9911796707
TMI Blog2019 (6) TMI 1531X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out any mistake on any of the particulars furnished by the assessee and/or the parties directly. It is also important to mention here that all the parties responded to the notices u/s 133(6) of the Act and submitted all the required documents /particulars. - Decided in favour of assessee. - I.T.A. No. 6691/Mum/2017 C.O. No. 47/Mum/2019 - - - Dated:- 24-6-2019 - Hon'ble Shri Sandeep Gosain, JM And Hon'ble Shri G. Manjunatha, AM Appellant by: Shri D. G. Pansari, DR Respondent by: Shri Nitesh Joshi, AR ORDER Sandeep Gosain, The present appeal as well as cross objection filed by the revenue and assessee are against the order of Ld. Commissioner of Income Tax (Appeals)-9, Mumbai dated 11.09.17 for AY 2009-10. 2. Since, the facts raised in this appeal as well as C.O. filed by the revenue and assessee are identical, therefore for the sake of convenience; they are clubbed, heard and disposed of by this consolidated order. 3. First of all we take up appeal in ITA No. 6691/Mum/2017 filed by revenue for AY 2009-10 on the grounds mentioned herein below:- 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Finance Investment (India) Pvt. Ltd. and M/s. Dolex Commercial Pvt. Ltd. Thus required notices were served upon the assessee in order to prove the identity of the parties, creditworthiness and genuineness of the transactions, but assessee failed to submit required documents and reply, therefore, the AO had rightly made additions u/s 68 of the I.T. Act. 9. On the other hand, Ld. AR reiterated the same arguments as were raised by him before Ld. CIT(A), which are at para no. 2.3.1 and the same are reproduced below:- 2.3.1 Ld. AR has, inter alia, submitted the following arguments: 7.1) The Appellants have received share application money from following four parties during the year:- Name Amount (Rs.) M/s. Victory Sales Pvt. Ltd. 40,00,000/- M/s. Shipra Fabrics Pvt. Ltd. 55,00,000/ M/s. Santoshima Lease Finance Investment (India) Pvt. Ltd. 20.00.000/- M/s. Do/ex Commercial Pvt. Ltd. 60,00,000/- Total 1,75,00,000/- 7.2)The assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various beneficiaries for c Sr.No. Name Amount i) M/s. SantoshimaTradelinks Limited ₹ 20,00,000/ ii) M/s. Do/ex Commercial Private Limited ₹ 60.00.000/- iii) M/s. Victory Sales Private Limited ₹ 40,00,000/- iv) M/s. Shipra Fabrics Private Limited ₹ 55.00.000/- It is further stated that the Appellant Company is one of such entity who has obtained accommodation entry from the above concerns. 7.4)During the year, the Appellant Company has received share application money of ₹ 2,30,00,000/- from various parties for which shares have been allotted in the subsequent period. 7.5) The Appellant Company has not taken any accommodation entry from any party including above entities. 7.6)Section 147 of the Act requires that the Assessing Officer should have a reason to believe that the income chargeable to tax has escaped assessment. In the instant case the assessment is reopened o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned AR has submitted the following arguments: 8.1) The date-wise sequence of event is as under: 08/07/2016 The Appellants furnished the details as per Notice dated 2th April, 2016 u/s 142(1) of the Act including (please refer Pages 30 to 33 of the Paper Book)- i) Details with supporting documents of the following parties along with Application forms, Resolution of the Company, Bank Statement of the parties highlighting the transactions and other documents as annexed herewith: a) M/s. Do/ex Commercial Pvt. Ltd. (Pages 34 to 79 of the Paper Book) b) M/s. Victory Sales Pvt. Ltd. (Pages 80 to 121 of the Paper Book) ] c) M/s. SantoshimaTradelinks Ltd. (formerly known as M/s. Satoshima Lease Finance and Investment (India) Ltd. (Pages 122 to 199 of the Paper Book) d) M/s. Shipra Fabrics Pvt. Ltd. (Pages 200 to 239 of the Paper Book) ii) Confirmation from the above parties. 11/07/2016 to 02/08/2016 Copy of Notice dated 2nd August, 2016 u/s 133(6) to M/s. Shantoshima Lease Finance Investment (India) Ltd., which is duly acknowledged by them. Copy of Notice dated 2nd August, 2016 u/s 133(6) to M/s. Do/ex Commercial Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of each of the four parties referred to in the reasons for reopening: i) Copies of Share Application Forms ii) Copy of resolution passed by the Company for investment in shares of Appellants. iii) Copy of Memorandum and Article of Association of the Company iv) Copies of bank statements of the company v) Copy of Audited Statement of Account as at 31st March, vi) Copy of acknowledgement of Return of Income filed for the A. Y. 2009-10 The details are submitted from Pages 34 to 239 of the Paper Book. 8.3) The Appellant furnished all the particulars which are necessary to substantiate the receipt of share application money. 