9911796707
TMI Blog2022 (9) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... entire addition. As in similar case in Peninsula Builders P Ltd, Shree Laxmi Fashions Private Limited and in Prime Embroideries Private Limited similar additions were made by assessing officer on account of share premium. Later on their directors accepted by filing application under IDS-16 and paid due tax of their own money, which was also infused through same modus operandi, and the ld CIT(A) deleted the addition, but no appeal is filed in such cases. We find that no contrary material is filed or shown to us by ld SR DR for the revenue that any further appeal is filed in all such similar cases by the revenue. Thus, in our considered view, the revenue cannot treat the similar situated assessee on similar additions in different way. So far as the objection of ld Sr DR for the revenue is concerned that undisclosed income declared in IDS-16, not to affect finality of completed assessment. We may note that the appeal is continuation of its original proceedings and the assessee cannot be deprived of the benefit, if it was available at the time of assessment, if the appeal of assessee is pending adjudication either at first or second appeal stage. We find that once the undisclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the declarant in their respective balance sheet or not?. 4. Whether on the facts and in circumstances of the case and as per law, the ld. CIT(A) was justified in deleting the addition made by the Assessing Officer of bogus Share Application money on relying on the CBDT Circular no. 29 of 2016 (Answer to Q.No.2) by ignoring the fact that the disclosure shall not affect the finality of completed assessment and also the fact that a subsequent year transaction after the declaration under the Scheme can be explained before the AO in assessment proceedings and not before the Appellate Authorities and that too to explain the transaction of the same year? 5.Whether on the facts and in circumstances of the case and as per law, the ld. CIT(A) was justified in deletion of the addition made by the Assessing Officer without appreciating the facts that the assessee has not submitted any evidences that directors and their relatives have routed their unaccounted income in the form of Share Application money in the assessee company? 6. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of Assessing Officer may be restored to the above extent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany, directors report, audit report of the respective investor-company, Memorandum of Article of Association and audit report of assessee-company. By furnishing such document, the assessee has proved the identity of the investors as they are registered under the company law and are regularly assessed under the income tax with their respective Assessing Officer which proved the existence of all shareholders. The assessee further contended that they are informed by the investor companies that a notice under section 133(6) of the Act was issued by the Assessing Officer and that those notices were replied in confirming the transactions and all the sums were received through banking channel. On the amount of premium, the assessee submitted that there are no statutory provisions to be fixed by the Private Limited Companies to determine the share premium in case of Private Limited Company. On the quantum of premium, the assessee contended that there is no statutory provision applicable in case of Private Limited Company for fixing or determining the rate of premium on share company. The assessee-company was set up by well known persons in the textile industries having own brand value an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reply of assessee was not accepted by Assessing Officer. On the identity of the investors, the Assessing Officer concluded that all the companies are existing only on paper as well as orchestrated arrangement. The arrangement has been made by filing reply in dak / tapals, however on physical inquiry they were not found at the given address. Thus, the identity of investors was not proved. On the submission of assessee that share capital was received through baking channel. The Assessing Officer concluded that mere routing the transaction through banking channel is not sacrosanct and it is a just a colourable device. So the mere fact is that the investors received funds from banking channel and in turn invested in assessee-company through banking channel is of no consequence in determining the genuineness and creditworthiness. The assessing officer also held that on perusal of bank statement of investor companies, he found one characteristic invariably emerges that consistently in all the cases, same pattern of equivalent deposits was made immediately prior to the issue of cheque of investment in the share application, which proved that accounts are irrigated with need based tempo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of challan of tax paid under IDS-2016. The investment in the share capital / share premium amounting to Rs.2.50 crores was made by the directors / family members through and in the name of so-called fifteen companies have accepted under IDS- 2016. The assessee also furnished copy of application form of IDS-2016 and form-3 4, issued by competent officer. On the basis of such submission, the assessee submitted that share capital / share premium were duly explained i.e., investment was actually made by the directors / family members out of their income / funds, which have been declared under IDS- 2016 and which has been accepted by the Department. 6. The Ld. CIT(A) after considering the submission of the assessee called for remand report from Assessing Officer, directing him to verify the share capital / share premium added under section 68 of the Act and the claim of assessee that the directors / shareholders of assessee-company made declaration under IDS-2016. The Assessing Officer furnished his remand report vide letter dated 07.02.2018. The contents of the remand report of Assessing Officer is referred to in para- 6.1.3 of the order of Ld. CIT(A), wherein the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer held that the declaration made by directors and their family members / relatives of the assessee-company under IDS-2016, have accepted that investment made in the assessee-company was made by directors / family members in the form of share capital /share premium through Kolkata based companies. In the IDS-2016 declaration all the persons have accepted and declared that they have invested in share capital / share premium in assessee-company through and in the name of fifteen Kolkata based companies. The declaration disclosed in the IDS-2016 was made in the following manner: Sr. No. Name of Director Family Member/Relative (Real Investor) Amount declared under IDS Scheme,2016(Rs) Declared amount invested in the form of share capital/share premium of Appellant company held in the names of following companies 1 Sarika Agrawal (Tulsyan) 50,00,000 Zigma Dealmark P Ltd. Rs.10,00,000 Plazma Tradecom P Ltd. Rs.10,00,000 Devang Commercial P Ltd. Rs.20,00,000 Target Vincom P Ltd. Rs.10,00,000 2 Nishadev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee-company in the name of various company entities by way of share capital / share premium have been accepted under IDS-2016. Thus, the addition under section 68 of the Act is covered by the declaration made by real owners of the funds / income introduced as share capital. The Ld. CIT(A) further held that income has been declared in the name of real owners of undisclosed income it is not justifiable to tax again the amount introduced in the name of assessee as the share capital / share premium otherwise it would amount to double taxation , which is not permissible. 