9911796707
TMI Blog2019 (9) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... LD THAT:- As find from the submissions made by the revenue that they have prayed for setting aside the issue to the learned AOfor re examination of the matter which, according to us is not permissible at this stage. If the prayer is granted by us, then this will be nothing but a premium on the inaction made by the authorities below on this aspect when they failed to avail the chances to do so at the relevant time. Both the Learned AO or by the Learned CIT(A) failed to do it. Opportunity of cross verification from the vendors, in our considered view should not be given in the hands of the Revenue once again which will be opening a further avenue for multiple innings which has been deprecated by the Hon ble Jurisdictional High Court in the matter of Rajesh Babubhai Damania-vs-CIT [ 2000 (6) TMI 5 - GUJARAT HIGH COURT] particularly when the alleged unaccounted investment made by the assessee in respect of the property in question has not been established by the Revenue before us. Thus, the addition made on the basis of the dumb document is unjustified, unwarranted and bad in law which is liable to be set aside. Hence, with the aforesaid observation, we delete the addition toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und No.1 being the maintainability of the proceeding. Hence, the first ground preferred by the assessee is dismissed as not pressed. 4. We now propose to deal with the grounds relating to the addition made on each count. Ground No.2:Addition on account of alleged bogus premium to the tune of ₹ 4 crore. 5. The brief facts leading to this addition is this that the assessee was alleged to have been in receipt of investment amounting to ₹ 4 crore from one M/s Ankush Finstock Ltd whereupon the director of the said company namely Shri Bharat M. Shah was summoned under section 131 of the Act and his statement was recorded on 27.06.2011. According to the statement of Shri Bharat M. Shah upon receiving the said amount of ₹ 4 crore from the director of the assessee company namely Shri Upendra C. Shah during the year relevant to assessment year 2010-11 has introduced the same into his own company M/s Ankush Finstock Ltd and subsequently used the same to invest in assessee s company through his own company. 6. It further revealed that the assessee company allotted 80,000, 40,000 and 40,000 number of shares to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned First Appellate Authority: 5.1 On this issue the appellant during the course of appellate proceedings submitted as under:- (i) ADDITION ON ACCOUNT OF ALLEGED BOGUS PREMIUM ₹ 4,00.00,000/- The Ld. A.O. has erred in law and on facts in making huge addition of ₹ 400,00,000/- on account of alleged bogus share premium ignoring the fact that there was absolutely no evidence of such undisclosed income of the appellant nor any concern of the appellant with regard to the share transactions. The addition made merely on assumption and on the basis of the statement of Director of Ankush Finstock Ltd. whose cross examination was specifically asked is patently wrong and against the sanction of law. It be so held now and the huge addition of ₹ 4,00,00,000/- made on this account be deleted. (ii) The ld AO further erred in law and on facts that the appellant had furnished all the details and explanation with regard to Ankush Finstock Ltd in its letter dated 11.12.2014 along with documentary evidences which have been clearly ignored and not properly considered while making addition in the hands of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verified statement of Mr. Bharat Shah of Ankush Finstock Ltd. It is also clear from the analysis of the transactions noted by AO in para 4 of his order that the transactions of share purchases were pertaining to year 2008 and were all genuine transactions between the various persons. Merely because the shares earlier allotted (which were accepted as genuine transactions) were transferred by the share holders during later years, it cannot be presumed that the amount received by those shareholders through proper banking channels was to be added in the hands of the appellant company which has no role to play in those transactions It be so held now and addition of ₹ 4,00,00,0007- be deleted, and addition. It is also further submitted that the Id AO has made half hearted erroneous addition-since in para 4.1.18, it is observed that alleged unaccounted income is to be added protectively in the hands of Shri Upendra Shah and Nilam U Shah.This shows that there is no Reason to believe as the AO himself has doubts with regard to the satisfaction which is envisaged in section 147. It is further submitted without prejudice to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that the appellant had allotted 1,60,000 shares at the rate of ₹ 250 per share (₹ 10 + premium of ₹ 240/-) to the directors/related individuals of the directors namely Nilam U. Shah, wife of Shri Upendra