8.4) The Assessing Officer issued notices u/s 133(6) of the Act to the four parties. As per Show Cause Notice dated 28th July, 2016, the Notices u/s 133(6) of the Act dated 11th July, 2016 has been received returned unserved with postal remark left . However, the fact is notices were served by hand delivery and there is an acknowledgement of two of the parties on the notice. Without prejudice, these parties are now witness of the department and, therefore, the department will have all their current address and whereabouts. Also the fact is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation against the Appellants without providing the copies of the same to the appellant and also an opportunity to make submission or rebut the same. The Appellant relies on the following decisions: i) KishinchandChellaram v. CIT (1980) 125 ITR 713 (SC) ii) CIT v. J. M. D. Communications P. LTD (2010) 320 ITR 17 (ST) (SC) (ITA NO 106 OF 2007 DT 16-1-2009(Delhi)(HC) iii) M/s. R. W. Promotions )(P) Ltd. v/s ACIT (Bombay High Court) ITA No. 1489 of 2013 (order dated 13th July, 2015) (Copy enclosed) iv) Tin Box Co. v. CIT (2001) 249 ITR 216 (SC) v) CIT v. Eastern Commercial Enterprises (1994)210 ITR 103 (Cal.)(HC) vi) International Forest Co. v/s CIT; 101 ITR 721 (J K High Court) 8.10) The addition has been made u/s 68 of the Act in respect of share application money received from four private limited companies. Section 68 of the Act reads as under: 68. Cash credits. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 8.14) In view of the above, Your Honour may be pleased to give a direction to delete the addition of ₹ 1,75,00,000/-u/s 68 of the Act. 2.4) Ground No. 17 regarding rate of tax: 2.4.1) The learned AR has submitted the following arguments: 9.1) In Tax Calculation, the Assessing Officer has taken the rate of tax as 42.23% as against the applicable rate of tax of 33.99% applicable for the A. Y. 2009-10. 9.2)The Appellant has also filed an Application u/s 154 of the Act, the copy whereof is placed at Page 272 of the Paper Book. No final rectification order has yet been passed. 9.3) Your Honour may be pleased to give a direction to apply the correct rate of tax in tax calculation. 2.4.2) Further, the Id. AR submitted a copy of affidavit of Vipul Vidhur Bhatt dated 2nd September, 2016 wherein he had retracted the statement made before the tax department at the time of search. 9.1 Ld. AR also relied upon various judgments of Hon'ble Supreme Courts and High Courts, which are mentioned in the order of Ld. CIT(A) and submitted that the facts contained in the decision of Hon'ble Supreme Court in the case of PCIT Vrs. NRA Iron Steel (P) Ltd (2019) 103 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the particulars furnished by the appellant and/or the parties directly. In the instant case, in response to notices issued by Ld.AO, all the 4 parties have filed the required particulars. He, thereafter, furher relied on following decisions: i) CIT v/s Lovely Exports Pvt. Ltd., 216 CTR 195 (SC); ii) CIT v/s Gagandeep Infrastructure Pvt. Ltd., 80 taxmann.com 272 (Bombay) iii) CIT v/s Green Infra Ltd., 392ITR 7 (Bombay) iv) Pr. CIT v/s Jatin Investment Pvt. Ltd., ITA Nos. 43 44 of 2016 (www. itatonline. org) v) Pr. CIT v/s Laxman Industrial Resources Ltd., ITA No. 169 of 2017 (www.itatonline.org). 2.4.26. I find that on similar such issue, there are a plethora of judgments. For instance, the Jurisdictional High Court in the case of CIT vs. Creative World Telefilms Ltd (2011) 333 ITR 100 (Bom) has held that when the assessee had given the details of name and address of the shareholder, their PAN/GIR Number and had also given cheque number, name of bank, and the AO did nothing except issuing summons which were ultimately returned back with an endorsement Not Traceable , Tribunal was justified in deleting the addition of cash credit in respect of share appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and allegation, if any, made therein, which has been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is not enough rather it has to be substantiated with facts. The information may and may not be correct. For fastening the liability upon anybody, the Department has to provide the authenticity of the information to the person against whom such information is used. The principle of natural justice, demands that without confronting the assessee of such evidence, if any, or the information, no addition can be made. Even otherwise, as per Article 265 of the Constitution only legitimate taxes have to be levied and collected. In our humble opinion, the assessee has duly discharged the onus caste upon it, therefore, respectfully following the decisions of Hon'ble Courts, we reverse the order - of the Ld. CIT(A) , resultantly, this ground of the assessee is allowed. 2.4.29. As the Hon'ble Mumbai ITAT has decided the appeal in favour of the assessee which is similar to the case of the appellant and since both are alleged beneficiaries of alleged hawala operators, the decision of Ld. AO cannot be sustained. 2.4.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Nova Promoters and Fin/ease Pvt. Ltd. 18 Taxman.com 217 wherein the Court has observed that cases of this type cannot be decided only on the basis of documentary evidences above and there is need to take into account the surrounding circumstances? The Tribunal ought to have taken note of the fact that the assesses was not able to produce even a single party before the AO despite agreeing before the CIT(A) that it will produce all parties before the AO during Remand proceedings. 