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TMI Blog2019 (10) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... the income tax return of the depositors, which the assessee has not produced before any of the lower authorities. Even before us, the assessee has not produced the same. CIT A has also made huge efforts by issuing notices to the shareholders u/s 133 (6) of the act which was not complied with. Appellant is also required to meet the argument of the learned departmental representative with respect to the judicial precedents of the honourable Delhi High Court and honourable Supreme Court. AR has tried to prove all these facts, which are held against him, based on the agreements, memorandum of Understanding by reading clauses contained therein, explaining the financial structure of the w whole transactions, to show the identity, creditworthiness and genuineness of the transactions and shareholders. As those agreements were, MOUs were not available with lower authorities along with other details produced before us, in the interest of justice, we set aside the whole issue back to the file of the AO with direction to the assessee to prove Identity, creditworthiness of the shareholders and genuineness of the transactions meeting the findings of the lower authorities. AO may exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red for the filing of the appeal. 2.0 Addition of share application money pending allotment 2.1 That on the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in confirming the addition made by the Learned Assessing Officer ( Learned AO ) vide his order passed under section 143(3) of the Act on account of share application money pending allotment amounting to ₹ 3,30,00,000. 2.2 That on the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in ignoring the fact that the shares were allotted by the Company in the subsequent year at the value which was evidenced by a valuation report. 2.3 That on the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in holding that the share application money received did not represent a bona fide business transaction and was merely a book entry to justify unaccounted cash. 3.0 On explanation of source of funds with Navaya Infrapower Private Limited ( the Shareholder ) 3.1 That on the facts and in the circumstances of the case and in law, the Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee Company has received share application money in the garb of accommodation entry from Messer Navya Infrapower Ltd. Further details of profit and loss account of the above company reveals that company has shown income from other sources to the extent of only INR 5100 for the year ended on 31st of March 2013. Thus, he held that the assessee has received share application money of ₹ 33300000/ - of which creditworthiness and genuineness of the depositor could not be proved during the course of assessment proceedings. Therefore, he made the above addition. Accordingly assessment order u/s 143 (3) of the income tax act was passed on 31/3/2016 determining total taxable income of the assessee at ₹ 33300000/ . 4. Assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned CIT A 1, Gurgaon. Before the learned CIT A , assessee submitted the details of share application money received during financial year 2012 13, copies of the audited balance sheet and profit and loss account of shareholders, copies of bank statement of the shareholders, details of allotment of shares. As per the details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and no response was received. The learned CIT A brought the fact of the notice issued by him to the assessee and assessee was requested to obtain the information from these two companies, as these companies were shareholders of the appellant. However, no reply was filed by the assessee. Thereafter in Para number 3.10 of the order the learned CIT A analyzed the statement of account of Punchamrit Real Estate Private Limited and other shareholders. In Para number, 3.1 to he also noted the discrepancy in the balance sheet of those companies and the details submitted by the assessee in its reply dated 20/2/2017. He noted that on the perusal of the balance sheet the reserve and surpluses were at ₹ 883097597/ whereas as per the reply of the assessee the premium of only INR 905653330/ was received. The assessee was also asked to reconcile the above difference. The learned CIT A also noted that though assessee has received the share application money of ₹ 33313690/ however the learned assessing officer has only made the addition of ₹ 33300000/ . Therefore notice of enhancement was issued on 25/5/2017 for enhancement of the income by INR 13690/ . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts on the very same day or a couple of days prior to the date on which the share capital was introduced. These amounts were rooted to various bank accounts in order to give them effect of genuineness. He further referred to the annual accounts of those companies, found that there is a very small amount of share capital in the form of shareholders fund, and share application money. In each of these companies, there is a huge amount of share premium. The perusal of the profit and loss account of these companies had no substantial taxable income and all the companies shown losses. These companies also do not have any expenditure and therefore they were merely the paper companies. He further noted that it is apparent that appellant is a private limited company and therefore the subscribers to the shares of private company can be only private persons, such private persons must invariably be persons of confidence of the directors of the private limited company and there should be normally no difficulty in producing them before the assessing officer. In the present case, they were not produced and therefore the natural corollary is that that the real position is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able delay of more than 3 months in filing of the appeal. He further stated that the explanation given by the assessee does not show that there is a sufficient reason in filing of the appeal belatedly. 