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TMI Blog2017 (12) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... d not undertake even a single step to prove identity, capacity and genuineness/ creditworthiness of its 13 share premium paying applicants. We repeat that this is not the assessee's case of having not being afforded adequate opportunity of hearing in the instant consequential proceedings. The same factual position continued in the three remand proceedings as well wherein it would file only photocopy of the confirmations in some of the cases. All the above 13 parties seem to be based in Ahmedabad only. The assessee still could not produce even one of the 13 parties in question We notice from the case record that all the above photocopy confirmations are dated September 1, 1995 i.e. well before this Tribunal's remand direction dated June 12, 2009. Rather the same is well before the Commissioner of Income-tax (Appeals)'s former order dated September 14, 2005 (supra). All this reflects the assessee's lack of explanation despite getting its matter remanded back to the Assessing Officer. We further observe that the assessee's act and conduct in not being able to file even a single original confirmation and its subsequent action in submitting all 4 photocopies of the same date indicates a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein that the assessee had not produced any of its relevant vouchers in order to get the expenditure in question verified from the field authorities. 3. The assessee filed I.T.A. No. 2253/Ahd/2005 before this Tribunal. The co-ordinate Bench remitted the said first round litigation back to the Assessing Officer in its order dated June 12, 2009 reading as under : "16. We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. In the instant case, the Assessing Officer completed the assessment under section 144 of the Income-tax Act, 1961 due to failure of the assessee to furnish the required details. The assessee explained before the Assessing Officer that all its books of account and vouchers, etc., were kept in the factory premises which was sealed by the bank and, therefore, requested for keeping the assessment proceedings in abeyance till the release of the books of account. However, the Assessing Officer completed the assessment because of the time limit available in the statute was going to be barred for passing the order. In the assessment so made, the Assessing Officer made an addition by estimating the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the lower authorities and restore the issue to the file of the Assessing Officer. The Assessing Officer is directed to reframe the assessment on all the above issues in accordance with law, after proper verification and after allowing sufficient opportunity of hearing to the asses see. All the above stated grounds are allowed for statistical purposes." 4. The Assessing Officer took up consequential proceedings. He appears to have issued under section 143(2) notices dated September 2, 2009, June 29, 2010, July 6, 2010 and July 28, 2010 to the assessee. Shri Patel (supra) appears this time on November 1, 2010. The Assessing Officer then issued section 144 notice dated November 19, 2010. The assessee replied the same on November 25, 2010 pleading therein that learned. The City Civil Court, Ahmedabad had sealed its premises in its order dated August 22, 2007. All of its books were claimed to be lying in the said sealed premises. The Assessing Officer therefore reiterated his earlier addition in the second round of assessment as well finalised on December 7, 2010. 5. The assessee instituted its latter lower appeal on January 19, 2011. It filed the following documents b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reased by approximately 33 per cent. over the previous year whereas the interest expense has increased by 200 per cent. Thus there is abnormal increase in expenses and in view of the above the Assessing Officer has correctly and judiciously made the addition on the basis of the net profit instead of disallowing the entire claim of interest. (B) Claim of depreciation During the relevant assessment year the assessee has made a huge investment in fixed assets and claimed depreciation for full year on the same. However during the assessment proceedings and set aside proceedings the assessee has not established the source of investment in fixed assets and also not established whether the assets were put to use during the year or not. The assessee has also not established whether the interest up to the date of put to use (if the assets were purchased from borrowed funds) has been capitalised or not. In view of the above the claim of the assessee is not justified and the Assessing Officer has correctly and judiciously made the addition on the basis of net profit instead of disallowing the entire claim of depreciation." 7. The Assessing Officer thereafter submitted two more reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s plea of availability of record. It fails to justify its total non-co-operation in the Assessing Officer's consequential proceeding resulting in the second ex parte assessment as well. Its Form 35 filed before the lower appellate authority does not explain its non-co-operation in various grounds pleaded therein. We thus reject the instant first argument. 10. The assessee's next contention refers to merit of the issue. It takes us to page(s) 135-137 (its letter dated October 7, 2012) addressed to the Commissioner of Income-tax (Appeals) tabulating various items of sale, raw materials consumed, purchases, manufacturing expenses, selling, administrative and other expenses followed by interest and depreciation as under : Particulars Amount for accounting year 2001-02 Amount for accounting year 2000-01 Sales 334,851,676 251,343,604 Raw material consumption and purchases of finished goods 314,706,967 243,415,167 Manufacturing expenses 9,093,575 5,957,066 Selling, administrative and other expenses 2,158,998 1,554,478 Interest 12,950, 103 4,332,087 Depreciation 5,626,817 2,262,716 Profit/loss (before tax) 9,517,392 12,579,237 11. The assessee according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not produced books of account in support of the profits shown in the return of income before the Assessing Officer or during the course of appellate proceedings, despite the submission made before the hon'ble Income-tax Appellate Tribunal that relevant books are now with the assessee and the same can be produced before the Department for verification. In view of the non-production of books of account and other documents, the profit estimated by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals)-XIV, Ahmedabad vide his order dated September 14, 2005 is confirmed." 