9911796707
TMI Blog2015 (12) TMI 1795X X X X Extracts X X X X X X X X Extracts X X X X ..... ment P. Ltd. 1,05,00,000 3 M/s. Money Penny Fincom P. Ltd. 60,00,000 1,70,00,000 2.2 That on the facts and in the circumstances of the case, ld. CIT(A) has erred in maintaining addition of Rs. 1,05,00,000 in respect of share application money as received from M/s. Neema Investment P. Ltd. even when Rs. 40 lacs was received during the previous year relevant to the AY 2005-06 and balance amount of Rs. 65 lacs only in the year under appeal." 3. Short facts of the case are as under: "A search u/s 132 of the I.T. Act was executed on 21.11.2006 on the office and factory premises of the assessee. A notice u/s 153C was issued to the assessee on 5.10.2007 which served to the assessee on 8.10.2007. In response to the notice issued u/s 153C, the assessee had filed its return of total income on 8.11.2008 declaring total income at NIL. During the course of assessment proceedings the assessee filed copy of confirmation letter duly singed by all the above applicant along-with share application form. However, the assessee was also asked to justify the amount of share application as received by it during the year under consideration. The assessees vide its r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sundry creditors added to the income of the share holders. In that case there is no justification to disbelieve the creditworthiness of all these companies. 2.5.4] That Income tax assessment for the Assessment Year 2005-06 was passed under scrutiny U/s 143(3) of the Income Tax Act. Hence, identity of the share holders stand proved. Since, entire amount of credits in their books of account has already been added to the income of the share holders. In that case source of investment made by them in the case of the assessee company stand proved. 2.6] That from the above documents it is very clear that the assessee has properly discharged onus lying on him. The assessee has proved identity and genuineness of the investment made by all the share holders in the share application money of the assessee company. Hence, there is no reason for making any addition in respect of share application money in the case of the assessee. 2.7.16] That in view of the above, when the assessee has properly discharged onus lying on it by proving the identity of the share holders and genuineness of the transaction. In the present case the assessee had filed complete details of share hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stification for making separate additions in the case of the assessee again. 3] That the assessee had properly discharged onous luing on him by proving the identity, capacity and genuineness of the share application/share capital. Hemce, the amount of share application /share capital as received by the assessee be treated as genuine. That all the above companies are filing there income tax return regularly with the department and also registered with the registrar of companies. Hence there is no reason to disbelieve on the identity of these companies. 4] That in view of the above and as submitted in our earlier submissions it is submitted that share application money of Rs. 4,90,00,000/-as received by the assessee be treated as genuine." The assessee's contention is not acceptable. Decision quoted and relied by the assessee in its submissions are distinguishable on the facts which are not identical with the facts of the present case. It is not a simple case of taxing of share application money u/s 68 of the I.T. Act, as the assessee has tried to project. It is a case of unaccounted money brought back into the books of accounts of the assessee compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition in respect of share application money has observed that substantial amount of cash were deposited in the bank account of the share holders in the Asst Year 2005-06. The AO also relied on the decision of the Hon'ble Jurisdiction High Court in the case of Rathi Finlease Ltd as reported in 215 CTR 249 and Hon'ble Calcutta High Court in the case of M/s Nividen Vanijya Niyjan Ltd as reported in 182 CTR 605. It was claimed by the appellant that following documents were filed by it during the course of assessment and appellate proceedings:- S.No. Particulars 1 Share application money form 2 Memorandum and Article of Association 3 Master Record from the MCA site 4 Memorandum and Article of Association 5 Copy of Acknowledgement of Income Tax retun 6 Copy of PAN Card 7 Copy of Audited final account of the shareholders 8 Confirmation letter duly signed with PA No 9 Copy of Board Resolution duly authorized to sign the Share application form 10 Copy of Affidavit of the shareholders accepting the investment made in the share application money/share capital 11 Copy of Bank statements 4.2.2) In the appellate proceeding the appellant had f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are still held by them as per submission of appellant datred 29-11-2012 in which they submitted share holding pattern dated 31.03.12 and confirmed that such share holding pattern remains same even today. 