9911796707
TMI Blog2014 (8) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... py of share application form submitted by those companies before the AO - Copy of the share application form shows the name and address of the company who applied for shares, number of shares applied, amount, date and cheque number by which payment is made, name of the bank on which cheque was drawn and the permanent account number of the company - No discrepancy in any of these details is pointed out - all the shareholder companies are assessed to income tax and the acknowledgements of filing of their income tax returns by those companies were furnished - the creditworthiness of these companies cannot be disputed - each company is assessed to income tax and the shares were allotted to each company on the basis of the share application form - the genuineness of the transaction is also duly established - The AO doubted the creditworthiness or the genuineness of the transaction on the basis of mere presumption and suspicion without properly appreciating the evidences on record – Relying upon CIT, Orissa Vs. Orissa Corporation P. Ltd. - [1986 (3) TMI 3 - SUPREME Court] – Decided against Revenue. - ITA No. 4980/Del/2013, Cross Objection No. 1/Del/2014 - - - Dated:- 25-7-2014 - Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares on the other side. On the enquiries conducted through the Inspector of Income Tax, none of these companies was found at the available address. On these facts, the Assessing Officer rightly concluded that the assessee has not been able to discharge the onus which lay upon it to prove the identity of the shareholders, creditworthiness of the shareholders and the genuineness of the transactions. Therefore, the Assessing Officer rightly added the share capital/share premium as unexplained and made the addition of ₹ 2.50 crores under Section 68 of the Income-tax Act, 1961. The CIT(A) admitted the additional evidence though the same was objected by the Assessing Officer, without proper justification. That the CIT(A) allowed relief to the assessee on the basis of those additional evidences which were not produced before the Assessing Officer. She, therefore, submitted that the order of learned CIT(A) should be reversed and that of the Assessing Officer may be restored, or alternatively, matter may be set aside to the file of the Assessing Officer for fresh investigation considering the additional evidence which was produced by the assessee before the learned CIT(A) for the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f learned CIT(A) should be sustained and the Revenue's appeal may be dismissed. 6. We have carefully considered the submissions of both the sides and perused relevant material placed before us. Paragraph 2.1 of the assessment order reads as under:- 2.1 The enquiries conducted in the case of above companies it is found that all these companies were not doing real business and are engaged in the business of providing accommodation entries. All these companies are maintaining their bank accounts in the same area of the Daryagunj. There is negligible profit shown by these company though thereon balance sheet also show huge share premium reserves on one side and investments in unquoted shares on the other search. The summary details of their balance sheet of some companies is as under. 7. From the above, it is evident that in the above paragraph, the Assessing Officer alleged :- (i) The enquiries conducted in the case of shareholder companies revealed that these companies were not doing real business but engaged in the business of providing accommodation entries. (ii) These companies have negligible profit but their balance sheet shows huge share premium reserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness. On the other hand, substantial share capital/share premium would only support the case of the assessee that these companies have substantial worth to invest in the shares of the assessee company. 10. In page 3, the Assessing Officer has also observed that the enquiries got conducted through the Inspector of Income Tax and these companies were not found physically operating from the addresses given by the assessee. However, in the same paragraph, the Assessing Officer has mentioned that the summons were issued to those companies and in response to the summons, the companies have furnished the reply and also forwarded the copies of account statement, bank account and income tax returns. That the above finding by the Assessing Officer itself proves that the shareholder companies were existing at the address given by the assessee, otherwise, how the summons could be served upon and reply could be sent by those parties. In view of above, we hold that all the allegations made by the Assessing Officer for doubting the genuineness of shareholder companies are without any basis and contrary to the facts on record. 11. Now, we come to the grounds of appeal raised by the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the [Assessing Officer]) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.]. 13. From the above, it is evident that the assessee is not permitted to produce additional evidence unless the circumstances specified in clauses (a), (b), (c) (d) of Rule 46(1) exist. Clause (d) of Rule 46A(1) permits an assessee to submit additional evidence when the Assessing Officer completed the assessment without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. Therefore, let us examine whether the Assessing Officer allowed adequate opportunity to the assessee to adduce the relevant evidence. At page 53 of the assessee's paper book, the assessee has given the copy of show cause notice dated 14th December, 2011 issued by the Assessing Officer. By this letter, the Assessing Officer asked the assessee to show cause why the share capital/share premium of ₹ 2.50 crores should not be treated as unexplained and added to the total income under Section 68 of the Act. The assessee was directed to furnish the reply latest by 19th December, 2011. Thus, the time of mere five days was allowed. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eness of the transaction. Let us examine the facts of the assessee's case so as to arrive at the conclusion that the assessee has been able to discharge its onus. We find that the CIT(A) has examined the facts of each and every shareholder company in detail and then arrived at the following conclusion:- 9.4 Beetal Plantation Pvt. Ltd. (Rs.30,OO,OOO) On going through the paper book I find that the money has been received from bank account of Beetal Plantation Pvt. Ltd. maintained with Punjab National Bank, Darya Ganj, New Delhi and there are no deposit in cash in this bank account before applying for shares in the appellant company and payment has been made out of the money received by the shareholder company from Saline Steels Pvt.Ltd. and Shree Balaji Traders. I have also perused the bank account of the Saline Steels Pvt. Ltd. and Shree Balaji Traders where a sum of ₹ 20 Lac and ₹ 10 Lacs have been paid to the shareholder company on 05.10.2007 and 12.10.2007 Saline Steels Pvt. Ltd. and Shree Balaji Traders Pvt. Ltd. It is also seen that Beetal Plantation Pvt. Ltd. is assessed to income tax and so is the case of all the companies from whom credit has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegrator Consultants P. Ltd. is not a genuine transaction. On the contrary, I find that the appellant has placed evidences {paper book page 136} that this company has confirmed to ADIT regarding its investment with the appellant company during the post search investigation. As the appellant company has explained its source as well as the source of its shareholder, therefore, in view of the above discussion appellant company has established the identity, creditworthiness and genuineness of the transaction. 9.6 Pragati Portfolio Foods ~ Ltd. (Rs. 70,00,000) On going through the paper book I find that the money has been received from bank account of Pragati Portfolio Foods {P} Ltd. maintained with Oriental Bank of Commerce, Darya Ganj, New Delhi and there is no deposit in cash in this bank account before applying for shares in the appellant company and payment has been made out of the money received by the shareholder company from Shree Balaji Traders, Paradise Commercial Pvt. Ltd., Royal Traders Ltd., P. Chand Jewellers Pvt. Ltd., Shreya Portfolio Pvt. Ltd. and Vikas Holding Pvt. Ltd. It is also seen that Pragati Portfolio Foods (P) Ltd. is assessed to income tax and so i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd a sum of ₹ 30,OO,OOO has been shown as investment in the name of the appellant company. Further, the AO in the assessment order has referred to the enquiries conducted in the case of a few companies but the assessment order is totally silent as to what enquiries have been made on the strength of which he came to the conclusion that the investment made by Pragati Foods Pvt. Ltd. is not a genuine transaction. All these issues were raised by the appellant in the written submissions and the AO in the remand report dated 27.08.2012 has not been able to rebut or controvert any of these facts. As the appellant company has explained its source as well as the source of its shareholder, therefore, in view of the above discussion appellant company has established the identity, creditworthiness and genuineness of the transaction. 9.8 Tone Financial Services (P) Ltd. (Rs. 50,00,000) On going through the paper book I find that the money has been received from bank account of Tone Financial Services (P) Ltd. maintained with Oriental Bank of Commerce, Darya Ganj, New Delhi and there is no deposit in cash in this bank account before applying for shares in the appellant company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1.99 crores respectively and a sum of ₹ 20,00,000 has been shown as investment in the name of the appellant company. No adverse inference has been drawn against this company in the assessment order. Further, the AO in his report dated 27.08.2012 has also not controverted any of the above facts. In the assessment order passed under Section 153A/143(3), I find that there is no adverse finding by the AO on the basis of which the amount received from Unit Commercial Pvt. Ltd. is being considered as unexplained credit. The AO in the assessment order has referred to the enquiries conducted in the case of a few companies but the assessment order is totally silent as to what enquiries have been made on the strength of which he came to the conclusion that the investment made by Unit commercial Pvt.Ltd. is not a genuine transaction. As the appellant company has explained its source as well as the source of its shareholder, therefore, in view of the above discussion appellant company has established the identity, creditworthiness and genuineness of the transaction. 9.10 Thus in all the above 6 shareholders the appellant has placed on record substantial evidences to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eserves Surplus with the assesse company 1. M/s Beetal Plantation P.Ltd. 8,98,80,569 30,00,000 2. M/s Integrator Consultants P.Ltd. 15,94,31,726 50,00,000 3. M/s Pargati Portfolio Foods P.Ltd. 11,01,42,376 70,00,000 4. M/s Pragati Foods P.Ltd. 11,00,00,000 30,00,000 5. M/s Tone Financial Services 3,00,00,000 50,00,000 P.Ltd. 6. M/s Unit Commercial P.Ltd. 26,39,99,900 20,00,000 18. From the above, it is evident that the share capital including reserves and surplus of all the six companies who applied in the shares of the assessee company is several times more than the investment made by them in the shares of the assessee company. The assessee has also furnished the copy of the assessment order passed under Section 143(3) in the case of four companies, viz., M/s Beetal Plantation P.Ltd., M/s Integrator Consultants P.Ltd., M/s Pragati Foods P.Ltd. and M/s Unit Commercial P.Ltd. The assessee has produced certificate of incorporation issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, on the assessee's request, summons were issued under Section 131 of the Income-tax Act. However, the summons were returned unserved by the postal authorities with the remark left . Therefore, the Assessing Officer made the addition of ₹ 1,50,000/- for unexplained credit. On appeal, the Tribunal deleted the addition on the ground that the assessee had discharged the onus to prove the credit. The Hon'ble High Court rejected the application of the Department for reference. On appeal to Hon'ble Supreme Court, their Lordships held as under:- That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case, Ld. Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts in law in rejecting the contention of the assessee that the order passed by the learned AO under Section 153A is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in the eye of law. 3. On the facts and circumstances of the case, Ld. Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search. 4. On the facts and circumstances of the case the learned CIT(A) has erred both on facts in law in going ahead with the reassessment order and not closing the reassessment proceedings, despite the fact that no incriminating material belonging to the assessee was found and has been subject matter of addition in any of the reassessment under section 153A for all the six years. 5. On the facts and circumstances of the case the learned CIT(A) has erred both on facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
