S. 254(1) : Appellate Tribunal- Powers- Search – Alleged Accommodation entry provider – 32,000+ beneficiaries- Shell companies -Alleged Money Laundering – Direction issued by the Tribunal to AO to intimate/report to SEBI, ED, MCA and ROC regarding details of money laundering activities. [S. 132, 150, S. 11 of Prevention of Money- Laundering Act, 2002; 11, Art. 226]
The Assessee was providing bogus accommodation entries and availing a 3% commission on the same. A search was conducted and it was found that the assessee provided bogus accommodation entries to 32,855 persons wherein thousands of crores were laundered by the assessee. Accordingly, the A.O. made an addition on the basis of a 3% commission which was charged by the assessee. Before the CIT(A), in an ex-parte order, confirmed the findings of the Assessing officer.
On appeal before the Hon’ble Tribunal, it found that there was no infirmity in the order of the lower authorities. the Hon’ble Tribunal also noted that the Assessee was a mere entry provider and the real beneficiaries of the bogus transitions were those 32,000 + people identified by the Assessing Officer in the order. Thus, the Hon’ble Tribunal directed the Assessing officer to share information about all beneficiaries within 90 days, who were involved in the racket with their concerned Assessing officers, in order to reopen assessments of those individuals. Further, the AO was also directed to intimate the Securities Exchange Board of India (SEBI) with a list of beneficiaries, share brokers, depositories, list of synchronized transactions who were involved in the racket. Furthermore, the AO was also directed to provide the same to respective government authorities for applicability of section 11 of the Prevention of Money-Laundering Act, 2002 (PMLA) and also to the Ministry of Corporate Affairs (MCA) and Registrar of Companies (ROC) with a list of shell companies involved whose share prices are rigged on the stock exchange.

The Hon’ble Bombay High Court has stayed the ex-parte order of the Hon’ble Tribunal on thein the case of Naresh Manakchand Jain v. ACIT [ITA No. 1945 & 1946/Mum/2023 dated August 29, 2023 (Mum)(Trib) as the Chartered Accountant representing the assessee could not remain present on account of ill health. [W.P. (L) No. 27193 of 2023 dated October 7, 2023 AY 2012-13]

Naresh Manakchand Jain v. The Registrar, ITAT (Bom)(HC)
Coram : HON’BLE SHRI JUSTICE K.R. SHRIRAM
HON’BLE JUSTICE DR. NEELA KEDAR GOKHALE