4.2.5) In earlier years also addition was made in hands of appellant's for share application money u/s 68 of the I.T. Act. But in those years share application money was received from different companies and in those years it was confirmed by Ld CIT (A) mainly because while such companies invested in share application of appellant at a premium but such shares were bought back by directors or sister concerns of appellant below face value only within next few years, which raises serious doubts on genuineness of entire transaction. But in present year under consideration the companies who invested in share application of appellant are different than companies of earlier year and they are still holding the shares allotted to them as per details from ROC. Therefore that decision would have no bearing in present case, as the facts are different, except for the share application money received from M/s Neema Invest. P. Ltd. and M/s. Money Penny Fincom P. Ltd. for the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a search action on 16/04/2009 of Shri Rameshchand Kathod director of M/s Neema Investment P. Ltd. and Money Penny Fincom P. Ltd. was provided to appellant. In this statement Shri Rameshchand Kathod admitted that these two companies provided accommodation entry of share application money. The relevant questions and answers from his statement are reproduced below:- ........................ 4.28) When appellant was confronted with these facts their only defence as furnished in reply dt. 06/11/2002 was that such statement of Shri Rameshchand Kathod was in regard to investigation carried out against Kalani Group of Indore and even name of appellant does not appear in the entire statement. Then they stated that since statement is taken on the back of appellant and therefore it cannot be used against them. They also referred to reply of Q.No. 25 regarding deposit of cash in bank account of these two share applicants and states that no such cash was seen deposited in bank account of these two companies in AY 2006-07. They also referred to Q.No. 29 of such statement which state buy back of such shares and submitted that shares allotted to these two companies were still owned by them. & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kathod exposing entire modus operandi of the "accommodation entry" for share application, merely filing a self serving affidavit of such person, at a subsequent date would be of no help unless all issues exposed in the statement are successfully explained by appellant as held in case of Garibdas Chandrikaprasad (1998) 147 CTR 373 (MP) and Smt. Gunwantibai Ratilal (1984) 146 ITR 140 (MP). Appellant has to establish creditworthiness of these two companies in view of meager income of such companies in their returns for last 5 years, furnish copy of bank account of not only these two companies but also of those companies/persons who transferred funds in these two accounts and also furnish a valid proof of handling over of such shares to these two companies. Till such points are explained and such details are filed the onus remain fastened on appellant, which was not discharged as held in case of Nivedan Vanijya Niyojan Ltd (2003) 263 ITR 623 (cal) and Hindustan Tea trading Co. Ltd. (2003) 129 Taxman 601 (Cal). When onus remains fastened on appellant for the specific facts of the present case the case law referred by appellant like Gangeshwari Metal P. Ltd. and other will not help their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lovely Exports P Limited. (iii) Hon'ble Apex Court in the case of Lovely Exports P Limited as reported in 216 CTR 195 has dismissed tha SLR as filed by the department. "In this case the Delhi High Court observed that when details where furnished by assessee, the burden shifted to the assessing officer to investigate into the creditworthiness of the share applicants which he was unable to discharge. (iv) Hon'ble Delhi High Court in the case of CIT vs NOVA PROMOTERS & FINLEASE (P) LTD reported in 342 ITR 169 has held that (Refer Para 38) "38. The ratio of a decision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holder's register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Office has not conducted any enquirty into the same or has not material in his possession to show that those particulars are flase and cannot be acted upon, then no addition can be made in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n can be made under section 68 of the Act consequently, the question is answered in the negative. The decision of the Tribunal is correct in law. The appeal is dismissed." 4.2.12) In view of the aforesaid discussion, I am of the considered view that appellant has failed to explain genuineness and creditworthiness of the credits shown as received from four share applicants namely Max Touch Securities P. ltd. (Share appl. Money of Rs. 5 lakh) because of huge unexplained cash deposits in its bank account directely linked to such issue of cheque to appellant, Central Region Inf. & Const. P. Ltd. (Share appl. Money of Rs. 5 lakh) because its bank account was not furnished, Money Penny Fincom P Ltd. (Share application money of Rs. 60,00,000/-) and Neema Invest. P. Ltd. (share appl. Money Rs. 1,05,00,000/-) because they have provided accommodation entry of share application and also becaue it was observed that these 4 companies have meager income in last 5 years raising serious question mark on their creditworthiness and their balance sheets are typical of the persons providing accommodation entries. Hence out of total addition of Rs. 4,90,00,000/- as made by AO u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85,00,000 NIL 2 Rifca Cost. P. Ltd.