Shah, Shri Upendra Shah, M.D of the appellant company and Shri Nishant U. Shah, son of Shri Upendra Shah. 160000 shares of the appellant were allotted by theappellant on 31/3/2009. Later on Smt. Nilam U. Shah purchased the shares so allotted to Shri Upendra C. Shah and Shri Nishant U. Shah. In F.Y.2009-10,Smt. Nilam U. Shah sold 160000 shares at the rate of ₹ 250/- per shares to Ankush finstock Pvt. Ltd. During the post search enquiries, enquiries were also made with regard to the investment made by Ankush Finstock in the shares of Nishant Construction Pvt. Ltd./appellant by way of purchasing 160000 shares from Nilam U. Shah. Shri Bharat Manubhai Shah, Director of Ankush Finstock on 27/6/2011 was asked about the source of funds for making investments in the shares of appellant. Shri Bharat M. Shah informed and admitted before the tax authorities that he was in the business of providing entries to various groups/companies/persons. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these three individuals and routed for making investments by means of share application money of the appellant company. 160000 shares of the appellant company were thus concentrated in the hands of Nilam U. Shah and finally with the help of entry operator namely Bharat M. Shah the money was introduced through purchase of shares of the appellant company at a premium. Therefore, as the funds of ₹ 4 crore in cash given by Shri Upendra Shah to Shri Bharat Shah finally came back in the form of share application money to the appellant company, although Ankush Finstock Pvt. Ltd. (company of Shri Bharat Shah) had purchased the shares of the appellant company from Nilam U. Shah. During the appellate proceedings the appellant has reiterated the submission made before the A.O. It further submitted that the A.O has failed to appreciate the supporting documentary evidence in the form of share application, Board resolutions, share transfer forms, resolution sanctioning transfer of shares etc. Thus, according to appellant it has discharged its duties u/s.68 and the A.O has failed to prove beyond doubt that money belong to the appellant. According to appellant the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nilam U. Shah and Nishant U. Shah to convert their unaccounted money into the accounted money by means of layering and laundering offers sufficient material on the basis of which the A.O can be said to have been fulfilled its duty. The statements of Shri Bharat M. Shah, refers to the practice of receiving cash and issuance of cheques in a systematic manner for subscription to share capital for a consideration i.e. the commission. The investigation wing has already recorded statement of such share applicant subscribing the shares of the appellant. This constitutes materials upon which one could reasonably come to the conclusion that the cash belonged to the appellant company and was introduced in the form of share capital by means of purchasing the shares of the appellant from Smt. Nilam U. Shah. Hon'ble High Court of Delhi in the case of Nova Promters and Finlease Pvt. Ltd. has held that we are afraid that we cannot apply the ratio to a case such as the present one, (refers to dismissal of SLP against Divine Leasing case 299 ITR 268, Delhi) where the A.O is in possession of material that discredits and impeaches the particulars furnished by the assesses and also establishes th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Upendra C. Shah. It would be worth mentioning that Hon'ble Delhi High Court in the case of N.R. Portfolio Pvt. Ltd. 206 (2014) DLT 97 (Del) has held that mere production of incorporation details, PAN, the fact that 3rd person or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts protect a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive Companies, no doubt, are artificial or juristic persons but they are soulless and dependent upon the individuals behind them who run and manage the sail companies, it is the persons behind the company to take the decisions, control and manage them. On 16/1/2015 Hon'ble Supreme Court has dismissed the SLP in the case of by Navodaya Castle Pvt. Ltd. vs CIT 230 Taxman.com 268. The SLP was filed by Navodaya Castle Pvt. Ltd. against the ruling of Hon'ble High Court of Delhi that certificate of incorporation, PAN etc. are not sufficient for purpose of identification of subscriber company when there is material to show that subscriber was a paper company and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and explanation with regard to such share transaction to Ankush by and under its letter dated 11.12.2014 along with all the documentary evidences including the share applications, the same have been totally ignored by the authorities below while making addition which is nothing, but the colourable exercise of power, as also submitted by the learned AR. In this respect he has relied upon the said letter dated 11.12.2014 being Exhibit-A as appearing at page 45 of the paper book before us. More so the