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TMI Blog2018 (7) TMI 1555X X X X Extracts X X X X X X X X Extracts X X X X ..... ndu Traders and Ashwin Pharmaceuticals, there is no addition of this nature made while framing assessment under section 143(3) of the Act. Thus, the Revenue cannot take different stand in respect of these two assessee. Therefore, CIT(A) as well as Assessing Officer was not correct in making substantive/protective additions in the hands of the assessees’ herein. Since the Ld. AR/assessee admitted that there is difference in the amount received and transferred to Rock Land Hospital group of ₹ 3,50,080/- in case of Sukumar and ₹ 2,50,638 in case of Sanskriti, the same needs to be verified by the Assessing Officer. Therefore, we direct the Assessing Officer to verify this difference as per the findings given hereinabove. - I.T.A .No. 6074/DEL/2017 And I.T.A .No. 6072/DEL/2017 - - - Dated:- 23-7-2018 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. P. C. Yadav, Advocate For The Respondent : Sh. S. S. Rana, CIT DR ORDER PER SUCHITRA KAMBLE, JM These two appeals are filed by the two separate assessees against the orders dated 05/09/2017 and 30/08/2017 passed by the CIT(A)-28, New Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent entities during the year and this amount was used to allot shares to these entities for ₹ 50 per share and at a premium of ₹ 40 per share. In view of receipt of fresh capital/application money during the year, assessee was requested by the Assessing Officer to produce the share applicants along with their books of accounts and bank statements. The assessee relied on the fact that the money was raised for investing in group companies namely, M/s. Rockland Hospitals (P) Ltd. and M/s. Rockland Hotels Ltd. Since the proceedings/enquiries in Rockland group were already under Central Circle-11, the assessee requested to keep the assessment proceedings in abeyance. Since there was failure on the part of the assessee to produce the share applicants with the books of account, the Assessing Officer treated it as failure of proving the creditworthiness of such creditors (share applicants). 4. The Assessing Officer held that since the assessee company is a private limited company and has close proximate relationship with the promoters / directors and share holders, therefore, there should not be any difficulty on the part of the assessee to produce somebody from the share a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viib). Consequently, the excess premium, as calculated by the Assessing Officer at ₹ 90,57,490/- was added by him in the hands of the assessee u/s 56(2)(viib) of the Act. Thus, the income of assessee was assessed at ₹ 90,04,490/- against the nil income disclosed by the assessee in the return of income. 5. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 6. The Ld. AR submitted that the present appeal is arising from the order of the CIT (A) dated 05.09.2017 and relates to AY 2014-15. The assessee has raised 5 grounds of appeal. Ground Nos. 1 and 5 are general in nature and in other grounds the assessee has basically challenged the additions of ₹ 1,23,50,000/- added by the Assessing Officer under section 68 of the Act on protective basis and sustained by the CIT (A) on substantive basis. In order to verify the genuineness of ₹ 1,23,50,000/-, the Assessing Officer raised queries to the assessee. The Assessee replied that the amount received was received on behalf of M/s Rock Land Group and has been invested in shares of Rock Land Hospital and in fact the entity M/s Rock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 28 of PB-2 3,50,080/- claimed by the assessee administrative expenses Sanskriti 10,39,00,000/- 9,53,49,362/- 2,50,638/- claimed as Administrative expenses. 10. The Ld. AR submitted that M/s Rockland Hospital has received amounts from 5 entities of M/s Rock Land Hospital which are as under:- Sl No . Name of the Investor Share capital Share premium Total States of Asst. 1 Purendu Traders 13,92,530/- 1,24,07,442/- 1,37,99,97 2/- No addition of premium or commission was made 2 Sulkumar Enterprises 12,10,,890/- 1,07,89,030/- 1,19,99,92 0/- Impugned before ITAT 3 Sunskiriti 96,21,530/- 8,57,27,832/- 9,53,49,36 2/- Impugned before ITAT 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal addition of commission of ₹ 2,47,000 is considered it is submitted that in the case of Rock Land Hospital assessment a detailed analysis of the companies and their profit and loss account has been made by the AO of Rock Land and it has been categorically mentioned that the Companies immediately transferred the sums of share application money to the Rock Land Hospital Group. It is no where mentioned that the Rock Land Hospital has paid them any commission on this arrangement. The Ld. AR pointed out that nothing has been found in search of Rock Land on the basis of which it can be said that Rock Land has paid anything out of books to these companies, which had arranged share application money to the group. 12. The Ld. AR submitted that there is a difference between the amount received and transferred to Rock Land Hospital group. In the case of Sukumar the difference is ₹ 3,50,080/- and in the case of Sanskrit it is submitted that the difference is ₹ 2,50,638/-. In this regard it is submitted that these amounts were incurred by assessee on maintaining the corporate entity of the Companies. And nothing has been brought on record by the revenue to establish tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 133(6) were issued to 22 persons in the case of Rockland Hotels P Ltd. and to 27 persons in the case of Rockland Hospitals Ltd. None of these notices were answered. Either those notices were returned back or no reply was received. Accordingly, additions u/s 68 were made in both the Rockland Group of companies against which they have not filed any appeal. Despite being given adequate opportunity, the assessee failed to file any details regarding identity of the investors, genuineness of the transaction as well as creditworthiness. Thus, it has failed to discharge the onus cast upon it. Section 68 of IT Act is a deeming provision under which addition is required to be made if the assessee offers no explanation about the nature and source thereof or the explanation offered by the assessee is not, in the opinion of the Assessing Officer, satisfactory with regard to any sum found credited in the books of the assessee. In the present case, the assessee failed to offer explanation with documentary evidence to the satisfaction of the Assessing Officer. The Ld. DR submitted that it does not matter how this money was spent or invested. The investment of similar amount in the hands of Rock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made and taxes has been paid as per the submission of the Ld. AR during the course of hearing. But the CIT(A) held that additions were wrongly made on protective basis and converted the entire addition on substantive basis. The factual aspect that the ultimate beneficiary was M/s Rock Land Hospital was never doubted by the CIT(A) as well. Thus, the CIT(A) erred in making this addition on substantive basis. Besides this, the Assessing Officer has also admitted that the ultimate beneficiary was M/s Rock Land Hospital and from the perusal of the Assessment Order in case of Rock Land Hospital, these facts are substantiated by the Ld. AR. During the course of Assessment Proceedings, the Assessing Officer has not taken the congnizance that M/s Rock Land Hospital was already scrutinized for the said additions and admitted that the entire amount was that of Rock Land Hospital Group only. Therefore, Assessing Officer as well as the CIT(A) was not correct in making the additions on protective/substantive basis. Nothing has been found in search of Rock Land on the basis of which it can be said that Rock Land has paid anything out of books to these companies, which had arranged share applica ..... 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