[ Now known as Saumya Infraventures P Limited ] AABCR2220B 40,00,000 40,00,000 NIL 3 Pramila investment & finance P Ltd AABCP8031A 25,00,000 25,00,000 NIL 4 Neema Investment P Limited AABCN5299 1,05,00,000 NIL 1,05,00,000 5 Money Penny Fincom Pvt. Ltd. AADCM5417F 60,00,000 NIL 60,00,000 6 Persuit Security P. Ltd. AAACP3800E 1,65,00,000 1,65,00,000 NIL 7 Max Touch Security Ltd. AADCM4409R 5,00,000 NIL 5,00,000 8 Central Region Infrastructure & Cont. Pvt. Ltd. AACCC5101D 5,00,000 NIL 5,00,000 4,90,00,000 3,15,00,000 1,75,00,000 2.2.4] The Ld CIT[A] grossly erred in maintaining addition of Rs. 1,05,00,000/- in respect of amount received from M/s Neema Investment P Limited even when in the year under consideration the appellant had received share application money of Rs. 65,00,000/- and balance amount of Rs. 40,00,000/- was received in the Asst Year 2005-06. 2.2.5] The appellant had not allotted shares in respect of the entire amount of share application money but an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,00,000 186-189 4 Neema Investment P Limited AABCN5299 1,05,00,000 219-225 5 Money Penny Fincom Pvt. Ltd. AADCM5417F 60,00,000 262-264 6 Persuit Security P. Ltd. AAACP3800E 1,65,00,000 310-328 2.3.3] That on perusal of the bank statement as filed above, your Hon'our will find that no cash were deposited in the bank account of all the above shareholders. Thus, factually the AO was not correct in observing that cash were deposited in the bank account of the share holders prior to issuance of the cheques. 2.3.4] The companies in which alleged cash were deposited assessed by the same AO i.e. by the ACIT 5(1), Indore and also by ITO 5(1), Indore. Thus, the assessing officer was well in its jurisdiction to examine the correct source of cash deposited by the alleged share applicant but the said exercise was not done by the assessing officer.The Assessing officer himself has not brought out any single instance of cash deposit against issue of cheque to the assessee company. 2.3.5] That from the bank account it is clear that cash as deposited in the bank account was very small and not directly linked with the cheques issued to the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n money was made in the assessee company. 120-129 9 Copy of Audited Balance Sheet of the share holder for the Year ended on 31.03.2005. 130-140 10 Copy of confirmation letter duly signed by the share holder with its PAN No in the A.Y. 05-06 which was accepted as genuine in that year. 141-142 11 Copy of Notice as received from Tax Recovery Officer-4, Indore Dt 21.06.2013 regarding the outstanding demand of the share holders in the name of the assessee company. 143 12 Copy of letter dt 24-06-2013 as filed in response to the notice as received from the TRO-4, Indore Dt.24.06.2013 144-145 (ii) Rifca Construction P Limited- [ Now known as Saumya Infraventures P Limited] - Share application money of Rs. 4000000/- S.No Descripotion Pg No of Compilation 1 Copy of A/c of RIFCA Construction P. Ltd in the books of the assessee 146 2 Copy of resolution of the Minute of Meeting of Board of Directors of the share applicant company, authorizing Shri Amit Jha for investment in the share of the assessee company 147 3 Covering letter of the share applicant as addressed to the assessee 148-149 company along with the cheque as received for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 190-191 10 Confirmation of loan duly signed with PAN No. in the A.Y. 05-06 duly accepted as genuine 192-193 11 Copy of Audited Balance Sheet of Share Holder as on 31.03.2006 194-204 (iv) Neema Investment P Limited - Share Application Money of Rs. 1,05,00,000/- S.No Descripotion Pg No of Compilation 1 Copy of extract of Minutes of the Board Meeting of the Director authorizing Shri V K Jain for investment in the shares of the assessee company 205 2 Copy of Share application form duly filled and signed on behalf of the share holder 206-211 3 Copy of confirmation letter duly signed with PAN No in respect of share application money of Rs. 10500000/- [ Rs. 4000000/- received on in the previous year relevant to the Asst Year 2005-06] 212 4 Copy of Ack of Income Tax return as filed for the Assessment Year 2006-07 213 5 Copy of Affidavit of director of company Shri Ramesh Chand Khatod duly sworn before the notary on 03-09-2010 accepting the investment in the share application of the assessee company 214-215 6 Copy of Affidavit of director of company Shri Ramesh Chand Khatod duly sworn before the notary on 31-03-2012 in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant duly signed with PAN No in the Asst Year 2004-05 duly accepted as genuine 267-268 12 Copy of Audited Balance Sheet of Share Holder as on 31.03.2006 269-279 (vi ) Pursuit Securities P Limited - Share Application money of Rs. 16500000/- S.No Description Pg No of Compilation 1 Copy of covering letter as addressed to the assessee company with cheque towards investment in the share application money 280-293 2 Copy of Share application form duly filled and signed on behalf of the share holder 294-305 3 Copy of Confirmation of share application money of Rs. 16500000/- duly signed with PAN No which include opening balance of Rs. 2000000/-. 306 4 Copy of Ack of Income Tax return as filed for the Assessment Year 2006-07 307 5 Copy of Affidavit of director of company Shri Vivek Kumar Dwivedi duly sworn before the notary on 22-06-2009 accepting the investment in the share application of the assessee company 308-309 6 Copy of Bank Statement of the share holders with The Bank of Rajasthan Limited from which the investment in the share application money in the assessee company was made 310-328 7 Confirmation of unsecured loan a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re holder as filed for the year ended on 31.03.2005 389-402 2 Certificate of Incorporation 403 3 Copy of Articles of Association of the share holder company 404-410 4 Copy of Form No 18 as filed by the share applicant in respect of an Intimation for change of Address 411 5 Copy of form 32 as filed by the share holder company regarding change in directors 412-413 6 Copy of confirmation of share application money of Rs. 500000/- duly signed with PAN No 414 2.6] The assessee as to justify the identity of the share holders filed ample documents as mentioned above which also includes copy of Balance sheet, Income Tax return, affidavit of the directors, Bank statement. 