M/s. Chander Prabhu Financial Service Pvt. Ltd., New Delhi v. DCIT, New Delhi

ITA 3421/DEL/2014 | 2008-2009
Pronouncement Date: 26-10-2016 | Result: Allowed

Appeal Details

RSA Number 342120114 RSA 2014
Assessee PAN AACCC1205G
Bench Delhi
Appeal Number ITA 3421/DEL/2014
Duration Of Justice 2 year(s) 4 month(s) 22 day(s)
Appellant M/s. Chander Prabhu Financial Service Pvt. Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC 2
Tribunal Order Date 26-10-2016
Date Of Final Hearing 24-08-2016
Next Hearing Date 24-08-2016
Assessment Year 2008-2009
Appeal Filed On 04-06-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SM C - II NEW DELHI BEFORE SH. N. K. SAINI A CCOUNTANT M EMBER ITA NO. 3421/DEL/2014 : ASSTT. YEAR : 2008 - 09 M/S CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 308 ARUNACHAL BLDG. 19 BARAKHAMBA ROAD NEW DELHI - 110001 VS DY. COMMISSIONER OF INCOME TAX (HQ) CENTRAL CIRCLE - III NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A CCC1205G ASSESSEE BY : SH. SANDEEP KUMAR CA REVENUE BY : SH. AMRIT LAL SR. DR DATE OF HEARING : 24.08 .201 6 DATE OF PRONOUNCEMENT : 26 . 10 .201 6 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 29.01 .2014 OF LD. CIT(A) - XXXIII NEW DELHI . 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE SUSTENANCE OF ADDITION OF RS.38 67 090/ - MADE BY THE AO U/S 68 OF THE INCOME TAX ACT 1961 REPRESENTING THE DEPOSITS IN ASSESSEE S BANK ACCOUNTS REC EIVED FROM VARIOUS INTERMEDIARIES OPERATED BY SH. S.K. GUPTA PROVIDED ACCOMMODATION ENTRIES TO BENEFICIARIES AGAINST CASH RECEIVED FROM THEM. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 24.09.2008 DECLARING AN INCOM E OF ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 2 RS.16 130/ - . SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY. THE AO OBSERVED THAT A SURVEY OPERATION WAS CONDUCTED IN THE S. K. GUPTA GROUP OF CASES ON 20.11.2007 AT 308 AND 1007 - 1008 ARUNACHAL BUILDING 19 BARAKHAMBA ROAD NEW DELHI. THE ASSESSEE COMPANY IS ONE OF THE GROUP CONCERNS OF S.K. GUPTA GROUP. DURING THE COURSE OF SURVEY PROCEEDINGS AND ASSESSMENT PROCEEDINGS SH. S.K. GUPTA AD MITTED THAT HE HAD BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS THROUGH LARGE NUMBER OF CONCERNS EFFE CTIVELY CONTROLLED BY HIM AND THAT HE WAS CONTROLLING MORE THAN 35 COMPANIES FROM SMALL OFFICE PREMISES WITHOUT SUFFICIENT INFRASTRUCTURE AND EMPLOYEES TO CARRY OUT MEANINGFUL BUSINESS ACTIVITY IN SO MANY COMPANIES. THE AO POINTED OUT THAT THE LEDGER ACCOU NTS MAINTAINED IN ONE OF THE LAPTOPS IMPOUNDED DURING SURVEY REVEALED A LARGE AMOUNT OF CASH AND THE CHEQUES WERE ISSUED ON THE SAME DAY/FEW DAYS TO VARIOUS PARTIES FROM THE ACCOUNTS OF THE COMPANY CONTROLLED BY SH. S.K. GUPTA. HE ALSO POINTED OUT THAT AS PER THE INQUIRIES CARRIE D OUT BY THE INVESTIGATION WING THE ASSESSEE HAS FOUND TO HAVE BEEN USING THE BANK ACCOUNTS OPENED IN DIFFERENT BANKS TO ROUTE THE ENTRIES THROUGH TWO TO FOUR ACCOUNTS TO GIVE THE COLOR OF GENUINENESS OF THO SE TRANSACTIONS. THE AO ALSO POINTED OUT THAT THE ASSESSEE WAS MAINTAINING FOLLOWING BANK ACCOUNTS DURING THE FINANCIAL YEAR 2007 - 08 SHOWING TOTAL DEPOSITS AS UNDER: ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 3 S. NO. NAME OF THE BANK ACCOUNT NO. DEPOSITS DEPOSITS FROM SISTER - CONCERNS 1. FEDERAL