10. The ld CIT(A) by refereeing the Circular No. 29 of 2016 of Central Board of Direct Taxes ( CBDT in short) dated 18.08.2016 observed that in the Circular it was clarified by CBDT that appellant can make disclosure of undisclosed income reflected as loan/ advance, creditors, share capital etc., which is fictitious in nature. It was also clarified that amount declared under the IDS-2016 for earlier years can be taken into account to explain the transaction of subsequent years also. On the aforesaid basis, the Ld. CIT(A) deleted the addition of Rs.2.50 crores made under section 68 of the Act. Aggrieved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed about the quantum of income declared by all the directors / family members in IDS- 2016. The Ld. CIT(A) on perusal of income declaration under IDS-2016 and the investment made by the six family members / directors of the assessee-company accepted that investments were made through fifteen Kolkata based companies which were their personal undisclosed income, and such income was declared under IDS-2016, which has been accepted by the Department and the assessee-company has paid necessary tax and penalty thereon. Once the directors of assessee company and their family members paid tax on the share application and share premium, the same amount cannot be taxed twice. The Ld. AR for the assessee submits that Hon'ble jurisdictional High Court in the case of M. R. Shah Logistics (P.) Ltd. Vs. DCIT (2018) 97 taxmann.com 211 (Guj) on similar set of facts held that where the Assessing Officer held share application money received by assessee from one Garg Logistics Pvt. Ltd. (for short to as GL ) as undisclosed cash received of assessee, since the said amount was disclosed by GL under Income Declaration Scheme-2016 and the same was accepted by the Department, pursuant to which G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rival submission of both the parties and have gone through the orders of lower authorities carefully. The ld. AR submits that the order of Ld. CIT(A) is based on the fact that the investment made by the assessee-company was undisclosed income of various directors / family-members of the directors of the assessee-company, which has been accepted by them in IDS-2016 on which due penalty has been paid, once the amount has been taxed, same cannot be taxed in the hands of assessee again. 16. We have considered the rival submissions of both the parties and have gone through the orders of authorities below. We have also deliberated on various case law relied by Ld. AR for the assessee. We find that during the assessment, the Assessing Officer made addition on account of share application money and share premium by treating it as unexplained cash credits under section 68 of the Act by taking view that all the investor companies are Kolkata based companies and the identity, creditworthy and genuineness of transaction is not proved by the assessee. The assessing officer also held that mere transfer of share premium through banking channel is not sufficient to prove the transaction as ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tradecom Pvt. Ltd. of Rs.28 lakh and Santusthi Vanijya Pvt. Ltd. of Rs.15 lakh respectively; Chandadevi made investment in Axiom Commodeal Pvt. Ltd. of Rs.25 lakh and Adhunik Dealmark Pvt.Ltd. of Rs.22 lakh respectively; Manish Kuamr Tulsyan (HUF) made investment in Santusthi Mercantile Pvt. Ltd. of Rs.15 lakh and Deep Commosales Pvt. Ltd. of Rs.10 lakh respectively and Niraj Kumar Agarwal made investment in Access Trade Link Pvt. Ltd., of Rs.25 lakh and Surya Deal Trade Pvt.Ltd. of Rs.10 lakh respectively. On perusal of Form-I of IDS, 2016, we find that all the names of investor companies, wherein six members / directors or relatives of the directors of assessee-company made investment are clearly shown in their corresponding Form-I of IDS-2016. We further find that each of the IDS, 2016 was accepted either by Ld. PCIT-I or Ld. PCIT-II of Surat to determining taxes, surcharge and penalty payable on their declared undisclosed income under IDS- 2016. 18. We find that the assessing officer while filing appeal has not raised dispute or grounds of appeal that due tax, cess or penalty on the declared income is not paid by all such directors / family-members of directors of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of doubt. It is declared that where any declaration has been made under section 183 but no tax, surcharge or penalty has been paid within the prescribed time, the undisclosed income shall be chargeable to tax under the Income-tax Act in the previous year in which such declaration is made. 12. The Scheme thus makes detailed provisions for declaration of income which hitherto was either undisclosed or not charged to tax. Upon such declaration being accepted, declarant would pay tax at the prescribed rate with surcharge and penalty. Upon such amounts being paid, declarant would receive certain immunities. The income so declared would not be included in the total income of any assessment year. Even Benami transactions would not be targeted. The scheme thus appears to have been framed to encourage disclosures of unaccounted income. Upon acceptance of such disclosure, Revenue would collect tax, surcharge and penalty at the prescribed rates. In turn, the declarant would have peace of mind and certain immunities. 13. In the present case, same amount which the Assessing Officer wishes to tax in the hands of the petitioner company by resorting to reopening of assessment was declared by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of charging tax on the same income only once. 18. In the result, impugned notice is set aside. Petition is allowed and disposed of. 20. Before, us the ld AR for the assessee also raised pleas that in similar case in Peninsula Builders P Ltd, Shree Laxmi Fashions Private Limited and in Prime Embroideries Private Limited (supra), similar additions were made by assessing officer on account of share premium. Later on their directors accepted by filing application under IDS-16 and paid due tax of their own money, which was also infused through same modus operandi, and the ld CIT(A) deleted the addition, but no appeal is filed in such cases. We find that no contrary material is filed or shown to us by ld SR DR for the revenue that any further appeal is filed in all such similar cases by the revenue. Thus, in our considered view, the revenue cannot treat the similar situated assessee on similar additions in different way. So far as the objection of ld Sr DR for the revenue is concerned that undisclosed income declared in IDS-16, not to affect finality of completed assessment. We may note that the appeal is continuation of its original proceedings and the assessee cannot be depriv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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