2.7.1]That in the case of the above companies scrutiny order U/s 143(3) has also been passed by the office of the ACIT 5(1), ITO 5(1) and ITO 5(2), Indore. Since, income tax assessment order has already been passed in the case of the above companies. There is no justification for making separate additions in the case of the assessee again. More so when identity of the above companies were proved beyond doubt. 2.7.2]That in the assessment of all the shareholders comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering the judgment of Hon'ble Supreme Court in the case of CIT vs. Steller Investment and the judgment of Hon'ble Supreme Court in the case of Lovely Export Ltd., 11 ITJ 357, Hon'ble High Court has held that each and every transaction of share application money involving application of provisions of sec. 68 in matter of contribution of share application/share capital and whether this onus on the assessee has been discharged or not has to be appreciated on totality of evidences available on record and surrounding facts and circumstances of the case. Ld. DR also relied on following decisions: S.No Reference of Decision Citation of the Decision 1 CIT vs Korlay Tradingn CO Ltd 232 ITR 820 [ Calcutta] 2 N Tarika Property Invest (P) Ltd 51 taxmann.com 387 [SC] 3 CIT vs N R Portfolio (P) Ltd 42 taxmann.com 339 [ Delhi] 4 Gayathri Associates 41 taxmann.com 526 [ AP 5 CIT vs Focus Exports (P) Ltd 51 taxmann.com 46 [Delhi] 6 CIT vs P Mohankala 291 ITR 278 [SC] 7 CIT vs MAF Academy (P) Ltd 42 taxmann.com 377 [Delhi] 8 Subhlakshmi Vanijya (P) Ltd 60 taxmann.com 60 [ Kolkata] 9 Agrawal Coal Corporation (P) Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ighting the cash deposit and withdrawal has also been filed. The assessee from the following share applicants received unsecured loans in the AYs 2004-05 and 2005-06, detail of the same is as under:- S.No Name of the Companies PAN No 2004-05 [ Rs] 2005-06 [Rs] 1 Money Penny Fincom P Limited AABCM5417F 20,00,000 2 Pramila Investment & Finance Limited AABCP8031A 20,00,000 3 Neema Investments (P) Ltd AABCN5299A 40,00,000 4 Sundrop Securities Private Limited AACCS5419C 15,00,000 5 Pursuit Securities Limited AAACP3800E 20,00,000 40,00,000 75,00,000 Confirmations of unsecured loans were filed during the course of assessment proceedings and the same was also accepted by the assessing officer in those years. When the identity, genuineness in respect of loan creditors were accepted by the assessing officer in that case, there was no reason to disbelieve regarding the identity of the share applicant.The summary of papers as filed by the assessee in respect of the above companies as filed by the assessee before the AO and during the course of appeal proceeding are as under:- (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of all the above companies, assessee has filed the details regarding above companies share application money, memorandum of articles etc. in the paper book pages146 to 415. We have gone through the above papers and we areof the view that the assessee has submitted all the documents like, copy of accounts of companies, books, copy of resolution, copy of share application money, copy of confirmation of share application money, copy of bank statement, copy of records downloaded from Registrar of Company and copy of audited balance-sheet of shareholders company for the year ended on 31.3.2005 for all the companies. The assessee as to justify the identity of the shareholders filed ample documents as mentioned above which also includes copy of Balance sheet, Income Tax return, affidavit of the directors, Bank statement. In the case of the above companies scrutiny order u/s 143(3) has also been passed by the office of the ACIT 5(1), ITO 5(1) and ITO 5(2), Indore. Since, income tax assessment order has already been passed in the case of the above companies, there is no justification for making separate additions in the case of the assessee again. Moreso when identity of the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the assessee has discharged its onus by proving the identity of subscribers and even otherwise had any suspicion still remained in his mind, nothing prevented him to initiate action as per the provisions of the Act. The existence of subscriber to share application is not in doubt as the assessee duly furnished their names, age, address, date of filing the application, number of shares for which respective applications were made, amount given and the source of income of the applicant. In view of these facts, we are of the considered opinion that there is no justification for making the impugned addition because once the existence of the investor/share subscribers is proved, onus shifts on the revenue to establish that either the share applicants are bogus or the impugned money belongs to the assessee company itself. Once the confirmation letters are filed, no addition can be made on account of share application in the hands of the company. Our view finds support from the decision in Shri Barkha Synthetics Ltd. v/s ACIT 155 Taxman 289 (Raj). The cases like CIT V/s GP International Ltd.229 CTR (P&H) 86, CIT V Steller Investment Limited 192 ITR 287 and Sophia Finance Limited 205 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from undisclosed sources. The similar view has been taken by the other High Courts. 