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TMI Blog2020 (5) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration credit in the books of account, the debit arises in the account of Thirst plantations private limited, which has been subsequently realized by further receipt of shares by the assessee. There is actual transaction of receipt of money in the form of shares of other private limited companies. Provisions of section 68 would be applied on the sale consideration credited in the books of accounts and not on the debit arising in the account of thirst plantations private limited. All judicial precedents relied up on by the assessee are distinguishable on facts. In view of this we dismiss all the grounds of appeal raised by the assessee and confirmed the action of the learned assessing officer and the learned CIT A with respect to the addition under section 68 - Appeal filed by the assessee is dismissed. - ITA No. 3361/Del/2018 - - - Dated:- 19-5-2020 - Ms Suchitra Kamble, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : None For the Revenue : Shri Jagdish Singh, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld CIT (A)-4, New Delhi dated 27/02/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion filed by the parties with whom the transaction conducted. 9. That on the fact and circumstances of the case the learned AO and CIT (A) erred in law and on facts wherein the learned AO and Cit (A) both failed to confront or make enquiries with the counter parties whose confirmation were placed on record to avoid the opportunity to heard hence the order has been passed in haste without affording any opportunity to heard and in complete defiance of natural justice. 10. That the learned AO and CIT (A) both erred on law and facts wherein he himself is confused and travelling on conjectures and surmises which is apparent from the AO s assessment order finding Either you were not having any shares of M/s Scholar steel pvt ltd and M/s Ravel Metals Pvt Ltd or the said shares were not having any value which shows that the learned AO himself is travelling on doubts and surmises and ifs and buts wherein the law says there must be concrete findings and no adverse view can be taken merely on doubts. If the stand of the AO s that there is no intrinsic value of the shares then the law is very clear and covered by Hon ble Delhi ITAT order in Income-tax Officer VS. M/s Diplomat Leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shares in earlier years which were shown as investment in the books of accounts in the balances sheets then the assessee sold certain investment and accounted for the profit or loss the provisions of sections 68 can not applicable. 16. That the learned AO himself admitted the existence of these alleged stock of shares in preceding years stock while completing the assessment u/s 143(3) without doubting the existence of such shares at in such preceding years, how can on contradictory view which he already taken at the time of concluding of assessment under scrutiny of preceding years now can change the already decided opinion. 17. That the learned AO never disputed the existence or purchase of such shares then without substantiating the allegation with evidence to prove in which year such sale income has been booked he has no right to challenge the present income in the garb of section 68.Section 68 is meant for the cash credit not shown as income and not for the sum which has already been disclosed as income. 18. That CIT appeal grossly erred in law on facts wherein simply accepted whatever the assessee produced without examining the veracity of the averments ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor's outstanding related to purchases and trading results were accepted and no corresponding disallowance on account of purchases/sales were made, the addition u/s 68 cannot be made. Reliance is placed on The Hon'ble Delhi High Court in the case of CIT v. Ritu Anurag Agarwal under similar circumstances has held The operative part of Hon'ble High Court judgment is as per para 3 4 of the said order which reads as under:- This finding of Assessing Officer remained undisturbed before the CIT(A) as well as has been accepted by the ITAT. Proceeding on this basis, the ITAT observed :hat the sale, purchases as well as gross profits as disclosed by the assessee have been accepted by the Assessing Officer. 4. That the learned AO and CIT (A) erred in law and on facts that when there was no cash involved in the transaction of sale of shares, provisions of Section 68 of the said Act treating it as unexplained cash credit are not attracted. 5. That the learned AO and CIT(A) erred in law and on facts wherein he ought to point out any discrepancy in the confirmation filed by the party i.e., Thirst Plantation Pvt ltd being a debtor who purchased the shares which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to ₹ 1 005000/ and 94500 shares of Raval Metals P Ltd on 11/4/2013 at the rate of ₹ 10 of ₹ 45000/ . Until 31st of March 2014 above, consideration was receivable. Further assessee has purchased 1500 shares of wisdom exports P Ltd for ₹ 753000 on 9/6/2015 and 1,18,000 shares of Canon alloys Ltd for ₹ 1197000 on 27 /4/ 2016 against the sum receivable from Thirst Plantations Pvt Ltd, thus the outstanding of thirst Plantation s private limited of ₹ 1 950000/ as on 1/4/2014 got settled in 2015 16 and 2016 17. The AO investigated the matter and it was found that assessee company was not holding any shares of scholar steel are private limited at the beginning of the year under consideration. As per the annual return filed by that company with registrar of Companies shareholding of the aforesaid company as on 28/9/2012 was found to be not with the assessee but with others. Therefore, AO found that assessee is not at all a shareholder in the above company. Thus, assessee did not have any assets existing with it in the form of shares of that company. Subsequently also AO noted that there has been no transfer/allotment of any share in the next ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt shares to thirst Plantation private limited in 2006 along with the blank transfer deed as security deposit business transaction is devoid of any merit. He accepted that there can be a lending of shares but handing it over with the blank transfer deed is not acceptable. He further held that there is no such documentary evidence furnished by the assessee and therefore the expression given by the assessee was merely a cooked up story. Therefore, he held that assessee has miserably failed to justify the sum credited in its books of accounts of ₹ 1 950000 on sale of shares receivable from M/s thirst Plantation private limited against which it has also received shares in the subsequent year. Therefore, he applied the provisions of section 68 of the income tax act and made an addition of ₹ 1 950000/ holding that assessee has failed to prove the identity, creditworthiness and the genuineness of the transaction by showing the sale of the shares. Accordingly total income of the assessee was assessed at ₹ 1 950000 by applying the provisions of section 115BBE of the income tax act by passing an order dated 30/11/2016 under section 143 (3) of the income tax act. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0000 of two different companies to Thirst plantations private limited. He further held that as the company has sold shares of the two companies to thirst plantations private limited does not show the genuineness and the creditworthiness of the whole transaction as well as the buyer company. He held that as the appellant company has stated that the shares of both the companies are held as stock in trade however, as per the financial of the appellant they were shown as an investment. Even merely showing the assets in the balance sheet in earlier years does not preclude AO in applying section 68 when non existing assets are allegedly sold and credit is generated in the books of assessee. He further held that the appellant company had transferred 1500 shares of Rawal metals from investment to stock in trade without any reason whatsoever. He further held that no funds were received on transfer of shares of such company instead, the company in the following years received shares of other companies from the transferee companies. The appellant company is not reflected as shareholder by the companies who shares are sold. The explanation of the appellant company is baseless and devoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not give any plausible explanation that why anybody would buy the shares of a company, which has already been struck off. This conclusively shows that the whole transaction entered into by the assessee is non-existent. The assessee has credited a sum of ₹ 1 950000/- in the books as sale of shares by debit to the account of Thirst plantations private limited. Therefore the provisions of section 68 of the income tax act are clearly applicable as sales consideration, sum is found credited in the books of accounts of the assessee. The assessee has subsequently received shares from that company of some other companies. In view of this, we do not find any infirmity in the order of the learned assessing officer in making addition under section 68 of the act. The more surprisingly the assessee being a company which does not have any stream of revenue is engaging in buying the shares of private limited company and selling the shares of private limited companies speaks volume about the nature of the activities carried on. Further, the additional arguments raised by the assessee in the additional grounds are also dealt with. In the first argument, assessee has submitted that mere book e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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