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TMI Blog2020 (2) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by the assessee in the grounds of appeal and the activities of the assessee clearly shows that there is no violation of principles of natural justice of the lower authorities. In fact it is assessee who is trying to seal itself for the misdeed conducted by it. Hence, Ground no 1 to 6 are dismissed. Claim of depreciation and expenses from allegedly non-existing bogus companies and non-production of books of accounts - HELD THAT:- The most of the purchase shows by the assessee are software for which the assessee has not produced any details about its ownership, functionary etc. the AO has proved conclusively with the suppliers are bogus. The issue is squarely covered against assessee by the decision of the Hon'ble Delhi High Court in case of Chintels India Ltd Vs. DCIT [ 2017 (7) TMI 746 - DELHI HIGH COURT] wherein, bogus depreciation of software was disallowed of the ld AO was confirmed. The special leave petition filed before the ld Hon'ble Supreme Court is also dismissed [ 2018 (1) TMI 814 - SC ORDER] . The facts on that case are identical to the facts of the case before us. In view of this, we do not find any infirmity in the order of the ld AO in disallowing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition of sum received from Lakshmi Exim private limited. - AO made an addition u/s 68 as the assessee has failed to show the identity, creditworthiness and genuineness of the transaction -HELD THAT:- Before the learned CIT A, no further information was provided and therefore the addition was confirmed. The facts are identical to the facts in the case of the assessee for earlier years where the identical addition on account of share application money was made. In view of these facts we find no infirmity in the order of the lower authorities as assessee has failed to show the identity, creditworthiness and the genuineness of the rejection of the above investment in the share application money with the assessee company. Disallowance u/s 14A under rule 8D - HELD THAT:- During the course of assessment proceedings the assessee was asked to submit the details about the applicability of the provisions of section 14 A of the income tax act. The issue has been dealt with in para number 6 of the assessment order. The assessee did not furnish any reply to the above query. Thereby the learned assessing officer computed the disallowance applying the provisions of rule 8D and disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, further inquiries during assessment proceedings also. Elaborate facts are recorded in the assessment order with respect to allegation of tax evasion and consequent noncooperation by assessee. 2. The assessee has raised the following grounds of appeal in ITA NO. 3745/Del/2016 for the Assessment Year 2006-07:- 1. That an appeal against the impugned order of the learned A.O. was filed before CIT [Appeals] on 26th April 2013 but CIT [Appeals] has passed an Ex-Parte order by confirming the demand of Ld. A.O. on 14.03..2016 without taking into consideration the reasons due to which the appellant could not provide the necessary documents and evidence and could not attend the hearings before the CIT [Appeals]. Some of the reasons are provided below:- [a] That Mr. Anand Tiwari, one of the Directors of the Appellant Company has been suffering from a chronic liver disease for the past 4-5 years. On account of his severe illness he has been admitted/treated in various hospitals in India as well as abroad on innumerable occasions and has been bed-ridden for most of the time during these years. The medical record of Mr. Anand Tiwari is voluminous and the same can be filed be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... huge money from the appellant but did not properly put forward the case before the respondent. They should at least have represented the difficulties being faced by the company and ought to have defended the appellant to the best of their capacity on the basis of records which were within their possession and knowledge. But most unfortunately they failed to perform their professional duty, resulting in passing of the impugned order. (e) That the respondent ought to have considered the aforementioned bona fide reasons and extra ordinary circumstances and should have granted further time to the appellant to satisfy the respondent on the aspect that the demand raised by the Ld. A.O. was illegal and unwarranted. The ex-parte order passed by the respondent is unwarranted and has resulted in extreme prejudice to the appellant. (f) That the appellant is entitled for hearing instead of the case being decided unheard. (g) That the failure on part of the appellant in pursuing its appeal was neither deliberate nor intentional and the same was occasioned due to reasons mentioned above. (h) That the extra-ordinary adverse situation suffered by the appellant entitles it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O., e.g. the Ld. A.O. has failed to explain (a) as to why he is accepting the sales/turnover appearing in the P/L Account, when according to him there were on plant machinery and other fixed assets; and (b) as to why he is making addition on account of unexplained investment in the plant machinery, when according to him there were no plant machinery. 7. That on the facts of the case and under the law ,the Ld. A.O. has erred in making disallowance of ₹ 1,92,06,750/-, on account of alleged bogus claim of depreciation on the plant machinery. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. 8. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of ₹ 15,29,00,000/-, on account of share capital, thereby treating the said amount as unexplained share capital. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. 9. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of ₹ 8,39,80,000/-, on account of unsecure loan, thereby treating the said amount as unexplained credit. The obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Appellant Company has been suffering from a chronic liver disease for the past 4-5 years. On account of his severe illness he has been admitted/treated in various hospitals in India as well as abroad on innumerable occasions and has been bed-ridden for most of the time during these years. The medical record of Mr. Anand Tiwari is voluminous and the same can be filed before this Hon'ble Tribunal, if so directed. On account of his severe medical condition, Mr. Anand Tiwari has been completely incapacitated in dealing with the affairs of the company in any manner whatsoever. In any event, the affairs of the company, particularly financial and taxation related matters of the company were being looked after by Mr. P.K. Tiwari, the other Director of the company, from the very inception. (b) That Mr. P.K. Tiwari, the other director of the appellant company, was himself suffering from various illnesses and had also been incarcerated during the relevant time. Due to financial crisis, the company had started making defaults in paying installments to various banks and also in fulfilling other financial obligation. Consequently, the banks had filed false frivolous complaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appellant. (f) That the appellant is entitled for hearing instead of the case being decided unheard. (g) That the failure on part of the appellant in pursuing its appeal was neither deliberate nor intentional and the same was occasioned due to reasons mentioned above. (h) That the extra-ordinary adverse situation suffered by the appellant entitles it for a fair hearing before this Tribunal so that the case can be decided on merits instead of being thrown out on account of non representation. (i) The company did everything within its power by engaging professionals to represent it before the respondent but the said professionals failed to perform their duty by not advising the company in the matter and by not representing it in bona-fide manner. (j) That the company sought a number of adjournments and tried to present its case. (k) That due to lack of funds and non availability of documents as explained above, the company, inspite of taking many adjournments, was not able to defend its case before CIT (Appeals). (l) That no reasonable opportunity was provided to the Company to present its case and to justify the grounds for quashing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. A.O. are either factually incorrect or are legally untenable. 9. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of ₹ 46,70,00,000/-, on account of share capital/ application money, thereby treating the same as unexplained credit/ share capital and share application money. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. 10. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of ₹ 6,90,00,000/-, on account of investment in the property bearing Plot NO. 13, Sector 16A, Film City, Noida, thereby treating the said amount as unexplained investment. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. The investment in the said property were duly accounted for/ recorded in the books of accounts and were reflected in the balance sheet. 11. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of ₹ 1,28,65,19,625/-, on account of investment in the plant machinery, thereby treating the same as unexplained investment. The observation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the company were being looked after by Mr. P.K. Tiwari, the other Director of the company, from the very inception. (b) That Mr. P.K. Tiwari, the other director of the appellant company, was himself suffering from various illnesses and had also been incarcerated during the relevant time. Due to financial crisis, the company had started making defaults in paying installments to various banks and also in fulfilling other financial obligation. Consequently, the banks had filed false frivolous complaints with the Central Bureau of Investigation (C.B.I.). The C.B.I. officials had started making inquiries not only from the directors, but also from the family/staff members etc. The C.B.I. officials had also started calling not only the directors, but also the staff members, to their office. The C.B.I. officials had started making visits to the office of the company. Mr. P.K. Tiwari was incarcerated in connection with the CBI cases from July, 2012 to October, 2012 and from September 2014 to March 2015. The Appellant Company was going through severe financial crunch during all these years, due to which most of the company staff left the company as their salaries could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form their duty by not advising the company in the matter and by not representing it in bona-fide manner. (j) That the company sought a number of adjournments and tried to present its case. (k) That due to lack of funds and non availability of documents as explained above, the company, inspite of taking many adjournments, was not able to defend its case before CIT (Appeals). (l) That no reasonable opportunity was provided to the Company to present its case and to justify the grounds for quashing the impugned order of the learned A.O. [m) That the impugned order, confirming the order of A.O., was passed by the CIT [Appeals) without considering the grounds provided by the Company or the documents or evidences to be provided on part of the Company and the order was passed ex parte. (n) That the Company has valid grounds and will be able to establish that the impugned order passed by the learned A.O. was bad in law and was based only on presumptions, if a reasonable opportunity is provided to the company. (o) That the grounds provided by the company in the appeal before the CIT [Appeals) which were not considered by it before confirming the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.41, 6th Floor, Jayanth Tech Park, Mount Poonamallee High road, Chennai, thereby treating the said amount as unexplained investment. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. The investment in the said property were duly accounted for/recorded in the books of accounts and were reflected in the balance sheet. 11. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of ₹ 5,91,47,066/-, on account of investment in Plant Machinery, thereby treating the same as unexplained investment. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. The investment in the said property were duly accounted for/recorded in the books of accounts and were reflected in the balance sheet. 12. That the total income assessed at ₹ 38,70,33,835/- is arbitrary, unjust, illegal highly excessive. 13. That on the facts of the case and under the law, the Ld. A.O. has erred in not allowing set off of losses of the earlier years. 14. That the income tax liability created at ₹ 13,15,52,801/- is arbitrary, unjust, illegal highly excessive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerated during the relevant time. Due to financial crisis, the company had started making defaults in paying installments to various banks and also in fulfilling other financial obligation. Consequently, the banks had filed false frivolous complaints with the Central Bureau of Investigation (C.B.I.). The C.B.I. officials had started making inquiries not only from the directors, but also from the family/staff members etc. The C.B.I. officials had also started calling not only the directors, but also the staff members, to their office. The C.B.I. officials had started making visits to the office of the company. Mr. P.K. Tiwari was incarcerated in connection with the CBI cases from July, 2012 to October, 2012 and from September 2014 to March 2015. The Appellant Company was going through severe financial crunch during all these years, due to which most of the company staff left the company as their salaries could not be paid. On the other hand, Mr. P.K. Tiwari could not devote time to pursue the appeals on account of the aforementioned reasons. On account of his advance age, frequent incarceration and the extra ordinary financial crises and other adverse conditions, Mr. P.K. Tiwari w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained above, the company, inspite of taking many adjournments, was not able to defend its case before CIT (Appeals). (l) That no reasonable opportunity was provided to the Company to present its case and to justify the grounds for quashing the impugned order of the learned A.O. [m) That the impugned order, confirming the order of A.O., was passed by the CIT [Appeals) without considering the grounds provided by the Company or the documents or evidences to be provided on part of the Company and the order was passed ex parte. (n) That the Company has valid grounds and will be able to establish that the impugned order passed by the learned A.O. was bad in law and was based only on presumptions, if a reasonable opportunity is provided to the company. (o) That the grounds provided by the company in the appeal before the CIT [Appeals) which were not considered by it before confirming the impugned order of learned A.O. are provided below. 2. That the assessment order dated 18.03.2013, passed by the Ld. A.O. U/s 144 r.w.s. 153A, is bad in law. 3. That the assessment order dated 18.03.2013 passed u/s 144 r.w.s. 153A, deserves to be quashed, because na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in making addition of ₹ 1,31,47,81,412/-, on account of investment in Plant Machinery, thereby treating the same as unexplained investment. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. The investment in the said property were duly accounted for/recorded in the books of accounts and were reflected in the balance sheet. 12. That the total income assessed at ₹ 1,89,60,17,693/- is arbitrary, unjust, illegal highly excessive. 13. That on the facts of the case and under the law, the Ld. A.O. has erred in not allowing set off of losses of the earlier years. 14. That the income tax liability created at ₹ 57,58,68,383/- is arbitrary, unjust, illegal highly excessive. 15. That the Ld. A.O. has erred in not giving full credit of prepaid taxes. 16. That on the facts of the case and under the law, the Ld. A.O. has erred in charging interest u/s 234A. Without prejudice, the interest charged is highly excessive. 17. That on the facts of the case and under the law, the Ld. A.O. has erred in charging interest u/s 234B, Without prejudice, the interest charged is highly excessive. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .B.I. officials had also started calling not only the directors, but also the staff members, to their office. The C.B.I. officials had started making visits to the office of the company. Mr. P.K. Tiwari was incarcerated in connection with the CBI cases from July, 2012 to October, 2012 and from September 2014 to March 2015. The Appellant Company was going through severe financial crunch during all these years, due to which most of the company staff left the company as their salaries could not be paid. On the other hand, Mr. P.K. Tiwari could not devote time to pursue the appeals on account of the aforementioned reasons. On account of his advance age, frequent incarceration and the extra ordinary financial crises and other adverse conditions, Mr. P.K. Tiwari was under acute depression and could not therefore, focus on the matter. (c) That the senior officials of the company in finance department left the company after committing serious acts of omissions and commission. It is learnt that such officials had been involved in various irregularities due to which the company and its present directors have suffered the extra ordinary circumstances and trauma. On account of such grave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Company or the documents or evidences to be provided on part of the Company and the order was passed ex parte. (n) That the Company has valid grounds and will be able to establish that the impugned order passed by the learned A.O. was bad in law and was based only on presumptions, if a reasonable opportunity is provided to the company. (o) That the grounds provided by the company in the appeal before the CIT [Appeals) which were not considered by it before confirming the impugned order of learned A.O. are provided below. 2. That the assessment order dated 18.03.2013, passed by the Ld. A.O. U/s 144 r.w.s. 153A, is bad in law. 3. That the assessment order dated 18.03.2013 passed u/s 144 r.w.s. 153A, deserves to be quashed, because natural justice has been denied by the Ld. A.O. to the assessee. 4. That on the facts of the case and under the law, the Ld. A.O. has erred in not taking into consideration the assessee's reply, vide letter dated 15.03.2013[filed on 18.03.2013). 5. That on the facts of the case and under the law, the Ld. A.O. has erred in altogether ignoring the assessee's reply, vide Receipt dated 15.03.2013(Friday), Which had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 96,03,68,734/- is arbitrary, unjust, illegal highly excessive. 15. That the Ld. A.O. has erred in not giving full credit of prepaid taxes. 16. That on the facts of the case and under the law, the Ld. A.O. has erred in charging interest u/s 234A. Without prejudice, the interest charged is highly excessive. 17. That on the facts of the case and under the law, the Ld. A.O. has erred in charging interest u/s 234B, Without prejudice, the interest charged is highly excessive. That the reasonable opportunity be provided to the Company for evidencing and establishing the above mentioned grounds which it could not do before the CIT (Appeals). The appellant craves leave to raise additional ground(s) of appeal to alter/modify the ground(s) of appeal, and/or to withdraw the ground(s) of appeal, either prior to or during the course of appellate proceedings. 7. We first state the facts for Ay 2006-07. 8. The brief facts of the case shows that search u/s 132 of the Act was conducted of M/s. Century Communication Group (M/s. Mahuaa Media Group) of cases on 11.03.2011, where the assessee was also covered. The appellant company was promoted by Shri P.K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that all the suppliers from whom assessee has purchased software are bogus and therefore, bogus depreciation claimed of ₹ 19206750/- was disallowed. 9. During the year the assessee received the share capital of ₹ 15.29 crores from various companies and individuals. The assessee was asked to proof the identity, capacity and genuineness of the transaction along with the necessary information. The assessee never produced those persons. The ld AO issued notice u/s 133(6) but all the investors and in most of the cases either reply was not received or it has come back as unserved. Wherever the reply was received, they were without adequate proof. As most of the investors are based in Kolkata the Inspectors were deputed to find out the companies. The inspector s report states that no such companies were found at the addresses. Such inspector s report were part of the assessment order. Therefore, the ld AO made an addition of ₹ 15.29 crores on account of unexplained share capital. 10. Assessee received a loan of ₹ 8,39,80,000/- and assessee was asked to explain the creditworthiness, genuineness of the loan. Despite number of opportunities the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that when learned CIT A asked for remand report of AO, the assessee did not produce any details before the assessing officer. Even otherwise, she submitted that for the claim of the depreciation the assessee should have established ownership, use, cost of the assets which the assessee has failed to submit. Merely submitting a chart will not show eligibility for claim. With respect to the unsecured loan the assessee should have submitted the identity and creditworthiness of the lenders as well as the genuineness of the receipt of loan which assessee has miserably failed to do so. With respect to the Investments , she submitted that assessee should have produced the Books of accounts as well as the vouchers and bills for the expenditure to show that they have been acquired from known sources. This has not been done by the assessee. Merely producing the audited balance sheet does not suffice for the allowance of the expenditure. She further submitted that there was a search pursuant to which the complete details were available about the tax evasion by assessee. All software purchases are conclusively proved as bogus. She further referred to the facts of the case to show th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the lower authorities and in fact we agree that the assessee had sufficient opportunity to furnish the evidence but assessee has deliberately not submitted the same. In view of this the argument advanced by the assessee in the grounds of appeal and the activities of the assessee clearly shows that there is no violation of principles of natural justice of the lower authorities. In fact it is assessee who is trying to seal itself for the misdeed conducted by it. Hence, Ground no 1 to 6 are dismissed. 