Learned Senior Counsel explained as regards transaction of share transferred between the shareholders and Ankush Finstock Ltd. has not been rebutted by the Learned Assessing Officer which was otherwise established from the records furnished to him. 10. It was further argued that it is clear from the analysis of the transaction noted by the Learned AO in paragraph 4 of his order that the transaction of share purchases were pertaining to the year 2008 and were all genuine transactions between the various persons. Merely because the shares earlier allotted that too was accepted as genuine transactions were transferred by the shareholders during later years, it cannot be pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is pre-dominant evidence and material to show that the subscriber company was only a paper company and not a genuine investor. He further relied upon the statement made by the director of the Ankush Finstock Ltd that he did not have possession of the shares allotted to his company and had given the blank signed shares transfer forms to the appellant and Shri Upendra C. Shah. According to the Ld DR though the funds have been received by the assessee from Ankush Finstock Ltd through banking channels, they do not reflect the actual, genuine business activity of the said company; being a paper company the entire transaction is ingenuine and thus he relied upon the conclusion made by the authorities below to this extent that the appellant has introduced the share capital of ₹ 4 crore in the form of share application money through the entry provider and hence addition has been rightly made. The Learned DR relied upon the judgement passed by the Coordinate Bench in the case of Ayaana Comtrade (P) Ltd -versus- Income Tax Officer, Ward-(1(1)(4), Ahmedabad, reported in (2019) 104 taxman.com 66 whereby and whereunder the addition in respect of unexplained share application money ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the authorities below the same were not taken into consideration either by the Ld AO or by the First Appellate Authority for the reason best known to them. Thus, the authority hasadmittedly acted in a closed and biased mind only on the basis of the statement of Bharat C shah recorded on oath under section 133of the Act and addition made thereon. The defense of the assessee has not been taken into consideration in its proper perspective either by way of examining the document placed before it as made known to the authorities by and under the representation dated 11.12.2014 or by affording opportunity to cross examine the said Bharat C Shah. It is a settled principle of law that assessment order in which addition is made on the basis of any such statement is a nullity as also held by Apex Court in the case of Andaman Timber Mart v. Commissioner of Central Excise, Kolkata [2015]62 taxmann.com 3 (C) where the Apex Court has observed that : According to us, not allowing the assesses to cross examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing but misleading in order to make addition against the assessee by hook or crook by the revenue.In this regard we further would like to rely upon the order passed by the Hon bleJurisdictional High Court in the matter of PCIT-vs-Chartered Speed Private Ltd in Tax Appeal No. 126 of 2015 and Tax Appeal No. 127 of 2015. While dealing with this particular aspect of the matter the Hon ble High Court observed as follows: In the appeal before the Commissioner (Appeals), the order of the AO was confirmed. In the further appeal before the Tribunal, at paras 17 and 18, it was observed thus 17. We find that in the instant case, the addition is made u/s. 68 of the Act on the ground of unexplained cash credit. As per the provisions of section 68, the initial onus lies upon the assessee to prove the nature and source of amount credited in his books of account. We find that this initial onus was discharged in the instant case by the assessee by furnishing documents like MOA, AOA, share application board resolution, Certificate of Incorporation, Certificate of Commencement, acknowledgements of ITRs, audited accounts etc. of concerned companies. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so made cannot be sustained. We, therefore, delete the addition of ₹ 2,00,00,000/- made in the case of M/s Charted Motors Pvt. Ltd. as well as addition of ₹ 70,00,000/- made in the case of M/s. Chartered Speed Private Limited. Under the circumstances, the present Tax Appeals before this Court. 