ffe rs an explanation a bout the nature and source o f such sum so credited; a nd
(b) such e xplanation in the opinion of the Assessing Officer afores aid has been found to be satisfactory:
Pro vide d furthe r that nothing contained in the first proviso shall apply if the person in who se name the sum referred to therein is recorde d is a venture ca pital fund or a venture capital company a s referred to in clause (23FB) of section
10."
5.8 Thus , as pe r section 68 o f the Act, the primar y onus is on the appe llant to pro ve to the satisfactio n of the AO that s um credite d in its books of acco unts is genuine . The appellant has to prove to the satisfaction of the AO, the identity and c reditwort hiness o f the creditor and genuineness of the tra nsaction. The appellant company by self pro claiming itself as a shell company cannot s hirk and avoid its legal o bligation to pro ve the ide ntity and creditwo rthiness of the so called share applicants and genuine ness of tr ansactions as mandated by various Courts o f law in respect o f application o f the provisio ns o f section 68 of the Act.
5.9 It has been held in various judgments that the assessee must prove identity and cre ditworthiness of credito r and genuineness of transac tio n e .g. a s in Shankar I ndustr ies Vs. CIT (Cal) 114 ITR 689, Nanak C handra Laxman Da s Vs. CIT (Cal) 140 ITR 151, Hari Chand Virender Paul Vs. CIT (P&H) 140 IT R 148, CIT Vs. BijuPatnaik (SC) 160 ITR 674, ITO Vs. Skyjet Aviatio n (P) L td. (ITAT, Ahd-TM) 71 I T D 95, CIT Vs . Precision F inance P. L td. (Cal) 208 ITR 465, Orie ntal Wire Indus trie s (P) Ltd. Vs. CIT (Cal) 131 ITR 688, Malabar Agric ultural Co. Ltd. Vs. CIT (Ker) 229 ITR 548, Roshan De Hatti Vs .
CI T (SC) 107 ITR 938, C. Kant & Co. Vs. CIT (Cal) 126 ITR 63, 14 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
Bharat P. Ltd. Vs. CIT (Cal) 111 ITR 951, Dhanalakshmi Steel Re- rolling Mills Vs. CIT (AP) 228 ITR 780, Prakash Textile Agency Vs . CI T (Ca l) 121 ITR 890, Norther n Bengal Jute Trading C o Ltd. Vs. CIT (Cal) 70 ITR 407, Sanil K .M.P. Vs. CIT (Ker) 177 Taxman 481."
5. The ld. C IT(A) after considering the judgments in the case of CIT Vs. M/s N.R. Portfolio Pvt. Ltd. dated 21.12.2012 (Del. HC), Onassis Axles Pvt. Ltd. Vs. CIT in ITA 31/2013 (Del. HC), CIT Vs. Nipun Builders & Develo pers Pvt. Ltd. and CIT Vs. Nova Promoters & Finlease (P) Ltd. 342 ITR 169 (Del.) affirm the addition of the Assessing Officer.
6. The ld. C IT DR submitted the decisions in support of the order of the AO which are as under:
"1. [2022] 139 ta xmann.com 352 ( Calc utta)- Principal Commissioner of Income-ta x vs. Swati Bajaj- Whe re assessee earned LTCG on sa le of shares and AO denied said claim and made additions under sectio n 68 o n gro und that assessee inve sted in shares o f penny s tock companies which pro vided bogus LTCG, since ass essee faile d to establis h genuine ness of rise of price of shares within a short period of time that too w hen ge neral ma rket trend was rece ssive , additions made under sec tio n 68 were jus tifie d.
Where Assess ing Officers we re fully awa re of investigatio n w hich was being done on penny stock companie s and failed to take note of suc h repor t to put asse ssee on notice and commence an enquir y by calling upon asses see to justify genuine ness of claim of LTCG/STCL and merely acce pte d submission that stock broker w as a public sector company in such case assumption of jurisdic tio n under sectio n 263 by Commissione rs was fully justified.15 ITA No. 1097/Del/2019
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2. Bhag Chand C hhabra vs. Principal Commissio ner of Income-tax- [2022] 138 taxmann.com 33 (SC)- SLP dismissed against High Court ruling that where assessee-HUF had claimed speculatio n profit earne d through a broker from purchase and sale s of commodities made in a stoc k exchange under he ad of income fro m business and profes sion, but said sto ck e xchange was unable to prove ge nuineness of such transa ctions, such income was to be treated as une xplained cash credit in ter ms of sectio n 68.