17. As the Apex Court has considered the law in Lovely Exports (supra) and in view of law laid down by the Apex Court, we find that the substantial questions framed in these appeals do not arise for our consideration. Accordingly, all these appeals are dismissed with no order as to costs. Hon'ble Apex Court in the case of Lovely exports P Limited as reported in 11 ITJ 357 has held that:- "2. Can the amount of share money be regarded as undisclosed income under s. 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment." ITAT, Indore Bench in the case of M/s Rajshree Finsec P Ltd [Appeal No 545/ Ind/2010 dt 06-02-2012 for the Asst Year 2007-08 ] had an occasioned to discussed the decision in the case of M/s Agrawal Coal Corporation and held that :- "5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concerned, in view of the decision from Hon'ble Apex Court in the case of Lovely Exports (supra), has remained for academic interest only, being on different facts, therefore, we are refraining ourselves in dealing with each and every case individually, especially in the light of the evidences, filed by the assessee, evidencing that the identity of such share applicants was very much proved by further filing of confirmation by them. 7. In view of these facts, the decision from Hon'ble Apex Court in Lovely Exports (supra) and uncontroverted fact that the summons issued to the impugned share applicants were duly received by them with further filing of confirmation by such share applicants, at least their identity is proved, therefore, this appeal of the assessee deserves to be allowed. Hon'ble Delhi High Court in the case of CIT Vs. Oasis Hospitalities (P) Ltd reported in 333 ITR 119 (2011) has held as under:- (i) Section 68 provides that if the assessee is not able to give satisfactory explanation as to the "nature and source" of a sum found credited in his books, the sum may be treated as the "undisclosed income" of the assessee. The initial burden is on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Nova Promoters P Limited has held that :- "Mr. Sabharwal, appearing on behalf of the revenue/ appellant sought to place reliance on a Division Bench decision of this Court in CIT v. Nova Promoters and Finlease (P) Ltd.: (2012) 342 ITR 169 (Del.). However, on going through the said decision in Nova Promoters and Finlease (P) Ltd. (supra) we find that the facts are clearly distinguishable. In fact, in Nova Promoters and Finlease (P) Ltd. (supra) itself this Court has observed, in the context of Lovely Exports (P) Ltd. (supra), as under: - "The ratio of a decision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holders register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the observations of the assessing officer in the assessment order to the following effect: - "Investigation made by the Investigation Wing of the Department clearly showed that this was nothing but a sham transaction of accommodation entry. The assessee was asked to explain as to why the said amount of Rs. 1,11,50,000/- may not be added to its income. In response, the assessee has submitted that there is no such credit in the books of the assessee. Rather, the assessee company has received the share application money for allotment of its share. It was stated that the actual amount received was Rs. 55,50,000/- and not Rs. 1,11,50,000/- as mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in respect of the amount is found correct. As such the unexplained amount is to be taken at Rs. 55,50,000/-. The assessee has further tried to explain the source of this amount of Rs. 55,50,000/- by furnishing copies of share application money, balance sheet, etc. of the parties mentioned above and asserted that the question of addition in the income of the assessee does not arise. This explanation of the assessee has been duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee's account to the share applicants' account. As held concurrently by the CIT (Appeals) and the ITAT, these conclusions were clearly baseless and false. This Court is constrained to observe that the AO utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents. We place these observations on the record and direct a copy of the judgment to be furnished to the concerned income tax authorities for appropriate action towards reflecting these observations suitably in service record of the concerned AO to avoid such instances in the future. 7. For the above reasons, this Court is of the opinion that the concurrent findings of fact, as to the true identity of the share applicants, their creditworthiness and genuineness of the transaction, are based on sound reasoning and do not call for interference. No substantial question of law arises. The appeals are dismissed. In the case of ACIT vs M/s Krishna Sheet Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case is distinguishable with the fact of N R Portfolio (P) Limited. In case of Gayathri Associates as reported in 41 taxmann.com 526, Hon'ble Andhra Pradesh high court has observed that except Bank account no other documents were filed before the assessing officer even no affidavit was filed. In the present appeal in hand the assessee not only the bank account but also the affidavit and various other documents were filed. Hence, onus lying on the assessee has properly been