4. Mr.Bhatt, learned counsel appearing for the Revenue contended that three aspects were required to be proved. One was the identity of the person concerned from whom the source of money is disclosed. The another was the creditworthiness of the person concerned and the third was the genuineness of the transaction. He submitted that in the present case, the Tribunal has committed error in not considering that the creditworthiness as well as genuineness of the transaction were not proved and therefore, irrespective of the fact that the persons who had given statements were not made available for cross-examination, the Tribunal has committed error in accepting the explanation as sufficient and thereby deleting the amount as income of the assessee concerned. He also relied upon the decision of this Court in the case of Umesh Krishnani Vs. ITO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Revenue, such a finding of fact would not call for interference when the appeal before this Court is limited to the substantial questions of law. The decision upon which the reliance has been placed by Mr.Bhatt in Tax Appeal No.800/12 (supra) is of no help to the Revenue because the facts and circumstances of the present case cannot be equated with the facts of the said caseconsidered by this Court. It is hardly required to be stated that whether the explanation is sufficient or not would essentially depend upon the facts and circumstances of each case. But the principle remains that once the initial burden is discharged by the assessee, it would be for the Revenue to show that the transaction was bogus leading to conclusion for discarding of the explanation. In the present case, as observed by us hereinabove, the burden was not discharged and therefore the Tribunal has held in favour of the assessee. We do not find that any substantial question of law would arise for consideration in the present appeals, as canvassed. 8. Hence, the appeals are meritless and therefore, dismissed. Thus, it appears that in that case the assessee has to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further pointed out to the CIT(A). Thus,in the event we accede to such prayer made by the revenue, at this stage, it will be nothing but adding premium to the inaction/overaction made by the authorities below particularly when we do not find any such receipt of the appellant during the year under consideration as added under section 68 of the Act, neither we encourage multiple innings to revenue authorities as the ratio laid down in the judgement passed by the Hon ble Jurisdictional High Court in the case of Rajesh Babubhai Damania-vs CIT, reported in 122 Taxman 614(Guj) which was subsequently followed by the Hon ble ITAT Bench, at Delhi in the case of COIM India private Ltd versus ACIT reported in 96 taxman.com 511. It is relevant to mention that the judgement relied upon by the Ld. DR has no manner of application to the instant case since the basic fact is completely different from that of the judgement relied upon before us.Particularly in the said judgment the assessee failed to produce a shareapplications before the Assessing Officer which is admittedly different from the case before us. Thus, the entire action of the authorities below speaks total non-ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequently retracted from his statement by filing an affidavit on 25.05 2011 which was made known to the authorities being the Assistant Director of Income Tax, Aykar Bhawana, Ahmedabad, by and under an intimation dated 20.06.2011 as it appears at page 118 of the paper book before us. Admittedly the authorities below while coming to the conclusion that the assessee had paid ₹ 18,05,87,658/- by cash relied upon that particular document which has been narrated by the Learned Assessing Officer in the following manner: 4.2.1. During the course of survey proceedings at the premises of Nishant Construction Pvt. Ltd. at 801-802, Regency Plaza, Satellite Road, Ahmedabad a loose paper inventoried as page no.160 of Annexure A-2 was found and impounded. There are certain rough notings on this page. A figure (₹ 23,30,87,658/-)is written at the top of this page with remarks 'total'. Below that, in the second line a figure of ₹ 14,26,00,000/- is written with remarks 'cash paid'. A figure of ₹ 9,04,87,658/- is written as the balance figure in the third line. A figureof ₹ 5,25,00,000/- is written at the four line. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the premises of the company at 801-802, Regency Plaza, Satellite Road, Ahmedabad and particularly was recovered from one Virendra N Thakkar, an employee of the assessee company who happens to be the liaison officer for the company for last 23 years. However, according to the authorities below the said Shri Thakkar deals with the matters related to land. We have also gone through the deed of conveyance dated 03.02.2010 available at page 175 to 193 of the paper book filed before us by the assessee where the total consideration of the said sale proceed was of ₹ 5,25,00,000 as reflected at page 185 of the said paper book. The case of the assessee is this that the said loose paper as aforesaid is a dumb document having no title, date or details which can lead to the conclusion that it was pertaining to the appellant and related to the alleged payment made by the appellant to DasharathbhaiPunjabhai, MahentabhaiDashrathbhai and RajendrabhaiDashrathbhai for purchase of land for the residential project of Ratnakar VI of the assessee