9911796707
TMI Blog2015 (12) TMI 1526X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer of the assessee has not clarified what inquiry had been conducted and what evidences collected which goes against the assessee. The notice U/s 131 issued by the ITO, Investigation Wing, Kolkata were served in case of Vidya Agencies Pvt. Ltd. and Shivarpan Mercantiles Pvt. Ltd., but compliance could not be made on the given date because concerned officer was on leave. In case of Middleton Goods Pvt. Ltd. and Lactrodryer Marketing Pvt. Ltd., notices were served on the assessee and in compliance to the notice, the party submitted all the documents in the IT office - Decided in favour of assessee - ITA No. 686/JP/2014 - - - Dated:- 14-12-2015 - SHRI T.R.MEENA, AM SHRI LALIET KUMAR, JM For the Appellant : Shri Vijay Goyal (CA) Shri Gulshan Agarwal (CA) For the Respondent : Shri Kalika Singh (CIT) ORDER PER T.R. MEENA, A.M. This is an appeal filed by the assessee against the order dated 05/08/2014 of the learned CIT(A), Central, Jaipur for A.Y. 2008-09. The respective grounds of appeal are as under:- 1. On the facts and in the circumstances of the case and in law the ld CIT(A) Central, erred in confirming the addition of ₹ 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that during the year under consideration, the assessee has shown total turnover of ₹ 2.05 crores on which the assessee has returned a net loss of ₹ 13,29,220/- has been disclosed. During the year, the assessee had also started a branch at Indore for which separate books of account are maintained. Thereafter the ld Assessing Officer issued a detailed questionnaire U/s 142(1) vide letter dated 29/11/2012. The ld Assessing Officer observed that the assessee had obtained share capital and share application money from under mentioned companies, which is as under:- A.Y. Name Amounts (Rs.) 2006-07 M/s Hariom Vanijya Pvt. Ltd. 10,00,000/- 2006-07 M/s Brothers Trading Pvt. Ltd. 9,00,000/- 2006-07 M/s Nupur Finvest Pvt. Ltd. (Old name M/s Nupur Computers Pvt. Ltd.) 6,00,000/- 2008-09 M/s Viindya Agencies Pvt. Ltd. 10,00,000/- 2008-09 M/s Shivarpan Mercantiles Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents do not prove the creditworthiness of the parties as without examining the source of funds with these companies, the creditworthiness and genuineness of the transaction cannot be examined. (c) From the documents submitted by the assessee its appears that all the companies are simply entry providers who are purchasing the shares of other companies at very high premium and later on the shares are sold at very nominal value to the persons closely connected with the share issuing company. It is further, relevant to mention here that the shares are purchased by these companies at very high premium without considering the fair market value of shares of issuing company. (d) On perusal of the share holder register of the assessee company it is seen that the share issued to above named company were later on in F.Y. 2011-12 and 2012-13 were purchased by the Directors of assessee company Sh. Prateek Kothari and Sh. Piyush Kothari at very nominal rates while as on the date of transfer the fair market value of the assessee company was much higher in comparison to value of shares as on the date of issue. Therefore, there is no reason to believe that how a prudent person would purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department and filing of a copy of these before the Investigation Wing, Kolkata served no purpose. The summons had been issued for personal attendance of principal offices of the share holding companies to personally examine them regarding the nature of business and transactions being conducted by these companies, because it was apparent from the evidence submitted that these companies were indulging in providing accommodation entries through the route of share application money. On assessee s submission that the assessee had furnished the copy of bank statements, IT returns and balance sheets of these parties showed that these parties had sufficient fund to make investment in the share applications of the applicant company particularly as there was no cash deposit in their bank accounts, she held that these submissions of the appellant, particularly with reference to the observations of the Hon'ble