discharged. Thus, fact of the present case is distinguishable with the fact of the case of M/s Gayathri Associates. In case of CIT vs Focus Exports (P) Ltd as reported in 51 taxmann.com 46, Hon'ble Delhi high court has observed that address and PA No of the share applicant was not provided. In the present appeal in hand the appellant company has provided the complete address , PA No and various other documents as to discharged onus lying on it. Hence, fact of the present appeal is distinguishable with the fact of Focus Exports (P) Ltd. In case of CIT vs P Mohankala as reported in 291 ITR 278, Hon'ble Apex Court has analysis the provision of section 68 of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the share holder only.In the present appeal in hand the assessee has proved the identity of the share applicant with the ample documents. Hence, rather the said decision supports the case of the assessee company. In case of CIT vs Nova Promoters & finlease (P) Limited as reported in 342 ITR 169, Hon'ble Delhi High Court has observed that the assessing officer has recorded statement of the share applicant in that case and confronted with the assessee but the assessee failed to substantiate its contention. In the present appeal the assessing officer did not make any inquiry. Hence, rather decisions of the Hon'ble Delhi High court in the case of CIT vs Nova Promoters & Finlease (P) Limited [supra] support the case of theassessee. 10. On consideration of above and respectfully following the decision of the jurisdictional High Court in the case of CIT vs. STL Extrusion, 53 DTR 97 and jurisdictional High Court in the case of CIT vs. Peoples General Hospital (Appeal No.27/2008) (supra) and the decision of Hon'ble Supreme Court in the case of Lovely Export (supra), 11 TTJ 357 and other decisions as reproduced above, we are of the view that ld. CIT(A) is justified in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sues which arise from return of income as books of account were neither were called nor produced. In this case, a search took place on 21.11.2006 and return for AY 2006-07 was processed u/s 143(1) after the search. The assessment has to be considered as abated and jurisdiction to conduct the scrutiny in such cases arises from sec. 153A of the I.T. Act. In the present case, the share application money was not scrutinised by the Assessing Officer because prior to search, return was not filed even processing u/s 143(1) was done after the search and processing is not an assessment because u/s 143(1), there are no powers of scrutiny. In this case, as per sec. 153A, the Assessing Officer has all the powers to assess and reassess the assessment u/s 153A of the Act. We find that issue in controversy is covered by the decision of Alcargo Global Logistics Ltd. vs. DCIT, 20 ITJ 45 (Mum) (SB) and also by decision of Indore Bench in cases of Sudhir Maheshwari, Motilal Dashrath Soni and Narendra Industries. In Al Cargo Global Logistics Ltd., it was also held that in cases where only 143(1) processing is done and the assessment abate, there is no requirement of seized books of account or se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of the assessee, therefore, it may be allowed. We find that this claim is a legal claim of the assessee, which is allowable claim, therefore, in the interest of justice and fair play, we allow the claim of the assessee and restore this matter to the file of the Assessing Officer with direction to the Assessing Officer to decide the issue as per amended section as per law. Thus, ground of appeal is allowed for statistical purposes. 15. Ground No.4 of the appeal of the assessee relates to charging of interest u/s 234B of the I.T. Act. We have already held that chargeability of interest u/s 234B is mandatory, therefore, dismissed on merit. In the result, departmental appeal is dismissed whereas ground no.1 of the appeal of the assessee is dismissed. Ground no.2 is allowed. Ground no.3 is allowed for statistical purposes. Ground no.4 is dismissed. In the case of Shivangi Rolling Mills P. Ltd. 16 In IT(SS)A No.134/Ind/2013, the assessee has taken the following grounds of appeal: "1.1 On the facts and in the circumstances of the case, ld. CIT(A) has erred in maintaining the issuance of notice u/s 153C as legal and proper even nothing incriminating was found and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction of A.O. u/s.153C necessary for assuming jurisdiction. In the assessee's case, notice u/s.153C were issued by the A.O. which requires recording of his satisfaction. Reliance is placed on the decision of the Hon'ble Madhya Pradesh High Court in the case of C.I.T. vs. Mechmen [I.T.A.no.44/2011 dt.10.07.2015] wherein it is held that satisfaction of A.O. is essential to assume jurisdiction. The relevant paras of the judgment are as follows : "15. We may now turn to Section 153C. No doubt, the form of Section 153C is dissimilar to that of Section 158BD. It is also true that the two provisions are embedded under different chapters. For, Section 153C is in Chapter XIV providing for procedure for assessment, whereas Section 158BD is found in Chapter XIV-B providing for special procedure for assessment of search cases. Further, Section 153C opens with non-obstante clause. However, the nonobstante clause in Section 153C is necessitated to give power to the Assessing Officer having jurisdiction to proceed against the person other than the person referred to in Section 153A, inspite of the action under Section 139, 147, 148, 149, 151 and 153 of the I.T. Act. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 153C of handing over the items referred to in Section 153C to the Assessing Officer having jurisdiction, of his duty to be satisfied about the jurisdictional fact that the items belongs or belong to a person other than the person referred to in Section 153A. 18. The concomitant of this conclusion, is that, the legal position as applicable to Section 158BD regarding satisfaction in the first instance of the first Assessing Officer forwarding the items to the Assessing Officer having jurisdiction; and in the second instance of the Assessing Officer having jurisdiction whilst sending notice to such other person (other than the person referred to in Section 153A), must apply propriovigore. The fact that incidentally the Assessing Officer is common at both the stages would not extricate him from recording satisfaction at the respective stages. In that, the Assessing Officer is satisfied that the items referred to in Section 153C belongs or belong to a person (other than the person referred to in Section 153A), being sine qua non. He cannot assume jurisdiction to transmit those items to another file which incidentally is pending before him concerning other person (person other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax-III Vs. Calcutta Knitwears (supra), would apply on all fours mandating satisfaction of the Assessing Officer(s) dealing with the case at the respective stages referred to in Section 153C. 22. Reverting to the substantial questions of law articulated while admitting these appeals, we hold that the same will be of no avail to the Department considering the fact situation of the present case and for the reasons mentioned hitherto. In that, we have rejected the argument that even in cases, under Section 153C the Assessing Officer(s) need not record satisfaction and in particular at both the stages - be it Assessing Officer of searched person or Assessing Officer having jurisdiction over such other person. Notably, the requirement of recording satisfaction is not for the benefit of the Assessing Officer(s), but lending credence to his satisfaction and on which matters the assessee can give meaningful explanation and reason it out as and when opportunity is given to the concerned assessee. 23. In the present case, the concurrent finding of fact recorded by the Appellate Forums is that, no satisfaction has been recorded by the Assessing Officer before issuing of notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of entire provision would lead to an irresistible conclusion that the term 'assessment' has to be read in the context of abated assessments and the term 'reassessment' has been used in the context of unabated assessments. In the case of completed assessments, income has to be re-assessed in terms of Sec.153A. The re-assessment requires belief of assessing officer regarding escapement of income from assessment. The belief should be founded on existence of appropriate material or information. It should be rational belief held in good faith and not arbitrary, subjective or a mere pretence. The material or information in his possession should have direct nexus with his belief regarding escapement of income. The absence of such nexus shall render the reassessment proceedings invalid. Thus, the re-assessment of income u/s.153A cannot be made sans any incriminating material or merely on change of opinion in relation to material already considered. [Indian & Eastern Newspaper Society Vs. C.I.T. (119 ITR 996 SC); Calcutta Discount Co. Ltd. Vs. I.T.O (41 ITR 191 SC)] The contention of the revenue to the effect that once a notice under Section 153A of the Act is issued, the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. Though such a claim by the assessee for the first time under Section 153A of the Act is not completed, the case in hand, has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though Section 153A of the Act would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. ............ 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 153 Ais relatable to abated proceedings (i.e. those pending on the dateof search) and the word 'reassess' to completed assessmentproceedings. vi. Insofar as pending assessments are concerned, the jurisdictionto make the original assessment and the assessment underSection 153A merges into one. Only one assessment shall bemade separately for each AY on the basis of the findings of thesearch and any other material existing or brought on the recordof the AO. vii. Completed assessments can be interfered with by the AO whilemaking the assessment under Section 153 A only on the basisof some incriminating material unearthed during the course ofsearch or requisition of documents or undisclosed income orproperty discovered in the course of search which were notproduced or not already disclosed or made known in the courseof original assessment. 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.Onthe date of the search the said assessments already stood completed. Sinceno incriminating material was unearthed during the search, no additionscould have been made to the income already assessed. 