company. It is only pure guess, without any supporting evidence to rebut the explanation of the appellant and given without any indepe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also in the loose sheet found, seized and impounded from the employee of the appellant company and, therefore, it was to be concluded that it is that amount which is reflected in the sale deed. Further that the other figures of various amounts mentioned in the said loose paper either paid or to be paid in cash has rightly been considered by the authorities below. It was further contended that in the event the aforesaid argument is not accepted by us the matter be set aside to the file of the authorities below to cross examine the Vendors of the land. Thus, it appears that the moot point to be considered by us is as to whether the revenue can rely upon the piece of paper in question as part and parcel of the transaction pertaining to the land which has been alleged to be a dumb document by the assessee in the present facts and circumstances of the case and as to whether the statement given by Upendra C Shah at all been taken into consideration while making addition of the amount of ₹ 18,05,87,658/- as payment of cash towards the purchase of land under section 69C of the Act. 18. Firstly, we would like to deal with that pi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with us hereinabove. No authority acting judicially would have acted on the basis of a loose paper having no evidentiary value had there been minimum application of mind. In this regard we have considered the judgement relied upon by the Learned AR passed in the matter of V. C.Shukla, reported in 1998(3) SCC 410 wherein, it was held that the loose sheet cannot be said to be the book or entries therein is not an admissible evidence. In the case before us the such loose paper was found from one of the employees of the assessee company namely Mr. Virender N. Thakkar. Shri Thakkar did not depose that this particular loose paper belongs to the appellant company or it relates to the payment made for land in cash by the appellant company. Relying on the figure mentioned in that particular loose paper and assuming that relates to the payment made by the appellant in cash towards land dealing is ultimately is of no value if the very basis of such conclusion is not having any true force in the eye of law. We have further considered the judgement passed in the matter of CIT, Delhi-VI-vs-Girish Choudhary, reported in (2007) 163 Taxmann 608 (Delhi) where in similar circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on the basis of the loose paper impounded from the office premises of the appellant company is of no value at all. 19. Secondly, we find that time and again the authorities below has relied upon the statement made by Shri Upendra C. Shah recorded during the survey on 20.05.2011 accepting discrepancy in the books and disclosing ₹ 15 crore but the affidavit dated 25.05.2011 shown by the assessee with a specific statement that such statement so recorded during survey was under pressure and coercion has not been taken into consideration in its proper perspective. The judgment passed by the Hon ble Madras High Court in the matter of CIT-vs-S. Kadarkhan, reported in 352 ITR 480 holding that statement during survey has no evidentiary value has been upheld by the Hon ble Apex Court. The ratio has also been followed by the Jurisdictional High Court in the case of CIT-vs-Sardaben K. Modi, reported in 217 Taxman 89. In the said judgment the Hon ble Court was pleased to refer the CBDT Circular dated 10.03.2003 whereby and whereunder the Board has instructed that no attempt should be made to obtain confessional statement of disclosure and evidence should be collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed this ground in view of this particular fact that the issue has already been examined by the Hon ble ITAT in ITA No.1502/Ahd/2017; the relevant portion of the written notes of submission filed by the revenue is as follows: Ld. CIT(A) erred in law and on facts in confirming addition made by AO of ₹ 17,85,79,435/- on account of alleged on money receipt from Ranker-III/IV scheme developed by the Appellant. Ld CIT(A) ought to have deleted addition made in absence of iota of evidence regarding price charged or received over and above documented rates approved by stamp valuation authority. It has been contended that this issue has already been examined by this bench of Hon ble ITAT in ITA No.1502/Ahd/2017 decided in pursuant to the specific direction of the Hon ble High Court in Tax Appeal No.898/2017 and the matter has attained finality by dismissal of the SLP filed by the Revenue against the orders of the Hon ble High Court in Tax Appeal Nos.809 and 898/2017 arising out of the orders of the Hon ble Tribunals in ITA No.378/Ahd/2016 for A.Y. 2012-13 and ITA No.1502/Ahd/2017 for A.Y. 2011-12. Therefore, the issue of addition of ₹ 17,85,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
