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TMI Blog2019 (10) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of the ld. CIT(A), Muzaffarnagar dated 16.02.2015. 2. Following grounds have been raised by the assessee: 1. That the Learned Commissioner of Income Tax (Appeals), Muzaffarnagar has erred in confirming the addition of ₹ 79,00,000/- against the returned income of ₹ 2,29,830/-. 2. That the Learned CIT(Appeals) has erred in confirming the addition of ₹ 79,00,000/- received as share application money by the appellant under section 68 of the Income Tax Act, 1961. 3. The facts have been taken from the orders of the revenue and submissions of the assessee. 4. Brief facts of the case are that Assessee is a closely held Private Limited Company. Assessee has filed it s income Tax Return on Dt.30/9/2010 declaring a total income of ₹ 2,29,830/-. The Company has Sh. Anil Singhal, Sh. Salek Chand Singhal, Ms. Sushma Singhal and Sh. Umesh Kumar Singhal as Directors. The assessee Company is engaged in the business of trading of Iron Steels. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isite details 22.10.2012 No details 6 22.10.2012 Again specifically asked to furnish name and current addresses of share applicant. 01.11.2012 Part reply, details of share applicant still not furnished 7 01.11.2012 Adjournment sought, no compliance 06.11.2012 8 06.11.2012 Remaining details 23.11.2012 Only name address of share applicant furnished. 9 23.11.2012 Remaining details. 07.12.2012 copy of ITR, bank statement, balance- sheet etc of share applicant furnished 10 07.12.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 12.03.2013 To substantiate the share application money Also asked to produce Directors of assessee company and share applicant. Written submission 18 19.03.2013 To substantiate the share application money Also asked to produce Directors of assessee company and share applicant. Written submission 7. The assessee was requested to prove the identity of companies from whom share application money claimed to have been received and to produce Principal Officers of these companies so that genuineness of documents and physical existence of companies can be examined. It was asked to furnish name and complete addresses and PAN of the persons from whom share application money was received along with copy of their bank statement, copy of Balance- sheet and confirmation of account in support of identity and creditworthiness of these persons and genuineness of transaction. Despite repeated requests and ample oppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 Amit Singhal, R-9/67, Raj Nagar, Ghaziabad 1,50,000/- 12 Salek Chand Singhal, R-9/67, Raj Nagar, Ghaziabad 1,50,000/- 8. It is also a matter on record that till financial year 2008-09, assessee company has shown share capital to the tune of ₹ 4 lacs only and Share application money of ₹ 6 lacs at the Book value of ₹ 10/- per share. During financial year 2009-10, the assessee company has received Share application money totaling to ₹ 79,00,000/- from eight companies on premium of ₹ 150/- per share. Notices u/s 133(6) of the I.T. Act, 1961 were issued by the Assessing Officer to the aforesaid parties and officials of the revenue were deputed to get confirmation of the transaction shown by the assessee. However, the aforesaid parties were not found at their respective addresses provided by the assessee. It is reported by the officials that none of the companies found at the given addresses and notices issued u/s 133(6) were returned un-served. It is also repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement, the Assessing Officer observed that amounts have immediately been credited before giving funds to your company. It was also observed that regular balance is only few thousands in the bank account of all companies. From the available records, the Assessing Officer held that these companies are hardly involved in business activities. 11. The Assessing Officer directed the assessee to produce Principal Officer of all the above companies along with ID proof and ITR, Balancesheet and Profit Loss account of the last three years for recording of their statement. Date fixed was 21.01.2013, but they have not been produced. Documents produced vide letter dated 21.01.2013 and dated 29.01.2013 have similar addresses which have already been verified and found to be incorrect. The assessee has again provided the same addresses, except three addresses, of companies, vide letter dated 11.02.2013, addresses of three companies are changed as under: 1 Safari Tradex Private Limited, G-10, Best Plaza, H-8, Behind P.P. Jewellers, Netaji Subhash Place, New Delhi 6,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 Focus Tradimpex Private Limited, YP-43 B, Pitampura, New Delhi Residential address some other person residing who has denied heard of such company. 6 Safari Tradex Private Limited, G-10, Best Plaza, H-8, Behind P.P. Jewellers, Netaji Subhash Place, New Delhi Building is Locked. Building guard and nearby told that they have never heard such company s name. 7 Focus Tradimpex Private Limited, 25/14A, No.14, Kunti Marg, 60 Feet Road, Vishwas Nagar, Shahdara, New Delhi Information obtained from owner of the building and nearby shopkeepers. No such company office have been in building. 8 Kabir Enterprises Private Limited., A-85, First Floor, Office No.2, ST No. 15, Madhu Vihar, New Delhi Sh. Anil owner of M/s Drishya Eye care since 2009 told that he has not heard of such company. 