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TMI Blog2017 (10) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... cer is directed to gather relevant facts and examine the persons involved in these transactions involving the inflow of ₹ 1.5 crore. These enquiries are necessary to arrive at the correct judgment on the genuineness of the transactions. Assessing Officer shall grant reasonable opportunity of being heard to the Assessee. Without going into merit of documents placed by assessee and without going into the correctness of the addition of the said amount of ₹ 1.5 Crore, we are of the view that the grounds raised by the assessee are required to be remanded to the file of Assessing Officer for fresh adjudication Non deduction of tds - payments involved in purchasing raw materials - Held that:- CIT(A) discussed the fact of non-requirement of effecting the TDS on the payments made for purchasing raw materials/finished goods from Shreeya Industries and Viana Lime Industries. The CIT(A) also gave findings that the provisions of section 194C of the Act are not applicable to the transactions of purchased goods from the said two vendors. He accordingly granted relief to the assessee on this count. We find that the same is reasonable and it does not recall for any interference. As s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med the said addition of ₹ 1.5 Crore despite the fact that all the subscribers of the premium confirmed their identity, credit-worthiness, source of payment and genuineness of transactions with six companies. It is merely a case of suspicion and presumption in the mind of the Assessing Officer that led the Assessing Officer to disbelieve the said transactions. Therefore, according to the Ld. AR such suspicion based addition should not have been confirmed by the CIT(A). 6. Explaining the facts relating to the subscription of share capital by six companies, Ld. Counsel submitted that during the year, the assessee issued additional share capital of 1,50,000 amounting to ₹ 1.5 Crore (1,50,000 shares) at a premium of ₹ 90/- per share. The names of six companies are i) Matrix Systel Pvt. Ltd. ii) Octopus Infotel Private Limited iii) Fairmont Venture Private Limited iv) Nextgen Infotel Private Limited v) Microchip Infotel Private Limited vi) Blazer Venture Private Limited. These six companies invested an amount of ₹ 25 Lakhs each totaling to ₹ 1.5 Crore. The Assessing Officer noticed that all these six companies share the common address i.e. 105, Sagar Sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s.271 (1) (c) of the Income Tax Act, 1961 is separately initiated. Thus, Assessing Officer proceeded to make addition of ₹ 1.5 Crore as per the discussion given in para 4.3 above. 7. During First Appellate Proceedings, assessee filed written submissions. He submitted that the fact of allotting ₹ 25 Lakhs worth shares to each of the said six companies and informed the fact of issuing/allotting them the shares with the face value of each share at ₹ 10/- and with the premium collected for each share at ₹ 90/-. He also furnished the fact relating to allotting the share certificates to the said six companies. Share certificate numbers and dates were also mentioned on the said document. Other documents relating to confirmation of the investment by the six Companies, the cheque or the banking details etc. were also submitted to the Assessing Officer. Assessee put forward various arguments in support of genuineness of transactions and they include that by Net Asset Valuation Method, the value of each share works out to ₹ 256/-. Therefore, as per the assessee collecting the premium of ₹ 90/- per share is convincingly justifiable. He also explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The terms and conditions of the said agreement are such that the onus of obtaining environment clearance from the state Government is put on the six companies and not on the appellant company. Why these six companies would take this impossible responsibility and put themselves in a condition where there monies are surely to be lost? Why the investors risk their investment doubly when the company itself is struggling to survive. That is because the said agreement is not meant to be implemented for business purpose, but for accommodation entries only. The entire transactions starting from the joint venture agreement dated 15/02/2010 to the date of re-purchase of said shares at the value of ₹ 10/- per share by the directors of the appellant are colourable devices to introduce capital funds in the appellant company through fraudulent means. The cases cited by the appellant are not applicable to the facts of this case. 9. Before us, regarding this addition of ₹ 1.5 Crore, Ld. Counsel of the assessee submitted that the said addition is unsustainable in law considering the documents filed by the assessee before the Assessing Officer and the First Appellate Authority. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act in the case of Pride Group of Pune, M/s. Benco Finance of Mumbai and M/s. Spectrum Vintrade Pvt. Ltd of Mumbai etc. Referring Shri Pradeep Gupta, CA, Ld. DR submitted that he confessed to the Department about the fact of providing professional services to float such companies on the instructions given by Shri Jagdish Prasad Purohit. Ld. DR for the Revenue further submitted that the facts relating to the Shell Companies and how they fall within the scope of the Shell Companies . Ld. DR mentioned that Assessing Officer has not given a finding of the fact that these companies constitute as Shell Company . Referring to various subscribed defaults in the details of these six companies who are floated by a team of Shri Pradeep Gupta and as well as Directors of these six companies, Ld. DR submitted that a comprehensive enquiry in to the facts is required in order to go into the root of the transactions involved in raising of the said ₹ 1.5 Crore in this case. 12. Replying to the above submission of Ld.D.R for Revenue, Ld. AR submitted that addition should not only be deleted in full but also it cannot be remanded to the file of Assessing Officer as Ld. DR proposed. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is directed to gather relevant facts and examine the persons involved in these transactions involving the inflow of ₹ 1.5 crore. These enquiries are necessary to arrive at the correct judgment on the genuineness of the transactions. Assessing Officer shall grant reasonable opportunity of being heard to the Assessee. Without going into merit of documents placed by assessee and without going into the correctness of the addition of the said amount of ₹ 1.5 Crore, we are of the view that the grounds raised by the assessee are required to be remanded to the file of Assessing Officer for fresh adjudication. Assessing Officer shall give reasonable opportunity of hearing to the assessee in accordance with law. Accordingly, grounds raised by the assessee are allowed for statistical purposes. 14. In the result, appeal of the assessee is allowed for statistical purposes. ITA No. 1242/PUN/2014 ( By Revenue) :- 15. The Revenue raised the following grounds and the same reads as under : 1. On the facts and in the circumstances of the case, the Hon'ble CIT(A), Nashik has erred in not granting an opportunity to the Assessing Officer under Rule 46A of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS provisions. Accordingly, the provision of section 40(a)(ia) and Section 194C are not applicable in this regard. Considering the said submission of the assessee, the CIT(A) granted relief. 20. We heard both the parties and we find that the CIT(A) granted relief to the assessee as per discussion given in para No. 8.2 to 8.5 of the order of CIT(A). In the said paragraph, the CIT(A) discussed the fact of non-requirement of effecting the TDS on the payments made for purchasing raw materials/finished goods from Shreeya Industries and Viana Lime Industries. The CIT(A) also gave findings that the provisions of section 194C of the Act are not applicable to the transactions of purchased goods from the said two vendors. He accordingly granted relief to the assessee on this count. We find that the same is reasonable and it does not recall for any interference. As such, we proceed to dismiss grounds of appeal raised by the Revenue and accordingly, the same is dismissed. 21. In the result, appeal of the Revenue is dismissed. 22. To sum up, the appeal of the assessee is allowed for statistical purposes and appeal of Revenue is dismissed. Order pronounced 18th day of October, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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