Delhi High Court in the case of Onassis Axlex P. Ltd. Vs. CIT (2014) 364 ITR 53 (Delhi) wherein the assessee received a sum of ₹ 1.8 crores as share application money out of which the amount in dispute was ₹ 80 lacs. The assessee filed confirmations in case of three s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns were issued for personal attendance. Another interesting observation made is that all these four companies were buying shares of the same companies for example M/s Vinayak Agency Pvt. Ltd. purchased the shares of the appellant and of Vinayak Industries, similarly Shivarpan Mercantile Pvt. Ltd, had also purchased shares of Vinayak Industries alongwith that of M/s Jadau Jewellers Manufacturing Pvt. Ltd. On 06/07/2007 Shivarpan Mercantile Pvt. Ltd. received ₹ 1 lakh and ₹ 9 lakh on 07/6/2009 and transferred these funds to M/s Radha Casating and Metalic Pvt. Ltd.. On examination of the portfolio statement of Middleton Goods Pvt. Ltd. it was seen that apart from the appellant the company had also given an entry to M/s Radha Casting and Metallic Pvt. Ltd. like Shvarpan Mercantile Pvt. Ltd. Furthermore, the same pattern of cash, inflow and outflow was discernible, huge amounts of monies were being transferred in from different accounts and then transferred out on the same date or proximate dates as share application money to different companies. From the above discussion, it is apparent that all the four companies had been created with the express purpose of giving acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prohibition of investigation of source of source in the case of share application money it is observed that it should not be construed that the various judicial pronouncements have given a carte balance to the assessee to introduce their unaccounted money via share application from entry providers. The law has been enunciated very clearly in the case of CIT vs Hospitality and CIT Vs Vijay Power Generators Ltd. ITA No. 514 of 2007 by the Hon'ble Delhi High Court. The Hon ble Division Bench of Delhi High Court in the case of CIT Vs Divine Leasing Finance Ltd. (299 ITR 268) has highlighted the menace of conversion of unaccounted money through the masquerade or such channels of investment in the share capital of company and thus stressed upon the duty of the Revenue to firmly curb the same. A distinction was also made in the case of a public issue, where it was observed that the company concerned could not be expected to know every detail pertaining to the identity as well as the financial worth of each of its subscribers. However, in the case of a private limited company the legal regime would not be the same. In the case of the latter that is in the case of a private Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le by the ld CIT(A) wherein the Hon ble Court held that transactions were made through banking channel, confirmation of the share applicant has been filed, but the case referred by the Assessing Officer, no investigation was made by the Assessing Officer, therefore, is not applicable on the facts of the case. The ld AR s argument is also rejected by the ld CIT(A) on the ground that no incriminating documents were found during the course of search regarding accommodation entries. Therefore, assessment made U/s 153(A) read with Section 143(3) is void ab initio. She further held that in this case no scrutiny assessment on the basis of original return U/s 143(3) has been made by the Assessing Officer. Only return had been processed U/s 143(1) of the Act. She distinguished the decision of Hon ble Rajasthan High Court in the case of Jai Steel (India) Vs. ACIT (2013) 259 CTR 281 (Raj) on abated proceedings and completed the assessment proceedings. She further held that the Hon ble Court has observed that when no incriminating material is found during the course of search and seizure and assessment proceedings have been completed then this would not abate as they are not pending on the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee before the ld proved the identity, genuineness and creditworthiness of the share holders by submitting the following evidence: Name Party Details enclosed herewith Vindya Agencies Pvt. Ltd 1. Copy of share application in lieu of confirmation containing the name/address/PAN of party, detail of payment received etc. 2. Copy of board resolution. 