19. Ground No. 12-15 are general in nature hence, they are dismissed. 20. Ground No 7 is on the bogus claim of depreciation on the plant and machinery. The most of the purchase shows by the assessee are software for which the assessee has not produced any details about its ownership, functionary etc. the AO has proved conclusively with the suppliers are bogus. The issue is squarely covered against assessee by the decision of the Hon'ble Delhi High Court in case of Chintels India Ltd Vs. DCIT 2017-TIOL- 1366-Hon'ble High Court-DEL-IT-wherein, bogus depreciation of software was disallowed of the ld AO was confirmed. The special leave petition filed before the ld Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rming the above addition. Ground number 9 is dismissed. 23. Ground number 10 is with respect to the addition of INR 3 6750000 on account of investment in the property at Mumbai. The assessee did not provide any details of information before the learned assessing officer or before the learned CIT A. In view of this, we do not find any infirmity in the order of the lower authorities in confirming the above investment in the fixed assets. 24. Ground number 11 is with respect to the addition on account of investment in plant and machinery of ₹ 256090000/ . AO found that during the course of search assessee company has made the above purchases from Amar Jyoti VyaparLtd, Avitel Electronics Ltd, and Sun Broadcast Limited. Inquiries during search as well as in assessment proceedings revealed that those companies could not have made any sales to the assessee company and there from to be bogus. The purchase of software was found to be from a nonbanking financial company which did not have any background or asset to deal with into such software. The companies were also found to be bogus there were glaring differences found with the documents submitted by the assessee. The clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Ground number 10 of the appeal is dismissed. 31. Ground number 11 is with respect to the investment in plant and machinery of INR 1 286519625/ made by the assessee. The facts relating to this is similar to the facts for assessment year 2006 07. No evidences were produced about the genuineness of the purchases by the assessee. Accordingly we do not find any infirmity in the order of the lower authorities. Thus ground number 11 of the appeal is dismissed. 32. Ground number 12 16 of appeal are general in nature and therefore they are dismissed. 33. Accordingly ITA number 3746/del/2016 filed by the assessee for assessment year 2007 08 is dismissed. 34. ITA number 3747/del/2016 is filed for assessment year 2008 09 by the assessee. The facts in this appeal are also identical to the facts stated by us in assessment year 2006 07. Therefore the respective grounds of appeal are dealt with as per reasons given by us in deciding the grounds for assessment year 2006 07. 35. Ground number 1 6 of the appeal are claiming that the principles of the natural justice have been violated. The identical grounds have been dismissed by us for assessment year 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal is also decided on the basis of the reasons given by us for deciding the appeal of the assessee for assessment year 2006 07 to assessment year 2008 09 as above. 43. Ground number 1 6 of the appeal are on violations of the principles of natural justice. This issue is identical to the issues in the case of the assessee for assessment year 2006 07. For the reasons given therein while holding that there is no violation of the principles of natural justice as the assessee was given sufficient opportunities presenting its case before the lower authorities, we find no merit in these grounds hence dismissed. 44. Ground number 7 9 are on the issue of allowability of depreciation. These grounds are identical to ground number 7 8 for earlier assessment years where the assessee did not provide any information about the claim of the depreciation, qua the genuineness of the acquisition of the assets. The lower authorities have confirmed this disallowance for the reason of genuineness of the purchases and genuineness of the claim of the depreciation itself. For the reasons given by us in assessee s appeal for earlier years, we find no infirmity in the orders of the lowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is made by the learned assessing officer under rule 8D of the income tax rules. During the course of assessment proceedings the assessee was asked to submit the details about the applicability of the provisions of section 14 A of the income tax act. The issue has been dealt with in para number 6 of the assessment order. The assessee did not furnish any reply to the above query. Thereby the learned assessing officer computed the disallowance applying the provisions of rule 8D and disallowed a sum of rupees 2293450/ . Before the learned CIT A no justification was given by the appellant for this disallowance. As there is a complete absence of information from the side of the assessee before the lower authorities, we do not find infirmity in their order in confirming the above disallowance. Accordingly ground number 10 of the appeal is dismissed. 52. Ground number 11 is with respect to the addition of/disallowance of INR 2 385113587 being the various expenditure incurred by the assessee including the opening stock of ₹ 296397855/ . Before the lower authorities assessee did not submit any details about the expenditure e, without substantiating the same with the vouchers and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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