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TMI Blog2015 (3) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, the Assessing Officer has drawn an adverse inference holding that the companies are not in existence at the place stated. We note that the Assessing Officer is not correct in drawing such adverse inference on the basis of this report. As rightly pointed out by AR the inspector has visited this premises on the evening at 4.30 p.m. The inspector has confirmed that there was an office with a name plate, A. S. Grewal and Co. The inspector has further stated that the registered office of these companies belongs to a tax consultant. On the basis of these findings, the Assessing Officer has drawn adverse inference and made the addition. We are of the view that the Assessing Officer is not justified on the basis of this inspector report to hold that the identity of the shareholder company has not been established. On the contrary, as rightly pointed out, the common surname "Grewal" is good enough to indicate that the offices of these companies were at that premises. The inspector did not make any effort to make any further enquiry about these companies and also the Assessing Officer did not make any effort to carry the investigation further. The sole basis for making addition about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Appellant : Shri Ved Jain, Advocate Smt. Rano Jain, Advocate For the Respondent : Shri Sunil Bajpai, CIT ORDER B. C. Meena (Accountant Member).- The appeal filed by the Revenue and the cross-objection filed by the assessee emanates from the order of the Commissioner of Income-tax (Appeals)-I, New Delhi dated March 8, 2013 for the assessment year 2005-06. 2. The Revenue in I. T. A. No. 3353/Del/2013 has taken the following grounds of appeal : 1. The order of the learned Commissioner of Income-tax (Appeals) is not correct in law and facts. 2. On the facts and circumstances of the case the learned Commissioner of Income-tax (Appeals) has erred in law in deleting the addition of ₹ 9,00,000 made by the Assessing Officer on account of unexplained share capital received by the assessee-company without appreciating the fact that the creditworthiness of investors and genuineness of transaction could not be proved by the assessee. 3. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal. The only effective ground in the Revenue' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer to reappraise the already settled issues and assessment. 7(i) On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred both on facts and in law in confirming the addition to the extent of ₹ 21,00,000 on account of share application money. (ii) That the addition has been confirmed despite the assessee bringing all material and evidences on record to prove the identity, genuineness and creditworthiness of the shareholder. (iii) That the addition has been confirmed without bringing any adverse material on record. 8(i) On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred both on facts and in law in confirming the disallowance of an amount of ₹ 18,645 made by the Assessing Officer by invoking the provisions of rule 8D under section 14A of the Act. (ii) That the disallowance has been made without there being any such expenses being incurred by the assessee. (iii) That the above said disallowance has been made ignoring the explanation of the assessee that no expenditure has been in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly members of the directors of the company have purchased these shares later on in the year 2006 at 30 per cent. of the value at which these shares were issued. The Assessing Officer accordingly carried out the investigation. An inspector was deputed to find out the whereabouts of these companies. Based on the report of the inspector, the Assessing Officer held that the share capital received by the assessee-company is not genuine and he accordingly made the addition of ₹ 30 lakhs as unexplained credit under section 68 of the Act. 8. The Assessing Officer further made an addition of ₹ 18,645 under section 14A of the Income-tax Act by invoking the provisions of rule 8D. 9. Aggrieved by the order of the Assessing Officer, the assessee came in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) after examining the facts of the case, upheld the addition of the Assessing Officer about the non-genuineness of the share capital of the company. However, he was of the view that the family members of the directors of the assessee-company have purchased these shares after paying 30 per cent. of the value of these shares i.e., ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Pvt. Ltd., Grewal Steel and Holding Pvt. Ltd. Sumit Credit Co. Ltd. exist at Room No. 6/7 4th Floor, Clive Row or not. I did not find any name plate of the abovementioned companies at the very parti cular address. At the time of my inspection the door of Room No. 6/7 on 4th floor of 6 Clive Row was totally closed under lock and key. Only one wooden board was showing 'AS Grewal and Co., Tax consultant, 6 Clive Row 4th floor, Room No. 6/7, Kolkata' placed above the door. 4.5 Thus, the registered office of these companies belongs to a tax consultant. The facts and evidences mentioned above indicate that there were no reasons why an unknown company in Kolkata would invest in a Private Limited. company at Delhi such significant amounts. The identity of the creditors has not been established fully. In view of the factors mentioned above, the creditworthiness of M/s. AC Steel and Holdings Pvt. Ltd. and the genuineness of the transaction are in doubt. In this context reliance is placed on the following judgments :. . . 12.2. It was submitted that the above report in fact supports the case of the assessee. It was pointed out that the inspector has noted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned above, the creditworthiness of M/s. Sofed Comtrade Pvt. Ltd. and the genuineness of the transaction are in doubt. In this context, it further relevant to note the shares held by M/s. Sofed Comtrade Pvt. Ltd., were transferred to Smt. Anupama Bansal the daughter-in-law of the director of the assessee-company Smt. Geeta Devi Aggarwal for a total consideration of only ₹ 1,50,000 on June 30, 2006, i.e. at one-third of the cost of purchase. 12.5. On the basis of the above submission it was submitted that the findings given by the Assessing Officer and the Commissioner of Income-tax (Appeals) that the share capital received by the assessee is not correct. 12.6. As regards the addition on account of section 14A it was submitted that the assessee-company has made an investment of ₹ 44,54,119 out of which ₹ 36,50,000 was within the group company and in respect of the balance investment of ₹ 8,04,119.50 there is no change in the investment as compared to the last year. The Assessing Officer was not justified in invoking provisions of rule 8D and making this addition in the assessment year under consideration as rule 8D is applicable from the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer is not justified on the basis of this inspector report to hold that the identity of the shareholder company has not been established. On the contrary, as rightly pointed out, the common surname Grewal is good enough to indicate that the offices of these companies were at that premises. The inspector did not make any effort to make any further enquiry about these companies and also the Assessing Officer did not make any effort to carry the investigation further. The sole basis for making addition about these companies is the inspector report. No doubts have been raised by the Assessing Officer about the documents filed by the assessee-company. The inspector report as alleged above cannot be a basis for disbelieving the assessee's version. 13.2. Further in the case of Sofed Comtrade Pvt. Ltd. we note that no enquiry whatsoever has been done by the Assessing Officer. The observations made by him are only raising a doubt without carrying out any investigation. Surprisingly we note that the Assessing Officer was having doubt in mind but he never issued any notice or summon to any of the directors. It is not a case where any confessional statement has been recorded by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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