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TMI Blog2021 (5) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. - I.T.A. No.630/Mum/2019 - - - Dated:- 5-5-2021 - Hon ble Shri Mahavir Singh, VP And Hon ble Shri Manoj Kumar Aggarwal, AM For the Assessee : Shri Vimal Punmiya Ld. AR For the Revenue : Shri Tharian Oommen Ld. Sr. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2010-11 contest the order of Ld. Commissioner of Income-Tax (Appeals)-49, Mumbai [in short referred to as CIT(A) ], Appeal No.CIT(A)-49/IT-163/2017-18 dated 17/12/2018 on following grounds of appeal: - 1. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the reopening the case u/s 148 which is bad in law. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the assessment order passed u/s. 143(3) of the Income Act 1961 by the Ld. Assessing Officer is against the principal of natural justice, hence bad-in-law. 3. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the passing assessment order without providing opportunity to rebut the material relied by Ld Assessing Officer during the reassessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd perused relevant material on record including the order of Tribunal in assessee s own case. We have also gone through the documentary evidences furnished by the assessee to establish the fulfillment of primary ingredients of Sec.68. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. Assessment Proceedings 4.1 Facts on record would reveal that the assessee being resident corporate assessee stated to be engaged as builders developers was subjected to an assessment u/s 143(3) r.w.s. 147 on 22/12/2017 wherein the assessee was saddled with certain addition of unexplained cash credit u/s 68 for ₹ 322.75 Lacs. The original return was processed u/s 143(1). However, pursuant to certain search / survey action on Lotus / Kamdhenu / Greenvalley group, the assessee s case was reopened as per due process of law in view of the fact that the assessee had received share capital / share premium of ₹ 322.75 Lacs from various Kolkata based entities. The said receipts were alleged to be bogus in nature. The shares of face value of ₹ 10/- each were stated to be issued at premium of ₹ 90/- per share to 16 entities during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee viz. Axayraj Buildwell Pvt. Ltd. but Shri Bhagwanji Patel ceased to be director of Axayraj Buildwell Pvt. Ltd. in 2009. The assessee submitted that in the absence of tangible material, Ld. AO had no jurisdiction to issue notice u/s 148. 5.2 However, the legal submissions challenging reassessment proceedings could not find favor with Ld. CIT(A) who observed that no scrutiny took place u/s 143(3) and there was no scope for Ld. AO to examine the issue of share capital / share premium. The Ld. AO had authentic information by way of appraisal report of the search in the case of Lotus group and the assessee s admissions during search compelled him to take action u/s 147 / 148. The subsequent retraction would not have any relevance since the onus would be on assessee to prove that the statement was factually wrong. The Ld.AO recorded elaborate reasons after giving analysis of each of the investor entities as well as of those entities who had invested in the investor entities. Therefore, Ld. AO had sufficient reason to believe that income had escaped assessment in the hands of the assessee. Accordingly, the legal grounds challenging reassessment proceedings were dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r share. Further, the retraction would not have any relevance in the light of decision of Mumbai Tribunal in Hiralal Maganlal and Co. V/s DCIT (97 TTJ 377). The case laws being relied upon by the assessee were held to be distinguishable rather reliance was placed on the decision of Hon ble Delhi High Court in Nova Promoters Finlease Pvt. Ltd. 342 ITR 169 to confirm the additions. Finally, the additions were confirmed by observing as under: - 7.8 The Learned Counsel also alleged that the AO made the addition on the basis of suspicion and not evidences. This also is not correct as the AO had brought in enough evidences both direct and corroborative to come to the conclusion that the share capital and premium received by the assessee are not genuine. As could be seen from the assessment order and from the discussion made above, the Learned Counsel further alleged that the AO has no material in his possession to prove the same and that he made the addition of the basis of information from investigation wing and without any independent enquiry made by the AO. This also is incorrect as the AO had in-depth information not only about the 16 companies which have invested in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umentary evidences with respect to all the 11 entities: - (i) Share Application Form (ii) Copy of Cheque (iii) Copy of Cheque Deposit Slip (iv) Copy of investor s Bank Statement (v) Copy of Share Certificate Counterfoil (vi) Copy of Audit Report along with financial statements of the investor entity (vii) Copy of ITR acknowledgement of the investor entity (viii) Copy of Certificate of incorporation of investor entity (ix) Memorandum Articles of Association of investor entity (x) Company Master Data showing status as active (xi) Copy of Board Resolution The assessee s own bank statement was also placed on record which would show that all the transactions have taken through banking channels. Upon careful consideration of these documents, we find that so far as the identity of the investor entities are concerned, the same stand proved by certificate of incorporation which is held to be conclusive proof of registration of a corporate entity. The creditworthiness of the entities would stand satisfied by the financial statements of the investor entities, which are also placed on record. The genuineness of the transactions would stand proved by the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30,05,42,053 TOTAL 207,00,000 5,74,50,130 1,21,63,78,635 1,27,38,28,765 The perusal of net worth chart would reveal that all the investor entities had sufficient net worth to make stated investment in the assessee company. Upon perusal of all these documentary evidences, it could safely be concluded that the assessee had successfully discharged the onus casted upon him u/s 68 and the onus was on revenue to rebut assessee s evidences. 8.3 Proceeding further, we find that the sole basis of making impugned addition is the statement of one of the directors as recorded during the course of survey proceedings u/s 133A. However, this statement has been retracted within a span of 7 days. It is settled law that statements recorded during the course of survey proceedings would not have much evidentiary value unless the same are backed by credible evidences. This position has been settled by Hon ble Supreme Court in the case of CIT V/s S.Khader Khan Sons (25 Taxmann.com 413). The CBDT instructions No. F.No.286/98/2013-IT (Inv. II) dated 18/12/2014 also discourages conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much substance in assessee s legal grounds. Ground Nos. 1 to 3 stand dismissed. 8.8 The appeal stands partly allowed in terms of our above order. This decision has subsequently been followed by another coordinate bench of the Tribunal in the case of assessee s sister concern namely M/s Moongipa Development Inf. Ltd. for AYs 2009-10 2010-11, ITA Nos.625 626/Mum/2019 common order dated 04/12/2020 on identical facts and circumstances. 7. We find that facts in this year are quite identical to the facts of earlier years. In fact, Ld. AR has demonstrated that 13 entities out of the 16 entities are common entities as dealt with by the Tribunal in the captioned appeals as is evident from the following tabulation: - No. Name of Investor entity BBPL* 2011-12 2012-13 MDIL** 2009-10 MDIL** 2010-11 1. Anmol Commerce P.Ltd. Yes Yes 2. Rexnox Trexim P. Ltd. Yes Yes 3. SSA Motor Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in terms of the requirement of Section 68, was duly fulfilled and the onus was on revenue to controvert the evidences furnished by the assessee. However, we find that nothing has been brought on record by the revenue to substantiate the fact that the assessee s unaccounted money was routed in the books in the garb of share capital. It is trite law that no addition could be made merely on the basis of allegation, suspicion, conjectures or surmises. Upon perusal of assessee s written submissions as placed on record, another pertinent fact to be noted is that all the 16 investor entities has sufficient net worth (shares capital + reserves surplus) to make investment in the assessee and the percentage of investment made by them in the assessee company is merely in the range of 0.47% to 5.45% of their respective net worth. 8. Hence, on the facts and circumstances of the case and respectfully following the earlier view of Tribunal in assessee s own case, we delete the impugned additions. Consequently, the set-off of losses, as allowable under law, would be available to the assessee. We order so. The Ld. AO is directed to re-compute assessee s income in terms of our above order. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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