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07-06-2019, Mannat Hospitality, Section 132, 68, 292BB, Tribunal Delhi

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3 months 1 week ago #9703 by amit
Section - 132, 68, 292BB, 101, 102, 153C, 147, 148
Order Date - 07-06-2019
Favouring - Assessee Partly allowed for statistical purposes
Court - Tribunal Delhi
Appellant - Mannat Hospitality (P) Ltd.
Respondent - ITO
Citation - 619Taxpundit119
Appeal No. - ITA No.7348/Del/2018
Asstt. Year - 2009-10



This appeal filed by the assessee is directed against the order dated 10.09.2018 of the CIT(A)-6, Delhi relating to A. Y. 2009-10.

2. Facts of the case, in brief, are that the assessee is a company which was incorporated on 05/01/2009 and for the A.Y. 2009-10, no return of income was filed. The reasons to believe that income escaped assessment in the said case emanated from a search/seizure operation under section 132 which was conducted at the residential and business premises of Shri Surendra Kumar Jain and Shri Virendra Jain by the Investigation Wing, New Delhi which resulted in seizure of a large number of incriminating documents. During the search and post search investigation it was established that Shri S .K. Jain and Shri Virendra Jain were in the business of providing accommodation entries through cheque in lieu of cash. Accommodation entries were provided to various beneficiary companies/ entities through a number of papers/dummy companies. Cash received from the beneficiaries was routed through paper companies and these dummy companies were managed and controlled by Shri S.K.Jain and Shri Virendra Jain.

The accommodation entries were provided by way of share capital, share application money and commission charged was from beneficiaries for providing such accommodations entries. The Investigation Report detailing the modus operandi adopted by the entry operators has been reproduced by the AO in the
assessment order which gives complete details showing receipt of accommodation entry by the assessee from entry providing companies, amount of entries, bank account and cheque details and money of middle men instrumental in managing the entries for the beneficiaries, i.e., the assessee.

3. As per information provided by investigation wing, the Assessing Officer noted that the assessee has obtained accommodation entries amounting to Rs.56,00,000/- from S. K. Jain group of companies as below :-

He further noted that on the basis of seized documents seized from Jain brothers, it has been noticed that Jain brothers had received Rs.56,00,000/- in cash from intermediary Chawla Ji in lieu of accommodation entry to the instant assessee (as well as other beneficiaries). This cash has been received during the same period when the accommodation entry has been given to the instant assessee, the details of which are as under :-

4. In response to the show cause notice the assessee submitted that the share capital had been raised from two parties namely Virgin Capital Services Pvt. Ltd. and Manimala Delhi Properties Pvt. Ltd. Confirmation letter etc were filed alongwith share application form, board resolution affidavit of director of company, bank statement, copy of acknowledgement, etc.

5. However, the Assessing officer was not satisfied with the arguments advanced by the assessee. Relying on various decisions the Assessing officer made addition of Rs.56 lacs u/s. 68 of the IT Act by observing as under :-

11.1 To sum up, a sum of Rs. 56,00,000/- has been found credited in the books of account of the assessee. The immediate source of this amount has been found to be M/s. Virgin Capital Services Pvt:. Ltd., and M/s. Manitnaia Delhi Properties Pvt. Ltd. out of the entities controlled by Jain brothers as discussed in para 6 above.

11.2 It is indeed surprising to note that the assessee has made unsuccessful efforts to prove that these transactions were genuine. It is quite possible that the assessee could have succeeded in its scheme but for the: search in the case of Jain Brothers where complete evidence of scheme of tax: evasion used by the assessee were seized. The incriminating seized documents are selfspeaking and give graphic picture of the modus operandi adopted by the parties involved. It is quite disturbing to note the ease with which the assessee has been conducting its affair by laundering its unaccounted money at: into regular transactions. The law allows the Assessing Officer to lift the corporate veil to unmask the real from the apparent and also to go behind the transaction to understand their
true import. The law also allows the authorities to test the transactions on a touches tone of human probability to arrive at a conclusion which the rationale mind would arrive at. After going behind the transactions on paper and

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