The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has confirmed the addition in respect of the commission earned from 54 paper companies.
Appellants, Pravin Kumar Jain and Pankaj Jain and Casper Enterprises Pvt Ltd filed appeals seeking to set aside the impugned common order.
On the basis of the search and seizure operation conducted at the premises of assesses, notices under section 153A were issued, and in response thereto they filed a return of income. Assessee claimed to have derived income from the business, capital gain and other sources. During the assessment proceedings, the Assessing Officer noticed that the assessees were directors, partners and proprietors of various group concerns, 15 in number, which was actually dummy and various group concerns were run and operated by the assessees.
It also comes on record that the assessee had provided accommodation entries for long-term capital gain, share application, accommodation entries for bogus sales and purchases and accommodation entries. Assessing Officer on the basis of assessment proceedings reached the conclusion that it is proved on record that credit appearing in the hands of the dummy companies being run by the assessee were nothing but accommodation entry in the guise of unsecured loans which were run, operated and controlled by the assessees for conducting the business of providing accommodation entries.
The AO made an addition.
K.C. Salvamani, on behalf of the revenue, explained the modus operandi of entire activities carried out by the assessee through his paper companies, who had been providing accommodation entries by charging a commission. It had also been proved on record that actual promoters of diamonds have imported the diamonds in the name of such diamond companies being operated by the assessee. The real importers also had not recorded the actual purchases of diamond purchases from the dummy company of the assessee in its books of account.
The Division Bench of S Rifaur Rahman (Accountant Member) and Kuldip Singh (Judicial Member) confirmed the addition and dismissed the appeal observing that,
“It is proved on record that assessee being into the business of providing accommodation entries for an unsecured loan, share application money, long-term capital gain, for bogus sales and purchases, for entries of turnover trading and accommodation entries for facilitating exempt income from bogus LTCG in penny stock by floating paper companies and by charging commissions, which is nothing but a fraud on the state exchequer,”
“In other words, it is an illegal business of money laundering. Assessee was also into providing accommodation entry in the form of circular transactions by securing bogus purchase bills of various natures like capital goods, trading raw materials, etc., then converting the same into a cheque and RTCG from one dummy concern to the main beneficiary or in the sister concern in the form of share application money.”
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