7. We have carefully considered the rival contention and found that the order of the learned CIT appeal was communicated to the assessee on 21/12/2017; however, the assessee could file the appeal only on fourth may 2018. The assessee has submitted that the main person Shri Girdharilal who is the director of the company was seriously ill in the year 2016 and after a prolonged illness; he passed away in October 2018. He was also aged about 75 years. There was nobody else who could have attended to the filing of the appeal. Further, by filing appeal belatedly, no benefit has accrued to the assessee. In fact, non-filing of the appeal would act as detrimental to the interest of the assessee. Therefore, delay in filing of the appeal cannot be construed as an intentional error/omission on the part of the assessee. In view of this, delay in filing of the appeal from 21/2/2018 to third may 2018 is condoned and appeal is admitted. 8. On the ground number 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip whose primary focus is to develop commercially vibrant power market in the country. PTC India financial services Ltd has been promoted by PTC India Ltd as a company Incorporated under the companies act and registered with Reserve bank of India as a nonbanking financial company. In February 2009, a Memorandum of Understanding was signed among PTC energy Ltd, RS India global energy Ltd and RS India wind Energy private limited to setup 1000 MW wind energy project in different parts of India with the specific roles and responsibilities for each of the participating partner in the memorandum of understanding. He submitted the copy of the Memorandum of Understanding as additional evidence. He further stated that PTC financial services Ltd made equity contribution of INR 610,000,000 in the shares of RS India energy private limited and holds 37% holding of the aforesaid company. Similarly, PTC energy Ltd also made an equity contribution of INR 230,000,000 in Rs India Global Energy Limited. Thus, aforesaid company holds 48% holding in RS India global energy Ltd. Since for setting up the aforesaid wind power project huge land at the rate of 5 acres per megawatt was requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced before the ld Lower authorities due to the situation prevailing on part of the assessee. These agreements needs to be analyzed to understand that the shareholders are genuine entities, the sources of funds is also explained and due to these agreements, there cannot be any doubt in the genuineness of the transactions. He referred to clause-by-clause conditions and understanding between those parties to show that there is complete clarity and business sense in those transactions. 10. The learned departmental representative vehemently supported the order of the lower authorities and submitted that despite being given a specific opportunity to the assessee at many point of times before the lower authorities no evidences were produced before them. Now the assessee is producing these evidences in form of several agreements, Memorandum of Understandings and other details. He submitted that there is no reason that these evidences must be admitted by the ITAT as the assessee has not justified that why this explanation was not given before the lower authorities. He further submitted that despite this merely producing the copy of the details of the directors, PAN of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors of the shareholder company and they also hold the permanent account number. Further the assessee has also tried to explain before us the source of the funds available with Navya Infrapower Private Limited in the form of share application and allotment money available of INR 1 6700000/- . Further, the bank statement of state bank of India of the shareholder is also produced wherein the transactions have been shown through banking channel. There are also amount credited because of premature closure of the fixed deposits receipts showing source of the funds invested in the appellant company. The confirmation has also been submitted of the depositor. As these details have been submitted by the assessee before us by invoking the provisions of rule 29 of The Income Tax Appellate Tribunal Rules, 1963 as additional evidences showing cause that these documents could not be submitted before the lower authorities for the reason that one of the main directors of the company passed away in October 2018 and was seriously ill since the year 2016 and aged around 75 years. It was also submitted that there was no other person who could provide the details of the transaction and disputes between ..... X X X X Extracts X X X X X X X X Extracts X X X X
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