3. Pr iy a Blue I ndustries ( P.) Ltd. vs. Assistant C ommissioner of Income- tax [2022] 138 taxmann.com 69 (SC)- SLP dismisse d against High Court ruling that w here Assessing Office r had reason to belie ve that inco me chargeable to tax had escaped assessment as assessee was be neficiary of accom modatio n entries and basis for formation of s uch belie f were seve ral inquir ies and investigation by Investiga tio n Wing that there had been escapement of income of assessee from as sessment because of his failure to disclose fully and truly a ll materia l facts, reopening o f assessment was justified.
4. Vishwatej De velopers (P.) Ltd. Vs. Assistant C ommissioner o f Income- tax, Company C ircle V(2), Chennai-[ 2021] 130 taxmann.com 9 (Madras) -W here addition under section 68 w as made to income of assessee on gro und that share capita l of more than Rs. 316 crores was invested by fo reign company in assessee, onus to prove identity, creditwo rthiness and genuineness of transac tio n was sole ly on assessee and merely because statutory appro vals had been o btained by assessee, it did not sanctify transactio n.
5. Ama r Jewellers Ltd. Vs . Assistant Commissioner o f Income-tax- [2022] 139 taxmann.com 198 (Gujarat)- Where pursuant to s ur vey under sectio n 133A conducted by Investigating Wing on BAS, he admitted o n oa th that he wa s engaged in busines s of providing accommodation entries to be neficiaries in lieu of commission and had named a pplic ant a s one o f rec ipients of accommodation ent ries and 16 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
Assessing Officer afte r examining facts fo rmed beli ef that income char geable to tax had escaped assessment, proceedings of reassessment initiated in cases o f a pplicant were justified.
6. Income-tax Officer vs. Sai Everest Building & Developers- [2022] 142 ta xmann.com 383 (Mumbai Trib.)-Where assesse e-firm claimed to have received unsecured lo ans during re levant years, howeve r, it could no t prove genuineness of unsecured loan taken and underne ath sources fo r making these investme nts, addition made by Assessing Office r unde r section 68 was justified.
7. C.V Rav i vs. Income-tax Officer- [2021] 129 taxmann.com 44 (SC)- SL P dismissed a gainst High C ourt ruling that w here assessee took loan from an entity, however , faile d to produce a ny confirmation from such entity o r produce its o wner in pe rson for cross-examinatio n and also failed to produce any document to establis h identity of suc h cre dito r or genuineness of alleged lo an transac tio n, impugned addition made under section 68 in respect of such loa n amount was j ustified.
8. NDR Promoters (P.) Ltd. Vs. Principal Commissioner of Income- tax- [2019] 109 taxmann.com 53 ( SC) SLP dismissed against High Court ruling tha t w here Assessing Office r made additions to assessee's income under section 68 in respec t of amount rece ived as share c apital from several companie s, i n view o f fact that all of these companies were maintaine d by one person who was engaged in providing accommodation entr ies through paper com panies and all such companies were locate d at same address, impugned additio n was justified.
9. B albir Chand Vi rmani Vs. Commissioner of Income-tax- [2019] 112 taxmann.com 214 (Punj ab & Harya na)- Whe re additions were made in case of assesse e on basis o f entries which were found in books of account seize d during search and seizure and assessee accepted that 17 ITA No. 1097/Del/2019 Lokenath Investment Consultants Pvt. Ltd.
documents we re seized from his premises and he had owned entries and undertook to explain them in next fina ncial ye ar, however failed to do so, said amounts had rightly been added to other income of assessee.
10. Par Excellence Leasing and F inancial Services (P.) Ltd. Vs. Assistant Commissioner of Income Tax, Central Circle-21, New Delhi- [2020] 115 taxmann.com 38 (Delhi Trib.) - Where assessee failed to produce contro lling perso ns o f share applicant companies along w ith suppo rtive doc umentary evidence fo r examination and field enquiries in respec t of share applicant companies reve ale d that such companies neve r e xisted in given addresses, Assessing Office r rightly infe rre d that asse ssee had roo ted its own money in books of account thro ugh fictitious and bogus companies, and rightly made additio ns under sec tion 68.
11. Commissione r of Income-tax, Central-II, Chennai Vs. Midas Golde n Dis telle ries (P.) Ltd. - [2021] 130 taxmann.com 206 (Madras)-Where share capital of assessee-company had been route d thro ugh two companies, e xistence and ope ration o f which remaine d only on paper and enquires conducted showe d that huge amounts were brought in assessee's books as share application money thro ugh sa id companies by shareholders, who could not properly explain the ir source, pro visions of se ction 68 got attracted."
7. On going through the record, we find no mistake in the factual matrix and the legal pro position and hence, the addition made by the AO is hereby confir med.
18 ITA No. 1097/Del/2019Lokenath Investment Consultants Pvt. Ltd.
8. In the re sult, the appeal of the assessee is dismissed. Order Pronounced in the Open Court on 31/07/202 3.
Sd/- Sd/-
(Yogesh Kumar US) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 31/07/2023
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR