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3. The Assessee had filed the return for the Assessment Year 2002-03 declaring nil income. The return was processed under Section 143(1) of the Income Tax Act.

4. On the basis of the information received from the Investigation Wing of the Income Tax Department, notice under Section 148 was issued to the Assessee. The proceedings were sought to be opened on the basis of the information unearthed by the Investigation Wing of the Income Tax Department, wherein it came to their knowledge that a huge money laundering ======================================================================= racket was being run by a few person s and bogus accommodation entries were being provided. A s per the information of the Investigation Wing, accommodation entries were being provided in lieu of payment in cash of equivalent amount plus commission being paid thereon to the entry o perators. The Investigation Wing during the investigation came across names of various individuals, who were operating as entry providers and also various parties, who were taking such accommodation entries. The name of the Assessee also figured as one of the parties involved in taking such accommodation entries.

"The Investigation wing of the Income Tax Department had unearthed a huge money laundering mechanism wherein it was established that bogus accommodation entries were being provided. These accommodation entries are received in lieu of payment of cash of equivalent amount plus commission thereon to the entry operator. For obvious reasons, these cash transactions are not routed through the books of account of the Assessee. In this case, information has been received from Directorate of Income Tax, (Investigation), New Delhi that during the relevant assessment year, this Assessee had received the following cheque amount(s) in the nature of accommodation entry:

7. The Assessing Officer during the reassessment proceedings found , on the basis of the inquires and ======================================================================= investigations made by the Investigation Wing , that the 24 parties/persons, who legitimately had invested a sum of Rs.1,50,00,000/- as share capital in the Assessee were in fact parties belonging to one Mahesh Garg group and these parties/persons were not carrying on any actual business and were engaged in the business of providing accommodation entries. The Investigation Wing h ad recorded the statement of Mahesh Garg on various dates and in the statemen t of Mahesh Garg, various dates and mod us operandi unearthed.

15. With regard to the additions made by the Assessing Officer of Rs.3,49,86,000/-, the Commissioner of Income Tax (Appeals) allowed the appeal filed by the Assessee. One of the reasons for allowing the appeal is that the Assessing Officer has relied on the statement of Mahesh Garg recorded by the ======================================================================= Investigation Wing and neither the statement was recorded by the Assessing Officer nor was Mahesh Garg summoned to re -examine the fact as to whether Mahesh Garg knew the Assessee company and to verify the veracity and the statement made by Mahesh Garg before the Investigation Wing.