13. The assessee was conveyed about the outc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter Status of those Director and Director of company as on date, as on paper/ROC- Anubhav Buildmart Pvt. Ltd. Sh. Dushyan Agrawal As per form 32 filed on ROC Sh. Dushyan Agrawal has resigned on 10.03.2012 and Amit Agrawal is appointed in place w.e.f. 10.03.2012 Visit India Voyages Pvt. Ltd. Sh. S. K. Garg Sh. S.K. Garg has already resigned letter enclosed below as per paper filed in ROC. Sh. Hemant has been appointed in place w.e.f. 11.04.2012. Monitor Sprint Elevators (P) Ltd. Sh. Dushyan Agrawal As per form 32 filed on ROC Sh. Dushyant Agrawal has resigned on 13.03.2012 and Sh. Hemant is appointed in place w.e.f. 13.03.2012 14. The Assessing Officer concluding that since the Assessee has failed to furnish current addresses of the companies, owing to which summons u/s 131 could not be issued, the notices issued u/s 133(6) have come back unserved, the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral meeting of the assessee, ITR of the share applicant companies, the confirmations, the ROC record, P L and balance sheet of the share applicant companies, copies of the application of the equity shares. It was argued that all the evidences to prove identity, genuineness and creditworthiness have been submitted before the authorities which has summarily rejected without giving due consideration. He relied on the documents filed in the paper book serial number upto 331. 18. On the other hand, ld. DR, Sh. N. K. Bansal strongly supported the orders of the lower authorities. He took us through various aspect of the investigations and enquiries conducted by the Assessing Officer and the rationale to the ld. CIT (A) in confirming the appeal. He has filed his arguments in the form of written submission which are as under: 1. PCIT Vs NRA Iron Steel (P.) Ltd. [2019] 103 taxmann.com 48 (SC) (Copy Enclosed) where Hon ble Supreme Court reverse order of lower Authorities holding that where there was failure of assessee to establish credit worthiness of investor companies, Assessing Officer was justified in passing assessment order making addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those shares were purchased back even at a loss, share transactions in question were to be regarded as bogus and, thus, amount received from said transactions was to be added to assesee's taxable income under section 68 it was held as follows: 53. In contrast to the above judgments, in the present case, the Assessee is a private limited company and in the factual matrix, we have held that the Assessee has not been able to discharge the initial onus and has not been able to establish the identity, creditworthiness of the share applicants and the genuineness of the transaction. Though, in our considered opinion, none of the above judgments, referred to by the Assessee respondent, are applicable in the facts of the present case and in view of the findings recorded by us hereinabove. 54. In view of the above, we are of the view that the Assessee has not discharged the onus satisfactorily and the additions made by the Assessing Officer were justified and sustainable. 6. CIT Vs Navodaya Castle Pvt Ltd T20141 367 ITR 306 (Del) (Copy Enclosed) where Hon ble Delhi High Court accepted that since the assessee was unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee-company received certain amount as share capital from various shareholders, in view of fact that summons served to shareholders under section 131 were unserved with remark that addressees were not available, and, moreover, those shareholders were first time assessees and were not earning enough income to make deposits in question, impugned addition made by AO under sec. 68, was to be confirmed. 8. Pratham Telecom India Pvt Ltd Vs PCIT (2018-TIOL-1983-HC-MUMIT) (Copy Enclosed) where Hon ble Bombay High Court held that mere production of PAN numbers bank statements is sufficient enough to discharge the burden on taxpayer to escape the realms of Section 68. 9. J J Development Pvt Ltd Vs CIT (2018-TIOL-395-SC-IT) (Copy Enclosed) where Hon ble Supreme Court held that when the assessee fails to provide a convincing explanation with regard to the cash credit before the AO and the same was accepted by the ITAT being a fact finding body, the same cannot be disputed further. Apex Court dismissed the Special Leave to Petition filed by the assessed 10. DRB Exports (P.) Ltd. Vs CIT [2018] 93 taxmann.com 490 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 252 CTR 187) (Copy Enclosed) where Hon ble Delhi High Court held that amount received by assessee from accommodation entry providers in garb of share application money, was to be added to its taxable income under section 68. It Was held as follows: 41. In the case before us, not only did the material before the Assessing Officer show the link between the entry providers and the assessee-company, but the Assessing Officer had also provided the statements of Mukesh Gupta and Rajan Jassal to the assessee in compliance with the rules of natural justice. Out of the 22 companies whose names figured in the information given by them to the investigation wing, 15 companies had provided the so-called share subscription monies to the assessee. There was thus specific involvement of the assessee-company in the modus operandi followed by Mukesh Gupta and Rajan Jassal. Thus, on crucial factual aspects the present case stands on a completely different footing from the case of Oasis Hospitalities (P.) Ltd. (supra). 