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TMI Blog2019 (12) TMI 1185X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case and under the law, charging of interest u/s 234B was unjust & illegal." 2.1 Whereas the Revenue has challenged the deletion of addition of Rs. 3,50,00,000/- u/s.68 on the following grounds: "1. On the facts & in the circumstances of the case, the Lei. CIT(A) has erred in deleting the addition of Rs. 3,50,00,000/- u/s. 68 of the Act holding that the Assessing Officer did not carry out the exercise required under the law'. " 2. On the facts & in the circumstances of the case, the Ld. C1T(A) has erred in deleting the above addition by not appreciating the findings of the Assessing Officer and material evidence on record after conducting proper enquiries by issuing notices u/s.133(6) of the Act." 3. The facts in brief qua the issue raised by the assessee in its appeal are that the assessee company is engaged in the business of real estate and during the course of assessment proceedings, the Assessing Officer noted that assessee has carried out F&O / derivative transactions in shares in this year. The assessee has earned derivative profits of Rs. 2,20,000/- and loss of Rs. 52,32,337/- and accordingly net derivative loss of Rs. 50,12,337/- was claimed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nserved. The assessee is ready to provide to changed address of the broker and from them inquiries can be made otherwise all the documentary evidences proving the transactions have been produced, the same cannot be disregarded. 6. On the other hand, ld. DR strongly relied upon the order of the Assessing Officer and Ld. CIT (A) and submitted that once the NCDEX has clearly stated that the broker has not traded during the period 01.04.2010 to 31.03.2011 and the assessee company was not registered with the exchange, therefore, the entire documents submitted by the assessee is mere paper, and therefore, the claim of loss in the wake of the inquiry conducted by the Assessing Officer is bogus and nongenuine. 7. After considering the rival submissions and on perusal of the relevant findings given in the impugned orders as well as material referred to before us, we find that assessee had carried out F&O/derivative transaction in shares during the year from which it has earned deliberative profit of Rs. 2,20,000/- and also claimed to have incurred loss of Rs. 52,32,337/-. Accordingly, net of derivative loss of Rs. 50,12,337/- was claimed. Though, the notice sent by the Assessing Officer u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 50,00,000 2 Automobile Components India Lts. 1,00,000 10,00,000 90,00,000 1,00,00,000 3 Zoom Developers SEZ (Indore) Pvt. Ltd. 1,00,000 10,00,000 90,00,000 1,00,00,000 4 Rangoli Buildtech Pvt. Ltd. 1,00,000 10,00,000 90,00,000 1,00,00,000 Total 3,50,000 35,00,000/- 3,15,00,000 3,50,00,000 11. Thus, the face value of the share at Rs. 10/- each was issued at a premium of Rs. 90/- per share. Ld. Assessing Officer though noted that assessee had filed copy of confirmation, copy of ITR and bank statement in respect of New International Stainless Pipe Company Ltd., but no ITR and bank statement was filed in respect of Zoom Developers SEZ (Indore) Pvt. Ltd. In respect of one party, M/s. Rangoli Buildtech Pvt. Ltd. again no bank statement was filed. The Assessing Officer had sent notices u/s. 133(6) to these parties. However in the case of three parties, the notice returned back unserved except in the case of M/s. Rangoli Buildtech Pvt. Ltd. Even the fresh notices issued were sent to the other parties at the address given by the assessee but again these notices remain unserved. The Assessing Officer had also called for copy of bank stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Id. A. O. to the said M/s New International Stainless Pipe Co. Ltd had not returned unserved. (iv) During the course of assessment proceedings, the Id. A.O. had not asked the assessee to provide latest address of the said M/s New International Stainless Pipe Co. Ltd. (v) Since the assessee had not been asked to provide latest address of the said M/s New International Stainless Pipe Co. Ltd., question of providing any other address did not arise. (vi) After getting the bank statement of the said M/s. New International Stainless Pipe Co. Ltd. from the Nainital Bank Ltd., the Id. A.O. had not sought clarification regarding the source of the investment made by the said M/s. New International Stainless Pipe Co. Ltd. in the shares of the assessee. 2. M/s. Automobile Components (India) Ltd./AGM Properties Pvt. Ltd. (i) The ld. A. O. had carried out such inquiries [either from the said M/s Automobile Components (India) Ltd. / AGM Properties Pvt. Ltd. or from the bank of M/s Automobile Components (India) Ltd. / AGM Properties Pvt. Ltd.] at the back of the assessee. (ii) During the course of assessment proceedings, the Ld. A.O. had not informed the assessee that the notice u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m The Naintal Bank Ltd. (vi) After getting the bank statement of the said M/s Zoom Developers SEZ (Indore) Pvt. Ltd. from the Nainital Bank Ltd., the ld. A.O. had not sought clarification regarding the source of the investment made by the said M/s Zoom Developers SEZ (Indore) Pvt. Ltd. in the shares of the assessee. 