3. Copy of directors report, auditors report, Balance Sheet, Profit Loss a/c and supporting annexure for 31.03.2008 4. Copy of Bank statement. The copies of documents are enclosed at PB Page 39-54. Shivarpan Mercantiles Pvt. Ltd 1. Copy of share application in lieu of confirmation containing the name/address/PAN of party, detail of payment received etc. 2. Copy of board resolution. 3. Copy of bank a/c of party showing the payment to assessee against share application money. 4. Copy of Ack. Of Income Tax return of AY 2008-09 AY 2007-08 5. Copy of directors report, auditors report, Balance Sheet, Profit Loss a/c and supporting annexure for 31.03.2008. The copies of documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued the notice was on leave. Middleton Goods Pvt. Ltd The notice duly served to party and in compliance to the notice the party submitted all the documents in Income Tax office. The copy of letter submitted by the party is enclosed herewith. (The copy of letter filed is at PB Page 118.) Lactrodryer Marketing Pvt. Ltd The notice duly served to party and in compliance to the notice the party submitted all the documents in Income Tax office. It is argued that the summons issued by the department has been served on all the companies. The summons served were complied by two companies and other two companies could not comply the summons because of the reasons mentioned in the above paras. Further it is relevant to mention that all the companies are Pvt. Ltd companies duly registered with Registrar of Companies and duly existence and regularly filing their balance sheets etc. in ROC and the current status of the companies can be verified from website of ROC. The assessee submitted a print outs of master data of above companies taken from the website o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion in the case of All Cargo Global Logistics Ltd. Vs DCIT 2012-TIOL-391-ITAT-Mum-Special Bench and argued that assessment made by the A.O. U/s 153A is not valid as per law. He further relied on the following decisions on this issue:- (i) CIT V/s Smt. Shaila Agarwal, 204 Taxman 276 (Allahabad High Court) (ii) Vishal Dembla Vs Deputy Commissioner of Income Tax ITAT, JODHPUR BENCH ITA Nos. 304 to 308/Jd/2013; 22nd July, 2013 (2013) 93 DTR (Jd)(Trib) 1 (2013) 36 CCH 484 Jodh Trib (2014) 61 SOT 10 (Jodhpur)(URO). (iii) Marigold Merchandise (P) Ltd Vs Deputy Commissioner of Income Tax ITAT Delhi ITA Nos. 2666 2667/Del/2013 27th December, 2013 (2013) 38 CCH 050 Del Trib. (iv) Gurinder Singh Bawa v. DCIT (2012) 28 Taxmann.com 328 (Mum trib). (v) Kusum Gupta v. DCIT, ITA Nos. 4873/Del/2009, (2005- 06) 2510 (A.Y. 2003-04), 3312(A.Y. 2004-05) 2833/Del/2011 (A.Y. 2006-07). (vi) MGF Automobiles Ltd. V. ACIT, ITA No s 4212 4213/Del/2011 (ITAT Delhi). (vii) Tarannum Zafar Khan Vs. ACIT, ITA Nos. 5888 to 5890/Mum/2009. (viii) Vee Gee Industrial Enterprises vs. ACIT, ITA No. 1/Del/2011 ITA No.2/Del/2011 (ITAT Delhi). (ix) ITA Nos. 1153 to 1159/Hyd/2012 Mir Mazhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The case laws referred by the ld CIT(A) and Assessing Officer are not squarely applicable on the facts of the case. Therefore, he prayed to hold the proceeding invalid and also on merit, this appeal is deserved to be allowed in favour of the assessee. 5. At the outset, the ld CIT DR has vehemently supported the order of the ld CIT(A) and has drawn our attention on findings given by the ld CIT(A) and case laws referred by her and argued that the assessee has not discharged its onus cast U/s 68 of the Act i.e. identity, genuineness and creditworthiness of the share holders. The ld DR relied on the decision in the case of CIT Vs. Navodaya Castles Pvt. Ltd. wherein the Hon'ble High Court set aside the order of the ITAT on the ground that the Tribunal merely reproduced earlier order of the CIT(A) on addition made U/s 68 of the Act as share application money. The ld CIT DR further argued that the Hon ble Apex Court decision in the case of CIT Vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195 has distinguished in which SLP has been filed by the assessee and decided in favour of the revenue. Therefore, he prayed to uphold the order of the ld CIT(A). 6. We have heard the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