BANK 2992/11050200029926 3 4 50 000/ 44 90 781 40 000 (S.K. GUPTA) 2. AXIS BANK (DEFENCE COLONY) 357010200002790 14 10 000 GRAND TOTAL 93 50 781 40 000 4. THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF DEPOSITS IN ITS BANK ACCOUNTS BY INDICATING NAMES AND ADDRESSES OF THE DEPOSITOR/CREDITORS AND TO PROVE THEIR CREDITWORTHINESS ALONGWITH GENUINENESS OF THE TRANSACTION U/S 68 OF THE ACT. THE AO WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND OBSERVE D THAT THE ASSESSEE COULD NOT ESTABLISH THE IDENTITY OF THE CREDITOR TH EIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE AO MADE THE ADDITION OF RS.38 50 781/ - TO THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT ON ACCOUNT OF THE AMOUNT CREDITED IN VARIOUS BANK ACCOUNTS OF THE ASSESSEE . 5. BEING AGGRIEVED THE ASSESSE E CARRIED THE MATTER TO THE LD. CIT(A) WHO SUSTAINED THE ADDITION MADE BY THE AO. 6. NOW THE ASSESSEE IS IN APPEAL. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED VIDE ORDER DAT ED 02.02.2016 IN ITA NO. 3575/DEL/2013 FOR THE ASSESSMENT YEAR 2008 - 09 IN THE CASE OF DHAMAKA TRADING & CONSTRUCTION PVT. ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 4 LTD. VS DCIT (HQ) CENTRAL CIRCLE - III NEW DELHI. IT WAS FURTHER SUBMITTED THAT THE TRIBUNAL S ORDER HAS NOW BEEN CONFIRMED BY THE HON BLE DELHI HIGH COURT IN THE CASES OF VIJAY CONDUCTORS INDIA PVT. LTD. (ITA 683/2015) NAMRATA MARKETING PVT. LTD. (ITA 684/2015) VISHRUT MARKETING PVT. LTD. (ITA 685/2015) AND BERIWAL INVESTMENT & CHIT FUND PVT. LTD. (ITA 686/2015) WHICH GROUP CONCERNS WERE ALSO SUBJECT MATTER OF THE ADJUDICATION EARLIER BEFORE THE ITAT . THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT IN THE CASE OF M/S KSA CHITS PVT. LTD. VS. DCIT (ITA NO. 4647/DEL/2013 - ORDER DATED 20.3.2015) THE TRIBUNAL HAS FOLLOWED THE DECIS ION IN THE CASE OF M/S OMNI FARMS PVT. LTD. VS. DCIT (ITA NO. 3477/DEL/2013 DATED 28.01.2015). IT WAS STATED THAT THE TRIBUNAL IN THE AFORESAID REFERRED TO ORDER DATED 02.02.2016 IN THE CASE OF DHAMAKA TRADING & CONSTRUCTION PVT. LTD VS DCIT(HQ) CENTRAL CIRCLE - III NEW DELHI HAS FOLLOWED THE DE CISION IN THE CASE OF OMNI FARMS PVT. LTD. VS DCIT IN ITA NO. 3477/DEL/2013 DATED 28.01.2015 (COPY OF THE SAID ORDERS WERE FURNISHED WHICH ARE PLACED ON RECORD). 7. IN HIS RIVAL SUBMISSIONS THE LD. DR ALTHOUGH SU PPORTED THE ORDERS OF THE AUTHORITIES BELOW BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE . ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 5 8. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MAT ERIAL AVAILABLE ON THE RECORD. IT IS NOTICED T HAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAD ALREADY BEEN ADJUDICATED BY THE ITAT DELHI BENCH E NEW DELHI IN THE CASE OF DHAMAKA TRADING & CONSTRUCTION PVT. LTD. VS DCIT(HQ) CENTRAL CIRCLE - III NEW DELHI (SUPRA) WHEREIN THE RELEVANT FINDINGS HAVE BE EN GIVEN VIDE PARAS 5 TO 8 OF THE ORDER DATED 02.02.2016 WHICH READ AS UNDER: 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE RECORD OF THE CASE. THE FACTS ARE NOT DISPUTED. THE ASSESSEE IS A GROUP CONCERN OF M/S S.K. GUPTA AND FINDS PLACE IN THE LIST REPRODUCED AT PAGE 7 OF TRIBUNAL S ORDER IN THE CASE OF M/S OMNI FARMS PVT. LTD. AND OTHERS (SUPRA) AT SL. NO. 11. THE ASSESSEE WAS MERELY A CONDUIT AND