13. We do not find any substance in the assessee's instant technical argument as well. We find that it is seeking to read the Commissioner of Income-tax (Appeals)'s above extracted observation in isolation. It is evident that the Commissioner of Income-tax (Appeals)'s relevant portion comes after a detailed extract of the third remand report (supra) which has already gone unrebutted from the assessee's side despite the fact that the instant case involves 8th innings in all (supra). We accordingly are of the view that assessee's instant technical plea does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,30,000 stood received well before March 31, 2001. The Assessing Officer's second remand report dated March 27, 2012 and the final one dated August 8, 2012 (supra) did not accept the same. He observed in his last remand report that the assessee has filed a summary of share premium account along with photocopy of confirmation from Shri Chandravadan M. Patel, Unity Pipes Pvt Ltd., Shri K. N. Patel and Shri Manilal M. Patel instead of filing original confirmation along with the bank statements and other details. The Commissioner of Income-tax (Appeals) thereafter confirmed the impugned addition in paragraph 7 of his lower appellate order under challenge. 16. The assessee pleads in the course of hearing to have filed all necessary details proving identity, capacity, genuineness and creditworthiness of its share premium paying parties. It refers to page 89 of the paper-book annexure 6 comprising of the following 13 share premium paying parties as under : Details of share amount and share premium a/c. Annexure-6 Name of shareholders Total amount Share capital Share premium Ankush Finstock Ltd. 35,00,000 3,50,000 31,50,000 Ankush Overseas Ltd. 15,00,000 1,50,000 13,50,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned addition under section 68 of the Act. Case law Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), CIT v. Durga Prasad More [1971] 82 ITR 540 (SC), CIT v. United Commercial and Industrial Co. (P.) Ltd. [1991] 187 ITR 596 (Cal) and CIT v. Precision Finance Pvt. Ltd. [1994] 208 ITR 465 (Cal) is relied upon in seeking us to uphold the impugned addition. 19. We have given our thoughtful consideration to above rival submission. Relevant findings perused. There is no dispute that the assessee has received share premium at the rate of ₹ 90 per share in case of face value of ₹ 10 each. We reiterate first of all that there is no explanation much less a justifiable one in support of its non-co-operation adopted in the second round of assessment before the Assessing Officer taken up in furtherance to this Tribunal's directions. The assessee admittedly did not undertake even a single step to prove identity, capacity and genuineness/ creditworthiness of its 13 share premium paying applicants. We repeat that this is not the assessee's case of having not being afforded adequate opportunity of hearing in the instant consequential proceedings. The same factual position co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble apex court's two decisions in Sumati Dayal and Durga Prasad More (supra) propounding genuineness theory on the touchstone of human probability squarely applies in the facts of the instant case as the assessee's entire evidence has not been able to satisfy any of the above four benchmarks. 21. We further deem it appropriate to emphasis significance of the above genuineness aspect in such kind of cases inviting section 68 addition. There is no quarrel that the assessee has received the impugned share premium at ₹ 90 per share having value of ₹ 10 each. It is therefore the assessee's onus to prove the genuineness thereof to the hilt. As against this, it admittedly has not been able to even prima facie demonstrate the above intrinsic value of shares to be at par with the impugned share premium charged as followed by producing cogent material on record to show the crucial nexus between the premium in question vis-Ã -vis its in built potential being the subscribing company justifying the exorbitant premium in dispute claimed to have been received in its own right. This clinching onus has remained undischarged despite a number of innings afforded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant in respect of the said amounts has been rejected unreasonably'. I will be superficial in my approach in case I do not examine the claim of the assessee on the basis of documents and affidavits filed by the assessee and overlook clear the unusual pattern in the documents filed by the assessee and pretend to be oblivious of the ground realities. As the hon'ble Supreme Court has observed, in the case of Durga Prasad More (supra), '. . . it is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Sabha v. Abdulbahi Faizullabhai, AIR 1976 SC 1455 'It is trite, going by Anglophonic principles that a ruling of a superior court is binding law. It is not of scriptural sanctity but of ratio-wise luminosity within the edifice of facts where the judicial lamp plays the legal flame. Beyond those walls and de hors the milieu we cannot impart eternal vernal value to the decisions, exalting the precedents into a prison house of bigotry, regard less of the varying circumstances and myriad developments. Realism dictates that a judgment has to be read, subject to the facts directly presented for consideration and not affecting the matters which may lurk in the dark'. Genuineness of transactions thus cannot be decided on the basis of inferences drawn from the judicial precedents in the cases in which genuineness did come up for examination in a very limited perspective and in the times when shell entities were virtually non-existent. As the things stand now, genuineness of transactions is to be examined in the light of the prevailing ground realities, and that is precisely what I have done. In my considered view, and for the detailed analysis set out earlier in this order, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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