42. In the light of the above discussion, we are unable to uphold the order of the Tribunal confirming the deletion of the addition of ₹ 1,18, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re applicants could not be served as the notices were returned unserved. In the backdrop of this circumstance, the assessee's ability to secure documents such as income tax returns of the share applicants as well as bank account particulars would itself give rise to a circumstance which the AO in this case proceeded to draw inferences from. Having regard to the totality of the facts, i.e., that the assessee commenced its business and immediately sought to infuse share capital at a premium ranging between ₹ 90-190 per share and was able to garner a colossal amount of ₹ 4.34 Crores, this Court is of the opinion that the CIT (Appeals) and the IT AT fell into error in holding that AO could not have added back the said amount under Section 68. The question of law consequently is answered in favour of the Revenue and against the assessee. 14. CIT Vs Frostair (P.) Ltd (26 taxmann.com 11, 210 Taxman 221) (Copy Enclosed) where Hon ble Delhi High Court held that where details furnished by assessee about share applicants were incorrect, addition under section 68 was proper. It was held as follows: 12. The application of the rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attending facts predicate 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 are dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take the decisions, controls and manage them. 16. CIT Vs Empire Builtech (P.) Ltd (366 ITR 110) (Copy Enclosed) where Hon ble Delhi High Court held that u/s 68 it is not sufficient for assessee to merely disclose address and identities of shareholders; it has to show genuineness of such individuals or entities. 17. CIT Vs Focus Exports (P.) Ltd (51 taxmann.com 46 (Delhi)/[2015] 228 Taxman 88) (Copy Enclosed) where Hon ble Delhi High Court held that where in respect of share application money, assessee failed to provide complete address and PAN of certain share applicants whereas in case of some of share applicants, there were transactions of deposits and immediate withdrawals of money from bank, impugned addition made under section 68 was to be confirmed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition. The addresses have been proved wrong, the notices u/s 133(6) of the Act have come back unserved, correct address of the Directors was not provided. There has been change of Directors and a set of persons taken as Directors and different companies. Approximately, 15 concerns are floated or taken over by a set of persons having same addresses and common Directors/Proprietors as below: S. No. Name of companies Owner's/Director 1 Rachita Buildcon Private Limited DA/4,106, Dua Business Centre, Main Vikas Marg, Shakarpur Delhi Anil Agrawal Sanjay Agrawal 2 Kabir Enterprises Room No.-204, 21St Century Business Centre, D-64, Shakarpur, New Delhi Anil Agrawal Rajeev Kumar Bansal 3 Anubhav Buiidmart Private Limited DA/4,106, Dua Business Centre, Main Vikas Marg, Shakarpur Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 J K SALES CORPORATION 301 23 Veer Savarkar Block, Delhi Mahukar Dubey 15 Accord sales Tradex Pvt. Ltd D-lll, South Ganesh Nagar, Mandawali, New Delhi. Yogendra Kumar Vinod Sharma 21. Further, from the study of the bank statement, it can be found that M/s Harshit textiles, M/s True way network Marketing, M/s Thakurji Sales Corporation, M/s BR Gupta Co. Pvt. Ltd., and M/s Harshit Textile have been used to deposit cash and the same has subsequently been transferred to other accounts on almost same date to provide entries. Trail of transaction for providing entry to the assessee company has been established by the way of following chart: Cash ₹ 9,00,000/- 12.11.2009 True way Network Mkg Kotak Mahindra Bank 900000 13.11.2009 Visit India Voyges Pvt. Ltd. Kotak Mahindr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yes Bank Chanakya puri 011-66569000 Accord Sales Tradex Pvt. Ltd. a/c no3883800000743 Yes Bank, Rajori Garden 6,00,015 19.11.2009 Focus Tradimpex Pvt. Ltd. Yes Bank a/cno.003083800001942 6,00,000 20.11.2009 Singhal Sunrise Deposited 20,00,000 on 19.11.2009 and transferred to four concerns Accord Sales Tradex Pvt. Ltd. a/c no.3883800000743 Yes Bank, Rajori Garden 6,00,040 19.11.2009 Safari Tradex Pvt. Ltd. Yes Bank 003083800001942 6,00,000 20.11.2009 Singhal Sunrise 25 Lacs 28.10.2009 J K SALES CORPORATION ING Vysya Bank, Sona Electrical Services Pvt. Ltd. 631011000076 ING Vysya Bank, Preet Vihar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Anubhav Buildmart Private Limited Naman Lam Pvt. Ltd. Porter Buildcon Pvt. Ltd. Anubhav Buildmart Private Limited, Ellora Buildtech Pvt. Ltd. Ankay Associates Private Limited, BRGupta Co. Private Limited, Rachaita Buildcon Private Limited, Visit India Voyages Pvt. Ltd. Ankay Associates Pvt Ltd. B.R Gupta Company Pvt. Ltd. Ellora Buildtech Pvt Ltd orter Buildcon Pvt. Ltd. SLB Finlease Pvt. Ltd. Thakur Ji Sales Corporation 23. Further, the turnover and profits of the share applicant company do not give any credence to the investments done with the assessee company while the revenue has brought on record all the evidences to prove that these share applicant entities are in fact shell companies. Rotation of the amount amongst the interconnected companies to provide share application mo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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