Addition for bogus share capital introduced as accommodation entries justified

PCIT Vs NDR Promoters Pvt. Ltd (Delhi High Court)

Conclusion: Addition made by AO was justified with regard to introduction of bogus share capital in the form of accommodation entries as the transactions done were clearly sham with excellent paper work to camouflage their bogus nature.

Held: In the instant case, assessee had received money in the form of share capital/share premium. AO made an addition recording that the five companies were ^„creation‟ of and de facto operated by one Chartered Accountant, who had set up about 90 companies/firms including the aforesaid 5 companies for providing accommodation entries and there was sufficient evidence to indicate that beneficiaries i.e. assessee had introduced income from undisclosed sources into their business in the garb of share capital/share premium. It was held that the transactions in question were clearly sham and make-believe with excellent paper work to camouflage their bogus nature. Accordingly, the order passed by Tribunal was clearly superficial and adopted a perfunctory approach and ignored evidence and material referred to in the assessment order. The reasoning given was contrary to human probabilities, for in the normal course of conduct, no one would make investment of such huge amounts without being concerned about the return and safety of such investment.

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (^„Act‟, for short), in the case of NDR Promoters Pvt. Ltd. relates to Assessment Year 2008-09 and arises from the order dated 3^rd March, 2019 passed by the Income Tax Appellate Tribunal (^„Tribunal‟, for short).

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