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TMI Blog2010 (11) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... /AHD./2008 - - - Dated:- 12-11-2010 - BHAVNESH SAINI, JUDICIAL MEMBER J AND D.C. AGRAWAL, ACCOUNTANT MEMBER J. S.N. Divatia and B.A. Patel for the Appellant. Anil Kumar for the Respondent. ORDER Per Bhavnesh Saini, Judicial Member This appeal by the assessee is directed against the order of learned CIT (A)-III,Barodadated26-9-2007for assessment year 2004-05 on the following grounds: 1.1 The order passed under section 250 on 26-9-2007 by CIT ( A ) -III, Baroda confirming the addition of Rs. 6.20 crore as unexplained cash credit is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT ( A ) has grievously erred in not considering fully and properly the explanation furnished and evidence produced with regard to the impugned addition of Rs. 6.20 crore. 2.1 The Ld. CIT ( A ) has grievously erred in law and/or on facts in upholding that the balance sheet filed with the original return of income was not bogus and the appellant had failed to prove the increase in share capital as well as reserves and surplus aggregating to Rs. 6.20 crore. 2.2 The Ld. CIT ( A ) ought to have considered the written submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company has not submitted any details regarding bank account in the name of the Assessee Company. 3.2 Complete details of the shareholders to whom the Assessee Company has issued shares such as name and address of the shareholders, their PAN, No. of shares issued to them were also asked for from the assessee company. The Assessee Company on dated20-4-2006 submitted addresses of only 11 shareholders out of 82 shareholders to the AO. Subsequently, letter under section 133(6) of the IT Act was issued to all the shareholders for which the address has been submitted by the assessee for seeking the information such as PAN of the assessee, mode of transactions for payment made to the Assessee Company, supporting evidence for payment made to the Assessee Company, copy of balance sheet reflecting the investment made for acquiring the shares of the assessee company were asked for. But the AO has not received any of the evidences in support of the transaction made by any of the shareholders for acquiring the shares of the assessee company. Subsequently, the Assessee Company submitted address of 55 shareholders on25-7-2006 and the addresses of total 82 shareholders were submitted by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.A., Shri P.P. Patel willfully filed wrong balance sheet and the profit loss account and he was absconding and could not be produced for examination. The submission of the assessee along with affidavit in this regard and copies of balance sheet and profit loss account were forwarded to the AO under rule 46A of the IT Rules. The AO vide his report dated 11-9-2007 strongly supported the assessment order and argued that once the assessee has filed its return of income along with supported documents, it could not now claim that the documents were forged and bogus. The return has been signed by the director; therefore, there was no reason to doubt the correctness of the documents. 5. The learned CIT (A) considering submission of the assessee and material on record confirmed the addition and dismissed the appeal of the assessee. The finding inPara 3.2 of the impugned order are reproduced as under: 3.2 I have considered the submissions of the ld. A R, the facts of the case and remand report of the AO. The fact of the matter is that the assessee filed a return. Certain entries in the accounts accompanying the return were found to be unsubstantiated and unexplained. The AO tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tamp of P.P. Patel,C.A. did not contain his identity asC.A. and that balance sheet and profit loss account is not as per Companies Act. Affidavit of B.A. Patel, present director along with unsigned agreement dated22-1-2007 was filed. He has submitted that another letter dated23-6-2007 was filed before the AO. after completion of the assessment by Shri B.A. Patel explaining the said fact. PB -33, 34 and 35 are the unaudited balance sheet and profit loss account is filed as prepared later on. He has submitted that Shri Narottam Joshi along with his son Shri Virul Joshi were the directors of the company who have retired on03-06-2004 and later on business was taken over by the new director Shri B.A. Patel and Shri Jigar Patel. He has submitted that the AO did not asked for the books of account and no details from Registrar of Companies and other departments were called for. Assessee did not issue any share capital. Therefore, the matter requires re-investigation. He has submitted that the submissions of the assessee and affidavit and correct balance sheet were referred to the AO under Rule 46A, therefore, there is sufficient compliance by the assessee. He has submitted that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able with the assessee. However, assessee has been given adequate opportunity of being heard at the assessment stage which has not been availed to by the assessee. The additional evidences are also not relevant and no reasons have been explained why the same were not filed at the assessment stage. Therefore, learned DR prayed that additional evidences may not be admitted for hearing. Learned DR on merit submitted that both the directors attended the proceedings before the AO and they have never disputed the filing of return of income or the documents therein. The assessee filed complete details of 82 new shareholders to whom the share capital of Rs. 6,20,00,0000 were issued. The 3 letters of the assessee referred in the assessment order has not been disputed by the directors particularly by Shri Narottam Joshi who has filed the return of income as well as signed the audited balance sheet prepared by Shri P.P. Patel, Chartered Accountant. Since the assessee did not dispute filing of return of income and documents therein, assessee should not be permitted to deny the same documents. The subsequent letters and the affidavit would not prove the case of the assessee. The onus was upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration the net loss income as per return at (-) Rs. 1,850. Admittedly, the assessee did not challenge the computation of income by the AO taking the net loss as per return at (-) Rs. 1,850. Even, the assessee did not dispute the correctness of processing of the return under section 143(1) of the IT Act dated 21-2-2005 accepting the net loss income of (-) Rs. 1,850. The balance sheet attached with the return of income so filed contained the details of the issue of share capital and reserves and surplus amounting to Rs. 6.20 Crores under consideration. It is also not in dispute that the assessee vide its submission by letter dated 8th March, 2006 submitted list of shareholders total 82 numbers of shareholders to whom the shares were issued and paid the capital under consideration. The assessee has also collected premium on such shares from each of the shareholders. The AO also called for the details of bank account where the funds have been kept. But the assessee did not submit details regarding bank account. The AO also asked the assessee to give the details of shareholders to whom the shares have been issued such as their names, addresses, PAN number and number of shares i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Joshi. Director of the Assessee Company and Shri B.A. Patel, present director of the assessee company attended the proceedings before AO time to time and submitted the details which have been considered by the AO. Since, both the directors appeared before the AO at the assessment stage and return of income is signed by Shri Narottam Joshi and Shri Virul Joshi, directors of the assessee company and they have also signed the audit report filed with the return of income, therefore, if they were not the signatory to the return of income and the audit report and balance sheet, they should have immediately disputed the correctness of the return of income and the balance sheet with audit report at the assessment stage. However, the directors despite appearing before the AO at the assessment stage did not make any allegation in this regard. Learned Counsel for the assessee at this stage submitted that Shri B.A. Patel intimated that Shri Narottam Joshi did not appear before the AO, however, no cognizance of such statement could be taken. The assessee did not take any step before the AO to dispute the correctness of the findings recorded in the assessment order. Hon ble Delhi High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Joshi another director of the assessee company who has signed the return of income, balance sheet and the audit report is the son of another director Shri Narottam Joshi. Shri Virul Joshi director of the assessee company never disputed the filing and singing of the return of income and the balance sheet. The conduct of the assessee noted above speaks against the assessee. 10. The assessee in the paper book filed copy of the acknowledgment of filing of the return in question at page 1 of the paper book. It contains the particulars of the assessee like PAN number, address, date of incorporation and returned income which according to the learned Counsel for the assessee are correct. The learned D R submitted that the receipt of acknowledgement of the return in question is issued to the assessee or to its authorized representative only by the department. If the assessee did not file return of income in question, there was no reason to file the copy of the acknowledgement of filing of the return in the paper book of the assessee. The returned income at (-) Rs. 1,850 is accepted under section 143 (1) of the IT Act before taking the matter for scrutiny assessment and copy of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces. The assessee has also not made out any case satisfying the conditions of Rule 46A of the IT Rules in the matter for admission of additional evidence. The assessee only filed subsequent letter dated25-7-2007 of Shri Narottam Joshi, affidavit of Shri B.A. Patel and agreement dated22-1-2007 along with new unaudited balance sheet before learned CIT (A). In the absence of non-compliance of conditions of Rule 46A, there was no reason to take into consideration such evidences at the appellate stage. The new balance sheet PB-33, 34 and 35 are unaudited; therefore, no reliance could be placed on the same. In this view of the matter, we do not find any justification to interfere in the order of the learned CIT (A). The conduct of the assessee at the assessment stage in not disputing the return of income and the balance sheet are relevant factors, therefore, no interference is required. The assessee has taken somersault at the first appellate stage in its submission which cannot be permitted in law. PB-2 is the audit report of Shri P.P. Patel which contained the statement that the balance sheet and profit loss account dealt in this report are in agreement with the books of account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions of the assessee because the return for the subsequent assessment year 2005-06 has been filed on 27-10-2005 i.e. much later than this case selected for scrutiny and issue of the statutory notices on dated 25-7-2005 under section 143(2) of the IT Act and on 11-8-2005 under section 142(1) of the IT Act calling for the details. The return for assessment year under appeal was also processed on 21-2-2005 i.e. prior to filing of the return for assessment year 2005-06. There was ample opportunity for the assessee to fabricate the record for the subsequent year particularly when nothing was produced before the AO to explain the above addition as well as no reason explained as to why those additional evidences were not filed before the authorities below. Even otherwise, the finding of fact recorded above would prove that the assessee has failed to explain the genuineness of the share capital; therefore, addition shall have to be maintained. Therefore, the additional evidences now filed would not be relevant to the matter in issue and thus, in our view, should not be admitted for hearing. We accordingly, decline to admit the above additional evidences as argued by learned Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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