WAS ONE OF THE 32 COMPANIES OF S.K. GUPTA GROUP. THE TRIBUNAL IN PARA 4 HAS REFERRED TO THE CONCLUSION OF SETTLEMENT COMMISSION CONTAINED AT PARAS 26 & 27 WHICH IS REPRODUCED HEREUNDER: 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 R ECORD 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 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 INTERMEDI A TORIES AND CHEQUES WERE ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 6 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 PREMIUM VARYING FROM 4% TO 8%. AFTER DISCU SSING VARIOUS FACTS THE A:A. 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 ENTRY HAS NOT BEEN REFLECTED AS I NCOME 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 CI T IN RULE 9 REPORT OR DURING TH E HEARING HAS NOT PRODUCED 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' ELT'S CONTENTIONS THAT THERE ARE ONE EVIDENCE/MATERIAL BROUGHT OUT BY THE APPLICANT TO PROVE THAT HE WAS AN ENTRY PROVIDER AND THAT HE HAD DEPOSITED HIS OW N 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. FURTH ER THE REPORT OF THE A.D. THAT THE BENEFICIARIES DISCLOSED RS.L06.33 CRORES AGAINST THE CHEQUES RECEIVED BY THEM FROM ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 7 THE APPLICANT FURTHER STRENGTHEN APPLICANT'S CASE THAT HE WAS ONLY ENTRY PROVIDER AND CASH DEPOSITED IN THE BANK ACCOUNTS FOR ISSUING CH EQUES ARE NOT HIS MONEY BUT MONEYS OF THE BENEFICIARIES TO WHOM CHEQUES WERE ISSUED. 27. AFTER EXAMINING THE FACTS OF THE CASE WEARE OF THE CONSIDERED VIEW THAT THE APPLICANT IS AN ENTRY PROVIDER. THEREFORE IN HIS CASE ONLY THE AMOUNT OF PREMIUM/COMM ISSION RECEIVED BY THE APPLICANT AFTER REDUCING EXPENSES INCURRED WILL BE HIS ADDITIONAL INCOME. ' 6. FURTHER IT IS NOT DISPUTED THAT THE ORDER OF THE SETTLEMENT COMMISSION HAS BEEN ACCEPTED BY THE REVENUE AS IT HAS NOT BEEN CHALLENGED BY THE REVENUE BE FORE THE HO N BLE HIGH COURT. THE ORDER OF SETTLEMENT COMMISSION HAS BEEN GIVEN EFFECT TO BY THE AO AFTER OBTAINING DIRECTION OF THE ADDL. COMMISSIONER U/S 144A. THE DIRECTIONS OF THE ADDL. COMMISSIONER WERE AS UNDER: '12. IN VIEW OF THESE FACTS IT IS CLE AR THAT CASH HAS BEEN RECEIVED BY SH. S.K. GUPTA AND ROUTED THROUGH VARIOUS ENTITIES TO BE PASSED ON ULTIMATELY TO THE BENEFICIARIES IN THE FORM OF CHEQUES. 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. SK GUPTA. THE JUSTIFICATION FOR BRINGING TO TAX THE CASH RECEIVED (AS PER LAPTOP) IN THE HANDS OF SH. S.K GUPTA (INDIVIDUAL) WOULD BE TH AT 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 ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 8 OF CASH BY MEDIATORS/BENEFICIARY I T IS NOT POSSIBLE TO ALLOW ASSESSEE THE BENEFIT OF ARGUMENT THAT THE CASH BELONGS TO BENEFICIARY AND ONCE THE DEPARTMENT IS TAKING ACTION AGAINST - BENEFICIARIES NO ACTION CAN BE TAKEN IN THE HANDS OF THE S~.K. GUPTA. IT IS CLEAR THAT CASH HAS BEEN RECEIVE D BY S.K. GUPTA IN DIFFERENT YEARS UNDER CONSIDERATION AND NONE OF THE CREDITORS / 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 ASSESS ING OFFICER. IN VIEW OF THIS IT SHALL BE MOST APPROPRIATE THAT CASH IS BROUGHT TO TAX IN THE HANDS OF SH. S.K. GUPTA. ADDITION HAS ALSO BEEN MADE ON ACCOUNT OF PREMIUM INCOME RECEIVED BY ASSESSEE ON ACCOUNT OF THESE TRANSACTIONS FOR AY 2008 - 09. ASSESSE E'S CONTENTION THAT HE SHOULD BE ALLOWED CERTAIN EXPENDITURE FROM THE PREMIUM RECEIVED BY IT ALSO CANNOT BE ENTERTAINED AS ASSESSEE HAS BROUGHT NOTHING 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 A Y 2008 - 09. THE AO MAY DECIDE THE ISSUE ON MERIT AFTER EXAMINING THE MATERIAL PROD UCED BEFORE HIM. THIS ISSUE DOES NOT SEEM TO ARISE FROM IMPOUNDED DOCUMENTS. ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 9 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 DEFIC IENCY 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 ACCOMMODATION ENTRIES OBTAINED BY BENEFICIARIES . THE INFORMATION WITH RELEVANT RECORDS SHOULD BE COMMUNICATED TO THE CONCERNED AOS. 14. TO TAX THE CASH RECEIVED BY SK. 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. 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 B ENEFICI ARIES 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 (PA RA 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 T HE 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 ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 10 RESPECT TO ALL THE ENTITIES REFERRED TO BY THE ASSESSING OFFICER VIDE HIS OFFICE LETTER NO.261 DATED 7.12.2011.' 7. IN THE BACKDROP OF THESE FACTS THE TRIBUNAL HAS OBSERVED IN PARAS 11 TO 17 AS UNDER: 11. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE' SIDES AND PERUSED RELEVANT MATERIAL PL ACED BEFORE US. THE FACTS IN THE CASE OF ALL THE COMPANIES ARE SIMILAR. THER EFORE THEY ARE BEING TAKEN UP TOGETHER 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 COM PANIES. 12. IN THE CASE OF M/S OMNI FARMS PVT. LTD. THE ASSESSING OFFICER AT PARAGRAPH 2 HAS RECORDED THE FOLLOWING FINDING: - '2. A SURVEY OPERATION WAS CONDUCTED IN THE 5 K GUPTA GROUP OF CASES ON 20/11/2007 AT 308 ARUNACHAL BUILDING 19 BARAKH AM BA ROAD NEW DELHI - 110001 AND 1007 - 1008 ARUNACHAL BUILDING 19 BARAKHAMBA ROAD NEW DELHI - 110001. THE ASSESSEE COMPANY IS ONE OF THE GROU P CONCERNS OF 5 K GUPTA GROUP. DURING THE COURSE OF SURVEY PROCEEDINGS ENID ASSES SMENT PROCEEDINGS SH SK GUPTA A DMITTED THAT HE HAD BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS THROUGH A LARGE NO. OF CONCERNS EFFECTIVELY CONTROLLED BY HIM. FUR THER IT WAS SEEN THAT SH. S. K. GUPTA OPERATES A NUMBER OF ACCOUNTS IN THE SAME BANK/BRANCH OR IN DIFFERENT BRANC HES 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 ROPED ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 11 IN. LIKE ANY OTHER BUSINESS IT DOES REQUIRE MAN POWER ACCORDING TO THE SCALE OF OPERATIO NS. E XCEPT 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 DOCUME NT S 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 SEEN THAT SH. S.K. GUPTA WAS CONTROLLING MORE THAN 35 COMPANIES FROM A SMALL OFFICE PREMISES WITHOU T SUFFICIENT INFRASTRUCTURE OR EMPLOYEES TO CARRY OUT MEANINGFUL BUSINESS ACTIVITY IN SO MANY COMPANIES. 