39. The question framed by the Court is answered in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the ld. DR submitted that this issue has been raised by the assessee in almost in all the appeals filed in this group and the learned CIT(A) has dealt with the same in detail and rejected the assessee's contention with detailed findings. The learned DR placed reliance on the finding of the learned CIT(A) and also placed reliance on the set of case laws of which he has provided a compilation before us. The case laws relied on by the ld. DR are as under :- S. No. Case Law Remarks 1 CIT V/s Rajkumar Arora 367 ITR 517, High Court. Allahabad Validity of Search assessment u/s 153-A/c 2 Nandini Delux V/s ACIT, 37 ITR (Trb) 52, ITAT Banglore, C Bench, - do- 3 Shivnath Rai Harnarain India Ltd. Vs/ DCIT, 117 ITD 74, ITAT, Delhi D Bench - do- 4 Harvay Heart Hospital Ltd. V/s ACIT 130 TTJ 700, ITAT Chennai A Bench - do- 5 Dr. Mansukh Kanjibhai Shah V/s ACIT, 129 ITD 376, ITAT Ahmadabad D Bench - do- 6 Rajat Tradecom India (P) Ltd V/s DCIT, 120 ITD 48, ITAT Indore Bench - do- 7 Canara Housing Development Co. V/s DCIT, 49 Taxmann.com 98 High Court, arnataka. - do- 8 Madugula Venu V/s DIT, 29 Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were found and seized. There was no abatement of any proceedings in these cases for these assessment years in terms of second proviso to section 153A of the Act. In the case of Mukesh Sangla HUF, the proceedings were initiated u/s 153C of the Act. The Hon'ble jurisdictional High Court in a recent decision in the case of CIT vs. Mechman while deciding the issue relating to assessments made by issuing the notice u/s 153C of the Act has held that the Assessing Officer before issuing notice u/s 153C of the Act has to record satisfaction. Hon'ble High Court held that the Assessing Officer having jurisdiction whilst giving notice to such other person (other than the person referred to in section 153A) must apply proprio vigore. After receipt of the materials, the Assessing Officer having jurisdiction is expected to conduct inquiry and due verification of the relevant facts before forming his prima facie satisfaction. The Assessing Officer must form his independent view before issue of notice. There is no seized material belonging to the assessee which was found and seized in relation to additions made. In view of this fact, there is no justification for action u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court, we allow these grounds of appeal of the assessee." 18 We, respectfully following the same, allow the ground 1.1 & 1.2 of appeal of the assessee. 19 Ground no.2 and ground no.1 of the departmental relate to share application money. The short facts of the case are as under: "During the course of asseessment proceedings the assessee had filed copy of confirmation letter duly signed by all the above applicant along -with share application form. However, the assessee was also asked to justify the amount of share application as received by it during the year under consideration. The letter vide its reply submitted as under: 1] That you have asked from the assessee to justify the amount of share application money of Rs. 1,90,00,000/- ( Rupees one Crores Ninety Lacs only) 2.1] Details of share application money of Rs. 49000000/- as received by the assessee is as under:- S.No Name of the Applicant Address PAN No Addition 1 Sandrop security P. Ltd. 34/35, Ganesh Path ,Govind Halwani Chowk, Pune(M.H.) AACCS5419C 3000000 2 Pramila investment & finance 40, Moti Mahal ,Sir Hukumchand Marg Indore(M.P) AABCP8031A 3000000 3 Neema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason for making any addition in respect of share application money in the case of the assessee. ............. 2.7.16] That in view of the above, when the assessee has properly discharged onus lying on it by proving the identity of the share holders and genuineness of the transaction. In the present case the assessee had filed complete details of share holders and also filed confirmations as received from all these share holders before the Assessing Officer. All are regularly assessed to tax and the amounts were also received through an account payee Cheque. In that case there is no justification for making any addition on account of share application of Rs. 1,90,00,000/-. 2.8] That in view of the above, it is submitted that the amount of share application money of Rs. 19000000/- as received by the assessee is genuine. The same requires to be accepted as genuine. The assessee vide his letter further submitted that:- "1] That you have asked the assessee to justify the amount of share application money received from the following companies:- S.No. Name of the Company Amount (Rs) 1 Sandrop security P. Ltd. 3000000 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishable on the facts which are not identical with the facts of the present case. It is not a simlpe case of taxing of share application mony under section u/s 68 of the I.T. Act as the assessee has tried to project. It is a case of unaccounted income brought back into the books of accounts of the assessee company in a systematic & organized manner which can be evidenced from the pattern of cash deposits in the bank accounts of the companies discussed above in detail from whom share application money were received by the assessee. These companies have been used as mere conduit companies for routing of unaccounted money into the business in the grab of share application money. During the assessment proceeding in Asst.Year 200506 in the case of the companies from whom the assessee companies received share application money, it was reveal that cash deposits were found in their bank accounts but source of cash deposited were not properly explained by the above companies. Hence, the source of share application money as received by the assessee company can not be treated as properly explained. In fact these companies have became quite notorious for giving s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
