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TMI Blog2015 (11) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... The hon’ble Bombay high court in case of CIT vs. Garbiel India (1993 (4) TMI 55 - BOMBAY High Court) deals with a similar situation wherein the CIT revised an assessment on the ground that the same did not contain discussion in regard to a deduction claim which alleging non application of mind. Their lordship observe that the Assessing Officer had made inquiries in view of all necessary explanation. It is held that the Assessing Officer had allowed the claim on being satisfied with assessee’s version and the same cannot be held erroneous merely because the assessment sought to be revised did not contain an elaborate discussion. The hon’ble Delhi high court in case of (.2009 (9) TMI 633 - Delhi High Court) CIT vs. Sunbeam Auto Ltd has also rejected Revenue’s arguments in identical facts and holds that the Assessing Officer in assessment order is not required to give detailed reasons in respect of each and every item. Their lordship draw a fine distinction between lack of inquiry; and inadequate inquiry and hold that if there was an inquiry even inadequate that would not by itself give an occasion to the Commissioner to invoke jurisdiction u/s. 263 of the Act. We reiterate the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is company and its related companies. The directors of these companies were one Mukesh M.Choksi and Jayesh K-Sampat. During the course of the search it was revealed that the Mahasagar Securities private Limited and its related group of 34 odd companies (the prominent ones being Alliance Intermediaries Network Private Limited, M/s. Mihir Agencies Private Limited, M/s. Goldstar Finvest Private Limited etc. all run by Mukesh Choksi) were engaged in fraudulent bilting activities and in the business of providing Bogus speculation profit/loss, short term/long term capital gain/loss, Share application money, commodities profit/loss on commodity trading (Through MCX) and had been continuing this business for Many years. In the list of clients who have taken accommodation entries from these companies, the name of this assessee i.e. Harmony Yarn pvt. Ltd. is also appearing. During the course the proceedings the statement of Shri Mukesh Choksi, main person behind this scam, was also recorded on 25-11-2009. In his statement recorded on Oath he has admitted that these transactions are bogus. From the details submitted by the Investigation wing it is seen th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indulging in-billing entry and total addition of ₹ 26 lakh were made as under: 1) Mihir Agency Pvt. Ltd. ₹ 11,00,000/- 2) Buniyad Chemicals Pvt. Ltd. ₹ 15,00,000/- Total ₹ 26,00,000/- 2. However, from the examination of records it is found that no proper verification appears to have been made in respect of 11 other, parties from whom the assessee company had obtained share application money and share premium to the tune of ₹ 56 lakh as given hereunder: Sr. No. Date of Allotment Name of Party Amount of Shares Amount Of premium 1 28.02.2005 M/s. Venus Dealing Pvt. Ltd. 10,00,000 2 28.02.2005 M/s. Kashmikal Mercantile Pvt. Ltd. 5,00,000 3 28.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not be revised u/s. 263 of the I.T. Act. For this purpose, hearing, in your case is fixed on 19-.02.2014 at 12.30 P.M. If in case, you do not wish to avail the opportunity of being heard in person or through your authorized representative, you may, if so, desired, make you submission in writing, on or before the date of hearing, which will be duly taken note of before passing any order. 5. The assessee filed its reply pleading therein that the Assessing Officer had made all verifications before framing reassessment sought to be revised in proceedings u/s. 263 of the Act. The CIT has declined the same in the order under challenge reading as follows: 5. The contention of the assessee is that complete details with respect to all the share applicants were submitted even in reassessment proceedings and were verified by the A.O. For this the assessee relied on the order of the A.O, and stated that since all the required details, were submitted and accepted by the A.O, onus in respect of every share applicant with regard to the genuineness and creditworthiness had been discharged. 5.1 It would be pertinent to-mention the fact leading1 to reassessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. 