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TMI Blog2014 (1) TMI 1767X X X X Extracts X X X X X X X X Extracts X X X X ..... Svs. N.M. Ranka, Aashish Sharma & N.K. Jain Department by: Shri D.C. Sharma ORDER PER HARI OM MARATHA, JM:- This appeal of the assessee pertaining to assessment year 2009-10 is directed against the order of the ld. CIT(A)-I, Jaipur dated 07-05-2013. 2.1 Briefly stated, the facts of the case are that the assessee filed the return of income (ROI) for the assessment year 2009-10 declaring total income of ₹ 7,54,65,640/-. The assessment was completed u/s 143(3) of the I.T. Act, 1961 ('the Act' for short) on 29-12-2011 at a total income of ₹ 10,04,65,640/-. In this appeal, the assessee has raised following grounds. ''1. That the learned lower authorities grossly erred in holding remittance of ₹ 1 Crore by M/s. Maa Sarveshwari (India) Ltd., Delhi for share application, as unexplained and income u/s. 68 of the appellant Company, when the applicant Company was incorporated on 14.5.1981, is in existence till date; had PAN; was regularly filing returns of income and assessed; had bank account and remitted through banking channel; had confirmed independently to the learned Assessing Officer and had provided relevant material; was issued share certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the appellant. 4. That the learned lower authorities grossly erred in holding remittance of ₹ 40 Lacs by M/s. Ghachan Alloys Pvt.Ltd., Delhi for share application, as unexplained and incomeu/s.68 of the appellant Company, when the applicant Company was incorporated on 11.9.1996, is in existence till date; had PAN; was regularly filing returns of income and assessed; had bank account and remitted through banking channel; had confirmed independently to the learned Assessing Officer and had provided relevant material; was issued share certificates whereby identity, genuineness and creditworthiness was fully established. 4.1. That the learned lower authorities erred in drawing adverse inference on account of filing of nil income return by the shareholder and different addresses and I.P. address etc.. 4.2. That the learned lower authorities grossly erred when summons was served by the Assistant Commissioner of Income-tax, New Delhi, inspector found the place as well as the owner admitting rented to Shri Rajneesh Jain. 5. That the learned lower authorities grossly erred in holding remittance of ₹ 25 Lacs by M/s. Natraj Agrotech Pvt.Ltd., Delhi for share applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed; had bank account and remitted through banking channel; had confirmed independently to the learned Assessing Officer and had provided relevant material; was issued share certificates whereby identity, genuineness and credit worthiness was fully satisfied. 7.1. That the learned lower authorities erred in drawing adverse inference on account of filing of nil income return by the shareholder and I.P. address, audit report not filed despite service on the shareholder, etc. 7.2. That the learned lower authorities erred in drawing adverse inference on account of summons sent by the Assistant Commissioner of Income-tax, New Delhi remaining unserved with the remarks "left". It clearly shows the shareholder existed. 8. That the learned Commissioner of Income-tax(Appeals) erred in considering the appellant Company as a private limited company when the appellant company is unlisted public company, where Board resolved to increase the capital, invited applications, considered resolution, held general meeting passed special resolution, took decision to allot, allotted, issued certificates and filed requisite forms to the Registrar of Companies in-accordance with law. No default w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant and source was proved by the appellant company. 8.9. That the learned lower authorities failed to exercise the discretion u/s 68 judiciously and judicially 8.10. That the learned lower authorities erred in not providing certified copy of the documents noted at item No. 1 & 3 application dated 18.1.2012 and providing only in part for item No. 2 and 4 of the said application and non-providing inspection of the assessment records, though inspection fee was deposited and the lower authorities grossly erred in heavily placing reliance on such material, collected on the back of the appellant and not provided though demanded. 9. That the learned lower authorities erred in charging interest u/s. 234B of the Act, when there is no such liability and the addition was non-anticipated/unsustainable.'' 2.2 We have heard the rival submissions and have carefully perused the entire record available before us. We have also gone through the relevant provisions of law and related precedents thereto. In fact, only one issue related to addition on account of disallowance of share application money is involved in this case and all the grounds in respect of the same and sole issue . The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e application moneyvideAnnexure-5 on page No. 146 to 154. The applicants have furnished detailed address and the cheque number for the application money. 2.That subsequently the assessee company received a letter dated19/08/2011 on 26/08/2011 for 29/08/2011, regarding share application money received from the companies. A details reply dated 29/08/2011wassubmitted wherein it stands established that the statements ofShri Pramod Jain were not voluntary as explained by him vide his letterdated27/07/2011 and 04/08/2011 alongwith his affidavit duly notarized. We have also drawn your kind attention towards the Board'sCirculardated10/03/2003 and the instructions dated 11/03/2003 issued by the Central Board of Direct Taxes. Hence, as requested the so called statements of Shri Pramod Jain is no material and deserves to be excluded from assessment record of the asssessee company. 2.1 That if still your honour want to rely upon the so called statement of Shri Pramod Jain, you are very kindly requested to produce Shri Pramod Jain for our cross examination. We submit any statement recorded on the back of the assessee cannot be used against the assessee. Such user shall be in violation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . it has established identify of the share applicant, the share applicant has been issued the shares duly notified with the Register of Companies ; each one of the company has furnished its PAN number as well as balance sheet, audited accounts and the assessment details. The Hon'ble Supreme Court in CIT v/s Orissa Corporation Limited (1986) 159 ITR 78 affirmed judgment of the Orissa High Court and dismissed appeal of the Revenue when the assessee had given names and addresses and it was in the knowledge of the Revenue that the said creditors were income tax assesses, their index numbers were in the file of the Revenue. It held that the respondent could not doe anything further and that the respondent had discharged the burden that lay on it. 6.1 That in similar circumstance , the Hon'ble Rajasthan High Court, the Jurisdictional High Court, in the following case dismissed appeal of the Revenue. (i) CIT v. Shree Barkha Synthetics Ltd. (2004) 270 ITR 477(Raj.)- In the said case 6 out of 7 companies had furnished GIR/PAN and confirmations about their investments. Regarding individual investors, 9 out of 10 had confirmed the fact of making investments in the shares of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The proposed addition of ₹ 2,50,00,000/- is objected to. We humbly request not to make the illegal addition in the light of the binding precedents of Supreme Court, Jurisdictional and Other High Courts.'' However, the reply of the assessee did not satisfy the AO. After mentioning the reasons given in the assessee's case, the AO conducted further enquiries by issuing summon u/s 131 of the Act and the AO found that the parties are not genuine. Therefore, the couple of admissions made during survey that the enquires made by him, the AO has added this amount of ₹ 2.50 crores to the returned income by holding that identity and creditworthiness of these parties does not stand proved on record. 2.3 Aggrieved, the assessee went in appeal in first appeal and the ld. CIT(A) also followed the suit and confirmed this addition. 2.4 Before us, both the parties have reiterated their earlier stands. 2.5 Before, we proceed to decide the issue on merits, we would like to discuss the scheme of the Act and precedents on the issue involved in this appeal as under:- ''In cases where share application money is found recorded in the books of an assessee which may repre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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