4. M/s. Rangoli Buildtech Pvt. Ltd. (i) That during the year under consideration, M/s Rangoli Buildtech Pvt. Ltd., holding PAN: AACCR8695P had applied for the allotment of 100000 shares of Rs. 10/- each on premium of Rs. 90/- each. It had paid an amount of Rs. 1,00,00,000/- to the assessee on 27.04.2010 through two different RTGS of Rs. 65,00,000/- and Rs. 35,00,000/- of The Bank of Rajasthan Limited, New Delhi. (ii) That during the course of assessment proceedings, the assessee had filed copies of the confirmation, ITR for A.Y. 2011-12, Balance Sheet as at 31.03.2011 and bank statements etc. of M/s Rangoli Buildtech Pvt. Ltd. (iii) That during the course of assessment proceedings, the Id. A.O. had issued notice u/s 133(6) dt. 21.11.2013 to M/s Rangoli Buildtech Pvt. Ltd. (iv) That in response to the said notice, M/s Rangoli Buildtech Pvt. Ltd. had made comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 issued by Learned Assessing Officer to Nainital Bank Ltd. Letter dated 24.2.2014 from Nainital Bank Ltd. Photocopy of cheque of Rs. 20,50,000/- issued by Shri Krishna Fabric Photocopy of cheque of Rs. 15,50,000/- issued by Aman Enterprise Photocopy of cheque of Rs. 14,00,000/- issued by Fab Care II Automobile Components (India) Ltd. (Rs. 1,00,00,000/-) Application form Confirmation ITR for 2011-12 Balance sheet Bank Statement - Nainital Bank Ltd. Notice u/s 133(6) dated 20.2.2014 issued by Learned Assessing Officer to Nainital Bank Ltd. Letter dated 24.2.2014 from Nainital Bank Ltd. Photocopy of cheque of Rs. 5,00,000/- issued by Dream Life Care Marketing Pvt. Ltd. Photocopy of cheque of Rs. 25,00,000/- issued by ZDSEZIPL Photocopy of cheque of Rs. 6,00,000/- issued by Fab Care Photocopy of cheque of Rs. 6,00,000/- issued by Alic Technologist RITGS Advice for Rs. 4,70,00,000/- from Bhagwati Trading Company III Zoom Developers SEZ (Indore) Pvt. Ltd. (Rs. 1,00,00,000/-) Confirmation ITR for 2011-12 Balance sheet Bank Statement - Nainital Bank Ltd. Bank Statement - Axis Bank Ltd. Photocopy of cheque of Rs. 7,5,0,000/- issued by Litman. Photocopy of cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings nor Assessing Officer has issued summon u/s 131 of the I.T. Act to produce the above said parties. * Where address is not clear, Assessing Officer should have asked the assessee to provide the new address. * Furthermore, in the case of Rangoli Buildtech Pvt Ltd, it is found that there is scrutiny assessment order for Assessment Year 2011-12, wherein there is no adverse inference has been pointed out by the DCIT Central Circle 14. The appellant has provided copies of scrutiny assessment order which available at page no. 114 - 116 of the order." 14. He further analyzed the each and every transaction and the bank details of the parties and after giving detailed finding held that the addition of Rs. 3,50,00,000/- cannot be made because not only the transaction were genuine but also the identity and creditworthiness of the parties had also stood established in the light of the facts and material on record. 15. Before us, ld. Sr. D.R. after referring to the various observations made by the Assessing Officer submitted that one peculiar fact which has been brought on record by the Assessing Officer is that a share which has been subscribed by four parties at a face value of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there were sufficient balances in the bank account of the creditors. Thus, from the inquiries made by the Assessing Officer the bank transaction stood corroborated and what has been explained by the assessee was also confirmed and accepted by the parties also. A finding has been given by the Ld. CIT (A) that the Assessing Officer had neither directed the assessee to produce the parties nor he has issued any summons u/s.131 to the said companies to appear before him with regard to each and every subscribing companies. The Ld. CIT (A) has examined the relevant credit entries appearing in the bank account and also the balance-sheets of these companies and found that these companies have paid the money from their disclosed sources duly reflected in the books of account. 17. The finding of fact given by Ld. CIT (A) qua each company is summarized hereunder. In the case of New International Stainless Pipe Co. Ltd., Ld. CIT (A) has noted that amount of Rs. 50 lac which was given to the assessee was appearing in the balance-sheet and also there were enough credit balance available with the said company at the time of issuance of cheque. Similar transaction was reflected in the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur parties from whom money was received by the appellant during the year and to whom shares were allotted by the appellant. The Assessing Officer did not ask the appellant to produce all the four parties from whom money was received by the appellant during the year and to whom shares were allotted by the appellant as it is evident from the order sheet of the Assessing Officer (photocopy is placed on record). From these facts, it is amply clear that the Assessing Officer did not carry out the exercise required under the law. Hon'ble Delhi High Court in the case of Gangeshwari Metal Pvt. Ltd 361 ITR 10, after taking into consideration its earlier decision in the case of Nova Promoters and Finlease Pvt. Ltd. 342 ITR 169, held that where the Assessing Officer without carrying out the exercise required in law reject the claim, no addition can be made u/s 68 in the hands of the company allotting shares. I am of the considered view that on the facts of the appellant's case, addition u/s 68 is not at all justifiable." 19. The aforesaid finding of the Ld. CIT (A) in absence of any rebuttal or contrary material on record which could have been revealed through inquiry made by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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