5,00,000 4 28.02.05 M/s. SatiTraxim Pvt. Ltd. 5,00,000 5 15.03.05 M/s. Akkal Paper Mills Pvt. Ltd. 60,000 2,40,000/- 6 15.03.05 M/s. Felicity Finance Leasing Pvt. Ltd. 60,000 2,40,000 7 15.03.05 M/s. J.M.D. Mercantiles Pvt. Ltd. 1,00,000 4,00,000 8 15.03.05 M/s. Sunflower Vinimay Pvt. ltd. 1, 00,000 4,00,000 9 15.03.05 M/s. Hiteshwari Marketing Pvt. Ltd. 1,00,000 4,00,000 10 15.03.05 M/s. Sugam Commercial Pvt. Ltd. 1,00,000 4, 00, 000 11 15.03.05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,00,00/- The company has filed its return showing loss of ₹ 10,29,605/-. The shares of the company is taken by 3 parties viz. Rajkumar Goehka, Girdharilal Parsarampuria and Jitendra Kumar Agarwal by 100 shares each. 5 M/s. Akkal Paper Mills Pvt. Ltd. Rs.3,00,000/- The company has filed its return showing loss of ₹ 6,72,167/-. The shares of the company is taken by one Raghubir Prasad Dudhwawala and Shankar Prasad Dudhwawala by 10 shares each. M/s. J.M.D. Mercantiles Pvt. Ltd. 6 M/s. Felicity finance Leasing Pvt. Ltd. Rs.3,00,000/- The company has filed its return showing loss of ₹ 2,30,386/- The shares of the company is taken by one Pradip Kumar Kundu and Nikhil Jana by 10 shares each. 7 M/s J.M. D. Mercantiles Pvt. Ltd Rs.5,00,000/- The company has filed its return showing loss of ₹ 6,00,341/-. The shares of the company is taken by one Chandra Prakash Sharma and Chanda Sharma by 100 shares each 8 M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 M/s. Sunflower Vinimay Pvt. Ltd. Kolkata 5,00,000 4 M/s. Sugam Commercial Pvt. Ltd. 5,00,000 5 M/s Edmond Commercial Pvt Ltd, Kolkata 5,00,000 6 M/s. Bhagya Laimi Mercantile Pvt. Ltd. Kolkata 5,00,000 It can be seen from the above table that 5 of the 6 parties are the same parties who have supposedly given share application money to the assessee, i.e. M/s. Harmony Yarn Pvt, Ltd and whose names are appearing in table given in paragraph 5.5. 5.7.1. During the course of assessment proceedings in the case of M/s Pankaj Enka Pvt Ltd, the identity, genuineness and credit worthiness of the share applicants were examined in detail by the A.O. It is, also noticed from the assessment folder of M/s Pakaj' Enka Pvt Ltd, that the; A.O has issued notice U/s' 133(6) in all these case, and on verification of the reply submitted by them it was noticed by the A.O that all the parties had given similar reply, which were received on the same day and that was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no reply to the show cause and the share application money was held as unexplained as to its nature and source and addition was made in the case of M/s. Pankaj Enka Pvt. Ltd. is an associate concern of the assessee, M/s. Harmony Yarn Pvt. Ltd. 5 of the transactions of share application held to be non genuine in the ease of M/s Pankaj Enka Pvt. Ltd are with persons who also appear in the list of 41 persons applying for shares of M/s. Harmony Yarn Pvt. Ltd (the Assessee). 6. In view of the facts narrated above and in the light of fresh evidences, it was the duty of the A.O. to investigate the genuineness of the share application transactions of the assessee with the 11 persons mentioned supra and not to accept them on the basis of the details provided by the assessee which were same as in the original assessment. Not making any independent inquiry into these transactions in the light of the fresh evidences and merely accepting the genuineness of the transactions on the basis of details already on record in the original assessment, makes the assessment order erroneous in as much as it is prejudicial to the interest of Revenue. It is wrong on the part of the assessee to sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court in case of CIT vs. Garbiel India (1993) 71 Taxman 585 (Bom) deals with a similar situation wherein the CIT revised an assessment on the ground that the same did not contain discussion in regard to a deduction claim which alleging non application of mind. Their lordship observe that the Assessing Officer had made inquiries in view of all necessary explanation. It is held that the Assessing Officer had allowed the claim on being satisfied with assessee s version and the same cannot be held erroneous merely because the assessment sought to be revised did not contain an elaborate discussion. The hon ble Delhi high court in case of (2010) 189 Taxman 436 (Del) CIT vs. Sunbeam Auto Ltd has also rejected Revenue s arguments in identical facts and holds that the Assessing Officer in assessment order is not required to give detailed reasons in respect of each and every item. Their lordship draw a fine distinction between lack of inquiry; and inadequate inquiry and hold that if there was an inquiry even inadequate that would not by itself give an occasion to the Commissioner to invoke jurisdiction u/s. 263 of the Act. We reiterate the facts of the instant case making it amply clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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