2.4.32. Hon'ble Bombay High Court observed that the assessee had produced the documents such as PAN, confirmation, bank statement, allotment letters, and financial statements. The Balance Sheets showed significant funds to invest in shares of the assessee. The Hon'ble Bombay High Court held that considering the voluminous documentary evidence, only because those persons had not appeared before the Ld.AO would not negate the case of the assessee. The Hon'ble Bombay High Court held as under: The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action were not proved. Whereas the assessee had placed on record the documents in the shape of share application form, resolution of respective companies, memorandum and articles of the companies, copies audited statement of accounts, bank statements of respective companies and also copies of acknowledgement of income tax return filed for A.Ys. 2009-10, 2011-12 and 2015-16. Apart from above, documents in the shape of copies of confirmation of the respective parties and the copies of letters filed by all the four parties pursuant to notice issued u/s. 133(6) of the Act. Affidavit of Vipul Vidhur Bhatt dated 2nd September, 2016, wherein he has retracted the statement made before the Department at the time of search was also filed. 10.2 We also noticed that although, the assessee vide letter dated 5th July 2016 and 18th Aug 2016 had requested the AO to arrange to furnish i) copy of information available with ADIT (Inv), ii) copy of information available with AO, iii) copies of statements recorded of the parties, wherein these parties have allegedly stated that they had issued accommodation entries to the assessee, but the same was not provided to it and no opportunity to make subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situations and there are a plethora of judgments on the identical grounds. For instance, the Jurisdictional High Court in the case of CIT vs. Creative World Telefilms Ltd (2011) 333 ITR 100 (Bom) has held that when the assessee had given the details of name and address of the shareholder, their PAN/GIR Number and had also given cheque number, name of bank, and the AO did nothing except issuing summons which were ultimately returned back with an endorsement Not Traceable , Tribunal was justified in deleting the addition of cash credit in respect of share application money, In the case of CIT v Gagandeep Infrastructure Pvt Ltd (ITA 1613 of 2014 dated 20.03.2017) has held that the Hon'ble Supreme Court decision in CIT v Lovely Exports P Ltd (317 ITR 218) is applicable for all Assessment Years prior to AY 2013-14. In the said decision in Lovely Exports P Ltd (supra), the Hon'ble Supreme Court has held that if the amounts have been subscribed by bogus shareholders, it is for the Revenue to proceed against such shareholders by reopening their assessments. Hon'ble Bombay High Court held that the proviso to Section 68, which states that the assessee has to prove the 'sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 10.7 In the recent decision of Hon'ble Bombay High Court in the case of CIT v Orchid Industries Ltd (ITXA 1433 of 2014) dated 5th July 2017, the additions were deleted as in that case, a survey was conducted u/s 133A of the Income Tax Act, 1961 on 24.11.2004. In the assessment order passed u/s 143(3) dated 29-12-2006, an addition of ₹ 95,00,000/- was made in respect of share capital and share premium received from the seven parties on the basis of enquiry made by ADIT (Inv) - Unit IV, Kolkata as the identity and credit worthiness of the parties and genuineness of the transaction could not be proved. An appeal was filed before CIT(A) against the aforesaid addition made in the assessment order. During the appeal proceedings, it was argued that no proper opportunity was given to the assessee to produce the parties even though the parties were ready to appear before the authorities. Therefore, considering this request of the assessee, the matter was remanded back to the assessing officer with a direction to give one more opportunity to the assessee to produce the parties. However, even during the course of remand report proceedings which lasted for almost two years, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing payment of share application money. It was also observed by the Tribunal that the assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share app/icationforms, allotment letters and share certificates, so also the books of account. The Balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P.) Ltd. (supra) would be applicable in the facts and circumstances of the present case. 10.9 In the case of Orchid Industries P Ltd (supra), the AO issued 133(6) notices to the parties. Despite the fact that the parties did not appear before the AO, the Hon'ble Bombay High Court held that the transaction was genuine as the assessee produced voluminous documentary evidence. 10.10 Ld. AR has also drawn our attention and distinguish the facts of the present case with the facts containe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