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 END CHEQUES ARE ISSUED ON THE SAME DAY/WITHIN FEW DAYS TO VARIOUS PARTIES TRAM THE ACCOUNTS OF THE COMPANY - CONTROLLED BY HIM. AS PER ENQUIRIES CARRIED OUT BY THE INVESTIGATION WING THE ASSESSEE WAS FOUND TO HAVE BEEN USING THE BANK ACCOUNTS OPE NED INDIFFERENT BANKS TO ROUTE THE ENTRIES THROUGH T WO TO FOUR ACCOUNTS TO VIE THE COLOR OF GENUINENESS TO THESE TRANSACTIONS. ' 13. THUS THE ASSESSING OFFICER HIMSELF 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 CON TROLLED BY HIM. THE SETTLEMENT COMMISSION ALSO HAS RECORDED T HE SIMILAR FINDING THAT SHRI S. K. GUPTA WAS PROVIDING ENTRIES TO VARIOUS ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 12 BENEFICIARIES BY USING VARIOUS FIRMS/COMPANIES. ADMITTEDLY THE COMPANIES UNDER APPEAL BEFORE US ARE THE PART OF COMPANIES WHICH WERE UTILIZED BY SHRI S.K. GUPTA FOR PROVIDING ACCOMMODATION ENTRIE. - 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 INTERMEDIARIES AND CHEQUES WERE ISSUED TO THE BENEFICIARIES OF ALMOST THE SAME AMOUNTS'. THUS 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 IS FURTHER NOTED THAT THERE ARE OVERWHELMING EVIDENCE IN THE IMPOUNDED MATERIAL AS ENCLOSED BY THE APPLICANT IN THE PAPER BOO K 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'. THEREAFTER THE SETTLEMENT COMMISSION NOTED' FURTHER THE REPORT OF THE A.D. THAT THE BENEFICIARIES 'DISCLOSED RS.L06.33 CRORES AGAINST THE CHEQUES RECEIVED BY THEM FROM LIE APPLICANT FURTHER STRENGTHEN APPLICANT'S CASE THAT HE WAS ONLY ENTRY PROVIDER ARID 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 SHRL S.K. GUPTA WAS ONLY ENTRY 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 ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 13 BENEFICIARIES 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 BENE FICIARIES. IN VIEW OF THIS FINDING THE CASH DEPOSITED IN THE BANK ACCOUNT OF VARIOUS COMPANIES WHICH WE~ THE CONDUIT COMPANIES CANNOT BE SAID TO BE UNEXPLAINED CASH CREDIT BECAUSE THE SOURCE OF CASH IS FROM THE BENEFICIARY WHO WANTED TO AVAIL THE ACCOMMOD ATION ENTRY AND TO W HOM CHEQUES FOR ACCOMMODATION ENTRIES WERE ISSUED ALMOST 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 BEFORE THE HON'BLE J URISDICTIONAL 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 'METTERS' NECESSARILY COULD COMPREHEND DISPUTED QUESTIONS ITEMS OR HEADS OF INCOME DISALLOWANCE ETE. OR VARIANTS OF IT BUT ALWAYS WITH REFERENCE TO A PARTICULAR ASSESSMENT YEAR. IN THIS CASE THE SETTLEM ENT COMMISSION WAS SEIZED OF ASST. YR. 2006 - 07. WHILST EXERCISING ITS AUTHORITY OVER THE APPLICATION THE COMMISSION CONCEDEDLY EXERCISED THE VAS T PLENITUDE OF ITS POWER OR - JU RISDICTION. 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 THE REVENUE - HAVE THROWN LIGHT ON ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 14 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 THAT ITS ORDER OF 17H MARCH 2008 IS A NULLITY. ALLOWING ANY OTHER AUTHORITY EVEN BY WAY OF A NOTICE UNDER S. 153C WOULD BE TO PERMIT MULTIPLE JURISDI CTIONS WHICH CAN RESULT IN CHAOS. AFTER ALL NON - DISCLOSURE OR SUPPRESSION OF INFORMATION IN RESPECT OF WHAT IS R EQUIRED TO BE REVEALED TO THE CONCERNED AUTHORITIES 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 CONCLUSIVE 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 FOR AY 2008 - 09. THE C I T(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 WERE NOT PLACED BEFORE THE SETTLEMENT COMMISSION. ON THE OTHER HAND READING OF THE ORDER OF THE SETTLEM ENT COMMISSION SHOWS THAT ALL THE RELEVANT MATERIAL INCLUDING THE SEIZED MATERIAL WERE DULY CONSIDERED BY THE SETTLEMENT COMMISSION. MOREOVER HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT EVEN IF SOME MATERIAL HAS BEEN SUPPRESSED FROM THE SETTLEMENT COM MISSION THE ONLY COURSE AVAILABLE TO THE REVENUE IS TO APPROACH THE SETTLEMENT' COMMISSION FOR DECLARING ITS ORDER AS ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 15 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 REVE NUE THAT IT HAS APPROACHED THE SETTLEMENT COMMISSION FOR DECLARING ITS ORDER AS NULLITY. THEREFORE RESPECTFULLY FOLLOWING THE DECISION 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 THE 'SPECIFIC DIRECTION OF THE ADDITIONAL CIT IN RESPECT OF THE GROUP COMPANIES WHICH HAS BEEN MENTIONED BY THE ADDITIONAL CIT 'S PARAGRAPH 2 OF HIS ORDER UNDER SECTION 144A. AFTER CONSIDERING ALL THE FACTS THE ADDITIONAL COMMISSIONER HELD 'IT WOULD BE IN THE BEST INTEREST OF REVENU E TO TAX THES E 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 RUN NING 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 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 DEPARTMENT AGAINST THE BENEFICIARIES. THE ORDER OF THE ADDITIONAL CIT UNDER SECTION 144A IS BINDING ON THE ASSESSING OFFICER WHICH IS EVIDENT FROM SECTION 144A WHICH READS AS UNDER: - ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 16 '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 ASSESS MENT IS 'PENDING AND IF HE CONSIDERS THAT HAVING REGARD TO THE NATDRE 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 OFFICE R TO ENABLE HIM TO COMPLETE THE ASSESSMENT AND SUCH DIRECTIONS SHALL BE BINDING ON THE ASSESSING OFFICER: PROVIDED THAT NO DIRECTIONS WHICH ARE PREJUDICIAL TO THE ASSESSEE SHALL BE ISSUED BEFORE AN OPPORTUNITY IS GIVEN TO THE ASSESSEE TO BE HEARD. EXPL ANATION. - 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) 1 7. 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 WAS PROVIDING ACCOMMODATION ENTRIES HE USED VARIOUS COMPANIES AS CONDUIT FOR PROVIDING THE ACCOMM ODATION ENTRIES CASH WAS RECEIVED THROUGH MEDIATORS FROM THE PERSONS WHO WANTED TO AVAIL THE ACCOMMODATION ENTRIES SUCH CASH WAS DEPOSITED IN THE BANK ACCOUNT 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 ACCEPTED THESE FACTS. CONSIDERING THE TOTALITY OF THESE FACTS AND THE LOGICAL CONSEQUENCES OF THE ORDE R OF THE SETTLEMENT COMMISSION AS WELL AS OF ADDITIONAL CIT UNDER SECTION ITA NO. 3421 /DEL /201 4 CHANDER PRABHU FINANCIAL SERVICE PVT. LTD. 17 144A WE HAVE NO HESITATION 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 'I N THE CASE OF ALL THE NINE COMPANIES WHICH ARE ADMITTEDLY CONDUIT COMPANIES OF SHRI S.K. GUPTA. 8. THE HON BLE DELHI HIGH COURT HAS ALSO CONFIRMED THE FINDINGS OF THE TRIBUNAL. WE THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CA SE OF M/S OMNI FARMS PVT. LTD. (SUPRA) DELETE THE ADDITION MADE U/S 68 OF THE ACT. 9. SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 02.02.2016 IN THE CASE OF DHAMAKA TRADING & CONSTRUCTION PVT. LTD. VS DCIT (HQ) CENTRAL CIRCLE - III N EW DELHI IN ITA NO. 3575/DEL/2013 FOR THE ASSESSMENT YEAR 2008 - 09 THE IMPUGNED ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. 10 . IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER PRON OUNCED IN THE COURT ON 26 /10 /2016) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DAT ED: 26 /10 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR